Financial Results
for the 6 Months Ended
June 30,2020
August 03,2020
SIOS ,Corp.
（Stock Code: 3744 on the Second Section of Tokyo Stock Exchange）© SIOS Corporation All rights Reserved.

Summary of Business Results
for the 6 Months Ended
June 30 ,2020© SIOS Corporation All rights Reserved.

Consolidated Financial Results
for the 6 Months Ended June 30,2020(In millions of yen)

Results for the6 months ended
June 30,2019

Net Sales

6,914

Gross profit

2,124

Operating income

38

Ordinary income

70

Profit attributable toowners of parent-20

EBITDA82

ROIC(annualized)

2.4%

Results for the6 months ended
June30,2020

7,276
2,178
5457
19101
3.5%

Change%Change＋361＋5.2%＋54＋2.5%＋16＋42.0%-12-17.9%＋39ー＋18＋22.3%ーー*EBITDA: Operating profit + Depreciation + Amortization of goodwill*ROIC: Operating profit after tax / (Shareholders’ equity + Interest-bearing debts)© SIOS Corporation All rights Reserved.

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Consolidated Net Sales(In millions of yen)

Record-high net
sales achieved in
FY 2020(Up 5.2% YoY)

© SIOS Corporation All rights Reserved.

4

Consolidated Operating Profit, EBITDA, and R&D Spending(In millions of yen)

⚫ Operating profit for the firsthalf of FY 2020 increasedby ¥16 million from thesame period the previous
fiscal year.
⚫ EBITDA up ¥18 million YoY.
⚫ R&D spending remainedrobust.
© SIOS Corporation All rights Reserved.

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Consolidated Balance Sheets(In millions of yen)

Total liabilities
4,023
Current assets
4,479(including(including cash interest-bearing
and deposits ofdebts of2,266)
614)

Total liabilities
Current assets
4,250
4,652
(including(including cash interest-bearing
and deposits ofdebts of2,595)
548)

Total net assets
1,308

Total net assets
1,277

Investment andother assets 438

Total assets
5,332

Total liabilities
and net assets

5,332◼ Property, plant and equipment◼ Intangible assets 226

186

As of December 31, 2019⚫
⚫

Investment andother assets 459

Total assets
5,527

Total liabilities
and net assets

5,527◼ Property, plant and equipment 168◼ Intangible assets 247

As of June 30, 2020

Current assets: An increase of ¥329 million in cash and deposits
Current liabilities: An increase of ¥359 million in advances received© SIOS Corporation All rights Reserved.

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Analysis of Consolidated Cash Flows(In millions of yen)

△90
△114
2,136

Cash and cash
equivalents as ofDecember 31,2019△52,465

Effect of exchange
rate change oncash and cash
equivalents

Cash and cash
equivalents as ofJune 30, 2020

540

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities© SIOS Corporation All rights Reserved.

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Year-on-Year Changes in Cash Flows(Millions of yen)
Cash flows fromoperating activities
Amount of YoYchanges

Increase of ¥540

Breakdown Increases• ¥57 resulting from profit
before income taxes• ¥145 resulting from a decreasein notes and accounts
receivable trade• ¥367 resulting from anincrease in advances received• ¥91 resulting from an increasein accrued consumption taxes

Decreases • ¥83 resulting from a decreasein notes and accounts payable
trade

Cash flows frominvesting activities

Cash flows fromfinancing activities

Decrease of ¥90

Decrease of ¥114

• ¥44 resulting from purchaseof intangible assets• ¥25 resulting from purchaseof investment securities• ¥21 resulting from paymentsof loans receivable tosubsidiaries and associates• ¥67 resulting fromrepayments of long-termloans payable• ¥42 resulting from cash
dividends paid

© SIOS Corporation All rights Reserved.

8

Cash Flows and Investments(In millions of yen)

R&D projects andinvestments
funded by anincreasing level ofcash flows© SIOS Corporation All rights Reserved.

9

Open System Infrastructure BusinessNet sales

4,183 million yen, up 7.5％ YoY（In millions of yen）

⚫ Sales of business-continuity solutions
achieved a solid YoY increase, buoyed bystrong demand for our core LifeKeeper* inJapan.
⚫ Sales of software products sourced fromRed Hat, Inc.* as well as OSS*-related
products and support services maintained
momentum of growth.

© SIOS Corporation All rights Reserved.

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Open System Infrastructure Business
Segment income

Loss of 5 million yen, compared with onincome of 46 million yen the year before（In millions of yen）

Segment income declined YoY due toincreases in R&D expenses to upgrade
LifeKeeper as well as in expenses associatedwith establishing new businesses.

