Consolid
dated Financcial Results foor the First Q
Quarter of th
he Fiscal Yearr Ending Maarch 31, 20188
(April 1, 20117 through Ju
une 30, 20177)
(Prepared purrsuant to Jap
panese GAAPP)
All financcial informatioon has been preparedpin acccord with accoounting princiiples generallyy accepted in Japan.
This is a ppartial Englishh translation ofo the originall Japanese-lan
nguage docum
ment. All inform
mation pertain
ns to
consolidaated results unnless otherwisee noted. Informrmation on thee basis of presentation of coonsolidated fin
nancialstatementts does not apppear in this traanslation.
Julyy 28, 2017
Compaany name:
Stock eexchange listinngs:
Stock ccode:
URL:
Represeentative:
Contactt:Phone:TIS Innc.
The First
F
Section off the Tokyo Stock Exchangge3626
http:///www.tis.com/
m/Toru Kuwano,
K
Pressident
Tsuneeyoshi Ito, Deppartment Man
nager of Finannce & Accountting Dept., Co
orporate
Planning SBU.
+81 3-5337-4569

Scheduuled dates
Submisssion of quarteerly report:
Commeencement of dividenddpaym
ments:

August 10, 2017-

mentary materials to the quuarterly resultss:
Supplem
Quarterrly results presentation heldd:Available
Yes (targeted at institu
utional investtors and analysts)

Figgures in millio
ons of yen aree rounded dow
wn to the neareest million
1. Consoolidated Resu
ults for the FirstF
Quarterr of the Fisca
al Year Endinng March 311, 2018
(Apriil 1, 2017 – June 30, 2017
7)(1) Consoolidated Finanncial Results
Percentaages indicate yyear-over-yeaar changes
ncome
Net inattributtable toNet
N sales
Reecurring profitt
Operating income
ownerss of theparent coompanymillioons of yen%

millions of yenn%milllions of yen%

millions of yen
y%91,778989,128
8

3.00
4.1

5,053
3
4,017
7

25.8
85.1

5,574
4,373

27..5
44..6

3,69
94
2,75
57

34.0
40.7

First Quuarter., FY20118
First Quuarter., FY20117

Note: Compprehensive incom
me: First Quarter., FY
F 2018: 5,056m
million yen (52.6%%), First Quarter.,, FY 2017: 3,3144million yen (68.99%)

Net
N incomeperp share –basic

Net income
per shaare –diluteed

YenFirst Quuarter., FY20118
First Quuarter., FY20117

yen

42.96631.777-(2) Consoolidated Finanncial Position
Total assets
End of F
First Quarter, FY2018
End of F
FY2017

Net assets

Equuity ratio

millions of yeen

millions of yen%

328,4611
337,6222

200
0,024
199
9,202

59.6
57.8

For referennce: Total equitty: End of first quarter, FY20118: 195,877million yen End ofo FY2017: 1995,053million yen.
*Total equuity = Shareholdders’ equity plu
us total accumullated other com
mprehensive income

Dividends forr Shareholderrs of Commoon Stock
2. Cash D
Cash dividends
dper share
Record date End-Q
Q1 End-Q2 End-Q3 Y
Year-endor period
FY20177
FY20188
FY20188(forecasst)

Total
T

y
yen

yen

yen

yen

-

12.00

-

24.00

36.00
3

14.00

-

26.00

40.00
4

Note: Revvisions from thee latest release ofo dividends forrecasts: Noneyen

3. Forecast of Consolidated Results for FY2018 (April 1, 2017 – March 31, 2018)
Percentages indicate year-over-year changes
Net income
Operatingattributable to Net income per
Recurring profit
Net sales
incomeowners of theshare – basic
parent company
First Half of FY2018(six months ending
Sep. 30, 2017)
Full FY2018(year ending Mar. 31,
2018)millions of yen%

