2023
アイティ
フォー統 合レポート
INTEGRATEDREPORTFORFOR

A BETTER LIFE AND
SUSTAINABLE FUTURE

1. Introduction

Corporate Mission

IT, for individuals and for society
Information technology (IT) is a force of enrichment forindividuals and society alike. As technology rapidly evolves,
IT’s potential to add value only grows. We envision a world
where IT is a source of happiness. The essence of our
mission to make it so is encapsulated in our name: ITFOR.
ITFOR Inc., founded in 1972 as CJK Co., Ltd., got its start
importing and selling information equipment and systems.
As the years progressed, we sharpened our skills and began
crafting advanced systems for niche sectors, marking
milestones along the way. These include our launches
of Japan’s inaugural online point-of-sale (POS) systemand pioneering auto-call system for debt reminders.
Our trajectory, however, has not been limited to theprovision of systems. We have ventured further to caterto our customers’ evolving needs with value-added
services that propel our growth. Today, we harness ourcutting-edge technology and wealth of experience tooffer comprehensive services that embrace not just ourcustomers but also the larger community they are a part of.
ITFOR’s management philosophy is to bring happiness throughthe power of empathy. At the heart of our IT systems andbusiness process outsourcing (BPO) services lies a steadfast
commitment — an enduring mission to elevate the experiencesof all. From regional businesses to the vibrant communities theycall home, we dedicate ourselves to making a positive impact.

23

1. Introduction

Editorial policy
This report provides insight into ITFOR Inc.’s ongoing efforts to enhance its
corporate value and the sustainability thereof. To ensure clarity for our stakeholders,
including shareholders and investors, we have edited this report to interrelatevital financial and nonfinancial information, with an emphasis on key initiatives.
In compiling this report, we have taken guidance from the International Integrated
Reporting Council (IIRC)’s International Integrated Reporting Framework and fromJapan’s Ministry of Economy, Trade and Industry’s Guidance for Integrated Corporate
Disclosure and Company-Investor Dialogue for Collaborative Value Creation.

Contents
1. Introduction

6. Message from the President

22

Corporate mission

2

Contents 		

4

7. Value Creation Strategy

Editorial policy 		5

Three-year medium-termbusiness plan

28

Financial Systems Division

30

Payment Systems Division

32

Retail EC Systems Division

33

2. Business Overview
Business and social contributions 6
Business activities structured
to deliver

8

CTI Systems Division34

Corporate history 		

10

Communications Systems
Division 			35

Public Systems Division

36

Technology Development
Department 		

37

3. Value Creation Process
Purpose 			12

Overview of business model

14

4. Special Feature:
Dialog with a Customer

16

8. Message from the CFO

38

9. Sustainability Management
5. Highlights

4

Financial data

20

Nonfinancial data

21

Digital transformation for
productivity and added value

45

Human capital valued

46

Management foundations
strengthened throughcorporate governanceManagement foundations
strengthened throughcompliance and risk
management

10. Message from an
Outside Director 		

48

50

A description of the value-creation process is central to this report.
By leveraging nonfinancial assets, such as human resources and IT
infrastructure for digital transformation (DX), we offer our mainstay regional
clients innovative and optimal services. This aligns with our commitment
to regional revitalization and elevates our corporate value. The businessmodel for achieving these goals is detailed on pages 12-15.
We hope that this report serves as a tool to enhance your understanding of
our company and can act as a dialogue with all of our stakeholders.
■ Reporting period: April 1, 2022, to March 31, 2023
Certain nonfinancial information covers the period until June 30, 2023.
■ Scope of reporting: ITFOR Inc.
Overall financial information herein covers all six companies in the ITFOR Group.

51

11. Financial Information
A Decade of performance52

Background to change insegment classification

54

Analysis of fiscal 2022
performance 		54

11-year financial summary

56

ITFOR’s approach tosustainability 		40

ESG initiatives 		42

12. Corporate Profile

Reduced environmental impact

43

Executive officers

58

Societal contributions throughregional revitalization

Corporate details 		59

44■ Disclaimer
This report has been prepared mainly to share insights into ITFOR Inc.’s efforts
to boost its corporate value. It is not a solicitation for the purchase or sale ofshares. Any projections or outlooks presented herein are not a guarantee of future
performance. The names of companies, services, and products mentioned in thisreport are trademarks or registered trademarks of their respective owners.
For more detailed information, please refer to our website:www.itfor.co.jp/en
Current issue date: December 1, 2023
Next issue date: planned for some time in September 2024

5

2. Business Overview

Solutions forfinancial institutions
Simplifying the homeloan process
The home loan review process,from application to approval, can betime-consuming. ITFOR’s home loansystem automates and standardizes
the process. Approval, whichusually takes several days, can becompleted on the same day as theapplication or next day, ensuring that
customers promptly learn if they’vebeen approved for a home loan.

Business and social contributions

Support for the sustainable
development of people and society

Solutions for retailers
and e-commercebusinesses

Solutions for public
institutions

Browsing in-store andpurchasing online

Managing school enrollment
Managing the enrollment ofschool-age children, especially toattend schools across borders orfor special needs, can be complex.
ITFOR offers a school registermanagement system and a school
meal fee management system
to streamline the process foreducation boards and school staff.

Omnichannel strategies, which
aim to boost sales by integrating
e-commerce sites with physicalstores, require the seamlessintegration of e-commerce and coreretail management systems. ITFOR
offers both systems and so is able
to ensure their coordination forconvenient shopping experiences.

Childbirth

From our earliest days, we have focused on serving regional financial
institutions, department stores, and municipal governments. In
collaborating with these entities, ITFOR’s guiding principle is consideration
for the community served by its clients. Our engagement through our
products and services with the linchpins of local economies and societies
helps us in our efforts to make a meaningful difference. This ethos
represents ITFOR’s profound commitment to society and its individuals.

Kindergarten andschool enrollment

Retirement

ITFOR serves mainly regional clients whose business activities underpin
local economies and social networks. This approach embodies ourbusiness-to-business-to-consumer (B2B2C) model. Our goal is to positively
influence and enhance the lives of individuals to improve society overall.

FOR

Child-rearing

EVERY LIFE STAGE

Education

The solutions that ITFOR provides to its clients are wide ranging andinclude business automation, digitalization, and security. They grantusers time and peace of mind. Without a doubt, they are helping todrive ITFOR, its clients, and the societies of which we are a part towarda brighter, more prosperous future—a vision uniquely human.
ITFOR considers itself a B2B2C company that serves more thanjust corporate clients. We also strive to sustainably develop
communities and the lives of their individual inhabitants.

Employment

Solutions forcontact centers

6

Graduation

Marriage

Solutions for infrastructureand data security

Solutions forcashless payments

Heightening inquiry
response efficiency

Countering cyberattacks
for peace of mind

Offering more-versatile
payment methods

Contact centers are indispensableas typically the first point ofcontact for product inquiries. ITFOR
offers call recording systems
and more to enhance operator
efficiency. Our offerings support
seamless responses to inquiries toeliminate customer wait times.

The Internet offers many benefits,
but its prevalence also increases
the threat of cyberattacks. ITFOR’s
cybersecurity solutions are designedwith postinfection or intrusion
scenarios in mind. Our systems
promptly detect threats to minimize
data breaches and other damage.

ITFOR’s multi-payment terminal
accommodates various payment
methods in a single device,including credit cards, electronicmoney, and QR codes. It helps save
space and labor by overcoming
the need to install and switch
between multiple payment
terminals, and in its versatility
increases sales opportunities.

72. Business Overview

Business activities structured to deliver

Stable growth in twosegments focused on
customers and society
ITFOR’s dedication to meeting its customers’ needs is wellacknowledged within its market. That compels us to continuously
introduce solutions through our System Development and Sales
segment, which, in turn, fuels our growth. Our Recurring Businesssegment ensures that our solutions are used with confidenceby customers, leading to ongoing customer engagementthat contributes to our strong management foundation.

ITFOR sales breakdown

Maintenance services
and usage fees

Financial systems

23.0%

27.1%

Our six business divisions deliver solutions:● Financial Systems Division

Provides systems to promote consumer product sales, loan
reviews, and debt management for entities such as banks,
credit card companies, and consumer finance companies

Recurring
Business segment

42.1%● Public Systems Division

Offers debt management solutions for local governments,
including delinquency management and notice service
systems; provides academic support solutions for educational
institutions; and delivers outsourcing services● Retail EC Systems Division

Net sales¥18.3
billion

SystemDevelopment andSales segment

57.9%

Public systems

2.0%

Business process
outsourcing

Retail EC systems

3.5%

19.1%

Furnishes detailed support for retail operations through a coresystem that encompasses essential functions, such as productmanagement, sales management, and customer management

CTI systems

6.6%

Communications systems● CTI Systems Division

Ensures comprehensive support for contact center operations,enabling automation through AI and robotics technology, andcollects customer feedback for improved service quality● Communications Systems Division

6.6%
Other

3.7%

Payment systems

8.4%

Constructs corporate IT infrastructure, with a focus on server
infrastructure, cloud services, and security measures● Payment Business Division

Supplies multi-payment terminals that support the retail industry’s largest
number of payment methods to financial institutions and retailers,
thereby contributing to the advancement of a cashless society

892. Business Overview

Corporate history

Evolving in tandem with
regional societies

FOR

ITFOR was founded in 1972 as CJK Co., Ltd. Under that name,the company’s business was the import and sale of informationequipment and systems from overseas. By 1975, however, we had
developed and introduced Japan’s first online POS system. Everexpanding capabilities led us in 1983 to develop and introduce a
personal credit information inquiry and debt management system.

SMILES AND SOLUTIONS:OUR STORY

1999

2017

Retail EC Systems

Payment Systems

2008

2021

Public Systems
2018

ITFOR has continued to provide optimal products and services
to customers central to regional economies, among themregional financial institutions, governments, and department
stores. This, of course, has contributed to our growth, as has
our 2017 move into new business areas with our developmentof payment cloud and payment terminal solutions.

2017

1999

CTI Systems

2008

2004

2001

2012
Introducesbusiness process
outsourcing (BPO)
services for CARS

2000
1999

1983

Financial Systems

1975

1986
1985

1972

Communications
Systems

1983

1979

1972

1979
Starts sale of local area
network (LAN) systems

1975
Develops Japan’s first online
point-of-sale (POS) system

10

1992
Launches sales of multiband
equipment for multiplexing ISDN
lines in Japan

1986
Develops a personal loan collection
management system “CMS”
1985
Releases a desktop videoconference system

1983
Develops the personal credit
information inquiry system “MICS2.0”
Develops auto-call system

1975

1972
Founded2008
Develops the ITFOR-developed
Civic Administration Relationship
Service “CARS”

1992

Releases a high-speed
time-division multiplexing(TDM) system

2021
Commences sale of the AI-based
EDR service “CyCraft AIR” forprotecting against cyberattacks

2020
Develops and commences sale ofweb-based loan application
system “WELCOME”

2012

Our history is characterized by a journey alongside the regions
we serve. In pursuing our mission, we provide inspirationand meaningful experiences for our regional customers andcommunities in an ongoing effort to contribute to a joyful society.

Retail Systems

2020

2018
Develops the ITFOR Package Cloud
service “IPaC”
Develops and commences sale ofrobotic call technology

2017
Develops and commences sale ofthe cashless payment platform “iRITSpay”
Develops personal loan operation
support system “SCOPE”

2004
Develops Retail Information Technology
System for Strategic Management “RITS”
Develops the e-commerce site
construction package “ITFOReC”
2001
Develops an automatedhome loan approval system
2000
Goes public on the JASDAQ Securities Exchange
and changes name to ITFOR Inc.
Develops the total collection system “TCS”
1999
Initiates sale of digital voice logging system
Releases e-commerce system

113. Value Creation Process

PurposeITFOR strives to evoke happiness and satisfaction
through empathy
With the diversification of business and personal consumer needs amid changes in the social
environment, ITFOR contributes to societal stability by invoking the power of empathy to evoke smiles
and satisfaction. ITFOR’s information technology (IT) systems and business process outsourcing(BPO) support businesses and individuals in the interest of establishing a sustainable society.
Human capital
Customer capital

Retail/department
store

Local government/
educational institute

Providecomprehensive
B2B2C services

Financial
institution

Payment
infrastructure

System (IT)/Service (BPO)Intellectual capital
Contact
centerFinancial capitalSocialinfrastructure
Expand services andenhance quality
Foster local employment
and human resources
Stimulate cashless purchasing
Enhance customer andsocial infrastructure

OutputInput

FOR A SUSTAINABLE FUTURE:

Toward a community full of excitement and happinessIndustry-specificexpertise

Solid customer
base
Niche businessstrategy

Quality human resources
to support society

12Abundant time

Safe andsecure society

Sound corporate activities
and sustained corporate value

Independentcompany

Outcomes

Strengths

External environment

Reducedenvironmental impact

Regional
revitalization

In-house developmentwith advanced
technology

International situation

Declining birth rate and aging population

Insufficient personnel

Diversification of social systems

Technological innovation

DX advancement133. Value Creation Process

Overview of business model

A business model of five strengths
In the rapidly changing and unpredictable world of IT, ITFOR’s steady development over 50
years is supported by a business model that leverages five strengths. ITFOR continues its
growth through that business model, tapping those strengths to ensure solid relationships
with customers and the prospecting of new customers and business domains.

