Consolidated Financial Results for the Fiscal Year Ended March 31, 2023
[Japan GAAP]
Name of listed company: Digital Arts Inc.
Securities code:

2326

Representative:(Title)Contact:(Title)May 9, 2023
Tokyo Stock
Exchange Prim
MarketListed on:

URL https://www.daj.jp
Representative Director,(Name) Toshio Dogu
President and CEO
General Manager of the(Name) Isao Konishi
TEL: 03-5220-6045
Administration Department

Scheduled date to hold theordinary general meeting of June 23, 2023
shareholders:
Scheduled date for filing
June 26, 2023
annual financial report:
Preparation of supplementary explanatory：Yes
documents for quarterly results
Holding of quarterly results briefing：Yes

Scheduled date to start
dividends distribution:

June 26, 2023

(for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(1) Consolidated operating results(Percentage figures represent changes from previous year.)Net salesYear ended March
31, 2023
Year ended March
31, 2022(Note) Comprehensive
income:Operating profit

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

10,436

15.3

4,413

7.0

4,429

7.1

3,062

5.6

9,051

32.6

4,126

38.6

4,135

38.2

2,900

40.8

Year ended
March 31,2023

3,067 millionyen(5.4 %)

Year ended
March 31,
2022

Profit per share(basic)Profit per share(diluted)

Yen

Year ended March
218.1231, 2023
Year ended March
206.71
31, 2022(Refer Equity-method
Year ended －ence) investment profit March 31,(loss):
2023

Return on equity

2,910 millionyen(41.1 %)

Ordinary profit to Operating profit tototal assets
net sales

Yen

％

％

％

213.92

23.3

21.9

42.3

202.03

26.2

24.2

45.6

millionyen

Year ended －March 31,2022

millionyen(2) Consolidated financial position
Total assets
As of March 31,2023
As of March 31,
2022(Refer Equity capital:ence)

Net assets

Equity ratio

Net assets per share

Million yen

Million yen％

Yen

21,14914,17366.9

1,007.27

19,341

12,15962.7

863.96

As of March 14,141
31, 2023

millionyen

As of March 12,129
31, 2022

millionyen(3) Consolidated cash flows

Million yen

Million yen

Million yen

Cash and cash
equivalents at end of
periodMillion yen

3,147

(867)

(1,051)

17,018

6,169

(978)

(810)

15,773

Cash flows fromoperating activities
Year ended March
31, 2023
Year ended March
31, 2022

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Dividends
Annual dividends
1Q-endYear ended
March 31, 2022
Year ended
March 31, 2023
Year ending March 31,
2024 (forecast)

2Q-endYear-end

3Q-endAnnual

Total
Dividends to
Payout ratio
dividends
net assets(consolidate
paid(consolidated)(annual)
d)

Yen

Yen

Yen

Yen

Yen

million yen

%

%

－

30.00

－

40.00

70.00

982

33.9

8.9

－

35.00

－

40.00

75.00

1,052

34.4

8.0

－

40.00

－

40.00

80.00

31.6

3. Forecast of consolidated financial results for the year ending March 31, 2024 (April 1, 2023 – March 31, 2024)

Net sales
Million yen%

11,500

10.2

Full year(Percentage figures represent changes from same period of previous year.)
Profit attributable
Operating profit
Ordinary profit
Profit per shareto owners of parent
MillionMillionMillion
%
%
%
Yen
yen
yen
yen
5,150
16.7
5,150
16.3
3,550
15.9
252.86* Notes(1) Changes in subsidiaries during the fiscal year (Changes in specified subsidiaries： Noneresulting in changes in scope of consolidation)
New‐(Company name),

Excluding - (Company name)(2) 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): None3) Changes in accounting estimates: None4) Restatement“ None（(3) Number of shares outstanding (common stock)1) Number of shares issued and outstanding As of March
31, 2023(including treasury shares)
2) Number of treasury shares
3) Average number of shares issued andoutstanding in each period

As of March
31, 2023
Year ended
March 31,2023

As of March
31, 2022
As of March
93,833shares
31, 2022
Year ended
14,039,205shares March 31,
2022
14,133,000shares

14,133,000shares
93,731shares

14,034,190shares

(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(Percentage figures represent changes from previous year.)(1) Non-consolidated operating results
Net salesYear ended March
31, 2023
Year ended March
31, 2022

Operating profit

Ordinary profit

ProfitMillion yen%

Million yen%

Million yen%

Million yen

%

8,984

12.3

4,395

8.8

4,407

8.8

3,048

7.6

8,003

31.8

4,040

37.1

4,052

36.7

2,832

38.5

Profit per share
Year ended March
31, 2022
Year ended March
31, 2021

Diluted profit per share
Yen

Yen

217.15212.97201.83197.26(2) Non-consolidated financial position
Total assets
As of March 31,2023
As of March 31,
2022(Reference) Equity capital:

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

20,78014,09167.8

1,002.92

19,13812,09763.1

860.82As of March 31,
As of March 31,
14,080 million yen
12,085million yen
2023:
2022

2. Forecast of non-consolidated financial results for the year ending March 31, 2024 (April 1, 2022 – March
31, 2024)(Percentage figures represent changes from previous year for full year figures.)
Net sales
Full year※※

Ordinary profit

ProfitProfit per share

Million yen%

Million yen%

Million yen%

Million yen

10,000

11.3

5,000

13.4

3,450

13.2

245.74

Summaries of financial results are not subject to audit.
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 futureassumptions, outlooks and plans as of the date of publication of this material. The Company does not warrant theaccomplishment of the forecasts. Actual results may differ 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 andinterest rates.
For matters relevant to business forecasts, refer to (4) Outlook in 1. Overview of Business Results, Etc. on page 5of the Attached Document.
(Obtaining the Supplementary Material for the Financial Results)
The material is available at Digital Arts Inc. corporate website.

