Consolidated Financial Result(For the 3-month period ended March 31, 2023)
May 10, 2023
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 12, 2023
(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, 2023 through March 31, 2023)(1) Consolidated business results
Net sales(% of change from previous first quarter)

Operating income

Million yen%

Million yen

3-month period(2023/3)
4,220
12.0
3-month period(2022/3)
3,767
-14.4
(Note)Comprehensive income
As of Mar.31, 2023: 13 million yen/ -57.6%

Ordinary income

%

24
-18

Million yen

-

57
1

Million yen

-99.3

%

12
-4

-

As of Mar. 31, 2022: 31 million yen/ -83.7%

Net income per share- Basic

Net income per share- Diluted

Yen

Yen

1.48
-0.48

-

3-month period(2023/3)
3-month period(2022/3)

Net income%(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen

%

1,172
1,243

17.0
19.4

3-month period(2023/3)
6,437
FY2022
6,022(Reference) Equity
As of Mar. 31, 2023: 1,094 million yen

As of Dec. 31, 2022: 1,168 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

FY2022-

FY2023

-

0.00

-

10.00

10.00

-

-

-

-

FY2023 (expected)(Note) 1. The dividend forecast for the fiscal year ending December 31, 2023 is undecided.
2. Revisions to recent dividend forecast: None

3. Forecast of consolidated results for FY2023 (January 1, 2023 through December 31, 2023)
Net sales
Million yen

Operating income%

Million yen%

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

Yen

FY2023(Note)1. Regarding the consolidated earnings forecast for the fiscal year ending December 31, 2023, it is extremely difficult to reasonably
calculate at this time. Since then, it is undecided. In the future, we will promptly announce it when it becomes possible to make areasonable calculation.
2. Revisions to recent business forecast: None-1-

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
FY2023First quarter of
FY2023First quarter of
FY20238,874,400 shares

FY2022

8,874,400 shares

205,838 shares

FY2022205,838 shares

8,668,562 sharesFirst quarter of
FY2022

8,668,562 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(Additional Information) .......................................................................................................... 12(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, 2022 (Q1 2023)
During the three months ended March 31, 2023, while the COVID-19 pandemic was finally settling down, the global economy
continued to face lingering uncertainty due to the prolonged Russia-Ukraine conflict and the rising prices of products and services
caused by soaring materials costs.
In this business environment, The SIOS Group ("the Group") continued to restructure its business operations to make its revenue
base more robust and upgraded its offerings of cloud-based products and services, including SaaS¹, to better assist corporate clientsin implementing DX² solutions.
The Group achieved consolidated business results by segment for the three-month period under review as follows:(i) Open System Infrastructure Business Segment
Sales of Red Hat Enterprise Linux³ and other software products sourced from Red Hat Inc.4, as well as sales of OSS5-related
products, increased over the same period the previous fiscal year. While perpetual license sales of LifeKeeper6, which is one of theGroup's core software products, declined in the Americas, sales were strong in Europe, Japan and other parts of Asia, and Oceania.
As a result, net sales in this segment jumped 18.7% from the same period a year earlier to 2,661 million yen, with a segment profit of
68 million yen, up 20.0% year on year.
(ii) Application Business Segment
Sales of the management support system to financial institutions were slow. In contrast, revenues from the provision of support forsystem development and implementation were strong, especially from the support provided in API7 projects and to financial
institutions. The Gluegent series8 also achieved a year-on-year increase in sales. As a result, net sales in this segment increased 2.1%
to 1,555 million yen.
The Company posted a segment loss of 46 million yen, compared with a loss of 77 million yen the year before, due to rising
personnel expenses, and more aggressive investments in developing and marketing new products and services, mainly in the Med
Tech9 business.
The Company's consolidated net sales for the period under review were up 12.0% year on year, to 4,220 million yen. The
Company posted a consolidated operating profit of 24 million yen, compared with a loss of 18 million yen the year before, and an
ordinary profit of 57 million yen, which reflected the share of profit of entities accounted for using equity method, foreign exchange
gains, and gains on valuation of derivatives. The profit attributable to owners of parent amounted to 12 million yen, compared with aloss of 4 million yen the previous year.
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 are as follows:
EBITDA: 40 million yen, up 167.5% year on year
ROIC (annualized): 4.6%, compared with -2.2% 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.

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.

-4-

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.

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

7.

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

8.

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.

9.

Med Tech
Short for medical technology.
It refers to technology that delivers medical services through software applications.

(2) Financial Positioni.

AssetsCurrent assets amounted to 5,631 million yen as of March 31, 2023, up 8.4% from the end of the previous fiscal year, reflecting
primarily an increase of 579 million yen in notes and accounts receivable trade, and contract assets.
Non-current assets decreased 2.5% to 806 million yen, reflecting primarily a decrease of 9 million yen in investment securities.
As a result, total assets amounted to 6,437 million yen, up 6.9% from the previous fiscal year-end.

ii.

Liabilities
Current liabilities amounted to 4,832 million yen, up 11.4%, reflecting primarily an increase of 424 million yen in accounts
payable trade.
Non-current liabilities amounted to 432 million yen, down 2.0%, reflecting primarily a decrease of 16 million yen in long-termborrowings.
As a result, total liabilities amounted to 5,265 million yen, up 10.2% from the previous fiscal year-end

iii.