Expertise in specific industries and nichebusiness strategy
The starting point of ITFOR’s business model is toconcentrate on specific industries, such as regional
financial institutions, local governments, and department stores, to enhance its own expertise. The
concentration of our management resources gives
us a deep understanding of our customers and theirneeds and refines our expertise and specializationin providing optimal solutions tailored to niche areas
within industries. In this way, we create unique valuethat shows our distinctive abilities to the full.

ITFOR’s Business Model

Initiatives for human resource development

Industry-specificexpertise
Independentcompany

Niche businessstrategy

In-housedevelopmentwith advanced
technology

We aim to provide a working environment that is
tailored to the individual’s needs, where each of ouremployees can thrive and work enthusiastically andreach their full potential. It is our belief that every
initiative related to securing and nurturing humanresources contributes to our corporate growth. As
such, we promote the engagement and development of diverse talents, the provision of a fulfilling
workplace, and the necessity of occupational healthand safety. We, in turn, benefit from a wealth ofhighly skilled personnel who grant us an accumulated level of expertise and business knowledge insystem development that is unparalleled, qualitatively and quantitatively. This is the source of ourtechnological advancements and high degree of
specialization.

Corporate independence
Our ability to harness advanced technical expertise
ensures deep engagement with the challenges
faced by our customers and their local communities. ITFOR’s approach is facilitated by its status as

14

Optimal solutions

Unique process
B2B2C perspective
Provide comprehensive
services throughsystems and operations

Solidcustomer basean independent company. Being unaffiliated withany particular group frees us from technical constraints or obligations and enables us to unleash
the inherent power of empathy and deliver optimal
solutions.

ITFOR’s solutions are crafted to address customer
challenges and thus quickly become indispensable
to customers’ operations after their implementation. Many of our customers utilize our solutions
long term, availing themselves of the iterative improvements that we regularly provide.
ITFOR regularly hosts user meetings that transcend
the conventional lecture format. Each session is a
dynamic forum where clients discuss and exchange
opinions on shared business challenges.
Our user meetings thus elicit insights for businessenhancement by encouraging clients to propose
suggestions for refining the systems we offer. They
also broaden mutual understanding between us andcustomers, further customer trust in us, and cultivate
future business ventures for us with customers.
Customers’ robust trust in ITFOR underpins their
ongoing utilization of ITFOR’s solutions, and thatrecurring business generates a steady revenue
stream for ITFOR.

Quality human resources and in-housedevelopment
Key to our provision of optimal solutions for ourcustomers is the ability of our in-house development. This characteristic demonstrates theindependence of ITFOR. ITFOR management has
the utmost regard for the individuals who are thebackbone of its operations.

Strong customer basesociety at large. This is why ITFOR identifies itself
as a B2B2C company whose intention is to enhancethe value of the solutions provided to an entire arrayof customers.

B2B2C perspectiveComprehensive IT services and business
operations

ITFOR’s principle is to develop products andservices to satisfy end customers. It is essential,
therefore, that we consider who in society are theusers of our offerings. In system development, ouremphasis lies in gaining profound insights into thelives, habits, service usage scenarios, and emotionsof our customers and all who might use what weoffer. We aim to extend the power of empathy to

ITFOR’s solutions extend beyond systems designedwith end users in mind. We also furnish the maintenance services essential for utilizing our systems
and offer operational support as part of our BPO
services. The comprehensiveness and reliability ofwhat ITFOR offers consistently contributes to ITFOR
being customers’ preferred choice for IT solutions.

Our solid customer base, moreover, is generating
customers and business opportunities for us. A
distinctive feature of our business is the frequency
with which customers recommend us to others
grappling with IT issues. This, again, indicates thetrust and confidence our customers have in ourability to address such issues. In response, we continually enhance our offerings to meet and exceed
expectations. And this commitment leads us into
new business domains that, along with additionalcustomers, contribute significantly to our growth.

15

4. Special Feature: Dialog with a Customer
We also ventured into the acquiring business tobridge the gap between the banking and tourism
industries. We acquired licenses from international
credit card brands, such as Visa and MasterCard,
to oversee merchant development, evaluation, andmanagement. This has facilitated card usage by
tourists, generated spending opportunities andboosted tourism.

“ITFOR, conversely,prioritized theunderstanding of ourscheme to ensure that it
would fulfill our desired
specifications.”
Many small retailers and tourism operators dealt
primarily with cash transactions, so the challenge
was introducing them to card services. We addressed
this by establishing a daily payment system.
This change met substantial demand because
depositing daily card sales into the accounts ofcard-accepting merchants—establishments withpayment terminals for credit cards, debit cards, andsimilar payment methods—significantly improved
merchants’ cash flow. Offering card services anddaily accounting showcased the bank’s strengthand potential.

Right: Masanobu Tago, Bank of the Ryukyus, Limited
Left: Kazunori Kono, ITFOR Inc.

Regional Cashless Transformation
Pioneered by the Bank of the Ryukyus
Masanobu Tago

Kazunori Kono

Deputy Head of Payment
Business Department
Bank of the Ryukyus, Limited

Executive Officer, Head of
Payment Business Division
ITFOR Inc.

Kono:
ITFOR excels through empathy that sees it alignwith customer needs by engaging in discussions
and striving for satisfaction to achieve growth, forcustomers and itself. I have heard that collaboration
with the Bank of the Ryukyus has sparked innovation. Can you expand on this please?

16

capitalizes on the tourism appeal of the region’s
rich culture and natural environment, which attract
visitors from around the world to the main andsmaller islands.

Tago:

Cashless payment adoption in Okinawa, however,remains low, especially on the smaller islands. The
absence of cashless payment options, despitehigh tourist demand, risks missing opportunities
for regional economic growth and undermines
Okinawa’s immense potential.

The Bank of the Ryukyus has promoted a cashlessisland concept in Okinawa since 2015. ThisTo maximize regional value, we have initiated such
experiments as introducing a local currency.

User-friendly payment terminals that require no
special training are vital to the widespread adoptionof card services. So we partnered with ITFOR tofine-tune every aspect of our card services businessto ensure a large-scale launch.

it. ITFOR, conversely, prioritized the understandingof our scheme to ensure that it would fulfill ourdesired specifications and enable us to realize ourcashless vision in its ideal form.
With the major credit card companies dominating
the market and banks their mere subsidiaries,
typically only managing credit card operations, theBank of the Ryukyus acted boldly. We obtained
licenses to engage directly in the acquiring business.
This allowed us to retain revenue, including fees,
within the prefecture.
We embarked on this and other new businesses
in part to offset the impact of Japan’s prolonged
zero interest rate policy. That policy led to declining
interest income from loans and returns on investments, such as government bonds. We needed tostrengthen our service-related income with, forexample, fee income. External factors were at play,
but our implementation of our cashless islandconcept greatly advanced Okinawa’s consumer
digital transformation (DX).

Kono:
The Bank of the Ryukyus and ITFOR had a strong relationship from previous system implementations.
But participating in your cashless island concept
presented ITFOR with a transformational opportunity involving the introduction of cashless payment
terminals (pictured) and a proposal for a terminal
center.
ITFOR earlier had provided payment terminals andthe terminal center for the retail mission-critical

The Bank of the Ryukyus became an acquiring
business at a time when few Japanese banks
managed merchants. Major card companies
dominated these functions. As a newcomer, we
lacked the requisite system and could not afford tobuild one. We instead handled the central systeminternally and collaborated with other companies
for payment terminals.
By chance, we consulted ITFOR about payment
terminals. ITFOR, as it turned out, had plans to
expand the use of payment terminals by separating
their POS payment functionality. This aligned with
our needs. ITFOR’s multi-payment devices, whichhandle credit cards, electronic money, and QR
codes, were industry groundbreakers. Today, all-inone terminals are the industry standard.
We tried to partner with other leading system development firms, but most wanted just to adapt theirproducts to our scheme rather than truly understand17

4. Special Feature: Dialog with a Customer
system “RITS” (Retail Information Technology
System for Strategic Management), which it
sourced from Castles Technology Co., Ltd., in
Taiwan for use by department stores. For the Bankof the Ryukyus, we utilized our technology and experience to develop a multi-payment terminal capableof processing 31 transaction types, including
electronic money, China’s UnionPay QR, Alipay, andWeChatPay. This was one of the industry’s mostextensively supported payment methods.
Some areas in Okinawa posed challenges because
they lacked broadband and relied on analog communication. But ITFOR’s communication technology
expertise made feasible their adoption of cashless
payment. Addressing such niche needs also contributed to our profile.
When the Bank of the Ryukyus launched its
acquiring business in 2017, ITFOR introduced
the multi-payment terminals “iRITSpay Payment
Terminal.” Looking back on our journey since thestart of our cashless island concept collaboration,
what stands out for you?

Tago:
Six years have passed since iRITSpay’s launch toa steadily expanding market share. Even remoteislands have adopted it through their chambersof commerce and tourism associations. Its
user-friendliness has led to its widespread use,even in family-run businesses. Yonaguni Island, forexample, boasts more than 40 cashless stores, andthe taxis on Miyako Island accept card payments,
boosting their revenue.

Cashless adoption in Okinawa is leaving room formuch growth. With more than ten million tourists
annually by 2019, Okinawa’s need of cashless
payments is vital for increased consumption. The
adoption of Taiwan’s EasyCard boosts the region’s
cashless options and promotes a more vibrant local
economy, but more can be done.

also working on incorporating J-Debit transactions
using cash cards. The diversification and payment
center expertise that we’ve acquired stem largely
from our need to meet the bank’s needs. What
has resulted from the considerable enhancementin our capabilities are products aligned with market
demands.

And whereas regional banks often lack expertiseto start credit card businesses, the Bank of the
Ryukyus can now provide that knowledge. Entering
this field allows regional banks to boost local
economic revival for positive societal impact by thebanking industry.

Our collaboration with the Bank of the Ryukyus
has seen iRITSpay evolve and get picked up byother regional financial institutions. Under the
direction of the Bank of the Ryukyus, we introduced
iRITSpay to Hida Shinyo Kumiai (Hida Credit Union).
The success of iRITSpay at the Bank of the Ryukyus
likewise influenced other regional banks, including
Chiba Bank and Shizuoka Bank, to incorporate it
into their acquiring business projects. ITFOR is
proposing iRITSpay’s expansion among additionalbanks.

“Collaboration with the
Bank of the Ryukyus has
sparked innovation.”
Can you outline the evolution of the ITFOR and Bankof the Ryukyus collaboration, which began with the
cashless island concept, and offer your outlook forthe relationship?

Kono:

The expansion of iRITSpay as a result of ITFOR’s
efforts to meet the expectations of the Bank of the
Ryukyus for multi-payment capabilities characterizes our collaborative journey. In addition to credit
cards, electronic money, and QR code payments,
iRITSpay now supports Okinawa’s regional electronic money, OKICA, and Taiwan’s EasyCard. ITFOR is

Cashless payments contribute greatly to remoteisland revitalization and are aligned with ESG principles. We aim to further integrate technologies for
additional community betterment.

18

We propose multi-payment and multi-service
options. Payment terminals now feature Android
functionality that extends their capabilities beyond
payments to POS apps, loyalty point systems, andattendance-tracking apps. Retailers thus see vastly
improved operational efficiencies.
The widespread adoption of cashless payments is
expected to boost regional economic activity andconsumer spending. Our addition of multi-service
solutions is meant to nurture thriving local businessenvironments. In Okinawa, we look to the Bank of
the Ryukyus for requests and insights to improve
our multi-service offerings in the same way thebank’s input helped us develop our multi-payment
terminals to meet the bank’s requirements.

The Bank of the Ryukyus entered the card businessthrough its affiliates Ryugin DC and OCS. With
ITFOR’s collaboration and the spread of its cashlessterminals, we were able to begin issuing Visa debit
cards. This gained us over 9,000 affiliated merchants
within six years.

“Cashless payments
contribute greatly toremote island revitalization
and are aligned with
ESG principles.”“Our partnership with thebank is our springboard
for providing ever-moreinnovative products andservices to invigorate
Okinawa’s local economies.”

Our partnership with the bank is our springboard
for providing ever-more innovative products andservices to invigorate Okinawa’s local economies.

displayed in leading the cashless island project.
Looking forward, we see the seamless integrationof services and applications, including merging
banking apps with multi-services, as an achievablegoal for generating value. DX initiatives that integrateusers, stores, and banks through value-added
services and banking apps are key to benefiting the
local community and advancing the bank’s societal
contributions. As witnessed in Okinawa, cashless
payments boost convenience and contribute toenvironmental sustainability. We hope that ITFOR
continues to promote the cashless economy, here
and nationwide.

“DX initiatives that integrateusers, stores, and banks
through value-added
services and banking
apps are key to benefiting
the local community andadvancing the bank’ssocietal contributions.”

