ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

Quarterly Consolidated Financial Results for First Three Quarters of Fiscal YearEnding March 31, 2021 (Japanese Accounting Standards)
January 29, 2021

Name of listed company:Digital Arts Inc.
Securities code:

Tokyo Stock Exchange
1st Section

Listed on:2326

URL https://www.daj.jp
Representative Director,
Representative:(Title)(Name) Toshio Dogu
President and CEO
General Manager of theContact:(Title)Administration(Name) Isao Konishi
TEL: 03-5220-6045
Department
Scheduled date for submission of
Scheduled date to start dividends
February 10, 2021－
quarterly report
distribution:
Preparation of supplementary explanatory Yes
documents for quarterly results:
No
Holding of quarterly results briefing:(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first three quarters of the fiscal year ending March 31, 2021 (April 1, 2020 –December 31, 2020)(1) Consolidated operating results (cumulative totals)
Net sales％

Million yen(Percentage figures represent changes from same period of previous
year.)
Profit attributable toOperating profit
Ordinary profit
owners of parent
Million yen

First three quarters of year
4,750
14.7
1,973
ending March 31, 2021
First three quarters of year
4,141
(0.6)
1,648
ended March 31, 2020
(Note) ComprehensiveFirst three quarters of 1,363million (21.1%)
income:year ending March 31,
yen
2021

％

Million yen％

Million yen

％

19.7

1,982

20.2

1,363

20.8

(1.6)

1,648

(1.5)

1,128

(20.4)

1,126million
yen(-20.9%)First three quarters ofyear ended March 31,
2020

Profit per share (basic) Profit per share (diluted)
First three quarters of year
ending March 31, 2021
First three quarters of year
ended March 31, 2020

Yen

Yen

97.22

94.97

80.72

78.54

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Yen％
Million yen
Million yen
As of December 31, 2020
11,906
9,358
78.4
665.66
As of March 31, 2020
10,852
8,680
79.7
617.27(Reference) Equity capital: As of December 31, 2020 9,336million yen
As of March 31, 2020
8,652million yen

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Year ended March 31,
25.00
－
2020
Year ending March 31,
25.00
－
2021
Year ending March 31, 2021
(forecast)(Note) Revisions to most recently announced dividend forecast :No

－

25.00

50.00

30.00

55.00

―1―

－

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

3. Forecast of consolidated financial results for the year ending March 31, 2021 (April 1, 2020 – March 31, 2021)(Percentage figures represent changes from previous year for full year figures.)
Profit attributable toProfit per share
Operating profit
Ordinary profit
owners of parent

Net sales
Million yen％

Million yen％

Full year
7,500
32.9
3,550
52.5
(Note) Revisions to most recently announced financial results forecast

Million yen％

Million yen

％

Yen

3,550
: No

52.6

2,450

54.0

174.79* Notes(1) Changes in important subsidiaries during the first three quarters of fiscal: Noneyear ending March 31, 2021
(Changes in specified subsidiaries resulting in changes in scope of consolidation)
New-(Company name), Excluding-(Company name)(2) Application of special accounting methods to the preparation ofquarterly consolidated financial statements: Yes(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (3) Notes to quarterly
consolidated financial statements (Application of special accounting methods to the preparation of quarterly consolidated financial
statements)” on page 9 of the attached materials.

(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.

:

None

2) Changes in accounting policies due to reasons other than those stated in 1)

:

None

3) Changes in accounting estimates

:

None

4) Restatement

:

None

(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding(including treasury shares)
2) Number of treasury shares
3) Average number of shares issued andoutstanding in each period (cumulative total)**

