Consolidated financial result

SIOS Corporation

Consolidated Financial Result(For the 9-month period ended September 30, 2021)
October 28, 2021
Company name:
Address:
Stock exchange listings:
Code number :URL:
Representative:
Contact:

SIOS Corporation
2-12-3 Minami Azabu, Minato-ku, Tokyo 106-0047 JapanTokyo Stock Exchange (TSE)3744
https://www.sios.com/
Nobuo Kita, Representative Director
Tokutaro Kobayashi, S.V.P. of Finance & Accounting
Phone: +81-3-6401-5111
Scheduled date for filing of quarterly financial report: November 12, 2021
(Note) All figures in the financial statements are rounded down to the nearest millionth.
‘-‘ indicates a loss or negative figure.

1. Consolidated results (January 1, 2021 through September 30, 2021)(1) Consolidated business results
Net sales
Million yen

Operating income%

Million yen

Ordinary income%

9-month period(2021/9)
11,70711.2
279
9-month period(2020/9)
10,5293.9-6(Note)Comprehensive income
As of September.30, 2021: 266 million yen/ 184.0%

Million yen-

Net income per share- Diluted

Yen

Yen

25.88
12.97

-

312
-2

Million yen-(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen

%

1,736
1,548

26.3
21.9

9-month period(2021/9)
6,398
FY20206,851(Reference) Equity
As of September. 30, 2021: 1,680 million yen

Net income

%

%

224
112

99.6
-

As of September. 30, 2020: 93 million yen/ -%Net income per share- Basic
9-month period(2021/9)
9-month period(2020/9)(% of change from previous third quarter)

As of Dec. 31, 2020: 1,500 million yen

2. Cash dividends
Record Date

End of Q1

Interim

Dividend per share
End of Q3

Year-end

Annual

Yen

Yen

Yen

Yen

Yen

FY2020-0.00

FY2021-0.00

FY2021 (expected)

-

10.00

10.00

-

10.00

10.00

(Note) Revisions to recent dividend forecast: None

3. Forecast of consolidated results for FY2021 (January 1, 2021 through December 31, 2021)
Net sales
Million yen

Operating income%

Million yen

FY2021
15,7005.8480(Note) Revisions to recent business forecast: None

Ordinary income(% of change from previous year)
Net income
Net income
per share%

Million yen%

Million yen

%

103.2

510

98.9

390

25.8

- 1 -

Yen

44.99

Consolidated financial result

SIOS Corporation

4. Others(1) Reclassification of significant subsidiaries during the period (Reclassification due to change in scope of consolidation): None
(2) Application of special accounting methods for the preparation of the consolidated quarterly financial statements: None
(3) Change in accounting policies, accounting estimates and restatement(i) Change in accounting policies associated with revision of accounting standards: None(ii) Change arising from other factors: None(iii) Change in accounting estimates:None(iv) Restatement:None(4) Number of outstanding shares (common shares)(i)

Number of outstanding shares(including treasury stock)(ii) Number of treasury stock(iii) Average number of outstanding shares(9-month period)

Third quarter of
FY2021
Third quarter of
FY2021
Third quarter of
FY20218,874,400 shares

FY20208,874,400 shares

205,838 shares

FY2020205,838 shares

8,668,562 shares

Third quarter of
FY20208,668,607 shares

Explanation about proper use of forecasts of consolidated financial results and other special notes
1.

Information Regarding the Audit Review Procedure: This report is outside the scope of the procedures for quarterly review offinancial statements as required under the financial instruments and Exchange Act of Japan. The aforementioned procedures havenot been completed as of the time of disclosure of this document.

2.

Net income per share was calculated by the number of outstanding shares (excluding treasury stocks) at the end of fiscal year.

3.

Forecasts announced by the company referred to above were prepared based on management’s assumption with information
available at this time and therefore involve known and unknown risks and uncertainties. Please note such risks and uncertainties
may cause the actual results to be materially different from the forecasts.

4.

This information to above is an UNOFFICIAL English-language translation of the original Japanese-language version. The format
and contents of this document are defined by the requirements of the Tokyo Stock Exchange’s 2nd Section.
To the extent that there are discrepancies between this translation and the original version, the original version shall be definitive.

