Outline of Medium-Term Management Plan

To realize sustainable growth and higher corporate value, we have made the current
medium-term management plan our first step toward achieving Group Vision 2026 andthrough further improvements within the Group, we will promote structural transformationand establish a resilient management foundation.

Transformation to 2020

Group Vision 2026

Taking advantage of the shift to an operating holding company in July 2016, TIS announced a new Group vision for the
future in May 2017 to mobilize the capabilities of Group executives and employees alike and take corporate value
higher. The Medium-Term Management Plan (2018–2020) is important because it is the first stage of a journey towardachieving Group Vision 2026.
2026 Corporate Ideal“Create Exciting Future”(From April 2018 to March 2021)

Utilize advanced technologies and know-how torealize business innovation and market creation—Achieving structural transformation as a corporate family and taking the leadin finding solutions to social issues—

Strategic Domains

Seeking Position on Global Stage● Be seen by leading companies in

Corporate Targets in 2020
Company where diverse
human resources, reliable,
proud and carrying
a sense of solidarity,

approach work
enthusiastically

Increase high-value-added quality(boost value of technology/social
research results) throughvalue chain reformin three years¥430 billion
Operating income ¥43 billion ★
Operating margin
10%★
Net sales50

to deliver ratio of%★
from strategic domain sales
Throughenhancedmanagement
efficiency

Becometop classROEgroup united in IT★ Key performance indicators

12%★

Become corporate groupthat contributes

solutions toenvironment/social issues
through business activities● Actively invest to rev

up growth engines● Improve value
provided to clients,
reinforce existing
fields throughproductivity
innovation

21

programs that motivate
employees to work productively
Emphasis on ● Build human resources portfolio
employee self- that supports structuraltransformation, and optimize
fulfillment
deployment throughout Group

Constant and rapid transformation● Proactively propose

Concentrateon corebusinesses

solutions to markets/clientsand transform structure to
realize business creation● Pursue strategicallydirected, robust investment, mainly throughM&A and service
investment

Advanced
technologies

Businessfunction
services* Four business areas forming core activities of
TIS INTEC Group by 2026.

Strategic
partnershipbusiness

Medium-Term Management Plan (2018–2020) will guide us in pursuit of rapid structural transformation to build afoundation for Group Vision 2026 success and expansion of strategic domains.
Medium-Term
Management Plan

2016

2026

(2018–2020)

Business Domains in 2016

● Create environment, culture andSustainableprofitgrowthIT offering
services

TIS INTEC Group management resources

Shift to priorinvestment
style ofbusinessdevelopment

Supportingclients’ businesses

derived through business activities,
establish structure generating
medium- to-long-term benefits forsociety as well as profits to sustain
corporate presence● Achieve cost reduction throughenhanced, more efficient
headquarters function

Frontier
marketcreationbusiness

both a revenue base and a technology/know-how base
● IT Offering Services: Prior-investment
business functioning as pillar of profit● Business Function Services: Recognized as Group forte, driver of growth● Frontier Market Creation Business:
Driver of explosive growth throughcreative destruction of prevailing walls

Strategic Domains in 2026

Business
CreatorBasic Policy● With solutions to social issues

different industries as having anappealing presence, always trusted
as a strategic partner● Always embrace reform in existing
industries and markets, and earn
reputation as market-creating
innovator● Transcend the limits of an IT
enterprise; be a leading company
with innovative market concepts● Proudly demonstrate high profileand showcase solid standing as acorporate group chosen by clients,society, employees—everyone

Marketable
services

Frontier Market
Creation BusinessNetwork
infrastructureservices
IT system
configuration andoperation

Specific
responses

Strategic
domainratio(net sales
basis)IT Offering Services

Business Function
Services

Strategic Partnership
Business

Provide IT
engineeringexpertise

IT domains

Expandglobalbusiness

Evolution ofstrategic
domains

BPO services● Become top-class

IT group in ASEAN
region● Hone global
strengths,
emphasizing
payment settlement/banking/ERP
solutions

Medium-Term Management Plan
(2018–2020)¥80 billion

Structuraltransformation

ASEAN Region

Budget for growthinvestment tofuel structuraltransformation● Strategic Partnership Business: Lay

Service domains

Fiscal 2018

Fiscal 2021

35%

50%

IT domains

Service domains

Above

70%

22

Progress on Medium-Term Management Plan
Fiscal 2020 Overview

Looking Back on Past Medium-Term Management Plans

Basic Policy and Key Performance Indicators● All key performance indicators for final year of medium-term management plan—fiscal 2021—achieved a year ahead ofschedule, reflecting groupwide business acceleration.

We look back on the three medium-term management plans that have led the TIS INTEC Group towhere it is today.

Key Performance Indicators (Fiscal 2021)
Strategic Domain Sales Ratio

50%

Fiscal 2021
initial estimate

Operating Income

50%

Fiscal 2021
initial estimate

Fiscal 2020 actual

Operating Margin

10%

Fiscal 2021
initial estimate

44.8

43 billion

ThemebillionFiscal 2020 actual

12 %Fiscal 2021
initial estimate

Fiscal 2020 actualSecond Medium-Term Management Plan
(Fiscal 2013 – Fiscal 2015)
Taking on Transformation“Brave Steps 2014”

Third Medium-Term Management Plan
(Fiscal 2016 – Fiscal 2018)“Beyond Borders 2017”

Group management emphasizing
independence of each Group company

Overall optimization of the Group andgreater sense of solidarity

Portfolio management, in a project sense,
blending exceptional businesses and key
strengths into a single approach● Demonstrate composite Group strengths

Basic Concept/
Medium-Term
Management Direction

ROE

10.1%

First Medium-Term Management Plan
(Fiscal 2010 – Fiscal 2012)“IT Evolution 2011”

12.5%

Major Priorities in GroupManagement

Fiscal 2020 actual● Top-line emphasis
while highlighting uniqueness of the● as One Company
Group and expand scope of business● Enterprising and bold
activities⇒ Embrace reforms. Expect full-fledged● Pursue business activities underpinned by
V-shaped recovery to get back on
client trust
growth trajectory.
● Reform production platform and capitalize
on new business opportunities● Profit emphasis● IT brain● Portfolio management● Promote greater management efficiency● Integrate/centralize shared functions withas a corporate group●C ultivate corporate culture that unites
the Group● Promote measures that fuel corporate
growth and motivate employees● Strengthen financial position on aconsolidated (groupwide) basis

Key indicators
Net sales¥400 billion

Fiscal 2020 Group Management Direction

Operating income
Operating margin

Robust prior investment to fuel business expansion
and structural transformation
Selectively invest in growth fields and areas of expertise to turnservice-style businesses into growth engines

Promote measures and review business portfoliowith view toward higher profitability
Concentrate on forte fields and key client businesses, eliminate
unprofitable projects, emphasize order profitability and thoroughly
implement enhancement reforms

Promote growth strategy aimed at becoming
a top-class IT group in ASEAN region
Expand business domains and pursue strategic investments
through cooperation built over time with overseas partners in linewith global strategy

Boost motivation and take human resource
management to higher level
Strive to create framework and corporate culture in which
employees—the driving force behind the Group’s growth—canthrive, and steadily realize measures described in personnel manifesto

Looking Back on Fiscal 2020
● Strategic domain ratio surpasses medium-term management plan target of△

23

achieved sales but posted lower operating income. Qualitativetransformation required to achieve medium-term targets, including
improvement in profitability on service-type businesses.

● Gross profit margin improved to 23.9% (YOY change, +1.4%), reflecting○

enhancement upgrades and efforts to reinforce order profitability.

● Development loss ratio held to 0.6%, staying within full-year target level(0.8%)● Implemented review of Group strategy for platform business, including

cloud, security, data center and network operations.

ROE

Fiscal 2012

the Group⇒ Make office procedures more efficient,enhance capital and asset efficiency,
raise Group profile, and cultivate
corporate culture with sense of solidarity● Realize higher level of administrative
management⇒ Promote management with profit
emphasis, work to enhance accounting,taxation, financial reporting, andimplement Group personnel strategies

Fiscal 2015

Estimates

ActualFiscal 2018

Estimates

ActualEstimates

Actual¥327.4 billion¥350 billion¥361 billion¥400 billion¥405.6 billion¥35 billion¥15.6 billion¥25 billion¥21.1 billion¥30 billion¥32.7 billion

8.8%

4.8%

Above 7%

5.9%

7.5%

8.1%

More than 10%

1.5%

7.5%

6.0%

8.0%

9.9%

Policy on return toshareholders

Maintain stable dividend

Strive for payout ratio of 30%

Strive for total return ratio of 35%

Payout ratio

74.0% in fiscal 2012

25.6% in fiscal 2015

16.6% in fiscal 2018

Total return ratio

74.0% in fiscal 2012

30.4% in fiscal 201530.5% in fiscal 2018

Reference: Average annual growth rate over three years
Net sales

–1.1%

+3.3%

+4.0%

Operating income–13.1%+10.6%+15.7%● Planned to expand business volume by● Reinforced ties with existing targets of capital participations and further○

fortified overseas business platform by bringing several influential partners
under the Group umbrella and by forming new capital and businessalliances.
● Utilized composite capabilities derived from alliances in joint expansion of
platform services.

● Formulated Diversity and Inclusion Policy and promoted various measures○

Realize enhanced management practices andhigher efficiency
Instill widespread awareness of unified, groupwide management,
based on OUR PHILOSOPHY, promote “G20” project to elevatehead office functions, and kick off new system “GAIA”

50% ahead of schedule.

