Information Meeting Materials
for the First Three Quarters of the Fiscal Year Ending March 31, 2018
February 2, 2018

Copyright © 2018 TIS Inc. All rights reserved.

Fiscal 2018 First Three Quarters Financial Highlights
Fiscal 2018 Performance Forecast
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

2

Fiscal 2018 First Three Quarters: Financial Highlights[Millions of yen]・Against a favorable business backdrop, sales and income were up over the corresponding three quarters a year
ago, thanks to higher business volume and efforts to improve profitability.

Net Sales
YOY change: + ¥8,312 million [+3.0 %]280,708

Operating Income
YOY change: + ¥4,765 million [+29.9 %]Net income attributable toowners of the parent company
YOY change: + ¥2,208 million [+19.6 %]13,46020,696

289,021

11,251
15,931

7.2％

5.7%
OperatingmarginFirst Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

In sectors where IT investment is showing
renewed growth, we emphasized accurate
identification of client needs and wererewarded with higher sales, year-on-year.
Copyright © 2018 TIS Inc. All rights reserved.

4.7％

4.0%

First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Year-on-year improvement in income reflects
higher net sales staring point and successful
efforts to boost profitability, including steps toprevent unprofitable projects, which absorbed
cost increases incurred to enhance employee
benefits and sharpen competitiveness.

Net income to
net sales ratio
First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Net income attributable to owners of parent
company was up year-on-year, buoyedmainly by higher operating income.

3

Fiscal 2018 First Three Quarters:
Sales and Income for Key Segments[Millions of yen]

IT Infrastructure Services

Financial IT Services

Industrial IT Services

Net Sales

Net Sales

Net Sales

YOY change: + ¥3,449 million [+3.7%]

YOY change: + ¥5,631 million [+9.3%]

92,73396,18360,399First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

First Three Quartersof Fiscal 2017

Operating Income
YOY change: + ¥1,166 million [+15.7%]

7,421
8.0%

Operatingmargin66,030132,105

132,663First Three Quartersof Fiscal 2018

First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Operating Income
YOY change: + ¥4,143 million [+422.7%]

Operating Income
YOY change: - ¥424 million [- 6.0%]

8,588

5,124

7,052

8.9％

7.8％

5.3%

980
First Three Quartersof Fiscal 2017

YOY change: + ¥557 million [+0.4%]

First Three Quartersof Fiscal 2018

Sales and income up year-on-year, as wider demand for BPO
services as well as contribution from large public-sector
projects and brisk demand for data center services fueled byinterest in cloud-based services absorbed higher costs
incurred to strengthen business capabilities.

Copyright © 2018 TIS Inc. All rights reserved.

1.6%

OperatingmarginFirst Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Sales and income up year-on-year, owing to contribution
from large projects for clients in credit card sector as wellas increase in business volume paralleling greater IT
investment by clients in payment settlement sector.
Successful efforts to prevent unprofitable projects also
helped boost segment results.

6,628
OperatingmarginFirst Three Quartersof Fiscal 2017

5.0％

First Three Quartersof Fiscal 2018

Sales were at a year-on-year par, as greater IT investment byclients offset a reactionary drop in demand for large projects.
Operating income fell year on year, owing to higher costs
related to the establishment of an dedicated structure andsystem improvements amid a push to boost profitability.
*Segment sales include intersegment sales.

4Fiscal 2018 First Three Quarters:
Net Sales and Operating Income Analysis[Billions of yen]

Net Sales
280.70IT Infrastructure
Services＋3.44[92.73 → 96.18]

Financial IT
Services＋5.63[60.39 → 66.03]

Industrial IT Services＋0.55[132.10 → 132.66]

289.02
Other- 0.90[8.88 → 7.98]

Inter-segment- 0.42[- 13.41 → - 13.83]

First Three Quartersof Fiscal 2017＋8.31[＋3.0%]First Three Quartersof Fiscal 2018

Operating Income
20.69
Industrial IT Services- 0.42[7.05 → 6.62]

15.93
IT Infrastructure
Services＋1.16[7.42 → 8.58]

Financial IT
Services＋4.14[0.98 → 5.12]

First Three Quartersof Fiscal 2017
Copyright © 2018 TIS Inc. All rights reserved.

