Notice: This document was prepared by machine translation, and no manual modification has been made to the translated contents. This documents is to be used only as a reference, and in cases any differences occur between English version and the original Japanese version, the Japanese version shall prevail. The consolidated financial statements in this document are unaudited.
Summary of Business Results for the First Quarter Ended June 30, 2022
[Japan GAAP] (Consolidated)
August 9, 2022
Company name: DIGITAL HEARTS HOLDINGS Co., Ltd.
Listed on the TSE
Stock code:
3676
URL: https://www.digitalhearts-hd.com/
Representative:
Yasumasa Ninomiya, President and CEO
Contact:
Toshiya Tsukushi, Executive Vice president and CFO
TEL: +81-3-3373-0081
Scheduled date of submission of financial reports: August 10, 2022
Scheduled commencement of dividend payment: –
Preparation of supplementary material for quarterly financial results: Yes
Holding of quarterly financial results meeting: None
(Figures are rounded down to the nearest million yen.)
1. Consolidated results for the first quarter ended June 30, 2022 (April 1, 2022 – June 30, 2022)
(1) Consolidated business results
(Percentages are changes from the same period of the previous year.)
Net sales
Operating income
Ordinary income
Profit attributable to
owners of parent
Three Months Ended
(Millions of yen)
(%)
(Millions of yen)
(%)
(Millions of yen)
(%)
(Millions of yen)
(%)
June 30, 2022
8,372
37.3
639
0.5
637
-4.8
416
-14.7
June 30, 2021
6,098
19.7
636
301.3
670
244.9
487
391.3
(Reference) Comprehensive income:
Three months ended June 30, 2022:
717 million yen
(41.3%)
Three months ended June 30, 2021:
507 million yen
(643.0%)
Net income
Diluted net income
per share
per share
Three Months Ended
(yen)
(yen)
June 30, 2022
19.24
–
June 30, 2021
22.57
–
(2) Consolidated financial position
Total assets
Net assets
Shareholders’ equity
ratio
(Millions of yen)
(Millions of yen)
(%)
As of June 30, 2022
19,033
8,111
39.5
As of March 31, 2022
17,565
7,576
39.9
(Reference) Shareholders’ equity: 7,524 million yen (As of June 30, 2022)
7,004 million yen (As of March 31, 2022)
2. Dividends
Annual dividends
Q1
Q2
Q3
Year End
Total
(Yen)
(Yen)
(Yen)
(Yen)
(Yen)
Fiscal year ended March 31, 2022
―
7.50
―
7.50
15.00
Fiscal year ending March 31, 2023
―
Fiscal year ending March 31, 2023
10.50
―
10.50
21.00
(Forecasts)
(Note) Changes from the latest released dividend forecasts: None
3. Consolidated earnings forecasts for the fiscal year ending March 2023 (April 1, 2022 – March 31, 2023)
(Percentages are changes from the same period
of the previous year.)
Net sales
Operating income
Ordinary income
Profit attributable to
Net income
owners of parent
per share
(Millions of yen)
(%)
(Millions of yen)
(%)
(Millions of yen)
(%)
(Millions of yen)
(%)
(Yen)
Full fiscal year
35,500
21.7
3,290
21.8
3,290
18.4
2,250
26.4
104.02
(Note) Changes from the latest released earnings forecasts: None
* Notes
(a) Changes in accounting policies associated with revision of accounting standards
:Yes
(b) Changes in accounting policies other than (a) above
:None
(c) Changes in accounting estimates
:None
(d) Restatement
:None
(Note) For details, please see page 9 of the attached materials to the Quarterly Summary of Business Results “2. Quarterly Consolidated Financial Statements and Important Notes (3) Important Notes to the Quarterly Consolidated Financial Statements (Changes to Accounting Policies)”.
As of June 30, 2022
23,890,800 shares
As of March 31, 2022
23,890,800 shares
As of June 30, 2022
2,260,060 shares
As of March 31, 2022
2,260,031 shares
Three months ended
21,630,756 shares
Three months ended
21,613,369 shares
June 30, 2022
June 30, 2021
・Any forward-looking statements included in this report such as earnings forecasts are based on the information available to the Company at this time and certain assumptions considered reasonable; and accordingly, actual results may differ significantly from the forecasts due to various factors.
・Presentation material will be posted on TD net and the Company’s website.
○ Contents of Attached Materials
1. Qualitative information on quarterly results……………………………………………………………………………………………………………………..
2
(1)
Explanation of financial results………………………………………………………………………………………………………………………………….
2
(2)
Explanation of financial standing……………………………………………………………………………………………………………………………….
4
(3)
Explanation of forward-looking information such as forecasts of consolidated financial results………………………………………..
4
2. Quarterly Consolidated Financial Statements and Important Notes……………………………………………………………………………………..
5
(1)
Quarterly Consolidated Balance Sheet………………………………………………………………………………………………………………………..
5
(2)
Quarterly Consolidated Income Statement and Quarterly Consolidated Statement of Comprehensive Income………………. 7
(3)
Important Notes to the Quarterly Consolidated Financial Statements……………………………………………………………………………..