● Driven by demand for payment settlement solutions, Service IT Businessgroupwide● Lay resilient financial base to facilitateprior investment activity● Streamline and centralize corporate
functions● Reinforce product brands and corporate
image

designed to enable employees to achieve self-fulfillment.

● Began groupwide initiative to constantly upgrade the skills of personnel

who will drive business growth.
● TIS included in “New Diversity Management Selection 100” by Ministry of
Economy, Trade and Industry.

● From April 2020, began implementing common systems and shared○development within Group under project to elevate head office functions.

● Brand recognition dramatically improved, hitting 32% (up 13% YOY),

through strategic brand investment.

● Finished selling off real estate in and around Metropolitan Tokyo as Group

office relocated and centralized.

Key reflections● Pushed ahead on building unique and● Expansion in value-added creation styleturning SORUN Corporation into consoliobvious strengths (growth engines) andservices, along with assignment solution
ated subsidiary, but growth was temperedlinking strengths, as well as concentratingstyle services geared to client requests, fuby significant deterioration in external
capabilities into core businesses. Achieved
eled growth. Shift to market-cultivating
environment caused by such factors as
net sales target but failed to hit operatingstyle services requires faster responses.
Lehman shock. Against this backdrop,
income target as issues continued toProfitability steadily improving, and efforts
management decided to pursue course ofsideline efforts to prevent projects fromto control unprofitable projects showing
realignment in Group formation, including
becoming unprofitable and efforts toresults. But low-level control still required.
merger of SORUN and UFIT Co., Ltd., into
boost productivity.
● Transition to operating holding company
TIS, and implemented sweeping structural ● Progress on approaches to achieve
structure and steady implementation ofreforms, including relocation and centralevolution in services and globalize
measures, including business realignment,
ization of Group offices in Tokyo area, tooperations fueled expansion in scope of
office consolidation and improved capitalcreate more resilient managementbusiness activities but not enough toefficiency, to achieve overall optimization
structure.
create business with revenue-sourceof the Group. Made progress in cultivating● Blueprint for totally revamping operations
potential.
corporate culture with sense of solidarity
urgently needed for Group to demonstrate ● Realized certain degree of success withthrough design of single logo and creation
truly comprehensive capabilities because
measures to restructure operations andof Group vision.
prevailing corporate consortium structure
reinforce cooperation across business● To achieve sustainable growth andoptimized to each company under Grouplines. This included turning AGREX Inc. into
improved corporate value, prioritizedumbrella insufficient to showcase overall
wholly owned subsidiary. Also unified
structural transformation and establishcapabilities.
Group brand to underscore integrated
ment of resilient management platform
group management, but more extensive
through additional reforms within theapproach needed for overall optimization.
Group in anticipation of major changes insociety.

24

Medium-Term Management Plan
(2018–2020)

Guided by a management policy with a profit emphasis, TIS has set KPIs under the following conditions. From the perspective of
progress toward targets and the status of efforts to ensure sustainable profit growth and constant transformation with a sense of
speed, as outlined in Medium-Term Management Plan (2018–2020), the chosen KPIs are operating income, the strategic domain
ratio and the operating margin. From the perspective of measuring returns over capital costs as the Company vigorously pursues
business more conscious of capital costs than before, ROE is the KPI.

● Promote new Group formation● Cultivate shared spirit that permeates⇒ Set ROE as key performance indicatorand strive for improved corporate value
and sustainable growthActivities under Medium-Term Management Plan
Structural Transformation Strategy

Business Portfolio Review

Progress on Structural Transformation Strategy (1)Medium-Term Management Plan (2018–2020) guiding rapid structural transformation toward success of Group
Vision 2026.
Marked favorable progress, particularly with expansion in demand for existing Strategic Partnership Business (SPB)
and IT Offering Service (IOS), and reached target set for final year of medium-term management plan a year aheadof schedule.
Realize structural transformation toward higher-earning-potential, stock-style services in strategic domains.
Charting Growth in Strategic Domain Ratio(Net sales basis)

ActualEstimate

Fiscal 2020

Placement of platform business strategy promotion structures

Structures to leverage strategies, with emphasis on investment, sales and personnel, applicable to key platformbusinesses groupwide placed in TIS.
Optimize businesses and operate efficiently with sense of speed

53%

45%

Integrating brands for EINS WAVE

Services, including cloud, network and data center services, under TIS and INTEC brands merged into single
brand.
Add quality of consistency to Group services, raise profile and sharpen competitive edge

40%

Fiscal 2018such as those for cloud, security, network and data center use.

50%

42%

35%

● As part of the business portfolio review, management looked into Group strategies to reinforce platform businesses,

Fiscal 2019

Fiscal 2020

Fiscal 2021

Service map under integrated brand (outline)

3. Business Function Service

For clients at the top of their industry, we will draw on industry foresight andbusiness knowledge that other companies cannot match—our businesstools—to explore and promote business strategies with clients and underpin
business basics.

We will combine industry and business knowledge accumulated within theGroup and utilize advanced technologies to anticipate client needs and provide
business functions as services to enhance their value chains.

Desired Status
Building strong business partnerships to help clients expand operations by
jointly exploring business strategies and identifying and solving businessrelated concerns.

Desired Status
Complementing IT Offering Service with new businesses to enhance efficiency,
mainly through automation, and providing high-value-added services to clients.

Data center advantages● Track record: More than

45 years● Facility availability:

4. Frontier Market Creation BusinessWe will combine leading-edge technologies and know-how accumulated as acorporate group to create and quickly provide IT solution services that
anticipate client needs.

We will utilize Group technology, operating know-how and customer bases tocreate new markets and business models matched to evolving industry andsocial needs and develop businesses for these markets on our own.

Desired Status
Allowing TIS INTEC Group strengths to blossom under IT Offering Service
banner; switch from labor-intensive style to non-price competition, knowledgeintensive style.

Desired Status
Creating new markets that become pillars of business for the Group.

Progress of Structural Transformation Strategy 2
Working to turn service-style business—at core of IT Offering Service—into growth engine and steadily develop businessby expanding accumulated strengths, taking a robust approach to investment and actively pursuing open innovation.
Going forward, selectively invest in areas of keen interest while focusing on further business expansion and enhanced
profitability.
Net Sales¥131.5 billion[Estimate]¥100.6 billion

Medium-term
management plan
initial targets

Operating Income¥13.00 billion[Estimate][Estimate]¥8.51 billion¥8.19 billion

8.1%
7.2%
Operating margin
Fiscal 2021

Fiscal 2021

Fiscal 2018

Fiscal 2019

6.5%

6.5%

Fiscal 2020

Fiscal 2021

10.8%

Fiscal 2021

Anticipated Core Composition of Net Sales
Fiscal 2018
ActualFiscal 2019
ActualFiscal 2020
ActualFiscal 2021
(Estimates)

Payment

10.0

15.0

22.5

28.5

Continue to emphasize payment settlement solutions. Anticipating
sales increase.

ERP

28.0

28.0

27.0

25.0

Risk of extended discussion on upgrade projects, with possible drop in sales.

Data centers/cloud/networks

42.0

42.0

43.0

44.0

Cloud attracting interest but existing data center business shrinking.
Will capture cloud and security demand to boost sales.

(Billions of yen)25

14

Systemoperation
services

Self-portal cloudservices

Integrated, closed network services

Private cloudservices

Internet-linked services

Cloud-style backup
servicesManaged network services

Tokyo No.1
Data CenterTokyo No.2
Data CenterTokyo No.4
Data Center

Yokohama
Data Center

ToyamaData Center

Osaka No.1
Data Center

Osaka No.2
Data Center

Osaka No.3
Data Center

Osaka No.4
Data Center

Manyo Data
CenterOther TIS-rundata center networks(in Tokyo, Nagoya
and Osaka)

Multi-environment remote-surveillance services

As a group, we will draw on composite expertise to respond to changes in the market with asense of speed and strive to sharpen our competitive edge and expand demand for services,
especially in the cloud and security domains.

●All shares in two BPO-related consolidated subsidiaries (AC Medical Inc. and Koushin Inc.) transferred outside the Group(February – March 2019).
●All equity in Tianjin TIS Hi-tech, in China, transferred outside the Group (October 2019).
●TIS’ EDI (electronic data interchange) business assumed by INTEC through corporate split to centralize operations¥8.50 billion[Estimate]

Fiscal 2020

Medium-term
management plan
initial targets¥120.0 billion¥8.13 billion

Fiscal 2019

● Number of data centers owned:

Managed cloudservices

Other recent accomplishments

Status of Service-Style Business

Fiscal 2018

Data
centers

86,400m2

2. IT Offering Service¥117.6 billion

Networks

99.999%● Total floor space:¥125.5 billion

CloudsMedium-Term Management Plan
(2018–2020)

1. Strategic Partnership Business

Status/Forecast(April 2020).
●TIS agreed to acquire a partial stake in TIS Chiyoda Systems Inc., a new company established to assume the IT businessdivested by Chiyoda System Technologies, a wholly owned subsidiary of Chiyoda Corporation, and decided in February2020 to make the company a consolidated subsidiary from October 2020.
TIS will utilize connection to build strategic partnership designed to promote digital transformation of the Chiyoda
Group and, in the future, will provide IT solutions utilizing accumulated know-how through the new company.
●TIS agreed to acquire a partial stake in Miotsukushi Analytics Co., Ltd., which is engaged in data analysis and AI

consulting, and turn the company into a consolidated subsidiary (August 2020).
TIS will strengthen data analysis and AI-related services, which are key components in clients’ digital transformationand pursuit of digital businesses.
26

Activities under Medium-Term Management Plan
Payment Business Strategies

Leveraging our strengths to accelerate business development andrealize a cashless society
Our major strengths are the experience, technology, know-how, and abundant human resources we have cultivated overmany years handling development and operation of core systems for major credit card companies. Deploying thesestrengths, we have established a position as the leading system integrator in the domestic settlement field.
Amid recent advances in cashless payments, conditions in the payment settlement market are changing dramatically
due to progress in smartphone and other related technologies, the entry of companies from different sectors, and therise of FinTech companies. Viewing this situation as a new growth opportunity, we develop and operate core systems for
major credit card companies, which represent an important foundation of our business. We are also deploying our
PAYCIERGE digital payment platform to accelerate business development.

