Presentation Material for the Fiscal Year Ending March 31 ...pdf.irpocket.com/C3676/h8MH/YwZ7/JUwe.pdfdevelopment to various types of customers Strengthen system verification area

Presentation Materialfor the Fiscal Year Ending March 31, 2014

Tokyo Stock Exchange First Section：Code 3676URL：http://www.heartsunitedgroup.co.jp/en/

Copyright 2014 Hearts United Group Co., Ltd. All Rights Reserved.2

Hearts United Group Co., Ltd. (HUG) was established as a 100% parent company of DIGITAL Hearts Co., Ltd. by sole‐share transfer on October 1, 2013.

The consolidated financial statements of HUG took over those of DIGITAL Hearts Co., Ltd. which became a consolidated subsidiary.As the scope of consolidation is not virtually changed, the consolidated results of DIGITAL Hearts Co., Ltd. are presented as the financial results prior to the Company’s establishment and used as comparative figures where applicable.

Explanation for the business results of FY2013

Copyright 2014 Hearts United Group Co., Ltd. All Rights Reserved.

1. Summary of Business Results of FY2013 ・・・・・・P4

2. Summary of Earnings by Segment ・・・・・P15

3. FY2014 Financial Outlook and The Medium‐term Management plan ・・・・・P23

Contents

3


1. Summary of Business Results for the FY2013


Major Moves in FY2013

5

1. Shifted to the holding company system (October 1,2013)

Shifted to the pure holding company system to separate the management and business execution functions and to enhance their specialty in each business.Organization restructuring took place on the same day and all shares of subsidiaries directly controlled by DIGITAL Hearts Co., Ltd. was transferred to HUG as dividends in kind, putting these subsidiaries under direct control of HUG.2. Actions toward business diversification

Provides total IT solution services including system development to various types of customers

Strengthen system verification area by integrating customer base, sales capabilities, know‐how and resources in debugging business

Engages in game development business and CG image production business based on their original 3D graphics engine “Chidori”

Develop high quality contents by sharing the Group’s know‐how/business base

Major purpose of consolidation

(Became a subsidiary on November 29, 2013)

(Became a subsidiary on April 1, 2014)

Network21 Co., Ltd. and Premium Agency Inc. became subsidiaries

Network21 Co., Ltd.


Major Moves in FY2013

6

Apr. 2013 Started “Cyber Security Service” to protect information assets from vicious cyber attack

Apr. 2013 Collaboration with PIPED BITS for integrated service of “Cyber Security Service” and “SEIJIYAMA”

Apr. 2013 Established cooperative relationship with Mozilla Japan

May 2013 Collaboration with Yahoo! Japan to prepare for the internet election using “Cyber Security Service”Started to provide “Cyber Security Support”

May 2013 Started to provide new service “SEIJIYAMA Net Security Cyber Security Diagnosis” with PIPED BITS

June 2013 Started to distribute novel version of a play‐by‐web RPG “Cross Tribe” via LINE novel

June 2013 “Cyber Security Service” was introduced in the internet election campaign by the Liberal Democratic Party

June 2013 Officially started to distribute a play‐by‐web RPG “Cross Tribe”

July 2013 Expanded Sasazuka Lab to enhance the system to provide “Debugging Service” and “Cyber Security Service”

July 2013 Expand Kyoto Lab to accommodate increased orders related to consumer games

July 2013 Developed mobile security software for Android

Aug. 2013 Released “YAMADABI” from Yamada Game

Sep. 2013 An American subsidiary doubled the office space in response to increased demand for Debugging service

Oct. 2013 Hearts United Group Co., Ltd. was established and listed (Security code:3676)

Oct. 2013 6 subsidiaries of DIGITAL Hearts became direct subsidiaries of Hearts United Group by subsidiary’s share dividends

Nov. 2013 Revised upward FY2013 full year forecast

Nov. 2013 Announced the medium‐term management plan up to the fiscal year ending March 31, 2017

Nov. 2013 Acquired the shares of Network21 Co., Ltd. and made it a subsidiary

Dec. 2013 Signed an Integration Partner Agreement with Webroot Inc. and started to provide security solution service

Mar. 2014 Tripled the floor space of Fukuoka Lab to enhance service capability and accommodate increased orders

Apr. 2014 Made Premium Agency Inc. a subsidiary through share acquisition and subscription to a third party allocation of shares

Debugging

Others

Others

Others

I R

I R

I R

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

DIGITAL Hearts

G & D

DIGITAL Hearts USA

H U G

H U G

H U G

New Service

New Service

New Service

New Service

Debugging

Debugging

Debugging

Debugging

Debugging

Debugging

Debugging

Debugging

Debugging

I R

I R

H U G

H U G

DIGITAL Hearts

DIGITAL Hearts

Debugging

Debugging

I R H U G


* 3DCG Contents Development Project started in April 2014 after Premium Agency Inc. became a subsidiary

7

*1 Media Business is included in the consolidated results from December 2012 as a result of consolidating Aetas, Inc. *2 System Development Project is included in the consolidated results from December 2013 as a result of consolidating Network21 Co., Ltd.

