We would like to express our sincere gratitude to our shareholders and investors for your continued and exceptional support. The CRESCO Group has finalized the financial results for the second quarter of FY2024 (from April 1, 2024 to September 30, 2024).
Domestic companies are facing further cost increases due to the rising cost of living, and real wages are continuing to fall. In addition, exchange rates have fluctuated significantly due to concerns about financial policies in Japan and the U.S. and the change of prime minister in Japan, and the instability of corporate earnings has become prominent. Furthermore, a series of incidents occurred that drew attention to the impact of IT on the business activities of domestic companies, such as cyber attacks using ransomware and system problems.
Under this business environment, the CRESCO Group began the Medium-Term Management Plan 2026 this fiscal year. We have set consolidated net sales of 70 billion yen, consolidated operating profit ratio of 11.5%, and consolidated ROE of 15% as financial KPIs for FY2026. We will achieve these financial KPIs and our mission as the CRESCO Group, “Continuously grow and move society forward together with our customers,” through the implementation of our seven growth strategies: (1) Establish a co-creation model, (2) Exercise quality leadership, (3) Promote human capital management, (4) Expand technologies and digital solutions, (5) Promote coordination among businesses, (6) Realize digital transformation, and (7) Group integrated management.
We reorganized the Solution & Service Innovation-Unit into the Regional Innovation-Unit for the purpose of promoting nearshore development at regional offices and strengthening our product development and technological capabilities. In addition, we reorganized the Business Enablement Service Unit into the Digital Modernization-Unit as an organization that promotes the digital solution business and can respond to cutting-edge technologies. Furthermore, we established the Quality Management Office and the Project Management Office under the Quality & Process Management-Unit to strengthen quality control. We also established the Business Support Center to centralize and streamline internal administrative operations. In addition, we established the Global Business & Management Office in the Strategic Business Management-Unit for the purpose of expanding into the global market. We have assigned an Executive Officer in charge of each of the seven growth strategies, and we will work to achieve these strategies.
In terms of CRESCO Group companies, we acquired all outstanding shares of Jet Technologies Co., Ltd. on April 1, 2024, making it a subsidiary. It has been included in the scope of consolidation since this interim period. The company has expertise and a large customer base in the IT infrastructure area, which we believe will enable us to achieve a high level of synergy. In addition, during this interim period, we carried out a reorganization of our consolidated subsidiary, Japan Software Design CO., LTD., and the business of its Nagoya branch was transferred to us. The company was merged into Mexess Co., Ltd., our consolidated subsidiary, and disappeared on July 1, 2024. In June 2024, all of our shares of CRESCO Wireless, Inc. were transferred to the company’s Representative Director.
As a result, the company was excluded from the scope of consolidation during this interim period.
Based on the resolution at the Board of Directors meeting held on May 10, 2024, we conducted a 2-for-1 share split of common shares on July 1, 2024, to lower the unit investment amount and thereby broaden our shareholder base and increase the market liquidity of our shares.
In addition, based on the resolution at the Board of Directors meeting held on July 18, 2024, we disposed of 18,047 treasury shares as restricted shares remuneration for Directors (excluding Outside Directors and Directors serving on the Audit and Supervisory Committee), employees serving as Executive Officers, and some Directors of our subsidiaries (total amount of disposal price is 25,680,881 yen).
In our digital solutions business, we began offering “Application Modernization Service,” “Creage DevOps Introduction Support Service,” which builds a system that improves productivity and quality when introducing and updating cloud systems, and “Control Tower Option,” a service that solves security and governance issues in AWS environments, as new services of Creage, our comprehensive cloud computing support service, in June 2024.
In addition, we released a new version of “RooMagic,” a tool for optimizing the hotel room assignment process, which will be introduced at the Yokohama Bay Sheraton Hotel & Towers operated by SOTETSU HOTEL Co., Ltd.
Furthermore, in July, we established the “Generative AI Business Transformation Lab” as a virtual organization to build a foundation for the strategic use of appropriate AI technology within the CRESCO Group and the implementation of strategic initiatives with an eye to future development. We will continue to track the latest trends in AI technology and apply them to our development process as we aim to improve productivity and quality.
In April 2024, CRESCO J CUBE CO., LTD. concluded a comprehensive cooperative partnership “Project Techno-Cube” with iS Technoport to revitalize market for the IBM OS “IBMi.” In addition, based on the resolution at the Board of Directors meeting held on September 10, 2024, the company acquired all outstanding shares of TAKAGI SYSTEM CO., LTD except for treasury shares on October 1, making it a subsidiary.
CRESCO Digital Technologies Ltd. announced the launch of installation support services for cloud-based next-generation firewall “Prisma®Access” in July 2024.
In addition to the above, in fund management, we recorded a gain on valuation of derivatives (in non-operating income) of 30 million yen, a gain on redemption of investment securities (in extraordinary income) of 37 million yen, a gain on sale of investment securities (in extraordinary income) of 21 million yen, and a loss on valuation of investment securities (extraordinary loss) of 22 million yen.
No changes have been made to the full year consolidated earnings forecasts for the fiscal year ending March 31, 2025 from the figures announced on May 10, 2024. If it becomes necessary to revise the forecasts due to future conditions, trends in financial results, etc., the revision will be disclosed promptly.
Nov, 2024
Hiroyuki Nemoto, Chairman & CEO
Hiroshi Tominaga, President
