Consolidated Financial Results for the First Three Quarters of the Fiscal Year Ending March 31, 2020
(April 1, 2019 through December 31, 2019)(Prepared pursuant to Japanese GAAP)All financial information has been prepared in accord with accounting principles generally accepted in Japan.
This is a partial English translation of the original Japanese-language document. All information pertains toconsolidated results unless otherwise noted. Information on the basis of presentation of consolidated financial
statements does not appear in this translation.
February 6, 2020
Company name:
Stock exchange listings:
Stock code:
URL:
Representative:
Contact:
Phone:TIS Inc.
The First Section of the Tokyo Stock Exchange3626
https://www.tis.com/
Toru Kuwano, Chairman and President
Takashi Nakamura, Department Manager of Finance & Accounting Dept.,
Corporate Planning SBU.
+81 3-5337-4569

Scheduled dates
Submission of quarterly report:
Commencement of dividend payments:

February 13, 2020-

Supplementary materials to the quarterly results:
Quarterly results presentation held:

Available
Yes (targeted at institutional investors and analysts)

Figures in millions of yen are rounded down to the nearest million

1. Consolidated Results for the First Three Quarters of the Fiscal Year Ending March 31, 2020
(April 1, 2019 – December 31, 2019)(1) Consolidated Financial Results

Percentages indicate year-over-year changes
Net income
attributable toOperating income
Recurring profit
owners of theparent company

Net sales
millions of yen%

millions of yen%

millions of yen%

millions of yen%

319,009302,961

5.3
4.8

30,10325,022

20.3
20.9

31,39325,51623.0
21.8

20,436
16,97920.4
26.1

First Three Qtrs., FY2020
First Three Qtrs., FY2019

Note: Comprehensive income: First Three Qtrs., FY 2020 25,043 million yen (338.8%), First Three Qtrs., FY 2019 5,707 million yen (-77.2%),

Net income
per share –basic

Net income
per share –dilutedYenFirst Three Qtrs., FY2020
First Three Qtrs., FY2019

yen

243.32200.64-(2) Consolidated Financial Position
Total assets
End of Third Quarter, FY2020
End of FY2019

Net assets

Equity ratio

millions of yen

millions of yen%

369,320
370,657

248,640
234,408

66.0
62.0

For reference: Total equity: End of Third Quarter, FY2020: 243,617 million yen End of FY2019: 229,633 million yen.
*Total equity = Shareholders’ equity plus total accumulated other comprehensive income

2. Cash Dividends for Shareholders of Common Stock
Cash dividends per share
Record date End-Q1 End-Q2 End-Q3 Year-end
or period
FY2019FY2020
FY2020(forecast)

yen

-

yen

20.00
30.00

yen

-

yen

Total
yen

50.00

70.00

50.00

80.00

Note: Revisions from the latest release of dividends forecasts: None

3. Forecast of Consolidated Results for FY2020 (April 1, 2019 – March 31, 2020)
Percentages indicate year-over-year changes
Net income
Operatingattributable to Net income per
Net sales
Recurring profit
incomeowners of theshare – basic
parent company
Full FY2020(year ending Mar. 31,
2020)