© SIOS Corporation All rights Reserved.

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Application BusinessNet sales

3,092 million yen, up 2.4％ YoY（In millions of yen）

⚫ Revenues from the provision of support forsystem development and implementationachieved steady growth, primarily to

educational institutions.
⚫ Sales of our core software applications for
MFPs* declined, affected by a shift to a
subscription* model among corporate users.

© SIOS Corporation All rights Reserved.

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Application Business
Segment income（In millions of yen）

59 million yen, compared with on loss of
7 million yen the year before⚫ Income from the sales of management support
systems to financial institutions as well as theprovision of support for system development andimplementation to educational institutions
increased YoY.
⚫ Income from the provision of support for systemdevelopment and implementation to financial
institutions increased YoY due in part to a higher
gross profit margin resulting primarily fromreduced subcontract expenses and in part to theabsence of unprofitable projects that had affected
negatively the profitability of this segment theprevious fiscal year.
© SIOS Corporation All rights Reserved.

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Major Achievementsin the First Six Months of FY 2020

© SIOS Corporation All rights Reserved.

Primary Objective and Management Metrics Established

Primary Management Objective
Under the mission of making the impossible possible for the people ofthe world, the SIOS Group works toward achieving its primary management
objective of pursuing innovative solutions to resolve issues affecting people
and to contribute to a better society.

Management Metrics
The Group uses EBITDA and ROIC as its key management metrics to continue togenerate positive cash flow. Positive cash flow enables the Group to invest in
the three driving forces for our growth—people, research and development,
and a corporate culture that fosters innovation—and to return profit to ourshareholders and stakeholders. Through these efforts, the Group works towardachieving its primary management objective.
© SIOS Corporation All rights Reserved.

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Merger of Three Consolidated Subsidiaries⚫

On July 6, 2020, we announced an absorption-type merger, under which Keyport
Solutions, Inc. and Gluegent, Inc. will be resolved and merged into SIOS
Technology, Inc.

⚫

Scheduled date of merger: October 1, 2020

Reason for merger

To consolidate human, intellectual property, and financial assets of these three key
subsidiaries in Japan to achieve greater operational efficiency and productivity in asocioeconomic landscape significantly affected by the COVID-19 crisis© SIOS Corporation All rights Reserved.

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Basis for Achieving the SIOS Group Mission
Make the businessSee page 18
foundation more solid
Raise the level ofCarry out
customer
M&A
satisfaction
Release new
products andservices

Maintain good
relationships
withEnhance existing
stakeholders
products andservices

Make the business See page 18
foundation more solid

Improve performanceon key management
metrics

Generate
positive cash
flows

Increase sales andgross profit
Optimizing SG&A expenses
Reduce interest-bearingdebts

See page 19
Invest to achieve the mission
Return profit to shareholders andother stakeholders

Invest in people, R&D, and acorporate culture that fosters
innovation

Return profit toshareholders and otherstakeholders
Achieve greater
EBITDA andROIC© SIOS Corporation All rights Reserved.

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Review of 1H FY 2020①
Release new
products andservices

Started offering in Japan licensed sales of andimplementation and operation support for
DataStax Enterprise, a distributed cloud
database developed by U.S.-based DataStax.

Enhance existingproducts andservices

Released Gluegent Flow Plus, a cloud-based
workflow solution.

Reduce interestbearing debts

Repaid ¥67 million of loans payable.

© SIOS Corporation All rights Reserved.

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Review of 1H FY 2020②
Invest in people, R&D,and a corporate
culture that fosters
innovation

Return profit toshareholders andother stakeholders

Offered ¥30,000 to every SIOS Group
employee with no strings attached toassist them in switching toteleworking amid the COVID-19crisis.

Plan to pay a cash dividend of ¥5.00
per share at fiscal year-end.

© SIOS Corporation All rights Reserved.

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Impact of the COVID-19 Crisis on
Our Business and Actions We Have Taken© SIOS Corporation All rights Reserved.

Impact of the COVID-19 Crisis on Our Business
Negative impact
Positive impact
Accelerated adoption ofdigital solutions in corporate
environments⚫ Declining motivation to makenew investments amongcorporations⚫ Suspension or postponementof large projects bycorporations

We will step up our efforts to assist
corporate clients in moving forward withdigital transformation*.
© SIOS Corporation All rights Reserved.

