Progress and Outlook ofMedium-term Business Plan
(April 2019 - March 2022)

December 10, 2019

ZUKEN Inc.
Tokyo Stock Exchange, First Section
Securities code: 6947

Contents
 Key Themes for More Progress First Half Progress and Outlook of FY3/20(First Year of the Three-year Business Plan)
Corporate Profile

1

Key Themes for More Progress

2Key Themes for More Progress(1) Being the leading enterprise PCB solution
vendor(2) Model-Based Systems Engineering (MBSE) isevolving in many industries(3) Start working on a next-gen. design environment3Competitive Landscape for PCB Solutions
Global Market Share for PCB Design CAD (2018)

Company C

Other12% (2017)→Company A
33%←35% (2017)

Company B
22% (2017)→Zuken
Source: Yano Research Institute
CAD/CAM/CAE Systems Market 2019 and 2018430%←26% (2017)

Why is Zuken the PCB Solution Leader now?
Developing new products through combination and linkage ofadvanced technologies involving ADAS, self-driving cars, 5G, AI and other fields
Required capabilities for enterprise PCB solutions
Smooth links withanalysis, mechanicaldesign and otherexternal CAE
systems

Semiconductor/package/PCB co-designs, SiP
designs and multi-board
designsReady for the latest
manufacturing
technologies (FOWLP,power moduledesigns, etc.)

Stress-free
performance inusing large
volumes of design
data

Proven 3D PCB design technology released in 2011 ahead of all competitors

The performance for the above required capabilities of the CR8000 is superior to all competing products in the market now.

5Why MBSE needed now?

Conventional
engineering
process

MBSE process

Determine basic concept
and requirements basedon experience andimagination

Repeated trial-and-error process to convert conceptual design
into a product based on the basic concept. Basic concept may berevised in the detailed design stage of the product to be released.
Increasing complexity of requirements rapidly boosts design
iterations and verifications.

Plan/Conceptualdesign

Detailed Design“Systems model” is created and optimized for all
requirements and necessary functions for the product.
In theory, the design can be almost completely
finished at this stage even for complex requirements.

A detailed product design ofeach domain is completed inaccordance with the plan andrequirements

Plan/Conceptual design

Detailed Design

What is different with MBSE?
 Making conceptual designs as a “systems model” rather than a natural language enables simulation,verifications, trade-off studies and other tasks even at the concept stage. (Eliminates subsequent iterations) No distortions of the plan and conceptual goals at the detailed design stage (Goals of the plan are
accurately passed on)
 The design intent underlying the product design can be retained.
(Highly efficient design reuse and traceability)

6

“IT Platform” for Evolving Engineering Chain

 An open and flexible engineering chain (IoT, cloud) Encompasses all information from conceptual design to production and services (digital thread) An environment to retrieve the necessary information from an enormous volume of data (AItechnology)

7Medium-term Sales/Earnings Targets and 1H FY3/20 Results
Sales(Millions of yen)

40,00035,00030,000Operating Profit(Millions of yen)

5,000

28,300 (+500)
27,80030,0003,100 (+200)

32,000
4,000

3,700

26,7873,050

25,00020,00015,00013,705 (+10%)

YoY

10,0003,200

Fullyear

YoY

3,000

Fullyear

12,4772,900

1,778 (+37%)

2,000

1,299
1H

1,000

1H

5,000
00

FY3/19(Results)

FY3/20(Plan)(Plan)(1H Results)

FY3/21(Plan)

FY3/22(Plan)

FY3/19(Results)

FY3/20(Plan)(Plan)

FY3/21(Plan)

FY3/22(Plan)(1H Results)

Note: Foreign exchange rate assumptions for the Medium-term Business Plan are 110 yen/USD and 125 yen/EUR.