Other- 0.04[0.75 → 0.71]＋4.76

Inter-segment- 0.07[-0.28 → -0.35][＋29.9％]First Three Quartersof Fiscal 2018

5

Fiscal 2018 First Three Quarters:
Operating Income Analysis, Increase/Decrease Reasons[Billions of yen]

YOY Change

20.69
Increased SGA
expenses-1.63
Improved profitability

15.93

＋4.76
[+29.9%]＋4.68

Increased sales＋1.71

Increased gross profit＋6.39
First Three Quartersof Fiscal 2017

Copyright © 2018 TIS Inc. All rights reserved.

First Three Quartersof Fiscal 20186

Reference: Fiscal 2018 Third Quarter (October - December)
Sales and Income for Key Business Segments
Net Sales
91,684

94,207+2,522[+2.8%]

Operating Income
7,105
6,507
+597
[+9.2%]

7.1%
3rd Quarter of
Fiscal 2017

3rd Quarter of
Fiscal 2018

Operatingmargin3rd Quarter of
Fiscal 2017

[Millions of yen]

Net income attributable to ownersof the parent company
5,570

- 712
[-12.8%]

7.5%

6.1%

3rd Quarter of
Fiscal 2018

3rd Quarter of
Fiscal 2017

4,857

5.2%
3rd Quarter of
Fiscal 2018

IT Infrastructure Services

Financial IT Services

Industrial IT Services

Net Sales

Net Sales

Net Sales

30,80232,357+1,555[+5.0%]

3rd Quarter of
Fiscal 2017

3rd Quarter of
Fiscal 2018

Operating Income
3,219
2,241
7.3%

+977
[+43.6%]
Operatingmargin3rd Quarter of
Fiscal 2017

20,342

3rd Quarter of
Fiscal 2017

3rd Quarter of
Fiscal 2018

Copyright © 2018 TIS Inc. All rights reserved.

41,917

3rd Quarter of
Fiscal 2018

3rd Quarter of
Fiscal 2017

Operating Income
2,104
1,507

9.9%

22,414+2,072[+10.2%]

7.4%

+596
[+39.6%]
Operatingmargin3rd Quarter of
Fiscal 2017

3rd Quarter of
Fiscal 2018

3rd Quarter of
Fiscal 2018

Operating Income
2,668

6.4%

9.4%

41,574-342[-0.8%]-940[-35.2%]
Operatingmargin3rd Quarter of
Fiscal 2017

1,728
4.2%

3rd Quarter of
Fiscal 2018

*Segment sales include intersegment sales.

7Reference: Fiscal 2018 Third Quarter (October - December)Operating Income Analysis, Increase/Decrease Reason[Billions of yen]

YOY change

7.10
6.50

Improved profitability Increased SGA
expenses
＋0.78
-0.72
Increased sales
＋0.53

＋0.59
[+9.2%]

Increased gross profit＋1.31
3rd Quarter of
Fiscal 2017

Copyright © 2018 TIS Inc. All rights reserved.

3rd Quarter of
Fiscal 20188

Fiscal 2018 First Three Quarters: Sales by Client Sector[Millions of yen]

63,33067,144

52,817[+6.0%]

46,995[+12.4%]
20,177

Credit card

31,266

19,586

18,763

31,25026,511

15,75818,61015,042[-2.9%][+0.8%][+4.8%]

Banking

Insurance

Other finance[-0.1%]

27,80423,292[+4.9%]＜First Three Quarters of Fiscal 2017＞24,101

23,751[-1.5%][-11.1%]

Assembly-based Processing-based
manufacturing manufacturing

First Three Quarters of Fiscal 2017

20,712Distribution

ServicePublic institutions

11,42911,379[+0.4%]
OthersFirst Three Quarters of Fiscal 2018
Credit card

＜First Three Quarters of Fiscal 2018＞

Banking

4.1%
8.6%

22.6%

Insurance

16.7%

Net
Sales
Breakdown by
ClientSector

8.3%
9.4%
Financial sector: 35.9 %Public sector: 8.6 %

7.2%
6.6%
5.4%

11.1%

Industrial sector: 51.4 %Other sectors: 4.1 %Copyright © 2018 TIS Inc. All rights reserved.

4.0%
8.2%

Other finance
Assembly-based
manufacturing
Processing-based
manufacturing
Distribution

23.2%

ServicePublic institutions

Others

18.3%

Net
Sales
Breakdown by
ClientSector

7.2%
9.6%
Financial sector: 37.0 %Public sector: 8.2 %

6.8%
6.5%
5.4%

10.8%

Industrial sector: 50.8 %Other sectors: 4.0 %9Fiscal 2018 First Three Quarters: Order Status[Millions of yen]・Against a brisk business backdrop, order volume remained high enough to offset adverse factors, such as reactionary
drop in demand, and pushed results above the corresponding period a year ago.
・Backlog decreased year-on-year, but primary cause was drop due to progress on large projects for clients in public sector.

