Financial Resultsfor Fiscal Year Ended December 31,2015

SIOS Technology, Inc.
(TSE Second Section: 3744)
February 2, 2016

Table of Contents

Ⅰ

Summary of Financial Results forFY 2015

Ⅱ

Strategic Initiatives Implemented
in FY 2015

Ⅲ

Medium-Term Business Plan andEarnings Forecasts for FY 2016
© SIOS Technology, Inc. All rights Reserved.

１

Ⅰ

Summary of Financial Results for FY 2015

© SIOS Technology, Inc. All rights Reserved.

２

Summary of Financial Results for FY 2015
売上高Net sales

5,110百万円（前年同期比2.5％増）
9,362
million yen（up％ yoy）

 Robust sales growth as a result of the qcquisition of Keyport
Solutions,Inc.(hereinafter "KPS"), in April 2015
 Steady sales growth of LifeKeeper,* one of our major products, in all regions
 Steady sales growth in software products for MFP*
 Steady sales growth in Red Hat, Inc.-related products and Solid sales growthin OSS * -related products

Operating loss: 111 million yen（operating income of 65
million yen for FY 2014）
EBITDA: -45 million yen （125 million yen for FY 2014）*EBITDA=operating income + depreciation + amortization of goodwill 648 million yen increase (up 29.1% yoy) in R&D expenses due toactive R&D investment*See page 28 for descriptions of terms with an asterisk(*).
© SIOS Technology, Inc. All rights Reserved.

3

Business Results for FY 2015

Unit: million yen

FY 2014 results

FY 2015 results YoY Changes Percentage

Net sales

7,367

9,362+1,994+27.1%

Gross margin

2,878

3,351+472+16.4%

Operating income

65(111)(177)-

Ordinary income

81(127)(208)-

Net income

39(179)(218)-EBITDA

125(45)(171)-(Number of employees ona consolidated basis)248458+210+84.7%

 The number of employees totaled 450 on a consolidated basis as KPS and ProfitCube Inc. became our subsidiary April and October 2015, respectively.
*EBITDA: Operating income + depreciation + amortization of goodwill*Number of employees represents total of annual average numbers of full-time employees and temp staff and contract
employees as of end of period© SIOS Technology, Inc. All rights Reserved.

4

Net sale by Region
 Solid sales growth of 25.9% in Japan
 Robust sales growth due to making KPS asubsidiary Steady sales growth of LifeKeeper
 Steady sales growth in OSS-relatedproducts

Europe欧州
103

Steady yoy sales
growth of 13.7%

118（Unit：million yen）

Japan
日本国内

6,916

●

8,709

2015

アジア
Asia
andオセアニア
Oceania Steady sales growth of
15.0% also in Asia andOceania excluding Japan

94

108

2014

2015

●
●

●

2014

 Up 68.8% yoy due tosales growth incontracted development
and solid sales growth ofLifeKeeper

●

2014

Americas
米州

2015

425
252

2014

2015

●Location of group companies*Translated at the rate of 105.79 yen and 121.11 yen to the dollar for 2014 and 2015, respectively© SIOS Technology, Inc. All rights Reserved.

5Balance Sheet for FY 2015
Unit: million yen

At end ofDecember 31,December
2014
2015

【Financial Positions】

Increase(decrease)

Total current assets

3,251

3,901

 Cash and deposits: Up 224 million yen+650  Fund in hand of about 2.2 billion yen (sufficient
funds available to accelerate the growth strategy)(Cash and deposits)

1,982

2,206+224

1,268

1,694+425

Total fixed assets

400

1,741+1,340

Total assets

3,651

5,642+1,990 (Accounts receivable-tradeand others) Fixed assets: Up 1,340 million yen
 Increase in goodwill and investment securities of
831 million yen and 190 million yen, respectively

Total current liabilities

1,783

2,872+1,088

Total fixed liabilities

134

1,230

+1,096

Total liabilities

1,918

4,102+2,184

Total net assets

1,733

1,539(193)(Treasury stock)

(119)

(116)

+3

(Foreign currency translationadjustment)

(144)

(143)

+0

Total liabilities and net assets

3,651

5,642

+1,990Current liabilities: Up 1,088 million yen
Increase in accounts payable-trade and shortterm loans payable of 193 million yen and 392
million yen, respectively

 Fixed liabilities: Up 1,096 million yenFunds raised from financial institutions topurchase shares of subsidiaries

 Net assets: Down 193 million yenNet loss of 179 million yen, dividends paid of 42
million yen and others© SIOS Technology, Inc. All rights Reserved.