PAYCIERGE digital payment platform

Status of cashless payments in Japan● The Japanese government is promoting cashless payments, which are expected to become more widespread in the future● The credit card is a typical tool for making cashless payments, and the credit card transaction volume is expected to increase in

the future alongside an increase in mechanisms for linking cards to code-based credit services, such as QR codes and barcodes,that have become popular in recent years.
Cashless payments (¥ trillions) and cashless payment ratio (%)

Combination of cashless payment methods

80.0%(¥trillions)

100

40.0%
50
20.0%

PAYCIERGE is a comprehensive, highly convenient, and reliable payment solution for all people who require retail payments.

11.9%
0

2008
Electronic money

2016

2025

Credit card

Debit card

FutureCashless payment ratio

Interface

Payment method

Contact typePrepaidNon-contact
type

Instant debit

Code reading
type

After pay

Source: TIS Compiled based on Cashless Vision (Ministry of Economy, Trade and Industry, April 2018)

Payment-related sales in service-style business(Estimate)¥50 billion

Overview of Payment Services and TIS’ Core Focus¥22.5 billion¥15 billion¥10 billion

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2026

The entire payment processing market is expanding, driven by
the spread of cashless options to pay for purchases. Against
this backdrop, companies are embracing digital transformation
to break into the payment settlement business, which iscreating an emerging platformer market that is expected toreach ¥90 billion by fi scal 2026.
Based on this forecast, TIS is targeting emerging platformers, specifi cally demand in the core area for issuers, which
requires a particularly high level of specialization. The Company has exactly this kind of specialization and will maximize it
for a competitive advantage. TIS will work toward sales of ¥50
billion, or a 70% share of the market, by focusing on credit
SaaS.

Status in fiscal 2020
Digital account services (credit Saas, debit SaaS, prepaid SaaS)● Directed efforts into platform-building for providing credit SaaS. Projects for first-time users moving well, steady progress withservices expected to go live during the next medium-term management plan.
● With growing demand from consumers for non-cash settlement options and wider interest in e-commerce, debit SaaS and prepaid SaaS also attracted attention. Client base steadily expanding and transaction volume also up.
Digital wallet services● Initiated services for MUFG Wallet and Toyota Wallet. Business development accelerating.
● Turned U.S.-based Sequent Inc. into subsidiary to ensure quick access to token requester technology.
Other services● Increasing demand for QR gateway services at money access points and merchants in Japan and overseas.
● Solid steps forward on proof of concept for MaaS and Super City initiative and further involvement in development plans

Topic
TIS held an information meeting on December 9, 2019, to highlight PAYCIERGE. This was the Company’s fi rst event on the
PAYCIERGE theme. A total of 80 investors attended, and three TIS executives with business unit responsibilities provided
details on areas of emphasis as well as strategies and other initiatives related to payment services.
We have a particularly strong competitive advantage in the fi eld of digital account services, which enable us toprovide all sorts of processing services, including prepaid, instant debit, and after-pay credit.

27

Presentation materials can be found at
http://www.tis.com/documents/en/ir/fi nance/meeting/191209.pdf

28

Medium-Term Management Plan
(2018–2020)(Billions of yen)Activities under Medium-Term Management Plan
Global Business Strategies

Leverage business domain expansion and strategic investments
to become top-class IT group in ASEAN region
Three pillars support expansion of the TIS INTEC Group’s overseas operations: providing local support to existingclients as they pursue a presence in other countries, applying know-how accumulated in Japan to develop local
markets overseas, and bringing cutting-edge technologies from abroad to Japan to reinforce our capabilities in thedomestic market.
Currently, TIS seeks to build a top-class group of IT companies in the ASEAN region. Toward this end, the Company
will maximize alliances forged through strategic investments in channels—that is, local markets—and technology,
while promoting business development that integrates the respective strengths of each company and expanding
business domains through new and reinforced connections across the ASEAN region.

Key M&A Targets in Recent Years, Capital/Business Alliance Results
Net sales: ¥44.2 billion

Capital and business alliance in July 2015
Increased stake in October 2019
Indonesia-listed, top-tier local IT company.

MFEC Public Company Limited(Equity-method affiliate = 24.9% stake)Net sales: ¥13.3 billion
Capital and business alliance in April 2014
Decided to acquire shares toward turning company into subsidiary in March 2020
Thai-listed, leading provider of enterprise IT solutions.

I AM Consulting Co., Ltd.
(Consolidated subsidiary = 99.9% stake)Net sales: ¥2.5 billion
Turned into consolidated subsidiary in June 2014
Thai-based consulting group producing total SAP-related IT solutions.

TinhVan Technologies JSC.
(Equity stake: 19.9%)

Capital and business alliance in June 2018
Leading IT service provider with considerable experience introducing solutions to
the Vietnamese government and financial institutions.

SQREEM TECHNOLOGIES PTE. LTD.
(Equity stake: 6.8%)

Capital and business alliance in May 2019
A Singapore startup—the world’s largest behavioral pattern data aggregator— growing
very fast in fields of digital marketing and data analytics using proprietary AI technology
based on massive data collection.

R3 HoldCo LLC(Equity stake: 1.4%)

Capital and business alliance in June 2018
U.S. technology startup boasting global-caliber results and brand in blockchain-related
technology for corporate users.

Shanghai CardInfoLink Data Service Co., Ltd.
(CardInfoLink)(Equity-method affiliate = 18.1% stake)

Capital and business alliance in September 2017
Equity-method affiliate in March 2020
FinTech company developing presence in China and around the world, with particularstrength in payment gateway solutions and other services.

PromptNow Co., Ltd.
(Consolidated subsidiary = 60.0% stake)

Turned into consolidated subsidiary in May 2016
Leading FinTech company with multiple proprietary mobile services for financial
institutions.

Sequent Software Inc.
(Consolidated subsidiary = 60.1% stake)Grab Holdings Inc.

Medium-Term Management Plan
(2018–2020)

PT Anabatic Technologies Tbk(Equity-method affi liate = 37.3% stake)

Capital and business alliance in May 2017, turned into consolidated subsidiary in
February 2020
One of very few tokenization vendors in the world, and recognized by multiple
international brands
Capital and business alliance in February 2020
Top-class super app provider in ASEAN region. Expands into one business after anotheracross wide range of sectors, including ride-hailing services, food delivery and financial
services. Boasts 196 million downloads on aggregate basis.

*Net sales for fiscal year ended December 31, 2019, converted at exchange rate prevailing at year-end.
*Equity stakes current as of May 12, 2020.

Capital and business alliance with Grab Holdings Inc.
In February 2020, TIS took a US$150 million (about ¥16.5 billion) stake in Grab Holdings, which offers diverse services in the ASEAN region. Goingforward, the Company aims to be an IT-oriented strategic partner through joint efforts in the areas of financial and payment services in the ASEAN
region. The collaborative emphasis will be on ensuring a stable infrastructure for digital payments, a method that is becoming more popular inSoutheast Asia, and jointly promoting development of new payment solution technology.

Promotes diverse services in eight Southeast Asian countries
and 339 cities (on-demand ride-hailing, food delivery,
product delivery, digital payments and other financial
services)
Number of provided app downloads: More than 185 million
User access points: Merchants, such as restaurants, and morethan nine million drivers

Solid track record in IT system configuration for finance andpayment services sectors
Cutting-edge technological know-how
Growing network through capital and business alliances with
influential local vendors in ASEAN region, including Anabatic(Indonesia) and MFEC (Thailand)

TIS continues to take a robust approach to alliances, including a capital and business alliance formed in May 2020 with Entropica Labs Pte. Ltd., astart-up in Singapore engaged in development of quantum computer software.
29

30

Activities under Medium-Term Management Plan
New Technologies and R&D

Focusing on the development of technologies and the promotion of
innovation that contribute to the resolution of social issues andthe attainment of a sustainable society
In recent years, the evolution of information technology and the accompanying changes in market needs have become
increasingly intense. COVID-19 has also accelerated the shift from real to virtual and analog to digital.
Against this backdrop, TIS is working to develop technologies and create innovations across the entire TIS INTECGroup, aiming to achieve the corporate goal described in Group Vision 2026: “Create Exciting Future – Realizing
business innovation and market creation using advanced technology and know-how”.
Our activities are based on open innovation in order to categorize technology strategies and to make the results ofactivities in all areas faster and more broad-ranging.

With an emphasis on speed, we are strengthening our ability to create new businesses mainly through collaboration with start-ups
in Japan and overseas.

