May 11, 2020

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2020 (FY2019)[Japanese GAAP]
Company name:
ZUKEN Inc.
Listing: Tokyo Stock Exchange, First Section
Stock code:
6947
URL: https://www.zuken.co.jp
Representative:
Jinya Katsube, President and Representative Director
Contact:
Susumu Yoshida, General Manager of Finance Department
Tel: +81-45-942-1511
Scheduled date of Annual General Shareholders’ Meeting:June 26, 2020
Scheduled date of payment of dividend:
June 29, 2020
Scheduled date of filing of Annual Securities Report:
June 26, 2020
Preparation of supplementary materials for financial results:
None
Holding of financial results meeting:None(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2020 (April 1, 2019 – March 31, 2020)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Millions of yen%
Fiscal years ended
Mar. 31, 2020
29,296
9.4
Mar. 31, 201926,787
13.6
Note: Comprehensive income (Millions of yen)

Net income pershare

Millions of yen

Profit attributable toowners of parent

Ordinary profit

Millions of yen

%

3,391
11.2
3,486
9.2
2,595
3,050
50.6
3,191
50.9
2,113
Fiscal year ended Mar. 31, 2020:
2,633 (down 14.4%)
Fiscal year ended Mar. 31, 2019:
3,078 (up 22.5%)

%

22.8
39.8

Diluted net income
per share

Millions of yen%

Ordinary profit on
total assets

Return on equity

Yen
Yen
%
Fiscal years ended
Mar. 31, 2020
111.65
7.7
Mar. 31, 2019
90.88
6.7
Reference: Equity in earnings of associates (Millions of yen) Fiscal year ended Mar. 31, 2020:
Fiscal year ended Mar. 31, 2019:

Operating profit to
net sales

%

%

7.1
7.0

11.6
11.4

-

(2) Consolidated financial position
Total assets

Net assets

Shareholders’ equity ratio

Millions of yen

Millions of yen

As of Mar. 31, 2020
51,445
As of Mar. 31, 201947,190
Reference: Shareholders’ equity (Millions of yen)

35,01333,050
As of Mar. 31, 2020:

Net assets per share%

34,583

Yen

67.2
69.1
As of Mar. 31, 2019:

1,487.50
1,402.49
32,607(3) Consolidated cash flows
Cash flows fromoperating activities
Fiscal years ended
Mar. 31, 2020
Mar. 31, 2019

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents at
end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

4,207
3,425

(1,034)(1,176)

(807)
(588)

20,30618,137

2. Dividends
Dividend per share
1Q-end 2Q-end 3Q-end Year-end
Fiscal year ended Mar. 31, 2019
Fiscal year ended Mar. 31, 2020
Fiscal year ending Mar. 31, 2021
(forecast)

Total

Total dividends

Payout ratio(consolidated)

Dividend on
equity(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

-

12.00
14.00

-

14.00
15.00

26.00
29.00

604
674

28.6
26.0

1.9
2.0

-

15.00

-

15.00

30.00

-

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2021 (April 1, 2020 – March 31, 2021)
The forecast for the fiscal year ending March 31, 2021 has not been determined at this time because it is difficult to reasonably
predict the impact of the spread of COVID-19. The Company will promptly announce the forecast as soon as it is determined.

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in change in scopeof consolidation): None
(2) Changes in accounting policies and accounting-based estimates, and restatements(a) Changes in accounting policies due to revisions in accounting standards, others:None(b) Changes in accounting policies other than (a) above:None(c) Changes in accounting-based estimates:

None(d) Restatements:

None(3) Number of outstanding shares (common stock)(a) Number of shares outstanding at the end of the period (including treasury shares)
As of Mar. 31, 2020:

23,267,169 shares

As of Mar. 31, 2019:23,267,169 shares

As of Mar. 31, 2019:17,480 shares(b) Number of treasury shares at the end of the period
As of Mar. 31, 2020:

17,680 shares(c) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2020:

23,249,578 sharesFiscal year ended Mar. 31, 2019:23,249,972 shares

Reference: Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2020 (April 1, 2019 – March 31, 2020)(1) Non-consolidated results of operations
Net sales
Fiscal years ended
Mar. 31, 2020
Mar. 31, 2019

(Percentages represent year-on-year changes)
Ordinary profit
ProfitOperating profit

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

12,072
11,235

7.5
12.6

1,680
1,456

15.4
73.9

2,553
2,154

18.5
37.9

2,277
1,783

27.7
32.6

Net income per share
Fiscal years ended
Mar. 31, 2020
Mar. 31, 2019

Diluted net income per share

Yen

Yen

97.96
76.69

-

(2) Non-consolidated financial position
Total assets

Net assets

Millions of yen

Millions of yen

As of Mar. 31, 2020
39,464As of Mar. 31, 201937,344
Reference: Shareholders’ equity (Millions of yen)

33,42731,556
As of Mar. 31, 2020:

Shareholders’ equity ratio

Net assets per share%

33,42784.7
84.5
As of Mar. 31, 2019:

Yen

1,437.76
1,357.29
31,556* This financial report is not subject to audit by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements and other special items
Forecasts of future performance in this report are based on assumption judged to be valid and information available to theCompany’s management at the time this report was prepared, but are not promises by the Company regarding future performance.
Actual results may differ substantially from the forecasts for a number of reasons. Please refer to “1. Overview of Results ofOperations, etc., (4) Outlook” on page 4 for forecast assumptions and notes of caution for usage.

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Contents of Attachments
1.

Overview of Results of Operations, etc. .............................................................................................................. 2(1) Results of Operations ........................................................................................................................................ 2(2) Financial Position .............................................................................................................................................. 3(3) Cash Flows ........................................................................................................................................................ 3(4) Outlook ............................................................................................................................................................. 4

2.

Basic Approach for the Selection of Accounting Standards ................................................................................. 4

3.

Consolidated Financial Statements and Notes ..................................................................................................... 5(1) Consolidated Balance Sheet .............................................................................................................................. 5(2) Consolidated Statements of Income and Comprehensive Income ...................................................................... 7
Consolidated Statement of Income ...................................................................................................................... 7
Consolidated Statement of Comprehensive Income............................................................................................. 8(3) Consolidated Statement of Changes in Equity ................................................................................................... 9(4) Consolidated Statement of Cash Flows ............................................................................................................ 11(5) Notes to Consolidated Financial Statements .................................................................................................... 12
Going Concern Assumption............................................................................................................................... 12
Basis of Presenting the Consolidated Financial Statements ............................................................................... 12
Notes to Consolidated Balance Sheet ................................................................................................................ 14
Notes to Consolidated Statement of Income ...................................................................................................... 14
Notes to Consolidated Statement of Comprehensive Income ............................................................................ 15
Notes to Consolidated Statement of Changes in Equity ..................................................................................... 15
Notes to Consolidated Statement of Cash Flows ............................................................................................... 16
Financial Instruments ........................................................................................................................................ 17
Marketable Securities ........................................................................................................................................ 19
Segment Information ......................................................................................................................................... 20
Per-share Information ........................................................................................................................................ 21
Subsequent Events............................................................................................................................................. 21

4.

Production, Orders and Sales ............................................................................................................................. 22

5.

Non-consolidated Financial Statements ............................................................................................................. 23(1) Balance Sheet .................................................................................................................................................. 23(2) Statement of Income........................................................................................................................................ 25(3) Statement of Changes in Equity ...................................................................................................................... 26

6.