6

Cash Flow for FY 2015
Unit: million yen

FY 2014

Increase(decrease)

FY 2015

Cash flow from operating activities

401168(232)Cash flow from investing activities

(223)

(996)

(773)

Cash flow from financing activities

(145)

988

+1,133

Translation adjustment on cash and cash equivalents

116

1(115)

Increases (decreases) in cash and cash equivalents

149

162+13

Balance of cash and cash equivalents at end of period

1,882

2,045+163

 Cash flow from operating activities: 168 million yen
 Net loss before income taxes of 145 million yen, depreciation and amortization of 59 million
yen, increase in notes and accounts payable-trade of 99 million yen and others

 Cash flow from investing activities: (996 million yen
 Purchase of shares of subsidiaries of 951 million yen

 Cash flow from financing activities: 988 million yen
 Proceeds from long-time loans payable of 1,060 million yen, dividends paid of 42 million
yen and others© SIOS Technology, Inc. All rights Reserved.

7

Open System Infra Business
Sales: 5,541 million yen (up 10.7% yoy)
Segment loss: 165 million yen (37 million yen for FY 2014)［million yen］

Sales

Sales

［Japan］
 Steady sales growth in our major productLifeKeeper Solid sales growth in OSS support service andOSS-related products
 Steady sales growth in Red Hat, Inc.-relatedproducts［Overseas］
 Steady sales growth in Americas, Europe andAsia and Oceania region

Up 10.7％

Segment loss

Segmentloss
2014

 R&D Investment in machine learning technology (IToperations analysis* software SIOS iQ* was launchedas the first fruit of the investment)
2015© SIOS Technology, Inc. All rights Reserved.

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Web Application Business
Sales: 3,820 million yen (up 61.9% yoy)
Segment income: 53 million yen (down 48.4% yoy)［million yen］

Sales

Up 61.9％

 Robust sales growth due to making KPS asubsidiarySales Steady sales growth in software products forMFP
 Steady sales growth in Google Apps-linked
SaaS* Gluegent Series*Segment incomeSegment
incomeDown 48.4%
2014

Active R&D investment in strengthening
functions of software products for MFP
and Gluegent series

2015© SIOS Technology, Inc. All rights Reserved.

9

Ⅱ

Strategic Initiatives Implemented in FY 2015

© SIOS Technology, Inc. All rights Reserved.

10Basic Policies of Medium Term Management Strategy

１Continuing R&D Investment

２

New Business Creation (Including M&A)

３

Strengthening Competitiveness of Core Businesses© SIOS Technology, Inc. All rights Reserved.

11

Basic Policies of Medium Term Management Strategy

１Continuing R&D Investment

２

New Business Creation (Including M&A)

３

Strengthening Competitiveness of Core Businesses© SIOS Technology, Inc. All rights Reserved.

12

１．R&D Achievements
Focus R&D investments on developing
machine-learning technology*First R&DAchievements

SIOS iQ

 Support companies’ operation of virtual system
 Completely automate the analysis of root causes
and the scope of effect and propose the solution
in the event of occurrence of issues
 User friendly interfaceLaunched SIOS iQ, the IT operations analysis software using the machinelearning technology, in the United States and Japan in July 2015
© SIOS Technology, Inc. All rights Reserved.

13

１．R&D Achievements
SIOS iQ adopted by Trend Micro Inc.
Before adoption of SIOS iQ
In the event of a performance issue in system, Trend Micro Inc. had
utilized several analysis tools to find the causes and call specialists intechnology areas to make an analysis.

After adoption of SIOS iQ
SIOS iQ automates cause analysis of the performance issue and makes it
possible to find and improve root causes early. This makes systemmanagement more efficient and increases credibility of services.

© SIOS Technology, Inc. All rights Reserved.

14

Basic Policies of Medium Term Management Strategy

１Continuing R&D Investment

２

New Business Creation (Including M&A)

３

Strengthening Competitiveness of Core Businesses© SIOS Technology, Inc. All rights Reserved.

15

２．M&A Achievements (New Business Creation)
Made Keyport Solutions, Inc. (hereinafter "KPS"), adeveloper of applications mainly for financial
institutions, a subsidiary in April 2015
Made Profit Cube Inc. (hereinafter "PCI"), which develops, sells, andmaintains the ALM system for financial institutions*, a subsidiary in October
2015

Made preparations for launching new products andservices in the potential high growth area Fintech*

Aim at offering new products and services inFintech area through KPS and PCI© SIOS Technology, Inc. All rights Reserved.