○Table of Contents for the Attached Document
1. Overview of Business Results, Etc. ................................................................................................................................... 2(1) Overview of business results in the fiscal year under review........................................................................................ 2(2) Overview of financial position for the fiscal year under review ..................................................................................... 4(3) Overview of cash flows in the fiscal year under review ................................................................................................ 4(4) Outlook ......................................................................................................................................................................... 5
2. Basic Approach to Selection of Accounting Standards ...................................................................................................... 5
3. Consolidated Financial Statements and Primary Notes .................................................................................................... 6(1) Consolidated balance sheet ......................................................................................................................................... 6(2) Consolidated statement of income and consolidated statement of comprehensive income ......................................... 8
Consolidated statement of income ................................................................................................................................. 8
Consolidated statement of comprehensive income ........................................................................................................ 9(3) Consolidated statement of changes in equity ............................................................................................................. 10(4) Consolidated statement of cash flows .........................................................................................................................11(5) Notes to consolidated financial statements ................................................................................................................ 12(Notes on the premise of a going concern) .................................................................................................................. 12(Significant matters that serve as the basis for the preparation of consolidated financial statements) ......................... 12(Consolidated statement of income) ............................................................................................................................. 13(Consolidated statement of comprehensive income) ................................................................................................... 14(Consolidated statement of changes in equity) ............................................................................................................ 14(Consolidated statement of cash flows) ....................................................................................................................... 16(Financial instruments) ................................................................................................................................................. 16(Securities) ................................................................................................................................................................... 20(Retirement benefits) .................................................................................................................................................... 21(Stock options) ............................................................................................................................................................. 21(Asset retirement obligations)....................................................................................................................................... 25(Matters concerning revenue recognition) .................................................................................................................... 25(Segment information, etc.) .......................................................................................................................................... 26(Related party information) ........................................................................................................................................... 27(Per share information) ................................................................................................................................................ 28(Significant subsequent events) ................................................................................................................................... 28

1

1. Overview of Business Results, Etc.
(1) Overview of business results in the fiscal year under review
During the consolidated fiscal year under review (April 1, 2022 through March 31, 2023), the Japanese economy saw
a mild rally in economic activities following the gradual easing of the activity restrictions that had been applied during
the COVID-19 pandemic. However, the outlook for the economy remains uncertain, chiefly reflecting the persistentconflict in Ukraine and rising prices of goods attributable to the sharp weakening of the yen against the U.S. dollar.
In the security industry, in which the Digital Arts Group (the “Group”) operates, cyber attacks diversified and intensified,including ransomware, Emotet and Agent Tesla, which is remote control malware that steals confidential informationfrom keyboard operations. That expanded demand for security products. Not only among large companies but also at
small and medium enterprises that lag behind in security measures, demand for newly introducing security products is
expanding.
In this situation, the Company enhanced the linkage and features of its mainstay products of i-FILTER, m-FILTER
and FinalCode and added a broad array of security solutions to them in response to mounting needs for comprehensive
security. It also worked hard to promote its original next-generation Secure Web Gateway (SWG).
In addition to the White Operation that the Company has long been proposing, it released Anti-Virus & Sandbox tosteadily achieve an increase in orders. This is a new option for secure file downloads and reception from secure
websites and email messages to improve the level of security. It also performs real-time judgment of malware and paves
the way for centralized control logs for greater convenience. To minimize the damage from cyberattacks, the Security
Operation Center (SOC), the Endpoint Detection and Response (EDR) and other solutions for detecting and responding
to incidents are of increasing significance. In light of that, the Company released the D Alert Reporting Service as a new
low-cost option for the swift detection of incidents for customers facing difficulties in hiring personnel or security costissues. The Company has thus entered the market of incident detection and response solutions.
Moreover, damage caused by phishing, which sends email or uses other means to direct users to fake websites, ison the increase, as well as that arising from unknown threats and malicious files. Phishing websites look so similar to
websites of financial institutions and online shopping websites that it can be very difficult to tell them apart. To protectfrom the threats of these phishing websites, the i-FILTER@Cloud was newly equipped with a credential protection
function to provide customers with a higher security level. This function uses the Company's original technology thatallows credential information to be sent to URLs, only those confirmed to be secure, while blocking transmission to any
website that is not confirmed to be secure. As a result of these measures, the number of licenses for use of the WhiteOperation that the Company independently promotes increased by 1.66 million during the consolidated fiscal year underreview to 11.68 million.
As a result of the above, consolidated net sales for the fiscal year under review amounted to 10,436 million yen (up15.3% year on year), operating profit reached 4,413 million yen (up 7.0% year on year), ordinary profit came to4,429million yen (up 7.1% year on year), and profit attributable to owners of parent was 3,062 million yen (up 5.6% year
on year).
Overview of Consolidated Business Results(Million yen)
Year ended
March 31, 2022

Year ended
March 31, 2023

Net sales

9,051

10,436＋1,384＋15.3

Operating profit

4,126

4,413

＋286

＋7.0

Ordinary profit

4,135

4,429

＋293

＋7.1

Profit attributable toowners of parent

2,900

3,062

＋161

＋5.6

2

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, to meet demand for total security, the Group gained new projects by adding antivirus
functions and sandbox functions as new options to i-FILTER and m-FILTER. Sales of m-FILTER increased steadily asa result of the high marks it has earned for its functions of tackling the PPAP (sending a Zip file protected by a passwordby e-mail and sending the password by a separate e-mail) and dealing with targeted attacks, including attacks using
Emotet. In addition, net sales for Digital Arts Consulting Inc., a subsidiary offering security consulting services, increased
with a progress achieved in new customer acquisition in line with greater corporate demand for cybersecurity and digitaltransformation (DX) consulting.
As a consequence, net sales in this market reached 5,316 million yen, up 16.6% year on year.
Public Sector Market
In the public sector market, the Group recorded sales from projects related to the GIGA School Concept, which ran
from before the previous fiscal year and which focused on proposing solutions to support local government efforts tostrengthen security measures that were ramped up from the fiscal year under review. As a result, sales of the i-FILTER
and m-FILTER series grew as brisk orders were won from local governments.
As a consequence, net sales in this market stood at 4,686 million yen, up15.8% year on year.

3Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs and onsales of i-FILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID.
As a consequence, net sales in this market amounted to 433 million yen, down 2.6% year on year.

(2) Overview of financial position for the fiscal year under review(Assets)
Total assets in the consolidated fiscal year under review increased 1,807 million yen from the end of the previous
fiscal year to 21,149 million yen. This was due mainly to an increase of 1,245 million yen in cash and deposits.
(Liabilities)
Total liabilities in the consolidated fiscal year under review declined 205 million yen from the end of the previous
consolidated fiscal year to 6,975 million yen. This was due mainly to a decrease of 496 million yen in advances received.
(Net assets)
Net assets in the consolidated fiscal year under review climbed 2,013 million yen from the end of the previous
consolidated fiscal year, to 14,173 million yen. This was mainly due to an increase in retained earnings due to therecording of profit attributable to owners of parent, which outweighed a decrease in dividends paid.