Others ................................................................................................................................................................ 28

1

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

1. Overview of Results of Operations, etc.
(1) Results of Operations
During the fiscal year ended on March 31, 2020, the global economy recovered slowly in Europe, the United States
and Japan. However, the COVID-19 pandemic caused a sharp downturn in the global economy late in the fiscal year
and the economic environment is now extremely challenging.
Manufacturers in the electronics, automotive and industrial equipment sectors are the main customers of the Zuken
Group. Though corporate activities were somewhat restrained due to the pandemic, IT investment remained strong
throughout the fiscal year.
The Zuken Group has the goal of becoming a “truly global company” able to supply the best-in-class solutions to
manufacturers worldwide. During the fiscal year, we stepped up activities for increasing sales of our core products,
increased the speed of new product development, entered new fields of technology and took other actions foraccomplishing this goal. Major initiatives of the fiscal year were as follows.
(i) Increase in Sales of Core Products and Development of New Products
In the electronic equipment manufacturing sector, there were many activities for increasing worldwide sales ofour core CR-8000 Design Force, electronics system design solution series. Sales were higher due to these
activities, especially in Japan and Europe. In addition, we started full-scale sales activities for eCADSTAR, a
new PCB design system tailored for relatively small design teams. This allowed us to increase sales activities
that targeted market segments requiring small and midsize designs.
In the automotive and industrial equipment manufacturing sectors, we continued to concentrate on sales of theE3.series wire harness design systems. Furthermore, we upgraded the functions of the DS-E3 electrical design
data management system, which was developed for use with the E3.series, in order to sell integrated solutions
extending from design to data management. To meet the requirements of a diverse array of design environments,
we are increasing the pace of activities to create a new wire harness design system that combines products ofGermany and Japan and takes these products to a higher level.
(ii) Activities for Medium- and Long-term Growth
A growing number of manufacturers worldwide are reexamining their design and manufacturing processes fromthe ground up in response to the increasing technical sophistication and complexity in product development. As
a result, manufacturers require new frameworks and technologies capable of making their design and production
process more efficient.
Towards meeting these requirements, we acquired a U.S. company with highly advanced technologies in the fieldof model-based systems engineering (MBSE), which is a new methodology of the design process. We
significantly strengthened our operation and support infrastructure for MBSE. Additionally, there are otherongoing activities including R&D cooperation and alliances with various companies focused on leading-edge
technologies. Taking these actions has enabled the Zuken Group to cover a broader range of solution domains
and build an infrastructure for supporting manufacturers’ innovations involving design and production processes.
*MBSE is a next-generation methodology that is starting to be used for fabricating products that are complex andrequire very high quality. Companies in the aerospace, automobile and other industries are using MBSE. Thisapproach allows electrical, mechanical, software and other engineers to perform their tasks based on a single
model. The main goal is to optimize at the conceptual planning stage the development of products that require
an intricate combination of a range of technologies.
Consolidated results
Net sales
Ordinary profit
Profit attributable to owners of parent

29,296 million yen
3,486 million yen
2,595 million yen

2(up 9.4% year on year)(up 9.2% year on year)(up 22.8% year on year)

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Net sales were much higher than the previous fiscal year and reached a record high for the fourth consecutive fiscal
year. Sales of the CR-8000 electronics system design solution series, our core product, and the E3.series wire harness
design systems increased. Sales growth was also attributable to strong sales at a subsidiary in Japan of 3D solutions
to construction companies.
Due to the higher sales, operating profit and ordinary profit reached record highs.
Sales by product category were as follows.
Sales by productPrinted Circuit Board design solutions
Circuit design solutions
IT solutions
Client services

Major products of Printed Circuit Board design
solutions

Major products of Circuit design solutions

Major products of IT solutions

4,782 million yen
7,361 million yen
6,193 million yen
10,948 million yen(up 13.3% year on year)(up 20.2% year on year)(up 4.6% year on year)(up 4.1% year on year)

CR-8000 Design Force
CR-8000 DFM Center
CADSTAReCADSTAR
CR-8000 Design Gateway
CR-8000 System Planner
E3.series
Cabling Designer
Harness Designer

CR-5000 Board Designer

CR-5000 System Designer

PreSight visual BOM
DS-CR
DS-2 Expresso
DS-E3
GENESYS(2) Financial Position
Total assets at the end of the fiscal year under review increased 4,254 million yen from the end of the previous fiscal
year to 51,445 million yen. The main factors were increases of 2,051 million yen in cash and deposits, 537 million
yen in notes and accounts receivable-trade and 465 million yen in investment securities.
Liabilities at the end of the fiscal year under review increased 2,291 million yen from the end of the previous fiscal
year to 16,432 million yen. The main factors were increases of 1,328 million yen in advances received, 350 million
yen in accounts payable-trade and 349 million yen in retirement benefit liability.
Net assets at the end of the fiscal year under review increased 1,963 million yen from the end of the previous fiscal
year to 35,013 million yen and the shareholders’ equity ratio was 67.2%.
(3) Cash Flows
Cash and cash equivalents (hereafter “cash”) at the end of the fiscal year under review increased 2,169 million yen
over the end of the previous fiscal year to 20,306 million yen.
Cash flows by category were as follows.
Cash flows from operating activities
Net cash provided by operating activities increased 781 million yen from the previous fiscal year to 4,207 million yen.
The main cash inflows were profit before income taxes of 3,619 million yen (a year-on-year increase of 519 millionyen), an increase in advances received of 1,321 million yen (a year-on-year increase of 1,102 million yen),depreciation of 694 million yen (a year-on-year increase of 25 million yen). The main cash outflow was income taxes
paid of 1,059 million yen (a year-on-year increase of 129 million yen).

3

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Cash flows from investing activities
Net cash used in investing activities decreased 141 million yen from the previous fiscal year to 1,034 million yen.
The main cash outflows include purchase of non-current assets of 721 million yen (a year-on-year increase of 226
million yen) and purchase of shares of subsidiaries resulting in change in scope of consolidation of 432 million yen.
Cash flows from financing activities
Net cash used in financing activities increased 218 million yen from the previous fiscal year to 807 million yen. Thiswas mainly due to cash dividends paid of 650 million yen (a year-on-year increase of 92 million yen).
Cash flow indicators were as follows:
Fiscal years ended

March 31, 2017

March 31, 2018

March 31, 2019

March 31, 2020

Shareholders’ equity ratio

69.3%

69.0%

69.1%

67.2%

Shareholders’ equity ratio based on market prices

78.2%

78.1%

73.8%

104.2%

Interest-bearing debt to cash flow ratio

0.9%

0.9%

0.9%

2.0%

36,726.9

28,300.6

11,290.9

977.3

Interest coverage ratio

Calculation formula: Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio based on market prices: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments
Notes: 1. All indicators are calculated based on consolidated figures.
2. Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares).
3. Operating cash flows are calculated using the figures for operating cash flows on the consolidated statement of cash
flows.
4. Interest-bearing debt includes all liabilities on the consolidated balance sheet that incur interest.