millions of yen%

millions of yen%

millions of yen%

Yen

193,000

2.1

11,50022.0

11,500

20.7

6,800

19.7

79.30

400,000

1.7

30,00011.0

30,00010.7

18,00010.4

210.20Note: Revisions from the latest release of earnings forecasts: None

※ Notes(1) Material reclassifications of subsidiaries during the period: None
(Changes in specified subsidiaries resulting in change in scope of consolidation)
Additions: None
Exclusions: None
(2) Accounting methods specific to quarterly consolidated financial statements: None
(3) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards, etc.: None
2) Changes other than noted in 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Common stock issued
1) Issued shares as of period-end (including treasury stock):
End-First Quarter, FY2018 (June 30, 2017):
87,789,098 shares
End-FY2017 (March 31, 2017):
87,789,098 shares
2) Treasury stock as of period-end:
End-First Quarter, FY2018 (June 30, 2017):
2,276,626 shares
End-FY2017 (March 31, 2017):
1,701,923shares
3) Average number of shares (during the respective three-month period):First Quarter, FY2018 (ended June 30, 2017):
85,987,828 sharesFirst Quarter, FY2017 (ended June 30, 2016):
86,811,601 shares*Quarterly review status
These materials are not subject to the quarterly review procedure requirements of Japan’s Financial Instruments
and Exchange Act.
Caution on Forward-Looking Statements and Other Important Matters
This report contains forward-looking statements that reflect TIS Inc. (“TIS”)’s plans and expectations based on
information available to TIS at the time of preparation and on certain other information TIS believes to bereasonable. These forward-looking statements are not guarantees of future performance, and actual results,
performance, achievements or financial position may differ materially from those expressed or implied herein
due to a range of factors.
For the assumptions underlying the forecasts herein and other notice on the use of earnings forecasts, refer to“(2) Consolidated Earnings Forecast and Caution on Forward-Looking Statements” in the “1. Results ofOperations” section on page 4 in the Accompanying Materials.

Accompanying Materials – Contents

1. Results of Operations

2(1) Analysis of Consolidated Operating Results2(2) Consolidated Earnings Forecast and Caution on Forward-Looking

4Statements
2. Consolidated Financial Statements

5(1) Consolidated Balance Sheets

5(2) Consolidated Statements of Income and Comprehensive Income

7

Consolidated Statements of Income
For the First Quarter

7

Consolidated Statements of Comprehensive Income
For the First Quarter8(3) Notes on the Consolidated Financial Statements

9(Notes on the Going-concern Assumption)

9(Notes on Significant Changes in the Amount of Shareholders’ Equity)

9-1-

1. Results of Operations(1) Analysis of Consolidated Operating Results
In the first three months of fiscal 2018 (April 1, 2017 ~ June 30, 2017), the Japanese economy
continued a moderate recovery owing to high corporate earnings and an improvement in
employment conditions. Regarding the outlook, although it is necessary to monitor the impactof uncertainties surrounding the global economy and financial market fluctuations, the Japanese
economy is expected to continue its moderate recovery trend.
The business environment surrounding the IT services industry, to which the TIS INTECGroup belongs, was robust during the period. The Bank of Japan’s Short-term Economic Surveyof Enterprises in Japan (June 2017) revealed companies’ growing IT investment, as reflected ina 5.8% year-on-year increase in software investment plans (all manufacturing & financial
institutions).
Under these circumstances, the TIS INTEC Group promoted various measures for
implementing Group-wide reform to achieve further growth and raise corporate value, based on
the Group management strategy developed under the third medium-term management plan(from fiscal 2016 through fiscal 2018) currently being implemented.
Consolidated net sales for the Group for the first quarter increased 3.0% year on year to¥91,778 million. Operating income rose 25.8% from a year earlier to ¥5,053 million, recurring
profit increased 27.5% to ¥5,574 million, and net income attributable to owners of the parent
company rose 34.0% to ¥3,694 million.
Consolidated net sales grew year on year as the Group accurately grasped the IT investment
needs of its customers in areas where IT investment is growing. Profit grew year on year due tothe increased sales and measures to improve profitability, including measures to restrain
unprofitable projects. These positive factors absorbed higher selling, general and administrative
expenses for measures to enhance competitiveness, including the establishment of specializedorganizations and measures to bolster the corporate structure.
Segment results for the fiscal year are as follows. The sales figures for each segment include
inter-segment sales.
1) IT Infrastructure Services
Consolidated sales rose 3.1% year on year to ¥31,308 million while operating income declined
7.5% to ¥2,382 million for the year. Sales grew as the data center business expanded steadily
with contributions from large public-sector projects and growth in cloud-related business.
Operating income declined due to higher expenses for business-reinforcing initiatives and a
decline in the profitability of some BPO business.
2) Financial IT Services
Consolidated sales increased 10.8% year on year to ¥20,398 million, while operating income
increased 86.7% to ¥1,099 million. Sales and profits increased as a result of contributions fromlarge-scale projects for credit card companies and business expansion driven by growing IT
investment in the settlement field.
3) Industrial IT Services
Consolidated sales totaled ¥41,941 million, a change of 0.0%, while operating income increased
86.5% to ¥1,415 million. While sales from large-scale projects declined from robust levels inthe same period of the previous year, sales grew in the manufacturing sector owing to ERP
upgrade demand and overall expanding IT investment, underpinning segment sales on levelwith the previous year. Operating income grew on the success of initiatives to raise profitability,
including measures to restrain unprofitable projects.
4) OtherConsolidated sales declined 3.9% year on year to ¥2,635 million, and operating income
increased 10.8% to ¥254 million.