Net assets

Total net assets amounted to 1,172 million yen, down 5.7% from the previous fiscal year-end, reflecting primarily
a decrease of 73 million yen in retained earnings.
(3) Forward-looking Statements Including Consolidated Business Forecasts
As stated in the Consolidated Financial Result for the fiscal year ended December 31, 2022, announced on February 2, 2023, theCompany has been restructuring its business operations and bolstering its cloud-based business in order to make its revenue basemore robust.
We are not disclosing at this time the Company's consolidated business forecasts for the fiscal year ending December 31, 2023, as
we are unable to make reasonable assumptions or estimates of forecasts. As soon as we can make reasonable assumptions andestimates, we will disclose the above-mentioned information.

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2. Consolidated Financial Statements(1) Consolidated Balance Sheet(In thousands of yen)
December 31, 2022
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade, and contract
assetsMerchandiseWork in process
Advance payments to suppliers
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Other, net
Total property, plant and equipment

March 31, 2023

2,505,766

2,424,611

2,028,395

2,608,249

13,55813,267
272,047
362,291-200

12,231
1,300
321,287
264,206-200

5,195,125

5,631,687

50,131
62,69945,23854,754

112,830

99,993

Intangible assets
Software
Software in progress
Other

48,49629,8791,441

48,22329,879
1,441

Total intangible assets

79,81779,544

Investments and other assets
Investment securities
Retirement benefit asset
Guarantee deposits
Other

380,634
50,635127,063
76,225371,092
53,798125,546
76,225634,558

626,663827,206

806,200

6,022,332

6,437,887

Total investments and other assets
Total non-current assets
Total assets-6-

(In thousands of yen)
December 31, 2022

March 31, 2023

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

1,084,110
66,00029,700396,729

1,508,256
66,00020,967402,705

Total current liabilities

4,337,206

4,832,389

Non-current liabilities
Long-term borrowings
Retirement benefit liability
Lease liabilities
Long-term deposits received

115,500
302,712
11,746
11,63299,000311,852
10,387
11,632

Total non-current liabilities

441,591

432,872

Total liabilities

4,778,798

5,265,262

Net assets
Shareholders’ equity
Share capital
Retained earnings
Treasury shares

1,481,520-130,975-87,254

1,481,520-204,793-87,254

1,263,289

1,189,471

5,147
-

5,257
-1,658Foreign currency translation adjustment-100,273-98,072

Total accumulated other comprehensive income-95,125-94,473

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-7-75,36977,6271,243,534

1,172,625

6,022,332

6,437,887

(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,
2022

Three months ended March 31,
2023

Net sales
Cost of sales

3,767,245
2,586,554

4,220,168
2,831,388

Gross profit

1,180,690

1,388,779

Selling, general and administrative expenses

1,198,843

1,364,182-18,152

24,596

1,241
29,572

2,158
10,912
9,457

20,75014,296

4,779

2,017

56,344

38,842439
31,659
4,450

273
5,601

36,550

5,874

1,640

57,565-

10,435

5

123

Operating profit
Non-operating income
Interest income
Foreign exchange gains
Gain on valuation of derivatives
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Loss on investments in investment partnerships
Total non-operating expenses
Ordinary profit
Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Loss on retirement of property, plant and equipment
Other

-

7

Total extraordinary losses

5

10,566

Profit before income taxes

1,635

46,998

Income taxes-current
Income taxes-deferred

11,106-5,27634,131-

Total income taxes

5,830

34,131

Profit-4,195

12,867

Profit attributable to owners of parent-4,195

12,867-8-

Consolidated Statements of Comprehensive Income
For three months ended March 31(In thousands of yen)Three months ended March 31,
2022

Three months ended March 31,
2023

Profit(loss)
Other 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-4,195

12,867

1,758
34,367

109
1,658
2,338

-17

-138

36,108651

Comprehensive income

31,912

13,51931,912

13,519Comprehensive 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, 2022
1. Information regarding the amount of net sales and profit by reportable segment(In thousands of yen)

Adjustments

Amount recordedin quarterly
consolidated
statements ofincome*Reportable segment
Open systeminfrastructurebusiness

Application
business

Total

Net sales
Sales to external customers
Intersegment
transferssales

2,241,709

1,523,275

3,764,984

2,261

3,767,245

-

2,090

2,090

-2,090-2,241,709

1,525,365

3,767,074

170

3,767,245

56,841-77,255-20,414

2,261-18,152

and

Total
Segment profit

Note: The total amount of segment profits or losses is the same as the amount of operating loss 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, 2022
(In thousands of yen)Japan
3,568,459

Americas138,628

EuropeOther regions

39,932

20,224

Total
3,767,245

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

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II

Three months ended March 31, 2023

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

Adjustments

Amount recordedin quarterly
consolidated
statements ofincome*Reportable segment
Open systeminfrastructurebusiness

Application
business

Total

Net sales
Sales to external customers
Intersegment
transfers

sales

2,661,742

1,555,276

4,217,018

3,150

4,220,168

－

1,551

1,551

△1,551－

2,661,742

1,556,827

4,218,569

1,598

4,220,168

68,231△46,784

21,446

3,150

24,596

andTotal
Segment profit

Note: The total amount of segment profits or losses is the same as the amount of operating loss 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(Additional Information)
There is no significant change to the assumptions we made earlier about the effect that the COVID-19 crisis might have on theGroup's business performance going forward, which were provided in the "Additional information" section of the Company's
securities filings for the fiscal year ended December 31, 2021.
(Significant Subsequent Events)
Not applicable-12-