Tago:
iRITSpay is a comprehensive cashless payment platform that provides
a secure and convenient payment solution for both businesses
and customers.

Early on, the Bank of the Ryukyus recognized thequality of and relied on ITFOR’s debt management
and call center systems. ITFOR’s track record wasagain demonstrated in the unique strengths it

19

5. Highlights

Financial data

Nonfinancial data

Financial data

Nonfinancial data
FY 2022

Income statement(Millions of yen)

Net sales

Balance sheet

Average length of employment

Current assets

17,676Gross profit

Fixed assets

Operating income

3,217
Ordinary income

3,278
Net income attributableto owners of the parent

2,291

3,990

(Millions of yen)

Cash flows fromoperating activities

1,714

Cash flows frominvesting activities–758

Cash ﬂows fromﬁnancing activities–744

Cash and cash
equivalents at year-end

10,79620

Rate of male parental leave uptake

44 %No. of employees

457

Current liabilities

4,243(nonconsolidated)

Fixed liabilities

256

Net assets

17,167

Rate of paid leave uptake

83 %Total assets

21,667Return-to-work rate

100 %(Of employees taking maternity/paternity leave)

Key indicators
ROA

Cash flow statement

11years(Millions of yen)

18,3226,734

FY 2022

15.7
14.0

%

ROE

%

ROIC

13.7

Equity to total
assets ratio

79.1

%

Net debt toequity ratio

0.0%

Percentage of female hires
in FY 2022

26%

17.6

Voluntary employee
turnover rate

6%

Operatingprofit margin%%

Medical checkup
attendance rate

89 %*Includes new graduates and mid-career hires

21

6. Message from the President

The Power of Empathy:
Building a Society Where Everyone
Can Thrive and Feel Secure
Transitioning from Product Sales
to a Service Orientation
Four and a half years have passed since I assumed
the roles of president and representative directorat ITFOR Inc. in 2019. During this period, the mostsignificant transformation at ITFOR has been ourtransition from a focus on system and product sales
to the provision of services aimed at maximizing
convenience for our customers.
ITFOR has since its founding in 1972 as CJK Co.,
Ltd., been involved in the procurement overseas
and sale in Japan of information and communication equipment, such as high-speed printers andoffice-oriented distributed computing systems.
In a milestone in 1975, we sharpened our systemdevelopment prowess by developing and releasing
Japan’s pioneering online point-of-sale (POS)
system. Our commitment to growth also led us toexpand our market presence by developing andoffering system packages, including credit management solutions customized for regional banks
and nonbank entities. Over the course of several
decades, ITFOR has thereby established a robust
customer base, particularly in various of Japan’s
regions, and accumulated a wealth of problem-solving capabilities.

“We see ourselves as abusiness-to-businessto-consumer (B2B2C)
company that emphasizes
the end user to enhance
end-user convenience,safety, and comfort.”
Tsunenori Sato
President and Representative Director

We have in addition harnessed the network
strengths of regional banks to extend our reach tountapped markets, such as regional public entities.
This has seen us apply our accumulated knowledge
and our system development capabilities.
ITFOR has evolved into a business-to-business(B2B) company primarily focused on delivering
products and services to businesses and public

22

organizations. We are, however, acutely aware thatour products and services have a broader societal
impact that extends to individuals. Customer useof what we offer underscores the importanceof comprehending how society and individuals
can undergo transformation. We see ourselves
as a business-to-business-to-consumer (B2B2C)
company that emphasizes the end user to enhance
end-user convenience, safety, and comfort.

Revealing the Power of
Empathy and Connection
ITFOR’s corporate philosophy centers on ensuring
heartfelt experiences through empathy to bringsmiles to people’s faces. When we listed on
JASDAQ in 2000, we were unknown relative to major
IT companies. And we recognized that emulating
those companies wouldn’t guarantee our success,so we embraced our strength in empathizing withcustomers. By attending to customers’ individual
needs, especially through regional financial institutions, and by engaging customers in conversation,
ITFOR has cultivated a reputation as an intriguingand customer-focused company.

“ITFOR’s corporate
philosophy centerson ensuring heartfelt
experiences throughempathy to bring smiles
to people’s faces.”
Empathy might seem an insufficient basis forbusiness success. But over several decades, ourdedication to empathizing with customers has
honed the system development expertise andbusiness acumen that we combine to provide
optimal solutions for our customers’ concerns andchallenges. Empathy thus underpins our growth.
Another of our strengths arises from empathy:
deep-rooted connections that result in long-standing customers. At ITFOR, our commitment doesn’tstop at the delivery of products and services. We

23

6. Message from the President
nurture long-term relationships with customers inlarge part through user groups. Other companies
also employ user groups, but ITFOR’s user groups
differ in being business study sessions. Themedaround customers’ operational challenges, theyencourage vibrant discussions among participants.
The sharing of challenges and information related
thereto make ITFOR user groups hubs that connect
customers with customers and customers withITFOR, deepening our customer relations. Hearing
unfiltered feedback from user group participants,
moreover, contributes to our development of increasingly advanced products and services and to
our corporate growth.

Enriching Lives throughESG Management
ITFOR management’s commitment to environmental, social, and governance (ESG) business practices
is significant for company-wide operations. Several
factors have contributed to the profound impact of
ESG on our business, but one in particular came tolight during our engagement with the Bank of the
Ryukyus, Ltd., which launched cashless transactions

Strategic Initiatives

in 2015. (For details, refer to “Special Feature: Dialog
with a Customer” on page 16.)

“ITFOR management iscommitted to integrating
ESG into the company’sbusiness philosophy
and strategy.”
The Bank of the Ryukyus was among the firstJapanese regional bank to initiate cashless operations. Japan lagged the world in cashless adoption,
so this represented a novel business development,
especially because it involved more than cashlesstransactions. It also addressed challenges such as
reducing costs for cash management and transport,aligning with environmental concerns by lowering
CO2 emissions that result from cash transportation,and stimulating the local economy by circulating
cash within the bank’s region.
The bank’s approach involved more than systems
for streamlining and automating internal operations■ Strengthen cross-selling to enable development of businesses basedon value chain analysis

to include ESG integration. I remember how profoundly this innovative, forward-thinking approach
influenced me and my awareness of ESG. It served,
in fact, as the catalyst for ITFOR’s embrace of
cashless payment and ESG.
ITFOR’s ESG initiatives include collaborating
in an experiment in 2021 with Iizuka City inFukuoka Prefecture and with the Kyushu Instituteof Technology. This industry, academia, andgovernment
collaboration
involved
utilizing
blockchain technology to electronically issue theinstitute’s academic transcripts. Its focus on the
Sustainable Development Goals (SDGs), including
paperless operations, marked Japan’s pioneering
attempt at a digital-to-digital social experiment formunicipalities.
To strengthen management’s embrace of ESG, in
December 2021 ITFOR formulated its basic sustainability policies and established its Sustainability
Committee, which I chair. In December 2022, we introduced a framework to accelerate our ESG efforts.
ITFOR management is committed to integrating
ESG into the company’s business philosophy andstrategy. We will explore business opportunities indaily life’s seemingly insignificant aspects with thegoals of enriching individuals’ lives and of enhancing
our corporate value.

Expanding Our Business Based on
Market Growth Potential

Our e-commerce distribution system and contact
center system operations likewise are critical insociety. They help us support our customers’ digitalization, bolstering the stability of their businesses
and fostering their sustainable growth and our own.

Putting Employee Well-Being First:
Navigating the COVID-19 Pandemic
ITFOR’s consolidated results for fiscal year 2022,
ended March 31, 2023, were as follows: net sales
increased 7.6% year on year, to ¥18,322 million;
operating income grew 6.1%, to ¥3,218 million;
ordinary income rose 5.5%, to ¥3,278 million; andnet income attributable to owners of the parent
climbed 8.5%, to ¥2,291 million.
These results can be attributed to growth trends
in our System Development and Sales and our
Recurring Business segments and to the stableearnings that we achieved by internalizing ourdevelopment activities and by reducing our costs.

Net Sales and Operating Income Margin
250
Net sales (Billions of yen)

Expand communication andpayment systems to financial
and public sectors
Market Trends

Communi-cationsystems■ Cashless■ Various DX■ Cybersecurity

Payment
systems
Publicsystems

MarketGrowthPotential

Create high value throughbusiness line synergies
Retail EC
systems

CTI
systems
Financialsystems

Expand DX and cybersecurity
to e-commerce and CTI
Sales Scale

24

17.8%
17.5%

Operating income (%)■ Expand high-growth markets into core businesses■ Expand market trends into sectors with slightly lower market growth

20%

ITFOR’s business historically centers on serving
financial institutions, which account for a substantial portion of its revenue (see Strategic Initiatives
graphic on previous page). Going forward, we expect
increased consolidation among regional financial
institutions amid the stagnation of their markets,
and we see this not as a risk but as an opportunity.
ITFOR holds a dominant share of financial customer
screening services. As financial institutions consolidate, these systems will have to be integrated andconnected across banks, servicers, and guarantors.
These institutions constitute the majority of ouruser base, so their consolidation provides us withthe opportunity to add infrastructure that generates
value and raises our market share.
It is important, moreover, that we capitalize on themarket growth potential of our communication
system, payment, and digital transformation (DX)businesses in cybersecurity and other areas so thatthey become core to our operations. We will expand
these businesses in the stable financial institution
and local government sectors and through heightened cross-selling.

16%

200
13.4%

13%

11.3%

150

183
162

12%

170

152
100

8%

125

50

0

4%

19

20

21

22

23

0%

Fiscal Year25

6. Message from the President
Challenges remain, however. The launch and salesof our cloud-based call center faced delays, andprojects in our Public Systems Division were put on
hold and did not materialize as planned because of
the adjustments that we had to make to align themwith government standardization efforts.

of schedule, in fiscal 2022. We anticipate meeting
our other numerical targets in fiscal 2023. In acknowledgement, moreover, of our ability to growfinancially even during the pandemic, we introduced
an enhanced shareholder return policy in May 2023.
We seek to surpass a shareholder return of 70%.

“Net sales increased
7.6% year on year, to¥18,322 million; operating
income grew 6.1%, to¥3,218 million; ordinary
income rose 5.5%, to¥3,278 million…”

We are, meanwhile, progressing toward our qualitative goals, starting with the advancement of ESG.
There are nevertheless still some unmet objectives,
particularly in internal DX and in human resource acquisition and development. And ROIC management
and investment and business withdrawal rules havenot been fully integrated and embraced throughout
ITFOR. We need especially to employ a strategy of
selection and focus to determine which of our six
business divisions and which of our products andservices we should continue.

The year following my appointment as president
in 2019 was overshadowed by the onset of the
COVID-19 pandemic, which cast a cloud over thebusiness landscape and society as a whole. Amid
the uncertainty, my priority has been the well-beingof ITFOR’s employees. I believe that protecting our
employees safeguards society.
ITFOR and its employees do more than simply sell
products and services. Our priority is on maximizing customer convenience. We emphasize our
Recurring Business segment as a means of mobilizing the entire company to secure steady revenue. I
am convinced that our approach helped us achieverobust financial results in fiscal year 2022. Our
expectations are for continued stable performance
growth in fiscal 2023, and as such we are eager toimplement strategies for the further advancementof our business.

Nearing the Completion of Our Third
Medium-Term Management Plan:
Next Stage 2023
ITFOR’s medium-term management plan, Next
Stage 2023, spans the three years from fiscal 2021
to fiscal 2023, ending March 31, 2024. (See page 28
for progress details.)
The strategies outlined in the plan rest on threepillars: reinforcing our management base, enhancing
profitability, and advancing ESG.
Our financial targets for fiscal 2023 include net
sales of ¥21 billion, operating income of ¥3.2 billion,
and returns on equity (ROE) and invested capital(ROIC) of more than 13%. Notably, we accomplished our operating income and ROE goals ahead

26

It is crucial to prioritize our Recurring Businesssegment for its stable revenue. But excessive focus
on it may cause us to miss opportunities for new
business models. Striking a balance is essential.
Our business as it stands can easily do many things
to build a society where people can live with daily
peace of mind. The challenge is to assess ITFOR’s
determination to commit to new initiatives.
We are taking steps to address some of the challenges left over from fiscal year 2022, such as
restructuring our internal processes. Our aim in
fiscal year 2023 is to attain the remaining goals of
Next Stage 2023 to ensure a foundation for our new
medium-term management plan.

“We are in addition
formulating a plan focusedon societal challenges
that sees ITFOR become
a comprehensive
service company.”
I am pleased to report promising developments in
new initiatives. Kumamoto Prefecture has chosen
to collaborate in ITFOR’s Digital Safe project,which is an extension of our previously mentioned
blockchain-based experiment, and validation work
is ongoing. We are also committed to advancing
research and development that combine the technologies of our core business with innovations.
By leveraging our extensive customer network,
including regional financial institutions, local governments, and local department stores, we will drive
initiatives forward.

