Consolidated Financial Result(For the 3-month period ended March 31, 2024)
May 8, 2024
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: May 14, 2024
(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, 2024 through March 31, 2024)(1) Consolidated business results
Net sales(% of change from previous first quarter)

Operating income

Million yen%%

Million yen

18
24

-25.3
-

57
57

3-month period(2024/3)
6,405
51.8
3-month period(2023/3)
4,220
12.0
(Note)Comprehensive income
As of Mar.31, 2024: 50 million yen/ 272.4%

Net income%

Million yen

-0.7
-

%

38
12

200.6
-

As of Mar. 31, 2023: 13 million yen/ -57.6%

Net income per share- Basic

Net income per share- Diluted

Yen

Yen

3-month period(2024/3)
3-month period(2023/3)

Ordinary income

Million yen

4.46
1.48

-

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen

%

1,203
1,187

12.0
16.4

3-month period(2023/4)
9,243
FY2023
6,706(Reference) Equity
As of Mar. 31, 2024: 1,106 million yen

As of Dec. 31, 2023: 1,099 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

FY2023-

FY2024-FY2024 (expected)

0.00

-

5.00

5.00

0.00

-

10.00

10.00

(Note) Revisions to recent dividend forecast: None

3. Forecast of consolidated results for FY2024 (January 1, 2024 through December 31, 2024)
Net sales
Million yen

Operating income%

Million yen

FY2024
16,6004.5(Note) Revisions to recent business forecast: None250

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

Million yen%

Million yen

%

-

330

-

220

-

-1-

Yen

25.38

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(3-month period)First quarter of
FY2024First quarter of
FY2024First quarter of
FY2024

8,874,400 shares

FY20238,874,400 shares

205,838 shares

FY2023205,838 shares

8,668,562 sharesFirst quarter of
FY20238,668,562 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 have notbeen 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 Standard.
To the extent that there are discrepancies between this translation and the original version, the original version shall be definitive.

-2-

Table of Contents of the Attached Document

1. Qualitative Information on Consolidated Results ............................................................................................. 4(1) Results of Operations ................................................................................................................. 4(2) Financial Position ....................................................................................................................... 5(3) Forward-looking Statements Including Consolidated Business Forecasts ............................ 5
2. Consolidated Financial Statements ................................................................................................................... 6(1) Consolidated Balance Sheet ....................................................................................................... 6(2) Consolidated Statements of Income and Comprehensive Income .......................................... 8(3) Notes on Consolidated Financial Statements......................................................................... 10(Notes on Going Concern Assumption) ..................................................................................... 10(Notes on significant changes in the amount of shareholders’ equity) ................................... 10(Segment Information) ............................................................................................................... 11(Significant Subsequent Events) ............................................................................................... 12-3-

1. Qualitative Information on Consolidated Results(1) Results of Operations
Overview of consolidated business performance for the three months ended March 31, 2024 (Q1 2024)
During the three months ended March 31, 2024, while the Japanese economy showed signs of picking up, as indicated by the factthat the Nikkei average stock price hit an all-time high in March, the global economy continued to face lingering uncertainty, due tosoaring materials prices amid rising geopolitical risks, and volatile foreign-exchange markets caused by a global monetary-tightening
trend.
In this business environment, the SIOS Group ("the Group") continued to restructure its business operations, expanded its SaaS¹
and subscription²-based businesses, and stepped up its efforts for new business development in order to increase its enterprise value.
The Group achieved consolidated business results by segment for the period under review as follows:(i) Open System Infrastructure Business Segment
While sales of LifeKeeper³, which is one of our core products developed in-house, increased from the same period of the previous
year, its profit decreased as the weakening yen inflated yen-denominated expenses at our U.S. subsidiary. Sales of Red Hat
Enterprise Linux⁴ and other software products sourced from Red Hat, Inc.,⁵ jumped substantially to fulfill major project orders, but
their combined profit was down as those projects were barely profitable and the contract with Red Hat, Inc., was renewed with terms
unfavorable to us. As a result, net sales in this segment increased 81.2% year on year to 4,822 million yen, and the segment income
fell 89.7% to 7 million yen.
(ii) Application Business Segment
Sales of the management support system to financial institutions were slow. Revenue from the provision of support for systemdevelopment and implementation to financial institutions remained steady but was below the year-earlier level. Revenue in the API⁶
Solutions Business achieved solid growth, as our engineering strengths in the field of API economy met surging business needs.
Revenue from the sales of the Gluegent series⁷ and software applications for MFPs⁸ was up year on year. As a result, net sales in thissegment increased 1.7% to 1,582 million yen.
As a result of the increased revenue mentioned earlier and the reassessment and reallocation of research and development
expenses, the segment income amounted to 10 million yen, compared with a loss of 46 million yen the year before.
The Group's consolidated net sales for the period under review jumped 51.8% year on year to 6,405 million yen, primarily due to a
substantial sales increase in software products sourced from Red Hat, Inc., reported earlier. The Group posted a consolidated
operating profit of 18 million yen, down 25.3%, and an ordinary profit of 57 million yen, down 0.7%, which reflected the share of
profit of entities accounted for using the equity method. The profit attributable to owners of parent amounted to 38 million yen, up
200.6%, which reflected a gain on sale of investment securities.
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) for theperiod under review were as follows:
EBITDA: 31 million yen, down 22.9% year on year
ROIC (annualized): 3.6%, compared with 4.6% the year before
1.

