Progress and Outlook ofMedium-term Business Plan
(April 2019 - March 2022)

December 4, 2020

ZUKEN Inc.
Tokyo Stock Exchange, First Section
Securities code: 6947

Contents◼ A Sound Base for More Progress as the Plan’s SecondHalf Begins◼ Medium-term Business Plan Progress and Outlook(First Half of the Second Year)(Appendix) Corporate Profile1

A Sound Base for More Progress as
the Plan’s Second Half Begins

2Outlook and Activities for the Plan’s Final Year

(1) Maintain the FY3/21 outlook due to the soundbacklog of orders, despite lower sales and earnings
in the 1H FY3/21(2) Deployment of Model-Based Systems Engineering(MBSE) is advancing as planned for tools andsolutions(3) Ready for the “new normal” by providing solutions
for customers’ remote engineering activities andsupplying online marketing and sales platforms
3Order Backlog At the End of the First HalfFirst half order backlog by solutions /services(Billions of yen)

9.0
8.0

Solutions

6.65

7.0
6.0

8.27

Client services (Maintenance)

6.83

YoY
+15.2%

7.18

5.63

5.0

3.60

4.0
3.0

2.84

3.75

4.17

+11.2%

3.09

2.0
1.0

0.01HFY3/1741H
FY3/181H
FY3/191H
FY3/20Order backlog reached an all-time high

1HFY3/21

Product Categories

Order Backlog (Millions of yen)

1H FY3/20

1H FY3/21

YoYchange

Printed Circuit Board design
solutions893

1,110+217+24.3%

Circuit design solutions

1,437

1,427-10-0.7%

IT solutions

1,417

1,650+233+16.4%

Client services

7,179

8,267

+1,088+15.2%

Total

10,925

12,456+1,530+14.0%A small decrease in circuit design solutions
because of the large volume of orders in 1H FY3/205Regions

Order Backlog (Millions of yen)

1H FY3/20

1H FY3/21

YoYchangeJapan

8,258

9,560+1,301+15.7%

Europe1,335

1,252-82-6.2%

USA

978

1,182+204+20.9%

Asia

354

460+106+29.9%

Total

10,925

12,456+1,530+14.0%The increase in Japan is due to growing demand for PDM
products and security products
6Medium-term Business Plan
Progress and Outlook(First Half of the Second Year)7

Medium-term Sales/Earnings Targets and 1H FY3/21 Results(Millions of yen)

Sales

Operating Profit(Millions of yen)

40,0005,000

30,000 (-1,000)
32,00029,296 29,000

35,00030,000

4,000

3,700
3,391

26,7873,050

25,0003,000

Fullyear

20,00015,0003,200 (-500)

2,700

YoY

12,477

13,705

13,071(-5%)

1,778

2,000

Fullyear
YoY

1,299

10,000

1H966

1,000(-46%)

1H

5,000
00

FY3/19(Results)

FY3/20(Results)

FY3/21(Plan)(Plan)(1H Results)

FY3/22(Plan)

FY3/19(Results)

FY3/20(Results)

FY3/21(Plan)(Plan)(1H Results)

FY3/22(Plan)

Note: Foreign exchange rate assumptions for the Medium-term Business Plan are 108 yen/USD and 120 yen/EUR.

A solid performance amid global turmoil in markets and restrictions
on sales and business activities due to the COVID-19 crisis
8Factors Impacting the Change in First Half Operating Profit
Lower sales-0.46 billion yen Lower gross-0.81 billion yen

profit margin

Newly
consolidated-0.33 billion yen subsidiaries

1.77 billion yen

Higher SG&Aexpenses-0.14 billion yen 0.13 billion yen

0.96 billion yen
1H FY3/20

1H FY3/21

Lower gross profit margin

New MBSE/MBD subsidiaries

Lower SG&A expenses◼ Due to change in the productmix caused by higher sales ofnetwork security products
purchased from third-partyvendors◼ The subsidiaries posted losses
due to up-front investments
immediately after starting
operations◼ Declines in expenses forbusiness travel, trade shows,user conferences and otheritems because of the COVID19 pandemic

