About the TIS INTEC Group

Drawing on the capabilities of executives and employees alike—some 20,000 individuals throughout the Group—
we have embarked on a journey to realize Group Vision 2026.
Corporate Image in 2026

Seeking Position on Global Stage

Create Exciting Future

Be seen by leading companies in different industries as having an appealing 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 and be a leading company under a new market concept
Be proud of high profile and showcase solid standing as a corporate group chosen by clients, society,employees—everyone

Utilize advanced technologies and know-how
to realize business innovation and market creation

CONTENTS
What does the TIS INTEC Group do?
Solutions from TIS INTEC Group with Expanding Social Profile
History of the TIS INTEC GroupTIS INTEC Group Value Creation Process
Consolidated Financial/ Non-Financial Highlights
To Our Stakeholders
Third Medium-Term Management Plan “Beyond Borders 2017”
Group Business Summary
IT Infrastructure Services/ Financial IT Services/ Industrial IT Services
Global BusinessTechnological innovation and New Service Strategy
Platform that Supports Value Creation Process
Basic Direction on CSR
Communication with Stakeholders
Contributing to Global Environment
Quality Control
Research and Development
Management Discussion by Chairman and External Directors
Corporate GovernanceDirectors and Members of the Audit & Supervisory Board
Financial Review
IT Glossary
Consolidated Financial Summary
Corporate Data

It has been one year since our July 2016 restart as the TIS INTECGroup. To raise corporate value even higher through the efforts
of executives and employees alike throughout the Group, we
formulated a new Group vision that looks ahead to 2026 and theimage that we want the Group to project.
“Create Exciting Future” is an attitude shared groupwide, andit guides us in business innovation utilizing advanced technology
and know-how and fuels the creation of new markets. Our goal is
to be a strategic partner to our clients, and we will consistently
strive to improve existing industry and markets while trailblazing
new markets as well.

Editorial Policy
From 2016, we have opted for an integrated report that provides key financial as well as nonfinancial content to enable all stakeholders, particularly shareholders and investors, to better
understand the measures that we have taken to achieve sustainable improvement in thecorporate value of the TIS INTEC Group. Please check our website, as well, for information, as
many of the topics we cover in the report are updated on the website, as appropriate.
http://www.tis.com/
Scope of reporting: TIS (parent) and TIS INTEC Group
Issued: September 2017
Disclaimer: Forward-looking statements, such as performance forecasts, described in this reportare based on information available to management regarding the TIS INTEC Group—that is, TIS
and the subsidiaries under its umbrella—as of the production date and certain assumptions
deemed reasonable at this time. No intent of promise is implied by the Company to achieve suchforward-looking statements. Indeed, various factors may cause future results to be substantiallydifferent from the assumptions presented in these materials.
The names of the products and services described in this report are trademarks or else registeredtrademarks of the respective company.

1

ProfileGroup History

Value Creation Process

2

Financial/
Non-Financial Highlights

To Our Stakeholders

3
5
7
9
11
13
21
23
23
25
26
27
28
29
34
35
37
39
41
43
54
58
59
61

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

What does the TIS INTEC Group do?

The TIS INTEC Group accurately addresses the diverse needs of a client base that extends across
many industry sectors, as one of Japan’s leading IT corporate groups. As a cohesive group,comprising about 20,000 people, we will provide IT services that draw on the individual strengths

Support lifestylescenarios

Support industrial
competitiveness

Public andGovernment Systems

Utilities (electricity,gas, water)

We provide general administration systems for government
use, including systems related totaxes and national health insurance, and we support efforts tocreate safe, eco-friendly communities where residents feel secureand lifestyles are characterized
by greater convenience throughthe establishment of smart cities
utilizing ICT infrastructure.

We support public and public
service businesses, which arerequired to meet high levels of
reliability and robustness, froman IT perspective with a range ofsolutions, from income/expense
control and card settlement systems to power generation maintenance systems. We are also
actively addressing new demandparalleling liberalization of theelectric power and gas sectors inJapan.

Manufacturing

We support the global businessdevelopment of manufacturers
by making business processes
more efficient through a richassortment of packages andtemplates matched to facetsof manufacturing, a business
realm characterized by its variety of business processes, fromdesign work through to sales
control.

Consolidated
Net SalesbillionContribute to build
a better future(As of March 31, 2017)

Consolidated
Operating Income(Year ended March 31, 2017)

19,843

Support financial
functions

New Technologies(AI, IoT, Fintech, etc.)

Credit Cards/
Settlement

Banking/
Insurance

Platform
Services

We provide solutions matched
to all stages of the businesslifecycle, starting with system
configuration designed to realize greater efficiency in sales
and distribution processes distinct to industry sectors andtypes of business. We support
food safety and stable distribution through fast and secure
merchandising systems andtraceability systems.

We pursue research into new IT
technologies, such as artificial
intelligence (AI), the Internet ofThings (IoT) and robotics, andexplore options for commercialization of such technologies. In
the field of fintech, we apply
new technologies, sourced not
only in Japan but also fromoverseas, to facilitate access toservices geared to new financetechnology.

We support systems that utilize
credit cards, such as web-based
services linked to core systems,
including systems to screen
applications and issue cards aswell as systems for sales, billing, payment to accounts anddemand for payment, in addition to payment formats related to retail settlement, such as
prepaid cards and debit cards.

We provide systems to support
banking operations, which
require IT services withextremely high levels of reliability and quality. We also offer
total solutions for insurance
operations, including systems
to handle policy applications,screening and other core processes, as well as establishment
and operation of call centers.

With the largest data center
network in Japan, we keep thevaluable information assets ofour clients safe and secure 24
hours a day 365 days a year. In
addition to on-premise operations, we offer high-level services applicable to various platform environments offering
cloud services, including private
cloud and public cloud services.

Number of Clients

Number ofGroup Companies(As of March 31, 2017)

About 15,000
companies

102

Value Creation Process(Year ended March 31, 2017)

A-/ Positive(Long-term/Japan Credit
Rating Agency, Ltd.)

57.8%

500 cases

3Group History

Consolidated
Equity ratio

More than(TIS+consolidated
subsidiaries+equity
method affiliates)

billion(Year ended March 31, 2017,
domestic)

8.8%

We offer an extensive menu ofoutsourced solutions and services covering all the administrative processes otherwise
handled by clients, from data
entry to call center operationand direct mail envelope-stuffing and distribution.

（At November 10, 2016）(Year ended March 31, 2017)

Aggregate Numberof Solutions

BPO Services

Rating

Consolidated ROE(Year ended March 31, 2017,
domestic)¥27.0

ProfileSupport various
businesses

Distribution/
Services

Number of
Employees,
Consolidated(Year ended March 31, 2017)¥393.3of each company and its human resources to support the business activities of a vast client base insuch industries as finance, manufacturing, services and the public sector, at home and abroad, andcontribute to efforts that support personal lifestyles and social infrastructure.

4

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Solutions from TIS INTEC Group with Expanding Social Profile

By providing IT services that meet the needs of clients across a wide spectrum of industry sectors
and business domains, the TIS INTEC Group contributes to solutions aimed at various social issues.
Some of the Group’s many achievements are highlighted on these two pages.
*Market data including market share is calculated/estimated by TIS INTEC Group.

Supporting safe and secure,daily credit card settlement

Promoting cashless
settlement in Japan

Credit cards

Branded debit card-relatedCore system development
results
Domestic market share

About

50%

(On annual transaction volume basis for clients served)

Of 25 companies in Japan with significant consumer credit transaction volumes, 10 are in the Group’s client basefor core system development.
Credit extended for card-facilitatedpurchases has reached ¥54 trillion in
Japan. The 10 companies that are in
the TIS INTEC Group client base haveaggregate membership of about 170
million people and credit transaction
volume representing about 50% of thetotal market.

EDI

Service provision/systemdevelopment results

System configuration andoperation track record

Domestic market share

Domestic market share

About

Highly evaluated as restaurant
sector-specific shop management
system

Supporting greater operating
efficiency in e-commerce

80%

About

There are more than five million debit
cards affiliated with an international
brand in Japan. Settlement transactions have reached about 100 million
per year, with an aggregate value ofabout ¥500 billion.
The TIS INTEC Group boasts anoverwhelming share—about 80%—of
the market, on a transaction-handlingfinancial institution basis, throughsuch solutions as DebitCube+, which
provides one-stop access to services
required or branded debit card issuance and operation.

Support centralized information
management at financial institutions
and raise efficiency and sophisticationof operations

TastyQube

F3 (F Cube)
Implementation

Call Series

160 companies
About 11,000 shops

36 of 64 banks

Annually

System implementation

30%

About

The TIS INTEC Group’s business portfolio includes high-quality EDI (electronic data interchange) services
matched to every type o industry­sector and business format using athorough system operation structure.
Overall, the Group boasts the industry’s top share in terms of EDI configuration and operation results.
The number of connections currently exceeds 100,000 ID ports.

Contributing to higher
customer satisfaction,stronger marketing capabilities

TastyQube is highly versatile and can beapplied to any restaurant format, helps
to visualize shop operations, and realizes enhanced operating efficiency.
The solution has been applied toabout 160 companies and about
11,000 shops, mainly restaurants, cafes
and pubs.

Usage(regional banks)

F3, an integration-type CRM system forfinancial institutions has been installedat more than half the regional banks inJapan.
In addition, the F3 series, which
includes a cloud-type solution, is usedby more than 90 financial institutions.

More than

100 million calls

In addition to Call Note, which quantitatively identifies incoming calls throughmass media and the Internet, we offer
CallCrayons, which visualize the statusof customers’ incoming calls in real timeusing proprietary PhoneCookie® technology. Annual usage of the Call Series
exceeds 100 million calls.

Helping to promote management
strategies using BPO services toboost productivity

Solving various social issues by providing IT services

Data entry services
Handling volume
Annually

About

80 million entries

The TIS INTEC Group is the expert indomestic BPO services, with more than
50 years of history in the field.
Data entry services, facilitated primarily through top-class systems in Japanand networks at home and abroad, havereached about 80 million entries a year.

Recent Major Award Activity• Recognized by APN as “AWS Premier Consulting Partner”• Acquired “SAP Competency” under APN Competency Program• Recognized as “Robo App Partner” under Pepper Partner Program• Selected as “Technology Partner” under IBM Watson Ecosystem Program• Received award at Oracle Excellence Awards 2017
• Named “Partner of the Year”—highest mcframe Award—for the 11th time
• Received “Sales Award” at SuperStream Partner Awards 2016
• Received “Product Award” at SuperStream Partner Award 2017
• Received “Solution of the Year” at GRANDIT AWARD 2016
• Named “Implementation Partner of the Year” at Salesforce Partner Awards 2016
• JISA Awards
2015 Finalist: CareQube remote monitoring/preventative maintenance system
2014 Winner: DebitCube+ and PrepaidCube+ payment settlement systems
2013 Winner: AtoMsQube production control system

Contributing to stable insurance
system platform creation

For Federation of
National Health Insurance
Associations
Track record in system implementation/operation/maintenance

12 of 47 prefectures
Of the 47 prefecture-based members of
the Federation of National Health
Insurance Associations in Japan, the TIS
INTEC Group has been tapped to install,
operate and maintain systems for 12
members.
About six million people are coveredby these 12 insurance associations.

5

ProfileGroup History

Value Creation Process

6

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

History of the TIS INTEC Group1964

Toyama Computer Center, Inc.
(now, INTEC) established.

1971

April 2008

ITHD is created through the
management integration of TIS
and INTEC Holdings, Ltd.

Toyo Information
Systems, Co., Ltd. (now,
TIS) established.

2008–2009

ITHD Group is reorganized. INTEC
Holdings is merged into INTEC,
and nine TIS subsidiaries are put
under the direct control of ITHD.

April 2011

June 2014

ITHD orchestrated athree-company merger
involving TIS, SORUN and
UFIT Co., Ltd., with TIS as
the surviving company.

May 2015

Shift to TIS INTEC Group
ITHD executed an absorption-style merger with TIS, adopted its subsidiary’s
high-profile name and transitioned to an operating holding company.

Discussions on Groupreorganization began

May 2017

March 2015

ITHD turned AGREX Inc. into a
100% consolidated subsidiary.

December 2009SORUN Corporation joined the
ITHD Group.

Period ofestablishment

July 2016

ITHD debuted a single logo for all
Group companies and adopted a
new brand message, “Go Beyond”.

First Medium-termManagement Plan
Group management
emphasizing independenceof each company

Announced “Group Vision 2026”, the overall
picture of the Group in 2026

Second Medium-termManagement Plan
Overall optimization of
the Group and greater
sense of unity

Third Medium-termManagement Plan
Portfolio management, in a project sense, combining exceptional
businesses and key strengths into a single approach.

8.8%

TIS INTEC Group
companies havebeen leaders in
the information
services industry
since its inception

7.4%
27.0
6.0%

23.7

9.0%

ROE

30.0

Operating income

400.0

393.3

21.1

(%)

(Billions of yen)

Net sales(Billions of yen)
Numerical Targets
Net sales ¥400 billion
Operating income ¥30 billion
Net income attributable to the parent
company ¥18 billion
ROE 9.0% (current calculation)

361.0

15.6

Group Vision
2026

Beyond Borders 2017

338.3
Third Medium-term Management Plan
For details on “Beyond Border 2017,”
please review the section starting on
page 21~22.

327.4

1.5%

Fiscal
2009

Fiscal
2010

Fiscal2011

IT Services Industry Market Scale andIndustry Position
TIS INTEC Group belongs to the IT services
industry. The Company is a leading, independent prime contractor, ranked as theindustry’s No. 2 system integrator on aconsolidated sales basis.

Fiscal
2012

Fiscal
2013

Fiscal
2014

Fiscal2015

Fiscal2016

Fiscal2017

Fiscal2018(Target)● Net Sales of Japan’s Leading IT Companies● IT Services Market Size in Japan (moderate case)(Year ended March 31, 2017)(Billions of yen)(Billions of yen, %)1,732.4

YOY change

1,700

15,000500

12,500424.5 407.8
393.3

400

329.3

300

11,802.0 11,978.7
11,036.4 11,243.7 11,430.5 11,622.9

282.2

3

7,500

232.4

1.9

1.3

5,000

1.7

1.7

1.5

1.5

NTT
Data

NRI

CTC

TIS

SCSK

UNISYSNSSOL···* The graph data indicates net sales of NTT DATA Corporation, Nomura
Research Institute, Ltd., ITOCHU Techno-Solutions Corporation (CTC), SCSKCorporation, Nihon Unisys, Ltd., NS Solutions Corporation, and TIS INTECGroup.
* CTC amounts are based on the IFRS (International Financial ReportingStandards).

0

2
1

2,500

100

5
4

10,000

200

0

6

0

2016

2017

2018

2019

2020

2021

Gartner “Forecast: IT Services, Japan, 2015-2021, 2Q17 Update” August 25, 2017 End user spending
based Graph created by TIS based on Gartner research
The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or
viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and150,000
are not representations of fact. Each Gartner Report speaks as of its original publication date (and not
as of the date of this Prospectus) and the opinions expressed in the Gartner Report(s) are subject to125,000
116,229
114,305change without
notice.
112,437
110,363

118,020

119,7871.5

1.

100,000

7

8

75,00050,000

1.3

1.9

1.7

1.7

25,000

ProfileGroup History

Value Creation Process

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

0Group Business Summary2016

Platform that
2017Supports
Value Creation Process

2018

Financial Review
2019
Financial Summary

2020
Corporate Data

2021

TIS INTEC Group Value Creation Process“Create value through IT” “Change society through IT” “Open doors to the future through IT”

TIS INTEC Group Business Activities

Resources of the TIS INTEC Group
Diverse workforce

Consulting
services

Everything from system
operation to full businessprocess outsourcing atstate-of-the art data
centers

High technological capabilities

Outsourcing
services

Ample experience and know-how

One-stop,
optimum support

input

Extensive service menu

Helping clients use
IT to raise business
value
Providing one-stop
access to systems
perfectly matched
Systemclient needs

integration
services

outcomeLargest data center network in Japan
Research
into and access Always on a quest for theto leading-edge latest IT technology toprovide systems a step
technology

IT platform
Building safe andsecure computer configuration
networks, from host toservices
public, matched toclient needs.

Broad customer baseSolid financial position

We help solve social issues throughbusiness activities

ahead of expectations

Plan and propose newpatterns of use for IT
Realize client visions andstrategies, and set on
growth track

The TIS INTEC Group seeks to be a corporate citizen whose activities, namely, theprovision of various services utilizing information technology (IT), match its status
as a leading corporate group, and will strive to raise corporate value, supported inthis effort by the high regard of all its stakeholders, including clients andshareholders as well as employees and their families.

Medium-term
management plan

Corporate governanceGroup History

Value Creation Process

Local communities

Group management philosophy

Financial IT Services

About the Group’s Five Principal Companies
Company Name

Domestic
Industrial IT Services

IT Infrastructure Services

TIS Inc.

IT Service
Force Inc.
Sorunpure
Corporation

INTEC Inc.

QUALICA Inc.
AJS Inc.
Other group companies: Consolidated subsidiaries 20 companies Equity method affiliates 8 companies

ASEAN and others●Consolidated subsidiaries●Consolidated subsidiaries 11 companies

1 company

Equity method affiliates 46 companies

Description of Business—

Focuses on credit card companies but pursues business
opportunities in a wide range of sectors, including services andmanufacturing
Merged with SORUN and UFIT in April 2011 and implemented
structural reforms. Merged with pure holding company IT
Holdings Corporation in July 2016 and became operatingholding company.

Other group companies
Consolidated subsidiaries
3 companies

TIS Inc.

China●Consolidated subsidiaries

5 companies
Equity method affiliates
1 company

Focuses on megabanks and life insurers but promotes CRM
100% for regional banks and offers a wide selection of services toregional public corporations, particularly in the Hokuriku region.

INTEC Inc.

TISQUALICA Inc.

Formerly, information systems subsidiary of Komatsu. Focuses
TIS80% on assembly-based manufacturers, mainly those under the
Komatsu20% Komatsu Group umbrella, while expanding business withcompanies in the distribution and restaurant sectors.

AJS Inc.

TIS51% Formerly, information systems subsidiary of Asahi Kasei. Focuses
Asahi Kasei
49% on companies under the Asahi Kasei Group umbrella.

AGREX INC.

Leading company in mainstay BPO field. Began global BPO
TIS100% services in October 2013. Became wholly owned subsidiary inMarch 2015. Efforts to centralize Group’s BPO operations at
AGREX still in progress.

Overseas
North America

Shareholding Ratios

Others9

ProfileBusiness partners

Deliver shareholder returns
matched to sustainablegrowthCorporate culture andhuman resources

AGREX Inc.