millions of yen%

millions of yen

436,000

3.6

42,000%10.4

millions of yen

43,000%11.4

millions of yen%

Yen

28,80010.6

343.07

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

※ Notes(1) Material reclassifications of subsidiaries during the period: Yes(Changes in specified subsidiaries resulting in change in scope of consolidation)
Additions: None
Exclusions: 1 (Tianjin Xiangming Technology Co., Ltd.)(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-Third Quarter, FY2020 (December 31, 2019):
87,789,098 shares
End-FY2019 (March 31, 2019):
87,789,098 shares
2) Treasury stock as of period-end:
End-Third Quarter, FY2020 (December 31, 2019):
3,973,288 shares
End-FY2019 (March 31, 2019):
3,358,468 shares
3) Average number of shares (during the respective nine-month period):First Three Qtrs., FY2020 (ended December 31, 2019): 83,989,935 sharesFirst Three Qtrs., FY2019 (ended December 31, 2018): 84,627,327 shares
Note: Treasury stock includes the number of the Company’s own shares held by TIS INTEC Group
Employees’ Shareholding Association Trust and the Board Incentive Plan (BIP) Trust.
*Quarterly review status
These materials are not subject to the quarterly review procedures to be conducted by certified public
accountants or an audit firm.
Caution on Forward-Looking Statements and Other Important Matters
At a Board of Directors’ Meeting held on May 13, 2019, TIS Inc. (TIS) resolved to acquire its own (treasury)
shares in accordance with Article 156 of the Companies Act of Japan, as applied pursuant to Paragraph 3, Article
165 of said Act.
Accordingly, “Net income per share – basic” in the Forecast of Consolidated Results for FY2020 has beenpresented taking into account the effect of this acquisition of treasury shares.
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“(3) Consolidated Earnings Forecast and Caution on Forward-Looking Statements” in the “1. Results ofOperations” section on page 7 in the Accompanying Materials.

Accompanying Materials – Contents

1. Results of Operations

2(1) Analysis of Consolidated Operating Results

2(2) Analysis of Financial Condition

6(3) Consolidated Earnings Forecast and Caution on Forward-Looking Statements

7

2. Consolidated Financial Statements

8(1) Consolidated Balance Sheets

8(2) Consolidated Statements of Income and Comprehensive Income

10

Consolidated Statements of Income
For the First Three Quarters

10

Consolidated Statements of Comprehensive Income
For the First Three Quarters

11(3) Notes on the Consolidated Financial Statements

12(Notes on the Going-concern Assumption)

12(Notes on Significant Changes in the Amount of Shareholders’ Equity)12(Significant Subsequent Events)

13

3. Other Information

15

-1-

1. Results of Operations(1) Analysis of Consolidated Operating Results
In the first nine months of fiscal 2020 (April 1, 2019 – December 31, 2019), the Japanese economy continued amoderate recovery on the back of solid corporate earnings, an improvement in employment conditions, and otherfactors, which combined to overcome some weakening mainly in the manufacturing sector. Regarding the outlook, in
addition to the impact of uncertainties surrounding the global economy and financial market fluctuations, the impactof the recent consumption tax rate hike on consumer spending must also be monitored closely. Nonetheless, theJapanese economy is expected to continue its moderate recovery trend.
The business environment surrounding the IT services industry, to which the TIS INTEC Group (“the Group”)
belongs, was robust during the period. The Bank of Japan’s Short-term Economic Survey of Enterprises in Japan(December 2019) showed a 10.6% year-on-year increase in company software investment plans (all manufacturing &financial institutions), reflecting a strong trend for increased IT investment by companies aiming to realize theirbusiness strategies through the aggressive application of digital technologies.
In this environment, in order to build the foundation from which the Group will work to realize its Group Vision
2026, the Group promoted various measures to achieve a speedy structural transformation and raise corporate value
under the current medium-term management plan (2018–2020).
Consolidated net sales for the Group in the first nine months of fiscal 2020 increased 5.3% year on year to ¥319,009
million. Operating income rose 20.3% to ¥30,103 million, recurring profit grew 23.0% to ¥31,393 million, and net
income attributable to owners of the parent company expanded 20.4% to ¥20,436 million.
The increase in consolidated net sales was driven by the Group’s ability to accurately grasp the IT investment needsof its customers in areas where IT investment is growing. The increase in operating income reflects sales growth andhigher gross profit realized through improved profitability (the gross profit margin increased 1.5 percentage points
year on year to 23.4%). These positives offset an increase in selling, general and administrative expenses primarily
related to expenditures targeted at strengthening the Group’s efforts to achieve structural reforms. The operating
income ratio increased 1.1 percentage points year on year to 9.4%. The increases in recurring profit and net income
attributable to owners of the parent company mainly reflect the growth in operating income.
The consolidated results for the first three quarters of fiscal 2020 include extraordinary income of ¥7,232 million
and extraordinary losses totaling ¥7,196 million. The majority of these extraordinary items were posted in the second
quarter. The extraordinary income, as reported in our September 10 press release “Booking of Gain on Sale ofInvestment Securities (Extraordinary Income)”, came mainly from a ¥5,445 million extraordinary gain on the sale ofinvestment securities. The extraordinary losses came mainly from the booking of a total of ¥4,112 million in expenses
in connection with the transfer and consolidation of Group offices in the Tokyo area (a provision for office
restructuring cost) and impairment loss relating to the reorganization of some existing offices, conducted inaccordance with the Group’s plan to create next-generation offices.