We conduct research and development in collaboration with universities and public research institutions.
Focusing on XR and multi-level edge computing as core technologies
Focusing on XR (extended reality – incorporating augmented reality (AR), virtual reality (VR), mixed reality (MR), and everything in
between) technology as a human augmentation technology, we are researching and developing modeling of physical and spatial
information important for remote communication in cyberspace.

Medium-Term Management Plan
(2018–2020)

1. Technologies that contribute to new business creation and existing business reinforcement

3. Technologies that drive medium- and longer-term innovation

Multi Level Edge Computing
Focusing on edge computing as an information service infrastructure technology in the IoT era, we are researching and developing
platforms (agile responsiveness, flexible configurations, more intelligent applications, energy savings, software description) that
integrate networks and computers.

Corporate venture capital: Implementing speedy investment in start-ups where collaboration is assumed
Through CVC, which is expected to lead to investment of ¥2 billion by March 2021, we will make investment decisions in a minimum
period of about one month from discovery to final approval for start-ups in the rapid growth period from seed to middle stage.
Number of investments: 35

Investment: ¥1.3 billion (Cumulative total from April 2016 to July 2020)

2. Technologies that enhance our product development competitivenessIn addition to Nablarch, a platform for developing mission-critical enterprise systems, we havedeveloped a variety of software and processes to improve productivity and quality and are using
them throughout the Group. We also use canal, a mutual technology support platform, torespond to rapidly evolving information technology.
canal: Mutual technology support platform for
employees
When an employee posts a technical question to canal, it is automatically forwarded to 113 TIG-certified experts, and they can receive
highly specialized and useful answers. It is a platform that can quickly
respond to customer needs and technical issues by leveraging theGroup‘s expertise and demonstrating the value that only a major
corporation can provide.
Seven Group companies have adopted canal, which is used by
6,027 employees, or 60% of the total workforce of companies thathave deployed it. canal also fosters a corporate culture of mutual support among Group companies.
Number of users: 6,027 (As of July 2020)
31

Our Technology & Innovation SBU pursues a variety of other technological developments, new business developments, and R&D. The
results of these activities are shown on Fintan (https://fintan.jp/).
Fintan: Development expertise provided for free
The know-how we have accumulated through our research and development, systems development, and new business development projects ispublished on the Internet. The tools, processes and know-how required topromote open innovation are available free of charge to anyone anywhere.
Fintan’s unique monthly users: 9,609 (July 2020)*Total number of users accessing from the same browser by period*Fintan is a legendary figure in Celtic mythology who accumulates the knowledge of all humanity.
The name has been used for this site to convey the idea of access to all sorts of system development knowledge.

32

Activities under Medium-Term Management Plan
Strategies for Enhanced Management Practices and Improved Efficiency
Enhanced corporate brand
Robust pursuit of strategic brand activities for stronger management foundation built on brand power
Implement concentrated investment through fiscal 2021, seeking to ensure market quickly associates brand with business activities.
(Increase investment by ¥500 million in second half of fiscal 2020, ¥1 billion in fiscal 2021 (plan))

Progress on G20
G20 project to elevate head office functions progressing well. Gradual introduction of shared services and common systems
within the Group, beginning in fiscal 2021.
Anticipate cost reduction effect of about ¥1 billion in fiscal 2021, ultimately leading to better-than-expected results.

Branding activities roadmap

Overview of G20 Project to Elevate Head Office Functions
Fiscal 2021

Shared Services
within Group

Common Systems
within Group
Anticipated cost reduction effect throughenhanced head office functions*Compared with fiscal 2018 (aggregate results)

Fiscal 2022

Fiscal 2023

● Related to common systems: Extend groupwide in conjunction with common system introduction● Not related to common systems: Gradual approach (timing set in cooperation with each company)

TIS office staff center in charge of all accounting, sales, purchasing, labor and general affairs operations atdomestic consolidated subsidiaries (currently, 22 companies), matched to centralization process at TIS

Implement at threecompanies(TIS, INTEC and one other)

Implement at total of
13 companies(addition of 10 companies
from previous year)

Wrap up implementation
at all 23 companies

About ¥1 billion

About ¥2 billion

About ¥2 billion + α(addition of 10 companies
from previous year)

Promote activities to enhance management capabilities groupwide and reinforce corporate governance● Various measures to boost recognition, including a television commercial — Group’s first — delivered a certain degreeof success.

● Going forward, measures will be put in place to make TIS INTEC Group the choice of all stakeholders and to raise brandprofileGroup office realignment (in Tokyo area)
Decided to relocate and concentrate Group offices within the Tokyo area, mainly to enhance groupwide business synergies,
encourage greater communication within the Group and promote new workstyles. Will open new offices in Toyosu district,scheduled for spring 2021.
Concentrate TIS and INTEC business operations at Toyosu Office. Concentrate head office function for both TIS and INTEC at
Nishi-Shinjuku Office.
Nishi-Shinjuku Office
TIS, INTEC head office function

Toyosu Office (new)TIS, INTEC business operations
New office concept
New office will be established to shape new future,with an environment in which each and every
employee plays a leading role
●Apply ABW (activity-based working) and implement workstyles

that allow employees to choose place to get work done

●Introduce office concierge so employees can concentrate on

dutiesKnowledge of TV
commercial

Group recognition(Among business people)
TIS survey on Augst 2020

43%

57%

(Among business people)
TIS survey on Augst 2020

(Up 24 percentage points
after television commercial)

IT industry new graduate job seekers

Company ranking by
popularity
Overall:
No.15
No.13
(last year)

Science-based:
No.16

（昨年）

No.9

To capitalize on more business opportunities, improve recruiting power and elicit greater
pride in working for a company under the TIS INTEC Group umbrella, TIS will make fiscal
2021 a time of intensive investment and maintain strategic brand investment
33●Feature showcase function for hands-on understanding ofGroup’s products and services, particularly advanced
technologies●Facilitate business creation through open innovation
opportunities with in-house and external experts

The COVID-19 pandemic has ushered in a new normal, and as we consider new workstyles that suit the altered
times, we will prioritize a review of how the Toyosu office will be set up.
Position as place of communicationand collaboration• Dramatic reduction in office area seating (Future target: 50% of initial design ratio)• Dramatic increase in communication booths —booth-sized workstations—including remote format

With two core offices, we will build a more unified group presence and accelerate structuraltransformation—a primary goal of the current medium-term management plan—
while seeking to reinforce Group governance.
34

Medium-Term Management Plan
(2018–2020)

Note: Details, such as the number of companies and the implementation schedule, noted above reflect content announced in November 2019.

Activities under Medium-Term Management Plan
Human Resources Strategies

TIS will implement a personnel strategy that matches its corporate direction, and this, I feel,
will be the key to future success.

Emphasize measures to help employees achieve personal career goals andcreate framework/culture that enables diverse human resources to thrive~Individual cycle of personal fulfillment will be driver of growth for the Group~
Of all the management resources available to the TIS INTEC Group, employees are the most important. One of
the basic policies described in Transformation to 2020—the medium-term management plan that TIS launchedin April 2018—is to emphasize employee self-fulfillment, and efforts will be directed toward the creation ofan environment, corporate culture and systems that make diverse human resources excited about their work.
TIS will promote the environment and opportunities that enable each and every employee under the Groupumbrella to fully demonstrate their skills, which will lead to sustainable growth of the Group overall.

Jun Ikimune
TIS Senior Managing
Executive Officer andGeneral Manager of
Human Resources SBU,
TIS Inc.

Human Resources Strategy in Medium-Term Management Plan (2018–2020)
Boost motivation through constant cycle ofself-fulfillment

Imaginean ideal
Highermotivation

Realizegoals

Declare andshare

Problemsolve

Human resources who fuel process ofstructural transformation● Account managers, service managers whodrive activity in strategic domains● Consulting staff who formulate businessstrategies along with clients● Service production staff who can turnindustry knowledge and businessknow-how into marketable products● In-house entrepreneurs who plan, launchand promote new businesses● High-level engineers who support activities
in strategic domains through quality andproductivity

Activities in fiscal 2020

Create framework and systems to achieve
optimum deployment of human resources
within the Group

Visualize humanresources information

Establish humanresources systemapplicable throughout
the Group

Establish humanresources portfolio

Boost motivation through constant cycle of self-fulfillment to realize career goals

In fiscal 2020, principal companies under the Group umbrella took up
performance management, signed on to the groupwide Diversity andInclusion Policy, implemented diverse activities to help employees thrive,and promoted health management and workstyle reform. These efforts
were designed to accelerate the cycle of self-fulfillment in career goals of
employees who are the driving force of corporate growth, based on the
personnel manifesto drawn up by the TIS Human Resources SBU.

Activities planned for fiscal 2021

Fiscal 2021—the last year of Medium-Term Management Plan (2018–2020)—will see the culmination of measures and accomplishments
achieved in line with the personnel manifesto. This will provide theframework and corporate culture that underpin the development of
human resources with top-level skills and who then contribute to
structural transformation of the Group.