Our investors, meanwhile, can be assured of ourcommitment to furthering shareholder returns. We
will showcase the obvious aspects of our endeavors
and our potential for growth to heighten investor
confidence in ITFOR.
And now our valued employees. I encourage each of
you to enthusiastically engage with our customers,
partners, and others in society to learn, experience,
and absorb as much as you can. Prioritize, though,not only your work but also your personal life, andstrive to make each day fulfilling. Remember thata playful spirit can at times be beneficial at workand can strengthen your business performance.
Work together, support one another, and tackle
challenges to foster the growth and robustness of
our company.

We are as yet unable to share the specifics of our
upcoming medium-term management plan otherthan to say that we are solidifying the steps andstructure to substantially enhance our shareholder
returns, as previously communicated. We are in
addition formulating a plan focused on societal
challenges that sees ITFOR become a comprehensive service company.

Conveying a Message to
Our Stakeholders
Many people engage with ITFOR’s services without
realizing it. We primarily serve the B2B sector andmay not be a direct, visible presence for individuals.
We are nonetheless determined to be a driving force
for positive social change and will continue to work
behind the scenes to foster a sustainable society.
Among our goals is to empathize and engage withsociety in line with a vision of a future where people
seamlessly interact with our products and services.
We intend to make this vision reality within thenext five years. To do so, we will maintain a B2B2C
mindset and work tirelessly to bring smiles to all ofsociety’s inhabitants.

“Work together, support
one another, and tackle
challenges to foster thegrowth and robustnessof our company.”
ITFOR’s management will steadfastly advance ESG
to contribute to a sustainable society. We will in
addition preserve ITFOR’s financial growth throughflexible business strategies. At the same time, we willremain conscious of our role in assisting society’s
evolution to sustainability. We will, in short, makemanagement decisions that meet expectations.
I ask for your continued support and understanding
as we forge ahead.

Tsunenori Sato
President and Representative Director

To our users, we pledge to continue advancing ourservices to meet expectations. ITFOR employees
are dedicated to engaging with customers to understand their needs and to provide optimal solutions
therefor. We want to ensure that every aspect of ourwork satisfies as many users as possible.

277. Value Creation Strategy

Achieving operating income and ROE and
ROIC goals ahead of scheduleThree-year medium-term business plan

A new stage for accelerating initiatives
to resolve challenges and achievesustainable growth
Reinforce
management baseThree basic
guidelines

Enhance
profitability

25,000• Introduce ROIC-based
management• Strengthen internal collaboration• Reform management procedures• Promote internal DX• Refine investing and businesswithdrawal rules

21,00017,021• Change approach significantly

15,000

ROIC¥21.0 bn

¥3.2 bn

13％ or more

13％ or more

Medium-term management plan target period: FY 2021 to FY 2023

Response: Valuing the power of empathy
Deepening: Strengthening relationships
with all stakeholders
Evolution: Striving for something better
Imagination: Embracing flexible thinking
Creation: Forging a company that can provide
continuing value to society

These key concepts of our medium-term management plan articulate the collective sentiments ofour employees and encapsulate our journey to a
new stage. While evolving beyond past conventions,
ITFOR remains dedicated to meeting expectations
through the power of empathy and by fostering
deeper connections with its stakeholders. This
reflects our ambition to drive the advancement ofsuperior products and services, fueled by a commitment to flexible thinking and the creation of ongoingvalue for society.

28

Three methods for achieving sustainablegrowth● Reinforce management base to ensure robust
growthWe hope to achieve an optimal governance framework
by enhancing supervisory functions, restructuring
departments, fostering internal collaboration throughcross-functional projects, and fortifying investment
and financing regulations. We will vigorously advanceinternal DX through concentrated investments in
our internal systems and human capital. And we will
strengthen our development structure and the qualityof what we develop—essential elements for expanding
our business scale—by increasing personnel, acquiring
new technologies, and revitalizing project management
methodologies.
● Enhance profitability based on return on invested
capitalWe will emphasize return on invested capital (ROIC) for
profit management at the divisional level and will fostera heightened awareness of costs throughout our group.
Long term, we plan to establish division-specific ROIC
targets and to break them down to better understand
ROIC on a more granular level within a financial analysis
framework. Our objective is to expand revenue by identifying opportunities across divisions.

13.5

13.5

2,000
13.0
1,500

10,000

0

ROE

13.9
13.7

2,500

12.5

12.0

500

Operating income

14.5

14.0

5,000

Net sales

Change: Breaking free from past conventions

3,000

1,000

• Invest in growing andnew businesses

Philosophy embedded in henca (change);sinca (evolution); and sozo (imagination)

3,217

ROE and ROIC (%)

18,322FY

21

22

23 Forecast

Net sales ¥21.0 billion

Quantitative
targets

3,400
3,031

• Appoint promotion office• Pursue synergies among
business units• Bolster development
system and quality

Operating income (Millions of yen)
3,500

20,000

Advance ESG
management• Conduct organizationaland structural reform• Enhance human resources

Net sales (Millions of yen)

(Net sales trending upward towardfiscal 2023 target)

0

FY

21

22

23 Forecast

11.5

Operating income¥3.2 billionーachieved

FY

21

22

23 Forecast

ROE and ROIC of 13%
or moreーachieved

Medium-term business plan targets• Net sales final-year target should be achieved given upward trend• Operating income target achieved ahead of schedule in the second year;
final-year target revised upward, to ¥34 billion• ROE and ROIC targets achieved in first year, and percentages continue to rise

● Advance ESG management with a focus on social
contribution
As the chairman of the Sustainability Committee,
ITFOR’s president will lead the company in addressing
societal challenges with its products and BPO services.
The objective is the sustainability of society and of
corporate value.

Progress of Next Stage 2023
ITFOR’s third medium-term management plan, Next
Stage 2023, covers the three-year period from fiscal
2021 to fiscal 2023. The year ended March 2023
was our fiscal year 2022 and the second year of
Next Stage 2023.
During the year under review, we attained the plan’sfinancial targets for operating income, ROE, and
ROIC ahead of schedule. We are well positioned tomeet the plan’s net sales target in fiscal year 2023,
the final year of the plan. Notably, orders received
and the orders backlog reached unprecedented
levels in the first quarter of fiscal 2023.

Our revision, moreover, of our corporate philosophy
in December 2021 to align it with our purpose has
gained traction in its company-wide adoption tofoster a cohesive organizational approach. Thisalignment is instrumental to reinforcing our management foundations, to enhancing our profitability
through synergies, and to advancing our pursuit of
ESG.
ITFOR is at a historic turning point as it seeks to capitalize on the technologies and expertise that it has
cultivated over its 50-year history for the purpose ofcontributing ever more to society. Within the fiscal
year under way, we will achieve the remaining objectives of Next Stage 2023 to thereby lay a robust
foundation for a new stage of our growth.

29

7. Value Creation Strategy
Added value as a source of competitiveness

Financial Systems Division

Providing packaged systems for businessefficiency
Go Yoshimura
Director and Executive Officer,
General Manager of Financial Systems Division
In step with the expansion of credit sales toindividual customers
The Financial Systems Division provides packaged
financial solutions systems, including a total collection system “TCS” for delinquent loans, to nationwide banks, credit unions, nonbanking financial
institutions, guarantee companies, servicers, andothers.
The division has been the exclusive representativein Japan of US-based Datapoint Inc. since 1973. A
pivotal moment in the Financial Division’s evolution
into a solutions business occurred in 1983 when it
developed Japan’s first auto-call system, a precursor
to its TCS and its personal loan collection management system “CMS.” The division’s auto-call innovation was prompted when a department store thatwas utilizing ITFOR’s POS system and managing
its in-house credit sought ITFOR’s assistance inmanaging the collection of delinquent credit receivables amid the expanding use of credit by Japanese
consumers.
The auto-call system developed by ITFOR seamlessly integrated Data Point’s office computer with
its auto-call unit, a specialized telephone device.
This pioneering system introduced a transformative
approach to task management in enabling users toengage in telephone interactions with the convenient
wearing of a headset. The system’s implementation
marked a pivotal shift by offering robust support
for tasks traditionally assigned to representatives.
It thereby addressed concerns about overlookedreminders, which resulted in a significant increasein collection rates.
From first users to other industries
The Japanese government’s amendment of Japan’s
Banking Act in 1982 allowed the country’s banks tooffer credit cards as an auxiliary service, and fromthis a wave of card companies emerged. ITFOR’s
increasingly proven auto-call system was adopted
by numerous of these card companies as it evolved
from a simple telephone-based collection system
in its early stages to an exceptional full businesssupport packaged system with document creation
capabilities.

30

ITFOR also responded to the expansion of individual
lending by Japan’s regional financial institutions
with the addition to CMS that it developed toincorporate features tailored to the nuances of
personal loans. Consequently, its auto-call systemgained recognition and has since seen widespread
adoption by various entities, including consumer
finance companies, leasing firms, credit unions, andonline banks.
Our prompt response to Japan’s 1999 Act on Special
Measures Concerning Claim Management andCollection Businesses (Servicer Law) opened newopportunities for us to expand our auto-call system’suser base. We deepened our understanding of debt
collection tasks and collaborated with users torefine the system. And we continue to enhance our
auto-call system by incorporating insights gatheredfrom user meetings to establish it as a servicer
system. Notably, the statutory books that are part ofthat system are included among the Loan Servers
Association of Japan’s statutory book samples. Anda majority of servicer companies nationwide have
implemented our system.
Expansion into credit-related systems for
personal loans heightens our competitiveness
Another of the Financial Systems Division’s chief
offerings is personal loan operation support
system “SCOPE.” ITFOR’s venture into the screening
business commenced with the development of asystem for personal credit information inquiries thatwas the personal credit information inquiry system“MICS2.0.” We built on the expertise that we’d gained
from developing our debt management system toexpand into screening systems for nonbank installment sales of individual products. Ultimately, ourefforts culminated in our highly competitive Scopesystem.
We in addition developed the web-based loan application system “WELCOME” that empowers our
systems to manage such crucial tasks in individualloans as online applications, screening, and credit
information inquiries. This furthers our competitiveness in systems for the personal loans business.

At every phase, be it requirement definition, systemdevelopment, or post-system deployment, ITFOR
leverages the strength it derives from the accumulated business insights and expertise of its sales
and engineering teams. ITFOR’s competitivenessstems from systemization and from its willingness
to suggest the redesign of its customer’s operations.
This translates into high added value that extends
beyond mere problem-solving to serve as a sourceof ITFOR’s competitiveness.

One-stop solutions for lending services

A hub for information and for generating
business opportunities

Web-based loan
application
systemITFOR supplies its systems to financial institutionsin 46 of Japan’s 47 prefectures, overwhelmingly toregional financial institutions. We also regularly holduser meetings for our nationwide customers. User
meetings that focus on various of our packaged
systems draw participation from many frontline
users who are responsible for the tasks involved inthose systems. This leads to lively exchanges. Our
user meetings thus encourage customer interaction
and grant us insight into challenges faced by ourfrontline users.

Personal credit
informationinquiry system

ITFOR has for several decades been a steadfast
partner to numerous financial institutions. This has
made possible cross-selling initiatives for various ofour divisions and presented us with opportunities toprovide systems to entrants to the banking sector
from diverse industries.

Implementation

millionFinancial Systems
Division
fiscal 2022 net sales

Delinquent debt
management
systemPersonal loancollection
management
systemStrengths

Weaknesses
・High barriers in major financial institutions,with a strong inclination toward
proprietary systems

Opportunities

Threats

・Exploration of untapped potential in mega-banks,
nonbanks, and legal-related offices

・Trend toward internal expansion andinsourcing of systems engineers (SE) in
financial institutions

・Expansion of system solutions into business areas
beyond existing packaged systems, leveraging theSalesforce platform

Claimsmanagement
systemTCS Servicer system

・High market share in systems for loan operations
among regional financial institutions
・Abundant packaged systems that enable
comprehensive proposals for loan operations

Guarantee
management
systemDebt management

The customer interview on pages 16–19 of thisreport makes clear that when regional financial
institutions ponder engaging in local economic
revitalization, ITFOR’s long involvement with themgives it an advantage in providing solutions fasterthan anyone else. Many regions and their businesses thrive as a result of regional financial institutions
efforts and their implementation of our systems.
So ITFOR’s advocacy of regional revitalization
continues to grow in scale and substance. The
Financial Systems Division plays a leading role inthis regard as a driver of growth for the company.