(3) Overview of cash flows in the fiscal year under review
In the consolidated fiscal year under review, cash and cash equivalents increased 1,245 million yen from the end of
the previous consolidated fiscal year to 17,018 million yen. Cash flows in each category are as follows:(Cash flows from operating activities)
Net cash provided by operating activities stood at 3,147 million yen (net cash provided of 6,169 million yen in theprevious consolidated fiscal year), chiefly reflecting profit before income taxes of 4,430 million yen, depreciation of
884 million yen.
(Cash flows from investing activities)
Net cash used in investing activities came to 867 million yen (978 million yen in the previous fiscal year), mainly due
to the purchase of intangible assets.
(Cash flows from financing activities)
Net cash used in financing activities was 1,051 million yen (810 million yen in the previous fiscal year), primarily due
to dividends paid.
The table below shows trends of cash flow indicators.
As of March 31, As of March 31, As of March 31, As of March 31,
2020
2021
2022
2023
Equity ratio (%)

79.7

67.6

62.7

66.9

Equity ratio based on market value (%)

603.2

915.0

538.6

338.5

1. The methods to calculate the indicators are as follows:a) Equity ratio: Equity capital / Total assetsb) Equity ratio based on market value: Market capitalization / Total assets(Market capitalization is calculated by multiplying the closing stock price at the end of the fiscal year by the
number of issued shares (excluding treasury shares).)
2. Each indicator is calculated based on consolidated financial numbers.

4(4) Outlook
The outlook for the next fiscal year (April 1, 2023 to March 31, 2024) is as follows:
In the security industry where the Group operates, with the growth of the online space, cyberattacks are becoming
increasingly diverse and sophisticated. As a result, businesses, public organizations and households are constantly
exposed to security threats. Needs for comprehensive security are expected to continue to grow in the future. In thesecond year of its medium-term business plan for the period ending March 31, 2025, the Group will speed up its
endeavors in three priority areas, namely steady organic growth, expansion of security products and services, anddrawing attention to high expertise at Digital Arts Consulting Inc. The Company will continue to spread its mainstay
products by adding new functions that act as next-generation SWG. They include the cloud access security broker(CASB) function added to the i-FILTER@Cloud. It visualizes the state of use of the cloud service and allows it to becontrolled. The Company will also introduce a new product using its original authentication technology, StartIn, to thefast-growing IDaaS (authentication) market as it seeks to enhance the lineup of products meeting needs forcomprehensive security. In addition, as a service for realizing the vision of creating new value and increasing demandstated in the medium-term business plan, the Company will release a new communications tool product called Desk in
the next fiscal year ahead of the schedule set out in the initial plan. Digital Arts Consulting will differentiate its services
and stress its expertise in order to increase its profit margin and to seek greater revenue.
As the Group pursues those initiatives, it expects to post net sales of 11,500 million yen, ordinary profit of 5,150 million
yen, and profit attributable to owners of parent of 3,550 million yen in the next consolidated fiscal year, up 10.2%, 16.3%
and 15.9%, respectively, year on year.
The Company has determined the results forecasts based on information available on the day of publication of thesefinancial results for the fiscal year ended March 31, 2023. Actual results may differ from the forecasts due to a variety offactors. If there are any significant changes, the Company will disclose them appropriately.
Results forecasts for the next fiscal year (consolidated)
Net sales

Profit attributable to ownersof parent

Ordinary profit

Million yen

Million yen

Million yen

11,500

5,150

3,550

10,436

4,429

3,062

Year ending March 31, 2024
(forecast)Year ended March 31, 2023
(results)

Results forecasts for the next fiscal year (non-consolidated)
Net salesYear ending March 31, 2024
(forecast)Year ended March 31, 2023
(results)

Ordinary profit

ProfitMillion yen

Million yen

Million yen

10,000

5,000

3,450

8,984

4,407

3,048

(Figures shown are rounded down to the nearest million yen.)
Note: The forecasts above are based on information available on the day of publication of these financial results for the
fiscal year ended March 31, 2022. Actual results may be different from the forecasts due to a variety of factors.

2. Basic Approach to Selection of Accounting Standards
The Group will prepare consolidated financial statements based on the Japan GAAP for some time to come, considering
a comparison with consolidated financial statements for the previous fiscal year and with financial statements of othercompanies. The Group will make an appropriate decision about the application of the International Financial ReportingStandards (IFRS), considering circumstances in Japan and overseas.

5

3. Consolidated Financial Statements and Primary Notes(1) Consolidated balance sheet(Million yen)
Fiscal 2022
(As of March 31, 2022)

Fiscal 2023
(As of March 31, 2023)

AssetsCurrent assets
Cash and deposits
Notes receivable - trade

15,77374

17,018148

Accounts receivable - tradeFinished goods

1,142
0

1,426
19

3
111

3
309

17,10518,925

Supplies
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings

220

220

(132)

(136)

88

83

18

18

Accumulated depreciation

(9)

(13)

Vehicles, net

85

Accumulated depreciation
Buildings, net
VehiclesTools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

493

506

(409)

(412)

83

93

Land

26

26

Total property, plant and equipment

206

209

Software
Other

1,317
209

1,264
243

Total intangible assets

1,526

1,508

Investments and other assets
Investment securities

101

101

96
304

116
288

Intangible assets

Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Total assets

6

503

506

2,236

2,223

19,341

21,149(Million yen)
Fiscal 2022
(As of March 31, 2022)

Fiscal 2023
(As of March 31, 2023)

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Asset retirement obligations
Other
Total non-current liabilities

44
760

238
839

95
5,684

156
5,187

546

502

7,130

6,924

48

48

1

1

50

50

7,181

6,975

713
953

713
953

Retained earnings
Treasury shares

10,758(307)

12,768(308)

Total shareholders' equity

12,11814,127

11

14

11

14

12
17

11
20

12,15914,173

19,341

21,149Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus

Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

7

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income

Net sales
Cost of sales

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
9,051
2,676

(Million yen)
Fiscal 2023
(from April 1, 2022
to March 31, 2023)
10,436
3,666

Gross profit

6,374

6,769

Selling, general and administrative expenses

2,248

2,356

Operating profit

4,126

4,413

Non-operating income
Interest income

00Foreign exchange gains
Gain on forfeiture of unclaimed dividends

6
1

12
1

Miscellaneous income

01

Total non-operating income

8

15

4,135

4,429

Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights

1

1

Gain on sales of non-current assets

0－

Total extraordinary income

1

1

0

0

Extraordinary losses
Loss on retirement of non-current assets

00Profit before income taxes

Total extraordinary losses

4,136

4,430

Income taxes – current
Income taxes – deferred

1,203
26

1,385
(19)

Total income taxes

1,229

1,365

Profit

2,906

3,064

Profit attributable to non-controlling interests
Profit attributable to owners of parent

