TIS Inc.
Q1 Financial Results Briefing for the Fiscal Year Ending March 31, 2025
July 30, 2024

Event Summary[Company Name]TIS Inc.

[Company ID]

3626-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q1 Financial Results Briefing for the Fiscal Year Ending March 31, 2025

[Fiscal Period]

FY2025 Q1[Date]

July 30, 2024

[Number of Pages]

15[Time]

16:30 – 16:54(Total: 24 minutes, Presentation: 8 minutes, Q&A: 16 minutes)[Venue]Dial-in[Venue Size][Participants][Number of Speakers]

2
Masakazu Kawamura
Daisuke Kawaguchi[Analyst Names]*

Hiroko Sato
Satoru Kikuchi
Mitsunobu Tsuruo

Managing Executive Officer, Division
Manager of Corporate Planning SBU
Department Manager of Corporate
Management Department
Jefferies
SMBC Nikko Securities Inc.
Citigroup Global Markets*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or
whose questions were read by moderator/company representatives.

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Presentation
Moderator: Thank you very much for your patience. We will now hold the financial results briefing for Q1 of
the fiscal year ending March 2025 for TIS Inc.
Masakazu Kawamura, Managing Executive Officer, Division Manager of Corporate Planning SBU, and Daisuke
Kawaguchi, Department Manager of Corporate Management Department, are attending today's conferencecall.
Kawamura will first give a 10-minute presentation, followed by a Q&A session. Kawaguchi will join the Q&A
session, and the two of them will be available to answer questions. The entire meeting is scheduled to last 30
minutes. The explanatory materials are available on the website of TIS Inc. for your reference.
We will now begin our presentation.
Kawamura: This is Kawamura from TIS. Thank you. I will now explain the details of the Group's financial resultsof Q1, which were announced at 3:30 PM today.

Please see page two. These are the highlights of our financial results.

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There are three key points. Revenues increased YoY, while operating profit declined slightly, but this is in linewith expectations. Profitability was lower than in the same period of the previous year due to the peak-out oflarge projects and the impact of unprofitable projects. On the other hand, regarding orders received and orderbacklogs, software development accumulated.
The impact of unprofitable projects has exceeded our initial estimates, and although we will continue to work
to curb the impact, we believe that the Q1 results for the fiscal year ending March 31, 2025, are generally inline with our full-year plan.

Please refer to page five, summary of results for Q1 of the fiscal year ending March 2025.
Despite the impact of the peak-out of large projects that had been anticipated from the beginning of theperiod, overall business expansion was able to proceed, and net sales increased 3.6% YoY to JPY134 billion.
Operating income declined 1.7% YoY to JPY14 billion, but this was largely due to the peak-out of large projects
and other factors, so the result was in line with expectations.
Net income for the period was JPY10.6 billion, up 5.2% from the same period last year, mainly due to thecontribution of gain on sales of investment securities resulting from the reduction of policy stockholdings. The
combined effect on the performance of NIHON ICS and RESCHO, which became consolidated subsidiaries in
the previous fiscal year, was approximately JPY2.5 billion in net sales and approximately JPY0.3 billion in
operating profit after amortization of goodwill.

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Page six shows changes in operating profit by factor.
The increase in SG&A expenses offset the increase in income from higher sales, resulting in JPY240 million YoY
decrease in operating income. The gross profit margin declined only slightly from the same period of theprevious year due to continued steady progress in improving profitability, in addition to the effect of changes
in consolidated subsidiaries, despite a decline in profitability due to the peak-out of large projects and theimpact of unprofitable projects. The operating income margin declined by 0.6 percentage points, but this wasdue to the impact of a decline in the gross profit margin.
Unprofitable projects in Q1 amounted to approximately JPY600 million, with JPY300 million incurred mainly
in Regional IT Solutions. Once again, we will strengthen group-wide quality improvement measures to prevent
unprofitable projects from occurring.