- 2 -Consolidated financial result

SIOS Corporation○Table of Contents of the Attached Document

1. Qualitative Information on Quarterly Results ................................................................................. 4(1) Results of Operations............................................................................................................................ 4(2) Financial Position ................................................................................................................................. 5(3) Forward-looking Statements Including Consolidated Business Forecasts .................................................. 5
2. Quarterly Consolidated Financial Statements ........................................................................................... 6(1) Quarterly Consolidated Balance Sheet ................................................................................................... 6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income ......................................................................................................................................................... 8
Quarterly Consolidated Statements of Income ........................................................................................ 8
Quarterly Consolidated Statements of Comprehensive Income ................................................................ 9(3) Notes to Quarterly Consolidated Financial Statements........................................................................... 10(Notes to Going Concern Assumption) ................................................................................................ 10(Notes on significant changes in the amount of shareholders' equity) ..................................................... 10(Segment Information) ....................................................................................................................... 11(Additional Information)..................................................................................................................... 13(Significant subsequent events) ........................................................................................................... 13- 3 -Consolidated financial result

SIOS Corporation

1. Qualitative Information on Quarterly Results(1) Results of Operations
During the nine months ended September 30, 2021, while the spread of COVID-19 began to show signs of slowing down, the global
economy continued to face lingering uncertainty.
In the IT solutions arena in which the SIOS Group operates, however, companies continued to invest at an accelerated pace in
implementing digital transformation (DX)1 solutions, including switching to teleworking and transitioning to cloud environments. In
this favorable business environment, the Group pursued every growth opportunity by offering value-added products and services tocorporate clients to assist them in moving forward with DX and by stepping up cross-selling efforts, following the realignment of Group
companies.
The Group achieved consolidated business results by segment for the period under review as follows:(i) Open System Infrastructure Business Segment
As corporate clients continued to invest aggressively in implementing DX amid the COVID-19 crisis, the Group enjoyed strong salesof Red Hat Enterprise Linux2 and other software products sourced from Red Hat, Inc.3 The Group also achieved an increase in sales of
its core LifeKeeper4. As a result, net sales in this segment amounted to 7,232 million yen, up 18.8% from the same period the previous
year, with a segment income of 271 million yen, up 543.2% year on year.
(ii) Application Business Segment
Revenues from the provision of support for system development and implementation to financial institutions declined. In addition, as
the web service business for broadcasters as well as the social and public outsourcing service business had been sold to outside theGroup in the previous fiscal year, revenues from those two businesses were no longer counted toward segment sales for the period underreview. Revenues from software applications for MFPs5 grew year on year, helped by the fact that the revenues from subscriptions6 forthese applications that corporate clients had signed on for during the previous fiscal year began to be recognized during the period underreview. The Gluegent series7 also achieved a year-on-year increase in sales. Both revenues from the provision of support for systemdevelopment and implementation and sales of the management support system to financial institutions showed a year-on-year increase.
As a result, net sales in this segment increased 0.8% year on year to 4,474 million yen.
The segment income was 7 million yen, compared with a loss of 48 million yen the year before, thanks primarily to the strong sales of
products developed in-house, such as software applications for MFPs and Gluegent series products mentioned earlier.
The Group's combined net sales of these two segments jumped 11.2% year on year to 11,707 million yen, which marked therecord-high nine-month sales for the Group. The Company posted a consolidated operating profit of 279 million yen for the period
under review, compared with a loss of 6 million yen a year earlier. The consolidated ordinary profit was 312 million yen, compared witha loss of 2 million yen the year before, and the consolidated profit attributable to owners of parent was up 99.6% year on year to 224
million yen.
The Group’s key management metrics EBITDA (the sum of operating profit, depreciation, and amortization of goodwill) and ROIC
(ratio obtained by dividing operating profit after tax by the sum of shareholders’ equity and interest-bearing debts) are as follows:
EBITDA: 338 million yen, up 437.8% year on year
ROIC (annualized): 10.9%, compared with -0.3% for the same period the previous year
1

Digital transformation(DX)A process in which a company uses data and digital technology to transform its products, services, andbusiness models to more effectively respond to constantly changing business environments and deliver
greater value to customers and society as well as to transform its business processes and organizational
structure and culture to gain greater competitive advantage.

2

Red Hat Enterprise LinuxLinux OS developed by the open solution provider Red Hat, Inc.

3

Red Hat, Inc. Related Items
Linux OS product developed by Red Hat, Inc., a provider of open source solutions.

4

LifeKeeper
A failover software product that automatically switches a failed primary server to a backup server.

- 4 -Consolidated financial result
5

SIOS Corporation

Software application for multifunction printers
A multifunction printer (MFP) is a piece of office equipment that incorporates print, scan, copy, and fax capabilities into one
unit. SIOS develops, markets, and updates Quick Scan and Speedoc, document management software applications runningon an MFP.

