Consolidated Financial Result(For the fiscal year ended December 31, 2020)
February 3, 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.
Phone: +81-3-6401-5111
Scheduled date of annual shareholders’ meeting:March 25, 2021
Scheduled date of financial report FSA filing:
March 26, 2021
Scheduled date of dividend payment:
March 26, 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, 2020 through December 31, 2020)(1) Consolidated business results
Net sales

Operating income

Million yen%

Million yen

Net income per share- Basic

Net income per share- Diluted

Yen

Million yen

Million yen

%

329.9
256
166.4
-81.1
96
-69.0
FY2019: -70 million yen/ -%

310
32

858.4
-85.7

Return on equity

Operating income
ratio

FY2019: -6 million yen

Net assets

Million yen

Net income
%

Yen

35.78
3.73
FY2020: 6 million yen(2) Consolidated financial position
Total assets
FY2020FY2019(Reference) Equity:

Ordinary income%

FY202014,841
8.4
236
FY201913,686
6.9
54(Note)Comprehensive income :FY2020: 279 million yen/ -%FY2020FY2019(Note) Equity in earnings:(% of change from previous year)

Ratio of ordinary
income to total assets

%

%

%

22.0
2.5

4.2
1.8

1.6
0.4

Equity ratio

Net assets per share

Million yen

%

6,851
1,548
5,332
1,308
As of Dec. 31, 2020: 1,500 million yen

Yen

21.9
23.7
As of Dec. 31, 2019: 1,264 million yen

173.15145.92(3) Consolidated cash flows
Cash flow fromoperating activities

Cash flow from investing
activities

Cash flow from financing
activities

Cash and cash equivalents- ending

Million yen

Million yen

Million yen

Million yen

649
363

151
-101

-182
-130

2,728
2,136

FY2020FY20192. Cash dividends
Record Date

FY2019FY2020
FY2021 (forecast)End of
Q1

End ofQ2

Dividend per share
End ofYear-end
Q3

AnnualTotal ofdividend(annual)Payout ratio(consolidated)

Net assets
dividend ratio(consolidated)

Yen

Yen

Yen

Yen

Yen

Million
yen

%

%

‐
‐
‐

0.00
0.00
0.00

‐
‐
‐

5.00
10.00
10.00

5.00
10.00
10.00

43
86

133.9
27.9
34.7

3.4
5.8

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

Operating income(% of change from previous year)
Profit attributable to
Net income
owners of parent
per share

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

Yen

15,500

4.4

320

35.5

350

36.5

250

-19.4

28.84

-1-

4. Others(1) Reclassification of significant subsidiaries during the period (Reclassification due to change in scope of consolidation): None
(2) 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
(3) 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

FY20208,874,400 shares

FY20198,874,400 shares

FY2020205,838 shares

FY2019205,768 shares

FY20208,668,596 shares

FY20198,664,828 shares(Reference)
1. Non-consolidated results (January 1, 2020 through December 31, 2020)(1) Non-consolidated financial results
Net sales
FY2020FY2019FY2020FY2019Operating income

Ordinary income

Net income

Million yen%

Million yen%

Million yen%

Million yen

%

1,002
1,160

-13.6
17.0

121
343

-64.6
186.9

118
364

-67.5
213.5

78
318

-75.4
205.4

Net income per share- Basic

Net income per share- Diluted

Yen

Yen

9.02
36.72

-

(2) Non-consolidated financial position
Total assets

Net assets

Million yen

FY2020FY2019(Note) Equity(% of change from previous year)

2,774
2,842
As of Dec. 31, 2020: 1,643 million yen

Equity ratio

Million yen

Net assets per share
%

1,643
59.2
1,610
56.6
As of Dec. 31, 2019: 1,610 million yen

Yen

189.60185.73

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 audit of financial
statements as required under the financial instruments and Exchange Act of Japan. The aforementioned procedures have not been
completed as of the time of disclosure of this document.

2.

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.

3.

