Financial Review

Platform that Supports Value Creation Process

As of March 31, 2016, the Group mainly comprised parent company IT Holdings Corporation (“ITHD” or “theCompany) and 46 consolidated subsidiaries, including principal companies TIS Inc., INTEC Inc., AGREX INC.,QUALICA INC. and AJS Inc., and 37 companies accounted for by the equity method.*
Through additional acquisition of shares, KOUSHIN INC., and MicroMates Corp., fall under the scope of
consolidation from fiscal 2016.

Approaches to Internal Controls
The Company enhances and implements its internal controls in accordance with its “Basic Policies Regarding
Internal Control Systems.” At the same time, it has established basic policies for internal controls within the Group
that set forth specific activities related to internal controls
so that the internal control policies permeate throughout
the Group as a whole. In particular, it has set the following

as key themes for internal controls: 1) compliance, 2) risk
management, 3) information security, and 4) enhancing
internal audits. Furthermore, the Group Internal Control
Committee, chaired by the President and Representative
Director, encourages the improvement of internal controls
in the Group as a whole and implements and evaluates
their progress on an ongoing basis.

Furthermore, a Group Compliance Committee has
been established. Its functions are to understand issues
related to compliance, discuss countermeasures, boost
awareness in executives, deliberate and demand corrective
action regarding items raised by whistle-blowers, deliberate and decide on measures to prevent recurrence of incidents, and manage the progress in implementation ofsuch countermeasures.

Approaches to Risk Management
The Company has established its Risk Management
Policies to strengthen its risk management structure. The
Company and its Group companies have segmented its
risks into hazard risk, operational risk, financial risk, andstrategic risk. It has established a risk management structure and structure for accountability for each of these risks

should they materialize.
The Group Risk Management Committee has been
established to identity and mitigate risks affecting theGroup as whole. The committee formulates risk management policies for the Group as a whole and confirms thestatus of risk mitigation measures.

Net Sales(A breakdown of performance by business segment is presented on page 21~22 under “Group Business Summary”.)

Sales and Income by Business Segment

Millions of yen

Fiscal 2016

Fiscal 2015

% change¥382,689¥361,025+6.0%

IT infrastructure services

125,929

118,200+6.5

Financial IT services

79,51979,543-0.0

Industrial IT services

180,000

166,357+8.2(Years ended March 31)

Net sales

Other business

16,095

14,667+9.7

Intersegment elimination/adjustments(18,855)(17,742)—

24,43621,121+15.7

IT infrastructure services

8,924

7,179

+24.3

Financial IT services

3,361

5,549

-39.4

Industrial IT services

9,972

7,049

+41.5

Other business

2,649

2,159

+22.7

Intersegment elimination/adjustments

(471)

(816)

—

Operating income

Note : Sales by segment in the above chart exclude intersegment sales.

Approaches to Information Security
The Company has established the Group Information
Security Policy and Group Information Security Promotion
rules. It has also established management systems to
respond to a variety of information security risks affecting
the Group as a whole. Appropriate measures are taken
based on risk assessments to protect against the loss of
information assets, accidents, disasters, criminal activities,
and all other threats.

Profit and Loss Analysis
Net sales rose 6.0% from fiscal 2015, to ¥382,689 million, as
the Group accurately grasped the IT investment needs of its
customers in areas where IT investment is growing.

Approaches to Compliance
The Company has set its basic direction on CSR, compliancerules, and other internal rules and regulations to strengthen
its compliance-related systems to implement measures inorder to prevent illegal activities from occurring. It has alsoestablished a whistle-blowing system within the Group andwhistle-blowing hotlines to detect and remediate such illegal activities at an early juncture and raise awareness oflegal compliance within the Group as a whole.

* Effective July 1, 2016, wholly owned subsidiary TIS, Inc., was merged into ITHD, which then transitioned into an operating holding company.
Paralleling this shift, the name of the Company changed to TIS, Inc..

