Consolidated Financial Result(For the 3-month period ended March 31, 2021)
April 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, Director and Senior Vice President
Phone: +81-3-6401-5111
Scheduled date for filing of quarterly financial report: May 13, 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 March 31, 2021)(1) Consolidated business results
Net sales
Million yen(% of change from previous first quarter)

Operating income%Ordinary income

Million yen%

Million yen

223
141

57.5
54.2

237
136

3-month period(2021/3)
4,398
10.5
3-month period(2020/3)
3,979
12.8
(Note)Comprehensive income
As of Mar.31, 2021: 196 million yen/ 192.9%

Million yen

74.4
27.5%

15973

116.8
112.4

As of Mar. 31, 2020: 66 million yen/ 99.9%

Net income per share- Basic

Net income per share- Diluted

Yen

Yen

18.41
8.49

-

3-month period(2021/3)
3-month period(2020/3)

Net income%(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen

%

1,662
1,548

24.7
21.9

3-month period(2021/3)
6,529
FY20206,851(Reference) Equity
As of Mar. 31, 2021: 1,610 million yen

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

2. Cash dividends
Record Date

End of Q1

InterimDividend per share
End of Q3

Year-end

AnnualYen

YenYenYen

Yen

FY2020-FY2021-FY2021 (expected)

0.00

-

10.00

10.00

0.00

-

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
15,5004.4(Note) Revisions to recent business forecast: None320

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

Million yen%

Million yen

%

35.5

350

36.5

250

-19.4-1-Yen

28.84

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
FY2021First quarter of
FY2021First quarter of
FY20218,874,400 shares

FY20208,874,400 shares

205,838 shares

FY2020205,838 shares

8,668,562 sharesFirst quarter of
FY20208,668,632 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 2nd Section.
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 ............................ 52. 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(Additional Information) ............................................................................................................ 13(Significant Subsequent Events) ............................................................................................... 13-3-1. Qualitative Information on Consolidated Results(1) Results of Operations
Overview of consolidated business performance for the three months ended March 31, 2021 (Q1 2021)
During the three months ended March 31, 2021, the global economy continued to struggle amid the increasingly serious COVID19 pandemic. The uncertainty over the economic outlook remained high also in Japan, as it was difficult to predict when the publichealth crisis brought about by the coronavirus would subside.
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 toassist corporate clients in moving forward with DX and by stepping up cross-selling efforts, following the realignment of Group
companies.
The Company’s consolidated business results by segment for the three-month period under review are 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

sales of Red Hat Enterprise Linux2 and other software products sourced from Red Hat, Inc.3 The Group also achieved an increase insales of its core LifeKeeper4 in Japan. As a result, net sales in this segment amounted to 2,863 million yen, up 22.2% from the same
period the previous year, with a segment income of 159 million yen, up 186.6% year on year.
ii. Application Business Segment
Revenues from software applications for MFPs5 jumped year on year, supported by their increased sales in units and helped by thefact that the revenue from subscription-based contracts6 for these applications signed with corporate clients during the previous
fiscal year began to be recognized during the period under review. The Gluegent series7 also achieved a year-on-year increase insales. In contrast, revenues from the provision of support for system development and implementation were weak, for both financial
and educational institutions. In addition, as the web service business for broadcasters as well as the social and public outsourcing
service business had been sold to outside the Group in the previous fiscal year, revenues from those two businesses were no longer
counted toward segment sales for the period under review. As a result, net sales in this segment were down 6.2% year on year to1,535 million yen, with a segment income of 64 million yen, down 25.6%.
With these two business segments combined, the Company achieved record-high consolidated quarterly net sales of 4,398 million
yen for the period under review, up 10.5% year on year. The Company's consolidated quarterly operating profit jumped 57.5% to
223 million yen. The Company posted a consolidated quarterly ordinary profit of 237 million yen, up 74.4%, and a consolidated
quarterly profit of 159 million yen attributable to owners of parent, up 116.8%.
The Group’s key management metrics EBITDA (the sum of operating profit, depreciation, and amortization of goodwill) andROIC (ratio obtained by dividing operating profit after tax by the sum of shareholders’ equity and interest-bearing debts) are as
follows:
EBITDA: 243 million yen, up 47.5% year on year
ROIC (annualized): 26.2%, compared with 17.7% for the same period the previous fiscal year
1.

Digital transformation
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 Red Hat, Inc., a provider of open-source solutions.

3.

Red Hat, Inc. Related Items-4-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.

5.

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

6.

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

7.

Gluegent seriesServices such as "Gluegent Gate" which manages ID in the cloud, "Gluegent Apps group scheduler" which added teamcalendar schedule management function etc. to Google Calendar, etc. Supporting business efficiency improvement. using
enterprise cloud.

(2) Financial Positioni.

AssetsCurrent assets amounted to 5,732 million yen as of March 31, 2021, down 5.4% from the end of the previous fiscal year, reflecting
a decrease of 486 million yen in merchandise.
Non-current assets amounted to 797 million yen, up 0.7% from the previous fiscal year-end, reflecting an increase of 17 million
yen in investment securities.
As a result, total assets amounted to 6,529 million yen, down 4.7% from the previous fiscal year-end.

ii.

Liabilities
Current liabilities amounted to 4,340 million yen, down 8.6% from the previous fiscal year-end, reflecting a decrease of 585
million yen in accounts payable trade.
Non-current liabilities amounted to 526 million yen, down 4.6% from the previous fiscal year-end, reflecting a decrease of 30
million yen in long-term loans payable.
As a result, total liabilities amounted to 4,867 million yen, down 8.2% from the previous fiscal year-end.

iii.