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
Table of Contents of the Attached Document ..............................................................................................................................3
1. Business Results ......................................................................................................................................................................4(1) Summary of Business Results ............................................................................................................................................4(2) Summary of Financial Position ..........................................................................................................................................5(3) Summary of Cash Flows ....................................................................................................................................................6(4) Forward-looking Statements ..............................................................................................................................................7
2. Basic Policy on the Selection of Accounting Standards ..........................................................................................................7
3. Consolidated Financial Statements ..........................................................................................................................................8(1) Consolidated Balance Sheets ..............................................................................................................................................8(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income........................................ 10
Consolidated Statements of Income ...................................................................................................................................10
Consolidated Statements of Comprehensive Income ......................................................................................................... 11(3) Consolidated Statements of Changes in Equity ................................................................................................................ 12(4) Consolidated Statements of Cash Flows........................................................................................................................... 14(5) Notes on Consolidated Financial Statements.................................................................................................................... 16
Notes on Going Concern Assumption ................................................................................................................................ 16
Additional nformation ........................................................................................................................................................ 16
Segment Information .......................................................................................................................................................... 16
Significant Subsequent Events ........................................................................................................................................... 20-3-

1. Business Results(1) Summary of Business Results
Overview of Consolidated Business Results for the Fiscal Year Ended December 31, 2020
Many corporations in Japan and the rest of the world reported a substantial year-on-year decline in their earnings forthe 12 months ended December 31, 2020, amid the increasingly serious COVID-19 crisis. Consequently, companies
became cautious about making new investments and suspended or postponed large projects. In the IT arena in which
the SIOS Group operates, however, companies invested at an accelerated pace in implementing digital transformation(DX)1 solutions, including switching to teleworking and transitioning to cloud environments as well as streamlining
and automating business processes. In this business environment, the Group offers value-added products and services
to assist corporate clients in moving forward with DX.
To get through the significant changes in the current socioeconomic environment brought about by the COVID-19
crisis, we have asked all our employees to switch to teleworking to protect their health and safety as well as to achieve
greater work efficiency. SIOS Technology, Inc., a consolidated subsidiary of the Company, merged with Keyport
Solutions, Inc. and Gluegent, Inc., both SIOS Group companies, on October 1, 2020, and plans to merge with Profit
Cube Inc., another Group company, effective April 1, 2021. These mergers enable the Group to consolidate its human,
intellectual-property, and financial resources in an effort to achieve even greater operational agility and productivity.
The Company's consolidated business results by segment for the period under review are as follows:(i) Open System Infrastructure Business Segment
Corporate clients accelerated their pace of investing in implementing DX amid the COVID-19 crisis. The Group
achieved a solid increase in sales of its core LifeKeeper2 in Japan and Red Hat Enterprise Linux3 and other software
products sourced from Red Had Inc.4. This was partly because we received project orders ahead of schedule andpartly because we received several large project orders from new clients. OSS5-related products achieved solid sales
growth as well.
As a result, net sales in this segment amounted to 8,883 million yen, up 15.4% from the previous fiscal year, with asegment income of 244 million yen, up 314.2% year on year.
(ii) Application Business Segment
Revenues from the provision of support for system development and implementation were strong, especially foreducational institutions. Revenues from the Gluegent series6 also maintained momentum of growth. In contrast,
revenues from software applications for MFPs7 declined. This was mainly because an increasing number of corporate
users had switched to a subscription model8 for these applications, and the revenue from them was not recognized up
front during the period under review, but was to be spread evenly over the following quarters. In addition, the sale ofthe social and public outsourcing service business to outside the Group contributed to the decline in revenues in thissegment. As a result, net sales in this segment were down 0.6% year on year to 5,957 million yen.
A year-on-year increase in revenues from the provision of support for system development and implementation toeducational institutions had a positive impact on the segment income. In addition, income from the provision of
support for system development and implementation to financial institutions was up due to the absence of unprofitableprojects that had affected negatively the profitability of this segment the previous fiscal year. These favorable factors
were more than offset by the declined revenues from software applications for the MFPs mentioned earlier. As aresult, this segment posted a loss of 8 million yen, compared with a loss of 4 million yen for the previous fiscal year.
With these two business segments combined, the Company's consolidated net sales were up 8.4% year on year toachieve a record 14,841 million yen, maintaining annual growth for the tenth consecutive fiscal year. The Company's
consolidated operating profit surged 329.9% to 236 million yen. The Company posted a consolidated ordinary profitof 256 million yen, up 166.4%, and a consolidated profit of 310 million yen attributable to owners of parent, up
858.4%.
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 andinterest-bearing debts) are as follows:-4-