A Group Security Committee was established to makethis management system a reality. The committee formulates plans to promote measures to enhance information
security, understand the status of implementation of information security measures, and to play a supervisory rolefor implementing measures when security incidents occur
and for the status of improvement when proposals are
made to prevent the recurrence of such incidents.

Approaches to Internal Audits
Audits are implemented in accordance with the internal
audit plan at each of the Company’s business units and at
TIS INTEC Group companies without internal audit divisions. In addition, the Company makes necessary recom-

mendations and follows up on corrective action plans
based on audit findings. Furthermore, sharing information
among the internal audit divisions within the TIS INTECGroup’s companies raises the quality of its audits.

45

ProfileGroup History

Value Creation Process

46

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Review

Segment Business Content
Provide self-administered computer utility or system operation services through large
IT facilities, including data centers.
Support clients in their efforts to make greater use of IT in their operations and in theexecution of their business activities with IT expertise and business know-how specificto the finance industry.
Support clients in their efforts to make greater use of IT in their operations and in theexecution of their business activities with IT expertise and business know-how in areas
other than finance, namely industrial and public sectors.

IT Infrastructure Services
Financial IT Services

Industrial IT Services
OthersFinancial Position
Assets, Liabilities and Net Assets¥180,539 million, down 4.4%. Equity capital, derived by subtracting non-controlling interests of ¥3,990 million from net
assets, dropped 4.3% year-on-year, to ¥176,549 million,­pushing the equity ratio to 52.5%, down 0.8 point.

Total assets stood at ¥336,495 million at the end of March
2016, down 2.7%, from a year earlier. Current assets
accounted for ¥166,666 million, up 18.7%, and fixed assets
accounted for ¥169,828 million, down 17.3%. Liabilities cameto ¥155,955 million, down 0.7%, and net assets wereActivities other than those described above.
Millions of yen

Fiscal 2016

Fiscal 2015

% change

Total assets¥336,495¥345,851-2.7%

Total liabilities

155,955

157,062-0.7

Net assets

180,539

188,789

-4.4

3,990

4,388

-9.1

176,549

184,400-4.3(As of March 31)

Expenses and Earnings
The higher sales starting point and successful efforts to boost
profitability neutralized the effects of tighter IT investment­budgets and reduced scale of business among some existing clients, absorbing the impact of unprofitable projects. Operating
income increased 15.7%, to ¥24,436 million. Recurring profit
expanded 15.4%, to ¥24,521 million. Net income attributableto owners of the parent company jumped 23.4%, to ¥12,678
million.
For fiscal 2016, the Company posted extraordinary incomeof ¥18.6 billion and an extraordinary loss of ¥21.3 billion, mostof which was recognized in the second quarter. In the second
quarter, the Company recorded a gain on sale of investment
securities of ¥16.0 billion in conjunction with the sale of a portion of its investment securities to improve the efficiency of held
assets and bolster the financial structure. Additionally, in conjunction with a decision to review future strategy for data center operations, the Company recorded an impairment loss of¥14.3 billion related to some of its data centers.

Non-controlling interests
Equity capital
Key ratios%

Equity ratio (*1)

52.5%

53.3%

-0.8 points

Return on equity (*2)

7.0

6.0

+1.0 points

Notes: 1. Equity ratio = (Equity capital / Total assets ) x 100
2. Return on equity = Net income / Equity capital [(equity capital at the beginning of the term + equity capital at the end of term) / 2] x 100