6

Subscription business model
A business model that charges customers a recurring monthly or annual fee to access a software product or service.

7

Gluegent seriesService products designed to assist corporate clients in achieving greater operational efficiency using cloud solutions. The
series includes the Gluegent Gate cloud-based management of user IDs, the Gluegent Flow cloud-based workflow system,and the Gluegent Apps Group Scheduler, which incorporated a function to manage schedules of team members into Google
Calendar.

(2) Financial Position(i) Assets
Current assets amounted to 5,593 million yen as of September 30, 2021, down 7.7% from the end of the previous fiscal year,
reflecting primarily a decrease of 483 million yen in merchandise.
Non-current assets amounted to 805 million yen, up 1.7%, reflecting primarily an increase of 53 million yen in investment
securities.
As a result, total assets amounted to 6,398 million yen, down 6.6% from the previous fiscal year-end.

(ii) Liabilities
Current liabilities amounted to 4,167 million yen, down 12.3% from the previous fiscal year-end, reflecting primarily a decreaseof 720 million yen in accounts payable trade.
Non-current liabilities amounted to 495 million yen, down 10.3%, reflecting primarily a decrease of 92 million yen in long-termborrowings.
As a result, total liabilities amounted to 4,662 million yen, down 12.1% from the previous fiscal year-end.

(iii) Net assets
Total net assets amounted to 1,736 million yen, up 12.2% from the previous fiscal year-end, reflecting primarily the posting of a
profit of 224 million yen attributable to owners of parent for the period under review.

(3) Forward-looking Statements Including Consolidated Business Forecasts
The consolidated business forecasts for the fiscal year ending December 31, 2021, remains unchanged from those announced on
July 29, 2021.
While consolidated net sales as well as operating and other profits were on target for the period under review, we will announce
promptly any update on consolidated business forecasts for the fiscal year ending December 31, 2021, if any material changes
should arise.

- 5 -Consolidated financial result

SIOS Corporation

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Unit: thousand yen)

FY 2020(as of December 31, 2020)

FY 2021 Q3(as of September 30,
2021)

2,858,289
2,311,150
491,228
26,741
245,565
127,097-200
6,059,872

3,209,009
1,887,144
8,012
58,157
241,324
190,228-200
5,593,678

76,52755,086
131,61465,30368,471
133,774

110,467
1,781
112,249

91,463
1,781
93,245

233,775
47,093
193,996
77,319-4,221
547,963
791,826
6,851,698

287,618
52,575
182,51459,778-4,221
578,265
805,285
6,398,964

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
MerchandiseWork in progress
Advance payment
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings (net)Other (net)Total tangible fixed assets
Intangible fixed assets
Software
Other
Total intangible fixed assets
Investment and other assets
Investment securities
Net defined retirement assets
Guarantee deposits
Other
Allowance for doubtful accounts
Total investment and other assets
Total fixed assets
Total assets- 6 -Consolidated financial result

SIOS Corporation(In thousands of yen)
December 31, 2020
Liabilities
Current liabilities
Accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Income taxes payable
Advances received
Provision for bonuses
Provision for loss on order received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Net defined benefit liability
Lease obligations
Long-term deposits received
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Subscription rights to shares
Total net assets
Total liabilities and net assets- 7 -September 30, 2021

1,845,041
50,000123,120
7,099
57,6732,070,735
35,328604
561,448
4,751,052

1,124,694－
123,120
6,173
7,031
2,461,626－－
444,399
4,167,046

290,500
241,315
8,908
11,632552,357
5,303,409

198,160
265,880
19,815
11,632495,489
4,662,536

1,481,520
349,766-87,254
1,744,031

1,481,520
487,424-87,254
1,881,690-6,848-3,480-236,209-243,057
47,315
1,548,289
6,851,698-197,437-200,917
55,655
1,736,428
6,398,964

Consolidated financial result

SIOS Corporation(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income
Nine months ended September 30

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Foreign exchange gains
Gain on valuation of derivatives
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on investments in partnership
Share of loss of entities accounted for using
equity method
Loss on valuation of derivatives
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on transfer from business divestitures
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of golf club membership
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
ProfitProfit attributable to owners of parent

Nine months ended
September 30, 2020
10,529,292
7,384,914
3,144,378
3,150,827-6,449(In thousands of yen)
Nine months ended
September 30, 2021
11,707,510
8,079,864
3,627,646
3,348,367
279,278