EBITDA: 329 million yen, up 127.0% year on year
ROIC (annualized): 6.9%, compared with 1.7% for the previous fiscal year
Notes: 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. LifeKeeper
A failover software product that automatically switches a failed primary server to a backup server.
3. Red Hat Enterprise LinuxLinux OS developed by Red Hat, Inc., a provider of open-source solutions.
4. Red Hat, Inc. Related Items
Linux OS product developed by Red Hat, Inc., a provider of open source solutions.
5. OSS
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.
6. Gluegent seriesService of subsidiary Gluegent. Services such as "Gluegent Gate" which manages ID in the cloud, "Gluegent Apps groupscheduler" which added team calendar schedule management function etc. to Google Calendar, etc. Supporting businessefficiency improvement. using enterprise cloud.
7. 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.
8. Subscription model
A business model that charges customers a recurring monthly or annual fee to access a software product or service.

(2) Summary of Financial Position
Assets, Liabilities, and Net Assets(i)

AssetsCurrent assets amounted to 6,059 million yen as of December 31, 2020, up 35.3% from the end of the previous fiscal year (“the previous

year-end”), reflecting an increase of 592 million yen in cash and deposits and an increase of 556 million yen in notes and accounts
receivable trade.
Non-current assets amounted to 791 million yen, down 7.1% from the previous fiscal year-end, reflecting a decrease of 184 million yen
in software in progress and an increase of 96 million yen in investment securities.
As a result, total assets amounted to 6,851 million yen, up 28.5% from the previous fiscal year-end.
(ii)

Liabilities

Current liabilities amounted to 4,751 million yen, up 41.6% from the previous fiscal year-end, reflecting an increase of 988 million yen
in accounts payable trade and an increase of 228 million yen in advances received.
Non-current liabilities amounted to 552 million yen, down 17.3% from the previous fiscal year-end, reflecting a decrease of 123 million
yen in long-term loans payable.
As a result, total liabilities amounted to 5,303 million yen, up 31.8% from the previous fiscal year-end.
(iii) Net assets
Total net assets amounted to 1,548 million yen, up 18.3% from the previous fiscal year-end, reflecting an increase of 266 million yen
in retained earnings.

-5-(3) Summary of Cash Flows
The Group’s balance of cash and cash equivalents amounted to 2,136 million yen as of December 31, 2019, up by 127 million yen from theprevious year-end.

（In millions of yen）
FY 2019

FY 2020

ChangeCash flows from operating activities

363

649

285

Cash flows from investing activities

△101

151

252

Cash flows from financing activities

△130

△182

△52

Net cash provided by operating activities increased to 649 million yen for the period under review. This reflected changes primarily in the amountof profit before income taxes and of notes and accounts payable trade.
Net cash provided by investing activities increased to 151 million yen. This reflected primarily a gain on transfer of business.
Net cash used in financing activities amounted to 182 million yen. This reflected primarily the repayment of long-term loans payable.

-6-(4) Forward-looking Statements
The Company predicts that a prolonged duration of the COVID-19 crisis will continue to cast uncertainties over the global economy
during the year ending December 31, 2021. Despite such lingering uncertainties, the Company expects that corporations' increasing
appetite to invest in DX, including switching to teleworking and transitioning to the cloud environment, will continue to have a positive
impact on the IT arena in which the Group operates. The Group will take advantage of this favorable trend to achieve continued growthof its businesses.
The Company projects consolidated net sales of 15,500 million yen for the fiscal year ending December 31, 2021, which will be a
year-on-year increase of 4.4% and mark the 11th consecutive year of growth. The Company projects a consolidated operating profitof 320 million yen, up 35.5% year on year, and a consolidated ordinary profit of 350 million yen, up 36.5%, with a projected increasein personnel expenses resulting from aggressive hiring of new talent to be more than offset by a projected increase in sales of its
products developed in-house. For the period under review, the Company posted a gain of 192 million yen on the sale of the Web
service business for broadcasters and the social and public outsourcing service business to outside the Group. The Company does notproject any extraordinary income or loss for the fiscal year ending December 31, 2021. As a result, the Company projects a
consolidated profit of 250 million yen attributable to owners of parent for the fiscal year ending December 31, 2021, down 19.4% year
on year.
The Company has resolved to pay a year-end dividend of 10.00 yen per share for the fiscal year under review, up from 5.00 yen per
share announced on February 5, 2020. This upward change has taken into consideration our projected operating results as well as ourintention to maintain a proper balance between the dividend payment and the need to accumulate capital through retained earnings.
The Company anticipates paying a year-end dividend of 10.00 yen per share also for the fiscal year ending December 31, 2021, basedon the business forecasts just mentioned.