8

5

2

2,900

3,062

Consolidated statement of comprehensive income
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
2,906(Million yen)
Fiscal 2023
(from April 1, 2022
to March 31, 2023)
3,064

Foreign currency translation adjustment

3

2

Total other comprehensive income

32Comprehensive income

2,910

3,067

Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

2,904

3,065

5

2

ProfitOther comprehensive income9(3) Consolidated statement of changes in equity
Fiscal 2022 (from April 1, 2021 to March 31, 2022)(Million yen)
Shareholders' equity

Balance at beginning of
periodSharecapitalCapitalsurplusSharecapitalCapitalsurplusSharecapital

713

963

8,699

(342)

10,034

Accumulated othercomprehensive
incomeCapitalShare
surpluscapital7

7

Share
NonTotal net
acquisition controlling
assetsrightsinterests
8

12

10,062

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesPurchase of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

(841)

(841)

(841)

2,900

2,900

2,900

35

25

25

(0)

(0)

(0)

(9)

3

3

3

5

13

－

(9)

2,059

34

2,084

3

3

3

5

2,097

713

953

10,758(307)

12,118

11

11

12

17

12,159Fiscal 2023 (from April 1, 2022 to March 31, 2023)(Million yen)
Shareholders' equity

Balance at beginning of
periodSharecapitalCapitalsurplusSharecapitalCapitalsurplusSharecapital

713

953

10,758(307)

12,118

Accumulated othercomprehensive
incomeCapitalShare
surpluscapital
11

11

Share
NonTotal net
acquisition controlling
assetsrightsinterests
12

17

12,159Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
period

(1,052)(1,052)(1,052)

3,062

3,062

3,062

(0)

(0)

0

0

(0)
0

2

2

(0)

2

4

Balance at end of period

－

0

2,009

(0)

2,008

2

2

(0)

2

2,013

Purchase of treasury
shares713

953

12,768(308)

14,127

14

14

11

20

14,17310

(4) Consolidated statement of cash flows(Million yen)
Fiscal 2023
(from April 1, 2022
to March 31, 2023)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
Cash flows from operating activities
Profit before income taxes

4,136

4,430

Depreciation
Increase (decrease) in provision for bonuses

890
(98)

884
60

Interest income
Foreign exchange losses (gains)

(0)
(6)

(0)
(12)

Gain on reversal of share acquisition rights
Loss on retirement of non-current assets

(1)
0

(1)
0

Loss (gain) on sales of non-current assets
Decrease (increase) in trade receivables

(0)
2,364

－
(856)

Decrease (increase) in inventories
Increase (decrease) in trade payables

0
10

(18)
194

Increase (decrease) in accounts payable - other
Decrease (increase) in other current assets

43
(40)

35
(186)

Increase (decrease) in other current liabilities
Other

38
(27)

(81)
16

7,309

4,464

SubtotalInterest and dividends received

00Income taxes paid

(1,140)(1,318)Net cash provided by (used in) operating activities

6,169

3,147

(17)

(56)

0

－

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets

(961)

(811)

Net cash provided by (used in) investing activities

(978)

(867)

25
(0)

－
(0)

5

－

－

1

(840)

(1,052)(810)(1,051)

10

17

4,391

1,245

Cash and cash equivalents at beginning of period

11,382

15,773

Cash and cash equivalents at end of period

15,77317,018Cash flows from financing activities
Proceeds from disposal of treasury shares
Purchase of treasury shares
Proceeds from issuance of share acquisitionrightsProceeds from stock issuance to non-controllinginterests
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents11(5) Notes to consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Significant matters that serve as the basis for the preparation of consolidated financial statements)
1. Matters related to the scope of consolidation(1) Number of consolidated subsidiaries: 4Names of consolidated subsidiaries
Digital Arts Consulting Inc.
Digital Arts America, Inc.
Digital Arts Asia Pacific Pte. Ltd.
Digital Arts Europe Limited(2) Names, etc. of non-consolidated subsidiaries
There are no applicable matters.
2. Matters related to the application of the equity method(1) Number of non-consolidated subsidiaries to which the equity method is applied: ―(2) Names, etc. of non-consolidated subsidiaries to which the equity method is not applied
There are no applicable matters.
3. Fiscal years of consolidated subsidiaries
The fiscal year end of all consolidated subsidiaries is the same as the end of the consolidated fiscal year.
4. Matters related to accounting policies(1) Valuation standards and valuation methods for significant assets
A. Securities(a) Bonds held for maturity
The amortized cost method (interest method) is applied.
B. Inventories(a) Finished goods
The gross average cost method is applied. (The balance sheet amount is calculated by the book value writedown method based on reduction in profitability.)(2) Depreciation/amortization method for significant depreciable/amortizable assets
A. Property, plant and equipment
The declining balance method is applied.
The useful life and the residual value are calculated based on the same standards as those set out in the
Corporation Tax Act. The straight-line method is applied for facilities attached to buildings acquired on April 1, 2016or later.
B. Intangible assets
The straight-line method is applied.
The straight-line method based on the availability period in the company (five years) is used for software in thecompany. For software for sale in the market, a method based on estimated sales quantities (or revenue) or theremaining lifetime (three years) is used.
C. Long-term prepaid expenses
The straight-line method is applied.
The amortization period is calculated based on the same standards as those set out in the Corporation Tax Act.
(3) Standards for recognition of significant allowances
A. Provision for bonuses
For the payment of employees’ bonuses, of the estimated payment amount, the amount to be paid in the
consolidated fiscal year under review is posted.
(4) Accounting standards for significant income and expenses
The Company has begun applying the Accounting Standard for Revenue Recognition (ASBJ Statement No.29
issued on March 31, 2020) and the Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ

12

Guidance No. 30 issued on March 26, 2020). Accordingly, the Company recognizes revenue in the amount expected tobe received in exchange for promised goods or services at the point where control over such goods or services moves
to customers.
Major performance obligations in major businesses and the normal time to recognize revenue are as described in(Matters concerning revenue recognition).
(5) Standards for translating significant assets or liabilities that are in foreign currency into yen
Monetary claims and obligations in foreign currency are translated into yen using the spot exchange rate on the
consolidated settling day, and translation adjustments are treated as a profit or loss. Assets and liabilities at overseas
subsidiaries, etc. are translated into yen using the spot exchange rate on the consolidated settling day. Revenue andexpense are translated into yen using the average rate during the period, and translation adjustments are included in
the foreign currency translation adjustment in net assets.
(6) Scope of funds in the consolidated statement of cash flows
Funds in the consolidated statement of cash flows (cash and cash equivalents) consist of cash on hand, deposits
that can be withdrawn as needed, and short-term investments that can be realized easily and only have insignificant
value fluctuation risk and whose redemption date arrives within three months of the acquisition date.
(Consolidated statement of income)*1. The major items of selling, general and administrative expenses and the amounts are as follows.