● Conduct groupwide survey on job motivation and encourage activities to improve
motivation● Extend system that enables employees to continue to be active in the workplace if they
are willing and able, regardless of age, through introduction of system for rehiring
retired employees up to age 70● Deepen scope of performance development measures, including 1-on-1 training, careerplanning, wider open-recruitment and promotions, to encourage personal growth● Create corporate culture/atmosphere and introduce peer bonus that foster praise andrecognition of outstanding efforts

Selectively develop model employees to fuel transformation of Group● Manage pipeline to human resources who, with training, will go on to become groupleaders and corporate management

Create framework and systems to achieve optimum deployment of humanresources within Group● Create a portfolio—a database of objective information about the status of humanresources groupwide—that management can access to optimize personnel assignments
and promote approaches shaped by TIS throughout Group

Employee Awareness Survey

35

Key Fiscal 2021 Measures

Group management

Create common groupwide framework andpromote diversity management

To vigorously promote growth and greater efficiency, TIS will implement measures thatbalance structure and corporate culture while enforcing a degree of control in its
role as parent company

Support for structuraltransformation

Enhance programs to train personnel who will
drive management and business forward

TIS will identify personnel with potential to drive management and businessforward, and then try out measures from skill and mindset perspectives toaccelerate personal growth

Forward-looking personnel

Build robust, sophisticated human resources
structure to realize management agility

To build a sophisticated personnel system that quickly responds to changes inmanagement and business environments, TIS will shift to a more strategic humanresources structure

Strong workforce

Reinforce human resources portfolio formation andhiring capabilities to secure workforce

Going forward, TIS will widely reinforce personnel-related measures, from hiring andassignment to training, to secure its required talent poolSupport for self-fulfillmentof goals

Shift from performance management toperformance development

TIS will promote change in perception, emphasizing corporate culture that encourages
managers to help junior staff develop skills rather than simply managing them,
thereby increasing employee engagement and fostering independent growth

TIS overall (good company to work for)
Trust (trust in management)

32 ％ 32 ％34 ％ 34 ％Fiscal 2016

Fiscal 201745 ％ 43 ％

48 ％

46 ％

38 ％ 38 ％Fiscal 2018

Fiscal 2019

Fiscal 2020

Note: The survey is outsourced to an external organization. Aggregate results are presented as apercentage, reflecting the ratio of respondents whose answers were positive, that is, they
selected “4. Often applies” or “5. Almost always applies” in a five-point rating scale.

Sustainable engagement
Organizations embody the values of the individuals therein, so we seek to create sustained employee engagement that aligns our
purpose as a company with the purpose of individuals traveling the same path and also makes employees more willing to contributeto the company’s—and their own—success.
As equals, we—a company and its employees—will embrace measures to grow and prosper together.
Reference: Sustainable engagement promotion system
A company that never rests in its efforts to deliver a better employee experience will be rewarded with enhanced employee
engagement. As a virtuous cycle, this approach will lead to sustainable engagement.
Achievements●Client satisfaction ●Corporate performance ●Individual performance

Last year of current management plan to achieve goal to boost motivation through constant cycle of self-fulfillment to realize career goals.
But look beyond next management plan and promote integrated onsite operations from perspective of understanding
individuals and drawing on inherent skills.
Key Themes

Changes in Results from Employee Awareness Survey

Since fi scal 2016, TIS has conducted an annual awareness survey toidentify employee motivation. The survey features questions about
working toward management targets under each offi ce structure andefforts to foster a good corporate culture. The survey acts as a barometer, gauging employee trust in management, and this result isincorporated into director evaluations. The survey thus helps us boost
management effectiveness while maximizing the success of measures inforce. Based on survey results, we have seen a huge improvement in thenumber of employees who answer that TIS is a great company to work
for and that management inspires trust. In fi scal 2020, similar surveys
were conducted at six Group companies. Approaches found to havebeen useful in boosting motivation at one company will be shared withthe other companies, and personnel programs and measures will beenhanced accordingly.

Employees

Promote Diversity and Inclusion policy to understand individuals anddraw on inherent skills

Sustainable engagement

Create an environment that encourages employees to acknowledge and share management’sview of the corporate vision and the company’s future direction and to contribute on their own
initiative to achievement of targets.

Engagement

Enabling environment

Lay groundwork for programs and measures common companywide but accept
that values of individuals and conditions that characterize each workplace differ
and lead to slight variations

Understand
individuals

EnergyWelcomeindividuals

Company
Improve employee experience

Experience and value obtained by working at that company
1. Purpose
Significance thatworking for thecompany holds

2. Work
Job responsibilities

3. People
Managers, peers
and junior staff
workingas a team

4. Total rewards
Financial andnon-financial
compensation●Instilling a vision ●Performance ●Development ●Workstyle reform●Better corporate culture ●Health management

Utilize skills of
individuals●Pinpoint where individuals are on their career
path through frequent engagement surveys●Share communication styles and diagnostics toidentify personal values (reflect in TIS talentmanagement system)●Communication training based on various
diagnostic results●Assess receptive behavior (personnel
evaluation)●Determine work assignment and sharedpurpose based on sense of values●Evaluate level of cooperation and co-creative
efforts＋

Establish environment to promote diversity●Attributes diversifying across various segments

36

Medium-Term Management Plan
(2018–2020)

Cycle ofself-fulfillment

Selectively develop model employees to fueltransformation of the GroupThe TIS Human Resources SBU Manifesto, which was unveiled at the same time as Medium-Term Management Plan
(2018–2020), is a declaration—a promise—to all employees about what the Company offers and how it supports
employees through human resources programs and measures, including compensation, intended to boost motivation.
The manifesto was not put in a corporate drawer, so to speak, once completed. It has an ongoing purpose. Every six
months, results are evaluated and revisions are considered. I believe this approach fosters greater engagement between
TIS and employees. Also of note, the manifesto is not exclusive to TIS, but rather, it is gradually being rolled out to companies under the TIS INTEC Group umbrella as well.
Robust measures have earned major external accolades not only for TIS but other members of the TIS INTEC Group as
well. Our approach to human resources policy is recognized as progressive, and our efforts to motivate employees arehighly regarded. We conduct employee awareness surveys to gauge employee perceptions, and increasingly positive
results are the fuel that keeps a virtuous cycle in motion—where a company with employees who are enthusiastic about
their work drive corporate growth, which in turn keeps employees motivated and the company moving forward.
From a group perspective, human resources are our most valuable management resource. People are a driving force,
adding signifi cant momentum to the creation and further improvement of corporate value. Therefore, we must continue
to leverage our human resources strategy as fully as possible and ensure that constituent measures are aligned withchanges in business strategies. To put it another way, our human resources strategy hinges on programs and measures
matched to the business direction that we—not just TIS but the Group as a whole—must follow. It is this humanresources strategy that will enable us to comfortably meet business targets, and we are committed to it. It is not goodenough to go only so far. We must always aspire to a higher level and keep moving to ensure steady progress.

Activities under Medium-Term Management Plan
Financial Strategies
Further improvement in ROE
TIS has always adhered to management practices conscious of capital cost, and set a target of 12% for return on equity(ROE) by March 31, 2021, as a key performance indicator measuring return exceeding capital cost. To reach this target, we
will seek more appropriate capital composition and enhanced capital efficiency, with efforts to promote growth investment, maintain financial health and strengthen return to shareholders—all in the right balance.

Net income ratio

ROE

12.0％

9.9％

(Fiscal 2021)(Fiscal 2018)

Promote growth investment●Pursue growth investment activity, such as prior investment and M&As, more robustly.
Envision maximum ¥80 billion in investments over three years. Seek 50% contribution
from strategic domains and operating margin of 10% through structural transformation.

Promotegrowthinvestment

Maintain financial health●Keeping in mind goal to maintain A rating, ensure equity ratio above 50% and allow
debt-to-equity ratio around 0.5 times.
Strengthen return to shareholders●Raise total return ratio yardstick to 40%, from 35%, and then aim for payout ratio of
30% by fiscal 2021 through stable dividend growth.
●Set upper limit on treasury stock holdings to 5% of total number of issued shares, withexcess of this amount cancelled.

Strengthen
return toshareholders

MaintainfinancialhealthPicture of ROE Success

Investment Strategy

××(Fiscal 2018)(Fiscal 2021)

paralleling growth investments

Financial leverage

1.69

Slight riseGreater improvement in equity
ratio offset by new acquisition ofinterest-bearing debt

1.15

Slight drop Increase in business assets(Fiscal 2021)(Fiscal 2018)
Fiscal 2018

Fiscal 2019

Fiscal 2020

ROE

9.9%

11.5%

12.5%

Net income ratio

5.1%

6.2%

6.6%

Total turnover ratio

1.15

1.14

1.16

Financial leverage

1.69

1.63

1.58

Total return ratio (yardstick)

Payout ratio (yardstick)Upper limit on treasury
stock holdings at(up from 35%)

(by March 31, 2021)(excess cancelled)

40%

Basic Policy● Investment into development of own services● Allocate fixed percentage of business profits for investment andconstantly sharpen competitive edge

● Develop skills of human resources who will realize switch toInvestment in human resources to fuelstructural transformation (¥8 billion)

Total asset
turnover ratio

strategic domains and advanced technology fields

30%● Year-end dividend increase, reflecting good business results (two consecutive years).

Total return ratio at 39.8%.

● Will maintain effective dividend increase in fiscal 2021 as well, working toward payout ratio of 30%.