(4) Outlook
We expect the current severe economic environment to continue because the impact of the spread of COVID-19 cannot
be foreseen. Dramatic changes are taking place worldwide in how products are manufactured along with advances in
artificial intelligence and the launch of 5G, the next generation communication infrastructure. These changes are
creating an urgent need for innovations involving design and manufacturing processes. We believe that the result will
be an expansion of the business domains where there are opportunities for the Zuken Group.
The Zuken Group is determined to achieve more growth in corporate value by supplying innovative solutions that
help client companies upgrade their manufacturing operations.
The forecast for the fiscal year ending March 2021 has not been determined at this time because it is difficult toreasonably predict the impact of the COVID-19 pandemic. We will promptly announce the forecast as soon as it isdetermined.

2. Basic Approach for the Selection of Accounting Standards
The Zuken Group will continue to prepare consolidated financial statements in accordance with generally accepted
accounting principles in Japan for the time being to permit comparisons with prior years and with the financial dataof other companies.
We will take suitable actions with regard to the application of International Financial Reporting Standards by taking
into account associated factors in Japan and other countries.

4

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

3. Consolidated Financial Statements and Notes(1) Consolidated Balance SheetFY2018(As of Mar. 31, 2019)(Thousands of yen)
FY2019(As of Mar. 31, 2020)

AssetsCurrent assets
Cash and deposits

18,523,202

20,574,644

Notes and accounts receivable-trade

5,870,720

6,407,981

Securities

6,700,000

6,700,000

Merchandise and finished goods

345,764

403,944

Work in process

109,325

264,482

3,761

1,862

Other

2,336,168

2,749,149

Allowance for doubtful accounts(25,786)(29,587)

33,863,156

37,072,477

Raw materials and supplies

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

9,249,118

9,398,922

Accumulated depreciation(6,466,880)(6,549,021)

Buildings and structures, net

2,782,237

2,849,901

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

96,86095,913(56,087)(60,821)40,77235,091Tools, furniture and fixtures

1,947,425

2,012,463

Accumulated depreciation(1,567,051)(1,615,356)

Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Total property, plant and equipment

380,374

397,1073,015,103

3,015,103

56,046

134,378(29,722)(54,926)

26,32379,452

6,244,812

6,376,656

492,088913,777

Intangible assets
Goodwill
Other

628,999

602,140

1,121,088

1,515,917

Investment securities

4,919,667

5,385,293

Deferred tax assets

532,100

564,101

Total intangible assets
Investments and other assets

Other

525,050

548,198

Allowance for doubtful accounts(14,908)(16,752)

Total investments and other assets

5,961,910

6,480,840

13,327,811

14,373,415

47,190,967

51,445,892

Total non-current assets
Total assets

5

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

FY2018(As of Mar. 31, 2019)(Thousands of yen)
FY2019(As of Mar. 31, 2020)

Liabilities
Current liabilities
Accounts payable-trade827,244

1,177,418

Income taxes payable

630,106

716,954

Advances received

5,455,151

6,783,516

Provision for bonuses

846,582

902,008

Provision for bonuses for directors (and other officers)

73,65066,600

Other provisions

10,88370,207

Other

2,273,360

2,303,253

Total current liabilities

10,116,979

12,019,959

3,842,064

4,192,059

181,867

220,565

4,023,931

4,412,625

14,140,911

16,432,584

Share capital

10,117,065

10,117,065

Capital surplus

8,659,016

8,659,023

Retained earnings

12,230,462

14,175,240

Treasury shares(16,365)(16,778)

30,990,177

32,934,550

2,022,397

2,266,875

Non-current liabilities
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment

22,984(86,604)

Remeasurements of defined benefit plans(428,220)(531,321)

Total accumulated other comprehensive income

1,617,162

1,648,949

Non-controlling interests
Total net assets
Total liabilities and net assets

6

442,715

429,808

33,050,055

35,013,308

47,190,967

51,445,892

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

Net sales

26,787,267

29,296,353

Cost of sales

7,561,172

8,524,666

Gross profit

19,226,094

20,771,686

Selling, general and administrative expenses

16,175,918

17,380,445

Operating profit

3,050,176

3,391,241

Interest income

9,686

15,286

Dividend income

34,707

66,278

Subsidy income

17,53336,917

Received incentive

19,462

22,257

Other

91,13030,525

Total non-operating income

172,521

171,266

Foreign exchange losses

27,95970,127

Other

3,165

5,620

Non-operating income

Non-operating expenses

Total non-operating expenses
Ordinary profit

31,12575,747

3,191,571

3,486,759

2,056

2,506

Extraordinary income
Gain on sales of non-current assets
Transfer of rights income-

137,358

Gain on liquidation of subsidiaries

23,321-

Total extraordinary income

25,377

139,864

3,885

5,246

-

2,000

112,756-

Extraordinary losses
Loss on disposal of non-current assets
Provision of allowance for doubtful accounts of golf clubmembership
Retirement benefit expenses

116,642

7,246

Profit before income taxes

Total extraordinary losses

3,100,307

3,619,377

Income taxes-current

1,003,689

1,151,151

Income taxes-deferred(48,160)(133,618)

Total income taxes

955,528

1,017,533

2,144,778

2,601,844

31,7586,076

2,113,020

2,595,767

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

7

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Consolidated Statement of Comprehensive Income
FY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

2,144,778

2,601,844

Valuation difference on available-for-sale securities

897,702244,477

Foreign currency translation adjustment(123,959)(109,588)

Remeasurements of defined benefit plans, net of tax

159,488(103,101)

Total other comprehensive income

933,232

31,787

3,078,010

2,633,631

3,046,252

2,627,554

31,758

6,076

ProfitOther comprehensive income

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

8

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(3) Consolidated Statement of Changes in Equity
FY2018 (Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
Shareholders’ equity
Retained
Capital surplus
Treasury sharesearnings

Share capital
Balance at beginning of period

10,117,065

8,659,021

10,675,443

Total shareholders’equity(15,716)

29,435,814

Changes during period
Dividends of surplus
Profit attributable to owners ofparentOther(558,001)(558,001)

2,113,020

2,113,020

(5)

(5)

Purchase of treasury shares(649)

Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period

(649)

-

(5)

1,555,018(649)

1,554,363

10,117,065

8,659,016

12,230,462(16,365)

30,990,177

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period

1,124,695

Total
NonRemeasurements accumulated controllingof defined
otherinterests
benefit plans comprehensive
income146,943(587,708)
683,930
427,891

Foreigncurrencytranslation
adjustment

Total net
assets30,547,635

Changes during period
Dividends of surplus(558,001)

Profit attributable to owners ofparentOther
Purchase of treasury shares
Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period

2,113,020(5)(649)
897,702(123,959)

159,488933,232

14,823

948,056

897,702(123,959)

159,488933,232

14,8232,502,419

2,022,397

22,984(428,220)1,617,162

442,715

33,050,055

9

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

FY2019 (Apr. 1, 2019 – Mar. 31, 2020)(Thousands of yen)
Shareholders’ equity
Retained
Capital surplus
Treasury sharesearnings

Share capital
Balance at beginning of period

10,117,065

8,659,016

12,230,462

Total shareholders’equity(16,365)

30,990,177

Changes during period
Dividends of surplus
Profit attributable to owners ofparentOther(650,989)(650,989)

2,595,767

2,595,767

7

7Purchase of treasury shares(413)

Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period

(413)

-

7

1,944,777(413)

1,944,372

10,117,065

8,659,023

14,175,240(16,778)

32,934,550

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period

2,022,397

Total
NonRemeasurements accumulated controllingof defined
otherinterests
benefit plans comprehensive
income22,984(428,220)1,617,162
442,715