Orders received during first three quarters

Order backlog at end of first three quarters

YOY change: + ¥4,910 million [+3.3%]
150,888

155,798

First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Financial IT Services

Industrial IT Services

56,46352,241

98,647＋4,222[＋8.1%]First Three Quarters First Three Quartersof Fiscal 2017of Fiscal 2018

YOY change: - ¥1,887 million [-2.7%]

67,924First Three Quartersof Fiscal 2017

First Three Quartersof Fiscal 2018

Financial IT Services

Industrial IT Services
45,912

99,335-344[-1.4%]First Three Quarters First Three Quartersof Fiscal 2017of Fiscal 2018

44,36923,55423,898＋688[＋0.7％]

Copyright © 2018 TIS Inc. All rights reserved.

69,811First Three Quarters First Three Quartersof Fiscal 2017of Fiscal 2018

-1,543[-3.4%]First Three Quarters First Three Quartersof Fiscal 2017of Fiscal 2018

*Order volume and backlog at term-end and net sales apply to Software Development only.

10Changes in Orders Received

110,457[+27.7%][Millions of yen]

108,697
98,648[-1.6%]

104,569

103,737

106,996[+6.0%][-4.6%][+2.3%][+10.4%]89,385[+3.6%]

58,095[+17.2%]47,73153,36961,62153,43757,41954,949[+6.1%][+0.1%][- 6.8%][+2.8%]

47,076

51,13346,31852,047[+12.9%][- 1.6%][+1.8%][+11.8%][+2.3%]

41,654[+5.3%]

52,362[+41.9%]

1st Half
2nd Half
Fiscal 2015

45,279[+8.7%][- 10.1%]

1st Half
2nd Half
Fiscal 2016

1st Half
2nd Half
Fiscal 2017

Second quarter of first half

Fourth quarter of second halfFirst quarter of first half

Third quarter of second half

Copyright © 2018 TIS Inc. All rights reserved.

48,802[+5.4%]

1st Half
2nd Half
Fiscal 2018

* Orders received during the term apply to Software Development only.
* Percentage figures in columns indicate increase or decrease from the previous term.

11

Changes in Orders Received[Millions of yen]

Financial IT Services
41,43038,410[+16.0%]30,81623,207[+13.4%]

39,596[- 4.4％][+6.8％]

19,494[+5.9％]

23,120[- 10.7％]

20,685[+6.1％]

16,476[+ 6.1％]

17,495[+7.5％]

2nd Half
Fiscal 2017

1st Half

35,765[+10.3％）25,900[+11.6%]

18,414[+8.1%]

15,203[+20.2%]

14,017[+1.7%]

15,530[+2.2％]

16,271[+16.1％]

2nd Half
Fiscal 2015

1st Half

2nd Half
Fiscal 2016

1st Half

13,786[+18.0%]

1st Half

32,431[+5.2%][+0.0%]
17,029[- 11.0%][+7.9%]

38,18018,283[+11.0％]

2nd Half
Fiscal 2018

Industrial IT Services
72,048[+35.0％）58,568[+5.7％）
30,701[+11.4％）
27,867[- 0.1％）

1st Half

34,889[+19.9％）37,159[+53.2％）

2nd Half
Fiscal 2015

66,217

67,26668,804[+13.1％）[- 6.6％）[+3.9％]

34,955[+13.9％）35,720[+2.4％）

33,943[- 2.9％]34,299[- 4.0％]34,263[+0.9％]

31,262[+12.2％）

31,546[- 15.1％）

34,861[+11.5％]29,843[- 5.4％]34,552[- 0.9％]30,520[+2.3％]

2nd Half
Fiscal 2016

1st Half

2nd Half
Fiscal 2017

1st Half

2nd Half
Fiscal 2018

1st Half

Copyright © 2018 TIS Inc. All rights reserved.

64,142[- 4.6％]

Second quarter of first half

Fourth quarter of second halfFirst quarter of first half

Third quarter of second half

68,815[+0.0％]* Orders received during the term apply to Software Development only.
* Percentage figures in columns indicate increase or decrease from the previous term.