As of December 31,
2020
As of December 31,
2020

14,133,000
106,342First three quarters ofyear ending March 31,
2021

As of March 31,
2020
As of March 31,
2020

14,133,000
116,042First three quarters of
14,020,719

year ended March 31,

13,983,960

2020

Quarterly financial statements are not subject to quarterly audits by certified public accountants or audit
corporations.
Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
Business forecasts and other forward-looking statements in this material contain predictions based on future assumptions,
outlooks and plans as of the date of publication of this material. The Company does not warrant the accomplishment of theforecasts. Actual results may different significantly from the forecasts due to risks and uncertain factors associated with the world
economy, the state of competition, and fluctuations in foreign exchange rates and interest rates.
For matters concerning results forecasts, please refer to “1. Qualitative Information on Financial Results for the First Three
Quarters of Fiscal Year Ending March 31, 2021 (3) Explanation about information on future forecasts such as consolidated results
forecasts" on page 5 of the attached materials.
(How to obtain supplementary materials for quarterly results)
The material is available at Digital Arts Inc. corporate website.

―2―

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23○Table of Contents for the Attached Document

1. Qualitative Information on Financial Results for the First Three Quartersof Fiscal Year Ending March 31, 2021…………………………………………………………….…………4(1) Explanation about business results……………………………………………………………….…………… 4(2) Explanation about financial position …………………………………………………………….…………… 5(3) Explanation about information on future forecasts such as consolidated results forecasts…………………… 5
2. Quarterly Consolidated Financial Statements and Primary Notes ………………………………..…………… 6(1) Quarterly consolidated balance sheet………………………………………………………………………… 6(2) Quarterly consolidated statement of income and comprehensive income…………………………………… 7
Quarterly consolidated statement of income
Consolidated first three quarters…………………………………………………………………………7
Quarterly consolidated statement of comprehensive income
Consolidated first three quarters…………………………………………………………………………8(3) Notes to quarterly consolidated financial statements………………………………………………………… 9(Notes on the premise of a going concern)……………………………………………………………………9(Notes on significant changes in the amount of shareholders’ equity)……………………………………… 9(Application of special accounting methods to the preparation of quarterly consolidated
financial statements)………………………………………………………………………………………… 9―3―

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

1. Qualitative Information on Financial Results for the First Three Quarters of Fiscal Year Ending March 31, 2021
(1) Explanation about business results
During the first three quarters of the consolidated fiscal year under review (April 1 through December 31, 2020), thecircumstances encountered by the Japanese economy were adverse. Economic activity stagnated and contracted due to the COVID19 pandemic, and as a result consumer spending and corporate earnings continued to decline sharply. Since then, the economy has
begun to rally, reflecting the increase in social and economic activities and the government economic package. However, the outlook
is very uncertain as a state of emergency was declared for the second time following a resurgence of the pandemic.
In the security industry, in which the Digital Arts Group (the “Group”) operates, demand for security products expanded following
a series of damaging incidents caused by diversifying cyberattacks, including ransomware and Emotet. Apart from demand fromlarge-sized organizations, new demand for security measures is growing from medium and small-sized enterprises, which werecomparatively lagging in these measures. In addition, IoT, AI and other technologies were increasingly used and the practice ofworking from home spread quickly to stop the proliferation of the COVID-19 coronavirus, security personnel must now manage
increasingly diversifying and advancing risks, and the demand for security measures is expected to continuously grow. In the public
sector market, the GIGA School Concept envisions the integrated development of an environment with one learning terminal foreach school-aged child and with a high-speed, high-capacity communication network. Providing every school-aged child with aterminal is urgently needed.
Amid these circumstances, the Group continued efforts to improve i-FILTER Ver. 10 and m-FILTER Ver. 5 by enhancing
performance and adding functions, and to provide higher-precision security environments to offer solutions for a secure Internet
environment regardless of the size of the customer.
For the enterprise sector market, the Group implemented activities for increasing recognition and sales promotion of
DigitalArts@Cloud, released in May 2018, in view of the rapid introduction of cloud technologies to online services and e-mailenvironments amid the spread of teleworking. The Group worked towards allowing users to solely view secure websites and receive
secure e-mail messages in the cloud environment. The Group also released the Desk@Cloud communication tool equipped not onlywith online conferencing, communication and chat features but also with security measures. Thus, it prepared to offer cloud services
that achieve not only security but also improved work efficiency.
In the public sector market, the Company strove to expand sales of the i-FILTER series, running a campaign building closer ties
with sales partners to offer the extensive i-FILTER lineup at special prices in line with the acceleration of the GIGA School Concept
and offering services matched with the standard specifications that conform to the Guidelines on Education Information Security
Policy free of charge.
In the consumer sector market, as more and more young people are using smartphones, they are increasingly being affected byinappropriate Internet content chiefly via smartphone. Filtering needs to be promoted to protect young people. Amid the COVID19 coronavirus crisis, the closures of schools and tutoring schools are protracted and use of computers and other terminals for online
learning at home is increasing. Given these circumstances, the Company continued its educational activities and conducted efforts
to popularize i-FILTER in collaboration with mobile network carriers.
For the fiscal year under review, demand in the enterprise and public sector markets has rapidly soared for cloud service products,
following the spread of COVID-19. A large part of the amount of the contract for traditional mainstay license sales products isrecorded as sales in a lump at the time of shipment. For cloud service products, recorded sales are apportioned on a monthly basis
throughout the service provision period. This means that as the contracts for cloud service products become a higher percentage of
total contract amounts, there is a rise in deferred sales and a wider gap between contract amounts and sales.
As a result, net sales for the first three quarters of the consolidated fiscal year under review stood at 4,750,916 thousand yen, up
14.7% year on year, operating profit at 1,973,608 thousand yen, up 19.7% year on year, ordinary profit at 1,982,538 thousand yen,
up 20.2% year on year, and profit attributable to owners of parent at 1,363,097 thousand yen, up 20.8% year on year.

