Financial Results
for the 6 Months Ended
June 30,2019
July31,2019
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 ,2019© SIOS Corporation All rights Reserved.

2

Consolidated Financial Results
for the 6 Months Ended June 30,2019(In millions of yen)

Results for the6 months ended
June 30,2018

Net Sales

6,270

Gross profit

2,056

Operatingincome

127

Ordinary income

131

Profit attributableto owners ofparent

79

EBITDA

166

ROIC(annualized)

8.1%

Results for the6 months ended
June30,2019

6,914
2,124
3870
△2082
2.4%

Change+643+10.3%+68+3.3%△89△70.0%△61△46.5%△99ー△83△50.3%ーー*EBITDA: Operating profit + Depreciation + Amortization of goodwill*ROIC: Operating profit after tax / (Shareholders’ equity + Interest-bearing debts)© SIOS Corporation All rights Reserved.

%Change3

Consolidated Net Sales in First Halves of the Past 5 Fiscal Years

Achieved record net sales in H1 2019
(In millions of yen)
8,000
7,000

6,238

6,226

6,270

1H FY 2016

1H FY 2017

1H FY 20186,914

6,000
5,000

4,392

4,000
3,000
2,0001,0000
1H FY 2015

© SIOS Corporation All rights Reserved.

1H FY 20194

Consolidated Operating Profit, EBITDA, and R&D Spendingin First Halves of the Past 5 Fiscal Years Operating profit for H1 2019 declined by 89 million yen
year-on-year R&D spending has remained at a consistent level.
(Millions of yen)

417
400

305

330
282

200

286

264

300

173

260

127285

166

100

38820
△ 100-55-21

H1 2015

H1 2016

H1 2017

Operating profit

EBITDA

H1 2018

H1 2019

R&D spending© SIOS Corporation All rights Reserved.

5

Consolidated Balance Sheets（In millions of yen）

Current assets Total liabilities
4,383
3,970
(including(including
cash andinterest-bearing
deposits ofdebts of2,138)751)

Investment andother assets 635

Total net assets
1,359

 Property, plant and equipment
 Intangible assets 89

221

Current assets
4,451(including
cash anddeposits of2,472)

Investment andother assets 616

Total liabilities
4,053(includinginterest-bearing
debts of684)

Total net assets
1,333 Property, plant and equipment 203
 Intangible assets 115

As of June 30, 2019As of December 31, 2018

 Current assets: An increase of 333 million yen in cash and deposits
 Current liabilities: An increase of 202 million yen in advances received
 Net assets: A decrease of 26 million yen© SIOS Corporation All rights Reserved.

6

Analysis of Consolidated Cash Flows(In millions of yen)△45

△602,008△102,343

450

Cash and cash
equivalents asof December
31,2018

Cash flows fromoperatingactivities

Cash flows frominvesting activities

Cash flows fromfinancing
activities© SIOS Corporation All rights Reserved.

Effect ofexchange ratechange on cash
and cashequivalents

Cash and cash
equivalents asof June 30, 20197

YoY Changes in Cash Flows(Millions of yen)
Cash flows fromoperating activities
Amount of YoY changes

Increase of 450

Breakdown

Increases• 76 resulting from adecrease in tradereceivables• 77 resulting fromreduced inventory• 86 resulting from anincrease in notes andaccounts payabletrade• 216 resulting from anincrease in advances
received• 94 resulting from otherfactors

Decreases• 99 resulting from
accrued consumption
taxes

Cash flows frominvesting activities
Decrease of 45

Cash flows fromfinancing activities
Decrease of 60

Other
Decrease of 10• 6 resulting fromother factors• 40 resulting frompurchase of property,
plant and equipment• 5 resulting from otherfactors© SIOS Corporation All rights Reserved.

• 66 resulting fromrepayments of longterm loans payable• 10 resulting
from foreignexchange loss

8

Cash Flows from Operating Activities and Advances Received
Cash flows from operating activities sustained by ample advances received(In millions of yen)

636
469
357

110

450
260

255

296

21669

1H FY 2015

1H FY 2016

1H FY 2017

CF from Operating activities

1H FY 20181H FY 2019

Increase in advances received© SIOS Corporation All rights Reserved.

9

Free Cash Flows
R&D projects and investing activities sustained by a stable level of cashflows(In millions of yen)

1000800600
4002000△ 200△ 400
1H FY 2013 1H FY 2014 1H FY 2015 1H FY 2016 1H FY 2017 1H FY 2018 1H FY 2019
CF from operations – R&D spending

R&D spending

CF from investing activities

Free cash flows© SIOS Corporation All rights Reserved.

