Investor Relations

To Our Shareholders

I would like to express my sincere appreciation for your loyal patronage.

In the current consolidated fiscal year (April 1, 2016 through March 31, 2017), the Japanese economy continued to show moderate recovery with continuing upturn in employment as a result of the government’s aggressive economic policies and corporate performance holding firm. On the other hand, prospects of the world economy remained unclear with concerns of economic downturn, mainly due to decelerating economy in emerging countries, Brexit, and the uncertainties of the new Trump administration policies.

In the security industry where the Digital Arts Group (the “Group”) engages its primary business, growing concerns over security incidents, such as large-scale leakage of personal data as a result of targeted attacks aimed at specific corporations and organizations, led not only security admins, but also corporate managers to become more aware of the importance of strengthening information security. Additionally, local governments actively improves their security under the guideline of fundamental strengthening of local government data security issued by the Ministry of Internal Affair and Communications.

In such circumstances, the Group strengthened domestic marketing activities for large corporations and organizations that need relatively advanced security. Specifically, it created a team specializing in sales for large domestic companies and organizations. The Group also created a consulting business subsidiary, Digital Arts Consulting Inc., to assist with security implementation and to provide high value added proposals for clients looking to implement security on a large scale and use its products as global tools.

In the public sector, the Group dramatically increased sales by developing and offering solutions that satisfy the level of security demanded in the Ministry of internal Affairs and Communications’ guidelines on strengthening local government security.

Overseas, US subsidiary FinalCode, Inc. and Asia-Pacific subsidiary FinalCode Asia Pacific Pte. Ltd. began to acquire contracts as a result of progress in partnerships with local sales partners and implementing concrete measures to drive sales. In Europe, FinalCode Europe Limited focused on hiring employees and developing partnerships with local sales partners.

Consolidated net sales for Fiscal Year 03/17 was JPY 5,058,685 thousand (+26.4% YoY). Despite increased expenses from hiring employees in Japan, the following contributed to the overall increase in earnings: operating income was JPY 1,824,248 thousand (+81.2% YoY), ordinary income was JPY 1,811,279 thousand (+82.2% YoY) and net income attributable to parent company shareholders was JPY 1,125,043 thousand (+106.1% YoY).

For Fiscal Year 2017, the Group leverages its capacity to develop products solely in-house to offer protection against enterprise data loss while also making a full-fledge entry into the external threat market, such as measure against targeted attacks. The Group anticipates an increase in demand for its products in response to recent legal reforms (i.e. Electronic Books Maintenance Act, Private Information Protection Law, etc.), local government security cloud framework, and plans by Ministry of Internal Affairs and Communications to place Wi-Fi in all public elementary and middle schools, and seeks to accelrate its drive and sales growth by seizing these opportunities.

Thank you very much for your continued support and encouragement.

May 9, 2017
Toshio Dogu
Representative Director, President and Chief Executive Officer
Digital Arts Inc.



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