Raised the full-year targets for the plan’s first year based on performance in the first half of FY3/208

Financial Summary
Sales and Operating Profit

Sales(Billions of yen)

Operating profit

34.0

11.5

28.3

29.0

26.7

24.0

19.0

22.0
19.1

18.8
17.0

15.2 14.6

16.1 15.7

19.8
17.0

16.7

17.9 18.2 17.8

19.7

22.1
21.2 21.9

9.5

23.500
8.500

7.5
6.5
5.5
(Billions of yen)

14.0

4.5

9.0

2.09 1.92 1.95 2.38

2.16
1.38

4.0

3.05 3.10

2.83

1.59

1.46
0.88

0.10 0.27

0.22(0.37)

0.35

0.63

2.02

1.5

0.50(Plan)

Forecast record-high sales and operating profit in FY3/20

3.5

2.5

1.00 0.77

0-1.0

910.5(0.5)

Policy for Shareholder Distributions
Consistent Growthof Dividends
株主還元策の推移(Unit: yen)
（単位：円）

記念配当・特別配当
Commemorative/special dividends
普通配当Ordinary dividend10105101010121414141414141720202226

2930

Investments for  Zuken has paid an annual dividend per share of at least 10 yen every year
since its listing in 1987
growthStableshareholder
distributions

Financialsoundness

 The dividend has increased several times since 2008 and the year-end
dividend for FY3/20 was raised from 14 yen to 15 yen Zuken plans to pay an annual dividend of 29 yen for FY3/20 and 30 yen for
FY3/21
 We will continue to consider suitable and highly effective methods ofreturning earnings to shareholders by taking into account businessperformance, operating conditions and other factors

Zuken will retain a progressive dividend policy
10First Half Progress and Outlook of FY3/20(First Year of the Three-year Business Plan)

11

Medium-term Sales/Earnings Targets and 1H FY3/20 Results
Sales(Millions of yen)

40,00035,00030,0005,000

28,300 (+500)
27,80030,0003,100 (+200)

32,000
4,000

3,700

26,7873,050

25,0003,000

Fullyear

20,00015,000Operating Profit(Millions of yen)YoY

12,477

10,00013,705 (+10%)

2,900

3,200

Fullyear

YoY1,778 (+37%)

2,000

1,299
1H

1,000

1H

5,000
00

FY3/19(Results)

FY3/20(Plan)(Plan)(1H Results)

FY3/21(Plan)

FY3/22(Plan)

FY3/19(Results)

FY3/20(Plan)(Plan)

FY3/21(Plan)

FY3/22(Plan)(1H Results)

Note: Foreign exchange rate assumptions for the Medium-term Business Plan are 110 yen/USD and 125 yen/EUR.

Raised the full-year targets for the plan’s first year based on performance in the first half of FY3/2012Core Strategies of the New Three-year Plan
(1) Migration to the latest solutions at majorcustomers→ Focus: CR-8000 in Europe and the U.S., the new wire

harness solution in Japan(2) Increase sales of data management products→ Expand data management coverage to include wire
harness design products and third-party products aswell as Zuken EDA products(3) Build a Zuken Business Model in thesystems engineering field (MBSE)
Activities progressing as planned
13

Going one more step
The goal is a broader range ofactivities by the entire Zuken
Group, …extending frommodel preparation andverification to model datamanagement.

1H FY3/20 Sales by Product Category vs. 1H FY3/19

Product Category

1H FY3/19

1H FY3/20

YoY change

8,196

9,237

+1,041+12.7%(2,422)(2,558)+135+5.6%

Data Management Solutions

4,281

4,468+187+4.3%

Total Sales

12,477

13,705+1,228+9.8%(Millions of yen)

Design Automation(of which WH Design)

14

1H FY3/20 Product Category Sales
0.9 billion yen

0.14 billion yen

Electronic Design Automation

12.5 billion yen

0.19 billion yen
1.23 billion yen

Wire Harness

Data Management

Design Automation

1H FY3/20

1H FY3/19
Electronic Design Automation
 Increasing speed of migrationfrom CR-5000 to CR-8000 in
Japan and other countries
 Strong demand in theautomobile (includingsuppliers), electronic
components, industrial
machinery and many otherindustries15

13.7 billion yen

Wire Harness Design
 Solid demand for use in designs
for aircraft and specialty
vehicles Anticipate a gradual expansionof solutions for factories
 Strong sales of B-to-B
mechanical design solutions

Data Management
 Strong sales of PDM as in
FY3/19 Demand for security solutions(provided by a Zuken affiliate)
remained strongReference: Product Category
Major products by product category
Product Category Used in Earnings Releases

