Integrated Report 2023

(For the year ended December 31, 2022)

In recent years, the external environment surrounding the company has undergone radical changes and has thus become increasingly uncertain. In the face of such an environment, we strive to remain true to our reason for being, maintain our competitive advantage and achieve sustainable growth in a manner that is aligned with the encountered changes. To this end, we announced our VISION/MISSION/CREDO in February 2021, with the aim of developing a resilient organization capable of flexibly tackling the turbulent business environment.

 Our VISION encapsulates our aspiration to deliver inspiring proposals to customers and society as a whole and, to that end, take full advantage of our unique capabilities. Meanwhile, our MISSION expresses our determination to resolve the technical issues our customers now confront by bringing to bear ideas that transcend their expectations. These endeavors extend beyond resolving discrete issues, as we also help customers navigate their path toward digital transformation (DX). In addition, our CREDO is designed to provide the company's executives as well as employees with standards for day-to-day business conduct and the judgment to realize our VISION and MISSION. Our thinking will always be based on our VISION and MISSION while upholding the CREDO as a cornerstone for every action we take. In this way, we will work hand in hand with our customers to realize a sustainable society.

Vision

Mission

Creating a sustainable

Guide customers toward

­society and inspiring the

breakthrough solutions with

world through technology

vigorous creativity

and ideas

Actively perceiving changes in society, we will

Through proposals that consistently exceed expectations, we will

continue to propose innovative solutions exceeding

serve as a partner in supporting each customer's determination,

customer expectations.

creativity­

and passion, in order to lead the way to innovation.

 Persistent in our daily aim to refine our technology

 Fulfilling

our promise to provide more valuable solutions, we will

and ideas, we will tackle the unknown and lead the

approach customers with sincerity by exercising flexibility and

way in finding solutions.

strong communication skills to identify the core of their issues and

 Ever evolving and unafraid of change, we will help

drive change.

realize a more prosperous and accessible society that

 No matter when or in which field, we will deliver value to

is safer and more secure.

customers­

through our technical expertise, breadth of knowledge,

and wealth of ideas.

Our commitment to

Our commitment to

society

customers

By making the aspirations

Credo

Through fair, explicit and

of the company clear to all

transparent evaluations,

employees, we must

Our commitment to

we must give appropriate

actively foster an environ-

Open

compensation and

ment where everyone can

Shared goal

employment opportunities

work together with a

employees

evaluations

to those who are capable

shared sense of purpose

of enhancing our corpo-

and accomplishment.

rate value.

Respecting the desire to

In order to take the lead in

work independently on

Taking on new

Leadership

providing society with value

new challenges, we must

challenges

development

that meets the needs of an

encourage open, responsi-

ever-changing business

ble discussion that enables

environment, we must work

individuals to give full play

Promoting

Invigorating

to develop personnel who

to their abilities.

Achieving

are capable of autonomy

diversity

the community

and growth.

work-life

By respecting diversity, we

balance

In order to put together strong

must make the most of each

teams and deepen customer

employee's individuality

trust, we must actively create

and values.

To enable employees to enjoy their jobs

opportunities for personal

interaction both inside and

safely and healthily, we must create a

outside­

the company.

working environment that is considerate

of work-life balance.

Contents

Contents/VMC/

CYBERNET's Value

Growth Drivers for Realizing a

Trajectory of Value

Creation Story

Brighter Future

Creation

05

Value Creation Process

21 Four Growth Drivers

01 Contents/VISION, MISSION

07

Message from the President

- Strengthening of In-House Developed Products -

13

Summary of CYBERNET's

23

Maplesoft

and CREDO (VMC)

Solution Map

24

Sigmetrix

03 Trajectory of Value Creation

15

Computer Aided

25

Noesis

17

Engineering (CAE)

- Expansion of Business in Asia -

MBSE/MBD

26 Group Subsidiaries in Asia

18

Platform

27 An Interview with the Director in

19

IoT/XR

Charge of Technology

20

Cybersecurity

Pages Featuring Interviews

Pages Featuring Data

01

Cybernet Systems Integrated Report 2023

CYBERNET's ESG

- Environment -

    1. Resolving Social Issues via the Use of Simulation Technology
  • Social -
    1. Initiatives to Address Materiality
    1. Human Resource Capabilities: Employee Friendliness
    1. Human Resource Capabilities: Training and Commendation Systems
    1. Human Resource Capabilities: Roundtable Talk among Employees
    1. Further Developing Quality Management and Partnerships
    2. Ensuring Information Security
  • Governance -
    1. Roundtable Talk with Independent Officers

45 Corporate Governance

49 Directors, Audit & Supervisory Board Members, and Executive Officers

Fact Data

  1. Key Financial Data
  1. Corporate Overview
  2. Share Information

Editorial Policy

The CYBERNET Group prepares an Integrated Report on financial information, as well as non-financial information on topics such as ESG in order to inform stakeholders of initiatives for long-term and sustainable growth. This report provides a summary of highly important information to understand the CYBERNET Group. For more detailed information, please refer to our website and other communication tools.