Net Sales6,885million

Increased by 147.2%

Outline of Business SegmentsSegment Business Unit Services

Debugging

Debugging Service is a service which tests bugs in software before its release and reports to clients

Consumer Games (CS) Mainly Debugging service for consumer games and on‐line games.Including service for overseas consumer games.

Digital Solutions (DS) Mainly Debugging service for mobile games devices such as social games and smartphone applications.Including system verification (WEB system etc.) and services for overseas mobiles.

Amusement (AM) Mainly Debugging service for Pachinko and Pachislot.

Media Media Business(*1) Operating Japan’s largest game portal “4Gamer.net”

Other Development Outsourcing ProjectSystem Development Project (*2)Video Production ProjectFuguai.com ProjectDIGITAL Hearts Creators Network Project

Receiving orders for outsourcing of development process.Developing variety of systems including contents program and core system.Providing the total service of image processing technology.Managing a bug information portal site “Fuguai.com”Operating user participating games which supports creators’ growth.

Bug

*Sales percentage includes inter segment sales and transfer

Debugging(AM)25.4%

Debugging(CS)38.9%

Media2.5%

Other5.0%

Debugging(DS)28.2%

For the Year EndedMarch 31,2013

Other8.7%

Media4.7% Debugging

(CS)33.4%Debugging

(AM)23.5%

Debugging(DS)29.7%




(Growth vs FY2012): Sales 147.2% Operating income 179.1%Sales and operating income increased significantly with solid growth of Debugging BusinessFull year forecast was revised upward on November 5 and the revised forecast was achieved

8※ Adjustment of operating income is mainly corporate expense including general and administrative expenses not allocable to any reporting segment

FY2013 Results Summary

(￥Million)FY2012Actual

FY2013Actual YoY Change

FY2013 Plan (Nov.5 2013)

FY2013 Forecast Achievement rate

Net Sales 6,885 10,137 3,252 147.2% 9,777 103.7%

Debugging Business 6,381 8,798 2,416 137.9% ‐ ‐

Media Business 175 483 308 275.6% ‐ ‐

Other Businesses 345 880 535 254.9% ‐ ‐

Adjustment for Each Segments ‐16 ‐24 ‐7 ‐ ‐ ‐

Operating Income 994 1,780 786 179.1% 1,660 107.2%

Debugging Business 1,741 2,631 889 151.1% ‐ ‐

Media Business 27 35 7 127.4% ‐ ‐

Other Businesses ‐99 ‐45 53 ‐ ‐ ‐

Adjustment* ‐676 ‐840 ‐163 ‐ ‐ ‐

Operating Income Margin 14.4% 17.6% +3.1 Points 17.0% +0.6 Points

Ordinary Income 996 1,788 792 179.5% 1,658 107.9%

Net Income 579 1,087 508 187.7% 956 113.7%


Achieved record high sales and continuous increase in sales and profit

Trend in Consolidated Sales/Operating Income (Fiscal Year)

FY2009 FY2010 FY2011 FY2012 FY2013

Net Sales(¥ million)

Operating Income(¥ million)

Operating Income(Operating Income Margin)


440 562 553 508 503 644 679 600 604

1,028 986 842 914 1,067 1,260 1,293 1,385

1,631 1,834 1,802

201221 202 203 262

255 243238 245

274 274295 305

338340 370

402

381

463 456

31163 181 144 32

181 194118 63

401292

76126

226

351 290330

528

602319

673

947 938 857 799

1,082 1,117 958 913

1,704 1,552

1,214 1,345

1,632

1,952 1,954

2,118

2,541

2,901

2,577

4.7%

17.2%

19.4%

16.9%

4.1%

16.8% 17.4%

12.4%

6.9%

23.6%

18.8%

6.3%

9.4%

13.8%

18.0%

14.9%15.6%

20.8%20.8%

12.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1Q 2Q 3Q 4Q 1Q2 2Q2 3Q2 4Q2 1Q3 2Q3 3Q3 4Q3 1Q4 2Q4 3Q4 4Q4 1Q5 2Q5 3Q5 4Q5