12

Fiscal 2018 First Three Quarters Financial Highlights
Fiscal 2018 Performance Forecast
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

13

Fiscal 2018: Performance Forecasts-1[Millions of yen]・ Expecting higher sales and income year on year. Net sales and operating income set at medium-term management plan targets.
・ Seek to push net income attributable to owners of parent, which hit the target stated in the medium-term management plan a year aheadof schedule, even higher.
⇒Favorable shift in consolidated results. Will continue to work toward initial targets.
No change to those numerical goals.

Net Sales

Operating Income

YOY change:+ ¥6,602 million [+1.7%]
393,398

YOY change:+ ¥2,981 million [+11.0%]

400,000[Estimate]

30,00027,019[Estimate]

6.9%

7.5％

Fiscal 2018

Anticipate higher net sales, underpinned bybusiness expansion through accurate responses
to clients’ IT investment needs and by steady
execution of big projects.
Copyright © 2018 TIS Inc. All rights reserved.

Fiscal 2017

YOY change:+ ¥1,694 million [+10.4%]

18,00016,306

4.1%

OperatingmarginFiscal 2017

Net income attributable toowners of the parent company

Fiscal 2018

Continued boost not only from higher sales but
also from successful efforts to keep projects
from turning unprofitable and enhanced
productivity. Should be able to absorb higher
costs, including prior investments, and post yearon-year increase in operating income.

Fiscal 2017

[Estimate]

4.5％
Net income to
net sales ratio

Fiscal 2018

Looking at higher net income attributable toowners of parent, mainly because of higher
operating income.

14

Fiscal 2018: Performance Forecasts-2[Yen]・Seeking ROE improvement, with goal to exceed 10% by fiscal 2021, ending March 31, 2021.

Net Income per ShareYOY change: + ¥21.74 [+11.5%]

210.76
189.02[Estimate]

Fiscal 2017

Fiscal 2018

Anticipating year-on-year improvement, parallelinghigher net income attributable to owners of parent.
(Initial target raised, paralleling purchase of treasury
stock)
Copyright © 2018 TIS Inc. All rights reserved.

ROE
YOY change: + 0.2 %

8.8%

9.0％
[Current
calculations]Fiscal 2017

Fiscal 2018

Anticipating further growth, mainly due tohigher profitability.

15

Fiscal 2018: Key Business Segment Performances [Forecast][Millions of yen]

IT Infrastructure Services

Financial IT Services

Industrial IT Services

Net Sales

Net Sales

Net Sales

YOY change: + ¥2,419 million [+1.9 %]YOY change: + ¥1,949 million [+2.3 %]129,000

126,581

84,051

Fiscal 2018

Operating Income
YOY change: + ¥342 million [+3.4 %][Estimate]

8.0%

Fiscal 2017

Fiscal 2017

Operatingmargin8.1%

Fiscal 2018

Positive factors, such as expanding data centerrelated business through Group connections andrising BPO revenue, will absorb some of costburden and lead to year-on-year improvement insales and income.
Copyright © 2018 TIS Inc. All rights reserved.

Fiscal 2018

Operating Income
YOY change: + ¥2,274 million [+62.7%][Estimate]

Fiscal 2017

Fiscal 2018

Operating Income
YOY change: + ¥604 million [+4.8%]

5,900

10,500

10,158

194,000

189,409[Estimate][Estimate]

Fiscal 2017

86,000YOY change: + ¥ 4,591 million [+2.4 %][Estimate]

13,10012,496[Estimate]

3,626

6.9%
Operating
4.3% margin
Fiscal 2017

Fiscal 2018

Anticipate year-on-year increase in sales and income,mainly due to steady execution of big projects, wider
business volume achieved by decisively capitalizing
on growing demand for payment settlement services,
and a reduction in unprofitable projects.

6.6%

Fiscal 2017

Operatingmargin

6.8%

Fiscal 2018

Looking at year-on-year increase in sales and income,as impact of reactionary drop in large projects offset
by decisive capture of growing ERP demand frommanufacturing sector and greater cooperation among
Group companies to address core clients’ needs.
*Segment sales include intersegment sales.

16Fiscal 2018: Net Sales and Operating Income Analysis [Forecast][Billions of yen]

Net Sales

393.39Financial IT
Services
IT Infrastructure＋1.94
Services[84.05 → 86.00]＋2.41[126.58 → 129.00]

Industrial IT
Services＋4.59[189.40 → 194.00]

Other
-0.88
[11.88 → 11.00]

400.00Inter-segment- 1.47[- 18.52 → - 20.00]

Fiscal 2017

[Estimate]＋6.60[＋1.7 %]

Fiscal 2018

Operating Income
30.00
Industrial IT
Services＋0.60[12.49 → 13.10]

27.01
IT Infrastructure
Services＋0.34[10.15 → 10.50]

Other- 0.08[1.08 → 1.00]

Inter-segment-0.15[- 0.34 → - 0.50][Estimate]＋2.98[＋11.0 %]Financial IT
Services＋2.27[3.62 → 5.90]

Fiscal 2017
Copyright © 2018 TIS Inc. All rights reserved.