Referenced Guidelines

Global Reporting Initiative (GRI): GRI Standards

The IFRS Foundation (IFRS): Integrated Reporting Framework

Reporting Period

January 1, 2022 - December 31, 2022

(Some matters outside this reporting period are also included.)

Use of this Report

The performance forecasts, targets, plans and other future information of the CYBERNET Group included in this report are only our judgments and thoughts when it was prepared based on the information available at publication. The actual perfor- mance, financial position and other results of the CYBERNET Group may differ materially from the contents of this report or from what is inferred due to changes in domestic and international political, economic and financial conditions; the status of measures intended in announced plans; and other factors that are unclear during preparation.

Cybernet Systems Integrated Report 2023

02

Contents/VMC/Trajectory of Value Creation

engineers equipped

Trajectory of Value Creation

CYBERNET's Value Creation

A team of

Sources of

Robust support

with distinctive

strengths in

areas of their

expertise

Cybernet Systems Co., Ltd. is a pioneering and leading company in assisting manufacturing via the use of Computer Aided Engineering (CAE), which involves

1

our

capabilities leading

Modeling support*

to high customer

simulated virtual experiments through computer simulations. For more than 30 years, we have provided software, educational services, technical support and

competitiveness

satisfaction

consulting to R&D and design departments of manufacturers as well as universities and government research institutes.

 In the field

of ICT, we also offer IT asset and system management tools, which have become essential to ensuring robust security for businesses, in addition

2021

Capabilities to

to ­providing cutting-edge security solutions. More recently, we began proposing solutions containing a combination of CAE, one of our strong areas, with

provide knowledge

­augmented reality (AR) and virtual reality (VR) technologies in the fields

of IoT, digital twins, big data analysis and AI.

2020

Established VISION/

to customers

EBITDA

Net Sales

MISSION/CREDO (VMC)

2009

Distributor agreement with

Postponed investment

Synopsys was terminated

2022

(Millions of yen)

Net Sales

EBITDA

2001

scheduled for 2020 and

Net Sales

(Millions of yen)

30,000

2021 due to fallout from

6,000

Distributor agreement with

the COVID-19 pandemic

¥30.0billion

MathWorks was terminated

Transitioned to the

Achieved IPO

software developers overseas

Tokyo Stock Exchange

Section of the Tokyo Stock

(transitioned to the First

Pursued M&A to acquire

Standard Market of the

1999

1967

Exchange in 2004)

EBITDA*2 ¥3.8 billion

20,000

Became a subsidiary of

4,000

The Tokyo Branch of U.S.-based Control

the FUJISOFT Group

12%

EBITDA margin

Data Corporation (CDC), a pioneer in

supercomputers and the precursor of

Cybernet Systems, opened

10,000

1985

*1 Modeling refers to the development and

2,000

analysis­

of simulation models to simulate

physical phenomena in accordance with the

Cybernet Systems Co., Ltd. inaugurated

laws of physics and other principles via the

Launched operations by obtaining

use of simulation software. For modeling to

Profitability

yield successful results, the support of experi-

distribution rights of Ansys, CODE V

enced engineers is essential.

of overseas

and other products

subsidiaries

*2 EBITDA: Operating income + Depreciation +

Goodwill amortization

improved

*3 Nine-month operations results for the period

from April 1 to December 31, 2013 (fiscal

0

year-end was changed from March 31 to

0

86/03

87/03

88/03

89/03

90/03

91/03

92/03

93/03

94/03

95/03

96/03

97/03

98/03

99/03

00/03

01/03

02/03

03/03

04/03

05/03

06/03

07/03

08/03

09/03

10/03

11/03

12/03

13/03

13/12*3

14/12

15/12

16/12

17/12

18/12

19/12

20/12

21/12

22/12

23/12

24/12

26/12

December 31)

1985~

2007~

2009~

2021~

Business expansion from start-up phase

Strengthened focus on

Transformation of the

Acceleration of business model

nurturing CAE engineers

business model

transformation

In 1967, the U.S.-based CDC, a pioneer in supercomputers, opened its

Tokyo Branch, which, in turn, became the precursor of CYBERNET. In

1985, the company was launched by spinning off the Cybernet service

business*4 of CDC Japan K.K., and then initiated sales of CAE software,

including multi-physics analysis tools and optical design and analysis

software. Overseas, the company launched a subsidiary in China in 2004,

aiming to accommodate the needs among growing corporations in Asia,

especially those in China. Since then, we have developed business over-

seas by taking full advantage of our technical capabilities, know-how and

other assets we have accumulated in Japan. We have also initiated such

businesses, such as providing solutions designed for visualization of big

data, solutions for the medical sector and IT solutions.