10

Open System Infrastructure BusinessNet sales

3,893 million yen, up 9.9％ YoYSegment income

46 million yen, up 128.2% YoY

Net sales
2,712(Millions of yen)

3,203

3,424

3,543

Net sales

3,893Japan

 Sales of LifeKeeper*, one of our core products, achieved a solidincrease.
 Sales of software products sourced from Red Hat, Inc.* maintained
H1 2015

H1 2016

H1 2017

H1 2018

H1 2019

Overseas LifeKeeper sales achieved a solid increase.

Segment income
81

Segment income

107
20

H1 2015-88

H1 2016

momentum of growth.

H1 2017

H1 201846
H1 2019

The segment income for H1 2019 jumped from the previous year,
thanks primarily to the strong sales of business-continuity solutions
bolstered by the addition of products offered by ThirdWare Inc.,
which the Company acquired in December 2018.

Note: See the Glossary on Page 26 for descriptions of terms with an asterisk.
© SIOS Corporation All rights Reserved.

11

Application BusinessNet sales

3,021 million yen, up 10.8% YoY

Segment income

Loss of 7 million yen, compared with an incomeof 107 million yen the year before

Net sales
3,034(Millions of yen)

2,801

2,727

Net sales

3,021
1,679

Revenues from the provision of support for system development
and implementation to financial institutions achieved a solidincrease.

Sales of software applications for multifunction printers (MFPs)*
achieved steady growth.

H1 2015

H1 2016

H1 2017

H1 2018

H1 2019



Revenues from the Gluegent series* achieved steady growth.

Segment income

Segment income

249Segment income for H1 2019 declined from the previous year
partly because most of the sales of management support systems

65

32
H1 2015107

to financial institutions are projected to materialize in the second-7
H1 2016

H1 2017

H1 2018

H1 2019

half of the year, and partly because several unprofitable projects
were undertaken to provide support for system development andimplementation to financial institutions.

© SIOS Corporation All rights Reserved.

12

Improve Performance on
Key Management Metrics© SIOS Corporation All rights Reserved.

13

Primary Objective and Management Metrics Establishedin Medium-Term Business Plan for FY 2019-2021
Primary Management Objective

Under the mission of making the impossible possible for the people ofthe world, the SIOS Group works toward achieving its primarymanagement objective of pursuing innovative solutions to resolve
issues affecting people and to contribute to a better society.
Management MetricsThe Group uses EBITDA and ROIC as its key management metrics tocontinue to generate 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 our shareholders and stakeholders.
５億円
Through these efforts, the Group works toward achieving its primarymanagement objective.
© SIOS Corporation All rights Reserved.

14

Basis for Achieving the SIOS Group Mission
Make the business foundation more solid
Raise the level ofcustomer
satisfaction
Release new
products andservices
Enhance existingproducts and services

Carry out M&A

Make the business foundation more solid
Increase sales and gross profit
while optimizing SG&A expenses

Reduce the cash conversion
cycle

Reduce interest-bearing debts
Maintain good
relationships withstakeholders

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

Return profit to shareholders and otherstakeholders

Achieve greater EBITDA and ROIC

Generate positive cash flows

Invest to achieve the mission
Return profit to shareholders and otherstakeholders© SIOS Corporation All rights Reserved.

Improve performance on
key management metrics
15

Enhance existingproducts andservices

Updates on Business-Continuity Solutions

Operating Profit from Sales ofBusiness-Continuity Solutions inJapanThe addition of products offeredby ThirdWare Inc., which theCompany acquired in
December 2018, bolstered thesales and profit in this category.

LifeKeeper and other existingproducts also achieved strong
sales and bolstered the sales
and profit in this category.

H1 2018

H1 2019© SIOS Corporation All rights Reserved.

16

Enhance existingproducts andservices

Updates on Software Applications for MFPs

Sales of Software Applicationsfor MFPs

After having struggled in theprevious year, sales of software
applications for MFPs picked up
in this period, helped by closer
collaboration with our distribution
partners.

H1 2018

H1 2019© SIOS Corporation All rights Reserved.

17

Enhance existingproducts andservices

SIOS to Release on September 30, 2019, AI-enabledService Solution That Recognizes Confidentiality
Designations on Documents*Log Capture

Existing benefit• Quickly respond to incidents• Provide psychological deterrent against
improper use of documents+AI-enabled service solutionthat recognizes confidentiality
designations on documents
Additional benefit• Detect incidents before theyoccurEnhance existing service
offerings by adding a
new service solution thatwill increase the level ofcustomer satisfaction andbolster sales of software
applications for MFPs.