●	We will uphold high corporate morals and fulfill our social obligations.

Employees

Use IT to help solve social
issues

As of March 31, 2017, the TIS INTEC Group consists of the parent company, 46 consolidated
subsidiaries, and 55 affiliated companies accounted for under the equity method.

Group Management Philosophy●	We will always provide our very best to clients by combining
Group strengths to foster higher quality and greater sophisticationin our technological capabilities.

Clients

Structures supporting TIS INTEC Groupbusinesses and sustainable growth

The Group acts as an IT brain, delivering the best solutions toaddress clients’ IT needs. At the same time, we create new value
for society and contribute to improvements that pave the way toa better future.

●	We will cultivate a vibrant corporate culture that encourages companies and individuals under TIS INTEC Group umbrella to work
toward higher goals and embrace new challenges, and thereby
ensure corporate growth.

Shareholders, investors

Offer IT services to support
increasingly sophisticatedinformation society

10

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Consolidated Financial Summary

Operating Income,Operating Income to Net Sales Ratio

Net Sales(Millions of yen)

(Millions of yen, %)337,834 346,647

361,025

Operating Income
Operating Income to Net Sales Ratio 27,019

382,689 393,398

Net Income Attributable to Owners of
the Parent Company (Millions of yen)
Net Income per Share (Yen)Net Income Attributable to Owners of the Parent Company
Net Income per Share

24,436
18,171
5.4

16,306

Orders Received during the Term
(Software Development)

Order Backlog at Year-End(Software Development)(Millions of yen)

(Millions of yen)

207,345 208,307

199,842

71,09562,055

179,352 172,721

69,961

Free Cash Flows(Millions of yen)

34,18464,751

58,86921,121

19,510
5.6

5.9

6.4

189.02

12,678

6.9
10,275
7,913
5,868

20,436145.22117.40

7,124

5,194

90.16

-4,536

66.86

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

ROE, ROANet Assets per Share, Equity Ratio(%)(Yen, %)

Dividends per Share, Payout Ratio,
Total Return Ratio* (Yen, %)Dividends per Share
Payout Ratio Total Return Ratio

ROE

Net Assets per Share

ROA

2,265.76

8.8
7.2
5.7

6.2

6.4

5.1

6.0

8.0

Equity Ratio

2,108.19 2,031.07
1,714.88 1,782.23

7.0

49.8

49.9

53.3

52.5

30.00

57.8

33.00

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

Interest-Bearing Debt Balance,
Interest-Bearing Debt Ratio

Number of Employees at Year-End

有利子負債60,55030.4

IT Infrastructure Services¥123,547 million

This segment provides
incidental business generated from the provisionof information systems
and other b­ usinesses.

This segment provides
self-administered computer utility and system
operation services
through large IT facilities,
such as data centers.

Industrial IT Services¥180,245 million

Total ¥393,398
millionThis segment supports
the shift toward greateruse of IT in business processes and in the execution of business activities,
with business know-how
and IT expertise in areas
other than finance, particularly industrial andpublic finance sectors.

Financial IT Services¥83,792 million
This segment supports
the shift toward greateruse of IT in business processes and in the execution of business activities,
with business know-how
and IT expertise specificto the financial sector.

10.4

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

0012

0041

007

0

0

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017
700

1400

2100

Employee Composition (As of April 1, 2017) (Number of employees)

Publicinstitutions

Others4.0%

9.4%

Credit card

16.5%

Year ended
March 31, 2017

Services

22.8%¥393,398 million
100.0%

55〜59

Banking

7.2%

8.1%

Processing-based
manufacturing

50〜54
45〜49

Insurance

6.4%

Other
finance

5.3%

Distribution

2 0
27
177
507 47
53
556
820
164
63
989
689
319
43
573 462
1,148
46
1,585
359 683

60〜

Assembly-based
manufacturing

10.9%

9.4%

40〜44
35〜39

1,816

30〜34

49

1,308

25〜29

22.64

Total

15,357 Ratio of annual paid leave taken

56.74%

Male

38.49 Number of employees on maternity leave

Female

35.22

Total

38.35

Average length of service (years) Male

14.21

Number of employees inmanagement positions

0 735

Percentage of employees inmanagement positions

11

Of this, men

Total

13.61

Male

29
549

8
2
141

2,999 Percentage of employees with a disability*2 1.97%
239 Percentage of employees over the age of 60*3 1.69%

Total

3,238

Male

8,307

Female

3,812

Total

12,119Male

26.53%

Total

445

9

Employees working shorter number ofhours to care for elderly family

Number of non-Japanese employees
4.17%(foreign nationals)

Female 5.90%

General positions (male)
General positions (female)

Number of employees working shorter
number of hours to care for young children

11.03 Employees on nursing care leave

FemaleNumber of employees ingeneral positions

Of this, men (paternity leave)

FemaleTurnover rate960

171.984,051 Non-scheduled hours worked

Average age

7

11,306 Average total working hours

Female728 0 442

(Age)

Value Creation Process

Non-Financial Data (As of April 1, 2017)
Number of full-time employees Male

〜24

Group History

19,393 19,843

13.7 35,144

Management positions (male)Management positions (female)

Profile19,09046,158(%)

Others¥5,813 million

Year ended
March 31, 201752,11519,081

19.0

Net Sales by Client Sector(Sales to outside customers, excludes intersegment sales)

18.8

31.9

22.7

*Total return ratio: Total amount of dividends and treasury
stock buybacks as a percentage of net income.

Net Sales by Business Segment

19,55321.00
27.7(Person)

有利子負債比率

58,86920.0

35.3

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

(Millions of yen, %)

15.1

25.6

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

25.00
31.4

3.9

36.00

Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017

* Senior employment: Following amendments to
the Law on Stabilization of Employment of Older
Persons in April 2013, we introduced a continuous
employment system that enables all employees
and anyone who falls under the criteria of this law,
who are in good health and have the desire tocontinue working after mandatory retirement, theopportunity to be reemployed and continue
working up to the age of 65.

21.08%

Notes: 1. The above are simple combined averages or weighted averages for the TIS INTEC Group’s sevenprincipal companies (TIS, INTEC, AGREX, QUALICA, AJS, TIS System Service, and TIS Solution
Link).
2. The percentage of employees with a disability represents the combined total for TIS, SorunPure
Inc. and 11 affiliated specially recognized companies under the Group umbrella (employees
hired under regular : 19,845.5 people; employees with a disability: 390.5 people).
3. Percentage of employees over the age of 60 is calculated based on June 1, 2017.

12

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate DataTo Our Stakeholders

Aware of the speed at which changes are transforming
the industry, we seek to be a group of IT professionals
traveling in the same direction to success.
It has been one year since the transition from IT Holdings (ITHD) Group to TIS INTEC Group.
Toru Kuwano, TIS president and representative director, looks back on the first year under
the operating holding company structure and talks about the new Group vision and theideal image that the Group seeks to realize by 2026.

Management Direction
Mission of Management TeamWork toward blended corporate group, as TIS INTEC Group, andpromote portfolio management to raise corporate value

Group Vision 2026

With market- and client-oriented perspective,● quickly solve internal management issues, and● as a cohesive group, contribute externally to digital management at client companies.

Looking back on the first year under the TIS INTEC

Leverage features of operatingholding company structure

Q1. Group banner“Management has definitely acquired a senseof speed.”
On July 1, 2017, we marked one year under the new TIS INTEC Groupstructure with TIS as the operating holding company. Behind the transition from a pure holding company structure was the realization thatmanagement with a sense of speed was essential for the Group toprovide high-added-value services amid rapidly changing businessconditions. That is, we needed an operating holding company thatwould lead the Group and guide investments and measures aimed at
lifting the overall capabilities of the Group to a higher level. I feel weare seeing obvious results from this evolution in structure.
For example, issues that exceeded a certain level at TIS before theintegration and reorganization would be discussed by the management committee and board of directors at each company and then go
through additional discussion by the Management Committee and
Board of Directors at ITHD. Now, after the integration, the lattertwo stages have been eliminated. At TIS, today, the Management
Committee and the Board of Directors make the final decisions on
issues that exceed a certain level for the Company and all companies
under the Group umbrella. But because TIS is itself the operatingholding company, the business themes at each Group company
are easier to follow and the discussions are more in-depth, and­management decisions are thus achieved more quickly.
In fiscal 2017, a favorable business environment led to record-highresults. Of particular note, net income attributable to owners of theparent company reached ¥16.3 billion and return-on-equity hit 8.8%—
each arriving at the target set for the final year of the three-year management plan ending March 31, 2018, a year ahead of schedule. These
performance-based results reflect the success of various measures­initiated in the past, as the transition to the current operating holding
company structure would not necessarily precipitate such huge results
so quickly. But by continuing to implement appropriate measures,
imbued with a sense of speed, under the new structure, we are sure tokeep corporate value on a groupwide basis charting upward.

Optimize capabilities
within Group

Strive to build structure that derives maximum value frommanagement resources a­ vailable within the Group● Reinforce forte capabilities in businesses showcasing competitive excellence● Raise level of excellence even higher in regions where Group enjoys comparative advantage overindustry rivals and in businesses, such as BPO, and connect organically with existing businesses.

Key Strategies
Cultivate corporate culture
with sense of solidarity● Establish Group vision● Strengthen Group brand power

Generate frontline energy andbuild a business portfolio● Train and keep human resourcesin management positions whobring capabilities well suited tothe business model● Improve and expand added-value/market-cultivating businesses

Environment surrounding
IT services industry

Establish newGroup governance● Promote best practices● Apply Corporate Governance Code● Enhance internal controls

Accelerate efforts topromote portfolio management

New business investment

Provider selection
by clientsBusinesses where the Group enjoys
a competitive advantage, namely,
status as top corporate groupin the industry

Improve profitability inapplicable businesses

Lateral application acrossapplicable industries

Reinforce training and redesign approaches to work to enable
employees throughout the Group to maximize their capabilities

Toru Kuwano, President

13

ProfileGroup History

Value Creation Process

14

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate DataTo Our Stakeholders

The reason for creating Group Vision 2026

Q2. “For 20,000 employees to travel in the same direction as they pursue dailyGroup Vision 2026

business activities”

Evolution of 2026 Strategic Domains
Business domains existing in 2016 may remain, but the emphasis will be on qualitative evolution
and expansion into strategic domains likely to present in 2026

Business Domains in 2016

IT domains
Shift to service domainsthat include IT
Specific responses
Shift to marketable services
Supporting clients’ businesses

Primary
contractor
Supporting clients’ businesses

We recently announced a new Group vision that captures the overall picture of the Group in 2026. This vision looks
ahead, starting from the introduction of the new structure, on July 1, 2016, and was created because management
felt a clear blueprint for the future was indispensable to ensure that all employees—some 20,000 groupwide—move in the same direction to achieve growth of the Group and to encourage everyone to pursue daily businessactivities with this common course in mind.
“Create Exciting Future”—a capability we seek to hone by 2026—conveys the importance of embracingchanges and the independence to create a future on our own. The catchphrase carries several ideas: that we will
make the future exciting for society and companies, that our own future will be exhilarating and that it is we whowill shape this future, and that we can create a different future through changes we make in ourselves. Group
Vision 2026 requires a cohesive effort on a groupwide basis, and through this embrace of solidarity, we will apply
the IT strengths we have accumulated to date while growing business outside the existing IT box and constantly
expand business content.
Employees in their 30s and 40s, selected from TIS, INTEC and other companies under the Group umbrella,
helped formulate Group Vision 2026. These people were chosen because they may become key players with leadership responsibilities in the TIS INTEC Group 10 years from now. Executives joined them in repeated discussions on
the future of the industry and how best to articulate our raison d’etre to clients and society.
Ultimately, the Board of Directors had final say, but I feel employee-based input in the process to that point
was extremely significant. The involvement of employees also made me see that Group Vision 2026 must become acornerstone of daily activities throughout the Group and at every level of business. This is of the utmost importance.
To promote widespread awareness of Group Vision 2026 among employees, a forum was set up in four locations in Japan, and I personally met with more than 2,000 employees in managerial positions or higher at Group
companies to explain the background leading up to Group Vision 2026 and its underlying concepts and to addressquestions and comments. Participants appeared to be extremely interested, and I truly feel this is a huge contributing factor in cultivating a sense of solidarity within the Group. In addition, a handbook was prepared in Japanese,
English and Chinese and distributed to employees groupwide to spark robust discussion about Group Vision 2026
in all workplaces. A more detailed manual was also produced for managers to help them properly explain Group
Vision 2026 to their staff. Going forward, we plan to run position-specific training programs to deepen awarenessand help Group Vision 2026 really take hold.

Shift to primary contractor status

Marketable
services

Network infrastructure services
BPO services
IT system configuration and operation

Specific
responses

Provide IT engineering expertise
IT domains

Service domains■ Frontier market creation businessWe will leverage our Group’s technologies, businessknow-how, and customer base to create entirely
new markets and business models responsive to theemerging needs of society and industry, promoting
these as our own new business ventures.

Strategic Domains in 2026

■ Strategic partnership business

About business domains for 2026

our business and explore new possibilities.”

Group Vision 2026 highlights four strategic domains that we will emphasize over the next 10 years. First—theStrategic Partnership Business. We are seeing an increasingly noticeable trend among companies to link IT strategies directly to management strategies. So the emphasis will be on the TIS INTEC Group’s role as a strategic partnerin building business models that help client companies stay at the top of their respective industry. Next—IT Offering
Services. We will utilize technologies and know-how accumulated mainly through system development—that is,
traditional IT services—to anticipate client needs and promote solution services, underpinned by speedy planningand presentation of cloud services and universal, shared systems. The third domain is Business Function Services,which leverage the BPO expertise of AGREX. We will draw on diverse choices to underpin business development,
going beyond an extension of existing services even in the area of BPO, to take on integrated outsourcing of all
back-office operations for our clients.

■ IT offering services

We will combine our Group’s accumulated knowhow and broad range of leading-edge technologies
to create and rapidly deploy IT solutions and services
that anticipate the future needs of our customers.
■ Business function services

We will combine the Group’s accumulated expertisein industries and business processes and utilize
cutting-edge technologies to anticipate the business
function needs within our customers’ value chainsand offer them as services.

15

ProfileGroup History

Value Creation Process

Primary
contractor
Supporting clients’ businesses

Q3. “With IT services as our core competence, we will emphasize the evolution of

As partners to world-class companies in their respective industries, we will jointly plan and promote business strategies and play a central role in their businessby leveraging our industry insight and our unmatchedbusiness expertise.

Marketable
services

Frontier Market
Creation Business

IT Offering
Services

Business Function
Services

Strategic Partnership
Business
Specific
responses
IT domains

Service domains

16

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate DataTo Our Stakeholders

The three domains described above are premised on support for client companies and emphasize efforts toextend the scope of our business pursuits beyond IT to meet existing and latent client needs. In comparison, ourfourth strategic domain—Frontier Market Creation Business—is more inward-oriented, turning the TIS INTEC Group
itself into a pillar of business and seeking out new business opportunities. Currently, the Group supports clients across
many different industries, including finance, manufacturing, distribution and services, but looking toward 2026, theobjective is to firmly maintain IT services—our core competence—while cultivating new markets by engaging in theactual businesses where our services are used, either on our own or through capital and business alliances with companies at home and abroad. An extreme example would be agriculture, an industry embracing AI and robotics. Maybe
one day, agriculture will be a source of revenue for the TIS INTEC Group. Various possibilities like this lie hidden in,
waiting to be explored, and it will be Frontier Market Creation Business that reveal these latent revenue opportunities.

2026 Ideal: Group Management and Key Resources

Revenue Model
Shift from structure dependent on laborintensive revenue model in favor of revenue
model hinging on prior investment, which
will be a driver of Group profit

New business fields, such as AI, IoT and fintech

Q4. “Established AI Services Division as specialized structure”

Establish several revenue structures, coveringbusiness revenue, consolidated/equity-based
profit for jointly run operations, and dividend
incomeIn April 2017, we established the AI Services Division as a dedicated structure under the direct supervision of thepresident—currently, me—to plan, develop and provide AI and robotic solutions as well as engage in related service
management and R&D activities. AI, IoT and fintech are often talked about in equal terms as new IT fields. But IoT
and fintech are actually better purposed in certain industries—IoT for the manufacturing industry and fintech forthe finance industry—while AI and robotics have potential over a wide spectrum of industries. Going forward, we
can expect swift application of these concepts to enterprise systems.
At TIS, we were already showcasing various measures to expand AI and robot-related businesses, mainly
through our technology division. Our activities included verification and development of technologies, such asmachine learning and natural language processing, and development of solutions using related technologies, as wellas putting Proof of Concept (PoC) into practice, engaging in joint research with universities, and looking for cooperative business opportunities through investment into start-ups and venture companies. But by integrating these activities under the AI Services Division, we have created a structure to expedite proposals and responses better geared toapplication of AI and robot-related technologies in business operations—a need that is sure to grow. The new division will collaborate with other operating divisions and will draw on the industry and IT service insights and knowhow that TIS has accumulated as a system integrator to incorporate technologies and services into the business systems of corporate clients. We expect AI and robot-related solutions to become a ¥20 billion business by 2020.

Technology/Know-how

Human Resources
Corporate Culture

Have access and utilize various
leading-edge technologies,
including technology inanticipation of latent client needs

Enterprising and bold corporategroup that encourages free
thinking and the pursuit of newchallenges without fear of failure

Apply business know-how
accumulated across various
industries through activities withcompanies at the top the industry

A corporate group that instills
pride in each and every employee
under its umbrella, motivates andenables employees to achieve
personal growth

Have know-how that draws on
external resources, such asalliances and M&A
Accumulate and share high-levelproduction technology that forms
the basis to underpin strategic
domains

Differentiation strategies through domestic and overseas operations

Q5. “Draw on strengths, and open up new business opportunities at home and abroad”
At one time, our global activities consisted of local support for Japanese companies expanding their operations
overseas. But today, we are building a wider presence in overseas markets, particularly China and the ASEAN
region, where demand for IT services is expected to grow, by emphasizing business fields where we—that is, theTIS INTEC Group— have expertise. At the same time, we are taking advantage of opportunities in business fields
where our partners—local companies that have formed capital and business alliance with us—have a strong presence. An example is PromptNow Co., Ltd., a leading company in Thailand with expertise in financial mobile application development for financial institutions. We turned the company into a subsidiary in May 2016 and seek to utilize reciprocal strengths to expand business in new markets.
Meanwhile, Japan, which is considered a mature market, lags behind the rest of the world in going cashless,with a ratio of cash-based settlements apparently still between 60% and 70% of all retail transactions. Going forward, the use of debit cards and smartphone payment settlement services, such as Apple Pay, is likely to expand
rapidly in the approach to 2020, when Tokyo will host the Summer Olympic Paralympic Games. Against this backdrop,
business chances are sure to grow. The payment settlement business is an area of expertise in the TIS INTEC Group
portfolio, but by honing this capability to a sharper edge, we will establish a firmer position in markets, whether athome or abroad, that encourages potential clients to say, “If we need payment settlement-related services, let’s talkwith the TIS INTEC Group first.” Through various client conversations, we will gain new insights and build a solid trackrecord, which will differentiate our brand from the competition. This is the virtuous cycle we aim to achieve.