Foreigncurrencytranslation
adjustment

Total net
assets

33,050,055

Changes during period
Dividends of surplus
Profit attributable to owners ofparentOther
Purchase of treasury shares
Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period(650,989)
2,595,767
7(413)
244,477(109,588)(103,101)

31,787(12,906)

18,880244,477(109,588)(103,101)

31,787(12,906)

1,963,252

2,266,875(86,604)(531,321)

1,648,949

429,80835,013,308

10

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(4) Consolidated Statement of Cash FlowsFY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

3,100,307

3,619,377

Depreciation

668,769

694,125

Amortization of goodwill

157,376

219,344

Interest and dividend income(44,393)(81,565)

461

9,494

Cash flows from operating activities
Profit before income taxes

Foreign exchange losses (gains)
Loss (gain) on liquidation of subsidiaries(23,321)--(137,358)

Decrease (increase) in trade receivables(513,764)(584,879)

Increase (decrease) in trade payables

406,714351,540

Increase (decrease) in advances received

219,525

1,321,834

Decrease (increase) in prepaid expenses(144,299)(407,794)

Increase (decrease) in retirement benefit liability

441,839

260,409

Transfer of rights income

Other, net

42,293(74,479)

Subtotal

4,311,508

5,190,050

Interest and dividends received

44,042

81,103

Interest paid

(303)

(4,305)

Income taxes paid

(929,422)(1,059,136)

Net cash provided by (used in) operating activities

3,425,824

4,207,711

Cash flows from investing activities
Decrease (increase) in time deposits(128,280)

93,000Purchase of property, plant and equipment(260,642)(446,002)

Purchase of intangible assets(234,238)(275,690)

Purchase of investment securities
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from transfer of rights(549,000)(100,800)-(432,557)-

137,358

Other, net(3,932)(9,875)(1,176,093)(1,034,567)

Repayments of short-term borrowings-(79,443)

Repayments of long-term borrowings-(25,797)

Net cash provided by (used in) investing activities
Cash flows from financing activities

Purchase of treasury shares
Dividends paid
Other, net

(649)

(413)

(558,001)(650,989)(29,845)(50,735)(588,496)(807,380)(132,610)(196,708)

1,528,624

2,169,055

Cash and cash equivalents at beginning of period

16,609,271

18,137,895

Cash and cash equivalents at end of period

18,137,895

20,306,950

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

11

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(5) Note s to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Basis of Presenting the Consolidated Financial Statements
1. Scope of consolidation(1) Number of consolidated subsidiaries: 23
Main consolidated subsidiaries: Zuken USA Inc., Zuken GmbH, Zuken Limited, Zuken Tec Inc., Zuken NetWave Inc.
In the current fiscal year, the number of consolidated subsidiaries has increased due to the acquisition the stock of Vitech
Corporation and the establishment of ZUKEN Modelinx Inc.
(2) Number of non-consolidated subsidiaries: 2
These subsidiaries are not included in the scope of consolidation since they are small-scale businesses whose total assets,
net sales, profit (equity in earnings) and retained earnings (equity in earnings) have no significant effect on the overall
results of consolidated financial statements.
2. Application of equity method
Number of non-consolidated subsidiaries not accounted for under the equity method: 2
These subsidiaries are not included in the scope of application of the equity method since they are small-scale businesses
whose profit (equity in earnings) and retained earnings (equity in earnings) have no significant effect on the overall resultsof consolidated financial statements.
3. Fiscal year-ends of consolidated subsidiaries
Among the consolidated subsidiaries, the fiscal year-end of Zuken Korea Inc., Zuken Singapore Pte. Ltd. and Zuken Taiwan
Inc. is the end of February, and the fiscal year-end of Zuken Shanghai Technical Center Co., Ltd., Vitech Corporation and one
other company is the end of December.
The consolidated financial statements include the financial statements of consolidated subsidiaries as of their fiscal year-ends.
However, adjustments to the consolidated financial statements are made as needed for significant transactions at the above six
subsidiaries with different fiscal year-ends that occur between their fiscal year-ends and the fiscal year-end for the
consolidated financial statements.
4. Accounting standards(1) Valuation standards and methods for principal assets(a) Securities
Available-for-sale securities
Marketable securities:
Stated at fair value using quoted market price on the balance sheet date. (Unrealized gain or loss
is included in net assets. Cost of securities sold is determined by the moving-average method.)
Non-marketable securities: Stated at cost determined by the moving-average method.
(b) Inventories
Valued at the cost method (the book value on the balance sheet is written down to reflect the effect of lower profitability).
Merchandise:Primarily stated at cost, determined by the moving-average method.
Finished goods and work in process: Stated at cost, determined by the specific identification method at the Company and its
major consolidated subsidiaries, and stated at cost, determined by the periodic averagemethod at some consolidated subsidiaries.
Raw materials: Stated at cost, determined by the moving-average method at the Company, and stated at cost, determined by
the specific identification method at major consolidated subsidiaries.
Supplies:
Stated at cost, determined by the last purchased price method at the Company and its major consolidated
subsidiaries.

12

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(2) Depreciation and amortization of significant depreciable assets(a) Property, plant and equipment (excluding leased assets)
Depreciation of property, plant and equipment at the Company and its domesti c consolidated subsidiaries is calculated by the
declining-balance method, except for facilities attached to buildings and structures acquired on or after April 1, 2016 andbuildings (excluding attached facilities) of which depreciation is calculated by the straight-line method. Overseas
consolidated subsidiaries compute depreciation mainly by the straight-line method.
Estimated useful lives of principle assets are as follows:
Buildings and structures:
3 years to 60 years
Tools, furniture and fixtures:
2 years to 20 years(b) Intangible assets (excluding leased assets)
Software for sale at the Company and its domestic consolidated subsidiaries is amortized using the straight -line method
over the period of validity starting when sales begin (not more than three years) and software for internal use at thesecompanies is amortized using the straight-line method over the estimated useful lives (not more than five years).
Amortization of other intangible assets is calculated by the straight-line method.
(c) Leased assets
Depreciation of finance lease transactions where there is no transfer of ownership is calculated based on the straight -line
method, assuming the lease period to be the useful lives and a residual value of zero.
(3) Recognition of significant allowances(a) Allowance for doubtful accounts
To prepare for losses on doubtful accounts such as notes and account receivables -trade and loans receivable, allowances
equal to the estimated amount of uncollectible receivables are booked for general receivables based on the historical writeoff ratio, and bad receivables based on case-by-case determination of collectibility.
(b) Provision for bonuses
To provide for employee bonus obligation, the Company and some consolidated subsidiaries provide an allowan ce at theamount based on the estimated bonus obligations.
(c) Provision for bonuses for directors (and other officers)
To provide for bonuses for directors (and other officers), the Company and some consolidated subsidiaries provide anallowance at the amount based on the estimated bonus obligations.
(4) Accounting for retirement benefit(a) Allocation method for the estimated retirement benefit obligations
For the determination of retirement benefit obligations, the benefit formula standard is used as the method for allocating
estimated retirement payments over the period ending in the fiscal year under review.
(b) Accounting for actuarial gain or loss and past service cost
Past service cost is charged to expenses for the fiscal year when they were incurred.
Actuarial gain or loss is amortized and charged to expenses in the year following the fiscal year in which such gain or loss isrecognized by the straight-line method over five years.
(5) Recognition of significant income and expenses
Recognition criteria for net sales and cost of sales of completed construction contracts(a) The portion of contracted work deemed to have been completed by the end of the fiscal year under re view
The percentage-of-completion standard (with the percentage of completion estimated on the cost -to-cost basis).
(b) Other contracted works
The completed-contract standard.
(6) Translation of significant foreign currency-denominated assets and liabilities
Foreign currency receivables and payables are translated into Japanese yen at year-end exchange rates and resulting exchange
gains or losses are recognized in earnings currently. All assets and liabilities of overseas consolidated subsidiaries andaffiliates are translated into Japanese yen at year-end exchange rates, and income and expenses into Japanese yen at the
average of the exchange rates in effect during each fiscal period, and resulting exchange gains or losses are included in