Operating IncomeSelling, General and Administrative Expenses (SG&A)CostsOperating Income Margin

（¥ Million）

Trend in Consolidated Sales/Operating Income (Quarterly)

Quarterly results

Profitability increased due to increased revenues from Debugging Business and containment of fixed costs

Investment in equipment and human resource in 4Q to prepare for FY2014

10

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QFY2009 FY2010 FY2011 FY2012 FY2013

Non‐consolidated results up to FY2011 1Q Consolidated results from FY2011 2Q

3Q 4Q

Aetas, Inc. became a subsidiary

Network21 Co., Ltd. Became a subsidiary

Shifted to the holding company system from FY 2013 3Q


Analysis of Changes in Operating Income


Consolidated Balance Sheets

● Current assets ：Increased by ¥1,941 million (up 53.8% YoY) mainly due to increases in cash and deposits and in notes and accounts receivable‐trade

● Current liabilities ：Increased by ¥1,317 million (up 64.1% YoY) mainly due to increases in short –term loan and corporate tax payable

●Net assets ：Increased by ¥979 million (up 35.2% YoY) mainly due to net profit (¥1,087 million) offset by dividend payment (¥141 million)

12

(¥ Million)FY 2012 (As of Mar. 31, 2013)

FY 2013 (As of Mar. 31, 2014)

YoYChange

Current assets 3,607 5,549 1,941(Of which)Cash and deposits 2,184 3,693 1,508

Notes and accounts receivable‐trade 1,273 1,483 209

Noncurrent assets 1,253 1,611 357

(Of which)Property, plant and equipment

262 323 60

Intangible assets 608 695 86

Investments and other assets 381 592 210

Total assets 4,861 7,160 2,299

(¥ Million)FY 2012 (As of Mar. 31, 2013)

FY 2013 (As of Mar. 31, 2014)

YoY Change

Current liabilities 2,055 3,372 1,317(Of which)Short‐term loan 1,000 1,610 610

Noncurrent liabilities 19 20 1Total liabilities 2,074 3,393 1,319Shareholders' equity 2,736 3,687 951(Of which)Capital stock 274 300 26Capital surplus 234 300 66Retained earnings 2,227 3,086 858Total accumulated other comprehensive income 18 29 11Minority interests 32 49 16Total net assets 2,786 3,766 979Total liabilities and net assets 4,861 7,160 2,299


Cash flows from operating activities: Cash inflows from income before income taxes, depreciation and goodwill amortization exceeded cash outflows from income tax paid and increase in accounts receivables

Cash flows from investing activities: Cash outflows from advance payment for affiliates’ share acquisition, purchase of tangible fixed assets and payments of lease and guarantee deposits exceeded cash inflows from sales of investment securities

Cash flows from financing activities: Cash inflows from proceeds of short term loan exceeded cash outflow from repayment of short and long term loan and dividend payment

Consolidated Statements of Cash Flows

13

(￥Million) FY2012Actual

FY2013Actual YoY Change

Net cash provided by operating activities 330 1,561 1,230

(*Cash flows before income taxes paid) 791 2,051 1,260

Net cash used in investing activities ‐649 ‐368 281

Net cash provided by (used in) financing activities 893 308 ‐585

Effect of exchange rate change on cash and cash equivalents 12 6 ‐5

Net increase in cash and cash equivalents 586 1,508 921

Cash and cash equivalents at the beginning of period 1,597 2,184 586

Cash and cash equivalents at the end of period 2,184 3,693 1,508


Profit Distribution to Shareholders

Dividends per share

※ Executed stock splits at a rate of 1:100, effective on July 1, 2012, and at a rate of 1:2, effective on October 1, 2012.Dividends per share in previous years are adjusted to reflect share splits impact. The dividend without adjustment are shown in brackets.

※ Dividends before interim dividend of FY2013 represent dividends of DIGITAL Hearts Co., Ltd.