9◼ GoodwillReference: First Half Sales by Solutions

Sales (Millions of yen)

1H FY3/20

1H FY3/21

YoYchangePrinted Circuit Board
design solutions

2,297

1,843-454

Circuit design solutions

3,325

2,674-650

IT solutions

2,7192,922+203

Data Management

Client services

5,363

5,630+267

Maintenanceservices

Total

13,705

13,071-634

10

Design Automation

Reference: Product Category
Major products of each product category
Product Categories Used in Earnings Releases

Printed Circuit Board
design solutions

Major Products

Design Automation
Printed circuit board

Circuit design solutions
Wire harness

Data Management

IT solutions

CR-8000 Design Force
CR-8000 DFM Center
CR-5000 Board Designer
CR-8000 Design Gateway
CR-8000 System Planner
E3.series
Cabling Designer
Harness Designer
DS-2, visualBOM
Knowledge Explorer
Fortigate (NW Security)(Divided among the three product categories)

Client services and others

11

Maintenance services for products

Sales by Product Category vs. 1H FY3/20

Product Category

1H FY3/20

1H FY3/21

YoY change

9,237

8,197

-1,039-11.3%(2,558)(2,345)

-213

-8.3%

Data Management Solutions

4,468

4,873+405+9.1%

Total Sales

13,705

13,071-634-4.6%(Millions of yen)

Design Automation(of which WH Design)

12Changes in Sales by Product Category
Electronic Design Automation

Data Management-0.83 billion yen

13.7 billion yen

Wire Harness-0.63 billion yen+0.41 billion yen-0.21 billion yen

13.1 billion yen
Design Automation

1H FY3/20

1H FY3/21

Electronic Design Automation

Wire Harness Design

Data Management◼ Current customers are postponing
projects because of the uncertain
business climate in Japan and othercountries◼ Demand is weak because of theuncertain business climate andsome current customers are
postponing projects◼ Consistent need for design
improvement investments, mainly at
automakers and their suppliers andin the electronic components
industry◼ Good prospects for growth in thefactory DX solutions market, butcurrently no signs of a significantrecovery◼ Sales of PDM products remained
high as in FY3/20 due to theconsistent need for theoptimization of engineering
processes

13◼ The COVID-19 crisis has increased
demand for security solutions(provided by a Zuken affiliate)Overseas Business Sales

Average exchange rates in 1H FY3/20 were 109 yen/USD and 121 yen/EUR.
Average exchange rates in 1H FY3/21 were 107 yen/USD and 121 yen/EUR.

Japan-0.36 billion yen

13.7 billion yen
Japan 9.6 billion
Europe 2.2 billion
USA
0.9 billion
Asia
1.0 billion

1H FY3/20

14-3.8%OverseasBusiness

Foreign exchange
impact-0.22 billion yen-5.3%-0.63 billion yen-0.05 billion yen

13.1 billion yen
1H FY3/21

Changes in Sales by Region

Average exchange rates in 1H FY3/20 were 109 yen/USD and 121 yen/EUR.
Average exchange rates in 1H FY3/21 were 107 yen/USD and 121 yen/EUR.

0.07 billion yen-0.14 billion yen

USAEurope

4.1 billion yen-0.26 billion yen-0.14 billion yen

Asia-0.05 billion yen(including direct sales in China)

Europe 2.2 billion
USA0.9 billion
Asia
1.0 billion+7.8%-6.4%-14.4%

Sales in local currencies

Foreignexchange
impact

3.9 billion yen
1H FY3/21

1H FY3/20

AsiaUSAEurope◼ Sales and earnings were stable
due to the large volume of timebased licenses, but thechallenging market conditions
made it difficult to receive neworders, especially in the aerospaceindustry◼ Almost all consulting and otherservices for current major
customers stopped and ongoingprojects were pushed back◼ Sales activities decreased
everywhere except Taiwan; thebusiness climate is especiallydifficult in India◼ Sales activities for new orders in
the industrial machinery sector
were suspended◼ The Asia region is expected toreturn to growth in the 2H due tothe resumption of economic
activity in China, South Korea,
Taiwan and other countries◼ Newly acquired Vitech
24contributed to sales