16

２． M&A Achievements (New Business Creation)
Keyport Solutions (hereinafter "KPS") develops applications forfinancial institutions based on superior technology and sets up
investment information websites
Products and services of KPS

 Corporate profile of KPS＊ Stress check software

Company nameKeyport Solutions, Inc.

Location

1-28-38 Shinkawa, Chuo-ku, Tokyo, Japan

Representative

Noboru Morita, Representative Director

Capital stock

232 million yen

Established

June 1999

Ownership

96.7% and 3.3% owned by the Company and others,
respectively

Business results

Sales 1,303 million yen, ordinary income 136 million yen andnet income 144 million yen (for the fiscal year ended March2014)＊IT business process management software＊Investment learning website＊Web access analysis software(The above is an example of offering products and services)© SIOS Technology, Inc. All rights Reserved.

17２． M&A Achievements (New Business Creation)
Profit cube (hereinafter "PCI") develops and sells the ALM systemmanaging assets and liabilities for financial institutions to provide
advanced support and consulting services of operations
Products and services of PCI

 Corporate profile of PCI
Company name

VivaldiProfit Cube Inc.

＊Business management software for financial institutions

Location

2-2-20 Higashi Shinagwa, Shinagawa-ku, Tokyo, Japan

Representative

Shinichi Kondo, Representative Director

Capital stock

380 million yen

Established

August 1982Ownership

100.0% owned by the Company

Business resultsSales 1,127 million yen, ordinary income 56 million yen andnet income 47 million yen (for the fiscal year ended June2015)＊Securities management software© SIOS Technology, Inc. All rights Reserved.

e-Acris＊Integrated credit management software（The above is an example of offering products and services）

18

Basic Policies of Medium Term Management Strategy

１Continuing R&D investment

２

New business creation (including M&A)

３

Strengthening Competitiveness of Core Businesses© SIOS Technology, Inc. All rights Reserved.

19

３．Strengthening Competitiveness of CoreBusinesses
Launched LifeKeeper for Linux v9 September 2015 to satisfy a varietyof requests for a cloud* environment from companies
Requests under cloud environment

Items realized by upgrade Request for accelerating the speed ofbusinesses resulting from fiercecompetition

 Replicating servers with the same
composition for a short time Response to globalization of businesses Increase in convenience and operation
efficiency of engineers Stronger request for credibility of thesystem and others

 Possible to build infra overseas immediately

New functions of LifeKeeper for Linux v9
 Addition of functions including the automatic composition
Major upgrade for the firstmanagement available at the time of building server environment
time in 3 years and 4 months
 Strengthening of the instruction execution function withcommand line
 Support of the latest version of the virtual platform (VMwarevSphere)© SIOS Technology, Inc. All rights Reserved.

20

３．Strengthening Competitiveness of CoreBusinesses
Expanded functions of the application for MFP (multi functionperipheral) Quick Scan V4 and started to offer the application
 Promoted an increase in the efficiency of businesses by
converting printed business cards and documents into digital data

Strengthened and improved MFP for higher usability
by adopting a large-size full-color touch panel

Support efficient and safe operations by managing printed
information in the office on a digital basis© SIOS Technology, Inc. All rights Reserved.

21

Ⅲ

Medium-Term Business Plan and Earnings Forecasts
for FY 2016

© SIOS Technology, Inc. All rights Reserved.

22

Medium-Term Business Plan
Basic policies
of medium-term
management
strategy

１．Continuing R&D investment
２．Strengthening competitiveness ofcore businesses
３．New business creation in new areas
including Fintech

Sales
14.0 billion yen

12.0 billion yen
10.5 billion yen
6.6 billion yen

7.3billion yen

9.3 billion yen

EBITDA
320 million yen

700 million yen

120 million yen
300 million yen
2013（actual results) 2014（actual results）

500 million yen-40 million yen

2015（actual results）

2016（plan）

2017（plan）© SIOS Technology, Inc. All rights Reserved.

2018（plan）

23

Earnings Forecasts for FY 201610.5 billion yen, a high growth of 2 digits ormore and sales growth for 6th consecutive period

 Expect to achieve sales of Expect to Turn into the black by promoting rationalization with tighter
cooperation within the group and increasing the composition ratio of highermargin in-house products Keep active R&D investment and aim at offering new products and services
including those in the Fintech area
 R&D expenses to total 880 million yen (up 35.8% yoy) for the next period.
Unit: million yen

Actual results for Full-year estimatesfor FY 2016
FY 2015

Increase(decrease)

Percent change

Net sales

9,362

10,500+1,138+12.1%

Operatingincome(111)

140+251-

Ordinary income(127)

100+227-

Net income(179)

50+229-

EBITDA(45)

300+345-© SIOS Technology, Inc. All rights Reserved.