14

（¥）ROE

ROE=Net Income/Equity

Dividend/Dividend Payout Ratio¥15

¥8

Year‐end dividend forecast: Increased from 6 yen to 8 yen, to be an increase for five consecutive years

(Basic policy)Pay dividends linked to business performance of the relevant period with the medium‐term target for consolidated dividend payout ratio of 20%

¥3

¥7

¥2.5 ¥3.75 ¥5

¥5

¥8

9.4%

15.6% 13.1%16.0%

16.3%

0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%20.0%

0

2

4

6

8

10

12

14

16

FY2009 FY2010 FY2011 FY2012 FY2013

Dividend (interim)DividendDividend Payout Ratio

21.0%

16.2%

21.6% 23.2%

33.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

FY2009 FY2010 FY2011 FY2012 FY2013

FY2009 FY2010 FY2011 FY2012 FY2013Annual Dividend

2.5 yen(500 yen)

3.75 yen(750 yen)

5 yen(1,000 yen)

8 yen (11 yen) 15 yen (plan)

Dividend Payout Ratio 9.4% 15.6% 13.1% 16.0% 16.3%

(Forecast)


2.Summary of Earnings by Segment


・Each segment and unit sales includes intra‐segment sales /transfer, and total sales excludes intra‐sales

・Segment income is based on operating income, and the total operating income includes corporate expense such as general and administrative expenses

These assumptions also apply to the following pages

Media 4.7%

Summary of Earnings by Segment

(￥Million) FY2012Actual

FY2013Actual

YoYChange Summary

Debugging Business

Net Sales 6,381 8,798 2,416 (137.9%)↑ Achieved record high sales in all units, showing steady growth

Especially DS recorded satisfactory results for two consecutive yearsSegment Income 1,741 2,631 889 (151.1%)

Consumer Games (CS) Net Sales 2,684 3,392 708 (126.4%) ↑ Increasing number of simultaneous releases of titles for multiple

hardware accelerated outsourcing

Digital Solutions(DS) Net Sales 1,945 3,016 1,071 (155.1%) ↑ Active development of native application resulted in increased

number of titles

Amusement (AM) Net Sales 1,751 2,388 636 (136.3%) ↑ Expansion in development scale such as increase in performance

patterns led to boost the number of man‐hours

Media BusinessNet Sales 175 483 308 (275.6%) ↑ Business started after Aetas, Inc. became a subsidiary in December

2012 and contributed to consolidated results with full year operation from FY2013. Showed steady growth from increased stable revenuesSegment

Income 27 35 7 (127.4%)

Other BusinessesNet Sales 345 880 535 (254.9%) ↑ System development project started contributing to consolidated

results from December 2013 after Network21 Co., Ltd. became a subsidiary

↓ Incurred expenses from policy change in Video Production Project/initial investments in new business (DCN Project)

Segment Income ‐99 ‐45 53 (‐)

TotalNet Sales 6,885 10,137 3,252 (147.2%)

↑ All segments mainly Debugging Business showed steady growth and sales and operating income increased significantlyOperating

Income 994 1,780 786 (179.1%)

Other8.7%

Debugging(CS)33.4%

Debugging(AM)23.5%

Debugging(DS)29.7%




Debugging(AM)25.4%

Debugging(CS)38.9%

Media 2.5%

Other5.0%


Debugging (DS)28.2%


Achieved revenue increase over 20% in all units of Debugging Business Enhance system to receive orders by expanding office and securing human resources in

domestic 3 labs and U.S. offices Improve competitiveness by increasing added value in services through development of new

services

(人)

Debugging Business

Net Sales, Segment income (Year Over Year)

(¥ Million) FY2012Actual

FY2013 Actual Y o Y Change

Net Sales 6,381 8,798 +2,416 137.9% Segment income 1,741 2,631 +889 151.1%

1,741 2,631

6,381

8,798

27.3%

29.9%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

FY2012 FY2013

SalesSegment incomeSegment income margin

(¥ Million)

709 883

1,239 1,449

2,091

0

500

1,000

1,500

2,000

2,500

FY2009 FY2010 FY2011 FY2012 FY2013

Number of average part‐time workers(Head Count)

17


Debugging Business (CS: Consumer Games Unit)

Outsourcing increased as number of titles released simultaneously for multiple hardware increased Provision of total services from early stage of development resulted in an increase of large orders Focused on taking in outsourcing needs in the U.S. through overseas subsidiaries and sales improved steadily

Sales(FY)(¥ billion)

18Source：Enter brain “Fami-Tsu Hakusho 2013”

Net Sales (Year Over Year)

(¥ Million)FY2012 Actual


Net Sales 2,684 3,392 +708 126.4%

Serviced Items: Debugging ‐ consumer game software Debugging ‐ online games Debugging ‐ arcade games Translation of consumer game software (localization) Overseas deal – Debugging ‐ consumer game software