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Please refer to page seven. Sales by client industry.
Excluding the negative impact of the peak-out of large projects in the card and public sectors, the overall trend
remained strong. Among them, services, banking, and assembly-line manufacturing led the overall market. As
for services, the contribution of NIHON ICS to our performance was significant, and as for banks, growth was
mainly overseas. In addition, sales of assembly-line manufacturing remained strong, especially to existingcustomers.

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5Page eight shows the status by major segments.
Offering services posted increases in both revenue and income due to the firm capture of IT investment
business in the settlement, infrastructure-related, and business management fields in line with the progressof digitization, as well as the impact of changes in consolidated subsidiaries, including NIHON ICS. Overseas
operations also contribute.
As for BPM, revenue declined as existing data entry operations continued to struggle, but ongoing cost
controls also contributed to an increase in income.
In financial IT, revenue and earnings declined due to the expected peak-out effects of large projects for credit
card-affiliated core customers and public-sector financial institutions.
As for Industrial IT, sales increased due to expanded IT investments in a wide range of industries, including
services, manufacturing, and distribution, but earnings declined due to a reactionary drop from large-scale
development projects in the manufacturing sector.
In Regional IT Solutions, sales and profits declined due to the impact of a reactionary decline in medical sales
projects, as well as unprofitable projects for financial customers and increased costs for system reinforcement.

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Beginning on page nine is an explanation of the status of orders.
First, overall orders received were up 2.1% YoY to JPY91.3 billion, reflecting a solid buildup of orders. Orders
received other than for software development decreased from the same period of the previous fiscal year,
but this was mainly due to a decline in sales and the timing of the recording of operations and is not a situationthat causes particular concern.

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7Page 10 shows the order backlog at the end of the period.
Overall order backlogs also increased YoY due to an increase in software development. The decrease infinancial IT was due to the peak-out of large projects.

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8Next, I would like to explain our forecasts for the full year ending March 2025.
Page 12 shows the full-year forecast for the fiscal year ending March 31, 2025.
As we mentioned at the beginning of this presentation, our Q1 results are generally progressing as expectedagainst our full-year plan, so at this time we have not made any changes to our forecast for the fiscal year
ending March 31, 2025. Although the impact of the peak out of large-scale projects still remains, we expect
to receive new orders in Q2, mainly for industrial IT and Regional IT Solutions, and we will further ensure theachievement of our initial plan by acquiring new projects and building up orders.
This is the end of my presentation.
Moderator: Thank you very much.