Major Products

Printed Circuit Board Design Automation
design solutions

CR-8000 Design Force
CR-8000 DFM Center
CR-5000 Board Designer

Circuit design solutions

CR-8000 Design Gateway
CR-8000 System Planner
E3.series
Cabling Designer
Harness Designer

Data Management

IT solutions

PreSight/visual BOM
Knowledge Explorer
DS-2 (DS-CR/DS-E3)

Divided among all of the above product categories

Client services and Others

16

Maintenance services for each productReference: First Half Sales by Solutions

17

Sales (Millions of yen)

1H FY3/19

1H FY3/20

YoYchange

Printed Circuit Board
design solutions

1,881

2,297+415

Circuit design solutions

2,702

3,325+623

IT solutions

2,662

2,719+56

Client services

5,231

5,363+133

Total

12,477

13,705+1,228

1H FY3/20

Overseas Business Sales

Average exchange rates in 1H FY3/19 were 110 yen/USD and 130 yen/EUR.
Average exchange rates in 1H FY3/20 were 109 yen/USD and 121 yen/EUR.

+13.5%(Higher sales in local currencies)+10.6%

0.51 billion yen(0.2) billion yen
1.23 billion yen

0.91 billion yen

12.5 billion yen
Japan 8.7 billion
Europe 2.3 billionUSA
0.7 billion
Asia
0.8 billion

1H FY3/1918Japan

OverseasBusinessForeign exchangeimpact

13.7 billion yen+8.2%(Including foreign exchange impact)

1H FY3/20

1H FY3/20

Average exchange rates in 1H FY3/19 were 110 yen/USD and 130 yen/EUR.
Average exchange rates in 1H FY3/20 were 109 yen/USD and 121 yen/EUR.

Overseas Sales by Region

0.26 billion yen (0.2) billion yen

0.11 billion yen

3.8 billion yen
Europe 2.3 billion
USA
0.7 billion
Asia
0.8 billion

0.14 billion yenEuropeUSA+5.0%+19.0%

0.31 billion yen

Foreign(including direct sales in China) exchange
impactAsia+33.1%

Higher sales in local currencies

1H FY3/20

1H FY3/19
EuropeUSA

 Progress as planned withproject for migration to theCR-8000 at major customers
 Promoting sales of theE3.series in the industrial
machinery sector in thesecond half

 Stable growth trajectory
backed by growth of thetime-based license business Consistently receiving orders
from large, prominentcustomers in the aerospace
and industrial machinery
sectors19

4.1 billion yen

Asia Weak sales in Korea but
expect a second half recovery
 Steady growth of sales toprominent local companies in
China, India and othercountries

Upward Revision in FY3/20 Forecasts and Outlook
 Demand in Japan for migration to the CR-8000 (circuitry, PCB) isvery strong. Due to the outlook for sales to remain highthroughout the fiscal year, Zuken has raised the sales forecast
500 million yen and the operating profit forecast 200 millionyen.
 There is still a risk of a downturn in market conditions due toprolonged political instability. But there are excellent prospectsfor more growth over the medium term in demand directly
linked to Zuken solutions involving automation and other laborsaving measures, safety and security, and new technologies suchas the IoT, 5G technology and self-driving cars.
There is no change in the current targets for thefollowing fiscal years.
20

Corporate Profile

21

Corporate Profile
ZUKEN Inc.
Established:
Capital:Employees:

December 17, 1976
10,117,065,000 yen
417 (non-consolidated)
1,384 (consolidated) (As of Sep. 30, 2019)
Tokyo Stock Exchange, First Section
Securities code: 6947
 A Japanese engineering software vendor with global presence More than 40 years of experience in the electronic design
automation industry (Backed by a consistently sound financialposition) In-house development of technologies along with the use ofalliances, M&A and other measures to acquire new technologies
quickly as needed22

History
December 1976

Established as Zukei Shori Gijutsu Kenkyusho Inc.

June 2009

June 1978

Developed Japan's first CAD/CAM system "Create 2000" forthe design of printed circuit boards.

Announced the release of “PreSight,” a new product of PLM
Solutions.