**Business unit was not reclassified until FY2009.Records include “Testing of home application” and “Mobile application localization”

274.6 271.2 273.7 275.1

28.5 34.2 36.7 55.4

0

50

100

150

200

250

300

350

2011 2012 2013(Forecast)

2014(Forecast)

Online Game Game Software

Market Size (FY)

Market Size of Game Software & Online Game


Debugging Business (DS: Digital Solutions Unit )

Orders for social games continued to increase due to active development of native application Expanded transaction volume with existing customers and also focused on finding new customers Promoted new measures toward mid‐term growth, e.g. development of new service and entering

to new service area aggressively

19

(¥ Billion)

Source ： Yano Research Institute Ltd. “Research of Social Games Market 2012”


(¥ Million)FY2012Actual

FY2013Actual Y o Y Change

Net Sales 1,945 3,016 +1,071 155.1%

Serviced Items: Debugging ‐ applications Debugging ‐ Social Network System (SNS) games,

operation support Testing of web system, operation system, home appliances Overseas deal – Debugging ‐ applications, localization, and operation support

New service “Cyber Security Service”Sales(FY) Market Size (FY)

*Business unit was not reclassified until FY2009.Records do not include “Testing of home application” and “Mobile application localization”

36.1

138.0

282.4

387.0425.6

0

100

200

300

400

500

2009 2010 2011 2012(Forecast)

2013(Forecast)

Market size of social games


Debugging Business (AM: Amusement Unit )

Expanded development scale due to increasing performance pattern, etc. resulted in an increase in outsourcing needs

Earned trust from existing/new clients by providing high added value service Focused on acquisition of new orders mainly from pachislot related business

20Source : Yano Research Institute Ltd. “Pachinko & equipment Market Research 2013”

Serviced Items: Debugging ‐ pachinko Debugging ‐ pachislot Other development support services


(¥ Million)FY2012Actual


Net Sales 1,751 2,388 +636 136.3%

985.2 886.9 826.7 772.9

225.8286.7 375.0 430.0

0

200

400

600

800

1,000

1,200

1,400

2009 2010 2011 2012

Pachislot Pachinko

Market size of Pachinko and PachislotMarket Size (FY)(¥ Billion)Sales(FY)


Media Business

Made Aetas, Inc. a subsidiary through acquisition of all shares on November 30, 2012 and included its full‐year results in the consolidated results from this fiscal year

Expanded content lineup especially for smartphone game applications to meet diversifying user needs Built a stable revenue base by focusing on obtaining yearly contracts or long‐term ad plans

21※Media Business started from FY2013 3Q after consolidation of Aetas, Inc. ※Segment income is net of goodwill amortization

Japan’s largest game portals http://www.4gamer.net/

Net Sales, Segment income (Year Over Year)



Net Sales 175 483 +308 275.6% Segment income 27 35 +7 127.4%

124

135

55

124

120

99

0

100

200

300

400

500

600

FY2012 FY2013

4Q3Q2Q1Q

(¥million)

483

175

27 35

175

48315.8%

7.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

0

100

200

300

400

500

600

FY2012 FY2013

Net SalesSegment IncomeSegment Income Ratio

(¥ million)


‐99 ‐45

345

880

‐200

0

200

400

600

800

1000Net SalesSegment loss

(¥ million)

Other Businesses

22

Business Items: Development Outsourcing Project System Development Project Video Production Project “Fuguai.com” Project DIGITAL Hearts Creators Network

(DCN) Project

Development Outsourcing Project：Increased earnings with solid developments System Development Project：Started contributing to consolidated results from December 2013

after Network21 Co., Ltd. became a subsidiary

※Segment loss is net of amortization of goodwill arising from the acquisition of Network21 Co., Ltd.



