(Delayed)

Results of Operations

for the First Half of FY2020

5 August, 2020

CYBERNET SYSTEMS CO., LTD.

  • Business Summary of Financial Results for the First Half of the Fiscal Year Ending December 31, 2020

[Consolidated] Business Summary

4

[Consolidated] Changes in Operating Income (YoY comparison)

5

[Consolidated] Changes in Operating Income (Against Plan)

6

[Consolidated] Balance Sheet

7

[Consolidated] Cash Flow Statement

8

[Consolidated] Quarterly Net sales

9

[Consolidated] Overview of Results by Segment

10

[Consolidated] Composition ratio of Net sales

11

[Consolidated] Net sales by sales form

12

[Consolidated] Net sales by region

14

[Non-consolidated] Net sales by Category of Industry

16

[Non-consolidated] Net sales by Contract type

18

Projection for FY2020

Our main efforts in COVID-19

21

The impact of COVID-19 pandemic

22

[Consolidated] Projection for Current Fiscal Year

23

[Consolidated] Dividend Estimate for Current Fiscal Year

24

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

2

Business Summary of Financial Results

for the First Half of the Fiscal Year

Ending December 31, 2020

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

3

Net sales were 0.6% year on year, to 11,871 million yen.

Operating income was 2,031 million yen (+25.0% year on year), Ordinary income was 2,011 million yen (-21.4% year on year), and Profit attributable to owners of parent was 1,343 million yen (+28.0% year on year).

Million yen

19/12 1H

20/12 1H

YoY

YoY

20/12 1H

Change

Change

Change

Change

Amount

%

Results

Results

Amount

%

Plan

From Plan

From Plan

Net sales

11,798

11,871

72

0.6%

11,870

1

0.0%

Operating income

1,624

2,031

406

25.0%

1,650

381

23.1%

Operating income margin

13.8%

17.1%

3.3pt

13.9%

3.2pt

Ordinary income

1,657

2,011

354

21.4%

1,690

321

19.0%

Ordinary income margin

14.0%

16.9%

2.9pt

14.2%

2.7pt

Profit attributable to owners of parent

1,049

1,343

294

28.0%

1,082

260

24.1%

Profit attributable to owners of parent margin

8.9%

11.3%

2.4pt

9.1%

2.2pt

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

4

Million yen

Operating income

margin 13.8%

(145)

287

technical

Decrease

1,624

Decrease profit

19/12 1H

Product in

service

of Cost in

Results

Main Causes of Year-on-Year Changes

263

Selling, in Decrease and general expenses administrative

Operating income margin 17.1%

2,031

20/12 1H

Results

Item

Causes of Changes

Product profit

Decreased due to increase in Cost of products sold as results of changes in the sales mix.

Cost of technical service

Decreased due to decrease in outsourcing fee and travel expenses, etc.

Selling, general and

Decreased due to decrease in furniture and fixtures costs (Floor renovation in

administrative expenses

the previous fiscal year) and travel expenses, etc.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

5

Million yen

inDecrease profitProduct

Costin Decrease servicetechnical

margin 13.9%

Operating income

of

(500)

1,650

357

20/12 1H

Plan

Main Causes of Changes Against Plan

524

Selling, in Decrease and general expenses administrative

Operating income margin 17.1%

2,031

20/12 1H

Results

Item

Causes of Changes

Product profit

Decreased due to increase in Cost of products sold as results of changes in the sales mix.

Cost of technical service

Decreased due to decrease in outsourcing fee and travel expenses, etc.

Selling, general and

Decreased due to decrease in travel expenses and unused costs and expenses,

administrative expenses

etc.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

6

Million yen

YoY

19/12

20/12 2Q

Change Amount

Current assets

19,022

19,750

728

Cash and deposits

3,019

3,761

742

Notes and accounts receivable-trade

4,382

5,000

618

Short-term investment securities

7,000

7,500

500

Short-term loans receivable

3,360

2,452

(908)

(i)

Others

1,260

1,036

(223)

Noncurrent assets

1,799

1,698

(101)

Property, plant and equipment

364

348

(16)

Intangible assets

280

413

132

Investments and other assets

1,153

936

(217)

Total Assets

20,821

21,449

627

Current liabilities

5,925

5,609

(315)

Accounts payable-trade

1,493

1,775

282

Income taxes payable

530

529

(1)

