Systena : Consolidated Financial Results for the Three Months Ended June 30, 2022 (Under Japanese GAAP)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

July 28, 2022

Consolidated Financial Results

for the Three Months Ended June 30, 2022

(Under Japanese GAAP)

Company name:	Systena Corporation
Listing:	Tokyo Stock Exchange
Securities code:	2317
URL:	https://www.systena.co.jp/
Representative:	Kenji Miura, Representative Director and President
Inquiries:	Hiroshi Kotani, Director
Telephone:	[phone]

Scheduled date to file quarterly securities report:	August 9, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
		Net sales		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
Three months ended	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%
June 30, 2022	17,627		15.0	1,821		3.8	1,879	10.4	1,285	12.3
June 30, 2021	15,331		3.2	1,755		(0.6)	1,702	(7.0)	1,144	(8.2)
Note: Comprehensive income	For the three months ended June 30, 2022:	¥1,348 million	[17.0%]
		For the three months ended June 30, 2021:	¥1,152 million	[(5.6)%]
	Basic earnings	Diluted earnings
		per share		per share
Three months ended				Yen			Yen
June 30, 2022				3.32			-
June 30, 2021				2.95			-

Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Basic earnings per share has been calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

(2) Consolidated financial position

	Total assets	Net assets	Equity-to-asset ratio	Net assets per share
As of	Millions of yen	Millions of yen	%	Yen
June 30, 2022	41,781	30,194	71.2	76.81
March 31, 2022	43,477	30,173	68.5	76.83
Reference: Equity
As of June 30, 2022:	¥29,755 million
As of March 31, 2022:	¥29,762 million

Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Net assets per share has been calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end		Third quarter-end		Fiscal year-end		Total
	Yen	Yen		Yen		Yen		Yen
Fiscal year ended	-	10.00		-		3.50		-
March 31, 2022
Fiscal year ending	-
March 31, 2023
Fiscal year ending		4.00		-		4.00	8.00
March 31, 2023
(Forecast)

Notes: Revisions to the forecast of cash dividends most recently announced: None

The Company implemented a four-for-one common stock split effective December 1, 2021. The stated year-end dividend per share for the fiscal year ended March 31, 2022 takes the said stock split into account. The total annual dividend for the fiscal year ended March 31, 2022 is not shown because a simple total cannot be calculated due to the implementation of the stock split. The annual dividend per share for the fiscal year ended March 31, 2022 that does not take the stock split into account is ¥24 (the interim dividend of ¥10 per share and year-end dividend of ¥14 per share).

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

(Percentages indicate year-on-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Millions		%	Millions	%	Millions	%	Millions	%	Yen
	of yen		of yen	of yen	of yen
Fiscal year ending
71,450		9.5	10,280	12.9	10,280	19.8	7,000	16.8	18.07
March 31, 2023
Note: Revisions to the earnings forecasts most recently announced: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 30, 2022	450,880,000 shares
As of March 31, 2022	450,880,000 shares

(ii) Number of treasury shares at the end of the period

As of June 30, 2022	63,483,788 shares
As of March 31, 2022	63,483,788 shares

(iii) Average number of shares outstanding during the period

Three months ended June 30, 2022	387,396,212 shares
Three months ended June 30, 2021	387,374,644 shares

Notes: 1. The Company has introduced a stock compensation plan, and in calculating the number of treasury shares of common shares at the end of the period and the average number of shares outstanding during the period, the number of treasury shares includes shares of the Company held by Japan Custody Bank, Ltd. (the Trust Account) as trust assets for the "Trust for Granting Shares to Directors" and the "Trust for Granting Shares to Executive Officers." The number of treasury shares held by the Trust Account included in the number of treasury shares at the end of the period ended June 30, 2022 and March 31, 2022 was 1,612,300 shares, respectively, and the number of treasury shares held by the Trust Account excluded from the calculation of the average number of shares outstanding during the three months ended June 30, 2022 and three months ended June 30, 2021 is as follows: the average number of common treasury shares held by the Trust Account for the three months ended June 30, 2022 and three months ended June 30, 2021 were 1,622,086 shares and 1,634,000 shares, respectively.

• 2. The Company implemented a four-for-one common stock split effective December 1, 2021. Number of shares has been calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

• Quarterly financial results reports are exempt from quarterly review by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  Forward-looking statements in this material, including earnings forecasts, are based on information currently available to the Company and on certain assumptions deemed reasonable. Actual results may differ significantly due to various factors. For assumptions underlying the forecast and cautions regarding the use of earnings forecasts, please refer to "1. Qualitative information on quarterly financial results, (3) Forward- looking forecasts, such as consolidated earnings forecasts" on page 6 of the Attached Materials.