Net Sales 345 880 +535 254.9%

Segment loss ‐99 ‐45 +53 ‐

Net Sales/Segment income (Year Over Year)

58 126 70 129 86

216 129

407

0

100

200

300

400

500

600

700

800

900

1,000

FY2012 FY2013

4Q

3Q

2Q

1Q

(¥million)

880

345

FY2012 FY2013


3.FY2014 Financial Outlook and The Medium‐term Management plan


FY2014 Consolidated Earnings Forecast

Net Sales ： 15,002 million (YoY：148.0%)Operating Income ： 2,223 million (YoY：124.9%)

24

Aim further growth as the 1st year of Medium‐term Management Plan

3,416 3,957

5,386

6,885

10,137

15,002

521 528 833

994

1,780

2,223

0

500

1,000

1,500

2,000

2,500

3,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014(Forecast)

Net SalesOperating Income

Net Sales (¥ Million) Operating Income (¥ Million)


FY2014 Earnings Forecast and Dividend Forecast

25

Consolidated Earnings Forecast

Dividend forecast

¥15（ Interim dividend ¥7/Year‐end dividend ¥8）

Dividend payout ratio：14.8%

FY2013 FY2014 Forecast

Place more focus on Debugging BusinessThe complexity of system development is expected to drive 120%+ growth in Debugging Business

Meet a variety of customer’s needs by expanding services through collaboration with group companiesNetwork21 Co., Ltd. and Premium Agency Inc., which became subsidiaries in FY2013, are expected to contribute to the consolidated results with full year operation

¥15（ Interim dividend ¥7/Year‐end dividend ¥8）

Dividend payout ratio：16.3%

¥ MillionFY2013 FY2014

Actual YoY Forecast YoY change

Net Sales 10,137 147.2% 15,002 4,864 148.0%

Operating Income 1,780 179.1% 2,223 442 124.9%

Operating Income Margin 17.6% + 3.1 point 14.8% ‐ 2.7 point

Ordinary Income 1,788 179.5% 2,201 412 123.1%

Net Income 1,087 187.7% 1,210 122 111.3%


Basic Policy of Medium‐term Management plan

Basic policy #1：

In developing the medium‐term management plan, we define the period up to the fiscal year ending March 31, 2017 as the

“period to enhance management base andachieve challenging and significant progress”and hold up the following basic policies

Basic policy #2：Develop service pursuing uniqueness

Basic policy #3：Strategic use of management resources

Basic policies of the medium‐term management plan

Positioning of the medium‐term management plan

26

Pursue growth of Debugging Business beyond geographic and service area


The Medium‐term Management planManagement Vision

27

¥10.1 billion

¥30 billion

Self‐sustaining growth

M&A

With the strong autonomic growth and the use of M&AWe aim at consolidated sales of ¥30 billion and market capitalization of ¥100 billion

(Net Sales : ¥ Billion)

In order to achieve new management vision, we shifted to the holding company system by sole‐share transfer method on October 1, 2013. Our milestone necessary for the everlasting growth of the entire group is as follows:

Management vision

Improve the management mobility with mobile and dynamic management decision capable of responding to environmental changes

Improve the Group’s management efficiency by efficient procurement and allocation of management resources


The Medium‐term Management planFinancial Indicator of the Group

Sales

FY2016 Plan+¥19.8billion(+196%)

The financial indicator to be achieved during the period of the medium‐term management plan is as follows:

OrdinaryIncome

+¥3.0billion(+168%)

OperatingIncome margin 16%17.6% -

+3%

¥91.9 +¥151(+164%)

¥30 billion

¥4.8 billion

37%

¥243

¥10.1 billion

¥1.7billion

33.6%

FY2013 Actual

Target increase for revenue/profit:150%

Dividendpayout ratio 16.3% +4% 20%

ROE

EPS

28


0

5,000

10,000

15,000

20,000

25,000

30,000

FY2012 FY2013 (Actual) FY2014 (Plan) FY2015 (Plan) FY2016 (Plan)

Other Businesses

Media Business

Debugging Business

Self‐sustaining growth

48%

47%

36%

6,885

10,137

15,000

22,000

30,000

15,002(Forecast)

The Medium‐term Management planTarget Sales by Segment

（¥ Million）

（¥ Million）

※As sales of each segment for FY2012 and FY2013 include inter‐segment sales or transfer, the sum of each segment’s sales does not necessarily match the total presented above.※Sales by segment for FY2014 (forecast) is not disclosed.