Millions of yen

Fiscal 2016

Fiscal 2015

% change

Net sales¥382,689¥361,025+6.0%

Cash Flow Status

Cost of sales

312,153294,927+5.8%

Cost of sales ratio

81.6%

81.7%

-0.1 point

Gross profit

70,53566,097+6.7%

Gross profit margin

18.4%

18.3%

+0.1 point

Selling general and administrative expenses

46,09944,976+2.5%

Ratio of selling, general and administrative expenses to net sales

12.0%

12.5%

-0.5 point

Operating income

24,43621,121+15.7%

Operating income ratio

6.4%

5.9%

+0.5 point

Recurring profits

24,521

21,251+15.4%

Recurring profits ratio

6.4%

5.9%

+0.5 point

Cash and cash equivalents (“cash”) totaled ¥48,651 million, as
of March 31, 2016, up 65.0%, from a year earlier.
Net cash provided by operating activities: Operating activities generated net cash of ¥25,496 million, up 11.2% from ayear ago. This mainly reflects income before income taxes of¥21,817 million and the positive cash flow effect of ¥11,952
million in depreciation, which offset a ¥4,470 million increase innotes and accounts receivable and ¥5,762 million in income
taxes paid.
Net cash provided by investing activities: Investing activities
generated net cash of ¥8,688 million. In fiscal 2015, theCompany recorded net cash used in investing activities of

Net income attributable to owners of the parent company

12,678

10,275+23.4%Net income attributable to owners of the parent company as apercentage of net sales

3.3%

2.8%

+0.5 point(Years ended March 31)

47

ProfileGroup History

Value Creation Process¥17,744 million. This is largely due to an inflow of ¥24,504 million in proceeds from sale and redemption of marketable securities, which overshadowed ¥4,697 million in payments for theacquisitions of property and equipment, ¥5,073 million for theacquisitions of investment securities and ¥6,633 million for theacquisition of intangible assets.
Net cash used in financing activities: Financing activities
used net cash of ¥14,979 million, down 21.5% from a year
ago. Cash inflow of ¥5,012 million in proceeds from long-term
debt was outweighed by outflows of ¥12,862 million for repayments of long-term debt, ¥2,711 million for dividends paid,and ¥1,610 million for purchase of treasury stock.

48

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Review

Millions of yen

Fiscal 2016

Fiscal 2015

% change

Cash and cash equivalents at end of year

¥48,651¥29,485+65.0%Net cash provided by operating activities

25,49622,938+11.2

Net cash provided by (used in) investing activities

8,688(17,744)—(14,979)(19,067)-21.5(As of March 31)

Net cash used in financing activities

Business Risks
System development

Risks with the potential to significantly impact the operations—business results and financial position—of the Group aredescribed below. Note that forward-looking statements mentioned in these materials are based on information available tomanagement as of June 27, 2016.

The TIS INTEC Group is involved in contract system development ­services and information systems for client companies. In
the development of systems that are increasingly larger in scaleand on shorter delivery schedules, costs could rise significantly
beyond the estimate if quality cannot be achieved according toplan or a project cannot be completed within the promised
timeframe. Also, in system development, certain services arecontracted to a number of companies, mainly to secure production capacity, boost production efficiency and utilize external
technology, and there is always a chance that these outsourced
providers will not meet productivity and quality expectations.
Such situations could adversely affect the Group’s businessresults.

Price wars and heightened competition

Dividend Policy
The Company’s basic policy has been to ensure a stable dividend based on performance trends while ensuring a suitablelevel of internal reserves to underpin business growth from a
medium- to long-term management perspective. Guided by thispolicy, the Company is from fiscal 2016 targeting a total return
ratio of about 35%, which includes share buybacks as well as
dividends.

For fiscal 2016, the Company paid an annual dividend of¥33 per share, including an interim dividend of ¥11 million, andacquired treasury stock of ¥1,599 million (540,400 shares). As
a result, the total return ratio at fiscal year-end was 35.3%. For
fiscal 2017, management intends to distribute an annual dividend of ¥36 per share, including an interim dividend of ¥12 pershare, and will pursue share buyback activities*.

In the information services industry, competition among sectors
is fierce and the situation is further exacerbated by such challenges as the increasing entry of companies from other industries into our industry. In addition, clients are cutting back on
IT investment. These factors could fuel price wars. Within the
TIS INTEC Group, we seek to distinguish ourselves from ourcompetitors, primarily by adding greater value to the information services we provide, and we also work to improve productivity. However, if price wars erupt beyond the scope we haveanticipated, our business results could be adversely affected.