¥4,966.1

Personal loan
operation support
systemStrategyⅠ
Cultivate and utilize talented
individuals with knowledgeof customer needs to introduce
services

Strategy Ⅱ
Expand solution offerings
among financial institutions
and cultivate customers in otherindustries

Financial System Division
net sales
System Development and Sales
segment net sales (¥10,611.0 million)31

7. Value Creation Strategy
Payment Systems Division

Retail EC Systems Division

Contributing to a cashless society with uniquedevices and systems

Adapting systems and services in response toretail industry needs

Kazunori Kono

Hirotaka Oeda

Director and Executive Officer,
General Manager of Payment Systems Division

Director and Executive Officer, General Manager of Corporate
Strategy Department and Retail EC Systems Division

A single terminal for all payments
The Payment Systems Division offers cashless
payment platform “iRITSpay.” That platformcomprises terminals and a payment center thatprocess all payment methods.
Customarily, stores must employ different terminals
to handle different payment methods, such as credit
cards and code payments. The iRITSpay terminalfrom ITFOR obviates that need. This single terminal
accepts all payment methods, including credit
cards; debit cards (including those issued abroad);
code payments; and electronic money payments.
This enhances consumer convenience. And it
improves operational efficiency for businesses,
reducing space requirements near the cash register,
shortening employee training time, and lessening
the tasks in sales accounting. The Payment System
Division’s support of iRITSpay, moreover, spans
implementation to operation and maintenance. The
division even offers iRITSpay users a dedicated callcenter.
ITFOR, meanwhile, has developed its own payment
terminal application and payment center. It gives us
a significant advantage in flexibly accommodating
new payment methods. Since its founding, ITFOR
has built a track record of furnishing core systems
to retailers. The company continues to tap theinsights it has gained particularly in utilizing newtechnologies to do so. We seek to contribute further
to rapidly advance a cashless society.

¥1,543.3

million

Focused on retailers and financial institutions
and consumers
Customers that adopt ITFOR’s cashless payment
solution are of two main categories. The firstcomprises stores, including retailers; service
providers; transportation companies; municipalities;
and others that facilitate cashless transactions.
The second category comprises mostly cashless
payment service providers, particularly financial
institutions.
For both categories, ITFOR emphasizes B2B2C
services. The C refers to consumers that are not
the service provider businesses signified by the B
in B2B. Our intent is to provide the best services
tailored to the needs of end-use customers using
the iRITSpay platform in recognition of the importance of maximizing consumer convenience, asconsumers are the primary agents of consumption
behavior.
The transition to cashless transactions is rapidly
gaining momentum in Japan, in line with global
trends. This is attributable in part to the heightened
demand, driven by the spread of COVID-19, forinteractions that are not face to face and that do
not involve contact. It also owes itself to the widely
recognized benefits of reducing the operationalburdens and risks associated with managing cash.
ITFOR is capitalizing on the accelerating trend in
cashless transactions by positioning itself as aunique cashless platform provider. Our expertisein the financial and the retail and distribution industries places us in good stead to make an especiallymeaningful impact.

Strengths

Weaknesses

・iRITSpay terminal, capable of supporting the
IT industry's largest number of payment methods

・Barriers to expansion into major retailchains as an independent entity

・Multifunctional payment terminals fromin-house development expertise・Terminals sourced from Taiwan, raisingconcerns about contingency issues andexchange rate risks

・In-depth knowledge and understanding offinancial institutions and retail businesses

Opportunities

Threats

・Expansion from multi-payment to multi-service infinancial institutions and the retail industry

・Demand for high-spec, cost-effective
solutions due to new technologies,
such as cloud and AI

Payment Business・Acceleration of trends in contactless transactions
Divisionand cashless payments
System Development
and Sales segment net
sales (¥10,611.0 million)

・Intensified competition amid
acceleration of the cashless economy

Explore opportunities throughunique marketing channels,
such as regional financial
institutions

Whenever changes occur in tax or accounting
regulations and procedures, companies must
adjust accordingly. A core system that promptly
addresses such changes, strategically and efficiently, is essential. To this end, ITFOR constantly
hones its capabilities to construct the requisite coresystems and meet the increasingly diverse needs ofcustomers amid escalating shifts in the businessenvironment. ITFOR views changes as business
opportunities and is especially active in driving DX
in the retail industry.

ITFOR developed the first POS system for major
department stores in Japan in 1975 and has sinceforged relationships with department stores of all
sizes and with the retail industry overall.
Our Retail EC Systems Division provides the retailmission-critical system “RITS” (Retail Information
Technology System for Strategic Management)
used primarily by regional department stores andretail superstores. Released in 2004, RITS has overits 20-year history become a comprehensive package
covering everything from product management tosales, customer management, in-house credit, andforeign trade and customer loyalty programs. It thus
is a packaged system as comprehensive as those
employed at major department stores but that wedeliver it at an affordable cost.

Common customer challenges
understood and solved
The Retail EC Systems Division’s customers, suchas department stores and specialty retailers locatedparticularly in regional cities, have cultivated close relationships with local financial institutions. Regional
financial institutions, of course, are mainstay ITFOR
customers, so they represent a vital conduit for the
Retail EC Systems Division’s marketing to regional
retailers.

RITS also grants us further competitive advantages over other companies in our industry. It canbe delivered in modules that offer only the selectfunctions desired by customers. In addition, RITS
features standard integration with the iRITSpay
payment terminal offered by the Payment Business
Division, which facilitates easy handling of inboundtransactions.

Also of enormous benefit are ITFOR’s user meetings.
They are a platform for customer interaction andexpose for ITFOR and its Retail EC Systems Division
the challenges faced in common by retailers.
Difficulties, for example, in adapting to the invoicesystem that we introduced on October 1, 2023,
became a topic of discussion during user meetingsand prompted us to make immediate adjustments
to ease retailers’ implementation. Besides responding in timely fashion to timely needs, we pursue
regular service updates. We will as such continue
to support the resolution of challenges in the retailindustry moving forward.

The Retail EC Systems Division has utilized theknowledge gained from the deployment of RITS in theretail sector to extend its offerings with ITFOReC, thee-commerce site construction package. ITFOReC’s
development reflects an ITFOR strength in being
able to collaborate with customers on strategy andoperational design to build an omnichannel systemusing in-house solutions.

Advance develop a payment
app with multi-service
functionalities

StrategyⅡ・Nationwide expansion based on broad customer
base, including regional financial institutions

Payment Business
Division
fiscal 2022 net sales

StrategyⅠ

Core packaged systems to promote
department store DX¥645.3

millionStrengths

Weaknesses

・ RITS Cloud, a total packaged system forregional department stores and retailchain stores・ Inability to differentiate in specificindustries due to the homogenizationof EC system products

・ Customer development in collaboration
with regional financial institutions
・ Synergy with the Payment Business Division

Retail EC
Systems Division
fiscal 2022 net sales
Retail EC Systems Division

StrategyⅠ
Develop packaged systems
aligned with market needs

StrategyⅡ

Opportunities

Threats

・ Capitalize on changes in regulations forbusiness opportunities

・ Frequent revisions and changes in
consumption tax and accounting systems

・ Understand customer needs better
through user meetings

・ Rapidly changing retail businessenvironment

Utilize customer base tobuild a unique information
network

System Development andSales segment net sales(¥10,611.0 million)

32

33

7. Value Creation Strategy
CTI Systems Division

Communications Systems Division

Advancing innovation in society with cuttingedge contact center solutions

Providing infrastructure that supports society
and business operations

Tenpei Ogawa

Satoshi Yumoto

Director and Executive Officer,
General Manager of CTI Systems Division

Director and Executive Officer,
General Manager of Communications Systems Division

Innovative fusion of advanced technology
and business expertise
The CTI Systems Division structures and integrates
contact centers with business systems to help businesses efficiently and accurately execute daily tasks.
For financial institutions, local governments, retailbusinesses, and other enterprises, telephone interactions with customers are a daily essential function of
their contact centers. Our addition to contact center
functionality of such communication tools as email,chat, social media, and now AI reflects accelerated
innovation that bolsters customer convenience andheightens businesses’ efficiency in interacting with theircustomers.
ITFOR initiated sales agent activities for foreign-madecall recording systems in 1999. In the more than 20 years
since, it has evolved to provide ever-more advanced
contact center solutions of its own development insupport of its customers’ business development.

Unique operational experience as a source ofcompetitive advantage
The contact center, essential for building relationships
with customers, is core to the business strategies ofmany companies. It is highly valued for its ability toenhance customer experience and collect valuable
customer feedback. For financial institutions, moreover,the contact center is indispensable in collecting overdue
debts from customers.
Government ministry and agency guidelines on claims
collection are a complex challenge in compliance formany financial institutions. ITFOR has established a¥1,200.9

millionCTI Systems
Division
fiscal 2022 net sales

The automatic call reception system “Robotic Call,” isa case in point. Robot Call is equipped with all of thenecessary functions for collection efficiency. It analyzes
call histories to reflect peak calling times in the call list,
automatically responds to callback requests, and more.

Growth opportunities in technologicalinnovation for altered business environments
Robotic-sounding telephone responses are anathema
to most of us. The COVID-19 pandemic, however, has
expanded the desire to avoid in-person interactions.
Fortunately, advancements in robotics make possible
voices of different genders, ages, and qualities approaching natural speech, and this has made automatedcall systems more palatable.
These advancements are especially welcome as
Japan’s workforce declines and causes chronic labor
shortages. The demand for robots in contact centers
is steadily increasing. Expectations are that the useof robots with advanced decision-making capabilities
powered by AI will only grow. Widespread work-stylereforms to suit changing lifestyles make inevitable
growing demand for AI-driven omnichannel support
beyond traditional phone and voice communication to
include email, chat, and social media.
The CTI Systems Division improves contact centerswith ITFOR’s increasingly innovative technologies. The
division’s omnichannel strategy involves the implementation of AI and robots to respond to changing lifestyles.

Strengths

Weaknesses

・Proposal of comprehensive packages in cooperation withother divisions to long-standing customers

・Transactional risks in doing businesswith overseas companies

・Knowledge and experience supported by a wealth ofsuccessful implementations

Core business division underpins
other ventures
Our Communications Systems Division has been in
existence since our establishment in 1972. ITFOR got its
start by importing advanced communication equipmentfrom the United States and Israel, enhancing it withengineering expertise, and then selling that equipment
domestically. In the early 1970s, the division ventured
into distributed computing even with the Internet in its
infancy. In the years since, the division has cultivatedand applied technical expertise to develop communication packages. Today, the Communications Systems
Division underpins the infrastructure of each of ourbusiness ventures.

Accumulated expertise balances security
and cost performance
The division has applied ITFOR’s accumulated
know-how in its comprehensive Package Cloud service

Application packages provided

Information
security
HardwareStrategyⅠ
Respond to small-scale callcenters through cloud-based
shared services

Opportunities

Threats

・Innovation of established systems by applying AI andcloud technologies

・Industry restructuring with emergenceof new entrants

・Promotion of DX to address chronic labor shortages

・Standardization of foundational
technologies in call center systems,
making differentiation difficult¥1,210.0

・Expansion of Robotic Call

System Development and Sales segment
net sales (¥10,611.0 million)

・Gaps in prices customers seek andoffered prices

Disaster
preparedness
Network

Customized tools protect social infrastructure
The cybersecurity market is expected to grow enormously, and the Communication Systems Division iswell positioned for that growth. The division offers
the cybersecurity service “Ransom Guard,” a blend ofcybersecurity tools from Taiwan, and incident response
functionality and cyber insurance customized for small
and medium-sized enterprises. The division is also
registered for the Cybersecurity Supporters Services facilitated by Japan’s Information Technology Promotion
Agency (IPA), which should further boost users’ confidence in the security of its offerings.
Since 1988, the division has focused on furnishingcustomers with advanced communication equipmentfrom Israel. That equipment is integrated with ITFOR’s
unique technological solutions that meet the requirements of a range of clients for communicationequipment, including communication carriers andsocial infrastructure companies. The division’s support
for the interconnectivity of society is borne out in its
support of social infrastructure with diverse solutions
that foster an environment where everyone can live inpeace of mind and safety.

Strengths

Weaknesses

・Advanced technologies and expertise supporting
long-standing customers, divisions, andsocietal infrastructure

・Sudden withdrawal of overseas vendors

・Customization of excellent overseas solutions to fit
Japanese specifications

・Impact from international geopoliticalsituations

Communications
Systems Division
fiscal 2022 net sales

Opportunities

Threats

・Further customization of cybersecurity products fromadvanced countries, such as Israel and Taiwan, to fit
Japanese specifications

・Cybercrime, with growing risk of
information theft and increasing ransom
demands

Communications
・Rise of significant potential in products for
Systems Division
telecommunication carriers
System Development
and Sales segment net ・Acceleration of efforts to defend societal infrastructure
sales (¥10,611.0 million)

StrategyⅠ
Deploy unique andspecialized solutions

・Provision of a secure and safe IT environment throughcybersecurity tools

StrategyⅡ
Develop proprietary products
incorporating other systems

Cloud
Operation andmaintenance“IPaC.” ITFOR IPaC implements everything from ITFOR’svarious packaged systems to network construction andoperation. To meet the increasingly diverse needs ofour customers, we provide them with multiple solutions
and at reasonable prices. These include solutions forfinancial institutions, e-commerce businesses, and distribution customers. Those solutions, moreover, employ
safety standards, including FISC security standards, that
ensure that our services can be used with confidence.

Infrastructure supporting services

millionCTI Systems Division

34

track record over several decades of helping financial
institutions overcome that challenge. We exhibit experience and know-how that significantly surpasses thatof other competitors in the packages that we offer thatcombine the tasks related to collection.