Images of target sales by segment are as follows:

M‐T management plan period

29

Segment FY2012 FY2013 (Actual) FY2014 (Plan) FY2014 (Forecast) FY2015 (Plan) FY2016 (Plan)

Debugging Business 6,381 8,798 10,90015,002

13,000 15,600Media Business 175 483 700 900 1,000Other Businesses 345 880 3,400 8,100 13,400Total 6,885 10,137 15,000 15,002 22,000 30,000


This presentation has been developed strictly for the purposes of investor relations activities and does not in any way attempt to influence or facilitate investment decisions orrepresent a solicitation for investment.While the information provided herein is based on that believed to be reliable at the time of submission, the Company does not guarantee its accuracy, be it partial or overall.Furthermore, because this presentation features the views and assessments of the Company at the time of its writing, it may therefore be subject to change without prior notice dueto unforeseen developments in the Company’s operating environment.The Company and its affiliated companies, as well as their executive officers, may hold positions in the securities and/or financial products featured in this presentation, and may standto profit or incur losses from their positions. The relevant parties may also purchase or sell securities and/or financial products, either in person or by proxy.This presentation is protected under exclusive copyright of the Company. To quote, reproduce or transfer any section, either partially or in its entirety, is prohibited by law. Those whowish to quote from, reproduce or transfer the information contained herein must therefore acquire in advance the written consent of the copyright holder.

＜Contact＞Management Planning Office Phone：+81‐3‐6406‐0081

Email：[email protected] http://www.heartsunitedgroup.co.jp/en


Reference

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・ Corporate Profile ・ Group Companies & Offices

・ History ・ Debugging Business

・ Our Group ・ Media Business

・ Segment ・ Other Businesses

・ FYI (Glossary)


Corporate Profile

(as of March 31, 2014)

* Premium Agency Inc. became a subsidiary on April 1, 2014, but all information is based on the data as of March 31, 2014

Registered Name Hearts United Group Co., Ltd.

Incorporated October 1, 2013

Date Listed

October 1, 2013 Listed on Tokyo Stock Exchange The 1st Section(Information about DIGITAL Hearts Co., Ltd.)February 1, 2008 Listed on TSE MothersFebruary 25, 2011 Moved from TSE Mothers to TSE 1st Section

Representative President & CEO Eiichi Miyazawa

Location 6‐10‐1 Roppongi Minato‐ku, Tokyo

Services Operation management of subsidiaries engaging in Debugging Business, Media Business, and Other Businesses and other and its incidental or associated business

Group Businesses ■ Debugging Service ■ “4Gamer.net” Site Management■ Development Outsourcing Service ■ System Development Service■ Video Production Service ■“Fuguai.com” Site Management■ Supporting creators : Managing online multiplayers games

Capitalization ¥300,571,000

Shares Issued 11,944,200 Shares

Group Companies DIGITAL Hearts Co., Ltd. DIGITAL Hearts USA Inc. DIGITAL Hearts Visual Co., Ltd. Aetas, Inc.

DIGITAL Hearts Korea Co., Ltd. DIGITAL Hearts (Thailand) Co., Ltd. G&D Co., Ltd. Network21 Co., Ltd.

Workforce(consolidated) 277

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History

Year Month Corporate History2001 April Established DIGITAL Hearts Ltd.

Began offering debugging services

2003 October Became a public corporation

2007 September Became first Japanese company to receive the Authorized Xbox 360 Test Program (AXTP) from Microsoft Corp. for the Xbox 360®

October Granted privacy mark certification

2008 February Listed on the Mothers Market on the Tokyo Stock Exchange

2011 February Listed on the First Section of the Tokyo Stock Exchange

July Established a subsidiary DIGITAL Hearts Korea Co., Ltd., in Korea

October Established a subsidiary DIGITAL Hearts USA Inc., in the United States of America

December Established a subsidiary DIGITAL Hearts (Thailand) Co., Ltd., in Thailand

2012 March Established a subsidiary G & D Co., Ltd., in Shinjuku Ward, Tokyo

May Established a subsidiary DIGITAL Hearts Visual Co., Ltd., in Shinjuku Ward, Tokyo

November Acquired all of the company shares for Aetas, Inc. and made it a subsidiary

2013 October Established a pure holding company, Hearts United Group Co., Ltd., by means of a stock transfer and transitioned to a pure holding company structure

November Acquired the company shares of Network21 Co., Ltd. and made it a subsidiary

2014 April Acquired the shares of Premium Agency Inc. through acquisition and subscription to a third party allocation and made it a subsidiary


Our Group

CompanyCompany BusinessBusiness SegmentSegment

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Media4.7%

Other8.7%

Net Sales¥10,137million

Med

ia

Consumer Games Unit (CS) Testing Consumer game software/Online games, etc.

33.4%

Digital Solutions Unit (DS)Testing mobile contents/system of social game and smartphone applications, etc.