System operation
The TIS INTEC Group offers round-the-clock outsourcing andcloud services 365 days a year through data centers and otherlarge IT facilities. In developing this business, a vast amount of
capital is required, from start-up investment through constant
upkeep and operation. In addition, utilization of facilities could
sink to a conspicuously low level in times of sluggish demand,
which could adversely affect business results. Furthermore, if, in
providing system operation services, losses are incurred becausea client company’s system crashes or malfunctions, the Group’s
reputation for reliability may be tarnished and the brand may
lose credibility, and compensation may be required to cover­client losses. Such situations could adversely affect the Group’sbusiness results.

*The Company acquired treasury stock of ¥2,099 million (834,900 shares) from May to June 2016.

Legal system and compliance

Millions of yen

Fiscal 2016

Fiscal 2015

Net income per share¥ 145.22¥ 117.40+23.7%Net assets per share

2,031.07

2,108.19-3.7%

Dividend per share

33.00

30.00

+10.0%

Payout ratio

22.7%

25.6%

-2.9 points

Total return ratio

35.3%

30.4%

+4.9 points(For the years ended March 31)% change

Per share data

Group companies pursue respective business activities in linewith prevailing laws and regulations in Japan and overseas. In
developing these activities, each company establishes a compliance system, in accordance with the TIS INTEC Group’s basic
policy on CSR, and strives to ensure thorough legal compliance.
However, if a law is broken or if additional laws or regulations
are put into force, the Group’s business activities and businessresults could be adversely affected.

Overseas business

Consolidated Performance Forecast for Fiscal Year Ending March 31, 2017 (Consolidated)(announced on May 10, 2016)

The Company remains committed to efforts aimed at expanding business by responding accurately to clients’ IT investment
needs and by steadily executing big projects. In addition, the Company will roll out profit-improvement measures, including
steps to boost productivity and reduce the number of unprofitable projects, which should fuel year-on-year increases in sales
and income.
Net sales¥390,000 million+1.9% year on year

Operating income¥26,500 million+8.4% year on year

Recurring profit¥26,000 million+6.0% year on year

Net income attributable to owners of
the parent company¥15,000 million+18.3% year on year

As part of its growth strategy, TIS seeks to expand the Group’s
presence overseas, especially in the ASEAN (Association ofSoutheast Asian Nations) region. Various factors can have an
impact on activities abroad, including legal restrictions, particularly regulations pertaining to investment and competition,
as well as business customs and labor-management relations.
If these risks appear, the Group’s business results could be
adversely affected.

Information security
The Group may gain access to confidential information, such as
personal information in possession of client companies as well
as system technology information belonging to client companies, during the stages of a project running from system­development through operation. Efforts are made to properly
manage information, in accordance with the TIS INTEC Group
Information Security Policy. But if confidential information isleaked, altered or otherwise impacted by such means as a computer virus or unauthorized access, client companies or otherrelevant parties could demand compensation for damages,
and the Group could lose the market’s confidence. This could
adversely affect the Group’s business results.

Note: Forward-looking statements, including the above performance forecast, are based on information available to management at the time of preparation andcertain assumptions that management believes to be reasonable. Such statements are not guarantees of future performance. Actual performance and otherachievements may differ considerably from expectations due to various factors.

49

ProfileGroup History

Value Creation Process

50

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Section

Financial Review

Business Risks

Consolidated Financial Statements

Human resources

Natural disasters

Consolidated Balance Sheets

The business activities of the Group rely heavily on humanresources and are greatly influenced by the Group’s ability tokeep talented individuals and upgrade their skills to provide
specialized, high-value-added services to clients. If the companies of the Group are unable to keep and train individuals withexcellent capabilities as planned, the business results of theGroup could be adversely affected.

The TIS INTEC Group offers outsourcing and cloud services
through data centers and other large IT facilities. These facilities
are equipped with various systems and structures to deal with arange of disasters. However, if a power outage that lasting longer than might reasonably be prepared for, a large-scale natural
disaster, international disputes, acts of terrorism or serious criminal activity were to interrupt smooth data center operations,the business results of the Group could be adversely affected.