13

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

foreign currency translation adjustment and non-controlling interests under the net assets section.
(7) Amortization method and amortization period of goodwill
Goodwill is amortized using the straight-line method within 15 years, with the number of years determined by the origin of the
goodwill.
(8) Scope of cash and cash equivalents on consolidated statement of cash flows
Cash and cash equivalents consist of cash on hand and readily available deposits and short -term investments which can beeasily converted to cash and are exposed to little risk of change in value.
(9) Other significant accounting policies in the preparation of consolidated financial statements
Accounting for consumption taxes, etc.
Consumption taxes, etc. are accounted by the tax-exclusion method.

Notes to Consolidated Balance Sheet
Investments and other assets for non-consolidated subsidiaries are as follows.
FY2018(As of Mar. 31, 2019)11,500

Other (Investments in capital)(Thousands of yen)
FY2019(As of Mar. 31, 2020)
11,769Notes to Consolidated Statement of Income
1. Major items of selling, general and administrative expenses are as follows.
FY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

5,678,902

5,983,283

555,566

577,270

Salaries and allowances
Depreciation
Provision of allowance for doubtful accounts
Provision for bonuses

-

4,983

563,754604,514

Provision for bonuses for directors (and other officers)

73,65066,600Retirement benefit expenses

403,098476,237

3,717,081

4,041,272

Research and development expenses

2. Total amount of research and development expenses included in general and administrative expenses(Thousands of yen)
FY2018FY2019(Apr. 1, 2018 – Mar. 31, 2019)(Apr. 1, 2019 – Mar. 31, 2020)
3,717,081

4,041,272

3. Breakdown of gain on sales of non-current assets is as follows.
FY2018(Apr. 1, 2018 – Mar. 31, 2019)
2,042

Vehicles(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)
2,421

13

85

2,056

2,506

FY2018(Apr. 1, 2018 – Mar. 31, 2019)
1,336(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)
2,182

2,549

3,063

3,885

5,246

Tools, furniture and fixtures, and others
Total
4. Breakdown of loss on disposal of non-current assets is as follows.

Buildings, etc.
Tools, furniture and fixtures, and others
Total

14

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Notes to Consolidated Statement of Comprehensive Income
Re-classification adjustments and tax effect with respect to other comprehensive income
FY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

1,280,977

364,815--

Valuation difference on available-for-sale securities:
Amount incurred during the period
Re-classification adjustments
Before tax effect adjustments

1,280,977

364,815

Tax effect(383,274)(120,338)

Valuation difference on available-for-sale securities

897,702244,477(123,959)(109,588)

1,768(249,353)

Foreign currency translation adjustment:
Amount incurred during the period
Remeasurements of defined benefit plans, net of tax:
Amount incurred during the period

133,640

125,005

Before tax effect adjustments

135,409(124,348)

Tax effect24,07921,247

Remeasurements of defined benefit plans, net of tax

159,488933,232(103,101)
31,787

Re-classification adjustments

Total other comprehensive income

Notes to Consolidated Statement of Changes in Equity
FY2018 (Apr. 1, 2018 – Mar. 31, 2019)
1. Type of share and number of shares of outstanding shares and treasury shares
Number of shares
Increase
as of Apr. 1, 2018
Outstanding shares(Shares)Number of shares
as of Mar. 31, 2019

Decrease

Common stock

23,267,169--

23,267,169

Total

23,267,169--

23,267,169

17,057423-

17,480Treasury shares
Common stock (Note)
Total

17,057423
Note: Number of treasury shares of common stock increased 423 shares due to the acquisition of odd-lot shares.

17,4802. Dividends(1) Dividend payment
Resolution

Type of share

General Shareholders’Meeting on Jun. 28, 2018
Board of Directors’ meetingon Nov. 5, 2018

Commonstock
Commonstock

Total dividends(Thousands of yen)

Dividend pershare (Yen)Record date

Effective date

279,001

12

Mar. 31, 2018

Jun. 29, 2018

279,000

12

Sep. 30, 2018

Dec. 4, 2018

(2) Dividends with a record date in the fiscal year under review but an effective date in the following fiscal year
Type of
Total dividends
Source ofDividend per
Resolution
Record dateshare
(Thousands of yen)funds
share (Yen)General Shareholders’CommonRetained
325,495
14 Mar. 31, 2019
Meeting on Jun. 27, 2019stock
earnings

15

Effective dateJun. 28, 2019

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

FY2019 (Apr. 1, 2019 – Mar. 31, 2020)
1. Type of share and number of shares of outstanding shares and treasury shares
Number of shares
Increase
as of Apr. 1, 2019
Outstanding shares(Shares)Number of shares
as of Mar. 31, 2020

Decrease

Common stock

23,267,169--

23,267,169

Total

23,267,169--

23,267,169

Common stock (Note)

17,480200-

17,680Total

17,480200-

17,680Treasury shares

Note: Number of treasury shares of common stock increased 200 shares due to the acquisition of odd-lot shares.
2. Dividends(1) Dividend payment
Resolution

Type of share

General Shareholders’Meeting on Jun. 27, 2019
Board of Directors’ meetingon Nov. 11, 2019

Commonstock
Commonstock

Total dividends(Thousands of yen)

Dividend pershare (Yen)Record date

Effective date

325,495

14

Mar. 31, 2019

Jun. 28, 2019

325,494

14

Sep. 30, 2019

Dec. 3, 2019(2) Dividends with a record date in the fiscal year under review but an effective date in the following fiscal year
Type of
Total dividends
Source ofDividend per
Resolution
Record dateshare
(Thousands of yen)funds
share (Yen)General Shareholders’CommonRetained
348,742
15 Mar. 31, 2020
Meeting on Jun. 26, 2020
stock
earnings

Effective dateJun. 29, 2020

Notes to Consolidated Statement of Cash Flows
Reconciliation of cash and cash equivalents at end of period and amount of consolidated balance sheet is made as follows.
(Thousands of yen)
FY2018FY2019(Apr. 1, 2018 – Mar. 31, 2019)(Apr. 1, 2019 – Mar. 31, 2020)
18,523,202
20,574,644
Cash and deposits
Time deposit with maturities over three months(385,306)(267,693)