● Build human resources portfolio that facilitates best possible

Fiscal 2020

Fiscal 2021 (estimate)

Before 1-for-3 stock split

After 1-for-3 stock split

Annual dividend per share¥90[Compared with estimate: +¥10]¥35[YOY change: +¥5]

Acquired treasury shares

Total ¥4,140 million

Total ¥3,030 million*

Total return ratio

39.8%

40.0%

Payout ratio

25.7%

29.7%

deployment throughout Group

Investment in R&D to acquire
advanced technologies (¥5 billion)● Pursue research into advanced technologies anticipating trends● Rev up open innovation＋● Invest in new companies to capture know-how and promote services● Increase investment into alliance companies (higher

Investment to grow strategic domains(¥50 billion, including M&A)

shareholding ratio)

Investment Management Policy*Upper limit of treasury stock buyback announced May 12, 2020

Fine-tune investment management practices to capture appropriate return from robust investment activity
Carefully select investment targets, based on investment efficiency index and investment cost, andtoughen up rules for exit management● Accelerate approaches to software investment for creating new services, with more spending than initially planned over two years.
● Maintain policy on robust growth investment to support structural transformation. However, take changes in the economic environment

Changes in Dividends per Share

(Billions of yen)

Software investment to create new services

17.0

Total return ratio

Actual (Fiscal 2019
–Fiscal 2020)

17.1

Estimate(Fiscal 2021)*Rough estimate

8.0

Most Recent Estimate(Cumulative)*Rough estimate

25.0

8.0

4.5

2.0

6.5

Investment in R&D to acquire advanced technologies

5.0

2.7

2.0

5.0

Total

30.0

24.3

12.0

36.5

37

50.0

＋

ActualAnnual ¥35

38.0

To be determined(Will actively investigate
if investment target is appropriate project)

Annual ¥30
Annual ¥23.3
Annual ¥13.3
30.5%
¥9
16.6%
¥5
Fiscal 2018

[Millions of yen]

Estimate

Payout ratio

4,209[Estimate]

Investment in human resources to fuel structuraltransformation

Investment to grow strategic domains(including M&A)

Total Acquired Treasury Shares■ ■ Interim dividends ■ ■ Year-end dividends

in account and implement individual investment decisions carefully.

Initial Estimate(Cumulative)

5%

Medium-Term Management Plan
(2018–2020)

Key Investment Objectives (envisioned)

Software investment to create new services(¥17 billion)

Improved profits through progresson structural transformation(Fiscal 2021)

Status on Return to Shareholders● Pursue growth investment activity, such as prior investment and M&As, more robustly to fueltransformation of business structure. Envision maximum ¥80 billion in investments over three years.
Investment Policy

6.7％

5.1％

(Fiscal 2018)

39.0%
¥17
22.7%
¥7
Fiscal 2019

¥20
39.8%

4,139

3,030

¥24

[Estimate]

2,859

40.0%
29.7%

(Actually acquired¥3,029 million)

25.7%
¥10

¥11

Fiscal 2020

Fiscal 2021

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

* Total return ratio: Total amount of dividends and treasury stock buybacks as a percentage of net income.
* The Company executed a stock split, with each share of common stock split into three shares, effective April 1, 2020 (the effective date). Actual results achieved prior to fiscal
2020 have been converted retroactively to reflect the stock split.
38

Message from the Executive Vice President

Conscious of capital costs, we will
pursue robust growth investment

We will pursue sustained
improvement in the corporate
value of the Group.
Masahiko Adachi,

Representative Director,
Executive Vice President

Fiscal 2020 Results
Business confidence began to deteriorate rapidly in the fourth quarter of fiscal 2020, reflecting issues related to the COVID-19
pandemic. But the TIS INTEC Group was able to escape a major impact on its performance, cementing a strong position with net
sales and operating income rising to record highs for the 10th and ninth consecutive year, respectively. On a consolidated basis,
TIS exceeded the upwardly revised targets announced when first-half results were disclosed, and also achieved the four key performance indicators stated in the medium-term management plan a year ahead of schedule.
Net sales, rising 5.5% year on year, benefited from a favorable trend in IT investment by companies seeking to realize management strategies through robust use of digital technology. Operating income climbed 17.9%, as the higher net sales starting
point more than covered our sustained approach to vigorous investment, particularly prior investment to fuel structural transformation as well as brand strategy costs. The operating margin edged up 1.4 point, to 23.9%, with a very commendable shift into
the 25% range in the second half of fiscal 2020. We steadily strengthened our earning power from business activities, including
successful measures to limit unprofitable projects (a management priority) to a low level of about ¥1.5 billion. This was certainly afactor in our ability to hit our operating margin target of 10%. Progress made on various measures driven by a management policy that emphasizes profitability was instrumental—of that I am sure.
TIS booked extraordinary income of ¥10,696 million and extraordinary losses of ¥12,128 million. The primary components ofeach line item are described below but all are connected to bold management decisions aimed at fueling sustainable growth of
the TIS INTEC Group.
●Extraordinary income: ¥6,927 million in gain on sale of investment securities¥3,178 million in gain on sale of fixed assets as part of reduction and consolidation of property andequipment●Extraordinary loss:¥4,112 million total comprising expenses (transfer to provision for office restructuring costs) related to
the relocation and centralization of Group offices in the Tokyo area and impairment loss on reorganization of some existing offices¥2,254 million impairment loss related to full amortization of goodwill arising following Sequent
Software Inc.’s change in status to subsidiary(Millions of yen)

Fiscal 2019

Fiscal 2020

Net Sales

420,769

443,717+22,947

Operating Income

38,043

44,839+6,796 [+17.9 %]Operating Margin

9.0%

10.1%

Net Income Attributable to Owners of Parent Company

26,034

29,411Net Income Ratio

6.2%

6.6%

Net Income per Share (Yen)

307.83350.35

ROE

11.5%

12.5%

YOY changes[+5.5%]+1.1 points–+3,376 [+13.0 %]+0.4 points–+42.52 [+13.8 %]+1.0 points–

Operating Income Analysis, Increase/Decrease Reasons (Billions of yen)

Improved
profitability

38.04
Increased sales

+5.55

+5.56

Increased SGA 44.83
expenses

‒4.31

＋6.79

(+17.9%)

Increased gross profit+11.11Gross profit margin

Fiscal 2019

39

Actual

23.9%[YOY change +1.4 points]

Fiscal 2020

Prior investment costs incurred in promoting structural transformation:
Up ¥1.7 billion (YOY)✓ Software investment to create new services✓ Investment in human resources to fuel structural transformation
Costs related to✓ Investment in R&D to acquire advanced technologies
Brand-related costs incurred to ensure quick recognition in market:
Up ¥0.5 billion (YOY)40

Medium-Term Management Plan
(2018–2020)

For the TIS INTEC Group, management—as in the running of business—assumes a capital cost perspective. And in the current
medium-term management plan, we set a target of 12% for ROE as a key performance indicator (KPI) measuring return on capital cost. We will achieve this target by building an appropriate capital structure, underpinned by a balanced approach in ourefforts to fuel growth investment, ensure good financial health and reinforce shareholder returns. (Reference: Financial strategy
described in medium-term management plan on page 37.)
In fiscal 2020, ended March 31, 2020, ROE hit 12.5%, up 1.0 point from fiscal 2019. We not only exceeded our 12% target
but did so a year ahead of schedule. The biggest factor in this successful result is that the net income to net sales ratio inched up
0.4 point year on year, to 6.6%. But behind this achievement were the core components—higher income and improved profitability, which is a point of particular emphasis—and it is because we reached our ¥43.0 billion operating income and 10% operating margin targets that we were able to boost ROE has high as we did in fiscal 2020.
In recent years, “DX”—that is, digital transformation—has become a buzzword, reflecting heightened IT investment trends
among companies keen to realize management strategies through robust use of digital technology. Consequently, the businessenvironment remains favorable for the information services industry to which the TIS INTEC Group belongs. I am certain that thepositive business environment has contributed to growth in demand for the Group’s services, which has in turn led to solid KPI
results. However, perhaps even more instrumental was TIS’ transition to an operating holding company in July 2016, which provided an opportunity to accelerate decision-making from a groupwide perspective and roll out measures quickly throughout theGroup. Expedited, our efforts to instill the profit emphasis management policy gained broad support and understanding, which
definitely drove profitability higher.
Under unified Group management, we moved beyond efforts to curtail unprofitable projects, which had been a major concern, and achieved success through various measures implemented groupwide to reinforce KPI management, including a process
to gauge potential for profitability at time of order, and improved productivity in the area of enhancement upgrades. In addition,
we made steady progress on a review of the Group’s business portfolio from a profitability perspective. We undertook robust
growth investment for the future and put a virtuous cycle into play, where any increase in costs due to such investment is fully
absorbed by a higher gross profit margin. We were able to achieve a sharper competitive edge in business, and this translated
into increased earning power. Through these efforts, we pushed the operating margin to 10.1%, and the net profit margin
followed suit.

In addition, TIS encourages a vigorous approach to strategic growth investment, including capital and business alliances (akey component of the TIS INTEC Group’s overseas business strategy) and efforts to leverage software investment to turn software
into marketable services. This is the primary reason assets increased. But because we have continued to work toward a tighter
asset balance—paralleling a review of portfolio assets, including cross-shareholdings and real estate—we are able to maintain acertain level of assets without seeing a drop in total asset turnover. Financial leverage is trending slightly downward at the present
time, reflecting the use of generated cash flow as the source of funds for our robust growth investment activity and the capitalleeway to ensure sufficient return to shareholders in line with our basic policy. We must consider changes to the economic landscape caused by such factors as the effects of the COVID-19 pandemic, and we must carefully execute individual investment decisions. But growth investment to fuel structural transformation is a policy that we remain totally committed to, and from a business continuity perspective we recognize the importance of ensuring a level of financial resiliency to withstand unexpected risks,
especially when conditions are so uncertain.