Segment results for the period are as follows. The sales figures for each segment include inter-segment sales.
1) Service IT BusinessThis segment comprises Group businesses providing knowledge intensive IT services that leverage the Group’s
service and industry know-how to create universalized, template-oriented solutions for its customers (includes
default configuration and ERP).
Segment sales in the first three quarters of fiscal 2020 totaled ¥89,901 million, up 6.8% year on year, while
operating income fell 2.8% to ¥5,112 million. Sales increased mainly owing to the expansion of settlementrelated business. The decline in operating income was largely due to an increase in forward-looking investment
to strengthen the business and to the posting of losses related to strategy revisions targeted at further expansion of
our platform business. As a result, the segment’s operating income ratio decreased 0.5 percentage points year-onyear to 5.7%.

-2-2) BPOThis segment comprises businesses that leverage the Group’s extensive service and IT know-how to deliver
business process outsourcing (BPO) services, including marketing and sales services and office and contract
operations.
Segment sales in the three quarters totaled ¥24,619 million, down 11.2% year on year. Operating income
increased 30.5% to ¥1,767 million. The growth in operating income despite the decline in sales reflected the large
impact from the transfer of all the equity shares of certain consolidated subsidiaries to non-Group companies in
the previous fiscal year in line with management’s policy of concentrating on core businesses. As a result, theoperating income ratio improved 2.3 percentage points to 7.2%.
3) Financial IT BusinessThis segment comprises businesses that leverage business and operating know-how specific to the financial sector
to raise the value-added of clients’ operations, expand their use of IT, and provide support to operations using IT.
Segment sales in the first three quarters totaled ¥81,963 million, up 5.1% year on year, and operating income
expanded 16.9% to ¥10,510 million. Sales and profits increased due to the growth in IT investment by coreclients, despite the impact of the reactionary drop after the conclusion of large-scale development projects, andthe operating income ratio improved 1.3 percentage points to 12.8%.
The know-how utilized in services provided to specific clients was moved from the Industrial IT Business to
the Financial IT Business. In conjunction with this change, transactions with these clients are recorded under the
Financial IT Business in fiscal 2020, whereas such transactions were recorded under the Industrial IT Business inthe previous fiscal year. This change contributed to the increases in sales and profits in this segment.
4) Industrial IT BusinessThis segment’s businesses leverage business and operating know-how specific to non-finance industries to raisethe value-added of clients’ operations, expand their use of IT, and provide support to operations using IT.
Segment sales in the first three quarters totaled ¥144,506 million, up 8.3% year on year, and operating income
expanded 36.6% to ¥12,601 million. The increases in sales and profits were driven by expanding IT investment
by clients in a wide range of sectors, including core clients in the energy-related and manufacturing-related
sectors. The operating income ratio rose 1.8 percentage points to 8.7%.
The know-how utilized in services provided to specific clients was moved from the Industrial IT Business to
the Financial IT Business. In conjunction with this change, transactions with these clients are recorded under the
Financial IT Business in fiscal 2020, whereas such transactions were recorded under the Industrial IT Business inthe previous fiscal year. This change had a negative impact on sales and profits in this segment.
5) Other
The Other segment includes a number of ancillary businesses that provide leasing and other information systems
to clients.
Segment sales in the first three quarters totaled ¥6,497 million, down 4.5% year on year, operating income fell
6.7% to ¥671 million, and the operating income ratio slipped 0.3 percentage points to 10.3%. These results
primarily reflect the absorption merger of IT Service Force Inc., a wholly owned subsidiary responsible for theGroup’s shared services, and inclusion of that business’s results in the Other segment from the second quarter ofthe fiscal 2019.
As noted above, the Group has been implementing a medium-term management plan (2018 – 2020) from the startof fiscal 2019. This plan will build the foundation from which the Group will work to realize its Group Vision 2026.
By striving to fulfill the new plan’s five basic policies—“Sustainable profit growth”, “Emphasis on employee selffulfillment”, “Concentrate on core businesses”, “Shift to prior investment style of business development”, and“Expand global business”—we aim to achieve a speedy structural transformation and raise corporate value.