24

Dividends for the Current and Next Periods
 Dividends planned for the current period (FY 2015)
 As announced on February 2, 2015, for the current period, we
made no dividends and prioritized R&D activities to achieve themedium-term management plan.

 Dividends expected for the next period (FY 2016)
 For the next period, we will record net income attributable toowners of the parent, but we intend to make no dividends toprioritize prior R&D investment toward further growth in future.
17th term
FY 2013(Period before theprevious period )Annualdividend

5.00 yen

18th term
FY 2014(Previous period)

19th term
FY 2015(Plan for the currentperiod)

20th term
FY 2016(Estimate for the nextperiod)

0.00 yen

0.00 yen

5.00 yen© SIOS Technology, Inc. All rights Reserved.

25

Move to TSE Second Section

The Company, which listed on
Tokyo Stock Exchange Mothers
Market August 2004, moved toTokyo Stock Exchange
Second Section on May 1, 2015.
We sincerely request your continuous guidance and support
as we will strive to further expand business activities andincrease enterprise value so that we can satisfy yourexpectations.
© SIOS Technology, Inc. All rights Reserved.

26

About SIOS Technology, Inc.
The Company offers software products and services on OS (operating systems),
servers, web applications, cloud computing and big data with focus on development
and use of open source software, represented by Linux. To support the rapidly
evolving virtualization of IT infra, we have also recently developed SIOS iQ, IT
operations analysis software equipped with machine learning functions, and started
to offer the software.
We will seek innovative software technology and become aninfluencer, an entity to influence the global IT industry, to create
value and contribute to social development
Headquarters

SIOS building, 2-12-3 Minami Azabu Minato-ku, Tokyo, Japan

Capital1,481 million yen

FoundedMay 23, 1997

Employees

458 persons on a consolidated basis (as of December 31, 2015)

Consolidated
subsidiaries

SIOS Technology Corp. (USA); SIOS (Beijing) Technology Inc. (China); Gluegent, Inc.
(Japan); Kanshin! Inc. (Japan); Glabio, Inc. (USA); Keyport Solutions, Inc. (Japan); and Profit
Cube Inc. (Japan)© SIOS Technology, Inc. All rights Reserved.

27GlossaryPage

TermDescription

3LifeKeeper

The software to play a role of reserving another backup server in the same environment as a server in operation
and automatically making the backup server take over services in the event of an unusual failure

3

Software products for MFP

MFP (abbreviation for multi-function peripheral) represents equipment with multiple functions of a printer,scanner, copier, and facsimile. We develop, sell, and maintain Quick Scan, the document management software
running on MFP.

3OSS (Open Source Software)

Software where the source code, design of the software, is freely available and can be used, updated, andredistributed.

8IT operations analysis

IT operations analysis to analyze the data from IT operations and convert the data into practical and clear
information.

8SIOS iQ

The product to comprehensively supervise, analyze, and optimize operations of applications in the virtual andcloud environments and seek to improve performance and efficiency to secure credibility for resolving complex
issues.

9SaaS

The service to provide software online and enable users to call and use what they need as needed.

9Gluegent series

The service to support companies’ optimization of businesses in the cloud, including Gluegent Flow, whichenables the companies to execute internal workflows in the cloud, and Gluegent Apps Group Scheduler, aGoogle Calendar app with the function to manage the schedule of team members.

13Machine learning technology

The technology to give the computer the same learning ability as a human being. It explores beneficial
information from a variety of data.

16

ALM system

The system to manage risks of assets and liabilities of financial institutions.

16Fintech

The new technology developed by mixing finance with technology.

20Cloud

New utilization form of computers to utilize computer processing online as service.
© SIOS Technology, Inc. All rights Reserved.

28

Note
The earning forecasts are based on our judgment from the most current
information but may include uncertainties. Please understand that actual
business results may differ from the outlook due to various factors.
Significant factors potentially affecting actual business results include, but
are not limited to, the economic environment surrounding our businessareas and the trend of the market.

Inquiry about this matter
SIOS Technology (IR)Tel (main)：03-6401-5111
In a case of using the net, please make an inquiry to the following address:→https://lp.sios.jp/MRK_Inquiry_IR.html© SIOS Technology, Inc. All rights Reserved.

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