As of March 31, 2015 and 2016

Technological innovation
Securities portfolio

In the information services industry, providers must respondquickly to advances in information technology and to changing
market needs that parallel these advances. The Group constantly promotes studies and research, with an emphasis on
information technology and production and development­techniques, to reinforce efforts to respond to market needs.
However, in the vast domains of the industry, the pace of­technological innovation is lightning fast, and if the Group’s
responses are not appropriate, its business results could be
adversely affected.

Companies within the Group hold stock to strengthen relationships with suppliers and bonds to utilize surplus capital. Whenacquiring these marketable securities, efforts are made to pinpoint financial status, performance trends, credit rating andother key factors of the issuer, and thereby ensure investment
stability. But obvious changes in the stock market and othersecurities-related developments could lead to situations, such as
losses on the books, which could have an effect on the Group’s
financial status and its business results.

Millions of yen

Fiscal 2015

Fiscal 2016

AssetsCurrent assets
		Cash and deposits¥ 29,211¥ 46,741

		

Notes and accounts receivable

78,87484,722

		

Lease receivables and lease investment assets

6,711

6,381

		

Marketable securities

661

2,201

		

Merchandise and finished goods

4,552

4,145

		

Work in process

5,546

5,278

		

Raw materials and supplies

243

264
7,161
9,952

		

Deferred tax assets

6,007

		

Other current assets

8,784

		

Allowance for doubtful accounts

		

Total current assets

(143)

(181)

140,450

166,666

Fixed assets

Intellectual property rights

		Members of the Group apply for and obtain patents on technologies and business models necessary to conduct businessand also register trademarks in Japan and overseas. Businessactivities are always undertaken with careful attention to prevent third-party infringement of intellectual property rights, but
it is possible that Group activities may infringe on the intellectual property rights of other companies and lead to claims forcompensation. If that occurs, the business activities and business results of the Group could be significantly impacted.

Property and equipment

			

Buildings and structures, net

53,67038,497

			

Machinery and equipment, net

4,853

5,433

			Land24,342

22,583			

Leased assets, net

3,995

4,092

			

Other property and equipment, net

4,552

4,623

Total property and equipment

91,41375,229					Intangible assets

			Goodwill

1,197

724

			

Other intangible assets

15,55517,509			Total intangible assets

16,752

18,233

71,25649,205

7,028

4,369

		

Investments and other assets

			Investment securities
			Net defined benefit asset			

Deferred tax assets

			Other assets
			
			
		

5,199

6,558

14,034

16,465

Allowance for doubtful accounts

(283)

(234)

Total investments and other assets

97,23576,365

205,401

169,828

345,851

336,495

Total fixed assets

Total assets

Basis of Presenting the Consolidated Financial Statements
The accompanying consolidated financial statements have been compiled from the consolidated financial statements prepared by the Company as
required under the Financial Instruments and Exchange Act of Japan, and have been prepared in accordance with accounting principles generally
accepted in Japan.

51

ProfileGroup History

Value Creation Process

52

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Section

Consolidated Balance Sheets

Consolidated Statements of Income

As of March 31, 2015 and 2016

For Years Ended March 31, 2015 and 2016

Millions of yen

Fiscal 2015

Millions of yen

Fiscal 2016

Fiscal 2016
¥382,689

Cost of sales

294,927

312,153

Gross profit

66,09770,535

Selling, general and administrative expenses

44,97646,099Operating income

21,121

24,436

Interest income

74

69

Dividend income

744

1,201

Foreign exchange gains

206—

Rental income from real estate

265

289

Other

472

541

1,762

2,101

Net sales

Liabilities
Current liabilities¥ 21,681¥ 22,617

		

Notes and accounts payable		

Short-term borrowings

12,521

13,069		

Income taxes payable

3,140

11,998		Accrued bonuses to directors and employees

11,331

11,860		

Other allowances

1,318

3,134

		