-3-

In fiscal 2020, the Group is energetically implementing various measures in line with the following Groupmanagement policies.
Group Management Policies for Fiscal 2020
1) Robust prior investment to fuel business expansion and structural transformation
2) Promote measures and review business portfolio with view toward higher profitability
3) Promote growth strategy aimed at becoming a top-class IT group in the ASEAN region4) Boost motivation and take human resource management to a higher level5) Realize enhanced management practices and higher efficiency
The major initiatives taken in the first three quarters of fiscal 2020 are presented below.

1) Robust prior investment to fuel business expansion and structural transformation
The Group aims to shift towards business that anticipates the needs of customers from the perspective of social
issues and will carry out investment with an emphasis on the Group’s growth and areas of strength, targeting the
growth of service-style business, which is positioned as a growth engine.
In the payment services domain, where we expect changes in the market environment due to the shift to
cashless services to lead to new IT investments, we are leveraging the insight and know-how cultivated overmany years to expand a service-type business under our PAYCIERGE total-brand payment solution.
As a part of this, we are moving forward with preparations to launch the Credit Card Processing Service thatfully leverages the technologies and expertise cultivated through our credit-card core operations system. The
new service will enable customers to improve competitiveness and reduce costs by using a system that optimallybalances the merits of shared data with customers’ proprietary data.
In preparation for the expected emergence of a variety of new services due to the advance of the cashless
economy and IoT (the Internet of Things), we have launched and promoted the Digital Wallet Service, a new
payment-related service-type business that integrates services for various payment methods and consumer
interfaces, including physical stores, e-commerce, and online apps, into one app. We provided the Digital Wallet
Service in support of the creation of the payment app TOYOTA Wallet launched in November 2019 by Toyota
Motor Corporation, Toyota Financial Services Corporation, and Toyota Finance Corporation. TOYOTA Wallet
is a smartphone app that can be used with multiple payment methods, including electronic money, QR codes,
and barcodes. In January 2020, the Company decided to acquire Sequent Software Inc., a US fintech company
with tokenization technology, a key technology used in the Digital Wallet Service. The acquisition wascompleted in February and Sequent Software became a consolidated subsidiary. Tokenization-related business is
expected to expand globally with the spread, for example, of IoT payments utilizing next-generation 5G
networks. Making Sequent Software a consolidated subsidiary enables us to promptly bring its leading
tokenization technologies into the Group, which will accelerate the expansion of the Digital Wallet Service andsupport our development of IoT payments.
In response to the progress of new technologies such as FinTech, IoT, and AI, as well as industry trends, weare proactively embracing open innovation and are accelerating partnerships with start-up companies. This
includes our investment in investment in U.S. venture capital fund Sozo Ventures II-S.
As part of our preparations for future business development, we added “Electronic settlement agency andbusiness relating to transfer of funds” as a new purpose in Article 2 of our Articles of Incorporation and are also
participating in demonstration tests for potential new businesses, such as a MaaS (Mobility as a Service)
demonstration test to promote tourism in the Yaeyama Islands of Okinawa Prefecture by creating aninterconnected transportation network comprising buses, taxis, and inter-island ships. Japan’s Ministry of Land,
Infrastructure, Transport and Tourism (MLIT) has selected the Yaeyama Islands MaaS demonstration test as a
“Pioneering Model Project” among “Projects for the Promotion of New Mobility Services” being carried out topave the way for nationwide application. Demonstration testing started in November 2019.
-4-2) Promote measures and review business portfolio with view toward higher profitability
Targeting further strengthening of our business competitiveness, we are continuing our efforts to eliminate
unprofitable projects and promote reforms aimed at further improving the profitability of enhancement areas.
These efforts have steadily contributed to improvement in the Group’s gross profit margin, which increased 1.5
percentage points year on year in the first three quarters to 23.4% despite the impact of losses booked in relation
to revision of strategies aimed at further reinforcing the Group’s platform business.
In the Cloud & Security field, we entered into a business alliance with LAC Co., Ltd., which possesses
industry-leading insight in the security field. Together, our companies plan to introduce a next-generation-type
cloud and security service platform that will quickly realize “security by design.” In addition, during the period
under review, we revised our strategy with the aim of further strengthening the key components of the platformbusiness, including cloud, security, data center, and network-related business. To accelerate the development ofbusiness in such growth areas as “Cloud & Security,” we established a business strategy promotion unit with themission of handling investment strategy, marketing strategy, and human resources strategy within the Company.