Group History

Value Creation Process

Service producers who turnindustry knowledge andbusiness know-how into
marketable products
Intrapreneurs (in-houseentrepreneurs) who are able toplan, kick-start and move new
businesses forward
High-level technical engineers
whose quality and productivity
support successful participationin strategic domains

Management
Emphasis on overall optimization of the Groupand a medium- to long-term perspective
Quick decision-making
Continuous management system reform

17

ProfileConsultants who work withclients to formulate businessstrategies

18

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate DataTo Our Stakeholders

Implement measures with a sense of
speed and cultivate possibilities
Betters ways to work, and Group System Development and Quality Management Innovation Committee

Q6. “Keys to ride out an era of change as a group of professionals”

We recognize that actively promoting better ways to work is a huge component in the platform that supports
higher corporate value, and we are implementing initiatives toward this end. But there are many avenues to
explore. For instance, to reduce work hours, we considered ways to improve the workplace environment through areview of meetings and the introduction of free address workspace as well as the use of a satellite office. All ofthese are measures, and the ultimate goal of these measures is to enhance the expertise of each employee anddevelop a group of professionals. This will, of course, help us ride out increasingly fierce competition in the industry
but it will also allow each employee to achieve personal growth through work and make life worth living—satisfyingly challenging. It is our corporate responsibility to develop professionals with top-quality capabilities. At thesame time, it is also our corporate responsibility to provide a work environment in which these excellent professions
can thrive.
In addition, the IT services industry has to date applied the traditional waterfall methodology for softwaredevelopment, which comprises stages, such as required definitions, design, configuration, testing and delivery.
However, the time has come for IT to be applied using a completely different business model, and it is imperative

I am confident that we cancapitalize on huge possibilities
by implementing appropriate
measures with due speed.

that we respond to agile and iterative software development where stages are essentially irrelevant. In today’s IT
services industry, measures to boost efficiency, respond to clients’ needs and ensure a good working environment
for employees are all inter-related themes that must be addressed.
In the Group System Development and Quality Management Innovation Committee, experts from Group­companies come together, share technology strengths from across the Group, and promote various production
reform measures, including approaches to promote higher standards. The committee emphasizes responses toindustry changes, such as initiatives in the field of core systems (Mode 1, SoR—System of Record), including efforts
to raise the sophistication of project management capabilities, and initiatives in the field of digital innovation (Mode2, SoE—System of Engagement), including application of agile development methodology, along with efforts toreinforce project risk supervision.
The underlying objective of these initiatives is to address changing times and diversifying client needs. For corporate clients, the times require different system infrastructures depending on the intended use, be that an effective, easy-to-use cloud or a highly secure private environment, or a system completely customized to a unique business model. Therefore, going forward, it will be extremely important that the TIS INTEC Group accurately perceive
client needs, package a variety of systems, and propose and provide seamless system platforms. The power of professionals—each person on the business frontlines—will be an indispensable factor in achieving this, as it is herethat we come into direct contact with our corporate clients. Toward this end, TIS seeks to establish the industry’s
No.1 education and training system and is working to put the system in place in fiscal 2018.
To stakeholders, including shareholders and investors

Q7. “Always aware of how fast times change, and promoting changes of our own”
Fiscal 2018 is the last year of our third medium-term management plan, and will definitely reach our targets of¥400 billion in net sales and ¥30 billion in operating income. This achievement is a vital stepping stone to new
goals in the next medium-term management plan.
We are already moving ahead on preparations for our fourth medium-term management plan. We have had
several earnest discussions on such topics as the best way to support efforts to realize Group Vision 2026 and what
point we should have reached on the road to this destination by the end of fiscal 2021. Also, groupwide, we aregoing beyond corporate barriers, with all companies working more closely together than ever before on solutions
related to finance, service, BPO and other business categories and pursuing discussions with due consideration to
the speed at which changes are affecting IT service providers. Our goal is to prepare a medium-term management
plan that all employees under the Group umbrella can actively get behind and stay on the same track.
The TIS INTEC Group has many issues to address, but solutions and approaches to deal with these issues are
already quite clear. I am confident that we can capitalize on huge possibilities by implementing appropriate measures with due speed. Everyone—executives and employees alike—will strive to make this happen. On behalf of theentire TIS INTEC Group, I ask for the continued support of our stakeholders as we work toward a successful future.

19

ProfileGroup History

Value Creation Process

20

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Medium-Term Management Plan

Third Medium-Term Management Plan
“Beyond Borders 2017”(Fiscal 2016 – Fiscal 2018)
Three Basic Concepts“Beyond Borders” evokes the idea of going beyond perceived barriers between companies and businessstructures to achieve cooperation and collaboration, to transform the current business model, to shift froma domestic perspective to a global view, and to see each and every employee within the Group transcendtheir own boundaries.
Progress on Third Medium-term Management Plan

Promote management activities with an even greater emphasis on
profitability●	Highlight operating income, operating margin and even more
importantly, net income●	Raise corporate value by introducing ROE (Return on Equity) and othermanagement indicators
Always look one step beyond clients’ current needs and provide
value-added proposals to enhance clients’ earning capabilities●	Shift from existing assignment solution style services, which address client
requests, in favor of value-added creation and market cultivating styles

Profit Emphasis

Utilize distinct strengths of operating companies as growth engines
while promoting cooperation — working together — andcollaboration— creating together — within the Group●	Draft and execute business portfolio strategies●	Reinforce and restructure operating platform through pursuit ofgroupwide optimization of all resource categories

IT BrainPortfolio Management

Accelerate measures under operating holding company structure

Emphasize ROE as a key performance indicator,
strive to boost corporate value, and realize sustainable growth.

Results of Key Activities in fiscal 2017

Future Issues

Promote optimized
capabilities within
the Group● Implemented shift to operating holding company to strengthen Group governance● Executed transfer of businesses between TIS and INTEC● Promoted concentration of domestic and overseas BPO operations under AGREX

Must constantly review Groupbusiness portfolio

Integrate/centralize
shared functions
within the Group● Integrated offices in Tokyo, Osaka and Nagoya● Realized full Group rollout of CMS, improved capital efficiency of Group overall● Conducted review of strategic stockholdings and data centers, improved asset e­ fficiency

Must cut costs with quantitative targets and elicit integrated synergies

Realize higher levelof administrative
management● Promoted better response to taxation topics (BEPS response), mainly at overseas
Group companies● Produced integrated report, effective from fiscal 2017; promoted more indepth IR content● Organized and consolidated internal control management systems, and brought­unified system under Group Internal Control Committee supervision

Must consistently address lingering issues, such as a groupwide human resources policy

Cultivate corporate
culture with senseof solidarity● Debuted unified Group logo in July 2016
● Formulated new Group vision● Published first Group newsletter “WA”

Must promote widespreadawareness of vision to tackle
issues with sense of solidarity

Progress on Third Medium-term Management Plan: Key Financial Data (Billions of yen, consolidated)
Medium-term management plan (initial numerical targets)
Net Sales
393.3

400.0
400.0 (Estimate)

Operating Income

Net Income
Attributable to
Owners of the
Parent Company

30.0
30.0 (Estimate)27.0 27.0

382.6 385.0
361.0

370.0

23.5

Fiscal 2017

Fiscal 2018

Fiscal 2016

POINT

Net sales● Year-on-year increase, fueled mainly byaccurately identifying client needs infields where client companies arestrengthening IT investment efforts.
Exceeded initial target.

Policy on return toshareholders during
the Third Medium-termManagement Plan
Will adopt total shareholder returnmeasure (total return ratio) topromote shareholder returns
through dividends and an
appropriate capital structure
through treasury stock buyback.
*Total return ratio: Total amount ofdividends and treasury stock buybacks asa percentage of net income.
*The Company acquired treasury sharesof ¥2,859 million (908,300 shares) fromMay 2017 to July 2017.

18.0

16.3

(current calculation)

12.8 12.6

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Net income attributable to owners of the parent
company● Reached level stated in medium-term management
plan a year ahead of schedule.
● Year-on-year increase, primarily due to higher operating income starting point. Exceeded initial target.

Year ending March 31, 2018 (estimate)

8.8%

Net income ratio

2.8%

4.1%

Total asset
turnover ratio

30.4%

31.9%

1.1 times

1.2 times

Financial leverage

1.9 times

1.8 times

19.0%

22.7%

¥24

¥22

Progress during the second year of the third medium-term management plan was brisk, thanks to the
support of everyone involved. Results for fiscal 2017 broke previous records, with net sales charting an
upward path for the seventh consecutive year and operating income marking growth for the sixth
consecutive year. Of particular note, net income attributable to owners of the parent company and ROE
reached final-year targets stated in the medium-term management plan a year ahead of schedule.
Fiscal 2018 is the final year of the current medium-term management plan, and our numerical goals are
net sales of ¥400 billion and operating income of ¥30 billion. Toward achievement of these goals, we will
constantly strive to expand business volume by accurately pinpointing the IT investment needs of ourcorporate clients and steadily executing large projects while promoting measures to improve productivity
as well as profitability, mainly by preventing projects from turning unprofitable. With regard to return toshareholders, our basic policy is for a total return ratio of 35%, and we intend to realize this level andreward shareholders for the support they have extended to us through an annual dividend of ¥40 per
share, up ¥4 from fiscal 2017, and treasury stock buybacks totaling ¥2,860 million.

(estimate)

35.0%¥2,099 million¥1,599 million

19.1%
¥26
20円
¥499 million

¥10

¥11

¥12

¥14

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Dividends (interim)

Dividends (year-end)

Total return ratio

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

In the Final Year of Medium-Term Management Plan
Josaku Yanai, Director and Managing Executive Officer, Division Director of Corporate Planning SBU¥2,860 million(estimate)

Annual: ¥36

Fiscal 2017

Return-on-equity● Year-on year improvement, reflecting higher
profitability as well as successful efforts to reduce
assets. Better than initially projected. Reached target
stated in medium-term management plan a year
ahead of schedule. New record.

Total Acquired Treasury Shares

Annual: ¥40
35.3%

Fiscal 2016

* Amount of treasury stock buyback announced May 10, 2017

Changes in Dividends per Share
Annual: ¥33

Fiscal 2015

Acquisition of Treasury Shares
Total ¥2,860 million (Upper limit)*

Dividends per Share¥40 (YOY+¥4)

Group History

6.0%

7.0%

Fiscal 2018

Payout ratio

21

Profile

ROE

8.0%

6.0%

Target 35% total return ratio (Stable, continuous dividends + share buybacks)

¥20

9.0%

8.8%

16.0

14.0

Operating income● Year-on-year increase, largely due to higher net sales
starting point, successful efforts to enhance
profitability and reduced impact from unprofitableprojects. Exceeded initial target.

25.6%

Fiscal 2017

10.2

Fiscal 2015

Annual: ¥30

ROE(Estimate)

24.4

21.1

Fiscal 2015

Fiscal 2015

Actual/estimate/current calculation

Value Creation Process

22

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Group Business Summary

These pages offer a look at the content and status of key segments in the TIS INTEC Group and overseasoriented business strategies.

IT Infrastructure Services
Main Business Activities
The segment provides computer utility,that is, operation services, underin-house control through the use oflarge IT facilities such as data centers.

Fiscal 2017
Net sales¥126,581 million(Up 0.5% year-on-year)

Operatingincome¥10,158 million(Up 13.8% year-on-year)

Understanding the External
Environment
Data center business should continue
to benefit from trend toward greateruse of cloud services. Expandingneed for value-added services, suchas data security.
BPO business should see sustained
increase in demand for outsourced
administrative services contributing
to improved corporate management.

Financial IT Services

Fiscal 2017 Summary

Accelerate shift toward service-stylebusiness through expansion of valueadded services, including security.

Fiscal 2017

Sales and Operating Income(Millions of yen)

Operating income

7,101

125,929 126,581 129,000

8,924

7,652

10,15810,500

7,179

Fiscal
2013

Fiscal
2014

Fiscal2015

Net sales¥84,051 million(Up 5.7% year-on-year)

Operatingincome¥3,626 million(Up 7.9% year-on-year)

Understanding the External
Environment

Positive factors, such as expanding
data center-related business throughGroup connections and rising BPO
revenue, will absorb some of costburden and lead to year-on-year
improvement in sales and income.

In the credit card sector, IT investment, especially core system replacement demand and responses torestructuring in the payment settlement business, will remain high.
IT investment by banks is growing
as they strive to incorporate newtechnologies, such as FinTech, andpromote reforms in business and­services. But demand for existing
technologies is being squeezed bycost reductions.
Negative interest rates continue toimpact the IT investment trends offinancial institutions.

Priority Focus

Actively promote cross-selling within
the Group for data center/network
business.
Improve profitability through creationof BPO integration effect and widerbase of high-profit projects.

The segment applies finance-specificbusiness know- how and IT to support theshift toward greater use of IT in business
operations and the execution of businessactivities drawing on the power of IT.

Fiscal 2018 Forecast

112,666 115,360 118,200

Priority Focus

Main Business Activities

Consolidated sales rose 0.5% year on
year to ¥126,581 million and operating income rose 13.8% to ¥10,158
million for the year. The data center
business expanded steadily with
contributions from large public-sector
projects and the BPO business also
grew. Costs were reduced throughthe successful promotion of businessefficiency measures. As a result, bothsales and income increased year onyear.

Net sales* Net sales include inter-segment sales.

Fiscal Fiscal Fiscal
2016 2017 2018

(Estimate)

Steadily execute large projects forclients in card-based operations.
Expand payment settlement services
business by enhancing PAYCIERGE 2.0
presence and accelerating monetization.
Pinpoint diversifying needs in payment
settlement sector and expand clientbase to include payment settlement
service providers, and clients in distribution and transportation sectors.
Business sentiment among banks andinsurers is unclear, but marketing will
target key themes, especially coreclient operations.

Industrial IT Services
Fiscal 2017 Summary

Main Business Activities

Consolidated sales increased 5.7%
year on year to ¥84,051 million, while
operating income increased 7.9%
to ¥3,626 million for the year. Sales
and profits increased as a result of
successfully capturing customers’
growing IT investment demand in thesettlement field, mostly among credit
card companies.

The segment applies business know-how
and IT targeting the public sector andcompanies in industries other thanfinance to support clients in their efforts
to make greater use of IT in business
operations and execute businessactivities drawing on the power of IT.
Fiscal 2017
Net sales¥189,409 million(Up 5.2% year-on-year)

Operatingincome¥12,496 million(Up 25.3% year-on-year)

Fiscal 2018 Forecast
Anticipate year-on-year increase insales and income, reflecting steady
execution of big projects and wider
business volume achieved by decisively
capitalizing on growing demand for
payment settlement services, promoting the reduction of ­unprofitableprojects.

Sales and Operating Income(Millions of yen)

Net sales

71,49975,1486,021

Operating income
84,051 86,000
79,543 79,519

6,385

5,900

5,549
3,361

Fiscal
2013

Fiscal
2014

Fiscal
2015

3,626

Fiscal Fiscal Fiscal
2016 2017 2018

(Estimate)

Understanding the External
Environment
In manufacturing, service anddistribution sectors, companies willcontinue to invest in front-office IT tosharpen competitive edge, especiallyin marketing-related pursuits, but
temporary lull is a worry, given
business sentiment.
ERP market remains favorable,buoyed by replacement demand
from manufacturing, service anddistribution sectors.
IT investment among utilities, spurredby electric power and gas system
reforms, is coming full circle, but
new demand, mainly in response to
decentralization, is expected.

Group History

Value Creation Process

Consolidated sales increased 5.2% year
on year to ¥189,409 million, while
operating income increased 25.3% to¥12,496 million for the year. Businessexpansion was driven by continued
robust IT investment in the energy fieldin conjunction with electric power andnatural gas system reforms, large-scale
investments by public-sector institutions,and successful measures to serve clients
expanding their IT investments to
support growth strategies. Measures
promoting earnings improvement,
including the reduction of unprofitableprojects, were also successful. As aresult, both sales and income increased.

Fiscal 2018 Forecast
Looking at year-on-year increase insales and income, as impact ofreactionary drop in large projects
largely offset by decisive capture of
growing ERP demand from manufacturing sector and efforts to promote
greater cooperation among Group
companies at core.

Sales and Operating Income(Millions of yen)

Operating income 189,409 194,000
180,000
166,357
13,100155,689 158,234
12,496
Net sales

9,972

Priority Focus
Steadily execute large projects forclients in public sector.
Cultivate demand by embracing themesof strategic importance to core clientsand by drawing on Group connections.
Expand client base by embracing ERP
replacement demand, especially among
manufacturers.
IT strategies are viewed as having a
direct link to management strategies,
so promote “untiring pursuit of highvalue-added businesses” by reinforcing
consulting and upstream businesses tocomplement existing SI business.

23

ProfileFiscal 2017 Summary

4,992

Fiscal
2013

7,049
4,687

Fiscal
2014

Fiscal2015

Fiscal Fiscal Fiscal
2016 2017 2018

(Estimate)

24

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Group Business Summary

Global BusinessTechnology Innovation and New Services Strategy
Enhance Activity Through Business andCapital Alliances in ASEAN Region

Three Pillars of Global Development
The Group’s global development is supported by three pillars:
local support for existing clients entering one or morecountries; cultivation of local IT markets where know-how
accumulated in Japan can be put to use; and domestic
application of leading-edge technologies sourced abroad andturned into new business strengths. The Group’s overseas
activities kicked off in China and have since expanded to
the ASEAN region where its capabilities are leveraged by athree-point presence—Thailand, Singapore and Vietnam—
mainly through representative offices. In recent years, ourapproach has diversified, drawing on business and capitalalliances with local companies, and thereby accelerating lateralexpansion through the ASEAN region.

In 2014, then ITHD-subsidiary TIS formed a capital andbusiness alliance with MFEC Public Company, a major local
provider of system integration services in Thailand, and turned I
AM Consulting, a top-class SAP consulting firm in Thailand into
a consolidated subsidiary. In 2015, the company formed acapital and business alliance with PT. Anabatic Technologies, amajor system integrator in Indonesia. The 2016 investment in
PromptNow Co., Ltd., which subsequently became a consolidated subsidiary, is another example of efforts to enhance ourpresence in the ASEAN region. Going forward, the revitalized
TIS will resourcefully promote joint strategies with promisingpartners to build a solid business presence in the ASEAN region.