・Intensified competition in the
cybersecurity industry

StrategyⅡ
Provide societal
infrastructure to safeguard
local communities

357. Value Creation Strategy
Technology Development Department
Public Systems Division

Assisting customers’ DX through enhanced
development and human resources

Resolving municipal challenges throughsystem solutions and BPO

Koji Sakata

Kenji Kobayashi

Director and Senior Managing Director,
General Manager of Technology Development Department

Director and Executive Officer,
General Manager of Public Systems Division
Full support for DX
Development expertise and the power of
empathy facilitate municipal DX

Focus on investing in human capital throughdigital BPO

The Public Systems Business Division provides
debt management and educational support
solutions tailored for local governments and educational bodies through the ITFOR-developed Civic
Administration Relationship Service “CARS.”
The division was originally part of the Financial
Systems Division but was spun off to apply ITFOR’s
delinquent loan management system to assist local
governments with such of their responsibilities as
the collection and notification of overdue taxes,
national insurance dues, and other outstanding
debts. That system has been adopted by 28 prefectures and 110 organizations, and the division plansto broaden its scope as an educational support
solution for educational bodies.
Staff at most local governments spend inordinate
time pursuing overdue payments. The Public
Systems Business Division’s help in digitizing
business processes improves operational efficiency
and collection rates. And that allows staff to concentrate on other responsibilities that contribute to
the welfare of residents.
The division has also developed and implemented
systems for numerous regional educational bodies.
These systems cover student registry management,
school attendance support, meal fee management,
and more tasks. Student registry management
and school attendance support are among the 17
standardized tasks that the Japanese government
has mandated to be addressed by fiscal 2025. The
division’s skill in visualizing and in streamlining suchtraditionally cumbersome tasks with its systems iscritical to realizing smart municipalities.

¥368.1
millionPublic Systems
Division
fiscal 2022 net sales

ITFOR emphasizes its BPO services as a means todevelop human capital. This provides ITFOR witha distinct advantage, as the cultivation of humancapital in BPO is often overlooked by its competitors. We comprehensively educate and train
staff from the local communities we serve for thediversity of skills required in BPO. Part of this sees
us regularly organize such activities as telephone
response contests to nurture highly skilled professionals who are well-versed in the demands of our
BPO operations.
Customers often express concerns about the costof our BPO services, especially in the first year of
implementation. We assure them that by providingthem with pre-trained staff proficient in every
aspect of BPO, we are able to deliver high-quality
services that save them the time and cost of hiringand preparing staff for the host of required BPO
functions. This often leads to long-term contracts
for our BPO services.

Strengths

Weaknesses

・Digitalization of operational processes inadministration and management systems of
local government and educational bodies

・Profit compression in the first year ofcontracts because of education and skills
reinforcement needs of call center
personnel

・Leadership in BPO, especially in call centers,with differentiation through digital BPO

Opportunities

Threats

・Discovery of projects from local businesses

・Intensified competition in areas such as
notification centers and office support services

・Exploration of future projects throughworkshops with officials from local
governments and educational committees

Public Systems Division
net sales
System Development and Sales
segment net sales (¥10,611.0 million)

36

In engaging with customers, including local governments and educational bodies, the division
frequently and with few exceptions sees their needof BPO services, such as a collection center. The
division provides a combination of ITFOR-developed
systems and BPO services in an all-in-one digital
BPO solution to meet that need, streamline
customers’ operations, and promote local employment as explained below.

・Uncertainty about differentiation after local
government system standardization

StrategyⅠ
Further strengthen educationfor BPO personnel

Strategy Ⅱ
Utilize private-sector
expertise

The Technology Development Headquarters
consists of the Software Division, which proposesand develops systems tailored to customer needs,
and the Infrastructure Systems Division, whichhandles networking and security. In addition, theheadquarters has three departments that support
ITFOR’s business divisions.
The Technology Promotion Department handles
education and the acquisition of new technologies.
The Quality Management Department objectively
and systematically manages development
processes until product delivery to ensure quality.
The Customer Support Department stabilizes theoperation of systems by promptly and accurately
responding to customer inquiries.
The Technology Development Headquarters thus
has in place a robust framework to comprehensively
advance customer DX efforts.
Balanced internal-outsourcing ratio forbetter in-house development capabilities
ITFOR is an independent primary contractor thatprioritizes collaboration with clients and the powerof empathy. That approach enables us to build
advanced technical expertise and a deep reservoirof experience and know-how for system development. To be sure, much of that development
involves partnering with external companies. But
we recognize the shortcomings of excessive
dependence on such arrangements in hindering
our accumulation of expertise and improvementof on-site skills.
We have an ambitious goal to achieve a one-to-one
ratio of in-house work to outsourcing by 2025.
Achieving this balance will, we anticipate, reducedelivery delays and specification discrepancies
and strengthen our in-house development capabilities. This, in turn, will enable us to deliver thehighest-quality, most-competitive products.
Engineers capable of leadership in business
ITFOR has since its founding viewed the engineers
involved in technical development as valuableassets and remains committed to their professional development. The Technology Development
Headquarters conducts various initiatives to uphold
this commitment.
To ensure the progress of projects, for instance,
the headquarters prioritizes engineers who holdthe internationally recognized Project Management
Professional (PMP) certification. It allocates thebudget and establishes the framework to facilitate attainment of this certification. At year-end
fiscal 2022, 18.4% of ITFOR’s engineers were PMP
certified. The aim is to surpass 20% by the endof fiscal 2023.
New employees, meanwhile, are given approximately
7.5 months, or more than 1,000 hours, of education.
Second-year technical staff are allocated 3% of
their time for educational purposes, and the intent
is to increase this to 5%—equivalent to one day
per month—in fiscal 2023.
This approach to training enhances technicalcapabilities and sharpens abilities in responding
to customer needs. Cultivating personnel capable ofproviding swift and accurate responses ensures, inturn, the building of long-term trust with customers.
Adaptation to changes in technology
In recent years, tools such as low-code and no-code
have emerged to enable system construction
even with limited development skills. In thisevolving environment, the challenge for ITFOR isto undertake ever-more selective initiatives andto allocate personnel and time to those initiatives
with ever-greater care.
This is all the more true given how quickly andcontinuously the IT landscape births new technologies. No matter how leading-edge are our innovations, we always face their swift obsolescence.
ITFOR’s strategic decision-making thus involves
evaluating necessity, industry trends, and prospects
for a proactive stance in adopting or developing
technology. Essential to this stance is to avoid
overlooking technologies even when they seemfruitless.
Innovation requires a consistent commitment to
exploring frontiers. And ITFOR intends to makesubstantial investments in acquiring and mastering
emerging technological skills for the sake of thehighest levels of innovation.
37

8. Message from the CFO

Investing in and utilizing humanresources to enhance corporate value

management framework for its fiscal 2021 to fiscal
2023 medium-term management plan, Next Stage
2023. Our previous approach, of assessing project
profitability, was grounded in gross margins basedon planned rates, which did not reflect cost variancesor central office expenses. The often misleading attribution of unanticipated cost increases as the soleculprits of reduced gross profits that resulted risked
an imprecise management of profits. The shift to
ROIC management, with its focus on operating profit,
has improved ITFOR’s profit management.
An examination of our staff’s working conditions,moreover, included considerations beyond project
quality to encompass the likelihood of staff availingthemselves of paid, maternity or paternity, andchildcare leave. And that has heightened ITFOR’semphasis on work-life balance and human resource
performance. This signifies a profound shift inspiredby the principles of ROIC management.

“The shift to ROIC
management, with its
focus on operating profit,
has improved ITFOR’s
profit management.”
Katsuo Nakayama
Director and Executive Officer, General
Manager of Administration Department

Liberating system development through adebt-free financial strategy
Debt-free management is a cornerstone of ITFOR’s
financial approach, as it allows us to innovate insystem development without constraint. Sincegoing public in February 2000 and transitioning
to a debt-free model by March 2004, ITFOR has
steadfastly avoided borrowing. This pivotal shift in
our financial strategy was influenced by the evolving
nature of bank support amid the financial changes
since the 1980s, which caused us to focus onachieving a stable capital policy.

“Debt-free management isa cornerstone of ITFOR’s
financial approach, as
it allows us to innovatein system development
without constraint.”38

Our commitment to serving the diverse needsof our clientele, which predominantly includes
regional financial institutions, has been unwavering. Maintaining a debt-free status ensures
impartiality and fosters an environment wherebusiness decisions are not influenced by creditor
relationships. This financial independence is vital,
as it allows us to engage with every customer on aneven footing, delivering tailored solutions without
entanglement.
Two decades of debt-free management have seen
ITFOR navigate through economic tumult, including
the Lehman shock, without resorting to high-risk investments. This prudent financial path has enabled
us to achieve consistent, risk-averse growth.
Proudly, ITFOR has not recorded a single year ofloss since its initial public offering, underscoring ourdedication to fiscal stability and enduring success.
Navigating the pandemic to realize our
medium-term management plan’s goals
ITFOR adopted a return on invested capital (ROIC;
net operating profit after taxes ÷ invested capital[shareholders’ equity + interest-bearing debt] × 100%)

The greatest challenge to ITFOR’s sustainability issecuring talented personnel. Our renewed recognition of how vital is human resource education,
which we have at times taken lightly, and of how
important a company asset is staff permeates every
aspect of our organization because of our thoroughimplementation of ROIC management. Substantial
investment in human resources, a key component of
ESG and growth, is critical to determining our future.
Enhancing staff welfare measures will constitute asignificant proportion of that investment.

Adapting to the times throughstrategic choices
ITFOR’s long-standing priority on remaining debt
free has gained it numerous advantages. We know,
however, that strategies cannot be static and that
continuous adaptation is essential to stay relevant
and effective. In May 2022, after deliberations
involving shareholder insights and market evaluations, ITFOR retired the anti-takeover measures it
has had in effect since 2006. This shifted us to strategies intended to achieve our medium- to long-termgoals, of fostering a healthy and sustainable trajectory of growth while elevating our corporate value.

market trend of rising shareholder returns and isindicative of our success in meeting our operating
profit goals during the second year of Next Stage
2023. It also marks a recalibration of our conservative stance on shareholder returns, which weadopted to maintain liquidity during the uncertainties of the COVID-19 crisis.
Although we uphold our debt-free status, we constantly assess the best course of action. Investingfor business growth, potentially with external capital,
is an option that we recognize may appeal to foreign
and institutional investors. As our enterprise grows,
we remain open to altering our financial strategy
to align with our business partnerships and with achanging business landscape.
Our investor relations (IR) activities involve us in
dialogues with investors and shareholders, whose
feedback we make every effort to incorporate into
management discussions and decisions to improve
our operations. These efforts, notwithstanding, weare aware that our IR could be more robust. We
seek to engage the full range of our stakeholders,
including institutional investors and shareholders,to ensure the inclusion of broader perspectives inour management strategies to raise our corporate
value. We are, in short, intent on pursuing the best
choices for our corporate growth and the satisfaction of all of our stakeholders.

“Throughout ITFOR’s
50-year history, every
successive management
team has been entrusted...
to maintain dignity inwork and management.”
There are, however, certain unalterable principles towhich we will adhere regardless of market fluctuations or economic conditions. Throughout ITFOR’s
50-year history, every successive management
team has been entrusted by its predecessors tomaintain dignity in work and management. Because
ITFOR serves sectors that have zero tolerance forerror, such as regional financial institutions andgovernments, its managements have consistently
prioritized integrity over profits. This longtime policy
has helped us to cultivate the trust needed to consistently boost our corporate value. As we venture
toward other business horizons, we continue tobelieve in the importance of maintaining dignity in
our every endeavor. This principle is the bedrock of
ITFOR’s corporate value.

We furthered this evolution in May 2023 when we
unveiled a shareholder return policy targeting apayout ratio above 70%. This aligns with the broader

39

9. Sustainability Management

ITFOR’s approach to sustainability

Basic Sustainability Policy
We aim to build a sustainable future by fostering
innovation that supports every aspect of local communities and individuals’ life stages while delivering
meaningful experiences.
ITFOR’s services find application within local communities and across various life stages, including
birth, enrollment in school, education, graduation,
employment, marriage, childbirth, and retirement.
We promote a sustainable future by continuously
providing excellent value to society through ourservices and business activities. In doing so, we
aim to bring joy and inspiration to people while
contributing to the health of the global environment,
economic systems, and local communities.
● We will support people in all stages of their lives
and always conduct our business activities based on
the power of empathy, contributing to the creation of asociety filled with inspiration and happiness.
● We will strive to address societal challenges throughengagement with communities and contribute toregional revitalization.
● We will contribute to the development of sustainable cities by building social infrastructure through thepromotion of digital transformation (DX).
● We will practice management with maximum consideration given to the environment. Through our systems
and services, we will contribute to resolving various
environmental issues faced by our customers, including
climate change.
● We will provide an equal, fair, and diverse environment
where individuals can leverage their unique qualities
and feel fulfilled.
● We will establish a robust governance structure thatenables us to respond swiftly and flexibly to significant
changes in society and to evolving needs. Through thisstructure, we will practice management that contributes
to all our stakeholders.