Advertising expenses

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
239million yen

Fiscal 2023
(from April 1, 2022
to March 31, 2023)
297million yen

Salaries and allowances

708

698

Provision for bonuses

54

86*2. Total amount of research and development expenses included in general and administrative expenses are as follows.
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
1million yen

Fiscal 2023
(from April 1, 2022
to March 31, 2023)
24million yen*3. The details of loss on retirement of non-current assets are as follows.
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
Tools, furniture and fixtures
Software－million yen
0

Total

0

13

Fiscal 2023
(from April 1, 2022
to March 31, 2023)
0million yen－
0(Consolidated statement of comprehensive income)*1. Reclassification adjustment and tax effect related to other comprehensive income
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
Foreign currency translation
adjustment:
Amount that occurred in thefiscal year under review
Reclassification adjustment

Fiscal 2023
(from April 1, 2022
to March 31, 2023)

3million yen

2million yen－－

Before tax effect adjustment

32

Tax effectForeign currency translation
adjustment
Total other comprehensive income

-

-

3

2

3

2

(Consolidated statement of changes in equity)
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
1. Class and number of issued shares and class and number of treasury shares
Number of shares at
beginning of
consolidated fiscal
year under review

Increase in number of Decrease in number of Number of shares atshares during
shares during
end of consolidated
consolidated fiscal
consolidated fiscal
fiscal year underyear under review
year under review
review

Issued shares
Common shares

14,133,000－－

14,133,000

Total

14,133,000－－

14,133,000

104,46269

10,80093,731

104,46269

10,80093,731

Treasury shares
Common(Note)

shares

Total(Note) An increase in the number of common shares in treasury shares, 69, is due to the purchase of treasury shares. A
decrease in the number of treasury shares, 10,800, is due to the exercise of stock options.
2. Matters related to share acquisition rights and treasury share acquisition rights
Class of
Number of shares to be acquired upon exercise ofsharesshare acquisition rights
Amount atunderlying
end of fiscal
Beginning of Increase
Decreaseshare
End of fiscal year underfiscal year during fiscal during fiscal
acquisition
review
year under
underyear under year underrights(million yen)review
review
review
review

Classification

Breakdown of shareacquisition rights

Reportingcompany(parent
company)

Share acquisitionrights as stock
options

―

―

―

―

―

12

Total

―

―

―

―

―

12

14

3. Matters related to dividends(1) Dividends paid
Total amount of
Dividend per share
Class of shares dividends (million
(yen)
yen)

Resolution

Annualshareholders’Common shares
meeting on June22, 2021
Board of Directors
meeting on
Common shares
October 28, 2021

Record date

Effective date

420

30

March 31, 2021

June 23, 2021

421

30

September 30,
2021

December 2, 2021

(2) Of dividends whose record date is in the consolidated fiscal year under review, those whose effective date in the next
consolidated fiscal year

Resolution

Class ofsharesTotal amountof dividends(million yen)

Financialsource ofdividends

Dividend pershare (yen)Annualshareholders’meeting on June21, 2022

Commonshares561

Retainedearnings

40

Record date

Effective date

March 31, 2022

June 22, 2022

Fiscal 2021 (from April 1, 2022 to March 31, 2023)
1. Class and number of issued shares and class and number of treasury shares
Number of shares at
beginning of
consolidated fiscal
year under review

Increase in number of Decrease in number of Number of shares atshares during
shares during
end of consolidated
consolidated fiscal
consolidated fiscal
fiscal year underyear under review
year under review
review

Issued shares
Common shares

14,133,000－－

14,133,000

Total

14,133,000－－

14,133,000

93,731

102－

93,83393,731

102－

93,833

Treasury shares
Common(Note)

shares

Total(Note) An increase in the number of common shares in treasury shares, 102, is due to the purchase of treasury shares.
2. Matters related to share acquisition rights and treasury share acquisition rights

Classification

Reportingcompany(parent
company)

Breakdown of shareacquisition rights

Share acquisitionrights as stock
options

Class of
Number of shares to be acquired upon exercise ofsharesshare acquisition rights
Amount atunderlying
end of fiscal
Beginning of Increase
Decreaseshare
End of fiscal year underfiscal year during fiscal during fiscal
acquisition
review
year under
underyear under year underrights(million yen)review
review
review
review―

Total
3. Matters related to dividends(1) Dividends paid

15

―

―

―

―

11

―

―

―

―

11

Resolution
Annualshareholders’meeting on June23, 2022
Board of Directors
meeting on
October 28, 2022

Total amount of
Dividend per share
Class of shares dividends (million
(yen)
yen)

Record date

Effective dateCommon shares

561

40

March 31, 2022

June 22, 2022

Common shares

491

35

September 30,
2022

December 2, 2022

(2) Of dividends whose record date is in the consolidated fiscal year under review, those whose effective date in the next
consolidated fiscal year

Resolution

Class ofsharesTotal amountof dividends(million yen)

Financialsource ofdividends

Dividend pershare (yen)Annualshareholders’meeting on June23, 2023

Commonshares561

Retainedearnings

40

Record date

Effective date

March 31, 2023

June 26, 2023

(Consolidated statement of cash flows)*1. Cash and cash equivalents at the end of the fiscal year and their relationships with items in the consolidated balance
sheetsFiscal 2022
(from April 1, 2021
to March 31, 2022)

Fiscal 2023
(from April 1, 2022
to March 31, 2023)

Cash and deposit account

15,773million yen

17,018million yen

Cash and cash equivalents

15,77317,018(Financial instruments)
1. Matters related to the status of financial instruments(1) Policy on financial instruments
The Group’s fund management is centered on short-term deposits. The Group also invests in government bonds,
which are very safe and highly rated corporate and other bonds.
(2) Description of financial instruments and their risks
Notes and accounts receivable-trade, operating receivables, are exposed to customers’ credit risk.
Investment securities are public and corporate bonds and are exposed to risks of fluctuations in market price.
(3) Risk management system related to financial instruments(i) Credit risk (risk related to business connections’ contract non-performance) management
The sales management section and administrative department of the Company regularly monitor the status ofoperating receivables at the main trading partners under the Company’s credit management regulations and control
the due dates and balances for individual partners. In this way, the Company strives to identify concerns overcollections caused by deterioration in partners’ financial situation early and mitigate them. The Company conducts
similar credit management at consolidated subsidiaries under its credit management regulations.
As for short-term fund management, the Company only uses bank deposits and investments in highly rated funds
to avoid as much credit risk as possible.
(ii) Market risk (interest-rate fluctuation risk, etc.) management
The Company determines its fund management portfolio while expecting its financing needs, and avoids market
risk as much as possible.