—Toward Value-Added Business Expansion
Addressing progress in new technologies, such as fintech, Internet of Things (IoT) and artificial intelligence (AI), as well as
industry currents is not only essential in contributing to clients’ digital management but also in creating new strengths under
the TIS INTEC Group banner. Therefore, we seek to quickly reshape our business model and set up new core businesses using
open innovation, and we are actively working toward these goals.

Innovation Ecosystem in TIS’ Sights
Innovation (re)investment
TIS

External innovators
Domestic venture businesses
Overseas venture businesses
Universities, graduate schools,
research organizations

Large corporations

Operating divisions

Open
innovation 1

Incubation Center

TIS’ existing client companies

Open
innovation 2

New companies consideringbusiness

Open innovation 3

TopicsAiming at further business expansion
Step 1.

Kicked off in China

Step 2.

Established three-point presence—
Thailand, Singapore and Vietnam

Step 3.

Accelerate expansion/lateral development
in ASEAN region through business andcapital alliances

Examples to expand and promote services thatcreate added value● Offer one-stop access to rich assortment of
payment settlement solutions, from front toback office.
● Anticipate needs, such as diversifying payment
settlement requirements and increasingly
multifunctional payment terminals, andestablish No.1 service-style business model.
● Promote robust market cultivation by forming
capital and business alliances with local
companies in growth markets.

Beijing

Wuhan

Consolidate know-how accumulated over many
years in serving credit card and consumer financecompanies to reinforce business development inpayment settlement sector
Enter e-money sector through alliances
Goals are to —● establish No.1 settlement solution● turn a profit on new services, and● create No.1 service-style business modelJapan

Shanghai

Step 2
Step 3 Thailand

Overseas

Provided above solutions and know-how to local
companies in which an equity stake taken toencourage local market cultivation(1) Thailand
I AM Consulting: 100% stake (consolidated subsidiary)
MFEC Public Company Limited: 20% stake (equity
method affiliates)
PromptNow Co., Ltd.: 60% stake (consolidated
subsidiary)(2) Indonesia
Anabatic Technologies: 28% stake (equity method
affiliates)

Vietnam

3

Singapore3

Indonesia

Examples of Key Collaborations with
Ventures/Start-ups
QUADRAC CO., LTD(payment settlement)

Elvez, Inc.
(AI)

SEQSENSE Inc.
(robotics)

Unirobot Corporation(robotics)

KOKOPELLI incubateinc. (AI)

Tangerine Inc.
(IoT)

Group History

Value Creation Process

New hub “bit & innovation” topromote open innovation

Stronger collaboration with Digital Garage● Participating as technology development partner in DG Lab, an open innovation-style R&D setup.
● Established joint venture DG Technologies, Inc., a company involved in strategic technology development (equity ratios: Digital Garage,
80%; TIS, 20%).
● Raised stake in Digital Garage to 5%, to solidify relationship as strategic partner in IT pursuits.
Strategic alliance with Singapore Telecom● Signed strategic alliance agreement on managed security services with Singapore Telecommunications, a major carrier in Singapore.
● Will develop demand in Japan for managed security services provided by Trustwave Holdings, a Singapore Telecom subsidiary and one of
the largest security vendors in North America. Intend to provide integrated security response, which is gaining interest in Japan, and willseek to expand security business in the domestic market.
Business alliance with Toppan Printing, start of joint services● Seeking higher corporate value for both companies, TIS and Toppan Printing entered into a business alliance, which includes a capital
aspect, to pinpoint domains in which the strengths of both companies can be leveraged and to develop and provide solutions that
address client issues.
● As a first step, jointly launch mobile wallet service to financial institutions facilitating use of mobile cash

25

ProfileUtilizing innovation• Business creation connecting external innovators and TIS’ client companies• Collaboration through corporate venture capital and joint industry-academic research• Access to leading-edge technologies, such as blockchain and AI

Domestic

Tianjin

Step 1

Generating innovation

26

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

TIS INTEC Group’s Platform for
Supporting Corporate Value Process
Communication with TIS INTEC Group’s stakeholders is a what supports improvement incorporate value. Consideration for the environment along with efforts in quality control
and R&D are also essential for the business of information systems—a key social infrastructure—to function in harmony with society and steadily evolve. With this in mind, we strive
to enhance corporate governance and internal controls, which form a vital ­cornerstone ofbusiness activities within the Group.

Basic Direction on CSR
The management philosophy that permeates the TIS INTEC Group stresses the Group’s development into a
corporate citizen whose activities, hinging on the provision of various services utilizing IT, match its status as aleading corporate group. This philosophy also underpins the Group’s efforts to raise corporate value, supported inthis effort by the high regard of all its stakeholders, including clients and shareholders as well as employees andtheir families. The Group’s stance on corporate social responsibility is evident in its commitment to cultivate a vibrantcorporate culture that encourages the companies and individuals under the Group umbrella to work toward higher
goals and embrace new challenges, to be honest and fair in business pursuits based on respect for the law, ofcourse, as well as high moral standards, and to fulfill social obligations. This is the Group’s basic direction on CSR.
Ensure sound,transparent management practices

Acknowledge responsibilities as a leading corporate group in the IT services industry and undertakesound corporate activities with integrity and clarity of purpose. In addition, be sincere and fair in
dealings with all stakeholders and proactively disclose pertinent corporate information.

Provide optimum
services

Always provide the very best to clients and strive to raise customer satisfaction levels through excellent
quality and technology built on the composite strengths of the Group.

Develop talent

Cultivate an environment in which employees always look ahead, striving to achieve higher goals andembracing new challenges. Provide opportunities to grow and realize personal goals, create a safe andproductive work environment, and give each person the freedom to reach his or her potential.

Communication with Stakeholders

Respect the law

Maintain high corporate morals, obey the law and uphold parameters of socially acceptable conduct,
and respect the spirit of such standards. Have absolutely nothing to do with antisocial forces.

The TIS INTEC Group strives to build bonds of trust through communication with all stakeholders, including
clients, employees, shareholders and investors, and business partners, and to boost corporate value.

Maintain fairbusiness practices

Ensure appropriate business transactions, based on fair and open competition.

Protect theenvironment

Recognize that environmental problems warrant universal attention and promote efforts to saveresources and energy in the execution of corporate activities. Also, through IT services, support clients’efforts to enhance operating efficiency and reduce energy consumption, thereby contributing to lower
environmental impact.

Contribute to society

Actively participate in community events as a corporate citizen whose social standing matches its
leading industry status.

Be a part of theinternational
community

Naturally, obey internationally recognized rules and local laws in the execution of cross-border projects,
but also contribute to social and economic development in the countries where TIS INTEC Group
maintains a presence by recognizing local culture and customs.

● Customer service points of contact● Local event participation(call center, website, main number)● Seminars, fairs and forums for clients● Publication of newslettersand technical brochures● Client satisfaction surveys● Regular meetings
Clients
and others● Cooperation and support for NGO/NPO social

contribution activities● Charity concerts● Opinion posts from website● Responses to relevant ministries/agencies andindustry associations
and others

Community/
Society

In line with Basic Policy on Group CSR, the TIS INTEC Group is considering and pursuing
various measures from the perspectives described below.
Organizational Governance

Employees

Primary methods of communication
with stakeholders■ Human rights

Due diligence, crisis situations impacting human rights, avoidance of complicity, complaint resolution, prejudice, sociallydisadvantaged, citizen and political rights, economic, social and cultural rights, basic principles and rights in labor● Information meetings on policy (guidelines)● Company news, Group news

■ Labor practices● Creating opportunities for discussion (project● Intranet● Personnel exchange groups, opinion

exchange groups

TIS INTEC Group● Day at the office for children of

employees● President’s Caravan
and others

Hiring and hiring-related issues, working conditions and social safeguards, social dialogue, health and safety in theworkplace, personnel instruction and training in the workplaceinformation)● Engineer development and support (educational
support, seminars)● New Year celebrations, informal social gatherings● Questionnaires, opportunities
for opinion exchange
and others

Shareholders ● General meeting of shareholders
and Investors ● Results briefing■ Environment

Approaches to prevent pollution, use of sustainable resources, mitigating and dealing with climate change,
environmental protection, preserving biodiversity and restoring natural habitats■ Fair business practices

Approaches to prevent corruption, responsible political ties, fair competition, promoting social responsibility in value
chain, respect for property rights

Business
Partners■ Consumer issues
Fair marketing, information and contract execution, protecting health and safety of consumers, sustainable consumption, services
and support for consumers as well as complaint and dispute resolution, consumer data protection and privacy, improved access torequired and indispensable services, education and awareness● Small meetings, domestic and overseas

roadshows, participation in conferences● Information disclosure on IR section of

corporate websites■ Community involvement and community development
Involvement in the community, education and culture, job creation and skill development, development of technology and access totechnology, wealth and income creation, health, socially responsible investment● Integrated Report● Business Reportand others

27

ProfileGroup History

Value Creation Process

28

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Communication with Stakeholders—Employees
To provide an environment in which employees can fully demonstrate their capabilities and stay on a career path withconfidence and no work/life balance concerns, companies within the TIS INTEC Group implement measures from thevarious perspectives.

Create environment in which each and every employee canfully demonstrate respective capabilities
For the TIS INTEC Group, the cornerstone of business, from an administrative perspective, is none other than employees—
each and every one. We strive to maintain an environment that facilitates diverse approaches to work, which enables
employees to feel they are contributing to society through their jobs and thus encourages personal pride and fuels motivation. Through the Third Medium-Tem Management Plan, we will emphasize the key measures described below as pursuits
common groupwide.
Key Measure
Encourage women to seek
management positions
Utilize human resources andupgrade skills
Promote hiring of disabled persons
Address aging of workforce
Create comfortable work
environment where employees
feel appreciatedCultivate sense of unity groupwide
Collect/organize human resources
information

Content
Address national policies, including the Act Concerning the Promotion of Women’s Career Activities, and­promote diversity in hiring.
Consider utilization and training of employees from groupwide perspective to achieve sharper b­ usiness edge at
all Group companies.
Achieve mandated 2.0% ratio as quickly as possible and maintain it, and develop further steps to promote hiring.
Address issue of shrinking working-age population that parallels falling birthrate and rising number of seniors insociety as well as associated increase in age composition of employees, and promote continuous recruitment
activities and establishment of appropriate personnel system matched to employee age composition.
Create structure for comfortable workplace by boosting the acquisition rate of paid holiday time (goal at eachcompany is rate above 80%) and trimming overtime work (goal to keep overtime
under 20 hours at each company).
Implement programs that cut laterally across the Group, highlighting “management,” “global,” “­ services” and“technology,” to cultivate united perspective and to reinforce the skills of human resources.
Realign functions within the Group and, as a strategy for job mobility, collect and organize human resources
information, not only basic personnel data but also skills, and share the information.

We realize that sustainable growth requires multifaceted perspectives and value perceptions, based on different experience,skills and attributes, and we will strive to ensure diversity in human resources, including efforts to encourage women to
take on positions with more responsibility. Getting women to be more active members of the workforce is an issue ofparticular importance in Japan these days, and the ratio of women in management positions at the seven principal companies
under the TIS INTEC Group umbrella averages around 6%. We recognize the pressing need to establish and maintain structures and a work environment that enable female employees to demonstrate even greater potential. Under the leadershipof top management, we will promote measures throughout the Group toward this end, emphasizing skill development,
career formation and consideration of various workstyles.

Major Activities
Noteworthy pursuits undertaken at Group companies are presented below.
1. Work/life balance, diversity (includes promoting role ofwomen in the workplace)● Promoting better structures for work at home and shorter
working hours (expand number of hours possible, extend
period of applicability)● Promoting reduction in overtime through no overtime days andother approaches● Encouraging employees to take allocated annual paid leave● Special paid leave categories, including refreshment leave, convalescent leave following injury or illness, and childcare/nursing
care leave● Visit-the-office opportunities for families● Morning flextime work structure with 9am-11am core time
● Program for return to work after maternity leave● Office-based daycare facilities for children of employees● Committee set up to explore the issue of creating a corporate
culture in which women feel empowered to work
● Promoting projects aimed at improving the work environment● Promoting “Thin Office” to raise administrative efficiency● Acquired “Kurumin” mark from Ministry of Health, Labour andWelfare in Japan for efforts supporting development of the next
generation● Information exchange opportunities for women on childcare
leave (includes other employees on leave as well)● Starts of part-time permit system● Participated in comfortable commute movement “Jisa Biz”

Activities at Principal Group Companies to Promote Greater Involvement of Women in the Workplace
In April 2016, the Act Concerning the Promotion of Women’s Career Activities came into force in Japan, obligating employers
to formulate a plan of action with specific details on duration, targets, measures and schedule, to submit this action plan to
the relevant government office and to make the content publicly available. Against this backdrop, 10 principal companies* in
the TIS INTEC Group began a process of discussions. A summary of the plans formulated by five of these companies is presented below.
Note: Companies with 301 or more regular employees are required to formulate an action plan for promoting women to leadership positions, to submit the plan to the relevant government office, and to publicly disclose the content of the plan. There are 10 companies in the TIS INTEC Group subject to the new legislation: TIS, INTEC, AGREX, QUALICA, AJS, Chuo
System, TIS Solution Link, TIS System Service, INTEC Solution Power and KOUSHI INTEC.
Company Plan Duration
Name(Years)TIS

4Plan Targets

Measures● Ratio of women in management positions: 10% (186 women)● Ratio of women promoted to manager level: 17% on average● Ratio of women taking training courses prior to promotion

to manager salary level: More than 20%● Set promotion ratio target for women in each fiscal year of the four-year action plan
● Set quota for women participating in training courses prior to promotion

to manager salary level● Provide training for women with potential to become managers through enhanced

career education for women

INTEC

5

● Ratio of women in management positions: More than 7%● Hold meetings that cross division or section boundaries to exchange information● Talk with employees before and after they return to work from leaves of absence● Set medium- and long-term goals for young female employees and expand content

AGREX

2

● Ratio of women in management positions: More than 20%*
● Motivate women to seek promotions and encourage supervisors to● Establish project to promote greater involvement of women in the workplace● Roll out programs that raise awareness about greater involvement of women in theof discussions*5-yeartargetacknowledge potential(Goal to train 60 women for management positions)workplace● Utilize employees with time constraints in management positionsQUALICA5● Ratio of women among recently graduated newly hired employees: ● Enhance disclosure of information to female students
More than 30%● Support career advancement and network creation for female employees● Ratio of female employees: More than 20%● Create comfortable working environment and offer human resources management● Ratio of women in management positions: More than 8.5% (15training to supervisors

AJS

5● Encourage female employees to pursue management positions● Ratio of women taking promotion-oriented training in preparation

women)

for a management position: Up 10%● Initiate project to promote greater involvement of women in the workplace● Implement various programs to cultivate perception conducive to greater involve-

ment of women in the workplace● Make content of promotion requirements course (at Globis University) widely known

2. Training and utilization of human resources, and fair­evaluation and treatment● Talent management to systematically execute such processes
as hiring, assignment, skill development and performance­evaluation● System to invite applications for job openings in-house, a system that allows individuals to apply for preferred positions, asystem to monitor goals determined through discussions withsuperiors once every six months on job-related goals, a specialist system (type of multi-track personnel system tapping people
with specialized know-how for suitable positions), and a nonterritorial office (where employees do not have their own desks)● Occupation-specific courses, e-learning, correspondence education and other training opportunities.
● President’s award program for employees (recognizing noteworthy individuals, projects and activities)● Evaluation training to ensure that evaluations are fair and­equitable● Debuted “coming home” system that enables retired­employees to return to work
● Incentive awards and financial assistance to help employees
acquire new qualifications● Establishment of career consulting office
3. Health management, other programs● Consultation point for physical and mental health questions,and mental stress checks● “Pink Vouchers” available through the TIS INTEC Group Health
Insurance Association to offset some of the costs incurred torefresh the body and mind
● Employee awareness surveys and human rights education

TopicsPOSITIVE ACTION Promotes Involvementof Women

Providing Employment Opportunities tothe Disabled

In 2013, TIS set up a voluntary team—POSITIVE ACTION—
with key participation from female employees. Specificactivities based on activity suggestions from this team havebeen implemented to enhance the workplace environment,
including steps to encourage female employees to pursue
career options with more responsibility. For the action planthat runs from April 2016 to April 2020, we aim to push theratio of women in management positions above 10%—up
from 7.4% as of July 2016—and are promoting several
initiatives, including the establishment of a target for theratio of women in senior management positions, career
training for women, and support for women pursuing careeradvancement.

Through SorunPure Inc, a special subsidiary, the TIS INTECGroup supports the creation of work environments whereas many disabled people as possible can find employment.
As of June 2017, SorunPure had a staff of 59, including
seven guides, who undertake office management services,and helping employees maintain good health (in-housephysiotherapist), at the Tokyo headquarters, the Osaka
office, the Nagoya office and the Matsumoto office.
As of June 2017, the TIS INTEC Group had achieved adisabled employee ratio of 1.97%, based on 390.5 disabled
persons at 11 companies, including TIS, SorunPure andspecially recognized companies.

and encourage women to take the course

29

ProfileGroup History

Value Creation Process

30

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

Platform that supports value creation process

TIS INTEC Group Embraces New Workstyles

Communication with Stakeholders—Shareholders

Human resources are a driver of growth for the TIS INTEC Group and represent a mostprecious management asset.
The TIS INTEC Group is actively promoting a change in workstyles as an indispensable component for sustainable growth and improved corporate value. Specifically, TIS—as the operating holding company—is compilingprecedents and best practices from each Group company for widespread implementation throughout the Group.