03

Cybernet Systems Integrated Report 2023

*4 A service provider business that allows customers to use cutting-edge simulation software with world-leading capabilities. Customers are given access to ­supercomputers, which are located in distant computer centers, from their own terminals to undertake safety

analysis,­ structural analysis, electronics and electric circuit analysis, thermal and fluid analysis, geophysical analysis, statistical analysis, optical analysis, numerical ­analysis, plant process analysis and other types of simulation-based analysis in fields such as nuclear power generation and others. In exchange for this service, the service provider receives fees determined based on the duration of usage.

In 2007, we established CAE University aimed at nurturing engineers capable of leveraging CAE software products. In addition to providing customers with our know-how backed by our accumulated experience since the company's found- ing, we began offering theoretical education on physics, analytical methods and other subjects. By doing so, we contributed to the popularization of simulations and the development of Japan-made products.

In 2009, the distributor agreement with MathWorks was terminated. On a net sales basis, we had sourced more than 30% of our products from this software development vendor. Meanwhile, in the wake of the Lehman Brothers bankruptcy and subsequent recessions, a growing number of Japanese corporations reduced their budgets for R&D investment. These negative factors caused the company to

struggle­ with stagnant operating results for several years. However, in addition to strengthening our existing businesses, we launched a series of acquisitions in 2009 and 2010 to rebuild our operations and revitalize business expansion, with software development vendors in Canada, the United States and Belgium becoming our sub- sidiaries. These acquisitions led to the creation of our in-house developed product business. We have also sought to develop a multilateral ­business portfolio by focusing on expanding the scope of our engineering services, through which we assist in product development undertaken by customers. Our operating results subsequently regained strength and have gradually expanded.

In February 2021, we reviewed our corporate philosophy and announced a new

VISION and MISSION. On the other hand, in October 20021, we terminated the

distributor­

agreement with Synopsys Inc., which had been a supplier since the

company's­

founding. As this termination put an end to a distributor business that

had accounted for about 20% of our net sales, the company's operating results for

2022 included decreases in sales and profit. However, we are currently striving to

strengthen in-house developed products and engineering services, while expanding

the lineup of our solutions for DX to accommodate recently growing in demand on

the back of immense public interest in this area, in addition to augmenting our IT solu-

tions. Furthermore, we aim to expand the simulation business in Asia to seize

opportunities arising from the double-digit growth of the regional markets. In these

ways, we will achieve a turnaround from our 2022 operating results and renewed

expansion of operating results in 2023 and later.

Cybernet Systems Integrated Report 2023

04

CYBERNET's Value Creation Story

Value Creation Process

CYBERNET's value creation process is characterized by four "sources of competitiveness." Developed over time, they form the core of our business model and provide six compelling reasons CYBERNET is highly evaluated by both customers and vendors.

External Environment

Social Issues

Technological

Issues Confronting

Innovation

Customers

• The urgent need to counter

• CASE (Connected,

• Cost reduction

global environmental issues

Autonomous, Shared,

• Globalization

and promote Green

and Electric vehicles)

• Human resource shortages

Transformation (GX)

• IoT

• Supply chain reform

• Surging resource prices

• AI

• Environmental impact

• Information security risks

• Metaverse

reduction

• Widespread public aware-

• Widespread use of

• Reduction of development

ness regarding diversity

the cloud

person-hours

• Growing calls for solutions

to realize well-being

Business Model

1

A team of engineers

equipped with distinctive

strengths in areas of

their expertise

Growth Drivers of CYBERNET

1

2

3

4

Strengthen

Promotion of

Use of

Expansion of

simulation

in-house

DX in

technology in

developed

business in Asia

manufacturing

fields related

products

to SDGs

For more details, please refer to P. 21-22.

Input

Financial Capital 

Strong financial position

Net financial assets

Equity ratio

¥15.3billion

60.3%

Note: Financial assets = Cash and deposits + Marketable securities

Simulation

software

development

vendors

4

Sources of

Modeling support

our

competitiveness

3

2

Manufacturers,

Robust support

universities,

capabilities leading

research institutes

to high customer

satisfaction

Output

CAE

For more details,

please refer to P. 15-16.