Advances received

2,021

2,013

(7)

Provision for bonuses

727

334

(393)

Others

1,152

957

(195)

Noncurrent liabilities

1,259

1,272

12

Provision for retirement benefits

1,230

1,244

13

Others

28

27

(1)

Total liabilities

7,185

6,882

(303)

Total net assets

13,636

14,566

930

(ii)

Total liabilities and net assets

20,821

21,449

627

Main Causes of Changes from the End of the Previous Fiscal Year

  1. Short-termloans receivable (down 908 million yen from the end of the previous fiscal year)
    • Decrease in CMS (Cash Management System) balance to the parent company-908 million yen.
  2. Total net assets (up 930 million yen from the end of the previous fiscal year)
    • Profit attributable to owners of parent + 1,343 million yen.
    • Dividend of earnings : - 389 million yen
    • Change in foreign currency translation adjustment : - 34 million yen.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

7

Million yen

19/12 1H

20/12 1H

YoY

Change

Results

Results

Amount

Net cash provided by operating activities

1,792

1,039

(753)

Net cash provided by investing activities

19

667

647

Net cash provided by financing activities

(271)

(416)

(144)

Effect of exchange rate change on cash and cash equivalents

(49)

(43)

6

Net decrease in cash and cash equivalents

1,490

1,247

(243)

Cash and cash equivalents at beginning of period

8,378

9,935

1,556

Cash and cash equivalents at end of period

9,869

11,182

1,313

Main Causes of Year-on-Year Changes

Item

Causes of Changes

Net cash provided by operating activities

Increased due to increase in payment of income taxes and in trade

receivables, etc.

Net cash provided by investing activities

Decreased due to decrease in loans to the parent company

Net cash provided by financing activities

Decreased due to increase in payment of year-end dividends for

the previous fiscal year, etc.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

8

Million yen

YoY comparison

+16.0%

+11.4%

-0.4%

+12.7%

+8.5%

+1.4%

+16.0%

+6.5%

-4.1%

+6.5%

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

6,658 6,751

18/12

6,135

19/12

5,140 5,119

4,349 4,632

4,949

20/12

4,612

4,621

1Q

2Q

3Q

4Q

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

9

Million yen

19/12 1H

20/12 1H

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Total Net sales

11,798

100.0%

11,871

100.0%

72

+0.6%

CAE

9,732

82.5%

9,684

81.6%

(47)

(0.5%)

IT

2,066

17.5%

2,186

18.4%

119

+5.8%

Elimination

Total Operating income

1,624

2,031

406

+25.0%

CAE

2,186

2,573

386

+17.7%

IT

204

138

(65)

(32.3%)

Elimination

(765)

(680)

85

Points of Results by Segment

Segment

Point

CAE

Software sales were steady, but total Net sales decreased due to sluggish of sales of engineering

services in Japan, etc. Operating income increased due to control of costs and expenses.

IT

Total Net sales increased due to steady growth of security-related solutions. Operating income

decreased due to sluggish of sales of other fields.

(Note) CAECAE Solution Services

ITIT Solution Services

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

10

First half of the fiscal year

Net sales by sales form

Net sales by region

Servic

Europe

Others

e

2.2%

0.2%

In-house8.8%

North America

Asia

5.2%

12.8%

10.0%

Distributor

Japan

78.4%

82.5%

(Note) Classification of Net sales by sales form is as follows:

(Note) From this time, the region identification has

Distributor : Distribution business of CAE solution services

changed from sales region to end user region.

In-house

and IT solution services

: In-house developed products of CAE solution

Service

services and IT solution services

: Services of CAE solution services

and IT solution services

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

11

Second quarter of the fiscal year

Million yen

19/12 2Q

20/12 2Q

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Distributor

5,376

80.7%

5,585

82.7%

209

+3.9%

In-house

794

11.9%

730

10.8%

(64)

(8.1%)

Service

487

7.3%

435

6.5%

(52)

(10.7%)

Total

6,658

100.0%

6,751

100.0%

93

+1.4%

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

12

First half of the fiscal year

Million yen

19/12 1H

20/12 1H

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Distributor

8,937

75.7%

9,311

78.4%

373

+4.2%

In-house

1,587

13.5%

1,516

12.8%

(71)

(4.5%)

Service

1,274

10.8%

1,043

8.8%

(230)

(18.1%)