16

(iii) Management of liquidity risk in financing (risk of failure to pay on due dates)
The Company manages liquidity risk chiefly by having the administrative department create financial plans in atimely manner.
(4) Additional information on matters related to the market prices of financial instruments, etc.
The market prices of financial instruments are based on market prices and rationally calculated prices if no market
prices are available. The calculated prices include variable factors, which may change if different assumptions are used.
2. Matters related to the market prices of financial instruments, etc.
Consolidated balance sheet amounts, market prices and differences between them are as follows: Cash is omitted.
Deposits are also omitted because deposits are settled in a short period of time and their market prices are similar to theirbook values.
Fiscal 2022 (As of March 31, 2022)(1) Notes receivable - trade(2) Accounts receivable

Consolidated balance
sheet amount(million yen)

Market price (million yen)

Difference (million yen)

74

74

－

1,142

1,142

－

101

101

(0)

1,318

1,317

(0)

760

760

－

760

760

－

Consolidated balance
sheet amount(million yen)

Market price (million yen)

Difference (million yen)

148

148

－

1,426

1,426

－

101

100

(0)

1,675

1,675

(0)

839

839

－

839

839

－

(3) Investment securities
Bonds held to maturity
Total assets(1) Income taxes payable
Total liabilities
Fiscal 2023 (As of March 31, 2023)(1) Notes receivable - trade(2) Accounts receivable(3) Investment securities
Bonds held to maturity
Total assets(1) Income taxes payable
Total liabilities

17

(Note) Monetary claims and securities with maturity periods to be redeemed after the consolidated closing dateFiscal 2022 (As of March 31, 2022)
More than aWithin a year year, within(million yen) five years(million yen)
Cash and deposits
Notes receivable - trade
Accounts receivable - trade

More than
five years, More than 10
within 10
years
years
(million yen)(million yen)

15,773

－

－

－

74

－

－

－

1,142

－

－

－

－

100

－

－

16,989100－－

Investment securities
Bonds held to maturity
Corporate bonds
Total
Fiscal 2023 (As of March 31, 2023)
More than aWithin a year year, within(million yen) five years(million yen)
Cash and deposits
Notes receivable - trade
Accounts receivable - trade

More than
five years, More than 10
within 10
years
years
(million yen)(million yen)

17,018

－

－

－

148

－

－

－

1,426

－

－

－

－

100

－

－

18,593

100－－

Investment securities
Bonds held to maturity
Corporate bonds
Total

3. Breakdown of financial instruments in different appropriate classifications
The fair values of financial instruments are classified into the following three levels according to the observability andimportance of inputs used in the calculation of fair values.
Level 1 fair value: fair value calculated using market prices, on an active market, of assets or liabilities whose fair value
is calculated of the observable inputs related to the calculation of fair value
Level 2 fair value: fair value calculated using inputs other than the inputs used for Level 1 of the observable inputs
related to the calculation of fair value
Level 3 fair value: fair value calculated using inputs that are not observable related to the calculation of fair value
If more than one input that has a significant effect on the calculation of fair value is used, the fair value is classified to
the level of inputs whose priority is lowest in the calculation of fair value.

18

Financial assets and financial liabilities whose consolidated balance sheet amounts are not market prices.
Fiscal 2022 (As of March 31, 2022)(Million yen)Classification

Market price
Level 1

Level 2

Level 3

Total

Notes receivable - trade

－

74

－

74

Accounts receivable – trade

－

1,142

－

1,142

Bonds payable

－

101

－

101

Total assets

－

1,317

－

1,317

Income taxes payable

－

760

－

760

Total liabilities

－

760

－

760

Investment securities
Bonds held to maturity

Fiscal 2023 (As of March 31, 2023)(Million yen)Classification

Market price
Level 1

Level 2

Level 3

Total

Notes receivable - trade

－

148

－

148

Accounts receivable – trade

－

1,426

－

1,426

Bonds payable

－

100

－

100

Total assets

－

1,675

－

1,675

Income taxes payable

－

839

－

839

Total liabilities

－

839

－

839

Investment securities
Bonds held to maturity(Note)Explanations about assessment techniques used in the calculation of fair value and inputs related to thecalculation of fair value
Notes and accounts receivable - trade
The fair value of each classified receivable is calculated periodically by the discounted cash flow method based on arate that takes the amount receivable, the period until the due date and credit risk into account and their fair value isclassified as level 2 fair value.
Investment securities
Corporate bonds are valued using quoted market prices. Corporate bonds valued by the Company are bonds forwhich quoted market prices are not readily available because they are not traded frequently and their fair value istherefore classified as level 2 fair value.
Income taxes payable
The fair value of income taxes payable is calculated by the discounted cash flow method based on a rate which takes
future cash flows and the term to the due date into consideration and is classified as level 2 fair value.

19

(Securities)
Bonds held to maturity
Fiscal 2022 (As of March 31, 2022)

Classification

Market price exceeds
consolidated balance
sheet amountMarket price does notexceed consolidatedbalance sheet amount

Consolidatedbalance sheet
amount (million yen)

Market price(million yen)

Difference(million yen)

(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

－

－

－

(3) Other－－－

Subtotal－－－(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

101

101

(0)

(3) Other

－

－

－

101

101

(0)

101

101

(0)

Subtotal
Total

Fiscal 2022 (As of March 31, 2022)

Classification

Market price exceeds
consolidated balance
sheet amountMarket price does notexceed consolidatedbalance sheet amount

Consolidatedbalance sheet
amount (million yen)

Market price(million yen)

Difference(million yen)

(1) Government bonds,
local
government
bonds, etc.

－

－

－

(2) Corporate bonds

－

－

－

(3) Other－－－

Subtotal－－－(1) Government bonds,
local
government
bonds, etc.