Key Steps in Changing TIS Workstyle
Raise Motivation (Consciousness, willingness)● Expand learning investment (more opportunities for learning)           Set a number of days for learning: 10 days annually/person● Concurrent licensing system● Organize TIS INTEC Group Hackathon● Expand in-house recruiting program: Regular job postings, venturebusiness challenge● Run work/life balance workshops● Boost base salary, anticipatinga drop in overtime hours

Enhance Workplace Environment (Facilities, systems)

Escape from typically longhours of work, and withhealthy mind and body,freely demonstrate richimagination and creativity toraise “added value” quality
Improve productivity, enrich
work/life balance by promoting various workstyles, andenhance employees’ enthusiasm for work by increasing
opportunities for self-directed study to upgrade skills● Expand telework        On Telework Day, July 24, 2017, TIS participated as a specially recognizedcompany (will report on results after the event).
● Set up free address workplace and multi-use areas at the head office● Set up “bit & innovation” coworking and event space● Open Satellite Marunouchi satellite officeEnhance Working Conditions (Systems, rules)● Reduce work during off-the-clock time, turn paid vacation utilization ratio into KPI
           Decrease overtime work by five hours per month           Boost paid vacation utilization ratio above 80%● Encourage application of flextime system           Offer two-pattern option: morning or full-day● Encourage employees to take paid vacation           Set days that employees are encouraged to take as paid vacation days (six days per year) andpromote Premium Friday quit-work-early campaign● Promote and share various useful strategies throughout the Company

Satellite Marunouchi office

Fast, fair and impartial information disclosure
We provide performance results and the latest news on our business activities to analysts as well as institutional and individual investors through events, such as information meetings, the production of pamphlets and other materials, and also in
the investor relations section of the TIS website.
IR Events in Fiscal 2017
Results briefings for analysts
and institutional investors
Small meetings for analysts andinstitutional investors
Small meeting

Frequency  1 time

Overseas roadshow  1 time

IR conference
Production of materials forindividual investors

Content  4 times

Quarterly briefings

195 times  3 times

Provide IR-oriented information for analysts and institutional investors. Of thesemeetings, 31 were for overseas investors. Total coverage: 238 companies (311 people)
President held a meeting with sell-side analysts
President, director responsible for overseas IR and other members of senior management
met with shareholders and investors in Europe
Participated in conference organized by securities firm in Tokyo  2 times

Issued “Business Report”

TIS’ IR Activities Recognized with Awards from External Organizations
At TIS, we believe that timely and objective information disclosure to shareholders and investors is an important obligation that any listedcompany must fulfill. Therefore, we strive to enrich our IR activities and improve the content and function of the IR pages of our website.
The success of our efforts is substantiated in part by the following awards.

2016

2016 Internet IR Commendation Award (Daiwa Investor Relations Co., Ltd.)
Marked fourth consecutive year, following wins in 2013, with award for excellence.

Selected for inclusion in the MSCIJapanese Women in Leadership
Total Return Index (WIN)Fiscal 2016 Homepage Quality Ranking Survey of All Listed Companies (Nikko Investor
Relations Co., Ltd.)
Received highest award as excellent website in comprehensive ranking, from Fiscal 2015 in two
consecutive years.

Selected for candidates, 500
companies, of the 6th Corporate
Value Improvement Award in fiscal
2017

Gomez IR Site Comprehensive Ranking 2016 (Morningstar Japan K.K.)
Recognized as company with excellent website, and captured bronze medal, from 2015 in two
consecutive years.

Communicating with Stakeholders—Clients

Opened Satellite Office Marunouchi

Making ourselves indispensable as a business partner

TIS has been working to open satellite offices as part of its approach to new workstyles. In
April 2017, we welcomed the opening of Satellite Office Marunouchi, near Tokyo Station.
Using this satellite office as a place for talks with clients and for preparations ahead of abusiness trip or for after-trip work will increase time spent communicating with clients andalso enhance the efficiency of operations and promote faster decision-making.

TopicsINTEC Kids Home
Kids Home is an office-based daycare opened in March 2007
inside the INTEC Kids Building, in Toyama, to create an environment that enables Group employees to raise children and continue to work without worrying about trying to balance work andhome responsibilities. The daycare has 25 regular staff, and highly
experienced childcare workers strive to provide an atmospherethat encourages youngsters to develop both mind and body,
mainly through life and play activities that use the five senses. The
daycare is intended for children ofGroup employees, but it is also open
to people who have young children
and work at companies near Toyama
Station.

Captured Highest Level of “Eruboshi” Certification
based on Act to Promote Women’s Participation
In June 2017, INTEC received Grade 3 certification—the highest
level—under the “Eruboshi” system, which recognizes companies
that provide excellent initiatives to encourage women to be more
active in the workplace. Certification is awarded by the Ministerof Health, Labour and Welfare and is only granted to companies
that fulfill certain standards sets by the Ministry of Health, Labourand Welfare. As of April 30, 2017, the ministry has recognized
308 companies nationwide. INTEC met
certification standards in all five categories—
hiring, continuous employment, working
conditions, such as working hours; ratio of
women in managerial positions; and career
path diversity—to capture the top-level grade.

Implemented Fiscal 2017 Customer Satisfaction Survey

TIS Business Forum 2017 Held in Tokyo

Every year, TIS conducts a questionnaire-style customer satisfaction survey to evaluate activities intended to underpin its­position as a business partner who helps clients expand theirbusinesses. The fiscal 2017 survey comprised 36 questions in 11
categories. While TIS was praised for an earnest and sincere
approach and quality-driven frontline responsiveness, somecomments indicated that the Company should offer moreproactive proposals and more information. Going forward, TIS
will continue to lend a corporate ear to client comments throughthis kind of process and promote measures that contribute more
extensively to client operations as a business partner.

In July 2017, TIS held TIS Business Forum 2017 in Tokyo, withsupport from TIS INTEC Group companies. This year, under
the theme “Synergy & Energy: Collaborative creation will be
the driving force that carries
us into the future,” wewelcomed 798 clients to thevenue, and showcased various
Group seminars and solutions.
In October 2017, a forum isscheduled to take place in
Nagoya.

Communicating with Stakeholders—Business Partners
Seeking stronger relationships with partners across wide spectrum
TIS Business Partner Social Gathering Held in Tokyo
In July 2017, TIS held the TIS Business Partner Social Gathering in Tokyo. The event was
attended by 156 people from 78 key business partners. Management took this opportunity to express its gratitude for the constant support extended to TIS by these business
partners and to describe the Company’s corporate stance, including business direction,
to create stronger relationships. Similar gatherings are to be held in Nagoya and Osakalater in the year.

31

ProfileGroup History

Value Creation Process

32

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

Platform that supports value creation process

Communication with Stakeholders—With Community/Society

Contributing to Global Environment

Through activities involving all Group companies

We actively embrace measures through our business activities to address environmental issues. At our newest data center,
we have taken an environment-conscious approach, emphasizing renewable energy and resources and utilize geothermal
sources for heating, outside air for cooling, rainwater for uses other than drinking water, and solar power for electricity.

We undertake multifaceted activities in cooperation with regional communities, including Smile Kids Camp,support for international conferences on local revitalization, a forest conservation project and lunchtime
concerts.

PUE at Data Centers 1.900 1.882

Selection of Major Activities

1.794 1.795

1.800

Smile Kids Camp—Supporting Seriously Ill
and Disabled Children and Their Families

Providing Smartphone App to Support International Conferences

This traveling event is planned and executed by acommittee of volunteers from TIS for children withserious illnesses or disabilities and their families.
Employees from TIS INTEC Group companies volunteer
their time to staff the event, providing a valuable
opportunity to contemplate the real significance of
CSR and volunteer activities.

In November 2016, INTEC provided a smartphone app
to participants at the Resilient Cities Summit in Toyama
and helped people get to where they needed to go bydelivering positioning-based information on roads,
conference programs and other summit- and hostcity-related activities.

1.781

1.754 1.763

1.786

1.700
1.600
1.500

Fiscal
2011

Fiscal
2012

Fiscal
2013

Fiscal
2014

Fiscal2015

Fiscal2016

Notes: 1.	PUE (Power Usage Effectiveness)=Electric consumption
by whole facilities/Electric consumption by facilities
related to i­nformation technology.
2.	Graph data includes amounts recorded by Tokyo
1st/2nd/3rd centers, GDC G­ otenyama, Nagoya Center,
Osaka Center, Shinsaibashi gDC, and ­Shinsaibashi
gDC-EX.

Fiscal2017

The TIS INTEC Group is taking an environment-conscious approach at offices and data centers, which form the bedrock of
corporate activities, by introducing measures to save energy and cut greenhouse gas emissions.

Examples of Environment-Conscious Activities at Data Centers

Taking Part in Asahi no Mori Forest­Conservation Project

Performances by
Friends of Music Society

AJS supports the Asahi no Mori forest conservation
project in the northern part of Miyazaki Prefecture
spearheaded by Asahi Kasei Corporation to prevent
global warming, protect the natural environment andalso contribute to the prefecture where it has anestablished business presence. The company first got
involved in this project in 2010, and since then, about
3,600 people in total have planted more than 60,000
seedlings over 26 hectares.

TIS INTEC Group Gakuyukai (Friends of Music Society)is a registered ensemble mainly comprising employeesof the TIS INTEC Group and family of employees. It
reflects the Group's objective to be a good corporate
citizen, through lunchtime concerts in the Tokyo head
office building and performances at local recital halls.

● Outdoor air for cooling● LED lighting● Use of geothermal energy● Optimized lighting with motion sensors and ambient light sensors● Use of rainwater● High-efficiency equipment● Use of well water● Rooftop greenery● Lighting equipment run on solar power● Landscaping● Green power procurement● External appearance in harmony with the local surroundings● Natural lighting● Noise-damping, heat-insulating sashes

Natural light (solar tracking equipment) Solar power generation monitor

Examples of Environment-Conscious Activities at Offices● Cool Biz● Stop running air barrier fans

● Go paperless (monitors set up in meeting rooms)● Power switched off on machine, such as copiers andshredders, during periods of non-use● Recycle PCs●C onfidential documents are solution-treated by a­provider● Absolutely no vehicle idling● Water tap frequently closed● Participate in eco-cap movement● Encourage use of stairs (instead of elevator)● Partner in Table for Two program● End over-wrapping● Lights turned off in work areas during lunch hour

● Encourage employees to use personal thermos bottles,● Uniform air conditioner setting (in principle, “blower”)

33

Group History

Value Creation Process● No heating in washrooms, and hot water setting disabled● Garbage is sorted for disposal● Reduced use of lighting (some lights not turned on)

The TIS INTEC Group is involved in various activities that bring employees together with local communities.
For details, go to http://www.tis.com/group/csr/

ProfileRooftop greeneryand reusable shopping bags.
● Encourage employees to take vacation days during summer

34

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

Sharing Best Practices Throughout the Group
Yuichi Aida, Chairman, Group System Development and Quality Management Innovation Committee

Quality Control

Unprofitable projects naturally impact consolidated business performance, but they also
inconvenience clients, by placing an extra burden on them or prolonging the schedule,
and force employees to execute jobs with conditions more difficult than initiallyenvisioned. I would definitely like to minimize these situations.
To date, we have pursued various production reform measures with the potential
to deliver results in conjunction with efforts to boost productivity, and tangible results
have indeed been achieved. But we cannot be complacent. As a cohesive group, wemust continue to improve our responses to changes in the operating environment, andwe must strive to reach higher levels.

The TIS INTEC Group is well aware of the social responsibility inherent in information systems, which underpinsocial infrastructure, and efforts are constantly directed toward improving the quality of the services provided.
We seek to boost productivity, mainly by promoting greater sophistication at the required definition stage andregular use of standard development platforms, while also preventing projects from turning unprofitable, which
is a priority under the current medium-term management plan.

Group System Development and Quality Management Innovation Committee
Experts from Group companies come together based on the newly established Committee,
and share information of best practices and precedents to control unprofitable projects andstrengthen technologies on a groupwide basis.
Loss Elimination Group
After having set a goal to prevent unprofitable projects within the Group and establishing a PDCA scheme toachieve this goal, monitored status of efforts. Analyzed unprofitable project status, shared Group company project
supervision rules and measures, identified issues for improvement, beginning with a format for screening projects at
the proposal stage and a format for monitoring—visualizing—project status, and implemented changes.
Technology Reinforcement Group
Started with goal to share measures related to enhanced technological expertise, such as development frameworkand development methods, throughout the Group, and to promote higher level of sophistication.

Efforts in production reform naturally lead to enhanced profitability by preventing projects
from becoming unprofitable, but such activities also help the Group maintain superiority ina transforming IT industry and promote improvements in workstyles for employees.
Core business system(Mode 1, SoR) field

Digital innovation(Mode 2, SoE) field

Enhance projectrisk supervision● Set stage for Nablarch and utilize on
corporate basis● Raise level of required definition
expertise● Raise level of project management
expertise● Enhancement reform activities● Application of agile development
approach● Greater use of cloud, PaaS

● Rigorous check to ensure that system and plan have been confirmed
through review at project start● Pinpoint and solve problems in
the early stage through project­diagnostic● Anticipating positive effect on two fronts—improved productivity and reduced appearance of
unprofitable projects—which are actually two sides of same coin
● Will utilize insights and know-how accumulated by TIS to unroll new system development andquality management innovation measures. Gradually promoting measures through Group as
precedents and best practices.

Case Study of Share Information at the Committee Project Risk Supervision Structure at TIS
Regular Project Reports●	Project managers submit weekly reports to division
managers and business unit managers who are responsible
for projects. These reports cover such aspects as progress,
the appearance of problems and responses to suchproblems, and the manifestation of risk and measures todeal with such risk.
●	If support, such as the addition of essential personnel fromdivisions or business units, is required, support measures
must be prepared and directions given.

3.45
3.45

4.47
2.75

3.74

Stage 1
(1) Proposal Review(Checkpoints)● Client needs, system
configuration, manhours, time for completion, structure, anddivision of roles withclientFiscal 2015

Fiscal 2016

(2) Review at Start of
Project(Checkpoints)● The project structure/project plan/ the way ofthe project/division of theroles with client necessary
for building a system as
required by the client.

Training that cuts
laterally acrossthe Group

Training based on
strategies at each company

Expect development loss ratio to bewithin 1.0% range in fiscal 2018.

Basic training common
throughout the Group

Fiscal 2017

Value Creation Process(3) Stage Screening(Checkpoints)
At end of current stage● Progress of the project,
and the quality of work.
At beginning of next stage● Preliminary work, planformation and client
agreement.

(4) Looking Back
(Checkpoints)● Client satisfaction● The cause of problem andrecurrence prevention
measure If problems arose.
(The System Development& Quality Management
Innovation SBU turns reportcontent into know-how forcompanywide study.)● Promote skills that are important groupwide, as acohesive group, and foster synergy within the Group● Expand the training theme year by year, including

program related to human skill, and globally, fine-tune
project management

differs by respective domain and implementation
content● If a company has difficulty executing a training programon its own, other Group companies will collaborate on
training and provide support● Use e-learning to provide insights and know-how that

35

Group History

Stage n● Each company plans and implements training that

Loss amount due to two projects

ProfileStage 2

Project postcompletion

For the TIS INTEC Group, its human capital is a vital management resource. From this perspective, training anddevelopment is also a key allocation in our investment activities. Training and development is broken down
into three categories.

If two unprofitable projects—one for card-oriented systemand one for a bank-oriented system—having a huge impact
on recent performance are excluded, the value impact of
unprofitable projects is on a downtrend.

1.72

Project execution period

Proposal
to client

Trend in Unprofitable Projects（Billions of yen）

5.72
1.98

(5) Project Diagnostic●	Once every three months, a questionnaire is given to allmembers of a project team by the project risk supervision division at each company to pinpoint problem
points in each project.
●	Divisions and business units will confirm problems,
based on questionnaire results. Causes will be clarified
and remedial measures implemented.

employees throughout the Group should have incommon● Create environment that enable employees to learn
anytime, anywhere, to support employees who arecommitted to personal development

36

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Research and Development
In the IT services industry, where the Group is a key player, rapidly responding to advances in IT and the changes in market
needs that they precipitate is critical to sustaining and enhancing competitiveness. The Group’s R&D activities hinge on TIS and
INTEC, which undertake leading-edge pursuits in the domains described below and tirelessly execute surveys and research,
particularly on IT and production and development technologies that reinforce the Group’s capacity to respond to the changes
these technologies precipitate. Note that most of the Group’s R&D activities are not specific to individual business segments,
but rather are expeditions to discover techniques that can be applied laterally across the businesses of the Group.

(1) Software Development Technology
Every member of the TIS INTEC Group is working actively andconstantly to boost service quality and productivity throughout
the Group.
TIS has made it possible to reduce running costs and ensure
operational continuity by developing the Xenlon-Shinryu
Migrator C2J migration tool, which simplifies the task of
migrating large applications from COBOL (for which finding
maintenance personnel can be a challenge) to Java (for which

engineers are easier to find).
INTEC acquired software development technology from
Pivotal Labs (considered the world’s leading agile developmentteam) of the U.S., and made preparations to promulgate thistechnology throughout the company. Concrete initiatives
include the investigation and development of standardization
tools targeting specific projects.

(2) Cloud Technology
With cloud services becoming commodified, the Group has
been engaging in R&D work on the evolving core technologies
that underpin them.
TIS has been engaging in R&D using software-defined anything (SDx) technology. R&D has been conducted on mechanisms that reduce the need for human intervention during
network reconfiguration and operation, and pilot-scale testingat clients with enormous network resources is planned.
Working in partnership with The University of ElectroCommunications, TIS is also pursuing R&D work on reducing
inter-cloud traffic by using distributed cache technology to
reduce the network load generated by ballooning volumes ofdata and growth in network use.
INTEC is participating in the Regional Inter-Cloud

Subcommittee (RICC) of the JSPS 163rd Committee on
Internet Technology, and is working with Osaka University,
Hiroshima University, Kanazawa University, and other institutions on R&D to promote the use of global wide-area distributed computer environments that use computer resources
dispersed across different organizations. It is also involved in
the activities of the T-Cloud Consortium, in which partners
from industry and academia are working to promote transparent cloud computing. As part of these activities, INTEC is conducting R&D with the objective of creating new service models
by transparently linking devices and the cloud. The activities ofthis consortium are contributing to the development of cloud
solutions that generate value in new forms, such as smart­cities and connected cars.

(3) Smartphone and Tablet Technologies
The Group continued its R&D work on the mobile environmenttoo.
As a member of Yokohama National University’s ResearchGroup for the Future City Design Corresponding to Global
Environment Problems, INTEC conducted pilot-scale indoor 3D
mapping tests and seamlessly gathered indoor and outdoor
location data on visitors to Yokohama’s Minato Mirai district
using the i-LOP platform for integrating location informationin partnership with Esri Japan Corporation, Hitachi, Ltd., and­others.

In the manufacturing realm, INTEC is developing motion
recognition technology that incorporates use of a wristwatchtype device (smartwatch) to detect hand movements and allow
data to be inputted in environments such as factories where
touch input is not feasible. INTEC is also exploring non-inputrelated applications for this technology, such as instant detection of errors in assembly work. Several firms have shown
interest in seeing the technology tested under real-world conditions, and INTEC is now engaging in joint research and pilotscale tests that will lead ultimately to commercialization.

(4) Big Data Processing and IoT Technologies
Interest in the Internet of Things (IoT) has soared in recent
years, raising the question of how to efficiently process thelarge volumes of data transmitted by all kinds of devices.
TIS has commenced a joint study with Osaka University’s
Cyber Media Center on a common platform for IoT resources.