Attached Materials Table of Contents
1. Qualitative information on quarterly financial results................................................................................	2
(1)	Operating results for the period under review ......................................................................................	2
(2)	Financial position.....................................................................................................................................	5
(3)	Forward-looking forecasts, such as consolidated earnings forecasts ..................................................	6
2. Quarterly consolidated financial statements ................................................................................................	7
(1)	Quarterly consolidated balance sheet ....................................................................................................	7
(2)	Quarterly consolidated statement of income and quarterly consolidated statement of
	comprehensive income.............................................................................................................................	9
	Quarterly consolidated statement of income..........................................................................................	9
	Quarterly consolidated statement of comprehensive income .............................................................	10
(3)	Notes to the quarterly consolidated financial statements...................................................................	11
	(Notes on premise of going concern) .......................................................................................................	11
	(Notes on substantial changes in amount of shareholder's equity) ..........................................................	11
	(Changes in accounting policies)..............................................................................................................	11
	(Segment information, etc.)......................................................................................................................	11
3. Supplementary information.........................................................................................................................	13
(1)	Production results ..................................................................................................................................	13
(2)	Order results...........................................................................................................................................	13
(3)	Sales results ............................................................................................................................................	13

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1. Qualitative information on quarterly financial results

Matters discussed here that are not historical fact reflect judgments made as of the end of the quarter of the fiscal year under review.

1. Operating results for the period under review
   During the first quarter of the fiscal year under review (April 1, 2022 to June 30, 2022), the Japanese economy was on a gradual recovery trend, particularly individual consumption, as restrictions on movement due to the COVID-19 pandemic were loosened and economic and social activities returned to normal. However, the economic outlook remains uncertain as inflationary pressure has grown due to the rapid weakening of the yen and increase in resource and raw material prices accompanying Russia's invasion of Ukraine.
   At the same time, the Group further accelerated its business "scrap and build" activities, management's core policy, and even in growth fields, the Group quickly introduced management resources into markets that can be won by leveraging its strengthens.
   Furthermore, efforts were made to aggressively move forward with not only reinforcing its own sales capabilities but also alliances formed with sales-capable partners and to strengthen sales of its own products and services. The Group made investments to expand the size of its businesses, including continuing to actively recruit new college graduates and increasing office floor space.
   In the Solution Design Business, the Group continued to focus on expansion in the in-vehicle, Internet business, IoT, robotics/AI, and digital transformation (DX) fields, where significant growth is expected. Here, the Group worked to further increase orders and improve profitability by making greater use of near-shore development at regional bases and off-shore development in Vietnam.
   In the Framework Design Business, the Group deployed its system development expertise from the financial sector to customers in the public and distribution/services sectors, and worked to increase orders in the business application development and infrastructure (cloud) architecture operations.
   In the IT Service Business, the Group grew its customer pool and sales volumes by further strengthening alliances with Group companies and partner companies, as well as by promoting the development of IT service products through the use of inbound sales.
   In the Business Solution Business, the Group focused on service businesses, not product-oriented businesses, and further strengthen its recurring revenue businesses, centered on the subscription business and system development and support.
   In the Cloud Business, which is responsible for promoting the subscription business model, the Group expanded the functionality of its in-house products Canbus.1 and Cloudstep1 and actively promoted sales through web marketing. The Group also founded MINGAL, a joint venture with MJE Inc., which has been collaborating on biz-us Cloud powered by Canbus. since last year, and launched efforts to promote DX for licensed professionals by melding the Company's development skills and experience providing cloud services with MJE's sale capabilities.
   As a result of the above, consolidated results for the first quarter of the fiscal year under review were net sales of ¥17,627 million (up 15.0% year on year), operating profit of ¥1,821 million (up 3.8% year on year), ordinary profit of ¥1,879 million (up 10.4% year on year), and profit attributable to owners of parent of ¥1,285 million (up 12.3% year on year).
   1. Canbus. and Cloudstep are Sytena's original services.

The following describes performance by segment. Note that net sales for each segment include inter-segment net sales or transfers.

1. Solution Design Business
   The Solution Design Business is divided into five categories: in-vehicle, social infrastructure, internet business, products, and DX services. Net sales in this business amounted to ¥5,325 million (up 12.0% year on year), and operating profit was ¥689 million (down 0.9%).

(In-Vehicle)

In the in-vehicle category, which primarily involves the development of elements related to mobility as a service (MaaS), autonomous driving, in-vehicle infotainment, telematics,2 and electronic control units (ECUs), the Group won orders for MaaS-related services thanks to differentiation from competitors owing to technological capabilities that leverage the Group's experience in the telecommunications business. Demand for MaaS is expected to grow stronger and stronger. Furthermore, the Group has

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