－

－

－

(2) Corporate bonds

101

100

(0)

(3) Other

－

－

－

101

100

(0)

101

100

(0)

Subtotal
Total

20

(Retirement benefits)
1. Outline of the retirement benefits system
The Company and its consolidated subsidiaries have a defined contribution pension plan.
2. Retirement benefit expenses
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
The amount that was required for contribution to the defined contribution pension plan was 38 million yen.
Fiscal 2023 (from April 1, 2022 to March 31, 2023)
The amount that was required for contribution to the defined contribution pension plan was 52 million yen.
(Stock options)
1. Expenses related to stock options and their account titles
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
Selling, general and administrative expenses

0 million yen

Fiscal 2023
(from April 1, 2022
to March 31, 2023)
0 million yen

2. Amount posted as profit due to the forfeiture of unexercised stock options
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
Gain on reversal of share acquisition rights

1 million yen

21

Fiscal 2023
(from April 1, 2022
to March 31, 2023)
1 million yen

3. Description of stock options, their scale and changes(1) Description of stock options

Company
Category and number of persons subject
to grants
Stock options by class of shares
Grant date

Vesting conditions

Requisite service period

Exercise period

8th Stock options

9th Stock options

Reporting company

Same as on the left

Four directors
151 employees

Three directors
96 employees

Common shares 350,100 shares

Common shares 848,000 shares

November 27, 2015

December 13, 2016

Being a director or an employee ofthe reporting company and not
being subject to salary reduction
or stricter disciplinary action
provided for in the rules of
employment of the reporting
company from the grant date(November 27, 2015) to thevesting date (July 1, 2017)
Share acquisition rights can be
exercised up to the percentage ofthe allocated share acquisitionrights specified in each item below
by each holder of share acquisitionrights only if operating profit
reaches the level specified in each
item below in the fiscal year ended
March 31, 2017, the fiscal year
ended March 31, 2018, or the
fiscal year ended March 31, 2019.
(i) If operating profit exceeds 1.5
billion yen, 20% of shareacquisition rights can be
exercised(ii) If operating profit exceeds 2.0
billion yen, 50% of shareacquisition rights can be
exercised(iii) If operating profit exceeds 2.5
billion yen, 100% of shareacquisition rights can be
exercised
In the items above, the operating
profit stated in the consolidated
statement of income in the
Company’s annual securities report(or the statements of income if noconsolidated statements of income
are prepared) shall be referenced.
If the concept of items to bereferenced changes significantly
due to the application of theInternational Financial ReportingStandards, etc. indicators to bereferenced shall be determined by
the Board of Directors.
No requisite service periods are
determined.

Being a director or an employee ofthe reporting company and not
being subject to salary reduction
or stricter disciplinary action
provided for in the rules of
employment of the reporting
company from the grant date
(December 13, 2016) to thevesting date (July 1, 2018).
Share acquisition rights can be
exercised up to the percentage ofthe allocated share acquisitionrights specified in each item below
by each holder of share acquisitionrights only if operating profit
reaches the level specified in each
item below in the fiscal year ended
March 31, 2018, the fiscal year
ended March 31, 2019, or the
fiscal year ended March 31, 2020.
(i) If operating profit exceeds 2.0
billion yen, 20% of shareacquisition rights can be
exercised(ii) If operating profit exceeds 2.5
billion yen, 50% of shareacquisition rights can be
exercised(iii) If operating profit exceeds 2.8
billion yen, 100% of shareacquisition rights can be
exercised
In the items above, the operating
profit stated in the consolidated
statement of income in the
Company’s annual securities report(or the statements of income if noconsolidated statement of income
are prepared) shall be referenced.
If the concept of items to bereferenced changes significantly
due to the application of theInternational Financial ReportingStandards, etc. indicators to bereferenced shall be determined by
the Board of Directors.
No requisite service periods are
determined.

From the vesting date to May 31,
2027.
The person must continue to be adirector or an employee of theCompany to exercise shareacquisition rights.

From the vesting date to May 31,
2028.
The person must continue to be adirector or an employee of theCompany to exercise shareacquisition rights.

22

11th Stock options

12th Stock options

Reporting company

Same as on the left

16 employees

55 employees

Common shares 69,000 shares

Common shares 137,500 shares

September 24, 2021

September 24, 2021

Vesting conditions

Being a director, an auditor, or an
employee of the reporting company
or its subsidiaries and not being
subject to salary reduction or
stricter disciplinary action provided
for in the rules of employment of thereportingcompanyorits
subsidiaries from the grant date
(September 24, 2021) to thevesting date (June 30, 2036)
The share acquisition rights can be
exercised only over the period from
July 1, 2036 to June 30, 2038, if
operating profit exceeds 14,736
million yen in any fiscal year fromthe fiscal year ended March 31,
2022 to the fiscal year ending
March 31, 2036.
Whether the operating profit above
is exceeded or not shall be
determined in reference to theoperating profit stated in the nonconsolidated statement of incomein the Company's Annual Securities
Report, and in the event of amaterial change in the concept of
the item to be referred to due to theapplicationofInternational
Financial Reporting Standards,
etc., the Board of Directors shallseparately determine the index tobe referred to.

Being a director, an auditor, or an
employee of the reporting company
or its subsidiaries and not being
subject to salary reduction or
stricter disciplinary action provided
for in the rules of employment of thereportingcompanyorits
subsidiaries from the grant date
(September 24, 2021) to thevesting date (June 30, 2041)
The share acquisition rights can be
exercised only over the period from
July 1, 2041 to June 30, 2043, if
operating profit exceeds 20,630
million yen in any fiscal year fromthe fiscal year ended March 31,
2022 to the fiscal year ending
March 31, 2041.
Whether the operating profit above
is exceeded or not shall be
determined in reference to theoperating profit stated in the nonconsolidated statement of incomein the Company's Annual Securities
Report, and in the event of amaterial change in the concept of
the item to be referred to due to theapplicationofInternational
Financial Reporting Standards,
etc., the Board of Directors shallseparately determine the index tobe referred to.

Requisite service period

No requisite service periods are
determined.

No requisite service periods are
determined.

Exercise period

From July 1, 2036 to June 30,
2038.
The person must continue to be adirector, an auditor, or an employeeof the Company or its subsidiaries
to exercise share acquisition rights.

From July 1, 2041 to June 30,2043.
The person must continue to be adirector, an auditor, or an employeeof the Company or its subsidiaries
to exercise share acquisition rights.

Company
Category and number of persons subject
to grants
Stock options by class of shares
Grant date23

(2) Scale of stock options and related changes
The stock options below are those that existed in the fiscal year under review (fiscal year ended March 31, 2023).
The number of stock options has been converted to the number of shares.
(i) Number of stock options

8th Stock options 9th Stock options

11th Stock
options

12th Stock
options

Before vesting (shares)
As of March 31, 2022

－

－

－

－

Granted－－69,000130,000

Forfeited－－

10,00030,000

Vested－－－－Yet to be vested－－

59,000100,000

152,000

300,900－－

Vested－－－－Exercised

－

－

－

－

Forfeited

－

－

－

－

152,000

300,900－－

After vesting (shares)
As of March 31, 2022

Yet to be exercised(ii) Unit price information

8th Stock options 9th Stock options
Exercise price (yen)Average stock price when
exercised (yen)Fair unit value (grantdate) (yen)11th Stock
options

12th Stock
options

2,034

2,639

8,310

8,310

－

－

－

－

2yen

24yen

6,741yen

7,482yen

4. Method for estimating the number of stock options vested
It is basically difficult to reasonably estimate the number of stock options to be forfeited, and only the actual number ofstock options forfeited is reflected.