Promotion System
At ITFOR, we have established a Sustainability
Committee to drive sustainability initiatives. The
committee is chaired by the president and representative director, with three directors serving as
vice-chairpersons. For addressing key issues, wehave established three promotion committees:
the Regional Revitalization Promotion Committee,
the Human Resources Promotion Committee, andthe Environmental Promotion Committee. Eachcommittee is headed by one of the three directors.
This allows us to respond quickly to important challenges at ITFOR and to expand and enhance oursustainability efforts.
As part of ITFOR’s governance-driven operations,
the Sustainability Committee reports its activities to

40

【E】

the Board of Directors every six months. Directives
from the Board of Directors are communicated toour group companies through the Sustainability
Committee and the ITFOR Group Management
Committee. This latter committee consists of top
executives from each division and group company,
ensuring a seamless implementation system.
The members of the Sustainability Committee
include employees from various ranks across ourbusiness divisions. Furthermore, female representation of approximately 30% demonstrates ourcommitment to gender diversity.

Reduceenvironmental
burden【S】
Contribute tosociety throughregional revitalization【S】
Improve productivity
and enhance added
value through thepromotion of DX

Reducing our environmental impact is a challenge that we share in common withmanagements at other companies. We are implementing measures to reduce our impact,
particularly measures critical to mitigating climate change. We are also looking from a
BCP perspective into solutions for environmental-related and other issues affecting ourbusiness continuity.

We have a robust regional business base and recognize and seek to contribute to the crucial roleof regional economic revitalization in societal development. We are doing so through business
innovation that yields optimal solutions for addressing regional disparities, fostering local
employment, and more.

Society’s rapid digital transition is another essential challenge that we are tackling. We use
evolving IT to digitize and thereby boost the productivity of businesses and other entities. We
strive for enriched social environments by making possible meaningful individual experiencesthat result in a sense of fulfillment. Our objective is societies where people can live well andfind purpose.

Board of Directors【S】

Sustainability Committee
Committee chairperson:president andrepresentative director

Regional
Revitalization
Committee

Head OfficeVice chairs:
director of technology
development
head office director
managing director

Human
Resources
Committee

Technology
Development
Headquarters

Management
Division

Environment
Committee

Deepen humancapital【G】
Strengthen
managementfoundation

We believe that each individual employee is an asset, to our company and to society. So we
provide a healthy and safe workplace where human rights for diverse values and backgrounds
and more are respected and where employees can maximize their capabilities and serve as
valuable resources. We promote employee education to enhance knowledge and skills that
support our corporate activities and that build individuals secure in who they are and who thus
are able to be contributing members of society.

Sound corporate governance is essential management policy to benefit the interests of all
stakeholders. We are strengthening our management foundation by enhancing such of ourcorporate governance structures as compliance management and risk management. We arealso reinforcing our internal infrastructure, chiefly by boosting the security measures so
indispensable for good corporate governance.

Group companies

Materiality

Stakeholder Engagement

ITFOR’s raison d’être is to contribute to the development of a sustainable future by delivering unexcelled and positive experiences to individuals andbusinesses through regional revitalization. Based on
this purpose, we have formulated our Sustainability
Basic Policy and identified five areas of materiality(key issues) in sustainability from environmental(E), social (S), and governance (G) perspectives.

ITFOR prioritizes stakeholder engagement topromote a sustainable future. We incorporate stakeholder feedback in our corporate activities throughtransparent information disclosure to build trustand drive mutual development.

ITFOR’s sustainability initiatives involve businessactivities in response to these material issues andstrive to achieve the United Nations Sustainable
Development Goals (SDGs) adopted in 2015 with a2030 deadline.
【E】Reduce
environmental burden【G】Strengthen
management foundation【S】Deepen human capital【S】Contribute to society
through regional revitalization

Regional communities(Individuals)

For details of stakeholder engagement

Initiatives Assessed Based on ESG Scores
ESG initiatives are objectively scored by various
evaluation organizations, each with a distinct perspective. The Nikkei ESG Management Forum established by Nikkei Inc., is Japan’s lead ESG assessor.
The forum provides comprehensive support for
entities’ ESG activities through three approaches:
information dissemination, information gathering,and research and analysis.
ITFOR is a general member of the Nikkei ESG
Management Forum, and as such reviews andadvances its corporate ESG initiatives based on
the ESG scores the initiatives have received. We
also support the improvement of our customers’
ESG scores with suggestions and assistance andthrough our products and services.

Students

Customers

Suppliers
and affiliatedcompanies

Employees
and theirfamilies

Shareholders
and investors【S】Improve productivity and enhance
added value through the promotion of DX

41

9. Sustainability Management

ESG initiatives

Reduced environmental impact

Basic to its third medium-term management plan is
ITFOR’s dedication to advancing ESG. This entails
pursuing our ESG initiatives and assisting ourcustomers with theirs. To that end, we reopened ourrenovated 12th-floor office space in December 2022
to offer internal and external stakeholders a place
to examine our sustainability initiatives. We plan aswell to open this space to local elementary schools
and other such groups for educational and work
experience purposes.

Basic Approach
The world faces significant risks from increased
environmental burden caused by climate change,
including rising air and ocean temperatures, raging
forest fires, heavy rainfall, flash floods, and additional severe natural disasters.

Innovation

Communication

Imagination

Innovation ＝ Communication ＋ Imagination

1. Environmentally friendly office [E]

4. Comfortable work environment [S]Our office boasts vinyl chloride flooring materials
and carpet tiles crafted from environmentally friendly
substances. We also recycle materials, such as waste
clothing, for green objects and use furniture linoleum
for box tables and meeting tables.
We have utilized 2,623 kilograms of recycled materials,
a reduction in greenhouse gas emissions of 1,877
kilograms and roughly the amount of CO2 213 40-yearold cedar trees would absorb in one year.

We feature a flexible work environment where
employees can work freely anywhere through ourintroduction of a hot desk system and movable desks
in open spaces. Team members can thus unleash theirpotential wherever and whenever in the office.

2. Paperless environment [E]We have achieved paperless operations by not installing photocopiers and printers in our office. This has
eliminated our need of trash cans and moved us toward
our objective of zero waste generation.

3. Conference rooms named for SDG colors [E][S] [G]
Our office has nine conference rooms, each namedfor a theme color associated with the SDGs. We havecarefully selected and arranged these theme colors toalign with our initiatives.

5. Communication that sparks creativity [S]We promote interaction among our employees byoffering free drinks in our office café and by providing
courtesy alcoholic beverages during happy hours
several times a month. We cover the cost with thesavings that we achieve through our paperless initiatives.

6. Battery station installations [S] [G]We have installed battery stations to provide just theright amount of power when needed. They are designed
for internal use and for use by the local community
during disasters or other emergency situations in linewith our focus on contributing to the regions where
we do business.

The ITFOR Group strives to reduce its environmental
impact and to assist its customers’ initiatives in thisregard through its products and services. Internally,
our efforts to combat global warming include thestrengthening of our greenhouse gas emissions
regulations in line with international frameworks.
We also consider disaster preparedness essential
amid heightened environmental risks and, as such,
have put in place business continuity planning(BCP) measures.
Our Environmental Promotion Committee is conducting an analysis of climate change risks andopportunities. Its scenario analysis of our transition
risks, which encompass policy and regulatory risks,market risks, and acute physical risks, forecasts
no significant impact on our operations to the year
2050. The reference for this forecast is that our
scope 1 and 2 emissions for fiscal 2021 were 454
t-CO2. We seek to identify our emissions so that
we can set reduction targets for fiscal 2024 andbeyond.

Key Initiatives
1. In-House Efforts● Low Environmental Impact Workspace
Our expansion of ourTokyo headquarters workspace wastrue to our commitment to ESG initiatives. We refrained
from installing photocopiers, printers, and shredders
to achieve paperless operations and minimize waste,eliminating the need even for trash cans. We have also
incorporated various environmentally friendly products
in our workspace (see page 42).

2. Our Customers’ Initiatives● Verification Experiment for Electronic Issuance ofUniversity Completion Certificates Using Blockchain
Technology
Open-space workplaces feature a hot desk system with movable desks

Environmentally friendly offices

Since May 2022, ITFOR has been conducting joint
verification experiments with the Kyushu Instituteof Technology and Chaintope Inc. into the electronic
issuance of university course completion certificatesusing blockchain technology. Enabling students toobtain their certificates without their need of visiting
the registrar’s office will reduce car travel and CO2
emissions.

financial institutions and other entities with cashless
payment platforms.
● Reduced Environmental Impact through Cloud
Service
Our next-generation cloud service, IPaC (ITFOR
Package Cloud), is a robust system of minimal environmental impact based on Amazon Web Services(AWS). Its leading-edge energy efficiency and use ofrenewable energy reduce its power consumption andCO2 emissions beyond anything previous and take us
toward a carbon-neutral society.

3. External Initiatives● Participation in Japan Climate Initiative
The Japan Climate Initiative was established in July
2018. Its participant companies, governments, NGOs,
and others pledge to solve global challenges and to
decarbonize society. They constitute a network thatstrengthens communication and the exchange of strategies and solutions regarding climate change. ITFOR
has participated in the initiative since November 2021
and uses the information it obtains to benefit various climate-related activities domestically and internationally.
Japan Climate Initiative● Response to the CDP
The CDP (formerly the Carbon Disclosure Project) is anongovernmental organization managed by a UK-based
charity. It operates a global information disclosuresystem for investors, businesses, countries, regions,and cities to manage their environmental impacts.
ITFOR began responding to the CDP’s annual questionnaire in 2022 to disclose information on its activities
related to climate change.
CDP Japan● Sponsorship of Tour de Kyushu 2023
We were a Silver Partner sponsor of the Tour de Kyushu
2023 bicycle race held from October 6 to 9, 2023. This
event transcends cycling in its promotion of sustainability in Kyushu. In its emphases on regional development
and recovery, environmental conservation, health, andadvanced technology, the event aligns with various
SDGs. It focuses on eco-friendly race operations, carbon
neutrality, and respecting the natural environment—all
goals and visions that ITFOR embraces.
Tour de Kyushu 2023

● Cashless Payments Lessen Environmental Burden
Cashless transactions reduce CO2 emissions associated with the issuance, transport, and management ofcash. ITFOR promotes cashless transactions in supportof regional economic revitalization by providing local
Battery stations

42

Meeting rooms with SDG
color names

Office café encourages employee interaction

43

9. Sustainability Management

Societal contributions through regional revitalization

Digital transformation for productivity and added value

Basic Approach

Basic Approach

Japan’s population, including its working-age demographic, is in decline because of the country’s low birthrate and aging society. This is a significant issue, as
it strains the nation’s social security capabilities andjeopardizes its international competitiveness.
Of particular concern is the stagnant population
growth in the nation’s rural regions, where populations
are rapidly aging and there is a net outflow of younger
residents to urban centers. The concentration ofpeople in major cities may enhance economic efficiency, but it poses the risk of mass casualties from thekind of natural disasters to which Japan is prone.
ITFOR believes that balance between Japan’s ruraland urban areas will strengthen the nation and bringpeace of mind to its members of society. The company
is addressing urban-rural disparities through open
innovation and by promoting regional economic revitalization in rural areas that yields employment andincome-generating opportunities.

Key Initiatives
1. Regional Revitalization through Open Innovation
We support corporate business transformation and, inturn, regional revitalization, by offering packages that
integrate our and other companies’ technologies tolocal customers.
● Solutions for Financial Institutions
We leverage expertise garnered through our workwith regional financial institutions, an ITFOR strength,
to provide our other financial institution customers
with increasingly advanced solutions to their needs.
These include personal loan operation support system“SCOPE” and the web-based loan application system“WELCOME.” By offering such solutions, we are helping
to revitalize regional finance.
● System for Retailers
RITS is a core operating system designed for and that
ITFOR provides to the retail industry. It caters to a wide
range of retail formats, including department stores,
hardware stores, specialty shops, general merchandise
stores, supermarkets, and drugstores. RITS features
every function vital to a retail operation: product management, sales management, customer management,
and credit. As such, it improves operational efficiency
and increases sales.
● Support for Public Education
Boards of education in Japan benefit from ITFORdeveloped CARS School Affairs Support Series. This
educational solution boosts efficiency by streamlining
and enhancing tasks typical of educational settings. It
frees teachers to focus on education. Comprehensive
in scope, it provides standardized support for schoolaffairs, ensuring equitable education for all children,
regardless of their location or school.