-2-

As previously stated, the Group is implementing its third medium-term management plan,
which ends with the current fiscal year. For the fiscal year under review, the Group formulated
the following Group management strategy in accordance with the management plan’s basic
concepts, and is promoting various measures for implementing Group-wide reform to achieve
further growth and raise corporate value.
Third medium-term management
plan basic concepts
Profit Emphasis
IT Brain(expansion of value-added business)
Portfolio Management

Group management strategy for fiscal 2018
Implement profit-oriented
thoroughly.

management

more

Make further upfront investments to establish new
growth engines.
Strengthen collaboration among Group companies
by leveraging the operating holding company
structure and rapidly execute structural reforms.

Regarding more thorough implementation of profit-oriented management, the Group
recognizes that the steady promotion of large-scale projects and the vigorous promotion of
productivity innovation are critical initiatives. Regarding the steady promotion of large-scale
projects, we are implementing each of the projects according to schedule throughcompany-wide management and monitoring systems. Regarding the vigorous promotion of
productivity innovation measures, the Group Production Innovation Committee is sharing
information on issues and countermeasures for unprofitable projects at each company. Measures
are being taken in accordance with the level of priority of each project, while Group-wide
information sharing conferences and working groups are being held to enhance technologicalcapabilities. Through these and other measures, we are steadily implementing productivity
innovation.
Regarding further upfront investments to establish new growth engines, the Group is taking
initiatives to further strengthen its settlement business, a core strength. The Group has taken
steps to establish an API platform as a shared platform for the retail settlement solution“PAYCIERGE 2.0” to maintain and enhance its competitiveness in the financial field amid
growing open API movements and open API trends for various services. In this way, the Groupis establishing environments in which services can be securely and rapidly implemented.
Additionally, to develop new initiatives in rapidly evolving new technologies fields, theGroup is promoting new business in the AI and robotics fields through investments in andcollaborations with start-ups and ventures. A new organization was also established in April
2017 to spearhead these initiatives and ensure the development of a structure under which highvalue-added proposals can be made to customers.
Regarding efforts to strengthen collaboration among Group companies by leveraging theoperating holding company structure and rapidly execute structural reforms, the Group is
actively deliberating and promoting priority and collaborative initiatives. As one example,
Group companies have begun connecting to the closed area network “DCAN” (Datacenter andcloud services - Customer Adapted Network) to enable a structure under which cross-selling canbe actively promoted among Group companies.
In conjunction with the transition to a holdings company system in July 2016, the Group
formulated and announced in May 2017 a new Group vision as its ideal corporate image for2026: “Create Exciting Future” ~ Utilize advanced technologies and know-how to realize
business innovation and market creation. Amid dramatic changes in the business environment,
the Group is uniting to leverage its accumulated IT strengths and expand its business fields
beyond traditional frameworks to ensure sustainable growth. Currently, the Group is holding
seminars for executives and distributing vision booklets to raise awareness and foster a sense ofunity. Additionally, the Group has begun to create specific measures as part of the ongoing-3-

effort to formulate the fourth medium-term management plan, including initiatives to transition
to four strategic domains.
The Group recognizes that a diverse workforce is critical to ensuring the Group’s sustainablegrowth and is actively implementing workstyle reforms to fully utilize employee talents.
Reflecting the success of Group initiatives, INTEC Inc. was certified by Japan’s Minister of
Health, Labor and Welfare as an outstanding company for promoting women’s participation in
the workplace, receiving the highest certification, the Grade 3 "Eruboshi" symbol.
Between May and July 2017, in accordance with its basic policy on shareholder returns, TIS
Inc. acquired 908,300 shares of treasury stock (aggregate acquisition cost of ¥2,859 million) as
part of its policy of executing a dynamic capital strategy responsive to changes in the businessenvironment and raising shareholder profit and capital efficiency.
(2) Consolidated Earnings Forecast and Caution on Forward-Looking Statements
As the Group’s consolidated business performance has been proceeding largely in line with theplan, the Group did not make any changes to the consolidated earnings forecast announced on
May 10, 2017.
The Company has adopted a total return ratio benchmark of around 35%. As a result of thepreviously mentioned share buyback, the Company estimates a total return of 35% in thecurrent fiscal year.
*Total return ratio: The ratio of the combined value of dividend payments and share buybacks
versus net income attributable to owners of the parent company.