24

(Asset retirement obligations)
Asset retirement obligations posted in the consolidated balance sheets(1) Outline of the asset retirement obligations
Obligations of restoration related to lease agreements at the head office and other offices(2) Method for calculation of the asset retirement obligations
The period of use is estimated to be one to 15 years from the acquisition. The discount rate is 0.15% to 1.73%. The
amount of asset retirement obligations is calculated based on those assumptions.
(3) Increase/decrease in the asset retirement obligations
Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Fiscal 2023
(from April 1, 2022
to March 31, 2023)

Balance at beginning of fiscal year
Increase due to purchase of property,
plant and equipment
Adjustment due to passage of time

48million yen

48million yen

－

－

0

0

Balance at end of fiscal year

48

48

(Matters concerning revenue recognition)
1. Information on the breakdown of revenue from contracts with customers
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
Below is a breakdown of revenue from contracts with customers.
(Million yen)Enterprise
Sector Market

Public Sector
MarketRevenue from contracts with
4,559
4,046
customers(Note) Internal transactions between Group companies are deducted.

Consumer
Sector Market

Total

444

9,051

Fiscal 2023 (from April 1, 2022 to March 31, 2023)
Below is a breakdown of revenue from contracts with customers.
(Million yen)Enterprise
Sector Market

Public Sector
MarketRevenue from contracts with
5,316
4,686
customers(Note) Internal transactions between Group companies are deducted.

25

Consumer
Sector Market
433

Total
10,436

2. Basic information for understanding revenue from contracts with customers
The Digital Arts Group is principally engaged in internet security, email security, the planning, development, sale, etc.
of file encryption and tracking solutions, and information security consulting.
In sales of security software, software is classified into two types: license products and associated maintenanceservices, and cloud service products.
Revenue from a license product is recognized when the software product is provided to the customer, at which time
the performance obligation is deemed fulfilled. The performance obligation for maintenance services is fulfilled over acertain period, and revenue is recognized over the term of the contract as the performance obligation is being satisfied.
As for the cloud service product, the service performance obligation is satisfied over time, and the transaction priceunder the contract with the customer is distributed evenly throughout the term of the contract and recognized as revenue.
Revenue is recorded mostly in accordance with the contract with the customer. If the Company pays a rebate
according to a transaction amount for a certain period, among other factors, the rebate is deducted from the revenue.
The promised consideration does not include any significant financing component.
3. Information to understand revenue in the fiscal year under review and the next fiscal year and thereafter
Below is the opening and ending balance of contract liabilities arising from contracts with customers.
(Million yen)Contract liabilities

Fiscal 2023

Balance at beginning of fiscal year

5,684

Balance at end of fiscal year

5,187

Advances received in the consolidated balance sheet are all contract liabilities arising from contracts with customers,
and advance payments are posted if the related performance obligations are not fulfilled at the end of the fiscal year.
The amount of revenue recognized in the fiscal year under review included in the balance of contract liabilities at the
beginning of the fiscal year is 2,319 million yen.
(Segment information, etc.)
Segment information
Previous consolidated fiscal year (from April 1, 2021 to March 31, 2022) and consolidated fiscal year under review(from April 1, 2022 to March 31, 2023)
The Group has only one segment, which is the security business, and segment information is omitted.
Related information
Fiscal 2021 (from April 1, 2021 to March 31, 2022)
1. Information by product/service
The Group has only one product and service category, and information by product/service is omitted.
2. Information by region(1) Net sales
Sales to external customers in Japan are more than 90% of net sales in the consolidated statement of income, andinformation by region is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment in Japan is more than 90% of the amount of property, plant andequipment in the consolidated balance sheets, and information on property, plant and equipment is omitted.

26

3. Information by major customer
The Group engages in only one segment, the security business.
(Million yen)
Customer name

Net sales

Daiwabo Information System Co., Ltd.

2,045

SB C&S Corp.

1,541

Fiscal 2023 (from April 1, 2022 to March 31, 2023)
1. Information by product/service
The Group has only one product and service category, and information by product/service is omitted.
2. Information by region(1) Net sales
Sales to external customers in Japan are more than 90% of net sales in the consolidated statement of income, andinformation by region is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment in Japan is more than 90% of the amount of property, plant andequipment in the consolidated balance sheets, and information on property, plant and equipment is omitted.
3. Information by major customer
The Group engages in only one segment, the security business.
(Million yen)
Customer name

Net sales

Daiwabo Information System Co., Ltd.

2,683

SB C&S Corp.

1,747(Related party information)
Transactions with related parties
Transactions between the company submitting consolidated financial statements and related parties
Officers and major individual shareholders of the company submitting consolidated financial statements
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
There are no applicable matters.
Fiscal 2023 (from April 1, 2022 to March 31, 2023)
There are no applicable matters.

27

(Per share information)
Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Fiscal 2023
(from April 1, 2022
to March 31, 2023)

Net assets per share

863.96yen

1,007.27yen

Profit per share

206.71yen

218.12yen

Diluted profit per share
Profit202.03yen

213.92yen(Note) Base for calculating profit per share and diluted profit per share
Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Item

Fiscal 2023
(from April 1, 2022
to March 31, 2023)

Profit per share
Profit attributable to owners of parent (million yen)

2,900

3,062

－

－

2,900

3,062

14,034,190

14,039,205－－

Increase in the number of common shares

325,272

275,549(Of the increase, the number of share acquisition rights)(shares)

325,272

275,549

Outline of potential shares that are not included in thecalculation of the diluted profit per share because they
do not have any diluting effects

Share acquisition rights
Resolution on Augsut 30,
2021
Number of potential shares:
199,000

Share acquisition rights
Resolution on August 30,
2021
Number of potential shares:
159,000

Amount not attributable to common shareholders(million yen)
Profit attributable to owners of parent related tocommon shares (million yen)
Average number of common shares during the term
Diluted profit per share
Adjustment of profit attributable to owners of parent(million yen)

(Significant subsequent events)
There are no applicable matters.

28