2. Basic Policy on the Selection of Accounting Standards
The Group will, for the time being, continue to prepare its consolidated financial statements under the Japanese GAAP inconsideration of comparability of period-to-period operating performance as well as comparability with other Japanese companies.
We will consider adopting IFRS in the preparation of consolidated financial statements if developments in Japan and abroad warrant
it.

-7-

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(In thousands of yen)
December 31, 2019

December 31, 2020

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade2,266,069
1,754,762

2,858,289
2,311,150

MerchandiseWork in progress

1,610
47,536491,228
26,741

Advance payments - trade
Other

181,936
228,243

245,565
127,097

-200

-200

4,479,958

6,059,872

224,331-112,019

201,044-124,517

112,31276,527

294,838-239,549

287,861-247,395

55,28840,46633,592-16,685

38,422-23,801

Leased assets, net

16,906

14,620Construction in progress

2,285

-

186,792

131,614

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Leased assets
Accumulated depreciation

Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other

786

-

39,720184,413

110,467
-

1,916

1,781

226,835

112,249

Investment securities
Net defined benefit asset

137,073
43,741

233,775
47,093

Guarantee deposits
Deferred tax assets

207,904
21,651

193,996
41,314

Other
Allowance for doubtful accounts

33,582-5,071

36,004-4,221

Total investment and other assets

438,881

547,963852,509791,826

5,332,468

6,851,698

Total intangible assets
Investment and other assets

Total non-current assets
Total assets-8-

(In thousands of yen)
December 31, 2019

December 31, 2020

Liabilities
Current liabilities
Accounts payable-trade856,680

1,845,041

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

50,000132,303

50,000123,120

Lease obligations
Income taxes payable

7,156
19,6197,099
57,673

Advance received
Provision for bonuses

1,842,348
34,2622,070,735
35,328326
413,077

604
561,448

Total current liabilities

3,355,774

4,751,052

Non-current liabilities
Long-term loans payable

413,620

290,500

Net defined benefit liability
Lease obligations

230,539
11,362

241,315
8,908

Long-term deposits received
Other

11,632
750

11,632-

Other

Total non-current liabilities

667,905552,357

4,023,679

5,303,409

Shareholders’ equity
Capital stock

1,481,520

1,481,520

Retained earnings
Treasury shares

82,963-87,198

349,766-87,254

1,477,284

1,744,031

Valuation difference on available-for-sale securities
Foreign currency translation adjustment-3,961-208,398-6,848-236,209

Total accumulated other comprehensive income-212,360-243,057

Total liabilities
Net assets

Total shareholders’ equity
Accumulated other comprehensive income

Subscription rights to shares
Total net assets
Total liabilities and net assets-9-43,86347,315

1,308,788

1,548,289

5,332,468

6,851,698

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(In thousands of yen)
Fiscal Year Ended
December 31, 2019

Fiscal Year Ended
December 31, 2020

Net sales
Cost of sales

13,686,915
9,341,312

14,841,739
10,376,326

Gross profit

4,345,602

4,465,412

Selling, general and administrative expenses

4,290,665

4,229,241

Operating profit

54,937

236,171

Non-operating income
Interest income

12,624

6,536

Dividend income
Fiduciary obligation fee

545
2,755

855
1,281

Foreign exchange gains
Gain on investments in investment partnerships
Share of profit of entities accounted for using equity
methodGain on valuation of derivatives
Other

11,957
9,956

29,646
-

-

6,271

3,354
11,081

6,323

Total non-operating income

52,27450,914

Interest expenses
Loss on investments in investment partnerships
Share of loss of entities accounted for using equity
methodLoss on valuation of derivatives
Other

3,821
-

3,084
4,288

6,691

-

435

22,866387

Total non-operating expenses

10,94730,626

96,263

256,459

50,999450--

192,881

51,450

192,881Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sales of shares of subsidiaries and associates
Gain on reversal of subscription rights to shares
Gain on transfer from business divestitures
Total extraordinary income
Extraordinary losses
Loss on sales of investment securities
Impairment loss
Loss on valuation of golf club membership
Other