Other current liabilities

27,673

28,827

		Total current liabilities

77,666

91,508Non-current liabilities		

Fiscal 2015
¥361,025

39,593Long-term debt

31,460Non-operating income

Total non-operating income		Lease obligations

5,497

6,050

Non-operating expenses		

Deferred tax liabilities

10,720440Interest expenses

519

471

		

Deferred tax liabilities from revaluation of land

663

403

Equity in losses of non-consolidated subsidiaries and affiliates

205

157

		

Accrued retirement benefits to directors

90

76

Foreign exchange losses

—

283

		

Net defined benefit liability

16,874

18,363

Rent expenses on real estates

238

185

		

Other non-current liabilities

5,955

7,651

Other

668

919

		

Total non-current liabilities

79,39564,447

Recurring profit

157,062

155,955

Extraordinary income

Total liabilities
Net assets
Shareholders’ equity

1,632

2,016

21,251

24,521Gain on sale of investment securities

377

18,374Gain on termination of retirement benefit plan

59

—

58

—

Total non-operating expenses		Common stock

10,001

10,001Gain on reversal of stock acquisition rights

		Additional paid-in capital

83,601

82,920Other

		Retained earnings

67,01977,485

Total extraordinary income(2,124)
168,282		Less treasury stock, at cost

(514)

		

Total shareholders’ equity

160,107

Accumulated other comprehensive income		

Net unrealized gains on other securities

26,191

13,659		

Revaluation of land

(1,898)(2,375)		Foreign currency translation adjustments

396

125

		

Remeasurements of defined benefit plans

(397)

		

Total accumulated other comprehensive income

Non-controlling interests
Total net assets
Total liabilities and net assets

Group History

Value Creation Process

267
18,641

354

264

1,566

16,617

67

—

1,578

4,463

Extraordinary losses
Loss on disposal of fixed assets
Impairment loss
Loss on liquidation of business
Other

3,567

21,344

Income before income taxes and minority interests

18,184

21,817(3,141)

Income taxes: current

5,417

14,33524,292

8,266

Income taxes: deferred

1,865△5,624

4,388

3,990

Total income taxes

7,282

8,710

Net income

10,901

13,107

188,789

180,539

345,851

336,495

Total extraordinary losses

Net income attributable to non-controlling interests
Net income attributable to owners of the parent company

53

Profile

3
500

626

429

10,275

12,67854

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Section

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets

For Years Ended March 31, 2015 and 2016

For Years Ended March 31, 2015 and 2016
(Millions of yen)
Millions of yen

Net income

Fiscal 2016
¥13,107

20,239(12,526)

68

22

Other comprehensive income
Net unrealized gains on other securities
Revaluation reserve for land
Foreign currency translation adjustments

379

(295)

Remeasurements of defined benefit plans

1,569(2,742)14(42)

22,271(15,584)

33,173(2,476)32,474(2,848)698

371

Share of other comprehensive income of equity-method affiliates
Total other comprehensive income
Comprehensive income
Components:		Comprehensive income attributable to owners of the parent company

		Comprehensive income attributable to non-controlling interests

Shareholders’ Equity

Fiscal 2015

Fiscal 2015
¥10,901

Commonstock

Balance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income attributable to owners of
the parent company
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

Additional
paid-in capital

Retainedearnings

Treasurystock

10,00186,786

57,579(6)

154,360

10,00186,786

1,532
59,111(6)

1,532
155,892(2,367)(2,367)

10,275(508)(3,184)(3,184)——10,001(3,184)
83,601

7,908
67,019

(508)
(514)

Net
Foreign Remeasure- Total accu- Stockacquisiunrealized Revaluation currency ments ofmulatedtion
gains onreserve translation defined other comotherfor landadjustbenefit prehensive rights
securities
ments
plans
incomeBalance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income attributable to owners of
the parent company
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