Cash and cash equivalents

18,137,895

20,306,950

16

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Financial Instruments
1. Conditions of financial instruments(1) Policy for handling financial instruments
Safety is the highest priority of the Zuken Group when investing funds in financial instruments, while also taking into accou nt
credit risk, interest rates and other factors. Funds are invested in financial instruments that a re believed to have an extremely
small risk of the value falling below face value.
(2) Details of financial instruments, their risks and risk management system
Notes and accounts receivable-trade, which are operating receivables, are vulnerable to credit risk associated with customers.
The Company performs rigorous credit management for each customer and supervise payment dates and balances. In addition,
there are measures to quickly identify doubtful receivables caused by a decline in a customer’s financial soundness or otherevent and to reduce the amount of these receivables.
Marketable securities and investment securities are mainly stock of companies with relationships with the Zuken Group. These
securities are vulnerable to risk associated with changes in their market prices. The Company periodically checks fair values, thefinancial condition of issuers and other items in order to quickly identify securities that may need to be written down and r educe
the amount of these securities.
Accounts payable-trade, which is operating debt, is mostly due within one year.
(3) Supplemental explanation concerning fair values, etc. of financial instruments
Fair value of the financial instrument is measured at a quoted market price, if available, or reasonably ass essed value if a quoted
market price is not available. As the calculation of the reasonably assessed value incorporates varying factors, the amount m ayvary if different assumptions are used.
2. Items related to fair values of financial instruments
The book value, fair value, and their differences are shown as follows. However, financial instruments whose fair value isdeemed to be extremely difficult to measure are not included (please refer to Note 2 below.)
FY2018 (As of Mar. 31, 2019)
Book value

Fair value(Thousands of yen)
Difference(1) Cash and deposits

18,523,202

18,523,202-(2) Notes and accounts receivable-trade(3) Marketable securities and investment
securities
Assets total

5,870,720

5,870,720-

11,327,167

11,327,167-

35,721,089

35,721,089-

827,244827,244-827,244827,244-(1) Accounts payable-trade
Liabilities total
FY2019 (As of Mar. 31, 2020)

Book value

Fair value(Thousands of yen)
Difference(1) Cash and deposits

20,574,644

20,574,644-(2) Notes and accounts receivable-trade(3) Marketable securities and investment
securities

6,407,981

6,407,981-

11,691,982

11,691,982-

Assets total

38,674,608

38,674,608-(1) Accounts payable-trade

1,177,418

1,177,418-

1,177,418

1,177,418-

Liabilities total

Notes 1. Matters concerning determination of fair value of financial instruments and marketable securities
Assets(1) Cash and deposits, and (2) Notes and accounts receivable-trade
Fair value of the financial instruments in these categories is deemed to be equal to their carrying amount.

17

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(3) Marketable securities and investment securities
For fair value of the financial instruments in these categories, stocks are valued based on their prices on securities
exchanges. Fair value of bond investment trust is deemed to be equal to its carrying amount. Please refer to the section“Marketable Securities” for information about securities categorized by purpose.
Liabilities(1) Accounts payable-trade
Fair value of the financial instrument in this category is deemed to be equal to their carrying amount because they aresettled within a short period of time.
2. Financial instruments whose fair values are deemed to be extremely difficult to measure(Thousands of yen)
FY2019(As of Mar. 31, 2020)

FY2018(As of Mar. 31, 2019)

Item

292,500

Unlisted stocks

393,310

These instruments are not included in the above table because there are no market prices and the fair values are deemed to
be extremely difficult to measure.
3. Balance of money claims and marketable securities with maturity scheduled to be redeemed in the subsequent fiscal
years
FY2018 (As of Mar. 31, 2019)(Thousands of yen)
Due within one year

One to five years

Five to ten years

Over ten years

Cash and deposits
Notes and accounts
receivable-trade18,523,202

-

-

-

5,870,720

-

-

-

Total

24,393,922

-

-

-

-

-

(Thousands of yen)Over ten years-

6,407,981---

26,982,626

-

-

-

FY2019 (As of Mar. 31, 2020)

Cash and deposits
Notes and accounts
receivable-trade
Total

Due within one year
20,574,644

One to five years

18

Five to ten years

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Marketable Securities
1. Available-for-sale securities
FY2018 (As of Mar. 31, 2019)(Thousands of yen)
Type
Securities with book value exceeds
acquisition cost(1) SharesBook value

Acquisition cost

Unrealized gains (losses)

4,627,167

1,725,592

2,901,575(2) Bonds---(3) Others

-

-

-

4,627,167

1,725,592

2,901,575

-

-

-

-

-

-

6,700,000

6,700,000-

6,700,000

6,700,000-

Sub-total
Securities with book value not exceedingacquisition cost(1) Shares(2) Bonds(3) Others
Sub-total

Total
11,327,167
8,425,592
2,901,575
Note: Unlisted stocks (book value of 292,500 thousand yen) are not included in available -for-sale securities in the above tablebecause there are no market prices and the fair values are deemed to be extremely difficult to measure.
FY2019 (As of Mar. 31, 2020)
Type
Securities with book value exceeds
acquisition cost(1) SharesBook value

Acquisition cost

4,917,949

1,642,224

3,275,725---(2) Bonds(3) Others
Sub-total
Securities with book value not exceedingacquisition cost(1) Shares(Thousands of yen)
Unrealized gains (losses)

-

-

-

4,917,949

1,642,224

3,275,725

74,032

83,367(9,334)(2) Bonds---(3) Others

6,700,000

6,700,000-

6,774,032

6,783,367(9,334)Sub-total

Total
11,691,982
8,425,592
3,266,390
Note: Unlisted stocks (book value of 393,310 thousand yen) are not included in available-for-sale securities in the above tablebecause there are no market prices and the fair values are deemed to be extremely difficult to measure.

19

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

Segment Information
1. General information about reportable segments
Reportable segments of the Zuken Group are based on the group’s components from which financial information can be obtained
separately, so that CEO can judge how to distribute management resources and to periodically evaluate its performance.
The Zuken Group is engaged in solutions business including research and development, manufacturing and sales activities
involving processes extending from design to production and related client services especially in electronics, automotive andindustrial equipment manufacturing sectors. In the domestic market, the Company and its domestic affiliates are in charge and inoverseas, each sales subsidiary which is an independent management unit in each country is in charge in Europe (mainly UK,
Germany, and France), Americas, and Asia (mainly Korea, Singapore, and China).
Therefore, the Zuken Group consists of segments based on the sales structure. Reportable segments are divided into following
four areas: Japan, Europe, Americas, and Asia. Each reportable segment consists of sales of solutions for processes extending fromdesigns to production and related client services especially in electronics, automotive and industrial equipment manufacturingsectors.
2. Basis of measurement for net sales, profit or loss, segment assets, and other material items for each reportable segment
The accounting treatment methods for reportable segments are the same as those listed in the section “Basis of Presenting theConsolidated Financial Statements.”
Profits for reportable segments are operating profit figures in the consolidated statement of income.
Intersegment sales or transfers are based on market price.
3. Information about net sales, profit or loss, segment assets, and other material items for each reportable segment
FY2018 (Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
Reportable segment

Adjustment
amountJapan

EuropeAmericas

Asia

Total

Appropriated amountin the consolidated
financial statements(Note 1)

(Note 2)

Net sales
Sales to third parties

18,969,942

4,674,988

1,728,838

1,413,498

26,787,267-

26,787,267

Intersegment sales or transfers

1,127,051

928,563

44,12789,0802,188,822(2,188,822)-

20,096,994

5,603,552

1,772,965

1,502,578

28,976,090(2,188,822)

26,787,267

Segment profit

Total

2,336,295

232,083

84,639387,641

3,040,660

9,515

3,050,176

Segment assets

20,171,981

5,909,217

1,094,188

1,457,676

28,633,063

18,557,903

47,190,967

Depreciation

545,059

101,806

15,503

6,399

668,769-

668,769

Amortization of goodwill

29,806

101,172

26,396-

157,376-

157,376

343,733
equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.