Total

11,798

100.0%

11,871

100.0%

72

+0.6%

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

13

Second quarter of the fiscal year

Million yen

19/12 2Q

20/12 2Q

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Japan

5,678

85.3%

5,714

84.6%

36

+0.6%

Asia

506

7.6%

596

8.8%

89

+17.6%

North America

301

4.5%

321

4.8%

19

+6.6%

Europe

157

2.4%

108

1.6%

(48)

(30.9%)

Others

14

0.2%

10

0.2%

(3)

(27.1%)

Total

6,658

100.0%

6,751

100.0%

93

+1.4%

(Note) From this time, From this time, the region identification has changed from sales region to end user region.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

14

First half of the fiscal year

Million yen

19/12 1H

20/12 1H

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Japan

9,711

82.3%

9,789

82.5%

78

+0.8%

Asia

1,148

9.7%

1,184

10.0%

35

+3.1%

North America

624

5.3%

615

5.2%

(8)

(1.4%)

Europe

282

2.4%

260

2.2%

(21)

(7.8%)

Others

32

0.3%

20

0.2%

(11)

(34.8%)

Total

11,798

100.0%

11,871

100.0%

72

+0.6%

(Note) From this time, From this time, the region identification has changed from sales region to end user region.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

15

Second quarter of the fiscal year

Million yen

Electrical equipment

Machinery & Precision Machinery

Transportation equipment

Other manufacturing industry

Education institution/ government and municipal offices

Telecommunication industry

Others

Total

19/12 2Q

20/12 2Q

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

2,042

35.9%

2,003

35.3%

(39)

(1.9%)

839

14.8%

1,002

17.7%

162

+19.4%

630

11.1%

537

9.5%

(93)

(14.8%)

662

11.6%

623

11.0%

(38)

(5.8%)

471

8.3%

498

8.8%

26

+5.7%

349

6.1%

318

5.6%

(31)

(8.9%)

695

12.2%

694

12.2%

(0)

(0.1%)

5,691

100.0%

5,678

100.0%

(13)

(0.2%)

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

16

First half of the fiscal year

Electrical equipment

Machinery & Precision Machinery

Transportation equipment

Other manufacturing industry

Education institution/ government and municipal offices

Telecommunication industry

Others

Total

Million yen

19/12 1H

20/12 1H

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

2,998

30.7%

2,799

28.8%

(199)

(6.6%)

1,486

15.2%

1,718

17.7%

232

+15.6%

1,430

14.7%

1,043

10.7%

(386)

(27.0%)

1,170

12.0%

1,377

14.1%

206

+17.7%

803

8.2%

773

7.9%

(29)

(3.7%)

604

6.2%

555

5.7%

(48)

(8.0%)

1,261

12.9%

1,467

15.1%

205

+16.3%

9,754

100.0%

9,735

100.0%

(19)

(0.2%)

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

17

Second quarter of the fiscal year

Million yen

19/12 2Q

20/12 2Q

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Licenses

5,298

100.0%

5,367

100.0%

69

+1.3%

New licenses

1,444

27.3%

1,418

26.4%

(26)

(1.8%)

Renewals

3,853

72.7%

3,948

73.6%

95

+2.5%

Others

393

310

(82)

(20.9%)

Total

5,691

5,678

(13)

(0.2%)

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

18

First half of the fiscal year

Million yen

19/12 1H

20/12 1H

YoY

YoY

Component

Component

Change

Change

Results

ratio

Results

ratio

Amount

%

Licenses

8,688

100.0%

8,945

100.0%

257

+3.0%

New licenses

2,807

32.3%

2,702

30.2%

(104)

(3.7%)

Renewals

5,880

67.7%

6,243

69.8%

362

+6.2%

Others

1,066

789

(277)

(26.0%)

Total

9,754

9,735

(19)

(0.2%)

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

19

Projection for FY2020

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

20

We are working on safety and prevention of infection of our customers, stakeholders, employees and their families, and we are working to improve productivity of operation by recognizing "coexistence with viruses = time of "With COVID-19"".