10,358938

1,480

36,875
268

0

1,748

Total extraordinary loss

11,83839,830

Profit before income taxes

135,875

409,510

Income taxes-current
Income taxes-deferred

69,00434,510118,485-19,120

Total income taxes

103,515

99,364

Profit32,360310,145

Profit attributable to owners of parent

32,360310,145- 10 -

Consolidated Statements of Comprehensive Income(In thousands of yen)
Fiscal Year Ended
December 31, 2019

Fiscal Year Ended
December 31, 2020

Profit32,360

Other comprehensive income
Valuation difference on available-for-sale securities-94,459-2,886-7,717-28,064-215

253

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income

310,145-102,392-30,697-70,031

279,448-70,031

279,448

Comprehensive income attributable to:Comprehensive income attributable to owners of parent- 11 -

(3) Consolidated Statements of Changes in Equity
Fiscal Year Ended December 31, 2019
(In thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

1,481,520

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity472,257-429,287-95,038

1,429,451

5,464
1,481,520

5,464

472,257-423,823-95,038

1,434,916-480,279

480,279-

32,36032,360Changes during period
Deficit disposition
Profit attributable toowners of parent
Disposal of treasury
sharesTransfer from retained
earnings to capitalsurplus
Net changes in items
other than shareholders'equityBalance at end of current
periodBalance at beginning ofcurrent period

2,168

7,839

10,0085,853-5,853---472,257

506,786

7,839

42,368

1,481,520-

82,963-87,198

1,477,284

Accumulated other comprehensive income
Valuation difference Foreign currency
on available-for-saletranslation
securities
adjustment
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

90,497

Total accumulated Subscription rights
otherto shares
comprehensive
income-200,465-109,967

40,121

Total net assets

1,359,605
5,464

90,497-200,465-109,967

40,121

1,365,069

Changes during period
Deficit disposition
Profit attributable toowners of parent
Disposal of treasury
sharesTransfer from retained
earnings to capitalsurplus
Net changes in items
other than shareholders'equityBalance at end of current
periodBalance at end of current
period32,36010,008--94,459-7,932-102,392

3,741-98,650-94,459-7,932-102,392

3,741-56,281-3,961-208,398-212,360

43,863

1,308,788- 12 -

Fiscal Year Ended December 31, 2020
(In thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodProfit attributable toowners of parent
Purchase of treasury
sharesCapital surplus

1,481,520

Retained earnings

Treasury shares

Total shareholders’equity82,963-87,198

1,477,284-

310,145-55

Dividends of surplus
Net changes in items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
period310,145-43,343-55-43,343--

266,802-55

266,746

1,481,520-

349,766-87,254

1,744,031

Accumulated other comprehensive income
Valuation difference Foreign currency
on available-for-saletranslation
securities
adjustment
Balance at beginning ofcurrent period
Changes of items during
periodProfit attributable toowners of parent
Purchase of treasury
shares-3,961

Total accumulated Subscription rights
otherto shares
comprehensive
income-208,398-212,360

43,863

1,308,788

310,145-55

Dividends of surplus
Net changes in items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
periodTotal net assets-43,343-2,886-27,811-30,697

3,451-27,245-2,886-27,811-30,697

3,451

239,501-6,848-236,209-243,057

47,315

1,548,289- 13 -

(4) Consolidated Statements of Cash Flows(In thousands of yen)
Fiscal Year Ended
December 31, 2019
Cash flows from operating activities
Profit before income taxes

Fiscal Year Ended
December 31, 2020

135,875

409,510

89,385857

92,561786-

36,875-192,881

Interest and dividend income
Interest expenses-13,169
3,821-7,391
3,084

Loss (gain) on investments in partnership
Share of (profit) loss of entities accounted forusing equity method
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in net defined benefit
liabilities
Increase (decrease) in advance received
Decrease (increase) in advance payment-9,956

4,288

6,691

-6,271-142,341-578,555

86,332-468,823

280,557

988,361

15,622

12,731

117,669-26,604

256,046-63,628

Increase (decrease) in consumption taxes payable
Other-109,604-10,523

135,979
79,458Sub-total

424,611702,131

Interest and dividend income received

13,1697,391Interest expenses paid
Income taxes refund-3,821
53,157-3,08435,851

Income taxes paid

-123,213-92,976

Net cash provided by (used in ) operating activities

363,904

649,314

Payment into time deposits
Proceeds from withdrawal of time deposits-260,000
260,000-260,000
260,000