We are also consolidating our brands under Group company EINS WAVE, which brings together our
cumulative knowhow to provide the full portfolio of platform services offered by the Group.
As part of this effort, the Company decided to transfer the EDI (Electronic Data Interchange) business to its
wholly owned subsidiary INTEC, Inc. through an absorption-type company split. Consolidating the EDI
business under INTEC will contribute to the ongoing effort to achieve optimal management of the entire Group.
In addition to advancing Group restructuring, the transfer will strengthen the competitiveness of the EDI
business and contribute to its expansion, therefore also helping to raise the overall value of the Group.
3) Promote growth strategy aimed at becoming a top-class IT group in the ASEAN region
As part of our efforts to acquire state-of-the-art technologies and deploy these in global markets, we entered intoa capital and business tie-up with Singapore-based SQREEM Technologies PTE. LTD. SQREEM is one of theworld’s largest behavioral pattern data aggregators. It is enjoying rapid growth in the fields of digital marketingand data analytics using proprietary AI technologies based on massive data collection. Leveraging SQREEM’s
advanced AI technologies and the Group’s business insight cultivated in various industries, including financial
services and manufacturing, the Group aims to become a leader in AI-based data analytics in Japan and theASEAN region.
4) Boost motivation and take human resource management to higher level
TIS aims to be a company where employees are highly motivated. To achieve the growth of each member of ourdiverse group of employees as well as the sustainable growth of the Company, we are implementing various“workstyle reforms” and “health management” measures.
As a part of this effort, in April 2019, we launched several new human resources-related programs, including“teleworkers” (employees who mainly work remotely on a full-day basis), as well as a “work-interval system”
and a “smart-work allowance.” With these and other measures, we are creating an environment that considers
employees’ health and makes diverse working styles possible. The Company is constantly working to improveconditions for its employees by, for example, reducing overtime, increasing the annual vacation usage rate, andintroducing various work-related systems. We have obtained “Kurumin” certification from the Ministry of
Health, Labor and Welfare for four consecutive years and recently were awarded the “Platinum Kurumin”
certification granted to “Kurumin” certified companies deemed to be making the greatest efforts to introduce andpromote the use of systems that support and encourage employees balancing child-rearing and work.
5) Realize enhanced management practices and higher efficiency
In January 2019, we announced a new Group basic philosophy, “OUR PHILOSOPHY,” which provides thecommon values that will serve as the basis for all activities of the entire Group. The Group is energeticallyholding training sessions on “OUR PHILOSOPHY” to ensure widespread awareness among all officers andemployees in the Group as a basis for carrying out our corporate activities with confidence and conviction underunified, group-wide management. In addition, we are strengthening our corporate sustainability initiatives. As-5-part of this effort, we established policies targeting the environment, sustainable procurement, and diversity andinclusion.
Also, to realize more sophisticated Group management, we are continuing the “G20” project to enhance
headquarters functions. As part of this, a project to build a new core Group system is progressing on schedulewith an expected launch in fiscal 2021. We are also making steady progress with the establishment of a future
framework for promoting Group-wide shared services along with the designation of target operations and thesetting of deployment schedules.
As part of our efforts to strengthen the management foundation that supports the enhancement of corporate
value, we are also bolstering our strategic branding activities with the aim of expanding business opportunities,
improving our personnel recruitment capabilities, and raising employees’ pride in their work. Based on thispolicy, beginning in the third quarter and continuing into fiscal 2021, we will be making concentrated investments
based on a communication plan designed to enhance brand awareness as rapidly as possible.
In addition, to promote the Group’s work-style reforms and foster greater communication within the Group,
we decided to move and consolidate Group offices in the Tokyo area to a new base in Toyosu to be opened infiscal 2021. This move will create a double-core office structure in the Tokyo area, with the business functionsof TIS Inc. and INTEC, Inc. brought together in the new Toyosu office and both companies’ head-office
functions housed in the Nishi-Shinjuku office. This consolidation of Group offices in the Tokyo area will
strengthen the sense of unity with which we conduct our business and enable us to accelerate the structuraltransformation that is a goal of our medium-term plan as well as strengthen corporate governance.
In addition to the above initiatives and in line with the Group’s policy of flexibly managing its capital position to
enable flexible responses to its operating environment while continuing to enhance shareholder returns and capitalefficiency, we carried out a share buyback from May to July 2019, resulting in the acquisition of 749,800 shares at a
total acquisition cost of ¥4,139 million.