―4―ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, active sales efforts enhanced recognition of effectiveness of i-FILTER Ver. 10 and m-FILTER Ver. 5
and helped acquire new contracts. Especially due to the COVID-19 pandemic, cloud services have increasingly been used to reduce
costs and operations management burdens. In addition, Digital Arts Consulting Inc., a subsidiary offering security consulting services,
enjoyed mounting demand and achieved an increase in sales.
Net sales in this market reached 2,804,275 thousand yen, up 21.4% year on year.
Public Sector Market
In the public sector market, the Group has traditionally enjoyed excellent recognition and a large market share as a provider ofJapan-made security solutions. Highly rated for its track record and reliability, new contracts for i-FILTER Ver. 10 and m-FILTER
Ver. 5, which provide advanced security measures and protect against targeted attacks, continued to gain new contracts. Also in the
public sector market, there is a rapid shift to security products with cloud technologies. The Group thus steadily acquired newcontracts for cloud service products in the i-FILTER series. In the GIGA School Concept, orders for the i-FILTER series arecontinuing to grow.
As a consequence, net sales in this market stood at 1,623,527 thousand yen, up 9.4% year on year.
Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs and on sales of iFILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID. As a result, it attained anincrease of users. Meanwhile, net sales tumbled due to revisions to the prices for sales to mobile network carriers.
Net sales in this market amounted to 323,112 thousand yen, down 6.4% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the third quarter of the consolidated fiscal year under review increased 1,054,165 thousand yen from theend of the previous consolidated fiscal year to 11,906,400 thousand yen. This was due mainly to an increase of 945,707 thousand yen in
cash and deposits.
(Liabilities)
Total liabilities at the end of the third quarter of the consolidated fiscal year under review rose 376,236 thousand yen from the endof the previous consolidated fiscal year to 2,548,246 million yen. This was due mainly to an increase of 379,374 thousand yen inadvances received due to the expansion of sales.
(Net assets)
Net assets at the end of the third quarter of the consolidated fiscal year under review increased 677,929 thousand yen from the endof the previous consolidated fiscal year to 9,358,153 thousand yen. This was chiefly due to the posting of a profit attributable toowners of parent.