May 2010

Concluded an equity alliance with Lattice Technology Co.,
Ltd., making Zuken the second-largest shareholder afterToyota.

June 2011

Announced the release of "visual BOM" that integrated bill ofmaterials technology with the ultra lightweight 3D format
XVL.

January 2011

Announced worldwide the release of the "CR-8000," a newgeneration electronic device design platform.

September 2013

Established "Zuken SOZO Center" in Silicon Valley, NorthAmerica.

August 2014

Established Global Automotive and Transportation
Competence Center in Erlangen, Germany.

December 2014

Concluded a capital and business alliance with Toyo BusinessEngineering Corporation (now Business EngineeringCorporation).

February 2015

Established DiverSync Corporation.

March 2015

Established ZUKEN INDIA Pte. Ltd. in India.

July 2015

Took over YDC Corporation's CADVANCE business (CAD andPDM operations).

November 1983

Established ZUKEN AMERICA Inc. (now ZUKEN USA Inc.) inthe United States.

January 1988

Developed a new CAD system "CR-3000."

October 1991

Registered in the Second Section of the Tokyo Stock
Exchange as a first EDA corporation.

January 1992

Established ZUKEN EUROPE GmbH (now ZUKEN GmbH) inGermany.

January 1992

Established ZUKEN KOREA Inc. in Seoul.

August 1992

Established ZUKEN SINGAPORE Pte. Ltd. in Singapore.

April 1994

Developed EDA vertical integration solution "CR-5000."

June 1994

Acquired all the shares of Racal-Redac Ltd. of the United
Kingdom.

September 1994

Moved up to the First Section of the Tokyo Stock Exchange.

March 2000

Acquired all the shares of INCASES Engineering GmbH.

March 2002

Started provision of a wire harness design environment forthe automotive industry.

June 2002

Established Shanghai Technical Center in Shanghai.

April 2016

The PreSight Division was spun off as Zuken PreSight Inc.

February 2004

Announced the release of "ePLM Platform DS-2," a PLM
solution specially designed for the electrical and electronics
industries.

December 2017

Alfatech Inc. (now Zuken Alfatech Co., Ltd.) became a wholly
owned subsidiary.

August 2005

Established ZUKEN TAIWAN Inc. in Taiwan.

August 2019

Acquired Vitech Corporation of USA.

May 2006

Acquired CIM-TEAM (now ZUKEN E3 GmbH) of Germany.

June 2007

Released "V54EE" based on "Catia V5."

Global Locations and Affiliates in Japan
Head Office/Central Research Facility: Tsuzuki-ku, Yokohama
Locations in Japan:

Yokohama, Osaka and Nagoya

Overseas Locations:

5 countries in Asia, 8 countries in Europe andthe United States

7 (Zuken Tec Inc., Zuken Netwave Inc., Zuken Elmic Inc., Zuken PreSight Inc.,

Domestic Affiliates:

Zuken Alfatech Inc., and two other companies)

EuropeUK, Germany, Switzerland,
France, Italy, Netherland, Poland

Americas

Korea

Japan
China:Sales OfficeTaiwanAsia

India
Singapore24

Zuken Group
Zuken Tec
Overseas subsidiaries
EuropeNorth America
Asia

Technology
services

Design/manufacturinglink
Knowledge/AI

25

3D mechanicaldesigns

BIM

Security

Telecommunications

Storage

Embedded softwarePrecautions
Information in this presentation includes forward-looking statements about results ofoperations and other items. These statements are judgments of the Zuken Group basedon information available when this presentation was prepared and include potential risks
and uncertainties. Therefore, actual results of operations and other aspects of future
performance may differ greatly from these forward-looking statements. Risk factors that
may affect the Zuken Group’s performance include, but are not limited to, changes in theeconomies of various countries, capital expenditures of the group’s customers, changes
in the demand for the group’s products, progress with the development of new products,
competition with other companies, and foreign exchange rate movements.
The performance targets in this presentation are not forecasts or current outlooks forfuture results of operations. These figures are goals that the Zuken Group will attempt toreach by implementing its business strategies.

26Contact

ZUKEN Inc.
Corporate Marketing Division
2-25-1, Edahigashi Tsuzuki-ku, Yokohama
Tel: +81-45-942-1511