(2) Analysis of Financial Condition(Assets)
Consolidated total assets as of the end of the third quarter on December 31, 2019, amounted to ¥369,320 million, adecrease of ¥1,336 million from ¥370,657 million at the end of the previous fiscal year on March 31, 2019.
Current assets totaled ¥167,849 million, down from ¥176,231 million, primarily owing to a ¥11,229 million
decrease in notes and accounts receivable.
Fixed assets totaled ¥201,471 million, up from ¥194,426 million, owing mostly to a ¥8,141 million increase ininvestment securities.
(Liabilities)
As of the end of the third quarter on December 31, 2019, total liabilities amounted to ¥120,680 million, a ¥15,568
million decrease from ¥136,248 million at the end of fiscal 2019.
Current liabilities totaled ¥71,035 million, down from ¥91,126 million, mainly reflecting a ¥7,317 million
decrease in income taxes payable.
Non-current liabilities amounted to ¥49,644 million, up from ¥45,121 million, primarily owing to an increase of¥1,994 million in long-term debt.
(Net assets)
Net assets as of the end of the third quarter totaled ¥248,640 million, up ¥14,232 million from ¥234,408 million at
the end of the previous fiscal year. The increase primarily reflects a ¥13,668 million increase in retained earnings,
mostly from the increase in net income attributable to owners of the parent company.

-6-(3) Consolidated Earnings Forecast and Caution on Forward-Looking Statements
The Group achieved a solid consolidated business performance in the first nine months of fiscal 2020. Over theremainder of the fiscal year, the Group aims to achieve its full-year targets by steadily implementing various
measures. As of the release of this quarterly earnings report, management has made no changes to the consolidated
earnings forecast announced on November 1, 2019.
From fiscal 2019, the Company has adopted a total return ratio* benchmark of 40% as a basic policy for shareholder
returns. Considering the previously mentioned share buyback and the current consolidated earnings forecast, theCompany estimates the total return will come to 37.7% in fiscal 2020.
*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-7-

2. Consolidated Financial Statements(1) Consolidated Balance Sheets
As of March 31, 2019

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
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
Software
Software in progress
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-8-

As of Dec. 31, 2019

millions of yen

millions of yen

57,591
88,121
4,122
100
5,043
4,064
234
17,331(377)
176,231

57,13076,891
3,932
200
5,260
8,005
240
16,808(621)
167,849

38,001
8,124
18,3992,523
6,073
73,12334,258
7,172
17,015
1,877
6,443
66,767

12,542
6,635
371
965
20,514

14,547
8,900
274
1,030
24,75367,7195,134
10,01318,017(96)
100,788
194,426
370,657