This will be a participatory platform that links the “IoT resource
holders” who possess various IoT resources (such as sensors,
computing resources, and services) with the “service providers” who plan and deliver services using other IoT resources. A
prototype of this common platform has been developed and is

now being tested through research into the feasibility of service development, security, and compatibility with network
requirements.
INTEC is conducting applied research on Big Data processing and machine learning with the aim of facilitating increases
in productivity (through improved availability and yields) andassisting the creation of predictive maintenance services that

(5) Artificial Intelligence and Robot Technologies
The dramatic evolution of artificial intelligence made possible
by deep learning, proliferation of humanoid robots, andemergence of open-source robot software are drawing more
and more companies into this field. The Group is pursuing
R&D on not only robotics itself, but also its combination withartificial intelligence, IoT, and cloud technologies.
TIS is conducting a joint study with Osaka University’sIntelligent Robotics Laboratory and Elvez, Inc., a startup, on
scenarios for dialogue between artificial intelligences andhumans. This research will verify how humans can relate to
robots and agents (including in social environments) andwhether it is possible for humans to communicate smoothlywith them. The findings are being programmed into Elvez’s
Social Agent communication tool to be tested under­real-world conditions with the cooperation of a certain local
government.
Regarding dialogue services, TIS has developed andreleased a beta version of the DialogPlay platform for enterprise clients. Developed based on the results of pilot-scale
tests at clients’ facilities, this software-as-a-service (SaaS) platform can simply create a chatbot that can produce automatic
responses and is capable of continuous response learning andimprovement using past response data.
On the robotics front, TIS has commenced R&D work with
SEQSENSE, a venture developer of autonomous robots, onGroup History

Value Creation Process

new solutions and services that solve social challenges bycombining TIS’s cloud and AI technologies. TIS has built its
own prototype autonomous robot, dubbed Jellibo, which wasused to test and assess how robots and humans interacted inpublic spaces at a certain leisure facility. The findings arebeing used to identify the obstacles to human-robot coexistence and solutions to them.
TIS is also pursuing research on communication robots
with Unirobot Corporation, the venture developer behind apersonality-learning partner robot named “unibo.” This
research is intended to link existing systems to a personal AI
engine behind a unibo interface to produce solutions in fields
such as services for older people, education, and in-store services.
INTEC, meanwhile, developed and unveiled two robot systems at Japan Robot Week 2016: a trolley robot system thatallows users to experience remote locations in real timethrough a combination of virtual reality (VR) and autonomous
movement, and an automated presentation system that adds
motion recognition technology (using a smartwatch) to a
Pepper service robot.
In the field of robotic process automation (RPA), which isused to automate routine business processes, INTEC has commenced valued-adding applied research in areas such as theautomation of atypical tasks and linkages with chatbots andservice robots.

(6) Blockchain Technology
Blockchain technology is a new kind of ledger system technology that is drawing attention in Japan and abroad, especiallyin the world of finance, and the Group is pursuing research toverify whether blockchains are suitable for use in actual business.
TIS is a participant in the University of Tokyo’s MITHRA
project, a large-scale real-world trial of next-generation personal authentication technology, and it is also conducting its
own technical study of the application of blockchain technology on the servers used to gather and manage data for thetrial. In collaboration with Digital Garage, Inc., TIS has­established the strategic technology developer DG
Technologies to develop solutions in fields such as financial
technology (FinTech), and FinTech-related technologies arebeing developed using blockchain technology.
INTEC hosted the Toyama Blockchain Forum and has
developed a network of contacts with people in the blockchain world. It is also contributing to the community throughits participation as a development partner in Hyperledger’s
Iroha project to develop open-source blockchain software.

(7) Mixed Reality (MR) Technologies
Mixed reality (MR) technologies combining virtual reality (VR)and augmented reality (AR) have recently emerged as a topic
of major interest. In the near future, it is forecast that thesetechnologies will mature into a single interface in ICT. TIS hascommenced research into the feasibility of new user interfaces(UIs) and user experiences (UXs) that fuse enterprise systems
and MR technology, and the findings will be used to verify
compatibility with new devices capable of taking the place of
personal computers, tablets, and smartphones.

As a result of these and other activities, consolidated expenditure on R&D in the fiscal year ended March 31, 2017 came to¥1,178 million.

37

Profiledetect signs of hardware abnormalities by gathering and analyzing various data from the factory floor.
As part of the Industrial Value Chain Initiative (IVI) that
now involves much of manufacturing, INTEC also conducteddata analyses as a participant in pilot-scale tests on themes
such as failure prediction, improving productivity, and quality
control.

38

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Round-table talk with chairman and external executives

Seeking to achieve healthy improvement incorporate value of the GroupKey Points for Next Stage of Group Governance
Maenishi: What issues do you think we need to emphasize
now from a groupwide perspective?
Sano: We’ve already formulated and announced Group Vision
2026, and the Board of Directors is starting to discuss concretemeasures on themes to move to the next step. I think, promoting groupwide cooperation with a sense of speed requires TIS
to leverage the uniqueness of each company and drive management of the Group forward using inherent leadership capabilities. On this point, I feel there is still room for growth.

Muneaki Ueda,

Koichi Sano,

External Audit &Supervisory Board Member

External Director

Norio Maenishi,

Chairman and Representative Director(Chairman of the Board)

Governance structure—in narrow sense—in place, moving now to governancefrom wider perspective
Maenishi: In July 2016, we transitioned to an operating holding company structure because we knew that reallocation ofmanagement resources and decision-making processes had to
be executed faster to properly address changes in the external
environment. Since then, we have implemented three measures—described in text box below—to establish governancepractices on a groupwide basis under the new structure. Mr.
Sano, you became an external director of TIS in June 2016, so
I’d like to ask you how you see the TIS INTEC Group.

nance structure. A particularly good approach during the pureholding company days was, to me, that management did notconfine itself to the operation of business but rather considered and acknowledged issues from a broader groupwide perspective. This provided a running start that fast-tracked
implementation of strategies to solve issues under the operating holding company structure, and that’s undoubtedly why
TIS is moving forward with an extremely well-balanced corporate portfolio.

Sano: Over the past year, the strong desire of top management
to raise the level of group governance under the new TIS haspermeated widely throughout the organization. I wouldn’t say
it’s perfect yet, but certainly, the level of awareness and action isdefinitely rising. The Board of Directors has been evaluatedtwice on its effectiveness, and I think the results could be used abasis for improvement plans.

Maenishi: I definitely feel that the external perspective of
stakeholders, including shareholders, provided through external executives during the ITHD period is the reason that weexist today as the TIS INTEC Group.

Maenishi: Mr. Ueda, you have been an external member ofthe Audit & Supervisory Board for six years, since 2012 underthe IT Holdings pure holding company structure. How has theGroup evolved from your perspective?
Ueda: Honestly speaking, I feel the management team has
been humble and sincere, willing to listen to the opinions ofexternal executives even when the comments were harsh andthen applying different viewpoints to shape the new gover-Ueda: Corporate governance in a narrow sense is an internal
control structure to ensure that corporate activities are aboveboard and comply with laws and regulations, and in thatsense, TIS has established a sufficient structure for the Group.
Going forward, though, I think TIS has to look at corporate
governance in a wider sense and thus emphasize steps toachieve a healthy improvement in corporate value of theGroup overall. Members of the Audit & Supervisory Board
must also look to see that the Company is implementing measures for the future, beyond the narrow sense of what is
expected. This is a major role for us.

Measures to Reinforce Corporate Governance (Fiscal 2017)1. 	Increased the number of independent external directors to three, from two, and the number of Audit &Supervisory Board members to five, from four, of whom three are external. Also build a structure thatencourages multifaceted opinions and advice based on various experience and insights.
2.	Made preliminary draft and presentation of Board of Directors’ annual agenda plan to promote animateddiscussion by the Board of Directors and also provided external directors with background information on
key agenda items through advance briefings and organized tours of related facilities.
3.	Conducted review of organization design, and expanded opportunities to discuss the Group’s medium- tolong-term direction and themes cutting across the Group, including Group Vision 2026.

Ueda: One of the TIS INTEC Group’s strong points is the sincerity and diligence that characterizes the overall approach tobusiness. But because so much emphasis and effort is placedon trying to address every aspect, whatever you don’t do
becomes a risk. You have to realize this reality. To ride out challenging times when changes occur so fast, you have to beaware of the time element as well as the priority ranking of
responses. In addition, I believe c­ orporate governance requires
maintaining and then improving flexibility from both management and overall organizational fronts. For example, if you
position the group vision as your trump card—your secret forsuccess—and a situation arises to cause it to become counterproductive, you might have to adjust the content, prudently, ofcourse, to better match the new environment.
Sano: The diligent approach that executives and employees
take in whatever they do, even in dealing with unprofitableprojects, really impressed me, personally, over the past year.
But you don’t be too conservative with diligence. Be progressive. React. I think the Board of Directors has to pursue what
you might call proactive governance—carefully taking risks
while acquiring the flexibility to respond to unforeseenchanges in society and in the industry—and also be more conscious of where priorities lie on the 2026 timeline as well as asense of speed in business pursuits. Also, a major theme going
forward will be how to develop and reinforce the skills of a
20,000-strong workforce—a true gem in the corporate treasure chest—to ensure sustainable growth of the Group.
Ueda: Unlike prevailing system configuration, new systems
will require creation from scratch. The Group has to maintainits DNA—that long-standing diligence to sincerely strive tomeet requirements—built through existing work while improving the quality of its human resources. In a­ ddition, humanresources must be properly evaluated to ensure that inherent
skills are suitably utilized and assignments are appropriate
from a groupwide perspective. With this in mind, an issue thatwill require attention is the f­ ormation of a personnel evaluation and compensation s­ ystem for all companies under theGroup umbrella.
Maenishi: As both of you have mentioned, people are a valuable TIS INTEC Group asset. Amid the shift to new businessmodel creation from emphasizing the value of IT in promoting
efficiency, we must change ourselves if we are to achieve ourvision for 2026. I’m eager for the Board of Directors to discuss

39

ProfileGroup History

Value Creation Process

the creation of a structure for developing human resources
capable of providing higher added value.
At the same time, SDGs—sustainable development goals—
were adopted at the United Nations General Assembly in 2015
to address issues with global impact. IT has the potential to go
beyond corporate applications to society with possible solutions
for a range of issues. The eyes of the world will quite literally belooking at IT providers like the TIS INTEC Group to deliver therequired expertise.
Sano: From a global perspective, there are business opportunities in fields that contribute to solutions aimed at social issues
and that make society itself better. I am quite interested in seeing how the TIS INTEC Group will capitalize on emerging possibilities. I must also say that today’s round-table discussion
reaffirms my belief that the exchange of opinions between inhouse and external directors and members of the Audit &Supervisory Board is very useful and insights gained could beof great benefit to the TIS INTEC Group if properly applied.
Ueda: Directors, of course, need the right materials to makeinformed decisions. Members of the Audit & Supervisory Board
must also have access to sufficient information to fulfill theirroles. In that sense, preliminary briefings and other measuresthat TIS has recently implemented will be extremely helpful inenabling us to form and express opinions at Board of
Directors’ meetings. The robust exchange of opinions by directors and members of the Audit & Supervisory Board, whichlook at issues from different perspectives, is extremely valuable, too.
Maenishi: The external executive system is another corporate
asset. But simply increasing the ratio of external executive tothe total is meaningless. The system becomes an asset throughthought-provoking comments about our measures and our
vision from these people on the outside looking in. Comments
are sometimes harsh, but they come from a different angle
than we see from inside the Company and the Group and canreveal misinterpretations and aspects that lack objectivity.
Therefore, such comments are in fact very much appreciated.
Going forward, I’d like to see more opportunities for exchange
among inside and external executive and I welcome comments
and suggestions. I’m sure such efforts will lead to value creation and higher corporate value. I thank you for talking withme today.

From left: Muneaki Ueda, External Member of the Audit & Supervisory Board;
Koichi Sano, External Director; and Norio Maenishi, Chairman and Representative Director

40

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Corporate Governance
Based on our Group Management Policy and Group Vision, we have formulated basic corporate governancepolicies aimed at improving the Group’s corporate value over the medium and long terms. We are working
constantly to enhance corporate governance.

Basic Policy
TIS will constantly strive to pursue, sustain, and enhance the highest level of corporate governance.
TIS believes that the key to corporate governance is to ensure transparency and fairness indecision-making, make full and effective use of its management resources, and increase the vitalityof management through swift and accurate decision-making, from the viewpoint of ensuring theCompany’s sustainable growth and enhancing its medium- and long-term corporate value.
Accordingly, TIS will strive to enhance its corporate governance in line with the following basic
principles.

Organizational Chart

General Meeting of Shareholders
Appointment, dismissal

Group Internal
Control Committee

Evaluation

Reports

Appointment, dismissal
Audit, reports
Statement of
opinionSupervision

Audit &
Supervisory Board(Members)

Election, dismissal, supervision

Cooperation

Board of Directors(Directors)

Discussion/report

President

1. To respect the rights of shareholders and to ensure their equality.
2.	To consider the interests of stakeholders including shareholders, and to cooperate
appropriately with them.
3. To disclose corporate information appropriately and to ensure its transparency.
4.	To engage in constructive dialogue with shareholders based on a medium- to long-term
investment policy.

Units involved
in internal audits

Reports

Executive Committee
Discussion/report on
significant issuses

Appointment, dismissal
Cooperation
Reports

Accounting Auditor

Accounting
audit
Cooperation

Internal audits

Execution of operations
Delegation of authority

Executive Officers

Divisions/Departments

Affiliated companies

Corporate Governance Structure
Reason for Selection of Current Corporate Governance Organization
Organizational Structure

Company with Audit & Supervisory Board

Chairman of the Board

Chairman

Number of Directors

10, including three external directors

Director’s Term of Office

One year

Number of Audit & Supervisory Board Members

Five, including three external audit & supervisory board members

Term of Office for Audit & Supervisory Board Members

Four years

Number of Independent Directors

Six, including three external directors and theee external audit& ­supervisory board members

The Company has selected the organization of a company with an audit & supervisory board, which has the double-check
function through which business execution is overseen by the Board of Directors, while the Audit & Supervisory Board
conducts audits of legality and appropriateness. In addition, the Company aims to strengthen the supervisory function of
the Board of Directors by electing external directors with experience and insights regarding industry and corporate
management and by providing advice and recommendations to ensure the validity and appropriateness of the decisionmaking of the Board of Directors from an independent standpoint.

Directors and Board of Directors
As stipulated in its Articles of Incorporation, theCompany’s Board of Directors will comprise at least threeand no more than 15 directors, and to strengthen the
supervisory functions of the Board of Directors, a policy
has been established that two or more of the directors
must be independent external directors. At present, three
independent external directors have been appointed.
For swift and dynamic decision-making by the Board of
Directors, the Board of Directors convenes in principle
once monthly and also meets on an ad hoc basis

41

ProfileGroup History

Value Creation Process

whenever necessary.
Furthermore, materials are provided for all Board of
Directors meetings as well as agenda items raised inimportant meetings to the external directors and external
auditors in advance for them to raise questions. In
addition, support is provided when necessary, such as
having the parties involved provide explanations inadvance to promote active discussion in order to vitalize
the meetings.

42

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

April 2006
June 2007
June 2010
August 2010
June 2011
June 2017Managing Director, in charge of PR & IR, Legal Affairs and General
Affairs of Japan Airlines Co., Ltd.
President & CEO of JALCard, Inc.
Retired from JALCard, Inc.
Section Manager of Internal Auditing Office of Faith, Inc.
Full-time Audit & Supervisory Board Member of Faith, Inc. (to present)
Director of TIS Inc. (to present)

Audit & Supervisory Board Members
Takuho Shimodaira, Standing Audit & Supervisory Board Member
Date of Birth: January 19,1952
April 1975
Joined the Sanwa Bank, Limited (currently, the Bank of TokyoMitsubishi UFJ, Ltd.)May 2003
Executive Officer of UFJ Bank Limited (currently, the Bank of TokyoMitsubishi UFJ, Ltd.)
June 2003
Director and Executive Officer of UFJ Bank Limited
May 2004
Executive Officer of UFJ Bank Limited
June 2004
Full-time Advisor at Kokusai Motorcars, Co., Ltd.
May 2005
Audit & Supervisory Board Member at The Daiei, Inc.
June 2007
Director of The Midori kai, Co., Ltd.
February 2008 Executive Director and Tokyo Branch Manager of The Midori-kai, Co.,Ltd.
June 2010
President and Representative Director of T&T ADVERTISING CO., LTD.
June 2013
Full-time Audit & Supervisory Board Member of TIS Inc. (to present)
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

Front row from the left, Mitsushi Nishida, Representative Director, Norio Maenishi, Chairman, Toru Kuwano, President, and Josaku Yanai, Director and Managing
Executive Officer. Back row from the left, Koichi Sano, External Director, Yoshiyuki Suzuki, Director, Katsuki Kanaoka, Director, Shigeki Kusaka, Director,
Yoshinobu Ishigaki, External Director, and Fumio Tsuchiya, External Director

Standing Audit & Supervisory Board Members, front row from the left,
Takuho Shimodaira, and Katsuhiko Ishii.
Back row from the left, Muneaki Ueda, Taigi Ito, and Sadahei Funakoshi.

Board of Directors
Norio Maenishi, Chairman

Josaku Yanai, Director and Managing Executive Officer

Date of Birth: April 19, 1949
April 1972
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 1996
Director of TIS Inc.
June 2001
Executive Director of TIS Inc.
April 2004
Representative Director and Executive Managing Director of TIS
Inc.
April 2008
Executive Vice President and Representative Director of TIS Inc.
April 2010
Director of TIS Inc. Executive Vice President and Executive Officerof IT Holdings Corporation
June 2010
Director and Executive Vice President of IT Holdings Corporation
June 2013
President and Representative Director of IT Holdings Corporation
June 2016
Chairman and Representative Director of IT Holdings Corporation(currently, TIS Inc.) (to present)

Date of Birth: November 14, 1963
April 1987
Joined the Long-Term Credit Bank of Japan, Limited
January 2000 Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
December 2006 Department Manager of Card Systems Sales Dept., Card Systems Div.1 of
TIS Inc.
April 2009
Executive Officer and Department Manager of Corporate Planning & Control
Dept., Corporate Planning & Control Div. of TIS Inc.
October 2010 Executive Officer and Department Manager of Corporate Planning & Control
Dept, Corporate Planning & Control Div. and Section Manager of Merger
Promotion Office of TIS Inc.
April 2011
Executive Officer and Division Manager of Corporate Planning Division of IT
Holdings Corporation
May 2015
Managing Executive Officer and Division Manager of Corporate Planning
Division of IT Holdings Corporation
April 2016
Managing Executive Officer and Division Manager of Corporate Planning
SBU. of TIS Inc. (to present)
June 2016
Director, Executive Officer and Division Manager of Corporate Planning
Division of IT Holdings Corporation
July 2016
Director, Executive Officer and Division Manager of Corporate Planning
Division of TIS Inc. (to present)

Toru Kuwano, President
Date of Birth: May 3, 1952
April 1976
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 2000
Director of TIS Inc.
April 2004
Executive Director of TIS Inc.
April 2008
Executive Managing Director of TIS Inc.
April 2010
Executive Vice President and Representative Director and General
Manager of Financial Industry HQ. of TIS Inc.
April 2011
President and Representative Director of TIS Inc.
April 2013
Chairman, President and Representative Director of TIS Inc.
June 2013
Director of IT Holdings Corporation
June 2016
President and Representative Director of IT Holdings Corporation(currently, TIS Inc.) (to present)

Katsuki Kanaoka, Director (Chairman of INTEC Inc.)