15

Outlook for the Business Environment◼ The business climate is uncertain and the outlook is unpredictablebecause COVID-19 infections started to increase again globally.
However, major Zuken customers are expected to continue to makesubstantial investments over the next several years to upgrade andoptimize their engineering infrastructures to keep up with advances inmany fields of technology.
◼ The acceleration of IT demand growth backed by working style reforms,
the digital transformation and other trends is expected to continue.
◼ New working styles reflecting the COVID-19 crisis, and the post-crisis
environment, are becoming firmly established at Zuken; the goal is astrong rebound in the second half of the current business plan.

No change in the current targets for the following fiscal years
16Financial Summary
Sales and Operating Profit(Billions of yen)

Sales

Operating profit

34.0

11.5

29.2 29.0

29.0

26.7

24.0
19.0

22.0
19.1

18.8
15.2 14.6

16.1 15.7

19.8
17.0

16.7

17.9 18.2 17.8

19.7

21.2

21.9 22.1

9.5
00

23.5

8.5
00

7.5
6.5
5.5

14.0
9.0
4.0

4.5

2.16

2.09 1.92 1.95

2.38

3.05

2.83

1.46
0.88

0.10 0.27

-0.37

0.22

0.35 0.63

1.00 0.77

1.59

3.39

2.70

2.02

-1.0
0

17

10.5

2.5
1.5
0.5
0.0

Plan

Record-high sales and operating profit in FY3/20

3.5

(0.5)
-0.5

Policy for Shareholder Distributions
Consistent Growthof Dividends
株主還元策の推移(Unit: yen)
（単位：円）

記念配当・特別配当
Commemorative/special dividends
普通配当Ordinary dividend

10105101010121414141414141720202226

2930

Investments for ◼ Zuken has paid an annual dividend per share of at least 10 yen every year
since its listing in 1987
growthStableshareholder
distributions

Financialsoundness◼ The dividend has increased several times since 2008 and the annual dividend
was 29 yen for FY3/20 with the year-end dividend of 15 yen◼ Zuken plans to pay an annual dividend of 30 yen for FY3/21◼ We will continue to consider suitable and highly effective methods ofreturning earnings to shareholders by taking into account businessperformance, operating conditions and other factors

Zuken will retain a progressive dividend policy
18

Corporate Profile

The Zuken Group’s digital transformation special web pagehttps://www.zuken.co.jp/dx/

Digital transformation of the Zuken Group19

Corporate Profile
ZUKEN Inc.
Established:
Capital:Employees:

December 17, 1976
10,117,065,000 yen
426 (non-consolidated)
1,447 (consolidated) (As of Sep. 30, 2020)
Tokyo Stock Exchange, First Section
Securities code: 6947
⚫ A Japanese engineering software vendor with global presence⚫ More than 40 years of experience in the electronic design
automation industry (Backed by a consistently sound financialposition)⚫ In-house development of technologies along with the use ofalliances, M&A and other measures to acquire new technologies
quickly as needed20

History
December 1976

Established as Zukei Shori Gijutsu Kenkyusho Inc.

June 2009

June 1978

Developed Japan's first CAD/CAM system "Create 2000" forthe design of printed circuit boards.

Announced the release of “PreSight,” a new product of PLMSolutions.

May 2010

Concluded an equity alliance with Lattice Technology Co.,
Ltd., making Zuken the second-largest shareholder afterToyota.

June 2011

Announced the release of "visual BOM" that integrated bill ofmaterials technology with the ultra lightweight 3D format
XVL.

January 2011

Announced worldwide the release of the "CR-8000," a newgeneration electronic device design platform.