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Actions We Have Taken to Cope with the COVID-19 CrisisBusiness⚫ Bolstered sales of Easy Fax, our paperless fax solution.
⚫ Released the cloud-based workflow solution Gluegent Flow Plus, which enables
remote approval of a business document from a PC or smartphone, eliminating theneed to physically sign off on one.
⚫ Allocated additional software engineers to a newly contracted project in the container
platform business.

Employees
On July 1, 2020, we asked all SIOS Group employees working out of offices in Japan toswitch to teleworking and other flexible working arrangements to accommodate theirdiverse lifestyles and ensure the Group's business continuity.

© SIOS Corporation All rights Reserved.

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Business Forecasts for

Fiscal Year Ending December 31, 2020

© SIOS Corporation All rights Reserved.

Consolidated Business Forecast for Fiscal YearEnding December 31,
We intend to maintain our momentum of growth for 10 consecutive
fiscal years and achieve net sales of ¥14.3 billion in FY 2020.
（In millions of yen）

Net sales

Results for the
6 months ended
June30,2020

7,276

Operating income

54

Ordinary
income57

Profit attributable toowners of parent

19EBITDA

101

ROIC(annualized)

3.5%

Forecast for fiscalyear ending
December 31, 2020

Percentage ofachievement

14,300
80
100
40
180
2.8%50.9%© SIOS Corporation All rights Reserved.

68.0%
57.9%
49.5%

56.1%
ー24

Cash Dividends for FY 2020
23rd term

24th term

Fiscal year ended

Fiscal year ending
December 31, 2020

December 31, 2019

(Forecast)

Annual cash
dividend pershare

Fiscal year ending
December 31, 2020

¥5

¥5Plan to pay a cash dividend of ¥5 per share at fiscal year-end.

(Forecast)© SIOS Corporation All rights Reserved.

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Appendix© SIOS Corporation All rights Reserved.

About SIOS Corporation

SIOS is Innovative Open Solutions
Listed on the Second Section of the Tokyo Stock Exchange, SIOS Corporation is a holding company that manages

subsidiaries having a wealth of expertise and assets in open source software, including Linux, AI and cloudtechnologies, and Fintech.
Under the mission of making the impossible possible for the people of the world, the SIOS Group pursues innovative
solutions to resolve issues affecting people and to contribute to a better society.
Headquarters
CapitalEstablished

SIOS Building, 2-12-3 Minami Azabu Minato-ku, Tokyo,
Japan
1,481 million yen
May 23, 1997

No. of employees

440 on a consolidated basis (as of December 31, 2018)

Main consolidatedsubsidiaries

Japan:
SIOS Technology, Inc.
Gluegent, Inc.
Keyport Solutions, Inc.
Profit Cube Inc.

U.S.A.:
SIOS Technology Corp.

© SIOS Corporation All rights Reserved.

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GlossaryPage

Term

10

LifeKeeper

10Software products sourced fromRed Hat, Inc.

10

Description
A failover software product that automatically switches a failed primaryserver to a backup server.

Open-source software products developed by Red Hat, Inc., aprovider of open-source solutions.
Abbreviation for open source software, Software whose source code,
which is the fundamental component of the program, ismade available for free and can be used, modified, and redistributed.

OSS

12Software applications for
multifunction printers (MFPs)

12

Subscription business model

21

Digital transformation (DX)A multifunction printer (MFP) is a piece of office equipment thatincorporates print, scan, copy, and fax capabilities into one unit. The
Group develops, markets, and updates document management software
applications, such as Quick Scan and Speedoc, that run on an MFP.
A business model that charges customers a recurring monthly or annual
fee to access a software product or service.
A process in which a company uses data and digital technology totransform its products, services, and business models to more effectively
respond to constantly changing business environments and deliver greater
value to customers and society as well as to transform its businessprocesses and organizational structure and culture to gain greater
competitive advantage.

© SIOS Corporation All rights Reserved.

28

Cautionary Statement
Forward-looking statements about the Company’s business outlook contained in this document
reflect management’s assumptions and judgments made on the basis of available information,and may include risks and uncertainties. We caution that significant risks and uncertainties could
cause actual performance to differ materially from what is discussed in the forward-looking
statements. Significant risks and uncertainties that might affect our performance include, but are
not limited to, the economic environment and market conditions in which we operate.

For inquiries about this document
Call the IR Section of SIOS Corporation on 03-6401-5111(+81-3-6401-5111 from outside Japan)
or fill in and send an online inquiry form available at:https://mk.sios.com/SIOS_Inquiry_english.html© SIOS Corporation All rights Reserved.

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