Sios Corp · TSE:3744
Sios — FY2019 Earnings Presentation
34 slides from Sios's earnings presentation, Feb 5, 2020
Slide 1: Financial Results for Fiscal Year Ended December 31, 2019
Financial Results for Fiscal Year Ended December 31, 2019 February 5, 2020 SIOS Corporation (Stock Code: 3744 on the Second Section of Tokyo Stock Exchange) © SIOS Corporation All rights Reserved.
Slide 2: Table of Contents
Table of Contents Ⅰ Summary of Business Results for the Fiscal Year Ended December 31, 2019 (FY 2019) Ⅱ Review of FY 2019 Ⅲ Medium-Term Business Plan for FY 2020-2022 and Business Forecasts for FY 2020 © SIOS Corporation All rights Reserved. 2
Slide 3: Summary of Business Results for FY 2019
Ⅰ Summary of Business Results for the Fiscal Year Ended December 31, 2019 (FY 2019) © SIOS Corporation All rights Reserved.
Slide 4: Consolidated Financial Results for FY 2019
Consolidated Financial Results for FY 2019 （In millions of yen） FY 2018 FY 2019 Change % Change Results Results Net sales 12,799 13,686 ＋887 ＋6.9% Gross profit 4,210 4,345 ＋135 ＋3.2% Operating profit 290 54 △235 △81.1% Ordinary profit 310 96 △214 △69.0% Profit (loss) attributable to owners of parent
Slide 5: Record-high net sales achieved in FY 2019
Consolidated Net Sales （In millions of yen） 13,686 12,799 Record-high net sales achieved in FY 2019 (Up 6.9% YoY) FY2018 FY2019 © SIOS Corporation All rights Reserved. 5
Slide 6: Consolidated Operating Profit, EBITDA, and R&D Spending
Consolidated Operating Profit, EBITDA, and R&D Spending （In millions of yen） 652 600 551 Operating profit declined 450 375 by ¥235 million from the 290 previous year. 300 145 150 R&D spending remained 54 robust. 0 FY2018 FY2019 Operating Profit EBITDA R&D © SIOS Corporation All rights Reserved.
Slide 7: Consolidated Balance Sheets
Consolidated Balance Sheets As of December 31, 2018 As of December 31, 2019 （In millions of yen） Current assets Total liabilities Current assets Total liabilities 4,383 3,970 4,479 4,023 (including (including (including (including cash and interest-bearing cash and interest-bearing deposits of debts
Slide 8: Analysis of Consolidated Cash Flows
Analysis of Consolidated Cash Flows （In millions of yen） △101 △130 △5 2,136 2,008 363 Cash and cash Cash flows Cash flows Cash flows Effect of change Cash and cash equivalents as from operating from investing from financing in exchange rate equivalents as of December activities activities activities
Slide 9: YoY Changes in Cash Flows
YoY Changes in Cash Flows (Millions of yen) Cash flows from Cash flows from Cash flows from operating activities investing activities financing activities Amount of YoY changes Increase of ¥363 Decrease of ¥101 Decrease of ¥130 Breakdown Increases • ¥135 resulting from profit before income taxes • ¥
Slide 10: Cash Flows and Investments
Cash Flows and Investments （In millions of yen） 1200 800 R&D projects and 262 400 investments funded 0 by an increasing △106 (400) level of cash flows (800) FY2018 FY2019 CF from operations(excluding R&D expenses) CF from investing activities R&D spending Free cash flows © SIOS Corporation All right
Slide 11: Open System Infrastructure Business
Open System Infrastructure Business Net sales 7,695 million yen, up 6.4％ YoY （In millions of yen） 7,695 Sales of business-continuity solutions 7,231 showed a solid increase, fueled by strong demand for our core LifeKeeper* in Japan. Sales of software products sourced from Red Hat, Inc.* increase
Slide 12: Open System Infrastructure Business
Open System Infrastructure Business Segment income 58 million yen, down 49.0％ YoY （In millions of yen） 115 Segment income declined YoY due to increases in labor cost at a U.S. subsidiary as well as in development 58 cost to upgrade LifeKeeper. FY2018 FY2019 © SIOS Corporation All rights Reserved.
Slide 13: Application Business
Application Business Net sales 5,991 million yen, up 7.6％ YoY （In millions of yen） 5,991 Revenues from the provision of support 5,568 for system development and implementation to financial institutions achieved steady growth. Revenues from the Gluegent series* maintained momentum of growth. Sa
Slide 14: Application Business
Application Business Loss of 4 million yen, compared with an Segment income income of 174 million yen the year before （In millions of yen） Segment income declined YoY partly 174 because the loss from unprofitable projects undertaken in the first half of the year to provide support for system devel
Slide 15: Review of FY 2019
Ⅱ Review of FY 2019 © SIOS Corporation All rights Reserved.