29.7%

Amusement Unit (AM)Testing Pachinko/Pachislot, etc.23.5%

4Gamer.netManage one of Japan’s largest game portals 4.7%

Development OutsourcingSystem DevelopmentVideo Production Fuguai.com Site ManagementSupporting creators

8.7%

Sales composition ratiofor FY2013

Other*Sales composition ratio is calculated including inter‐company sales

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Segment

Deb

ugging

Debugging(CS)33.4%

Debugging(DS)29.7%

Debugging(AM)23.5%


Group Companies & Offices

Sapporo Lab.Sapporo 2nd Lab.

Hatsudai(Head office) Sasazuka Lab.Ueno Lab.

Asakusa Lab.

Nagoya Lab.

Tokyo

Thailand

U.S.A.Korea

DIGITAL Hearts Co., Ltd.Offices

DIGITAL Hearts Korea Co., Ltd.

DIGITAL Hearts(Thailand) Co., Ltd.

DIGITAL Hearts USA Inc.

• DIGITAL Hearts Co., Ltd.(10 offices)• G&D Co., Ltd.• DIGITAL Hearts Visual Co., Ltd.• Aetas, Inc.• Network21 Co., Ltd.

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Osaka Lab. Kyoto Lab.

Fukuoka Lab.


Clients Our Group

Registered staff

Testing process

Fee payment

・ # of personnel involved ×

# of man‐hours ×

price per unit (inclusive of know‐how fee)

・ Payment at 1 month after sight

・ Safe security environment with fingerprint authentication and security cameras

・ Personal reference system applied to all registered testers

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DIGITAL Hearts Co., Ltd. DIGITAL Hearts Korea Co., Ltd.DIGITAL Hearts USA Inc.DIGITAL Hearts(Thailand) Co., Ltd.

Debugging Business

• Game Industry• Mobile Device Industry• Pachinko & Pachislot Industry• Home Appliance Industry• System Industry• Others

Bug information report(daily)

Request to test bugs


Media Business

Manage one of Japan’s largest game portals for game fans.

Dealing with the world wide game related information. Our strength is frequency of information update.The information includes breaking news, review articles, hardware information and the series of articles uniquely featured by editors.Built the strong position as mainstream media as shown by below number.

The number of page views : 65 million PV/ MonthThe number of unique users : 4.7 million UU/ Month(As of October 2013, including PC/Smartphone versions)

User4Gamer.netClients

Provide/cover game information

Provide ad space

Pay ad fees

Visiting websites

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http://www.4gamer.net/


Development Outsourcing ProjectProvide total outsourcing service throughout the development processes of consumer games and mobile contents

Provide total service regarding image processing technology to create computer generated imagery

Manage a portal site for bug information with the aim to improve products’ quality by collecting and posting a wide variety of information on “bugs”

Manage online multiplayers games in which online players communicate each other to progress the story while creators create and provide the game contents based on the players’ requests for a fee

Video Production Project

Fuguai.com Project

Supporting creators : Managing online multiplayers games

First shot : Cross Tribehttps://cross‐tribe.jp

http://www.fuguai.com/

System Development ProjectDevelop variety of systems including content program, core system, etc.

Other Business

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FYI (Glossary)

40

Word MeaningBug A bug is an error, flaw, or fault in a computer program.

DebuggingIn general, debugging refers to identification and correction of errors in computer program (i.e. bug). Debugging Service of the Group specializes in "identifying and reporting bugs" without correcting them.

Outsourcing Outsourcing is to entrust all or part of the company's work or process to another company who specializes in such work or process.

Lab. The Group refers to the location for debugging work to "Lab."

TesterThe Group refers to staff who carries out debugging service as a "tester."The Group adopts the part‐time registration system, and a "registered tester" refers to a staff registered with the Group.

Consumer games A consumer game is a game played on the home video game player (floor‐standing type or portable type).

On‐line gamesOnline game is a video game played by multiple people simultaneously over the internet and also a downloadable game content through the Internet which can be charged.

SNSSocial Networking Service (SNS) is a general term for web‐based service to create community promoting social network among people or community to provide means to interact over the internet.

Social games Social network game is a type of online game that is played through social networks with other users.

Browser game Browser game is a game that is played over the internet using a web browser without downloading or installation.

Native application (game) Native application game is an application game developed by a program operating on a platform such as smartphone. It can be played by downloading or installing.

Documents

Presentation Material for the Fiscal Year Ending March 31 ...pdf.irpocket.com/C3676/h8MH/YwZ7/JUwe.pdfdevelopment to various types of customers Strengthen system verification area