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9Question & Answer

Moderator [M]: We will now take your questions. Please note that only two questions can be asked perperson at a time. We will now begin the question-and-answer session.
Now, Mr. Sato of Jefferies Securities, please ask your questions.
Sato [Q]: My name is Sato from Jefferies.
Kawamura [M]: Thank you very much.
Sato [Q]: I have three questions. I would like to start with the unprofitable projects. I believe you mentioned
earlier that the cost is JPY600 million, and this is a Regional IT Solutions. Is this a new project? When will thecutover be? This is my first question.
Kawamura [A]: Yes. Of the JPY600 million, the larger one is for Regional IT Solutions. This is a new unprofitableproject that has been handled from the past. A financial customer required quality enhancement due torework, and the progress has resulted in unprofitability. We have taken firm measures to ensure the qualityof our products, and we are continuing to take action. The launch is scheduled for the spring of 2025. That's
all from me.
Sato [Q]: So you will be involved in this throughout the current term?
Kawamura [A]: Yes, that's right.
Sato [Q]: Financial projects in Regional IT Solutions, I understand. Thank you. By the way, is this project on
TIS's side or on INTEC's side? Maybe it is from TIS's side, or if it is a Regional IT Solutions, is it from INTEC's
side?
Kawamura [A]: Since this is a Regional IT Solutions, the target company is INTEC.
Sato [Q]: Sorry, I have an additional question. I understand that INTEC has been involved in large unprofitableprojects in the past, and I am sure that they are taking various measures to control the quality of these projects.
Am I correct in understanding that you are making some progress in quality control?
Kawamura [A]: Yes. I apologize for the continued concern about the unprofitable projects. As I explained inMay, we are once again beginning to strengthen quality control, including unprofitable projects that occurred
last fiscal year. Regarding this, we are in the process of strengthening our response and system, including TIS,
and we are making firm progress in this regard. In the course of these efforts, we were able to confirm thestatus of new unprofitable projects, and we have made an allowance for them after making a firm allowance.
We will tighten our measures to prevent this from happening in the future. I appreciate your understanding.
Sato [Q]: Is the remaining 300 million an accumulation of smaller amounts?
Kawamura [A]: Yes. The other segments are also included in the small accumulation.
Sato [Q]: Thank you. Second, I would like to ask about the financial IT and BPM segments, which have had a
bit of a reactionary decline. I think sales, profit, orders received, and order backlogs are in the negative, butfinancial IT, especially credit card development, has peaked out, and I think we know this to a certain extent.
I also heard that BPM is rather in a bit of a slump in the industry as a whole and your company dares to
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10selectively accept orders from high-margin areas. So, I wonder if the current profits are almost in-line or if the
figures are actually not as much as expected due to a reactionary decline. I would appreciate it if you could
give me a detailed assessment of this area. This is my second question.
Kawamura [A]: Yes, thank you. financial IT and BPM, respectively, will be answered.
First of all, financial IT uptake is generally in line with our expectations. From the beginning of the fiscal year,
we had expected a decrease in sales of approximately JPY2 billion in Q1 and approximately JPY5 billion in H1
as a whole, and we have generally met our expectations. Although orders are slightly negative, we are notthat concerned about it, partly because of the timing of order booking. We hope you understand that we arein a situation where we are responding well in line with respect to our initial plan for the period.
As for BPM, the top line has been struggling since the last fiscal year, and there has been a slight decrease in
Q1 as well. As I mentioned in my presentation of last fiscal year's results, we have continued to control costs
since Q2 of last year, and this has made a contribution to our profit in Q1 of this fiscal year. In terms of YoY,
we have managed to secure profits.
We believe that it is essential to continue to increase the top line, so we have been considering measures toaddress this issue and are taking them one by one. We will take a little more time to recover from this issue,
and we will make a thorough response to the situation.
Sato [Q]: I understand. Please excuse my asking just an extra 2.5 question, but overall, I think you said orally
at this briefing that you are slightly above internal, but generally in-line. Am I correct in understanding that
Q1 was not actually that bad, although there is certainly a reactionary decline from last year to look at?
Kawamura [A]: That's right. As I said at the beginning, I believe that we are generally making in-line progresscompared to our original plan. On the other hand, although profits decreased slightly, part of this is to tighten
up, and on the other hand, although profits have decreased slightly, both financial and industrial businesses
achieved more than planned in Q1, so there is no cause for concern. In addition, the effect of new
consolidation was stronger than expected, so in this sense, I hope you understand that we are making good
progress in Q1.
Sato [Q]: I understand. So if there had been no unprofitability, I wondered whether you would have landed
above the general consensus or whether you could have gone a little higher. In that sense, it was a bit
disappointing.
Kawamura [A]: That's right. In terms of YoY, unprofitable operations increased by JPY0.3 billion, and without
this increase, profits would have turned to an increase in the previous year. In that sense, we understand that
we need to continue to take firm action.
Sato [M]: Thank you very much. I appreciate your understanding.
Kawamura [M]: Thank you very much.
Moderator [M]: Thank you very much. Next, Mr. Kikuchi from SMBC Nikko Securities.
Kikuchi [Q]: I am Kikuchi. I know that time is short, so I would like to ask you just one point about the increasein profit from the offering section. I think the NIHON ICS is also a factor, but I would like to know what factors
are contributing to the increase in profit and what will happen from Q2 onward. I understand that the midterm plan also calls for the expansion of such offerings, so I am not sure if they are steadily growing, but I
would like to know more.