124,90312,440

4,663

485,741-

485,741

Other items

Increase in property, plant and(1) Adjustment amount in segment profit includes amount of 9,515 thousand yen eliminated for intersegment transactions.
(2) Adjustment amount in segment assets includes amount of -4,201,398 thousand yen eliminated for intersegment transactions andtotal company assets of 22,759,302 thousand yen. The total company assets are mainly composed of surplus funds (deposits andmarketable securities), and long-term invested assets (investment securities) of the Company.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.

20

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

FY2019 (Apr. 1, 2019 – Mar. 31, 2020)(Thousands of yen)
Reportable segment

Adjustment
amountJapan

EuropeAmericas

Asia

Total

Appropriated amountin the consolidated
financial statements(Note 1)

(Note 2)

Net sales
Sales to third parties

21,228,330

4,654,408

2,063,016

1,350,598

29,296,353-

29,296,353

Intersegment sales or transfers

1,070,003

952,423

56,55596,7802,175,763(2,175,763)-

22,298,334

5,606,831

2,119,571

1,447,378

31,472,116(2,175,763)

29,296,353

Segment profit

Total

2,656,588

240,028

115,655

372,433

3,384,706

6,535

3,391,241

Segment assets

22,839,235

6,161,296

1,496,278

1,653,481

32,150,291

19,295,601

51,445,892

Depreciation

544,439

106,321

17,40725,956694,125-

694,125

Amortization of goodwill

94,85898,60525,880-219,344-219,344608,520
equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.

107,809

8,060

7,244

731,634-

731,634

Other items

Increase in property, plant and(1) Adjustment amount in segment profit includes amount of 6,535 thousand yen eliminated for intersegment transactions.
(2) Adjustment amount in segment assets includes amount of -4,870,157 thousand yen eliminated for intersegment transactions andtotal company assets of 24,165,758 thousand yen. The total company assets are mainly composed of surplus funds (deposits andmarketable securities), and long-term invested assets (investment securities) of the Company.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.

Per-share Information(Yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

FY2018(Apr. 1, 2018 – Mar. 31, 2019)
Net assets per share

1,402.49

1,487.50

Net income per share
90.88
Notes: 1. Diluted net income per share is not presented since there is no dilutive share.
2. Basis for calculation of net income per share is as follows.
FY2018(Apr. 1, 2018 – Mar. 31, 2019)111.65FY2019(Apr. 1, 2019 – Mar. 31, 2020)

Net income per share
Profit attributable to owners of parent(Thousands of yen)Amount not available to common shareholders(Thousands of yen)
Profit attributable to owners of parent
applicable to common stock (Thousands of yen)
Average number of shares outstanding during
period (Shares)

Subsequent Events
Not applicable.

21

2,113,020

2,595,767--

2,113,020

2,595,767

23,249,972

23,249,578

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

4. Production, Orders and Sales(1) Sales and Orders(a) Sales
Segment
Japan
EuropeAmericas
Asia
Total

FY2018(Apr. 1, 2018 – Mar. 31, 2019)
AmountComposition (%)
18,969,942
70.8
4,674,988
17.5
1,728,838
6.5
1,413,498
5.2
26,787,267
100.0(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)
AmountComposition (%)
21,228,330
72.5
4,654,408
15.9
2,063,016
7.0
1,350,598
4.6
29,296,353
100.0(b) Orders received and order backlog(Thousands of yen)
FY2018FY2019(Apr. 1, 2018 – Mar. 31, 2019)(Apr. 1, 2019 – Mar. 31, 2020)
Segment
Orders received
Order backlog
Orders received
Order backlog
Japan
19,558,177
6,790,874
22,100,211
7,662,755
Europe4,721,708
1,654,721
4,759,748
1,685,342
Americas1,994,316
1,367,109
2,146,215
1,424,182
Asia
1,173,237
366,344
1,451,654
439,523
Total
27,447,439
10,179,049
30,457,830
11,211,804
Notes: 1. Intersegment transactions have been eliminated.
2. The above amounts are based on selling prices and the amounts do not include consumption taxes.
(Reference) Results by product category are as follows.
(a) Sales
Product category
Printed Circuit Board design solutions
Circuit design solutions
IT solutions
Client services
OthersTotal

FY2018(Apr. 1, 2018 – Mar. 31, 2019)
AmountComposition (%)
4,221,589
15.8
6,121,850
22.9
5,918,626
22.1
10,517,058
39.2
8,142
0.0
26,787,267
100.0(b) Orders received and order backlog(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)
AmountComposition (%)
4,782,582
16.3
7,361,105
25.1
6,193,266
21.1
10,948,790
37.5
10,6070.0
29,296,353
100.0(Thousands of yen)
FY2018FY2019(Apr. 1, 2018 – Mar. 31, 2019)(Apr. 1, 2019 – Mar. 31, 2020)
Product category
Orders received
Order backlog
Orders received
Order backlog
Printed Circuit Board design solutions
4,244,941
695,935
4,913,702
812,423
Circuit design solutions
6,462,662
1,193,974
7,268,256
1,084,438
IT solutions
6,122,386
1,053,754
6,128,067
983,467
Client services
10,608,428
7,234,342
12,137,899
8,331,135
Others
9,020
1,043
9,904
339
Total
27,447,439
10,179,049
30,457,830
11,211,804
Notes: 1. The above amounts are based on selling prices and the amounts do not include consumption taxes.
2. Name of major products by product category are as follows.
CR-8000 Design Force
CR-5000 Board Designer
Major products of Printed Circuit Board design
CR-8000 DFM Center
solutions
CADSTAReCADSTAR
CR-8000 Design Gateway
CR-5000 System Designer
CR-8000 System Planner
Major products of Circuit design solutions
E3.series
Cabling Designer
Harness Designer
PreSight visual BOM
DS-CR
Major products of IT solutions
DS-2 Expresso
DS-E3
GENESYS

22

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

5. Non-consolidated Financial Statements(1) Balance Sheet(Thousands of yen)
FY2019(As of Mar. 31, 2020)

FY2018(As of Mar. 31, 2019)
AssetsCurrent assets
Cash and deposits

11,143,135

12,083,975

229,516

223,893

Accounts receivable-trade2,874,739

2,794,357

Securities

6,700,000

6,700,000

68,70688,716

20,81065,298229,675

250,311

Notes receivable-trade

Inventories
Short-term loans receivable from subsidiaries andassociates
Other
Allowance for doubtful accounts

(620)

-

21,265,963

22,206,553

Buildings

2,653,589

2,715,507

Structures

34,162

31,353

Total current assets
Non-current assets
Property, plant and equipment

Vehicles

16,563

10,927

Tools, furniture and fixtures

103,275

107,6313,009,559

3,009,559

8,922

6,104

5,826,072

5,881,084

Other

296,722260,237

Total intangible assets

296,722260,237

Investment securities

4,916,167

5,381,782

Shares of subsidiaries and associates

1,479,526

2,138,039

Investments in capital of subsidiaries and associates
Long-term loans receivable from subsidiaries andassociates
Long-term trade accounts receivables fromsubsidiaries and associates
Deferred tax assets