Fiscal 201817

Fiscal 2018: Priority Focus by Core Business Segment
IT Infrastructure Services
・ Accelerate shift toward service-style business through wider variety of value-added services, including security, and expandedmenu of cloud services
・ Actively promote cross-selling within the Group for data center/network business, including groupwide connection start for
DCAN (Datacenter and cloud services – Customer Adapted Network) closed network service
・ Improve profitability through creation of BPO integration effect and wider base of high-profit projects

Financial IT Services
・ Steadily execute large projects for clients in card-based operations, embrace themes of strategic importance to core clients・ Expand payment settlement services business by enhancing PAYCIERGE 2.0 presence and accelerating monetization
・ Pinpoint diversifying needs in payment settlement sector and expand client base to include payment settlement service
providers, and clients in distribution and transportation sectors
・ Business sentiment among banks and insurers is unclear, but enhanced marketing efforts will target key themes, especially coreclient operations

Industrial IT Services
・ Steadily execute large projects for clients in public sector
・ Cultivate demand by embracing themes of strategic importance to core clients and by drawing on Group connections
・ Expand client base by capitalizing on ERP replacement demand, especially among manufacturers
・ IT strategies are viewed as having a direct link to management strategies, so promote “untiring pursuit of high-value-added
businesses” by reinforcing consulting and upstream businesses to complement existing SI business

Copyright © 2018 TIS Inc. All rights reserved.

18

Fiscal 2018 First Three Quarters Financial Highlights
Fiscal 2018 Performance Forecast
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

19

Fiscal 2018 Second Half:
Sales and Income for Key Business Segments [Forecast]
Net Sales

Operating Income
205,187

204,375

17,596[Estimate]＋812[＋0.4 %]
Second Halfof Fiscal 2017

8.6%

Second Halfof Fiscal 2018

IT Infrastructure Services
Net Sales
65,17564,651

16,409- 1,187[- 6.7 %]Second Halfof Fiscal 2018

Financial IT Services
Net Sales
43,99442,384

Operating Income
5,132
4,979

7.7%

OperatingmarginSecond Halfof Fiscal 2017

-1,227[- 11.5 %]Second Halfof Fiscal 2017

Second Halfof Fiscal 2017

Operating Income
4,153[Estimate]

7.9%
Second Halfof Fiscal 2018

Copyright © 2018 TIS Inc. All rights reserved.

Second Halfof Fiscal 2018

102,912

99,221[Estimate]＋3,691[＋3.7 %]

Second Halfof Fiscal 2018

- 1,272[- 30.6 %]9.4%

OperatingmarginSecond Halfof Fiscal 2017

[Estimate]

Industrial IT Services
Net Sales- 1,610[- 3.7 %]Second Halfof Fiscal 2018

9,398

[Estimate]＋524[＋0.8 %]

+153[＋3.1 %]

10,625

8.0%[Estimate]

Second Halfof Fiscal 2017

Net income attributable to owners of
the parent company[Estimate]

OperatingmarginSecond Halfof Fiscal 2017

[Millions of yen]

Second Halfof Fiscal 2017

Operating Income
8,113

8,201
＋88
[Estimate][＋1.1 %]

8.2%

Operatingmargin2,881[Estimate]

6.8%

Second Halfof Fiscal 2018

Second Halfof Fiscal 2018

Second Halfof Fiscal 2017

8.0%

Second Halfof Fiscal 2018

*Estimated amounts for the second half of Fiscal 2018 are calculated by subtracting the first half results fromthe annual estimates of Fiscal 2018. *Segment sales include intersegment sales.

20Cautionary Statements• All statements described in these materials are based on information available to management regarding the TIS INTEC Group—that is,
TIS and the subsidiaries under its umbrella—as of the presentation date and certain assumptions deemed reasonable at this time. No
intent is implied of promise by the Company to achieve such forward-looking statements. Indeed, various factors may cause future
results to be substantially different from the assumptions presented in these materials.
• Amounts for each three-month quarter are calculated by subtracting data for the respective period from the cumulative total.