75,861
5,283
7,889
21,680(764)
109,950
201,471369,320

As of March 31, 2019

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
Provision for loss on liquidation of subsidiaries andassociates
Provision for office restructuring cost
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
Provision for office restructuring cost
Other allowances
Net defined benefit liability
Asset retirement obligations
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-9-

As of Dec. 31, 2019

millions of yen

millions of yen

23,3386,285
9,299
13,935581

19,811
1,755
1,981
7,083
533

2,248

‐

‐
219
35,21891,126

1,166
110
38,592
71,035

18,498
3,238
58
272
56
‐
406
12,497
4,103
5,989
45,121
136,248

20,493
2,602
1,596
272
34
819
224
12,463
2,836
8,302
49,644
120,680

10,001
82,945
130,703(11,816)
211,834

10,001
82,950144,372(15,418)
221,905

22,701(2,672)(257)(1,972)
17,7994,775
234,408
370,657

26,181(2,672)(239)(1,556)
21,712
5,022
248,640
369,320

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
First Three Qtrs.,
First Three Qtrs.,
FY2019FY2020Items(Apr. 1 – Dec. 31, 2018) (Apr. 1 – Dec. 31, 2019)
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
Financing expenses
Equity in losses of affiliated companies
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sale of investment securities
Gain on sales of fixed assets
Other
Total extraordinary income
Extraordinary loss
Impairment loss
Data center transfer cost
Provision for office restructuring cost
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-10-

millions of yen

millions of yen

302,961
236,676
66,284
41,261
25,022

319,009244,518
74,491
44,38830,103

132
983
475
1,591

191
858
911
1,962

254
302
148
393
1,098
25,516

177
125
141
226
672
31,393

13,145913
301
14,360

6,482
94
655
7,232

457
8,800
‐
3,989
13,247
26,628
6,465
2,641
9,106
17,522542
16,979

3,628
‐
1,985
1,582
7,196
31,4288,614
1,690
10,304
21,124687
20,436

Consolidated Statements of Comprehensive Income
First Three Qtrs.,
First Three Qtrs.,
FY2019FY2020(Apr. 1 – Dec. 31, 2018) (Apr. 1 – Dec. 31, 2019)

Items
Net income
Other comprehensive income
Net unrealized gains on other securities
Revaluation reserve for land
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-11-

millions of yen

millions of yen

17,522

21,124(11,589)
(296)
(327)
524

3,499
‐
(79)
417

(127)

82

(11,815)
5,707

3,919
25,043

5,193

24,349513

694

(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-12-(Significant Subsequent Events)(Business Combination through Acquisition)
The Company resolved at a Board of Directors meeting held on January 21, 2020 to acquire additional shares ofSequent Software Inc. to make it a subsidiary. On February 6, 2020, the Company bought additional shares ofSequent Software Inc. and made it a subsidiary.
1. Overview of business combination(1) Name of acquired company and its business
Name:Sequent Software Inc.
Business: Development of software and services relating to mobile payments(2) Main reasons for business combination
Management expects that tokenization-related business will see worldwide growth, fueled by the spreadof tokenization technology for IoT payment solutions using next-generation 5G networks. In light of thisand other factors, management came to the conclusion that, promptly bringing Sequent’s tokenization
technology into the TIS INTEC Group to accelerate expansion of its digital wallet services and actively
apply tokenization to IoT payment solutions, would contribute to medium- to long-term enhancement of
the Group’s corporate value.
(3) Date of business combination
February 6, 2020
(4) Legal form of business combination
Acquisition of shares(5) Name of acquired company after business combination
No change.
(6) Ratio of voting rights acquired
Ratio of voting rights held by the Company before the business combination: 13.1%
Ratio of voting rights additionally acquired on the date of the business combination: 46.9%
Ratio of voting rights held by the Company after the business combination: 60.0%(7) Main reason for deciding on the acquired company
The Company acquired the shares of Sequent Software Inc. primarily with cash as consideration.
2. Acquisition cost of the acquired company and breakdown of consideration by type
Consideration for acquisition: Cash and deposits: 1,649 million yen
Other:
1,101 million yen
Acquisition cost:
2,750 million yen
3. Type and amount of major acquisition-related expenses
Advisory fees and commissions and other related expenses: 134 million yen
4. Goodwill amount, cause, amortization method, and amortization period(1) Amount of goodwill
2,688 million yen
The amount has been calculated on a provisional basis because allocation of the acquisition cost is yet tobe completed.
(2) Cause
Because the acquisition cost was higher than the amount of net assets at market value at the time of thebusiness combination, the difference is recognized as goodwill.
(3) Amortization method and amortization period
The Company examined the recoverable amount of the goodwill based on the expected future cash flow.
As a result, the amount of unamortized balance of goodwill is expected to be recorded as impairment
loss at the end of the fiscal year ending March 31, 2020.
-13-