September 2013

Established "Zuken SOZO Center" in Silicon Valley, North
America.

August 2014

Established Global Automotive and Transportation
Competence Center in Erlangen, Germany.

December 2014

Concluded a capital and business alliance with Toyo BusinessEngineering Corporation (now Business EngineeringCorporation).

February 2015

Established DiverSync Corporation.

March 2015

Established ZUKEN INDIA Pte. Ltd. in India.

July 2015

Took over YDC Corporation's CADVANCE business (CAD andPDM operations).

April 2016

The PreSight Division was spun off as Zuken PreSight Inc.

December 2017

Alfatech Inc. (now Zuken Alfatech Co., Ltd.) became a wholly
owned subsidiary.

August 2019

Acquired Vitech Corporation (now Zuken Vitech Inc.) of USA.

October 2019

Established ZUKEN Modelinx Inc.

November 1983

Established ZUKEN AMERICA Inc. (now ZUKEN USA Inc.) inthe United States.

January 1988

Developed a new CAD system "CR-3000."

October 1991

Registered in the Second Section of the Tokyo Stock
Exchange as a first EDA corporation.

January 1992

Established ZUKEN EUROPE GmbH (now ZUKEN GmbH) inGermany.

January 1992

Established ZUKEN KOREA Inc. in Seoul.

August 1992

Established ZUKEN SINGAPORE Pte. Ltd. in Singapore.

April 1994

Developed EDA vertical integration solution "CR-5000."

June 1994

Acquired all the shares of Racal-Redac Ltd. of the United
Kingdom.

September 1994

Moved up to the First Section of the Tokyo Stock Exchange.

March 2000

Acquired all the shares of INCASES Engineering GmbH.

March 2002

Started provision of a wire harness design environment for
the automotive industry.

June 2002

Established Shanghai Technical Center in Shanghai.

February 2004

Announced the release of "ePLM Platform DS-2," a PLM
solution specially designed for the electrical and electronics
industries.

August 2005

Established ZUKEN TAIWAN Inc. in Taiwan.

May 2006

Acquired CIM-TEAM (now ZUKEN E3 GmbH) of Germany.

June 2007

Released "V54EE" based on "Catia V5."

Global Locations and Affiliates in Japan
Head Office/Central Research Facility: Tsuzuki-ku, Yokohama

Locations in Japan:

Yokohama, Osaka and Nagoya

Overseas Locations:

5 countries in Asia, 8 countries in Europe andthe United States

7 (Zuken Tec Inc., Zuken Netwave Inc., Zuken Elmic Inc., Zuken PreSight Inc.,

Domestic Affiliates:

Zuken Alfatech Inc., and two other companies)

EUROPEUK, Germany, Switzerland,France, Italy, Netherland, Poland

AMERICAS

Korea

Japan
China:Sales OfficeTaiwanAsia

India
Singapore

22Zuken Group
Zuken Tec
Overseas subsidiaries
EuropeNorth America
Asia

Technology services(including support for modelbased development activities)

Design/manufacturinglink
Knowledge/AI23

3D mechanicaldesigns
BIM

Security

Telecommunications

Storage

Embedded softwarePrecautions
Information in this presentation includes forward-looking statements about results ofoperations and other items. These statements are judgments of the Zuken Group basedon information available when this presentation was prepared and include potential risks
and uncertainties. Therefore, actual results of operations and other aspects of future
performance may differ greatly from these forward-looking statements. Risk factors that
may affect the Zuken Group’s performance include, but are not limited to, changes in theeconomies of various countries, capital expenditures of the group’s customers, changes
in the demand for the group’s products, progress with the development of new products,competition with other companies, and foreign exchange rate movements.
The performance targets in this presentation are not forecasts or current outlooks for
future results of operations. These figures are goals that the Zuken Group will attempt toreach by implementing its business strategies.

24

Contact

ZUKEN Inc.
Corporate Marketing Division
2-25-1, Edahigashi Tsuzuki-ku, Yokohama
Tel: +81-45-942-1511