5,082
19,770－3,412－
42,370－28,956

8,339
33,192

7,231
81,970

2,369
1,269

1,689
－

13,797－

11,936－
293
29,667-2,924－46,451
255
48,396
312,853

192,881－
192,881

－
74
74

615
268
1,133
2,016
187,940
75,529－75,529112,410
112,410

2,856
－
－
2,856
310,071
56,28929,43885,727224,343
224,343- 8 -Consolidated financial result

SIOS Corporation

Quarterly Consolidated Statements of Comprehensive Income
Nine months ended September 30

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Quarterly comprehensive income(Comprehensive income attributable to)
Quarterly comprehensive income attributableto owners of the parent

Nine months ended
September 30, 2020
(From January 1, 2020
through September 30,
2020)
112,410(Unit: thousand yen)
Nine months ended
September 30, 2021
(From January 1, 2021
through September 30,
2021)
224,343-2,393

3,367-16,516

39,187328-415-18,581
93,82842,139266,483

93,828266,483- 9 -Consolidated financial result

SIOS Corporation(3) Notes to Quarterly Consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable(Notes on significant changes in the amount of shareholders' equity)
Not applicable- 10 -

Consolidated financial result

SIOS Corporation(Segment Information)【Segment Information】
I. For the nine months ended September 30, 2020 (From January 1, 2020 through September 30, 2020)
1. Information on the amount of sales and income/loss by reportable segment(Unit: thousand yen)
Reportable segment
Adjustments

Amount recordedin quarterly
consolidated
statements ofincome(Note)

Open systeminfrastructurebusiness

Application
business

6,089,421

4,439,691

10,529,112

180

10,529,292

836

1,971

2,807

-2,807－

6,090,257

4,441,662

10,531,920-2,627

10,529,292

42,155-48,784-6,629180-6,449Total

Net sales
Sales to external customers
Inter-segment sales and transfers
Total
Segment profit (loss)

Note: The total amount of segment income (loss) is equal to operating profit (loss) presented in the quarterly consolidated
statements of income.
(Supplementary Information)
Information by region
In addition to the disclosure required by “Accounting Standard for Quarterly Financial Statements,” information (Sales) by region isdisclosed in accordance with “Accounting Standard for the Disclosure of Segment Information” for the purpose of providing users offinancial statement with valuable information.
Net sales
Nine months ended September 30, 2020
(From January 1, 2020 through September 30, 2020)(Unit: thousand yen)Japan
10,069,683

Americas308,242Europe102,505

Other regions
48,861

Note: Sales are classified by country or region in which customers are located.
2. Information on impairment loss of fixed assets or goodwill by reportable segment
Not applicable- 11 -

Total
10,529,292

Consolidated financial result

SIOS Corporation

II. For the nine months ended September 30, 2021 (From January 1, 2021 through September 30, 2021)
1. Information on the amount of sales and income/loss by reportable segment(Unit: thousandyen)

Adjustments

Amount recordedin quarterly
consolidated
statements ofincome(Note)

11,707,060

450

11,707,510

15,45816,379-16,379－

7,233,496

4,489,943

11,723,439-15,929

11,707,510

271,157

7,671

278,828450

279,278

Reportable segment
Open systeminfrastructurebusiness

Application
business

7,232,576

4,474,484

920

Total

Net sales
Sales to external customers
Inter-segment sales and transfers
Total
Segment profit

Note: The total amount of segment income is equal to operating profit presented in the quarterly consolidated statements ofincome.
(Supplementary Information)
Information by region
In addition to the disclosure required by “Accounting Standard for Quarterly Financial Statements,” information (Sales) by region isdisclosed in accordance with “Accounting Standard for the Disclosure of Segment Information” for the purpose of providing users offinancial statement with valuable information.
For the nine months ended September 30, 2021 (From January 1, 2021 through September 30, 2021)(Unit: thousand yen)Japan
11,231,753

Americas308,167

Europe113,038

Other regions
54,550Note: Sales are classified by country or region in which customers are located.
2. Information on impairment loss of fixed assets or goodwill by reportable segment
Not applicable- 12 -

Total
11,707,510

Consolidated financial result

SIOS Corporation(Additional Information)
There is no significant change to the assumptions we made earlier about the effect that the COVID-19 crisis might have on theGroup's business performance going forward, which were provided in the "Additional Information" section of the Company's
securities filings for the fiscal year ended December 31, 2020.

(Significant subsequent events)
Not applicable- 13 -