Our main efforts

For

customers

and

stakeholders

March

April

May

June

July

August

Postponing or

Change of our seminars from face-to-

Active participation in online events and enhancement of

canceling events or

face to online

our online seminars

our seminars

Recommendation of online meeting

For

employees

  • Wearing masks / washing hands / use of alcohol disinfection thoroughly
  • Recommendation of staggered hours of work with flextime system
  • Recommendation of work from home for employees who find it difficult to work at office because of temporary closures of schools for their children etc.
  • Work from home on principle for employees of all offices (Tokyo Head Office, Nishi-Nihon Branch Office and Chubu Branch Office) from April 13
  • Implementation of work by optimal combination of office work and telework.
  • Set work place at office or at home for each organization considering characteristics of operations of each organization to improve productivity from July 28.
  • Wearing masks / washing hands / use of alcohol disinfection thoroughly
  • Ingenuity of office layout and seat arrangement to keep social distancing
  • Recommendation of staggered hours of work with flextime system, etc.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

21

Due to the impact of COVID-19, some customers canceled or postponed projects / purchase of licenses, but the negative impact was within expectation as of 1Q. We also attempted to generate profits by controlling costs and expenses.

We are paying close attention to future impacts, and we will strive to minimize the negative impact on our business performance.

Major impacts on our business

Segment

Major impacts on our business and our efforts

Although some customers canceled or postponed their purchase of software licenses, for

renewal contracts the business was steady and negative impact was limited.

CAE

Some customers canceled or postponed Engineering services.

We will strive to minimize the negative impact on our business performance by working on

enhancement of our online seminars and actively participating in online events, and

controlling costs and expenses.

Although some customers canceled or postponed their purchase of software licenses, for

renewal contracts the business was steady and negative impact was limited.

IT

We will strive to minimize the negative impact on our business performance by working on

sales promotion of cloud-base services and telework promotion solutions, expansion of online

seminars, etc. that meet customers' needs for "With COVID-19" and "After COVID-19" and

controlling costs and expenses.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

22

Million yen

19/12

20/12E

YoY

YoY

Results

Projection

Change

Change

Amount

%

Net sales

21,350

22,000

649

103.0%

Operating income

2,020

2,060

39

102.0%

Operating income margin

9.5%

9.4%

(0.1pt)

Ordinary income

2,145

2,140

(5)

99.7%

Ordinary income margin

10.0%

9.7%

(0.3pt)

Profit attributable to owners of parent

1,258

1,300

41

103.3%

Profit attributable to owners of parent margin

5.9%

5.9%

0.0pt

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

23

Although the impact of the spread of COVID-19 on our future business performance is uncertain, the Projection of Current Fiscal Year remains unchanged, so we decided to pay interim dividends of 10.43 yen per share as initially projected and we will keep Year-end dividends projection unchanged.

(unit: yen)

16/12

17/12

18/12

19/12

20/12E

Total

Total

Total

Total

Interim

Year-end

Total

Result

Result

Result

Result

Result

Projection

Projection

Dividend per share

13.00

15.05

16.52

20.19

10.43

10.43

20.86

Net income per share

14.83

30.09

(21.07)

40.38

43.10

41.72

Dividend payout target ratio

87.7%

50.0%

50.0%

50.0%

(Ref.) Dividend on equity

3.0%

3.4%

3.8%

4.8%

4.7%

ratio

Basic Policies on Profit Distribution

The Company considers that the policies on shareholder dividends are some of the most important issues, and basically strives to pay steady and continuous dividends, strengthen and expand its earnings base corresponding to the rapid changes and development of industries, and accumulate internal reserves for active business development in the future.

© 2020 CYBERNET SYSTEMS CO., LTD. All Rights Reserved.

24

  • IR Department

Address:

Fuji Soft Bldg., 3, Kanda Neribei-cho,Chiyoda-ku, Tokyo 101-0022, Japan

TEL.:

+81-3-5297-3066

FAX.:

+81-3-5297-3609

E-mail:

irquery@cybernet.co.jp

URL:

https://www.cybernet.jp/english/

These materials are prepared for the sole purpose of providing information as a reference to investors in making investment decisions, and are not intended as a solicitation for investment.

These materials were created from data obtained through our operations. We make no guarantees, however, with respect to integrity. In addition, the opinions and predictions provided in these materials relate to the Company's outlook at the time the materials were prepared. No guarantees whatsoever extend to any outcomes over the use of such opinions or predictions. The contents of these materials are subject to change without notice.

Investors are requested to use their own judgment in making any final decisions regarding investments.

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Cybernet Systems Co. Ltd. published this content on 31 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 August 2020 08:04:02 UTC