SaaS
Software as a Service. A software licensing and distribution model that allows users to connect to and use cloud-based
software applications over the internet.

2.

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

3.

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

-4-

4.

Red Hat Enterprise LinuxLinux OS developed by Red Hat, Inc., a provider of open-source solutions.

5.

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

6.

API
A mechanism for software and applications to exchange information with each other.

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.

8.

Software applications for multifunction printers
A multifunction printer (MFP) is a piece of office equipment that incorporates print, scan, copy, and fax capabilities into one
unit. The Group develops, markets, and updates document management software applications, such as Quick Scan andSpeedoc, that run on an MFP.

(2) Financial Positioni.

AssetsCurrent assets amounted to 8,276 million yen as of March 31, 2024, up 44.2% from the end of the previous fiscal year, reflecting
primarily an increase of 2,409 million yen in notes and accounts receivable trade, as well as contract assets.
Non-current assets amounted to 967 million yen, up 0.2%, reflecting primarily an increase of 17 million yen in software in
progress.
As a result, total assets increased 37.8% to 9,243 million yen.

ii.

Liabilities
Current liabilities amounted to 7,613 million yen, up 48.4%, reflecting primarily an increase of 2,337 million yen in accounts
payable trade.
Non-current liabilities amounted to 427 million yen, up 10.0%, reflecting primarily an increase of 36 million yen in leaseliabilities.
As a result, total liabilities increased 45.7% to 8,040 million yen.

iii.

Net assets

Total net assets amounted to 1,203 million yen, up 1.3% from the previous fiscal year-end, reflecting the postingof a quarterly profit of 38 million yen attributable to owners of parent.
(3) Forward-looking Statements Including Consolidated Business Forecasts
The Group's consolidated business forecasts for the fiscal year ending December 31, 2024, remain unchanged from as stated in theConsolidated Financial Results for the Fiscal Year Ended December 31, 2023, announced on February 8, 2024. The Company will
announce promptly an update on consolidated business forecasts if any material change should arise.

-5-

2. Consolidated Financial Statements(1) Consolidated Balance Sheet(In thousands of yen)
December 31, 2023

March 31, 2024

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade, and contract
assetsWork in process

2,604,002

2,710,786

2,433,031

4,842,374

2,267

1,813

Advance payments to suppliers
Other

532,496
169,429

477,033
244,319

Allowance for doubtful accounts

-200

-

5,741,026

8,276,326

Total current assets
Non-current assets
Property, plant and equipment
Buildings, net

42,14941,255

Other, net

90,672

87,718

Total property, plant and equipment

132,822

128,973

Intangible assets
Software36,78030,715

Software in progress
Other34,332
1,441

51,847
1,441

Total intangible assets

72,55484,004

Investments and other assets
Investment securities

407,162

393,407

Retirement benefit asset
Guarantee deposits

57,004
119,273

61,457118,002

Other

176,736

181,518

Total investments and other assets

760,177

754,385

Total non-current assets
Total assets-6-965,554

967,364

6,706,581

9,243,691

(In thousands of yen)
December 31, 2023

March 31, 2024

Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Lease liabilities
Income taxes payable
Contract liabilities
Other

1,235,031

3,572,242

66,00059,03966,00020,17330,5093,212,077

40,9663,350,066

527,833

563,793

Total current liabilities

5,130,492

7,613,242

Non-current liabilities
Long-term borrowings

49,50033,000Retirement benefit liability
Lease liabilities

320,317
6,676

327,297
43,371Long-term deposits received
Provision for share awards for directors (and other officers)