Slide 16: Business Challenge ①: Software Applications for MFPs
Business Challenge ①: Software Applications for MFPs A larger-than-expected number of corporate customers switched from a perpetual licensing model for our high- Challenge margin software applications for MFPs to a subscription model launched in the fourth quarter of FY 2019, and the recognition of
Slide 17: Business Challenge ②: Business with Financial Institutions
Business Challenge ②: Business with Financial Institutions (1) Provision of support for system development and implementation Challenge Profit in this business declined due to unprofitable projects undertaken and delayed in the first half of FY 2019. We conducted more stringent preliminary assessmen
Slide 18: Medium-Term Business Plan for FY 2020-2022 and Business Forecasts for FY 2020
Ⅲ Medium-Term Business Plan for FY 2020-2022 and Business Forecasts for FY 2020 © SIOS Corporation All rights Reserved.
Slide 19: Primary Objective and Management Metrics
Primary Objective and Management Metrics Established in Medium-Term Business Plan for FY 2020-2022 Primary Management Objective Under the mission of making the impossible possible for the people of the world, the SIOS Group works toward achieving its primary management objective of pursuing innovati
Slide 20: Basis for Achieving the SIOS Group Mission
Basis for Achieving the SIOS Group Mission Make the business foundation more solid Raise the level of Carry out customer satisfaction M&A Improve performance on key management Invest to achieve the mission Release new metrics Return profit to shareholders and products and Maintain good other stakeho
Slide 21: Review of FY 2019 ①
Review of FY 2019 ① Release new Released SIOS bilink, a platform that supports products and companies operating under subscription services business models Enhance existing Released an AI-enabled service solution for MFPs products and that recognizes confidentiality designations on services document
Slide 22: Review of FY 2019 ②
Review of FY 2019 ② • Rolled out a new container* platform Invest in people, R&D, business to meet the growing needs among corporate clients to pursue and a corporate culture digital transformation (DX)* that fosters innovation • Introduced new talent management programs, such as OKR* and 1 on 1* Re
Slide 23: Medium-Term Business Plan for FY 2020-2022
Medium-Term Business Plan for FY 2020-2022 We will use the transition to a subscription business model to lay the groundwork for sustained growth under the three-year plan and will work toward achieving EBITDA of ¥560 million and ROIC of 14.7% in FY 2022. （In millions of yen） 2019 2020 2021 2022 EBI
Slide 24: Key Initiative: Transition to a Subscription Business Model ①
Key Initiative: Transition to a Subscription Business Model ① Background and Benefits of Making a Transition to a Subscription Model Background As companies have been investing aggressively in implementing DX, more and more of them have been switching from perpetual licensing of software to subscrip
Slide 25: Key Initiative: Transition to a Subscription Business Model ②
Key Initiative: Transition to a Subscription Business Model ② Why We are Making a Transition to a Subscription Model Offer corporate customers subscription options for our products and services developed in-house We can better assist our corporate customers in their efforts to implement DX by offeri
Slide 26: Key Initiative: Transition to a Subscription Business Model ③
Key Initiative: Transition to a Subscription Business Model ③ Projected Revenues from Subscription Business for Products and Services Developed In-House (Millions of yen) 2,910 3,100 3,160 2,860 2,340 2,530 2,500 2,160 1,790 1,940 2018年度 FY 2018 2019年度 FY 2019 2020年度 FY 2020 2021年度 FY 2021 2022年度 FY
Slide 27: Consolidated Business Forecasts for FY 2020
Consolidated Business Forecasts for FY 2020 We intend to maintain our momentum of growth for 10 consecutive fiscal years and achieve net sales of ¥14.3 billion in FY 2020. （In millions of yen） FY 2019 FY 2020 Change % Change Results Forecasts Net sales 13,686 14,300 +613 +4.5% Operating profit 54 80
Slide 28: Key Strategies for FY 2020 ①
Key Strategies for FY 2020 ① Raise the level of Conduct stakeholder surveys to better serve our customer customers and improve the quality of our satisfaction products and services Enhance existing Update existing products and add more value to products and them to better serve customers in their gr
Slide 29: Key Strategies for FY 2020 ②
Key Strategies for FY 2020 ② Implement programs intended to assist every employee in achieving their full professional potential Invest in people, R&D, • Ensure employees embrace new talent and a corporate culture management programs, such as OKR and 1 on 1 that fosters innovation • Offer employees
Slide 30: Cash Dividends for FY 2019 and 2020
Cash Dividends for FY 2019 and 2020 23rd term 24th term Fiscal year ended Fiscal year ending December 31, 2019 December 31, 2020 (Projected) Annual cash dividend per ¥5.0 ¥5.0 share Fiscal year ended December 31, 2019 Dividend payment of ¥5.0 per share resumed Fiscal year ending December 31, 2020 Di
Slide 31: About SIOS Corporation
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.
Slide 32: Glossary
Glossary Page Term Description 11 LifeKeeper A failover software product that automatically switches a failed primary server to a backup server. Software products sourced 11 Open-source software products developed by Red Hat, Inc., a provider of open-source solutions. from Red Hat, Inc. "Gluegent Ga
Slide 33: Cautionary Statement
Cautionary Statement Forward-looking statements about the Company’s business outlook contained in this document reflect management’s assumptions and judgments made on the basis of available information, and may include risks and uncertainties. We caution that significant risks and uncertainties coul
Slide 34: STOS
STOS