55

Group History

Value Creation Process

10,275
(508)
—

4,215
160,107

Accumulated other comprehensive income

Fiscal 2015

ProfileTotal shareholders’equityMinority
Totalinterests net assets

5,975(1,967)48(1,964)2,092

45

8,004 164,502

5,975(1,967)48(1,964)

2,092

45

1,532
8,004 166,035(2,367)
10,275(508)—(3,184)

20,216
20,21626,19168
68(1,898)

347
347
396

1,566
1,566
(397)

22,19922,19924,292

(45)
(45)
—

(3,615) 18,538(3,615) 22,753
4,388 188,789

56

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Section

Consolidated Statements of Cash FlowsFor Years Ended March 31, 2015 and 2016
(Millions of yen)
Shareholders’ Equity

Fiscal 2016
Commonstock

Balance at beginning of fiscal year
Changes during the fiscal year
Dividends from surplus
Net income attributable to owners of
the parent company
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve for land
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

Additional
paid-in capital

10,001

83,601Retainedearnings

Millions of yen
Treasurystock

67,019Total shareholders’equity(514)

160,107(2,711)(2,711)

12,67812,678(1,610)0(1,610)
0

0
(680)

(680)
499

499

—
10,001(680)
82,92010,46577,485—
8,174
168,282(1,610)(2,124)

Accumulated other comprehensive income

Fiscal 2016

Balance at beginning of fiscal year
Changes during the fiscal year
Dividends from surplus
Net income attributable to owners of
the parent company
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve for land
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

Net
unrealized
gains onothersecurities

Revaluation
reservefor landForeigncurrencytranslation
adjustments

26,191(1,898)396

Remeasure- Total accuments ofmulateddefinedother combenefit
prehensive
plansincome(397)

24,292

Minority
interests

Total
net assets

4,388

188,789(2,711)
12,678(1,610)
0
(680)
499

(12,532)(12,532)
13,659(477)(477)(2,375)

(271)
(271)
125

(2,744)(2,744)(3,141)(16,025)(16,025)
8,266

(398)
(398)
3,990

(16,424)(8,249)180,539

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
(Gain) loss on sale of investment securities
Loss on disposal of fixed assets
Amortization of goodwill
Increase (decrease) in accrued bonuses to directors and employees
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Increase (decrease) in consumption tax payable
Other, net
		Subtotal
Interest and dividend income received
Interest expenses paid
Income taxes paid
		 Net cash provided by operating activities
Cash flows from investing activities
Purchase of marketable securities
Proceeds from sale and redemption of marketable securities
Acquisitions of property and equipment
Acquisitions of intangible assets
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Payment of lease and guarantee deposits
Collection of lease and guarantee deposits
Proceeds from transfer of business
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Other, net
		 Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings, net
Proceeds from long-term debt
Repayments of long-term debt
Acquisition of treasury stock
Dividends paid
Dividends paid to minority shareholders
Purchase of shares of subsidiaries not resulting in change in scope of consolidation
Other, net
		 Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

57

ProfileGroup History

Value Creation Process

Fiscal 2015

Fiscal 2016

¥ 18,184
12,809
1,566
(293)
354
863
388
38
(389)
(819)
519
(10,229)
(148)
2,516
3,466
(121)
28,707831(533)(6,067)22,938¥ 21,817
11,952
16,617(18,356)
264
209
448
(19)
1,292
(1,270)471(4,470)658
748(3,830)3,902
30,437
1,276(453)(5,762)25,496(3,400)3,425(7,482)(5,400)(5,150)
2,423
(967)
537
259
(926)
(1,062)(17,744)(400)
410(4,697)(6,633)(5,073)24,504(1,001)
659
—
(73)
992
8,688

(412)
7,300
(13,949)(508)(2,367)(351)(7,031)(1,747)(19,067)217(13,656)
43,142
29,485(752)
5,012(12,862)(1,610)(2,711)(202)(1,324)(526)(14,979)(39)
19,16629,48548,651

58

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data