Net assets

Total net assets amounted to 1,662 million yen, up 7.4% from the previous fiscal year-end, reflecting the postingof a quarterly profit of 159 million yen attributable to owners of parent.
(3) Forward-looking Statements Including Consolidated Business Forecasts
The consolidated business forecasts for the fiscal year ending December 31, 2021, remain unchanged from as stated inConsolidated Financial Results for the Fiscal Year Ended December 31, 2020, announced on February 3, 2021.
While 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 change should arise.

-5-2. Consolidated Financial Statements(1) Consolidated Balance Sheet(In thousands of yen)
December 31, 2020

March 31, 2021

AssetsCurrent assets
Cash and deposits

2,131,096

2,648,683

2,149,810

2,650,364
4,353

Work in process
Advance payments- trade

31,183
176,653

18,147232,111

Other
Allowance for doubtful accounts

194,556-200

178,549-200

4,683,101

5,732,009

106,585

76,260Notes and accounts receivable-trade
Merchandise

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

68,58452,499Total property, plant and equipment

175,170

128,760

SoftwareOther

108,162
1,882

103,870
1,781

Total intangible assets

242,573

105,651

Investments and other assets
Investment securities

137,680

251,527

Net defined benefit asset
Guarantee deposits

39,322
205,410

52,239190,185

Other
Allowance for doubtful accounts

57,503-5,07173,559-4,221

Total investments and other assets

434,845563,290

Intangible assets

Total non-current assets
Total assets-6-

852,589

797,7025,535,691

6,529,712

(In thousands of yen)
December 31, 2020

March 31, 2021

Liabilities
Current liabilities
Accounts payable-trade945,305

1,259,851

Short-term loans payable
Current portion of long-term loans payable

50,000128,971

123,120

Lease obligations
Income taxes payable

6,813
44,7876,733
81,098Advances received
Provision for bonuses

1,961,510
17,9952,350,037-671
404,488191
519,598

3,560,544

4,340,631

Long-term loans payable
Net defined benefit liability

382,840
236,660

259,720
247,898

Lease obligations
Long-term deposits received

9,874
11,632

7,518
11,632

Total non-current liabilities

641,761

526,769

4,202,306

4,867,401

Shareholders’ equity
Capital stock

1,481,520

1,481,520

Retained earnings
Treasury shares

113,212-87,198

422,654-87,254

1,507,534

1,816,919

Provision for loss on order received
Other
Total current liabilities
Non-current liabilities

Total liabilities
Net assets

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities-7,274-4,513Foreign currency translation adjustment-211,746-202,048

Total accumulated other comprehensive income-219,021-206,562

44,872

51,953

1,333,384

1,662,310

5,535,691

6,529,712

Subscription rights to shares
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 31,2020Three months ended March 31,2021

Net sales

3,979,744

4,398,750

Cost of sales

2,784,278

3,138,799

Gross profit

1,195,466

1,259,951

Selling, general and administrative expenses

1,053,612

1,036,531

141,853

223,419

2,939
5,611

1,098--

35,589Operating profit
Non-operating income
Interest income
Foreign exchange gains
Loss on valuation of derivatives
Share of profit of entities accounted for using equitymethod
Other-

16,216

1,089

5,862

Total non-operating income

9,640

58,766837-

630
43,523

1,269
646

-

12,371--232

Non-operating expenses
Interest expenses
Foreign exchange losses
Loss on investments in investment partnerships
Loss on valuation of derivatives
Share of profit of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit

15,12544,386

136,368

237,799-

1,172

Extraordinary losses
Loss on retirement of property, plant and equipment
Loss on valuation of golf club membership

268-Total extraordinary losses

268

1,172

Profit before income taxes

136,100

236,627

Income taxes-current
Income taxes-deferred

55,812
6,695

72,006
5,046

Total income taxes

62,50877,053

Profit73,592

159,573

Profit attributable to owners of parent

73,592

159,573-8-

Consolidated Statements of Comprehensive Income
For three months ended March 31(In thousands of yen)Three months ended March 31,
2020

Three months ended March 31,2021

Profit73,592

159,573

Other comprehensive income
Foreign currency translation adjustment-3,35934,307-3,312

2,334

11-147-6,66136,49566,931

196,068

66,931

196,068

Valuation difference on available-for-sale securities
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-

(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, 20201. 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

2,343,196

1,636,487

3,979,684

60

3,979,744

-

1,290

1,290

-1,290-2,343,196

1,637,778

3,980,975-1,2303,979,744

55,501

86,291

141,79360

141,853

andTotal
Segment profit

Note: The total amount of segment profit is equal to operating profit recorded in the quarterly consolidated statements of income.
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, 2020
(In thousands of yen)Japan
3,814,897

Americas116,817

EuropeOther regions

31,60816,421

Total
3,979,744

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, 2021

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

2,863,457

1,535,143

4,398,600

150

4,398,750

8296,881

7,710-7,710-2,864,286

1,542,024

4,406,310-7,5604,398,750

159,062

64,207223,269150

223,419

andTotal
Segment profit

Note: The total amount of segment profit is equal to operating profit recorded in the quarterly consolidated statements of income.
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, 2021
(In thousands of yen)Japan4,246,076

Americas84,609EuropeOther regions

51,01517,048

Total
4,398,750

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-12-

(Additional Information)
Not applicable(Significant Subsequent Events)
Not applicable-13-