Purchase of property, plant and equipment
Purchase of intangible assets-19,475-159,597-9,295-47,183

Payments for guarantee deposits
Proceeds from collection of guarantee deposits-4,2903,807-17,741
1,421

Purchase of shares of subsidiaries and associates
Proceeds from sales of investment securities
Proceeds from distributions from investment
partnerships
Proceeds from redemption of investment securities
Proceeds from sales of shares of subsidiaries andassociates
Loan advances to subsidiaries and associates
Collection of short-term loans receivable-1,000-89,539-25,000-

19,81330,000-51,000---21,352
5,838

Proceeds from sale of businesses
Other-1,445329,855
4,606-101,001

151,424-133,116-42,779-132,303

2,825-7,907-130,290-182,990

5,364-25,528

127,247

592,220

Depreciation
Amortization of goodwill
Impairment loss
Gain on transfer from business divestitures

Cash flows from investing activities

Net cash provided by (used in) investing activities
Cash flows from financing activities
Dividends paid
Repayments of long-term loans payable
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents- 14 -

(In thousands of yen)
Fiscal Year Ended
December 31, 2019

Fiscal Year Ended
December 31, 2020

Cash and cash equivalents at beginning of year

2,008,821

2,136,069

Cash and cash equivalents at end of year

2,136,069

2,728,289- 15 -

(5) Notes on Consolidated Financial Statements
Notes on Going Concern Assumption
Not applicable

Additional nformation
When estimating the amount of impairment loss on non-current assets and the recoverability of deferred tax assets, the Company assumed at this timethat the impact of the COVID-19 crisis on the Group's business performance would be limited and that the spread of the pandemic would trend down
toward the end of the fiscal year ending December 31, 2021, and beyond.
However, as the extent of the impact of the pandemic on the Group's business performance is difficult to predict with certainty, a change in assumptions
mentioned above might affect the Group's financial position, results of operations, and cash flow performance going forward.

Segment Information
Segment Information
1. Outline of reportable segments
The Group's reportable segments are components of the Group for which separate financial information is available and which are subject toperiodic reviews by the Company's Board of Directors to determine the allocations of resources and evaluate business performance.
The Company has established business units and subsidiaries, each of which serves specific markets and customers as well as specializes in specifictechnology fields: Some provide products and services in the open system infrastructure field, which includes operating systems and middleware,and some in the application field, which includes enterprise applications.
Therefore, the Group has two reportable segments: the open system infrastructure business segment, and the application business segment.
The description of each segment is as follows:
・Open System Infrastructure Business Segment
In this business segment, the Group markets LifeKeeper, which automatically switches a failed primary system to a backup system, andOSS-related software products, including those sourced from Red Hat, Inc., and provides OSS support services as well as consulting services
for a wide range of information systems.
・Application Business Segment
In this business segment, the Group markets software applications for MFPs, management support system for financial institutions, and the
Gluegent series, which is a SaaS product that works with cloud, develops enterprise information systems for corporate clients on a contract
basis, and provides consulting services for a wide range of information systems.

2. Basis for calculating net sales, profit or loss, assets, liabilities, and other items by reportable segment
Accounting methods used for the reported business segments are the same as those described in "Basis for the Preparation of
the Consolidated Financial Statements."
Profit of reportable segments is based on operating profit. Intersegment sales and transfers are calculated based on market prices.
Please note that the Company does not report assets or liabilities by segment.

- 16 -

3. Information on net sales, profit or loss, assets, liabilities, and other items by reportable segment
Fiscal year ended December 31, 2019
(In thousands of yen)
Reportable segment
Open systeminfrastructurebusinessAmount on
consolidated
financialstatements*

Adjustments

Application
business

Total

Net sales
Sales to external customers

7,695,447

5,991,227

13,686,675

240

13,686,915

-

1,575

1,575

△1,575-

7,695,447

5,992,803

13,688,250△1,335

13,686,915

58,918△4,221

54,697240

54,937

27,20362,181

89,385-89,385

857

-

857

-

857

Intersegment sales andtransfers
Total
Segment profit
Other items
Depreciation
Amortization of goodwill* The total amount of segment profit is the same as the amount of operating profit shown in the consolidated statements of income
for the year.
Fiscal year ended December 31, 2020
(In thousands of yen)
Reportable segment
Open systeminfrastructurebusinessAmount on
consolidated
financialstatements*

