Through the Strategic Reorganization, to Maximize Our Group’s Corporate Value with Our Uniqueness

 Since our founding, we have been expanding our businesses with our mission “SAVE the DIGITAL WORLD.” The Company started with debugging service for game software and then added quality assurance and cybersecurity services in the enterprise field. We have been helping to live in a digital society with peace of mind, from corporate clients to individual users.

 In recent years, new technologies, such as the generative AI, have become increasingly popular. At the same time, digital platforms and contents have become increasingly diverse, complex, and globalized at an accelerating pace. As a result, businesses climate surrounding our group is undergoing major changes. Corporate management also requires advanced specialized knowledge, the ability to adapt to change, and foresight. In Enterprise Business, against the backdrop of increasingly complex software, there has been growth in demand not only as a testing agent but also as solutions by leveraging our expertise as a testing specialized company. Meanwhile, Entertainment Business is seeing growth in demand for translation and marketing support with the acceleration of global development of game titles, and new business opportunities arising from the diversification of entertainment content such as video and manga apps.
 We consider these changes as a good opportunity for our future growth. In order to further develop both businesses and maximize corporate value, we have found it quite important to completely separate both Enterprise and Entertainment Businesses and develop a business basement with human resources and technologies, which is specializing in each unique business. And in May 2023, we resolved to begin preparations for the share-distribution-type spin-off and for listing the shares ("Spin-Off Listing") of AGEST, Inc., the core subsidiary of Enterprise Business.
 Since we began preparing for this Spin-Off Listing, we have made it clear that each business will aim for, and we believe that we have promoted new initiatives for our future growth with an unprecedented sense of speed. In Enterprise Business we have strengthened our business operation focusing on “QA” and “Technology” by launching a series of new “Shift-Left” services which are not provided by other third-party verification and also starting to utilize AI for our businesses. In addition, by promoting these initiatives, AGEST's brand as a "tech company" utilizing the newest technology has penetrated the market, and the recruiting of high-skill engineers has steadily progressed. Meanwhile, in Entertainment Business, with the aim of strengthening its global businesses, the Group has aggressively pursued M&A and alliances. We expanded our services such as translation for European languages and audio/voice recording for games, established a joint venture that conducts debugging in English-speaking countries, and we have been developing AI translation engine for game titles. The Entertainment Business accelerated strategic investments to shift from a stable growth phase to a growth trajectory.
 Net sales for the fiscal year ended March 2024 were ¥38,790 million (YoY 106.2%), thanks in part to the results of these initiatives. However, in terms of profitability, due to an increase in Spin-Off Listing related costs and impairment of goodwill in the U.S. testing subsidiary, which had fallen in profitability, Operating income recorded ¥2,039 million (YoY 68.0%), and net income attributable to the parent company shareholder was ¥176 million (YoY 22.1%). These short-term business results have become extremely challenging, and we are very concerned about shareholder, but the momentum for the growth of both businesses is continuing. Recently, the number of global projects in Entertainment Business has increased steadily, and the number of new projects in Enterprise Business has also increased due to favorable market conditions. For this reason, in the next fiscal year ending March 2025, both businesses will move to an upward trend in both sales and profits. As a result, we plan to record high Net sales and Operating income, with sales in \44,100 million (YoY 113.7%) and Operating income in \3,100 million (YoY 152.0%).
 In addition, on April 1, 2024, we changed our corporate management structure with the aim of conducting management exclusively for “DH Group” doing Entertainment Business and “AGEST Group” doing Enterprise Business. In FY2024, we will strive to maximize the growth potential of both businesses by conducting management that specializes in each.

 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.

May 9, 2024
President & CEO
Toshiya Tsukushi