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Kawamura [A]: Okay. We believe that offering services are a segment that we will expand firmly in the current
fiscal year and in the mid-term business plan, so we are happy that we were able to produce results in Q1. I
will divide the explanation into three major categories. Overseas, domestic and, within domestic, newly
consolidated.
First of all, overseas sales increased by JPY1.6 billion, with a slight increase in profit, although profit is still in
the process of improvement. The increase is about JPY100 million below.
As I mentioned at the beginning of this report, the two domestic consolidated companies contributed JPY2.5
billion in sales and JPY350 million in profit after amortization of goodwill. ICS's performance was a little
stronger than expected due to its very strong performance, but generally within our expectations.
In the existing business in Japan, sales increased by JPY2.1 billion, of which JPY300 million came frompayments, JPY700 million from the enterprise field such as digital marketing and business management, andJPY800 million from the cloud platform. Profit relative to that is around JPY200 million, with the increase inprofit in line with that increase in revenue. In this context, we believe that the increase in profits fromsettlement services was a little stronger than sales, and that the improvement in profits from our PAYCIERGE
3.0 service was more effective than from any of the other services. We believe that orders received were also
very strong, and we see it as sustainable to achieve the first half of the fiscal year.
For Q2, there will be no new consolidated contribution, so we will work hard to achieve this H1 plan so that
we can first do well in the area of solid organic growth. I appreciate your understanding.
Kikuchi [Q]: Thank you very much. I know that your company has a variety of activities. Overseas and NIHONICS and PAYCIERGE. You mentioned that PAYCIERGE is growing in a variety of specific areas, but what are theygrowing in?
Kawamura [A]: Okay. Rather than a specific one, our services are growing broadly, including increased sales
to existing customers. SI-type business for existing customers is also growing, so we hope that this businesscan be considered to be growing in all areas.
Kikuchi [M]: Thank you very much.
Moderator [M]: Thank you very much. Please continue with your question, Mr. Tsuruo of Citigroup Securities.
Tsuruo [Q]: Yes, thank you. I have two questions.
The first point is about unprofitability. Is it correct that the JPY300 million was not expected at the beginningof the term and the total was JPY600 million? If so, what is your current forecast for the unprofitable amountfor the full year, which I believe is JPY2 billion? What kind of things do you see coming out in Q2, and what
are the nuances of that?
Kawamura [A]: All right. We plan to keep unprofitable projects within JPY1 billion for the full year. On theother hand, at 600 million in Q1, we believe we have come out very much as planned. We will continue ourefforts to keep the amount within JPY1 billion by making continuous efforts to curb the amount. At this point,
we have made allowances for what is necessary, and we will do our best not to incur them in the future. I
appreciate your understanding.
Tsuruo [Q]: I understand. In light of this, please allow me to confirm the outlook for Q2 and H1 of the fiscal
year. Since you did not change your earnings forecast this time, I think the message of this confirmation isthat you expect that earnings will be roughly flat in Q2 and that profits will increase thereafter. Is that correct?

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Is there anything you can comment on regarding the outlook for Q2 and the prospects for earnings recovery
in the second half of the year and beyond?
Kawamura [A]: All right. Looking at the results by segment, there are some strengths and weaknesses, and if
we subtract them, the results may be uneven, but overall, I believe that we are on track to achieve the firsthalf of our initial plan for Q1. Orders also increased by 5% for development orders as a whole. In Q2, we intend
to further increase orders, especially in the areas of industrial IT and Regional IT Solutions, to which we haveadded a message, and to make our initial plan a reality. I appreciate your understanding.
Tsuruo [M]: Thank you. These are all the questions I have.
Moderator [M]: Thank you very much. As there seem to be no other questions, this concludes the questionand-answer session. In closing, Mr. Kawamura will offer a few words.
Kawamura [M]: Thank you very much for participating in this conference call today to discuss TIS Inc.'s
financial results for Q1 of the fiscal year ending March 2025. If you have any questions, please contact our IR
staff during an individual interview or by phone, and we will be happy to answer them. Thank you for yourcontinued support.
Moderator [M]: This concludes the teleconference. Thank you all for your participation.
[END]______________
Document Notes
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TollfreePortions of the document where the audio is unclear are marked with [inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
This document has been translated by SCRIPTS Asia.

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