Mitsushi Nishida, Representative Director
Date of Birth: September 29, 1951
April 1977
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 2001
Director and Department Manager of Corporate Planning &Control Dept., Corporate Planning & Control Div. of TIS Inc.
April 2003
Director and Department Manager of Corporate Planning &Control Dept. and Section Manager of Business Development andPlanning Office of TIS Inc.
April 2004
Director and Division Manager of Financial Card Systems Div.1 of
TIS Inc.
October 2005 Director and Division Manager of Card Systems Div. 2 of TIS Inc.
April 2006
Director and Division Manager of Card Systems Div. 2, BusinessGroup of TIS Inc.
April 2008
President and CEO of QUALICA Inc.
April 2013
Executive Vice President and Representative Director of TIS Inc.
April 2016
Executive Vice President and Representative Director andExecutive Officer of TIS Inc.
June 2016
Representative Director of IT Holdings Corporation
July 2016
Representative Director, Executive Vice President of TIS Inc. (topresent)

Date of Birth: February 24, 1956
May 1985
Joined INTEC Inc.
June 2000
Director of INTEC Inc. President and Representative Director of AT TOKYO
Corporation
June 2003
Managing Director of INTEC Inc.
April 2005
Director, Senior Managing Executive Officer of INTEC Inc.
April 2007
Representative Director, President and Executive Officer of INTEC Inc.
June 2007
Representative Director, President and Executive Officer of INTEC Inc.,
Director of INTEC Holdings, Ltd.
April 2008
Director of IT Holdings Corporation President, Representative Director andExecutive Officer of INTEC Inc.
June 2009
Director of IT Holdings Corporation President and Representative Directorof INTEC Inc.
June 2012
Chairman and Representative Director of IT Holdings Corporation Director
and Corporate Advisor of INTEC Inc.
May 2015
Chairman of INTEC Inc. (to present)
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Shigeki Kusaka, Director (President of INTEC Inc.)
Date of Birth: November 26, 1952
April 1977
Joined Mitsubishi Corporation
April 2007
Senior Vice President of Mitsubishi Corporation
April 2009
Representative Director, Executive Officer, President and COO of IT Frontier
Corporation
April 2011
Managing Director of INTEC Inc.
May 2015
President and Representative Director of INTEC Inc. (to present)
June 2015
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)* As of June 27, 2017
* Designated for Independent Director/Auditor as specified by the Tokyo Stock Exchange in Japan.

Yoshiyuki Suzuki, Director(Representative Executive Vice President of INTEC Inc.)
Date of Birth: May 25, 1952
April 1975
Joined INTEC Inc.
April 2003
Director of INTEC Inc.
April 2005
Executive Officer of INTEC Inc.
June 2007
Managing Executive Officer of INTEC Inc.
June 2009Managing Director of INTEC Inc.
President and Representative Director of INTEC Systems Institute,Inc.
April 2011
Senior Managing Director of INTEC Inc.
June 2014
Director and Executive Vice President of INTEC Inc.
May 2015
Executive Vice President and Representative Director of INTEC Inc.
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)
June 2017
Representative Executive Vice President of INTEC Inc. (to present)

Yoshinobu Ishigaki*, External Director
Date of Birth: October 6, 1946
April 1969
Joined IBM Japan Ltd.
April 1998
Executive Director of IBM Japan Ltd.
October 2001 Retired from IBM Japan Ltd.
November 2001 President and CEO of Sapient K.K.
October 2004 President and CEO of AT TOKYO Corporation
June 2009
Board Chairman of AT TOKYO Corporation
June 2010
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Koichi Sano*, External Director
Date of Birth: August 30, 1948
April 1971
Joined Mitsui Petrochemicals Industries, Ltd. (currently, Mitsui
Chemicals, Inc.)
June 2003
Executive Officer and Manager of Finance Department of Mitsui
Chemicals, Inc.
June 2005
Executive Director of Mitsui Chemicals, Inc.
June 2009
Executive Vice President and Representative Director of Mitsui
Chemicals, Inc.
June 2013
Special Councilor of Mitsui Chemicals, Inc.
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Fumio Tsuchiya*, External Director
Date of Birth: May 10, 1948
July 1971
Joined Japan Airlines Co., Ltd.
July 1995
Regional Manager of Madrid Branch of Japan Airlines Co., Ltd.
June 1998
Section Manager of Airport Ground Handling Contract Section ofJapan Airlines Co., Ltd.
May 1999
Director and Section Manager of Personnel & Corporate Planning
Section of JAL Hotels Co., Ltd. (currently, Okura Nikko HotelManagement Co., Ltd.)
April 2001
Manager of Corporate Planning of Japan Airlines Co., Ltd.
June 2002
Manager of Corporate Planning and Director General of
Administration Office for JAL/JAS Merger
October 2002 Executive Officer, Deputy Section Manager of Corporate Planning
Section and Director General of Administration Office for Merger
Promotion of Japan Airlines System, Inc. (currently, Japan Airlines
Co., Ltd.)
April 2004
Executive Officer and Section Manager of Corporate Planning
Section of Japan Airlines System, Inc.
June 2004
Director and Section Manager of Corporate Planning Section ofJapan Airlines Corporation (currently, Japan Airlines Co., Ltd.)

43

ProfileGroup History

Value Creation Process

Katsuhiko Ishii, Standing Audit & Supervisory Board Member
Date of Birth: November 5,1953
April 1976
Joined the Long-Term Credit Bank of Japan, Limited
October 2001 Joined SORUN Corporation
June 2007
Director and Executive Officer of SORUN Corporation
April 2011
Managing Executive Officer, Division Director of the Financial Industry
SBU., Financial Industry HQ. and Division Manager of the Financial
Systems Div. 3 of TIS Inc.
October 2011 Managing Executive Officer and Deputy Division Manager of Financial
Industry SBU. of TIS Inc.
April 2012Managing Executive Officer and Deputy Division Manager ofCorporate SBU. of TIS Inc.
June 2012
Director of IT Holdings Corporation. Managing Executive Officer and
Deputy Division Manager of Corporate SBU. of TIS Inc.
June 2013
Managing Executive Officer and Deputy Division Manager ofCorporate SBU. of TIS Inc.
April 2014
Managing Executive Officer and Division Manager of Corporate SBU.
of TIS Inc.
April 2016
Advisor to TIS Inc.
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

Taigi Ito*, External Audit & Supervisory Board Member(Certified Public Accountant and President, Ito Office)Date of Birth: October 13,1946
January 1970 Joined Tsuji Audit Corporation
February 1989 Representative Partner of MISUZU Audit Corporation
July 2004
Deputy Chairman of the Japanese Institute of Certified Public
Accountants
August 2007
Chief of Ito CPA Firm (to present)
April 2009
Professor at Graduate School of Accountancy, Waseda University
June 2012
Audit & Supervisory Board Member of IT Holdings Corporation(currently, TIS Inc.) (to present)

Muneaki Ueda*, External Audit & Supervisory Board Member(Chairman, Professional Bank, Inc.)
Date of Birth: January 1,1948
August 1983
Joined Temporary Center Inc. (currently, Pasona Inc.)
January 1988 Executive Director and Manager of International Division andManager of Business Development Dept. of Pasona Inc.
President and Representative Director of Pasona N A, Inc.
April 1991
Executive Managing Director and General Manager of Sales Divisionof Pasona Inc.
June 1993
Director and Vice President of Pasona Inc.
June 2000
President and Representative Director of Pasona Inc.
August 2004
President and Representative Director of Professional Bank Inc.
April 2007
Chairman and Representative Director of Professional Bank Inc.
(to present)
June 2012
Audit & Supervisory Board Member of IT Holdings Corporation(currently, TIS Inc.) (to present)

Sadahei Funakoshi*, External Audit & Supervisory Board Member
Date of Birth: August 15,1954
April 1977
Joined Mitsubishi Corporation
March 2003
Transferred to Mitsubishi Corporation Financial & Management
Services (Japan) Ltd. as Director and Vice President
April 2009
Transferred to Mitsubishi Corporation LT, Inc. as Advisor
June 2009
Director and Managing Executive Officer of Mitsubishi Corporation LT,
Inc.
June 2011
Director and Senior Managing Executive Officer of Mitsubishi
Corporation LT, Inc.
January 2013 Representative Director and Senior Managing Executive Officer of
Mitsubishi Corporation LT, Inc.
May 2013
Statutory Auditor of IT Frontier Corporation
July 2014
Statutory Auditor of TATA Consultancy Services Japan, Ltd.
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

44

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Summary of Results of Analysis and Evaluation of Effectiveness of Entire Board of Directors

Management Committee
The Company has established the Management

affecting business execution at the Company and theCommittee to deliberate and report on important matters

Group as a whole.

Executive Officer System
The Company has adopted an executive officer system tobusiness execution to Executive Officers, and theseaccelerate management decision-making and supervisory

Executive Officers provide specific direction, orders, andfunctions of the Board of Directors. Directors delegate

supervision to each business unit head.

Audit & Supervisory Board Members and Audit & Supervisory Board
The Audit & Supervisory Board comprises five auditors (ofto receiving the annual financial audit plan and reportingwhich three are external auditors). Each auditor will per-on results of financial audits from Ernst & Youngform audits of directors’ business execution in accordance

ShinNihon LLC, with which the Company has entered andwith the audit & supervisory policies established by theauditing contract. Furthermore, the Audit & Supervisory

Audit & Supervisory Board. In addition, the Company

Board receives the audit reports of the auditing depart-works closely with its financial auditors, exchanging infor-

ment and exchanges opinions on a regular basis.

mation and sharing opinions on a regular basis in addition

Viewpoint regarding Composition of Board of Directors
The Board of Directors shall be composed of no more thanbears a responsibility to ensure sustainable growth and

15 directors, at least two of whom shall be independentenhance medium- to long-term corporate value. In theexternal directors. The Board of Directors recognizes its

case of directors that constitute the Board of Directors,

fiduciary responsibility toward shareholders, supervises

after engaging in discussion at meetings of the Board ofmanagement strategy, management plans and other

Directors, the Company shall nominate persons who haveimportant decision-making and business execution of theextensive experience, strong insights and a high level ofCompany, as prescribed by laws and regulations, thespecialization that is appropriate for these obligations

Articles of Incorporation and Company regulations, andbased on the election criteria prescribed by the Company.

Since fiscal 2016, ended March 31, 2016, the Company
has evaluated the effectiveness of the Board of Directors
each fiscal year in order to reveal issues and points for
improvement that will lead to initiatives to increase theeffectiveness of the Board of Directors. With respect to theevaluation in fiscal 2017, the Company provided an anonymous questionnaire to comprehensively conduct selfevaluation and self-analysis regarding the composition andoperation of the Board of Directors to all directors andauditors, and the Board of Directors held discussions
based on the results of the questionnaire. The method of
evaluation, results of the evaluation, as well as current
and future issues and responses to them in light of theevaluation are described below.
1. Method of evaluation
The Company distributed a questionnaire regarding theeffectiveness of the Board of Directors to all directors
and auditors, and obtained responses. Based on these
responses, the Company’s Board of Directors analyzed andevaluated the effectiveness of the Board of Directors.
2. Results of analysis and evaluation of effectiveness of theBoard of Directors
The Company’s Board of Directors concluded that a certain degree of effectiveness had been ensured to appropriately supervise the approval of important management
matters and business execution, such as the state of business implementation and investments at the Company
and Group companies, through deliberation based on­collective decision-making regulations and Group­administration regulations.
The Board of Directors confirmed that external directors and auditors had actively participated in discussions at
meetings of the Board of Directors due to the provision ofassistance such as holding advance briefings for the Boardof Directors and providing necessary information for­management decisions.

On the other hand, the Company’s Board of Directors
recognized that although discussions regarding the medium- to long-term vision and strategy had been conducted,
there had been a tendency not to adequately discuss
medium- to long-term strategy in accordance with individual themes. Furthermore, the Board acknowledged that itwas necessary to strengthen the supervisory function further in order to enable plans to be appropriately reviewed
and changed in light of factors such as changes in the
management environment that arise in the process ofbusiness execution at Group companies.
3. Current and future issues and responses to them basedon analysis and evaluation
In light of the analysis and evaluation previously mentioned, the Company will focus its efforts on tackling thefollowing issues especially.
(1)	Improvement of discussion regarding medium- to longterm management issues at the Board of Directors
The Company will further improve discussion regarding
medium- to long-term management issues at meetings ofthe Board of Directors. In particular, with respect to theformulation of the next medium-term management plan,
the Board of Directors will more fully discuss major issues
and individual themes such as business strategy, humanresource strategy and investment strategy in light of themedium- to long-term state of competition and market
trends.
(2)	Enhancement of supervisory function for execution ofimportant business at Group companies
We will continuously strengthen management of Group
companies at the Board of Directors and enhance functions to supervise the state of execution regarding proposals that are judged to be important matters in terms of
medium- to long-term strategy and management.

Policy and Procedures for Election and Nomination of Directors, etc.
When nominating candidates for director, auditor andother such positions, the Company shall nominate people
who have extensive experience, strong insights and a highlevel of specialization that is appropriate as a director or
auditor, after conducting discussions at meetings of the45

ProfileGroup History

Value Creation Process

Board of Directors based on the selection criteria that theCompany prescribes. The purpose of this is to realize
effective corporate governance and contribute to theCompany’s sustainable growth as well as its medium- tolong-term corporate value.

46

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process

Reason for Election of Directors and Audit & Supervisory Board Members● Directors

Norio
Maenishi

Toru
KuwanoMitsushi
NishidaJosaku
Yanai

KatsukiKanaoka

Mr. Norio Maenishi was for a long time mainly involved in the planning and development of industrial systems
and duties in the Corporate Department. After having assumed the office of Director and Executive VicePresident of the Company in June 2010, he served as President and Representative Director of the Company.
Since June 2016 to the present, he has been serving as Chairman and Representative Director of the Company.
He has a wealth of experience and knowledge about the Company’s and its Group’s business, as well as in business administration. He has also been assuming duties as Board Chairman in the administration and supervisionof management, making such efforts as encouraging active discussions at Board meetings and reforming theBoard of Directors in view of the Japan’s Corporate Governance Code with the aim to strengthen corporate governance. Based on these experiences and past achievements, he was appointed as a Director since he is highly
expected to continue to fulfill the duties of significant decision-making for the Company Group and the­administration and oversight of business management as a Director of the Company.
Mr. Toru Kuwano was for a long time mainly involved in the planning and development of financial systems.
After assuming the office of President and Representative Director of the Company’s Group company in April
2011, he was appointed as a Director of the Company in June 2013. Since June 2016, he has assumed the officeof President and Representative Director of the Company. He has a wealth of experience and knowledge about
the Company’s and its Group’s business, as well as in business administration. Based on these experiences andpast achievements, he was appointed as a Director since he is highly expected to continue to fulfill the duties ofsignificant decision-making for the Company Group and the administration and oversight of business management as a Director of the Company, so that the Company will fulfill the function as an operating holding­company in the execution of the Company’s Third Medium-term Management Plan, which commenced in
April 2015.
Mr. Mitsushi Nishida was for a long time mainly involved in the planning and development of financial and industrial systems. He assumed the offices of Executive Vice-President and Representative Director, and President andCEO of the Company’s Group company. Since June 2016 to the present, he has been serving as Representative
Director of the Company. He has a wealth of experience and knowledge about the Company’s and its Group’sbusiness, as well as in business administration. Based on these experiences, he was appointed as a Director since
he is highly expected to continue to fulfill the duties of significant decision-making for the Company Group andthe administration and oversight of business management as a Director of an operating holding company.
Mr. Josaku Yanai was mainly engaged in corporate business in the Corporate Planning Department of theCompany and its Group company. He assumed the office of Executive Officer and Division Manager of Corporate
Planning Division of the Company in April 2011. Since June 2016, he has been serving as a Director of theCompany. He has a wealth of experience and knowledge about the Company’s and its Group’s business, as wellas in business administration. Based on these experiences, he was appointed as a Director since he is highly
expected to continue to fulfill the duties of significant decision-making for the Company Group and the­administration and oversight of business management as a Director of an operating holding company.

Shigeki
KusakaAfter having worked for a trading company, Mr. Shigeki Kusaka was involved in the management of the­industrial system business division at the Company’s Group company from April 2011. He has been serving as
President and Representative Director of INTEC Inc., the Company’s major subsidiary, since May 2015 to the present, while concurrently serving as a Director of the Company since June 2015. He has a wealth of experience andknowledge about the Company’s and its Group’s business, as well as in business administration. Based on theseexperiences, he was appointed as a Director since he is highly expected to continue to fulfill the duties of significant decision-making for the Company Group and the administration and oversight of business management asa Director of an operating holding company in the group-wide execution of the Company’s Third Medium-termManagement Plan, which commenced in April 2015.

Yoshiyuki
SuzukiMr. Yoshiyuki Suzuki was for a long time involved in the Corporate Department, Technology Department, etc., at
the Company’s Group company. Since May 2015 to the present, he has been serving as Executive Vice-President
and Representative Director of INTEC Inc., the Company’s major subsidiary, while concurrently serving as a
Director of the Company since June 2016. He has a wealth of experience and knowledge about the Company’s
and its Group’s business, as well as in business administration. Based on these experiences, he was appointed
as a Director since he is highly expected to continue to fulfill the duties of significant decision-making for theCompany Group and the administration and oversight of business management as a Director of an operatingholding company in the group-wide execution of the Company’s Third Medium-term Management Plan, which
commenced in April 2015.

Yoshinobu
Ishigaki

Mr. Yoshinobu Ishigaki holds extensive experience and broad insight as a corporate executive with wide-ranging
experience and a wealth of expertise in the IT service industries. His advice and suggestions from an independent
perspective will ensure that the decisions to be made by the Company’s Board of Directors will be reasonable andappropriate. For this reason, he was appointed as an External Director.