5. Amounts and breakdown of assets and liabilities accepted on the date of the business combination
Current assets:
74 million yen
Fixed assets:
554 million yen
Total assets:
628 million yen
Current liabilities:
887 million yen
Non-current liabilities:534 million yen
Total liabilities:
1,422 million yen(Stock Split and Partial Amendment of Articles of Incorporation Accompanying Stock Split)
TIS resolved at a Board of Directors meeting held on February 6, 2020, to implement a stock split.
1. Purpose of the stock split
The purpose of the stock split is to enhance the liquidity of the Company’s stock and expand its investor base bylowering the stock price per investment unit.
2. Overview of the stock split(1) Method
Each share of common stock owned by shareholders listed or recorded in the closing register of shareholders on
the record date of Tuesday, March 31, 2020, shall be split into three shares.
(2) Number of shares to be increased by the stock splita) Total number of shares outstanding prior to stock split

87,789,098 sharesb) Increase in number of shares due to stock split

175,578,196 sharesc) Total number of shares outstanding following stock split

263,367,294 sharesd) Total number of authorized shares following stock split

840,000,000 shares(3) Schedule of the stock splita) Public notice of record date

March 13, 2020 (provisional)b) Record date

March 31, 2020 (provisional)c) Effective date

April 1, 2020 (provisional)(4) Impact on per share information
Per share information of the case given that the stock split had been conducted at the beginning of the prior fiscal
year is as follows.
First Three Qtrs., FY2019(Apr. 1 – Dec. 31, 2018)
Net income per share – basic

First Three Qtrs., FY2020(Apr. 1 – Dec. 31, 2019)¥66.88¥81.11

Note: “Net income per share – diluted” is not presented as there are no diluted shares.
3. Partial amendment of Articles of Incorporation(1) Reason for amendment
The total number of authorized shares prescribed in Article 5 of the Company’s Articles of Incorporation shall beamended in conjunction with the stock split as provided for in Article 184, Paragraph 2 of the Companies Act,
effective Wednesday, April 1, 2020.
(2) Details of amendment
Details of the amendment shall be as follows:(Amended part is as underlined below)
Prior to amendment

After amendment(Total number of shares authorized to be issued)
Article 5: The total number of shares authorized to
be issued by the Company shall be 280,000,000
shares.

(Total number of shares authorized to be issued)
Article 5: The total number of shares authorized to
be issued by the Company shall be 840,000,000
shares.

(3) Schedule of amendment
Effective date of partial amendment to Articles of Incorporation: April 1, 2020-14-

4. Other information(1) Change in amount of capital
The amount of the Company’s capital shall not change as a result of the stock split.
(2) Dividends
The effective date of the stock split is April 1, 2020. Hence, with regard to the year-end dividends for the fiscal
year ending March 31, 2020 (which have a date of record of March 31, 2020), the dividend payment shall be
executed based on the number of shares held prior to the stock split. In addition, there is no change to theforecast for fiscal 2020 year-end dividends as a result of the stock split.

3. Other Information
INTEC Inc., a consolidated subsidiary of the Company, is currently in litigation with Mitsubishi Shokuhin Co.,
Ltd., which filed a claim for compensation in connection with services including systems development provided
by INTEC Inc. (Amount of compensation demanded: 12,703 million yen; date the complaint was received:
December 17, 2018).

-15-