How the new service works
Sensitive
documents

Send alert emails
AI-enabled service solution
recognizes confidentiality
designations on documents

Log Capture

AI recognizes confidentiality designations, such as“strictly confidential,” “for internal use only,” and“confidential,” placed on documents anddesignates those documents as sensitive, alerting aninformation security administrator.
© SIOS Corporation All rights Reserved.

Administrator ina user company

18

Release new
products andservices

Beta Version of SIOS bilink Released
SIOS bilink provides a platform that supports companies
operating under subscription business models.*
Consumers①Business rules engines*
and other basic functions③Log management
analytics platform

Providers of subscriptionbased services

Subscription business
model④Added value that helps
maximize revenues②API* platform forexternal systems

Business partners© SIOS Corporation All rights Reserved.

Vendors

19

Cash Dividends for FY 2019
Based on the latest business forecasts for FY 2019, the Company plans to
pay a year-end dividend of 5.00 yen per share for FY 2019, to be funded byprojected profit for the year and dividends received from subsidiaries.

Annual cash
dividends pershare

22nd term

23rd term

Fiscal year ended
December 31, 2018
(Planned)

Fiscal year ending
December 31, 2019
(Projected)

0.00円

5.00円

© SIOS Corporation. All rights Reserved.

20

Business Forecasts for
Fiscal Year Ending December
31, 2019© SIOS Corporation All rights Reserved.

21

Consolidated Business Forecasts for FY 2019
Remain unchanged as announced on February 5, 2019
Bolster profit in struggling business in the second half of FY 2019
Provision of support for system development and implementation tofinancial institutions
Reason for reduced profit in H1 2019
Additional costs incurred to catch up
on delayed project deliveries
Status
Unprofitable projects completed by theend of June 2019

Actions taken and forecast
Perform more stringent review ofspecifications and delivery dates prior
to deal closure to prevent project
delaysThis business is projected to improve its
profitability in H2 2019.

Sales of management support systems to financial institutions
This business is projected to achieve a year-on-year increase in sales and profit in
H2 2019, after having struggled in the first half.
© SIOS Corporation All rights Reserved.

22

Consolidated Business Forecast for Fiscal YearEnding December 31,
Results for the
6 months ended
June30,2019

Forecast for fiscalyear ending
December 31, 2019

Net sales

6,914

13,20052.4%

Operatingincome

38

200

19.0%

Ordinary
income

70

210

33.3%

△20140ー

82

300

27.3%

2.4%

6.4%

ー(In millions of yen)

Profit attributableto owners ofparent

EBITDAROIC(annualized)© SIOS Corporation All rights Reserved.

Percentage ofachievement

23Appendix© SIOS Corporation All rights Reserved.

24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 cloud technologies, and Fintech.
Under the mission of making the impossible possible for the people of the world, the SIOS Grouppursues innovative solutions to resolve issues affecting people and to contribute to a better society.
Headquarters
CapitalEstablishedSIOS 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 consolidated
subsidiaries

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

U.S.A.:
SIOS Technology Corp.

© SIOS Corporation All rights Reserved.

25

GlossaryPage

Term

11

LifeKeeper

11

Software products sourced
from Red Hat, Inc.

12

Software applications for
multifunction printers (MFPs)

12

Gluegent series

18

Log Capture NX Plus

19

Subscription business model

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

19

Business rules engine

Application that manages decision-making processes using pre-defined logic
to determine outcomes.

API

Application Programming Interface. A set of data formats and procedures forenabling an operating system or software application to access data andfeatures of other applications.

19

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.
A multifunction printer (MFP) is a piece of office equipment thatincorporates print, scan, copy, and fax capabilities into one unit. TheGroup develops, markets, and updates document management software
applications, such as Quick Scan and Speedoc, that run on an MFP.
Service of subsidiary Gluegent. "Gluegent Gate" which manages ID in thecloud, "Gluegent Apps group scheduler" etc. which added teamcalendar schedule management function etc to Google Calendar etc.
We support business efficiency by using enterprise cloud.
One of the software applications for MFPs offered by SIOS Technology, Inc., aconsolidated subsidiary of the Company. Maintains image and operation
logs of documents copied, faxed, printed, and scanned by users on MFPs.

© SIOS Corporation All rights Reserved.

26

Cautionary Statement
Forward-looking statements about the Company’s business outlook contained in thisdocument reflect management’s assumptions and judgments made on the basis ofavailable information, and may include risks and uncertainties. We caution that significant
risks and uncertainties could cause actual performance to differ materially from what isdiscussed in the forward-looking statements. Significant risks and uncertainties that mightaffect our performance include, but are not limited to, the economic environment andmarket 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.

27