KoichiSano

Mr. Koichi Sano worked mainly in the Finance and Accounting Departments, and served as Executive VicePresident and Representative Director of Mitsui Chemicals, Inc., and has a wide range of experience and a wealthof expertise in corporate management. He was appointed as an External Director since his advice and suggestions from an independent perspective by utilizing these experiences and expertise in the Company’s business will
ensure that the decisions to be made by the Company’s Board of Directors will be reasonable and appropriate,and he is highly expected to be a person who will contribute to the enforcement of the corporate governance of
the Company.

Fumio
Tsuchiya

Mr. Fumio Tsuchiya previously worked in an important position in overseas offices and the Corporate Planning
Department of Japan Airlines Co., Ltd. After having assumed the office of Director of Japan Airlines in June 2004,
he served as Managing Director and was thereafter appointed as President & CEO of JALCard, Inc. in June 2007,
which is a group company of Japan Airlines. He has a wide range of experience and a wealth of expertise in corporate management. He was appointed as an External Director since his advice and suggestions from an independent perspective by utilizing these experiences and expertise in the Company’s business will ensure that thedecisions to be made by the Company’s Board of Directors will be reasonable and appropriate, and he is highly
expected to be a person who will contribute to the enforcement of the corporate governance of the Company.

Mr. Katsuki Kanaoka was for a long time involved in duties in the Corporate Department, Financial System
Department, Infrastructure Department, etc. at the Company’s Group company. After having assumed office as a
Director of the Company in April 2008, he has been serving as Chairman and Representative Director of theCompany. He has a wealth of experience and knowledge about the Company’s and its Group’s business, as wellas in business administration. In addition, since May 2015 to the present, he has been serving as Chairman of
INTEC Inc., the Company’s major subsidiary. He was appointed as a Director since he is highly expected to continue to fulfill the duties of significant decision-making for the Company Group and the administration and oversight of business management as a Director of the Company in the group-wide execution of the Company’s Third
Medium-term Management Plan, which commenced in April 2015.

47

ProfileGroup History

Value Creation Process

48

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Platform that Supports Value Creation Process● Audit & Supervisory Board Members

For reference: Criteria Concerning Independence of External Officers

TakuhoShimodaira

Mr. Shimodaira served as president and representative director and audit and supervisory board member, etc. atvarious companies including a financial institution, and since June 2013, has served as a full-time Audit &Supervisory Board Member of a Group company. Based on his experience, he was appointed as an Audit &Supervisory Board Member as he can be expected to oversee the execution of duties of the Company’s Directors
in a fair and appropriate manner.

Katsuhiko
Ishii

Mr. Ishii worked for a financial institution and served as General Manager of the Corporate Department of aGroup company. He also served as an advisor at the same Group company. Based on these experiences, he wasappointed as an Audit & Supervisory Board Member as he can be expected to oversee the execution of duties of
the Company’s Directors in a fair and appropriate manner.

Taigi Ito

Mr. Ito is a licensed Certified Public Accountant. His expertise and knowledge in the field of finance and accounting and professional experience are beneficial to the Company in enforcing its audit system. Although he was
not directly involved in corporate management, he was appointed as an External Audit & Supervisory Board
Member as he was considered to be well qualified to appropriately perform the duties of Audit & Supervisory
Board Members given the above credentials.

MuneakiUeda

Mr. Ueda has a wealth of experience and wide-ranging insight as a corporate executive. He was appointed as anExternal Audit & Supervisory Board Member in expectation of obtaining his overall management advisory andmanagement oversight on execution of duties from an external perspective.

Sadahei
Funakoshi

Mr. Funakoshi has a wealth of experience and knowledge in corporate management, with his experience in the
management of investment and loan, credit and administrative departments of Mitsubishi Corporation, as wellas his service as an auditor at IT companies. He was appointed as an External Audit & Supervisory Board Member
in expectation of obtaining his overall management advisory and management oversight on execution of duties
from an external perspective.

Training Policy for Directors and Auditors
For directors and auditors, including external directors andexternal auditors, the Company will provide and arrange
training opportunities that are appropriate for individual
directors and auditors and support the cost of such training. The objective of such training is to provide an opportunity to acquire necessary knowledge regarding theGroup’s businesses, financial affairs and organization andto understand the duties and responsibilities required of
directors and auditors when assuming office, as well as tocontinuously update these attributes during the term ofoffice.

External Directors and External Auditors
The Company has three external directors and three­external auditors. The determination of the independenceof external directors and external auditors is prescribedby the requirements of the Companies Act as well asj­udgement criteria to ensure the independence of external
directors and external auditors (referred to as “external
officers” hereafter) as described below, with reference tothe rules and regulations of the Tokyo Stock Exchange.

The determination of the independence of external directors and external auditors is prescribed by the requirements of theCompanies Act as well as judgement criteria to ensure the independence of external directors and external auditors(referred to as “external officers” hereafter) as described below, with reference to the rules and regulations of the Tokyo
Stock Exchange.
1.	External directors (including candidates) are defined by Article 2, Paragraph 15 of the Companies Act (Requirements ofExternal Directors) and have never served as an executive director, manager or other employee of the TIS INTEC Group(Note 1) even in the past.
2.	External auditors (including candidates) are defined by Article 2, Paragraph 16 of the Companies Act (Requirements ofExternal Company Auditors) and have never served as a director, manager or other employee of the TIS INTEC Groupeven in the past.
3.	In the current fiscal year and during the past nine fiscal years, none of each of the following items shall apply to
external officers.
I.	A counterparty which has transactions principally with the Company (Note 2) or a person who executes thatcounterparty’s businessII.	A counterparty which has transactions principally with the TIS INTEC Group (Note 3) or a person who executes thatcounterparty’s businessIII.	A consultant, accounting professional or legal professional who has received a large amount of money or otherassets (Note 4) other than remuneration of officers from the Company. In addition, when these are received by anorganization such as a corporation or partnership, this includes persons who belong to the applicable organization.
IV.	A major shareholder of the Company (Note 5). In addition, when the major shareholder is a corporation, thisincludes a person who executes the business of the corporation.
V.	A person other than those in (I), (II) and (III) above who executes the business of a counterparty of the Company(Note 6)
VI.	A person who was formerly a member of a counterparty which is in a situation of cross-assumption of offices ofexternal officers
VII. A counterparty or former member of the counterparty that receives donations from the Company
4. External officers must not be a relative within the second degree of a person who falls under each of the following items.
I. A person mentioned in (I) to (III) of the previous clause
II. A person who executes the business of a subsidiary of the Company
III. A non-executive director of a subsidiary of the Company (limited to external auditors)IV.	A person who fell under (II) or (III) above or a person who executes the business of the Company (including a nonexecutive director in the case of an external auditor) recently (in the current business year and during the past fourbusiness years)
5.	In addition to the above, there exist no circumstances in which duties imposed on an independent external officer arereasonably deemed not to be achieved.
Note 1: The “TIS INTEC Group” means the Company and its subsidiaries.
Note 2:	A “counterparty which has transactions principally with the Company” means a counterparty which provides
products or services to the Company and whose payments from the Company constitute at least 2% of thesales of such counterpart in one fiscal year. The main bank (The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and the leadmanaging underwriters (Nomura Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co, Ltd., and
SMBC Nikko Securities Inc.) of the Company shall also each be a “counterpart which has transactions principallywith the Company,” regardless of the transaction amount.
Note 3:	A “counterparty which has transactions principally with the TIS INTEC Group” means a counterparty with sales
exceeding 2% of the total consolidated sales of the TIS INTEC Group.
Note 4:	"A large amount of money or other assets” means the total value exceeds 10 million yen per fiscal year. This
shall apply also to a consultant, accounting professional or legal professional that enters a consulting agreement
or similar arrangement and periodically pays an amount of money or other assets, regardless of the amount.
Note 5:	A “major shareholder” means a person or company, and the like, that directly or indirectly holds 10% or moreof total voting rights. However, the Company’s leading shareholders (the top 10 approximately) shall be treatedas “major shareholders."
Note 6:	A “counterparty which has transactions with the Company” means the case when transactions with theCompany per fiscal year constitute at least 2% of non-consolidated sales of the Company.

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 Summary

Corporate Data

Platform that Supports Value Creation Process

stock in full for the duration of their period in office.
The Company believes that the current remuneration
system contributes to sound motivation and has not intro-

Primary Activities of External Directors and External Auditors (Fiscal 2017)
StatusName

Director

ShingoOda

Mr. Oda attended 14 of 16 meetings of the Board of Directors held in fiscal 2017. He provided
comments as necessary in discussions of matters for resolution, based on his experience in theindustry and in corporate management and the insights thus gained.

Director

Yoshinobu
Ishigaki

Mr. Ishigaki attended all 16 meetings of the Board of Directors held in fiscal 2017. He provided
comments as necessary in discussions of matters for resolution, based on his experience in theindustry and in corporate management and the insights thus gained.

Director

KoichiSano

Mr. Sano attended all 11 meetings of the Board of Directors held after his appointment on June24, 2016. He provided comments as necessary in discussions of matters for resolution, based on
his experience and insights regarding corporate management.

AuditorTaigi
Ito

Mr. Ito attended 15 of 16 meetings of the Board of Directors and 12 of 13 meetings of the
Audit & Supervisory Board held in fiscal 2017. He provided comments as necessary in discussions of matters for resolution, from the specialized perspective of a Certified Public Accountant.

AuditorMuneakiUeda

Mr. Ueda attended 14 of 16 meetings of the Board of Directors and all 13 meetings of the Audit& Supervisory Board held in fiscal 2017. He provided comments as necessary in discussions ofmatters for resolution, based on his experience and insights into corporate management.

AuditorSadahei
Funakoshi

Mr. Funakoshi attended all 11 meetings of the Board of Directors and all ten meetings of the
Audit & Supervisory Board held after his appointment on June 24, 2016. He provided comments
as necessary in discussions of matters for resolution, based on his experience and insights
regarding corporate management.

Primary Activities

Remuneration for Directors and Audit & Supervisory Board Members (Year ended March 31, 2017)
Recipients (Persons)Remuneration (Millions of yen)

Directors (including external directors)

8 (3)196 (23)

Audit & Supervisory Board Members(including external members)

7 (4)62 (26)

Total (including external officers)

15 (7)

259 (49)

Note 1:	Remuneration for directors does not include the employee portion in the case of directors who serve concurrently as employees.
Note 2:	As of March 31, 2017, the Company had ten (10) directors, including three (3) external directors. The discrepancy between the number of directors
and the number shown under “Recipients” is because two (2) directors, served without compensation and are thus excluded from the above figure.
Note 3:	As of March 31, 2017, the Company had five (5) Audit & Supervisory Board members, including three (3) external Audit & Supervisory Board
members. The discrepancy between the number of Audit & Supervisory Board members and the number shown under “Recipients” is due to theinclusion of two (2) Audit & Supervisory Board members, including one (1) external Audit & Supervisory Board member, who retired as of theconclusion of the 8th Ordinary General Shareholders’ Meeting held on June 24, 2016.
Note 4:	Per resolution of the 1st Ordinary General Shareholders’ Meeting held on June 25, 2009, the combined remuneration for directors and Audit &Supervisory Board Members is limited to ¥400 million (¥50 million for external directors) and ¥85 million per year, respectively.
Note 5:	The Company does not maintain a retirement bonus system for directors, and does not pay any directors’ bonuses.

Note: Director Shingo Oda completed his term as of the 9th Annual General Meeting of Shareholders convened on June 27, 2017, and retired from his position.

Outline of Liability Agreements
In accordance with Article 427, Paragraph 1 of theCompanies Act, each external director and external auditor enters into an agreement with the Company that limits
legal responsibility for liability compensation as set forth

under Article 423, Paragraph 1 of the same law.
The limit of liability compensation, based on these
agreements, is an amount prescribed by the provisions ofArticle 425, Paragraph 1, of the same law.

Outline of Policy on Officers’ Remuneration
The basic policy on determination of officers’ remuneration is to provide incentives to improve performancethrough a system of remuneration linked to measures ofcompany performance.
The Company’s remuneration for Directors consists ofbasic remuneration and performance-linked remuneration.
Basic remuneration is paid according to the size of therole and scope of responsibilities of each position.
Performance-linked remuneration is linked to attainmentof the measures of company performance established on
the basis of the management plan for each fiscal year, andshall not exceed the proportion of basic remuneration (upto a maximum of 30%) determined for each position.

Remuneration paid to external directors consists onlyof basic remuneration and performance-linked remuneration will not be paid. In addition, remuneration is paid toauditors after being determined through consultation at
the Audit & Supervisory Board and is not linked to performance and consists solely of basic remuneration in orderto ensure a high degree of independence.
Furthermore, based on the viewpoint of reflecting
medium- to long-term business performance, Directors(excluding External Directors) shall contribute at least acertain portion of their basic remuneration to the purchaseof the Company’s own stock through the share ownershipplan for directors and officers, and they shall retain such

Constructive Dialogue with Shareholders
In the case of dialogue with shareholders, the corporate
communication department will strive to ensure that theopinions of shareholders are shared at the entire Board of
Directors by responding appropriately after consideringGroup History

Value Creation Process

the method of response with the President andRepresentative Director, the director in charge, and theexecutive officer in charge.

Strategically Held Shares
1. Policy regarding acquisition and ownership of strategically held shares
The Company holds the shares of other companies only
when it believes this is necessary for such purposes asestablishing long-term, stable relationships with customers
and promoting business that will contribute to the Com­pany’s sustainable growth and the enhancement of its
medium- to long-term corporate value. Each year, we regularly verify that major strategic holdings will contribute to
the Company’s sustainable growth and the enhancementof its medium- to long-term corporate value.

2. P olicy on exercising voting rights relating to strategically held shares
The Company appropriately exercises voting rights forlisted shares that it holds after comprehensively determining whether this will contribute to the Company’ssustainable growth and the enhancement of its mediumto long-term corporate value and whether this will contribute to the common interests of the shareholders of
the investee company.

Takeover Defense Measures
TIS has not introduced takeover defense measures.

51

Profileduced a remuneration system utilizing the Company’s own
shares (stock option system).

52

Financial/
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To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data

Financial Review

Platform that Supports Value Creation Process

Status of Internal Control Systems and Risk Management Structure
The Company revised its Basic Policies Regarding Internal Control Systems at a meeting of the Board of Directors on June24, 2016, in order to accommodate the merger by absorption with wholly owned subsidiary TIS Inc. on July 1, 2016. The
revisions reflect changes to the management structure resulting from the Company’s adoption of an operating holding
company structure, and internal control systems have been developed and put into effect based on the new policies.
More specifically, the Company has adopted a “Group Management Philosophy” and “Basic Group Policy on CSR,” inaccordance with which it is working to ensure business is conducted properly and to make improvements that enhance
corporate value by developing group-wide internal control systems (including structures for business administration,­compliance, risk management, and internal audits).
Internal control at the Company is organized as follows.
Group Internal Control Committee
The Group Internal Control Committee identifies issues concerning the internal control of the Group as a whole, assesses
progress on implementing improvements, and performs other related tasks from the following four standpoints.
Compliance
The Committee deliberates significant compliance issues affecting the Group as a whole and embeds good compliancepractices throughout the Group by determining and managing progress on implementation of measures to prevent­recurrences of incidents in accordance with compliance regulations.
The Committee has also introduced an internal group-wide whistleblower system and launched a whistleblower support service as means of preventing illegal acts and detecting and rectifying them as soon as possible when they occur,and it is working to raise awareness of legal compliance throughout the Group.
Risk Management
The Committee classifies the risks facing the Group as a whole into hazard risks, operational risks, financial risks, and­strategic risks, and it has established structures for managing these risks and systems of accountability should crises arisein accordance with risk management regulations.
The Committee has also drawn up group risk management policies for the Company and the Group as a whole, and it
monitors risks, promotes risk mitigation measures, and confirms the state of implementation of risk countermeasures.
Information Security
The Committee ascertains, assesses, and promotes improvements to the standard of information security management
throughout the Group in accordance with regulations on promoting group information security. The Committee has also
set up investigative committees when information security incidents occur, and it has established systems of accountability
and other structures to resolve incidents (including by identifying causes, implementing countermeasures, and pursuingmeasures to prevent a recurrence).

As of March 31, 2017, the Group comprised parent company TIS Inc. (“TIS” or “the Company) and 46 consolidated subsidiaries, including principal companies INTEC Inc., AGREX INC., QUALICA INC. and AJS Inc., and 55
affiliated companies for which the equity method is applied. Through additional acquisition of shares,
PromptNow Co., Ltd. fall under the scope of consolidation from the fiscal 2017 ended March 31, 2017.
Effective July 1, 2016, wholly owned subsidiary TIS Inc., was merged into the Company (previously, IT
Holdings Corporation), which then transitioned into an operating holding company. Paralleling this shift,
the name of the Company changed to TIS Inc.

Profit and Loss Status¥27,019 million, and recurring profit increased 10.5% to¥27,092 million. Net income attributable to owners of theparent company rose 28.6% to ¥16,306 million, andreached target stated in medium-term management plan ayear ahead of schedule.
(A breakdown of performance by business segment ispresented on page 23 under “Group Business Summary”.)

On the consolidated basis, net sales increased 2.8% fromfiscal 2016, to ¥393,398 million, because we emphasized
accurate identification of client needs in sectors where IT
investment is showing renewed growth. On the earnings
side, successful efforts to improve profitability, along withhigher net sales starting point, neutralized impact of
unprofitable projects, pushed income up year-on-year.
Operating income rose 10.6% from a year earlier toMillions of yen

Fiscal 2017

Fiscal 2016

% change

Net sales¥393,398¥382,689+2.8%

Cost of sales

317,440

312,153+1.7%(Years ended March 31)

Cost of sales ratio

80.7%

81.6%

-0.9 point

Gross profit

75,95870,535+7.7%

Gross profit margin

19.3%

18.4%

+0.9 point

Selling general and administrative expenses

48,93846,099+6.2%

Ratio of selling, general and administrative expenses to net sales

12.4%

12.0%

+0.4 point

Operating income

27,01924,436+10.6%

Operating income ratio

6.9%

6.4%

+0.5 point

Recurring profit

27,092

24,521+10.5%

Recurring profit ratio

6.9%

6.4%

+0.5 point

Net income attributable to owners of the parent company

16,306

12,678+28.6%Net income attributable to owners of the parent company as apercentage of net sales

4.1%

3.3%

+0.8 point

Assessment of Development and Operation Status of Internal Control Systems
The Committee promotes various measures to maintain and improve group-wide internal controls in accordance with the
Basic Policies Regarding Internal Control Systems and other rules and regulations, and it has established processes formonitoring the development and operation status of internal control systems and reporting the findings of deliberationby the Committee to the Board of Directors. Action is then taken to strengthen and improve internal control systems
throughout the Group based on the reports made to the Board of Directors.

53

ProfileGroup History

Value Creation Process

54

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Summary

Corporate Data