Fiscal 2021 Performance Forecast
With regard to the business environment surrounding the TIS INTEC Group, I have to say that the path ahead is extremely uncertain, requiring careful attention to the still-evolving consequences of the COVID-19 pandemic. The situation is unpredictable andis likely to remain so for the time being, due to such factors as a growing trend toward tighter IT budgets following a turndown ineconomic activity and worsening corporate performances.
Some aspects of our business activities have indeed been affected. It was, for example, rather difficult to make service proposals to new clients during the state of emergency in Japan. Companies went back to work in June, when the government order
was lifted, and with some ingenuity in executing meetings non-face-to-face, marketing activities are gradually being reimplemented. But the view that a challenging business environment will continue through the second quarter remains unchanged.
Against this backdrop, it is impossible to reasonably predict when the COVID-19 pandemic might end, and this hinders ourability to form a performance forecast for fiscal 2021 with a high degree of accuracy. Consequently, management prepared a provisional forecast that assumes efforts to contain the spread of the novel coronavirus will begin to bring the pandemic to a close in
the second quarter of fiscal 2021, and then economic activity will gradually recover. From the third quarter, the business environment for the TIS INTEC Group should normalize.
Due to the challenging business environment that is likely to persist through the second quarter, management sees a drop in
net sales year on year. The same will apply to operating income. Nevertheless, we remain committed to a management policy thatemphasizes profitability while pursuing investment opportunities to ensure future growth. We will continue with measures toimprove productivity and strengthen cost-control efforts to keep profitability at a year-on-year par, on a continuing business basisthat excludes impact from newly consolidated subsidiaries. It is our goal to maintain the 10% operating margin we reached infiscal 2020.

The TIS INTEC Group has made business continuity a priority and is currently engaged in various initiatives conditional upon its
mission to support key social infrastructures and ensure the safety of employees. Attitudes of society as a whole are changing significantly, and against this backdrop, we must be sensitive to developments in the external environment, including changes inindustry structures and evolving social issues, and we must anticipate customer needs. Right and ready responses will fuel business growth. In addition, we must take a flexible approach, including introduction of new workstyles, to mitigate challenging circumstances and leverage quick and bold management decisions. This will underpin sustained improvement in the corporate valueof the Group.

Fiscal 2021 Group Management Direction❶ Deepen unified, groupwide management practices and ensure safe office environment and higher efficiency to better copewith sudden changes in operating environment❷ Maintain financial health while creating social value and engaging in robust growth investment to strengthen ability toprovide digital transformation value❸ Promote measures and review business portfolio to build stable revenue base
❹ Promote growth strategy aimed at becoming top-class IT group in ASEAN region❺ Motivate employees and invest in richly diverse human resources who will drive growth in services and fuel demand for
digital transformation

Business continuity efforts in response to COVID-19 pandemic● Performance forecast for fiscal 2021 will be calculated on assumption of reduced impact from COVID-19 pandemic from second quarter,with economic activity gradually recovering, so that TIS INTEC Group’s business environment normalizes from third quarter.

TIS INTEC Group taking various approaches, premised upon good balance of efforts to uphold mission to support key social
infrastructures and efforts to ensure safety of employees.
Priority measure : allowing workfrom home● Possibility that performance forecast will change, based on actual status of COVID-19 pandemic.

Wider scope of work underwork-from-home measure
Fiscal 2020

Fiscal 2021 (estimates)

Net Sales

443,717440,000–3,717[–0.8%]

Operating Income

44,83944,000–839[–1.9 %]

Operating Margin

10.1%

10.0%

–0.1 points–

Net Income Attributable to Owners of Parent Company

29,411

29,500+89[+0.3 %]Net Income Ratio

6.6%

6.7%

+0.1 points–

Net Income per Share (Yen)

116.78117.95+1.17[+1.0 %]

ROE

12.5%

11.8%

–0.7 points–

YOY changes* The Company executed a stock split, with each share of common stock split into three shares, effective April 1, 2020. Earnings per share for fiscal 2020 is presented
using the number of shares after the stock split.
* ROE for fiscal 2021 is a calculated value.

Fiscal 2021: Operating Income Analysis, Increase/Decrease Reasons [Forecast] (Billions of yen)
YOY change
44.83
Decreased
sales

–0.95

Improved
profitability*+0.31

Decreased SGA
44.00
expenses*
Others–0.83
of newly+0.65 (Impact
consolidated(–1.9%)
subsidiary)*Excludes effect due to change from cost of sales
to SGA expenses, paralleling efforts to enhanceorganizational management (cost of sales down
¥1.5 billion, SGA expenses up ¥1.5 billion)–0.84

Anticipated brand-related costs incurred
to ensure quick recognition in market:
Up ¥0.5 billion (YOY change)

Gross profit margin

Target24.3%[YOY change +0.4 points]

Fiscal 2020

Anticipated prior investment costs forpromoting structural transformation:
Up ¥1.1 billion (YOY change)✓ Software investment to create new services✓ Investment in human resources to fuel structural transformation✓ Investment in R&D to acquire advanced technologies

Fiscal 2021

● TIS employees work from home, in principle, and if that is just not possible, then Company encourages staggered

office hours.

● Clients have been advised of Company policy, and on-site work at client offices has been modified as much as

possible.

● Each data center decides on essential workers needed to maintain operations and ensures means for these(Millions of yen)

Performance-based

Medium-Term Management Plan
(2018–2020)● Currently, not possible to realistically predict when COVID-19 will be stamped out, making it difficult to estimate business results.

Employees at data centers

employees to commute to assigned offices, so operations continue as normal● Thorough approach to prevent infection among staff (everyone wears a mask, temperature checked, surfaces

regularly disinfected)

Provide masks, sanitizing sprayand other protection● Distribute equipment to employees who have no choice but to go to the office because the work they do supportssocial infrastructure so that the work environment is safe and affords peace of mind.

Return to Shareholders
At TIS, our basic policy on return to shareholders is to keep internal reserves at a level sufficient to ensure business developmentfrom a medium- to long-term perspective, while continuing to pay a stable dividend after review of consolidated financial results.
Based on this policy, we seek to enhance return to shareholders by boosting the total return ratio yardstick to 40%, from 35%,
during Medium-Term Management Plan (2018–2020) and then realize a payout ratio of 30% by fiscal 2021 through stable dividend growth.
The annual dividend for fiscal 2020 was higher than in fiscal 2019, extending dividend growth for the eighth consecutive
year. And, as in fiscal 2019, better-than-anticipated business results allowed us to boost the year-end dividend by ¥10 per share.
Consequently, the total return ratio hit 39.8%, after combining treasury stock buybacks amounting to ¥4.14 billion.
Looking to fiscal 2021, we aim to achieve our stated yardstick of a 40% total return ratio and a 30% dividend payout ratio
through effective dividend increase taking into account a 1-for-3 stock split, effective April 1, 2020, and treasury stock buybacks
totalling ¥3.0 billion (completed in May 2020).

Costs
related to

Fiscal 2020

Fiscal 2021 (estimates)

Annual dividend per share

Before 1-for-3 stock split¥90[Compared with estimate: +¥10]

After 1-for-3 stock split¥35[YOY change: +¥5]

Acquired treasury shares

Total ¥4.14 billion

Total ¥3.03 billion*

Total return ratio

39.8%

40.0%

Payout ratio

25.7%

29.7%

*Upper limit of treasury stock buyback announced May 12, 2020

41

42

Business Strategies and Performances by Segment

Service IT Business

BPO

Provides original knowledge-intensive IT services leveraging TIS’ service and industry know-how to create
universalized, template-oriented solutions for clients (includes default configuration and ERP).

Draws on Group’s extensive service menu and IT know-how to deliver business process outsourcing (BPO)
services, including marketing and sales services and office and contract operations.

■ Business Growth Strategies, Focus Points of Medium-Term Management Plan

■ Business Growth Strategies, Focus Points of Medium-Term Management Plan

● With priority allocation of management resources toward growth engines and use of advanced● Improve gross profi t ratio on existing entry services through BPO concentration effect and businesstechnologies, expand business (IT Offering Services) through shift toward business anticipating priorinvestment by clients

restructuring● Watch for changes in structure of payment settlement business and expand prior investment style services

not only for debit and prepaid card transactions but for credit card transactions as well

Segment sales include intersegment sales.

Operating Income

Estimates(Millions of yen)

ActualEstimates

Operating margin(Estimate)
117,617

125,518

122,900

131,500

Fiscal 2021

Fiscal 2020 Performance Results
Payment services expanded, boosting sales, but higher prior investment
expenses and the booking of one-time losses led to lower income.
Exceeded target reset in first half, owing to greater demand for payment
services.

Fiscal 2021 Performance Forecast
Anticipate higher sales and income year on year as clients’ investment in
IT, such as for payment services and the cloud, generates demand that
offsets costs involved in bringing new companies into Group as
consolidated subsidiaries.