-4-2. Consolidated Financial Statements(1) Consolidated Balance Sheets
As of March 31, 2017

Items
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Lease receivables and lease investment assets
Marketable securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Property and equipment
Buildings and structures, net
Machinery and equipment, net
Land
Leased assets, net
Other property and equipment, net
Total property and equipment
Intangible assets
Goodwill
Other intangible assets
Total intangible assets
Investments and other assets
Investment securities
Net defined benefit asset
Deferred tax assets
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets-5-

As of June 30, 2017

millions of yen

millions of yen

26,137
92,915
5,179
100
4,341
4,526
240
6,889
12,003(170)
152,162

38,91164,898
4,900
100
3,998
7,410
246
6,033
15,455(152)
141,80337,118
6,665
21,435
3,937
6,723
75,87837,277
6,799
21,435
3,819
6,520
75,851803
17,863
18,666763
18,12818,89164,1565,027
6,129
15,810(210)
90,914
185,459
337,622

65,6494,938
5,785
15,778(237)
91,914
186,657
328,461

As of March 31, 2017

Items
Liabilities
Current liabilities
Notes and accounts payable
Short-term borrowings
Income taxes payable
Accrued bonuses to directors and employees
Provision for loss on order received
Other allowances
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term debt
Lease obligations
Deferred tax liabilities
Deferred tax liabilities from revaluation of land
Accrued retirement benefits to directors
Other allowances
Net defined benefit liability
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Additional paid-in capital
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains on other securities
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

As of June 30, 2017

millions of yen

millions of yen

24,047
6,084
5,932
12,402
3,379
297
26,532
78,676

17,766
5,961
956
6,381
2,496
339
35,98869,891

26,263
5,304
2,676
403
66
419
16,876
7,735
59,743
138,420

25,055
5,031
3,042
403
65
359
16,986
7,601
58,545
128,437

10,001
82,91890,846(4,230)179,535

10,00182,742
92,474(6,062)
179,155

20,478(2,375)51(2,636)
15,517
4,149
199,202337,622

21,756(2,375)(34)(2,623)
16,721
4,146
200,024
328,461(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
First Quarter, FY2017First Quarter, FY2018
Items(Apr. 1 – Jun. 30, 2016) (Apr. 1 – Jun. 30, 2017)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expense
Interest expenses
Equity in losses of affiliated companies
Foreign exchange losses
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of fixed assets
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss
Loss on retirement of fixed assets
Loss on valuation of investment securities
Other
Total extraordinary loss
Income before income taxes
Income taxes: current
Income taxes: deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent company-7-

millions of yen

millions of yen

89,12873,303
15,824
11,807
4,017

91,77874,241
17,536
12,482
5,053

16
705
162
884

15
738
139
893

96
137
106
188
528
4,373

94
130
147
372
5,574

0
0

2
0
3

28
106
38
174
4,199
1,026
365
1,391
2,808
50
2,757

9
9
5,567
739
1,039
1,778
3,789
95
3,694

Consolidated Statements of Comprehensive Income
Items
Net income
Other comprehensive income
Net unrealized gains on other securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of equitymethod affiliates
Total other comprehensive income
Comprehensive income(Composition)
Comprehensive income attributable to owners of theparent company
Comprehensive income attributable to noncontrolling interests-8-First Quarter, FY2017(Apr. 1 – Jun. 30, 2016)

First Quarter, FY2018(Apr. 1 – Jun. 30, 2017)

millions of yen

millions of yen

2,808

3,789

477
51
10

1,287
1
13

(33)

(35)

506
3,314

1,266
5,056

3,221

4,898

93

157

(3) Notes on the Consolidated Financial Statements(Notes on the Going-concern Assumption)
Not applicable(Notes on Significant Changes in the Amount of Shareholders’ Equity)
Not applicable-9-