2,429,229

2,429,229-

108,785

617,185594,665

211,665

145,548

Land
Leased assets
Total property, plant and equipment
Intangible assets

Investments and other assets

Other

333,260

333,083

Allowance for doubtful accounts(31,612)(14,902)

Total investments and other assets

9,955,421

11,116,231

16,078,216

17,257,554

37,344,179

39,464,108

Total non-current assets
Total assets

23

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(Thousands of yen)
FY2019(As of Mar. 31, 2020)

FY2018(As of Mar. 31, 2019)
Liabilities
Current liabilities
Accounts payable-trade466,853

672,988

Accounts payable-other938,623

943,296

Income taxes payable

394,790

339,523

Advances received

647,921883,458

Provision for bonuses

350,614360,369

Provision for bonuses for directors (and other officers)

50,00050,000950-

Provision for loss on business liquidation
Other

199,607

186,9613,049,359

3,436,597

2,443,118

2,484,919

177,000-

96,85096,85021,383

18,5852,738,351

2,600,354

5,787,711

6,036,951

10,117,065

10,117,065

Legal capital surplus

8,657,753

8,657,753

Total capital surpluses

8,657,753

8,657,753

311,082

311,082

General reserve

8,325,000

9,525,000

Retained earnings brought forward

2,139,534

2,566,158

10,775,617

12,402,241(16,365)(16,778)

29,534,070

31,160,281

Valuation difference on available-for-sale securities

2,022,397

2,266,875

Total valuation and translation adjustments

2,022,397

2,266,875

31,556,468

33,427,156

37,344,179

39,464,108

Total current liabilities
Non-current liabilities
Provision for retirement benefits
Provision for loss on business of subsidiaries andassociates
Long-term accounts payable-other
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments

Total net assets
Total liabilities and net assets

24

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(2) Statement of Income
FY2018(Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
FY2019(Apr. 1, 2019 – Mar. 31, 2020)

Net sales

11,235,386

12,072,710

Cost of sales

2,998,862

3,162,497

Gross profit

8,236,523

8,910,213

Selling, general and administrative expenses

6,779,777

7,229,770

Operating profit

1,456,745

1,680,443

888

2,442

Dividend income

598,594

868,495

Rental income

156,615

131,334

Other

74,67572,038

Total non-operating income

830,773

1,074,310

Foreign exchange losses

13,51170,068

Rental costs on real estate

117,689

130,523

1,976

1,071

Non-operating income
Interest income

Non-operating expenses

Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Reversal of provision for loss on business of subsidiaries
and associates
Reversal of allowance for doubtful accounts for
subsidiaries and associates
Total extraordinary income

133,177

201,662

2,154,342

2,553,091

53,000177,000

17,87018,55470,870195,554

1,357

1,641

-

35,047

-

2,000

1,357

38,6882,223,854

2,709,957

Extraordinary losses
Loss on disposal of non-current assets
Loss on valuation of shares of subsidiaries and associates
Provision of allowance for doubtful accounts of golf clubmembership
Total extraordinary losses
Profit before income taxes
Income taxes-current

535,907486,565

Income taxes-deferred(95,146)(54,221)

Total income taxes

440,760

432,344

1,783,094

2,277,613

Profit25

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

(3) Statement of Changes in Equity
FY2018 (Apr. 1, 2018 – Mar. 31, 2019)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Balance at beginning of period

10,117,065

Legalcapitalsurplus8,657,753

Total capitalsurplusLegalretainedearnings

Generalreserve

8,657,753

311,082

7,325,000

Retainedearnings
brought
forward1,914,442

1,000,000(1,000,000)

Total
retainedearnings
9,550,525

Changes during period
Provision of general reserve
Dividends of surplus(558,001)(558,001)

Profit

1,783,094

1,783,094

Purchase of treasury shares
Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period

-

-

-

-

1,000,000

225,092

1,225,092

10,117,065

8,657,753

8,657,753

311,082

8,325,000

2,139,534

10,775,617

Shareholders’ equity

Treasury shares
Balance at beginning of period(15,716)

Total
shareholders’equity28,309,627

Valuation and translation
adjustments
Valuation
Total valuationdifference onand translation
available-for-saleadjustments
securities
1,124,695

1,124,695

Total net assets

29,434,322

Changes during period
Provision of general reserve
Dividends of surplus(558,001)(558,001)

Profit

1,783,094

1,783,094

(649)

(649)

Purchase of treasury shares
Net changes other thanshareholders’ equity(649)

Total changes during period(649)(16,365)

Balance at end of period

897,702897,702897,702

1,224,443

897,702897,7022,122,145

29,534,070

2,022,397

2,022,397

31,556,468

26

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

FY2019 (Apr. 1, 2019 – Mar. 31, 2020)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Balance at beginning of period

10,117,065

Legalcapitalsurplus8,657,753

Total capitalsurplusLegalretainedearnings

Generalreserve

8,657,753

311,082

8,325,000

Retainedearnings
brought
forward2,139,534

1,200,000(1,200,000)

Total
retainedearnings
10,775,617

Changes during period
Provision of general reserve
Dividends of surplus(650,989)(650,989)

Profit2,277,613

2,277,613

Purchase of treasury shares
Net changes other thanshareholders’ equity
Total changes during period
Balance at end of period

-

-

-

-

1,200,000

426,623

1,626,623

10,117,065

8,657,753

8,657,753

311,082

9,525,000

2,566,158

12,402,241

Valuation and translation
adjustments
Valuation
Total
Total valuationdifference onshareholders’and translation
available-for-sale
equityadjustments
securities
29,534,070
2,022,397
2,022,397

Shareholders’ equity

Treasury shares
Balance at beginning of period(16,365)

Total net assets

31,556,468

Changes during period
Provision of general reserve
Dividends of surplus(650,989)(650,989)

Profit2,277,613

2,277,613

(413)

(413)

Purchase of treasury shares
Net changes other thanshareholders’ equity(413)

Total changes during period(413)(16,778)

Balance at end of period

244,477

244,477

244,477

1,626,210

244,477

244,477

1,870,687

31,160,281

2,266,875

2,266,875

33,427,156

27

ZUKEN Inc. (6947) Financial Results for the Fiscal Year Ended March 31, 2020

6. Others(1) Change in Representative Director
Not applicable.
(2) Changes in Other Board Members (Scheduled for June 26, 2020)i)

Candidate for promoting director
Kazuhiro Kariya

Current position: Managing Director and General Manager of Technology
Division
New position:
Senior Managing Director and General Manager of Technology
Divisionii) Candidates for director
Yasuo Ueno

Current position: General Manager of Business Division
New position:
Senior Managing Director and General Manager of Business
Division

Hiroyuki Fujiwara Current position: General Manager of EDA Business Unit
New position:
Director and General Manager of EDA Business Unitiii) Candidate for Audit & Supervisory Board Member
Yoshinobu Maeba

COO and Representative Director of Taisay Building Management Co.,Ltd.
New position:
Audit & Supervisory Board Member (part-time)

Note: Mr. Yoshinobu Maeba is a candidate for an Outside Audit & Supervisory Board Member. The
Company plans to submit a notice that Mr. Maeba as an independent Audit & Supervisory Board
Member as prescribed by the Tokyo Stock Exchange.
iv) Retiring Audit & Supervisory Board Member
Akio Tate

Current position: Audit & Supervisory Board Member (part-time)

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been preparedin accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer
an English translation.

28