MBSE/MBD

For more details,

please refer to P. 17.

Platform

For more details,

+ Short term loans­ - Interest-bearing debt

Human Capital  Engineers with strong technical skills

Ratio of employees who are engineers

45%

Six reasons why vendors choose us

Capabilities to

Trusted by the world's leading

provide knowledge

5

manufacturing customers

to customers

2,400 corporations/350 universities and research

6

institutes/94% of major manufacturers­

in Japan

Six reasons why customers choose us

5

One of the world's top software offerings

An extensive lineup supported by more than

6

35 vendors/more than 80 software products

please refer to P. 18

IoT/XR

For more details,

please refer to P. 19.

Cybersecurity

For more details,

please refer to P. 20.

Intellectual Capital

Extensive track record and strong reputation Knowledge provision capabilities

37years of

CAE University held

110times/year

simulation support

Social Capital 

Leader in simulations

The largest reseller of mechanical CAE software in the Japanese market

94% of major companies are customers

Note: Companies that have ranked in the top 100 listed companies for sales over the past three years, excluding food product and non-manufacturing companies.

Results for fiscal year ended

December 31, 2022

Create solutions that

Contribute to

Foster a corporate culture

that leverages the

contribute to the

society by

benefits of diversity to

realization of a

solving customers'

continuously

sustainable society

challenges

create new value

Materiality: Priority issues

Business

Exploration and pursuit of

Growth into a

transformation

technologies and ideas

global company

Platforms supporting materiality: Three activities

Recruiting and nurturing of

Strengthening of

diverse human resources

governance

Platforms supporting materiality: Two foundations

Materiality

Please refer to pages 31-32 for details.

Outcome

Social and Environmental Value

Contribute to the realization of a bright

future using simulation technology

Economic Value

Targets for fiscal year ending December 31, 2026

Net Sales

EBITDA

ROE

¥30.0billion ¥3.8billion 12%

VISION/MISSION/CREDO

05

Cybernet Systems Integrated Report 2023

Cybernet Systems Integrated Report 2023

06

CYBERNET's Value Creation Story

Message from the President

Moving Forward

Becoming a globally competitive company with distinctive strength in simulations means securing more employees capable of attracting and nurturing future generations of human resources

Q1 Please share your personal beliefs on corporate management.

Reiko Yasue

President & CEO

At CYBERNET, I aim to create a workplace in which every employee leverages their uniqueness and competencies to the fullest and works with passion. My aspiration for this endeavor arises from my experience developing careers overseas.

 In the latter half of the 1990s, in the course of exploring more challenging career opportunities, I flew to the United States and found a position at an IT company. Since then, I spent around two decades working for several tech compa- nies, including communications device and semiconductor manufacturers, mostly in Silicon Valley, where excellent human resources from countries around the world gather and engage in fierce competition. I, too, had abundant opportunities to take on challenges while mutually inspiring colleagues.  After that, I came back to Japan, hoping to play my part in creating a growing number of Japan-made businesses and human resources capable of competing globally. I also felt that, to this end, the development of career opportunities and workplaces where people can succeed irrespective of gender is essential. I first joined FUJISOFT INCORPORATED, the parent company of CYBERNET, and experienced the management of its overseas businesses. Eventually, my career journey took me to an executive position at CYBERNET, whose overseas sales ratio is particularly large compared to other FUJISOFT Group companies.

 The business environment surrounding us has been evolving radically. Today's businesses are called upon to give due consideration to a more extensive range of factors than ever before. Therefore, businesses need to clarify their purpose, place greater value on their human resources and engage in sustainable management. These undertakings have become a matter of great importance in this present era.

 I am confident that the simulation technology CYBERNET handles can significantly contribute to the resolution of social issues. Moreover, if you are aware of how deeply relevant your job is to resolving social issues, your passion for work could grow stronger, inspiring you to take a different approach to your work.

 CYBERNET is now transitioning from a business model centered on distributorships to the provision of solutions finely tuned to customer needs, as we strive to become a company capable of delivering unique added value.

 Although our customer base currently consists mainly of major Japanese manufacturers, we aim to evolve into a provider of high-value-added services in the global market. I would also like to develop CYBERNET into a company that can be recommended to our children and future generations. This is the ultimate goal I aim to achieve.

07

Cybernet Systems Integrated Report 2023

Cybernet Systems Integrated Report 2023

08

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Cybernet Systems Co. Ltd. published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 08:53:03 UTC.