Adjustments

Application
business

Total

Net sales
Sales to external customers
Intersegment sales andtransfers
Total
Segment profit

8,883,868

5,957,630

14,841,499

240

14,841,739

832

3,299

4,131

-4,131-8,884,701

5,960,929

14,845,631-3,891

14,841,739

244,046-8,115

235,931240

236,171

29,59962,961

92,561-

92,561

786

-

786

-

786

Other items
Depreciation
Amortization of goodwill* The total amount of segment profit is the same as the amount of operating profit shown in the consolidated statements of income
for the year.

- 17 -

Related Information
Fiscal year ended December 31, 2019
1. Information by product and service
Information is omitted as similar information is disclosed in the Segment Information section.
2. Information by region(1) Net sales(In thousands of yen)Japan

Americas12,917,269

554,494

EuropeOther regions

151,327

Total

63,823

13,686,915

Note: Sales are classified by country or region in which customers are located.
(2) Property, plant and equipment(In thousands of yen)Japan

Americas141,035

45,756

Total
186,792

3. Information by major customer(In thousands of yen)
Name of customer

Net sales

Otsuka Corporation

Relevant segments
3,455,569

Open system infrastructure businessand application business

Fiscal year ended December 31, 2020
1. Information by product and service
Information is omitted as similar information is disclosed in the Segment Information section.
2. Information by region(1) Net sales(In thousands of yen)Japan

Americas14,205,915

443,690

EuropeOther regions

126,823

65,309Total
14,841,739

Note: Sales are classified by country or region in which customers are located.
(2) Property, plant and equipment(In thousands of yen)Japan

Americas101,874

29,739

Total
131,614

3. Information by major customer(In thousands of yen)
Name of customer

Net sales

Relevant segments

Otsuka Corporation

3,548,866

Networld Corporation

1,493,835- 18 -

Open system infrastructure businessand application businessOpen system infrastructure businessand application businessInformation Regarding Impairment Loss on Non-Current Assets by Reportable Segment
Fiscal year ended December 31, 2019
Information is omitted as similar information is disclosed in the Segment Information section.
Fiscal year ended December 31, 2020
Information is omitted as similar information is disclosed in the Segment Information section.
Information Regarding Amortization of Goodwill and Remaining Goodwill Balance by Reportable Segment
Fiscal year ended December 31, 2020
Reportable segment
Open systeminfrastructurebusiness

Application
business

Adjustment

Total

Total

Year-end
36,87536,875balance
Note: Information on amortization of goodwill is omitted as similar information is disclosed in the Segment Information section.
Fiscal year ended December 31, 2019
Reportable segment
Open systeminfrastructurebusiness

Application
business

Adjustment

Total

Total

Year-end
786
786
786
balance
Note: Information on amortization of goodwill is omitted as similar information is disclosed in the Segment Information section.
Information Regarding Gain on Negative Goodwill by Reportable Segment
Fiscal year ended December 31, 2019
Not applicable
Fiscal year ended December 31, 2020
Not applicable- 19 -

Per-Share Information
Fiscal year ended
December 31, 2019
Net assets per share
Profit per share

Fiscal year ended
December 31, 2020

145.92 yen

173.15 yen

3.73 yen

35.78 yen

Notes: 1. Diluted profit per share is not presented because the Company has no outstanding dilutive shares.
2. The basis for calculating profit per share is as follows:
Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Profit per share
Profit attributable to owners of parent (thousand yen)

32,360310,145

Amount not attributable to ordinary shareholders (thousand
yen)

-

-

Profit attributable to owners of parent relating to common
stock (thousand yen)

32,360310,145

Average number of common stock outstanding during theperiod (shares)

8,664,828

8,668,596

Descriptions of potentially dilutive common shares that were
not included in the calculation of diluted profit per share

Share options for
334,375 commonshares resolved by the
Board of Directors on
May 22, 2012

Share options for
459,354 commonshares resolved by the
Board of Directors on
May 22, 2012

Significant Subsequent Events
Not applicable- 20 -