9
(Notes Concerning the Going-Concern Assumption) …………………………………………………………………………………………………
9
(Notes on marked changes to amounts of shareholders’ equity) …………………………………………………………………………………..
9
(Changes to Accounting Policies) ……………………………………………………………………………………………………………………………
9
1
1. Qualitative Information on Quarterly Results
FY2021 Q1
FY2022 Q1
Change
(JPY in thousand)
(JPY in thousand)
(%)
Sales
6,098,810
8,372,061
37.3
Operating income
636,462
639,914
0.5
Ordinary income
670,356
637,884
–4.8
Net income attributable to owners of the
487,747
416,103
–14.7
parent
Against a backdrop of exponentially increasing use of Internet of Things (IoT) technologies and accelerating digital transformation (DX), the digital markets in which the Group does business are undergoing diversification of content and services at an extremely rapid pace. At the same time, as individual companies are facing chronic shortages in the IT human resources needed to support their development and operation activities, the Group expects continued growth in revenue opportunities from providing services to support clients in areas such as software development, testing, maintenance and operation, and security.
Under these conditions, the Group will aim toward further growth through focusing on expanding the Enterprise Business, where demand is growing rapidly, underpinned by the Entertainment Business, which is a highly profitable business. During the cumulative period through the consolidated first quarter, net sales of the Enterprise Business, which is our focus business, continued their growth at a high level, including growth of approximately 1.8 times thanks in part to the effects of M&A activities, and the Entertainment Business also performed favorably, as it realized double-digit growth in net sales against a backdrop that includes a favorable console-game market.
As a result, net sales during the cumulative period through the consolidated first quarter showed substantial growth to JPY8,372,061 thousand (up 37.3% YoY). Operating income also increased from the previous year to JPY639,914 thousand (up 0.5% YoY), despite more proactive investment, including in human resources, for future growth, centered on the Enterprise Business. Ordinary income, however, was JPY637,884 thousand (down 4.8% YoY) due to factors including the difference in the timing of recording subsidy income, and net income attributable to owners of the parent was JPY416,103 thousand (down 14.7% YoY).
Business results by segment are reviewed below.
FY2021 Q1
FY2022 Q1
Change
(JPY in thousand)
(JPY in thousand)
(%)
Sales
6,098,810
8,372,061
37.3
Enterprise Business
2,029,589
3,589,171
76.8
Entertainment Business
4,069,221
4,818,390
18.4
Adjustment
–
–35,500
–
Operating income
636,462
639,914
0.5
Enterprise Business
87,871
29,681
–66.2
Entertainment Business
930,562
1,036,309
11.4
Adjustment
–381,971
–426,076
–
Net sales of each segment includes internal sales or transfers between segments, and segment profit is based on operating income.
2
(i) Enterprise Business
This segment mainly consists of QA Solutions such as system testing for detecting defects in enterprise computer systems, security testing, ERP introduction support, and other services, as well as IT services such as dispatching engineers, system maintenance and operation support, and other services.
During the cumulative period through the consolidated first quarter, we proactively carried out hiring activities for engineers using the different “Tech” branding image from the “Game Entertainment” image of the Group, centered on AGEST, Inc., which is the core company in the Enterprise Business, that was newly formed through Group organizational restructuring on April 1, 2022. In addition, combined with promoting efforts to improve quality assurance (QA) technological capabilities through means including launching research institutes and in-house educational institutions related to cutting-edge quality technology, we also endeavored to improve awareness of AGEST, Inc., and identify outsourcing needs such as QA, through means including active participation in seminars and exhibitions conducted by CTSO (Chief Testing Solution Officer). Furthermore, combined with promoting business growth in the ERP domain through enhancing Group-wide coordination with newly joined subsidiaries through acquisition last year, we also promoted growth strategies through use of M&A and other means, including conclusion of absorption-type split contracts and business alliance contracts inherited by AGEST, Inc. in the Quality Assessment Business of Sobal Corporation.
As a result, net sales in the Enterprise Business continued to grow at a high level of JPY3,589,171 thousand (up 76.8% YoY) in the cumulative period through the consolidated first quarter, thanks in part to the effects of M&A activities conducted last year. Segment profits were JPY29,681 thousand (down 66.2% YoY) due to the impact of aggressive investment in future growth.
(ii) Entertainment Business
This segment mainly consists of domestic debugging services for console games, mobile games, and similar software, as well as global services such as game localization and LQA (Linguistic quality assurance), game development support, marketing support, and other services.
In the domestic debugging service during the cumulative period through the consolidated first quarter, we made progress on securing new transactions backed by growth in demand in the robust console-game market, and realized double-digit growth in net sales. In Global and other services, we also secured growing demand for translation, LQA, and marketing support due to the active global deployment of content, and thanks to the effects of M&A activities, we also realized large- scale growth in sales. In addition, we also made progress on efforts toward further growth, including enhancing our services and providing new value, through a capital and business alliance agreement with GameWith, Inc.
As a result, net sales in the Entertainment Business during the cumulative period through the consolidated first quarter were JPY4,818,390 thousand (up 18.4% YoY), and segment income was JPY1,036,309 thousand (up 11.4% YoY).
3
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Hearts United Group Co. Ltd. published this content on 09 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2022 10:35:08 UTC.