ActualOperating Income

Estimates(Millions of yen)

8,519

7.2%

Fiscal 2018 Fiscal 2019

(Estimate)
8,198 7,900

8,500

6.5%

6.5%

ActualEstimates

Operating margin

Initial estimate
38,25736,231

10.8%

33,699 32,400(Estimate)

43,0002,622

33,500

1,638

1,843

(Millions of yen)

(Estimate) Initial estimate
7.8%

7.8% 2,100

2,600

Fiscal 2020

Fiscal 2021

3,000

7.0%

5.1%

Fiscal 2020

Fiscal 2021

4.3%

Fiscal 2021

Fiscal 2018 Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2021

Understanding the External Environment*

Fiscal 2020 Performance Results●Even amid sudden changes in the business environment, demand forSale of subsidiaries undertaken in previous fiscal year had a major
negative impact on segment sales but profitability continued to improve,
driving income higher.
Efforts to improve profitability fueled significantly higher operating
margin. Met targets.

digital transformation and the trend toward a cashless society should
remain firm. The payment market remained stable, supported by anincrease in e-commerce transactions and government assistance.
Payment methods are diversifying but challenges exist for clients dueto heightened competition and a sharp decrease in inbound demand.
●Social landscape marked by major evolving need for certain companies
to provide cloud-based access. Growth in security market accelerating,prompting wider demand.
●In ERP, despite reinvigorated demand to support migration to
S/4HANA before SAP’s 2025 end-of-service deadline on the existing
platform, there’s a high possibility that mission-critical upgrades will
be postponed, especially in the manufacturing industry.

Note: Due to a shift from business based on expert service know-how specific to the financial sector to knowledge-intensive business using a template of general, financial sectorknow-how, transactions with certain clients were booked under Financial IT Business in fiscal 2020 and will be booked under Service IT Business in fiscal 2021.

Fiscal 2018 Fiscal 2019

Fiscal 2021

Understanding the External Environment*●Continuing growth in demand for BPO services that help companies

improve operations on an administrative level.
●Even greater need for digital innovation due to prolonged labor
shortage and changes in workstyle, including working remotely.

Fiscal 2021 Performance Forecast
New orders may be impacted by prevailing challenges, but changes in thebusiness environment will probably have only minimal overall impact.
Nevertheless, expecting slightly lower sales and operating income.

* Due to the still-unfolding consequences of the COVID-19 pandemic, the operating environment for the TIS INTEC Group is, and will likely continue to be, impacted byuncertainty, at least in the short term, as sluggish economic activity and deteriorating corporate performances fuel a trend among corporate clients to tighten their IT
investment budgets. For assumptions pertaining to the fiscal 2021 performance outlook for the TIS INTEC Group, please turn to page 41.

We will establish service-style business as a growth engine and strive to boost profitability on a groupwide basis.

Yasushi Okamoto
Director, Executive Vice President,
TIS Inc.
43

Service IT is a segment that hinges on service-style business, which symbolizes structural transformation of the TIS INTEC Group. Developing and extending the strengths that exist already within theGroup leads to new capabilities. For this reason, we have pursued a robust prior investment strategy
over the past two years to build the service-style business into a future growth engine that provides
platforms that many clients can make use of. Consequently, the scope of business, particularly
payment solutions, where the Group can best demonstrate its expertise, has steadily expanded. We
recognize that the next step must be to drive profi tability higher.
The COVID-19 pandemic has signifi cantly impacted the way society functions. The businessactivities of the Group have been similarly affected. For our clients, the need to respond accurately ina rapidly changing world is sure to fuel a preference for system use over system ownership. We

always strive to anticipate such needs and are always mentally prepared and ready to act
quickly when needs materialize. This is how we grow our businesses and how we will fulfi ll oursocial mission to contribute to the realization of a bright future.
The BPO segment is one of our forte fi elds. Our current view is that companies will increasingly look to outsourced service providers to handle administrative procedures as demographic
trends—fewer children and more seniors—cause the working population to shrink. This view isunlikely to change. Over the last two years, revenues decreased, refl ecting the sale of subsidiaries in line with a review of the business portfolio. But through measures, including efforts tomake services more high-value-added, we have dramatically improved profi tability. Goingforward, we will accelerate access to digital BPO to chart further growth.
44

Medium-Term Management Plan
(2018–2020)

8.1%

Fiscal 2021

(Millions of yen)

13,000120,000

8,139

Fiscal 2020

Net Sales

Initial estimate

Initial estimate

100,603

Fiscal 2018 Fiscal 2019drawing on shift to high-level, combined BPO and use of forte business knowledge and advanced
technologies

Segment sales include intersegment sales.

Net Sales
Actual● Expand business and boost profi tability (Business Function Service) through more sophisticated BPO

Financial IT BusinessIndustrial IT Business

Leverages business and operating know-how specific to the financial sector to raise value-added quality ofclients’ operations, expand use of IT, and provide IT-based support for operations.

Utilizes business and operating know-how specific to non-finance industries to raise value-added quality ofclients’ operations, expand use of IT, and provide IT-based support for operations.

■ Business Growth Strategies, Focus Points of Medium-Term Management Plan

■ Business Growth Strategies, Focus Points of Medium-Term Management Plan

● Expand business (Strategic Partnership Business) by strengthening connection to extensive client base of● Expand business (Strategic Partnership Business) by strengthening connection to extensive client base in● Increase provided value by utilizing Mode2 and other digital innovations as well as AI and other advanced● Increase provided value by utilizing Mode2 and other digital innovations as well as AI and other advanced

credit card companies, banks and insurers, and creating business together

technologies, and boost profi tability by promoting measures, such as enhancement innovation activities, toimprove productivity

Segment sales include intersegment sales.

106,655

Estimates

106,436

Operating Income(Millions of yen)

114,472 109,800

technologies, and boost profi tability by promoting measures, such as enhancement innovation activities, toimprove productivity

Segment sales include intersegment sales.

Net Sales
Actualindustry and public sectors, and creating business together(Estimate)
115,000

ActualEstimates

Operating margin

14,936

Initial estimate
100,000(Millions of yen)

ActualEstimates(Millions of yen)

(Estimate)
13,90013.0%

15,300Initial estimate

176,485

12,000Operating Income

189,595

202,701 199,800(Estimate)
194,000

ActualEstimates

19,159Initial estimate
185,000

13.3%

Operating margin

18,100(Estimate)
17,90014,777

Initial estimate
14,5009.5%

11,509(Millions of yen)

9.2%

12.0%

12.0%

7.8%

7.8%

10.6%
6.5%

Fiscal 2018 Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2021

Fiscal 2020 Performance Results
Recorded higher sales and income thanks to wider IT investment by coreclients, which made up for a drop in demand for large system development
projects.
Met target, mainly due to greater IT investment by core clients.

Fiscal 2018 Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2021

Fiscal 2018 Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2021

Fiscal 2018 Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2021

Understanding the External Environment*

Fiscal 2020 Performance Results

Understanding the External Environment*●Demand solid for businesses that support key social infrastructure,

Sales and income up, largely reflecting more IT investment across a wide
range of industries, including core clients in energy- and manufacturing-basedindustries.
Met target, thanks to greater IT investment across a wide range ofindustries, including core clients in manufacturing industry.

●Deteriorating business results and pressure on investment budgets,

such as payments.
●IT investment to sharpen competitive edge, paralleling changes inpayment structure, will continue to grow but must watch timing.

Fiscal 2021 Performance Forecast

Fiscal 2021 Performance Forecast

regardless of industry, will be unavoidable due to sudden changes inthe business environment. The biggest impact will be felt in manufacturing industry and small and medium-sized companies.
●Expect changes in social structure to be drivers of demand creation,
especially in public sector and medicine.

Will capture IT investment demand from core clients, emphasize
value-added services and improve productivity, which should underpin
higher sales and income.

Anticipate negative effect from reduced IT investment by clients in manufacturingsector and small and medium-sized companies, causing drop in sales and income.

Note: Due to a shift from business based on expert service know-how specific to the financial sector to knowledge-intensive business using a template of general, financial sectorknow-how, transactions with certain clients were booked under Financial IT Business in fiscal 2020 and will be booked under Service IT Business in fiscal 2021.

* Due to the still-unfolding consequences of the COVID-19 pandemic, the operating environment for the TIS INTEC Group is, and will likely continue to be, impacted byuncertainty, at least in the short term, as sluggish economic activity and deteriorating corporate performances fuel a trend among corporate clients to tighten their IT
investment budgets. For assumptions pertaining to the fiscal 2021 performance outlook for the TIS INTEC Group, please turn to page 41.

We will lead reforms at client companies as a true business partner and promote business growth along with solutions to social issues.
Financial IT and Industrial IT are core segments of the TIS INTEC Group. Through the course of businessdevelopment over many years, we have built an extensive client base, hinging on top-caliber Japanesecompanies that lead in their respective industries. Over the past two years, we have actively helped
clients, regardless of industry sector, in pursuing digital transformation by providing high-value-added
services. As a result, the Financial IT Business and the Industrial IT Business reached performance targets
stated in Medium-Term Management Plan (2018–2020) a year ahead of schedule. These two segments
drive growth of the TIS INTEC Group overall.

The COVID-19 pandemic has made new proposal activities a challenge. But from a
medium- to long-term perspective, we anticipate a swift digital shift throughout society
and a much greater role for IT services to play in helping to solve social issues. From thisstandpoint, the TIS INTEC Group will not merely tag along with clients but instead willlead reforms and support growth strategies as a true business partner. Through thisapproach, we will not only grow our own businesses but also work in concert with ourclients to address social issues.

Josaku Yanai
Director, Executive Vice President,
TIS Inc.

45

46

Medium-Term Management Plan
(2018–2020)

11,331

12,797

Net Sales