11,632-

11,632
11,400

-

389

Other
Total non-current liabilities

388,127

427,090

5,518,619

8,040,332

Share capital
Retained earnings

1,481,520-236,541

1,481,520-241,143

Treasury shares-87,254-87,254

1,157,723

1,153,122

9,796
187

-1,408735

Foreign currency translation adjustment-68,280-45,958

Total accumulated other comprehensive income-58,296-46,631

88,534

96,8681,187,961

1,203,358

6,706,581

9,243,691

Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Share acquisition rights
Total net assets
Total liabilities and net assets-7-

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income
For three months ended March 31(In thousands of yen)Three months ended March 31,
2023

Three months ended March 31,
2024

Net sales

4,220,168

6,405,925

Cost of sales

2,831,388

5,076,242

Gross profit

1,388,779

1,329,682

Selling, general and administrative expenses

1,364,182

1,311,307

24,596

18,375Interest income
Foreign exchange gains

2,158
10,912

5,624

Gain on valuation of derivatives
Share of profit of entities accounted for using equity
method
Other

9,457

－
42,392

14,29624,228

2,017

1,700

Total non-operating income

38,84273,945273

185
34,098Operating profit
Non-operating income

Non-operating expenses
Interest expenses
Foreign exchange losses

－
5,601
－

－
878

5,874

35,162

57,565

57,157

Gain on sale of investment securities－

23,623

Total extraordinary income－

23,623

10,435－123－

Loss on investments in investment partnerships
Other
Total non-operating expenses
Ordinary profit
Extraordinary income

Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Loss on retirement of property, plant and equipment

7－

10,566－

Profit before income taxes

46,99880,781

Income taxes-current
Income taxes-deferred

34,131－

40,7101,385

Total income taxes

34,13142,095

Profit12,867

38,685

Profit attributable to owners of parent

12,867

38,685

Other
Total extraordinary losses-8-Consolidated Statements of Comprehensive Income
For three months ended March 31(In thousands of yen)Three months ended March 31,
2023

Three months ended March 31,
2024

12,867

38,685

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners ofparent-9-

109-11,205-1,6582,338

547
21,445

-138

876

651

11,664

13,51950,35013,51950,350(3) Notes on Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable(Notes on significant changes in the amount of shareholders’ equity)
Not applicable-10-(Segment Information)
I Three months ended March 31, 2023
1. Information regarding the amount of net sales and profit by reportable segment(In thousands of yen)
Reportable segment
Open systeminfrastructurebusiness

Adjustments

Application
business

Total

Amount recordedin quarterly
consolidated
statements ofincome*Net sales
Sales to external customers

2,661,742

1,555,276

4,217,018

3,150

4,220,168

－

1,551

1,551

-1,551－

Total

2,661,742

1,556,827

4,218,569

1,598

4,220,168

Segment profit(loss)

68,231-46,784

21,446

3,150

24,596

Intersegment
transfers

sales

and

Note: The total amount of segment income and losses is the same as the amount of operating profit presented on the Consolidated
Statements of Income for the period under review.
Supplementary Information
Information by region
In addition to the disclosure required by the “Accounting Standard for Quarterly Financial Statements,” information (net sales)by region is disclosed in accordance with the “Accounting Standard for the Disclosure of Segment Information” for the purpose ofproviding users of financial statements with valuable information.
Net sales
For three months ended March 31, 2023
(In thousands of yen)Japan
4,040,793

Americas109,717

EuropeOther regions

45,27824,377

Total
4,220,168

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

-11-

II

Three months ended March 31, 2024

1. Information regarding the amount of net sales and profit by reportable segment(In thousands of yen)
Reportable segment
Open systeminfrastructurebusiness

Adjustments

Application
business

Total

Amount recordedin quarterly
consolidated
statements ofincome*Net sales
Sales to external customers
Intersegment
transfers

sales

4,822,526

1,582,248

6,404,775

1,150

6,405,925

－

1,348

1,348

-1,348－4,822,526

1,583,596

6,406,123-198

6,405,925

7,042

10,183

17,225

1,150

18,375

and

Total
Segment profit

Note: The total amount of segment income is equal to the operating profit presented in the Consolidated Statements of Income for theperiod under review.
Supplementary Information
Information by region
In addition to the disclosure required by the “Accounting Standard for Quarterly Financial Statements,” information (net sales)by region is disclosed in accordance with the “Accounting Standard for the Disclosure of Segment Information” for the purpose ofproviding users of financial statements with valuable information.
Net sales
For three months ended March 31, 2024
(In thousands of yen)Japan
6,225,649

Americas111,501

EuropeOther regions

44,49624,276Total
6,405,925

Note: Sales are classified by country or region in which customers are located.
2. Information regarding loss on impairment of non-current assets or goodwill by reportable segment
Not applicable(Significant Subsequent Events)
Not applicable-12-