(3) Explanation about information on future forecasts such as consolidated results forecasts
Operating results for the first three quarters of the consolidated fiscal year under review remained steady overall, and there wastherefore no change in the forecast of consolidated financial results for the year ending March 31, 2021 announced on May 8, 2020.
The Company has determined the results forecasts based on information available on the day of these financial results for the
first three quarters of the year ending March 31, 2021. Actual results may be different from the forecasts due to a variety of factors.
If there are any significant changes, the Company will disclose them appropriately.

―5―

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet(Thousand yen)
Fiscal 2020
(As of March 31, 2020)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other
Total current assets

First three quarters of fiscal 2021
(As of December 31, 2020)

7,651,645
994,793771
654
85,614

8,597,352
1,138,038
1,218
566
73,712

8,733,479

9,810,888

Non-current assets
Property, plant and equipment
Intangible assets
SoftwareOther

249,474

235,192

1,331,410
79,251

1,315,680
87,553

Total intangible assets

1,410,661

1,403,233

Investments and other assets

458,619457,086

2,118,755

2,095,511

10,852,234

11,906,400

32,469469,079
119,788
1,229,998
274,151

46,605317,121
127,786
1,609,373
397,979

Total current liabilities

2,125,487

2,498,865

Non-current liabilities
Asset retirement obligations
Other

45,877645

48,736645

Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other

46,522

49,381

Total liabilities

Total non-current liabilities

2,172,010

2,548,246

Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares

713,590972,058
7,340,668(380,126)

713,590964,735
8,002,805(348,351)

8,646,190

9,332,778

6,120

4,169

6,120

4,169

18,0499,864

8,855
12,349Total shareholders' equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets―6―

8,680,224

9,358,153

10,852,234

11,906,400

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three quarters

Net sales
Cost of sales(Thousand yen)First three quarters of fiscal 2020 First three quarters of fiscal 2021
(from April 1, 2019 to December (from April 1, 2020 to December
31, 2019)
31, 2020)
4,141,002
4,750,916
984,044
1,362,430

Gross profit

3,156,958

3,388,485

Selling, general and administrative expenses

1,508,767

1,414,877

Operating profit

1,648,190

1,973,608

603
15
840

432

Non-operating income
Interest income
Commission income
Gain on forfeiture of unclaimed dividends
Foreign exchange gains
Subsidy income
Miscellaneous income
Total non-operating income
Non-operating expenses
Foreign exchange losses
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on liquidation of subsidiaries
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

―7―

－
330
244

－
1,199
2,680
3,562
1,055

2,034

8,930

979
299

－
－

1,278

－

1,648,945

1,982,538

468
－

9,009
3,430

468

12,439

－
55

2,109
0

55

2,109

1,649,358

1,992,868

521,559

627,286

1,127,799

1,365,582(1,045)

2,485

1,128,844

1,363,097

ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23

Quarterly consolidated statement of comprehensive income
Consolidated first three quarters

ProfitOther comprehensive income
Foreign currency translation adjustment(Thousand yen)First three quarters of fiscal 2020 First three quarters of fiscal 2021
(from April 1, 2019 to December (from April 1, 2020 to December
31, 2019)
31, 2020)
1,127,799
1,365,582(1,512)(1,951)(1,512)(1,951)

Comprehensive income

1,126,286

1,363,631

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

1,127,332

1,361,146(1,045)

2,485

Total other comprehensive income―8―ファイル名:FY0321 Third

Quarter Consolidated Financial Results.docx

更新日時:2021/02/01 10:32:23(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.

(Notes on significant changes in the amount of shareholders’ equity)
There are no applicable matters.

(Application of special accounting methods to the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
With respect to the calculation of tax expenses, reasonable estimations are performed on an effective tax rate established after
applying tax accounting to profit before income taxes for the consolidated fiscal year, which includes the first three quarters of
the consolidated fiscal year under review, and such tax expenses are calculated by multiplying this estimated effective tax rateby profit before income taxes.

―9―