44

2. Cashless Transactions Revitalize Regional
Economies
ITFOR furnishes its cashless payment platform
iRITSpay, to regional financial institutions and otherentities. Further details of our regional promotionof cashless transactions appear in “Dialog with a
Customer” on page 16.
● Business Process Outsourcing Boosts Regional
Employment
ITFOR offers business process outsourcing (BPO)
services to local governments. Governments that
outsource to us the collection of tax and National
Health Insurance payments and other tasks liberate
their employees to focus on core responsibilities. This
improves services for local residents. Our BPO also
opens local employment opportunities, as we hire
and train local people to undertake these tasks to thehighest standards. In regions grappling with economic
stagnation, our recruitment of locals stimulates local
economies.
● Cybersecurity for Local Companies
ITFOR collaborates with local systems engineering
companies to meet the cybersecurity needs of local
businesses. The cybersecurity service “Ransom
Guard,” protects small and medium-sized enterprises(SMEs) from ransomware threats. It helps even SMEs
that lack specialized expertise elevate their cybersecurity. In fiscal 2022, the Tokyo metropolitan government entrusted ITFOR to enhance the cybersecurityof SMEs in its jurisdiction. We are doing so throughthe AI-based EDR service “CyCraft AIR” (see page 45
for details).

External Initiatives
1. Public-Private Partnership for Regional
Revitalization and SDG Implementation
The Japanese government Cabinet Office has established a public-private partnership to promote theimplementation of the SDGs and the revitalization ofregional economies. ITFOR joined the partnership earlyin calendar 2023 and is working toward its objectives
alongside regional financial institutions and governments and public enterprises and universities.
Public-private partnership for regional revitalizationand SDG implementation

2. Regional Revitalization Campaign to Promote
Remote WorkWe are aligned with the objectives of a Japan government Cabinet Office and Cabinet Secretariat campaign
to promote remote work as a means of driving regional
revitalization. Early in 2023, we issued an action declaration regarding this campaign.
Campaign to promote remote work for regional
revitalization

Much of what ITFOR does to advance DX is foundedin Japanese government policies.
Japan’s government formulated its Basic Policy
for Reforms for the Realization of a Digital Society
in 2020 and in so doing announced its vision fora futuristic digital society. This was followed up
in 2021 with the passage of the Basic Act on theFormation of a Digital Society and the adoption bycabinet of the Priority Policy Program for Realizing a
Digital Society. What is clear in each issuance fromthe Japanese government is the imperative role oflocal governments in helping to realize the vision fora digital society in Japan.
Ministry of Internal Affairs and Communications
ITFOR leverages emerging technologies and works
with businesses and other organizations to support
their DX initiatives and enhance their productivity. We
strive to establish workplace environments whereindividuals find fulfillment in their work and can workwith a sense of purpose. To do so sees us blend ourtechnologies with those from other companies tobuild and provide the digital infrastructure necessary
for the DX of businesses, other organizations, andsociety overall.

DX and “Decent Work”“Decent work” is a term introduced by Juan Somavia,
who became the director-general of the International
Labour Organization (ILO) in 1999. It refers to theidea of ensuring work that is meaningful, motivating,and dignified. ITFOR values decent work and is capitalizing on digital technology to transform society
and its myriad entities to enrich the lives of workers
and people in general. We are determined to ensurethat workers find job satisfaction in meaningful,motivating, dignified employment.

Trustworthy ITFOR technology, therefore, will figure
prominently in raising the quality of services provided
by local governments.
2. End-of-Life Service Verification Project
ITFOR’s Digital Safe end-of-life service employs
blockchain technology. Kumamoto Prefecture haschosen Digital Safe for its DX verification projectof advanced Web3 technologies, scheduled to run
from July 2023 to March 2024 of our 2023 fiscal year.
The prefecture is thus pioneering IT for end-of-life
services in its bid to improve its public service. ITFORis pleased to be a part of this project and to support
Kumamoto Prefecture’s DX initiatives.
Demonstration Project for DX Utilizing Blockchain Technology

Building Societal Awareness and Knowledge

Digital safe

Blockchain

End-of-lifenotebook

Local government

Local citizens
Interactive exchange

3. Artificial Intelligence Cybersecurity

Key Initiatives

To combat cyberattacks, ITFOR offers CyCraft AIR.
Artificial intelligence (AI) underpins CyCraft AIR andsignificantly reduces the time and cost involved ininvestigating and analyzing vast terminal logs. It
also expedites recovery, delivering analyses reports
within three hours along with actionable response
strategies in report form. CyCraft AIR enables organizations to undertake cybersecurity internally. The
primary users of this ITFOR product are regional
financial institutions, governments, and e-commercesite operators.

1. Electronic Issuance of Certificates

4. Automated Call Center Systems

ITFOR collaborated with the Kyushu Institute ofTechnology and Chaintope Inc. in a verification
experiment for the electronic issuance of university
course completion certificates using blockchain
technology. Having verified the technology, we plan
now to establish partnerships with other private
corporations to offer it to universities across thecountry and to upgrade it to issue certificates ofdiverse kinds.

Financial institutions benefit from two further ITFOR
systems, each of which encourages customers tosettle outstanding payments. The automatic call
reception system “Robotic Call” that uses interactive voice response (IVR) technology, and the credit
promise reception system “NYUS.” Because thesesystems automate traditional call center tasks, they
obviate the need for personnel to handle calls andenhance efficiency. Staff can focus on interfacingwith customers for more complex tasks, thereby
improving service quality.

Japanese Trade Union Confederation

We will also develop additional digital platforms thatinspire DX throughout the country. These platforms
will facilitate the electronic issuance of certified
copies of resident registers and other documents.

45

9. Sustainability Management

Human capital valued

long term. We hope to expand our proportion of female
employee role models to, in turn, raise our number offemale managerial candidates.

Basic philosophy
Our basic philosophy is to elicit joy through the power of
empathy. To realize it, we cultivate a work environment
where employees can engage diligently and enthusiastically and be empowered to unlock their potential. Each
employee is integral to our mission of staying closely
connected with our customers to learn how best we canmeet customer needs. Only a happy, fulfilled employee isable to do so.
We believe that every initiative related to securing andnurturing human resources contributes to improving
our ROIC. This reflects our approach to human capitalmanagement. We engage in initiatives where everyone
involved is aware of the objective to maximize the effectiveness of each initiative. And for every initiative, weestablish and monitor key performance indicators (KPIs)
that we observe at fixed points throughout an initiative.

Key Initiatives● Conducting in-house education and training
In line with ITFOR’s belief that the growth of each employee
contributes to the growth of the company, ITFOR’s management is committed to employee education and development. We also encourage a culture of self-learning in the
belief that this contributes to elevating job performancecapabilities.
KPIs
PMP certification holders: FY 2022: 17.3% (FY 2023 target: 20%)

1. Respecting Human Rights
We consider it our corporate responsibility to respect
the right of all individuals to freedom and happiness.
This initiative applies as much outside as inside thecompany. In the conduct of our business and in our
conduct as members of society in general, we respect
the human rights of our customers and of every individual in society.
2. Promoting and Nurturing the Participation ofDiverse Human Resources
We inaugurated a project team to drastically revise
our personnel system in September 2021. That teamengages in ongoing discussions regarding personnel
system challenges and the direction of our humanresource (HR) initiatives. This has resulted in the implementation of various reforms, such as a qualificationand grading system and a performance evaluation
system.

Components
of indicator

We also conduct surveys to discern employee expectations and satisfaction levels through scoredassessments. The surveys enhance employee engagement, and we utilize the insights gleaned fromthem to optimize our work environment and refine our
HR systems. We regularly measure the effectivenessof our engagement with employees by employing aplan-do-check-act (PDCA) cycle to ensure continuous
improvement in that regard.

Improvement drivers

National exam pass rate for IT engineers: FY 2022: 75.3%(FY 2023 target: 80%)

● Pursuing aggressive hiring of experienced personnel
We emphasize the recruitment and development of recent
graduates but also hire experienced professionals toensure the swiftest response to changes in the businessenvironment. This promotes diversity within our organization. In April 2023, in fact, we introduced a Comeback
Alumni Program that seeks to reemploy former employees
who left ITFOR mid-career for such reasons as childbirth,caregiving, spousal relocation, or career advancement
elsewhere. It is part of our efforts to secure talented
individuals and raise the mix of our employee ranks andplaces no limitations on the duration either of employment
or nonemployment at ITFOR.
● Promoting female empowerment
ITFOR promotes the recruitment of women and aworkplace that accommodates their life stages, including
marriage and childbirth, to ensure that they thrive in careers

Improvement measures

Human resources strategyaligned with measures
Strengthen internal talenteducation and development

Grossprofit margin

Enhance marketing,expand new businesses
and products, andsustain and improve
the recurring business

SG&A expenses
to sales ratio

Capitalturnover ratio

Enhance employees’
value and creativity,
and reduce costs

Current asset
turnover ratio

Strengthen
diversity and inclusion
Improve
employee retention rate
Enhance working conditions
Improve employees’ mental
and physical well-being

Fixed asset
turnover ratio
Every employee actively
participates, keeping in mind the
direction of each initiative witha focus on improving ROIC

46

Promotewomen’s participation

Secure and nurture
new talent, andenhance the work
environment

Engage senior professionals

Operatingprofit margin

ROIC

Recruitexperienced professionals

Ensure a workplace
where employees
can maximize
their potential

KPIs
Percentage of female employees: FY 2022: 18.0%(FY 2025 target: 25%)
Percentage of female managers: FY 2022: 4.3%
(FY 2025 target: 9%)● Fostering the participation of senior talent
We plan to implement a retirement age extension in April
2024. This is a strategic measure to exploit the skills andexperience of our senior talent.
● Strengthening diversity and inclusion
To foster IT-related innovation, we offer a work environment that embraces diverse talents and work styles. Thisencourages mutual inspiration among employees andpermits employees to work in the way that they are most
comfortable and productive. It also sees us participate intalent exchanges with client and other companies throughlong-term secondments and placements and the like. In
some cases, we develop IT talent on behalf of and for the
express purpose of placement with our customers.
● Lowering employee turnover
Mobility within the IT industry is rising. So we are improving
our employee retention rate by emphasizing the value ofeach initiative outlined in this section.

3. Providing a Fulfilling Workplace
A large part of what we offer in the way of a fulfilling
workplace is our flexible accommodation of individual
work styles. This heightens employee engagement,
empowers personal growth, and bolsters creativity andproductivity.
● Prioritizing ease of work through a redesigned officespace
We believe that a comfortable workplace contributes toenthusiastic and innovative work. The redesign of our
12th-floor headquarters’ office space, completed in fiscal
2022, provides a relaxing environment and encourages
employee interaction (see page 42).
● Improving our work environment and conditions ofwork
Our efforts at employee motivation and engagement
involve improvements to ensure a fulfilling and rewarding
workplace. We also advocate for work-life balance, especially through the taking of paid vacations. In fiscal 2022,
we saw our paid vacation utilization exceed 80%.
Success in this respect came in part because of incentives.
They include anniversary leave, where employees who takepaid leave during the month of their birthday or some othercommemorative day are eligible for a bonus. They also
include +1 (plus one) leave, where employees are encouraged to take an extra holiday before or after a three-day
weekend or in the gap between public holidays. Throughthese and possible further incentives, we hope to maintainour paid vacation utilization rate at a high level.

leave and in providing for individual work styles to support
men and women in balancing work and life.
KPIs
Percentage of employees taking paid leave: FY 2022: 83.0%(FY 2023 target: 85%)
Percentage of male employees taking childcare leave: FY 2022:
44.4% (FY 2023 target: 50%)

4. Promoting Occupational Health and Safety
In an evolving work environment with diverse employment arrangements, we prioritize occupational safety
and health. Our commitment is to ensure a work environment where everyone can work with confidence andpeace of mind.
● Conducting regular employee health checkups
We proactively monitor the physical and mental well-beingof our employees. As such, we arrange for regular healthcheckups and track participation therein. We strongly
encourage any nonparticipating employees to avail themselves of these health checkups.
KPI
Percentage of employees taking health checkups: FY 2022:
89.0% (FY 2023 target: 100%)● Protecting employee mental health
We strive to protect the mental health of our employees.
This includes annually checking employees for stressto raise their awareness of their stress levels. Stressed
employees are taught coping mechanisms while we
address any workplace issues causing their stress. We
also offer one-on-one sessions with occupational physicians. In addition, we have established the ITFOR Hotline,
an internal and external consultation service throughwhich employees can anonymously seek advice if they
feel uneasy about openly discussing power harassment,
sexual harassment, compliance malfeasance, and the like.
KPI
Percentage of employees taking stress tests: FY 2022: 84.0%(FY 2023 target: 100%)● Participating in the Health & Productivity
Management Alliance
The Health & Productivity Management Alliance is, asof June 30, 2023, a collection of 148 companies and organizations that share a vision of invigorating Japanesecompanies by promoting employee health and sustainable
health insurance.* ITFOR participates in this alliance tocollaborate on health-related initiatives, including healthinsurance, with other companies and on recognizing healthand productivity management.
*Health & Productivity Management is a registeredtrademark of nonprofit organization Kenkokeiei.
Health & Productivity Management Alliance website

We also hope to achieve the government target of a 50%
uptake in paternity leave by 2025. We launched a support
program for that purpose in October 2022 that provides fullsalary for up to two weeks from the start of paternity leave.
Our promotion, meanwhile, of the diverse work styles of
our working parents has seen us implement a number ofmeasures. Among them are the options of telework andshortened working hours. We desire our efforts in paternity47

9. Sustainability Initiatives

Management foundations strengthened through corporate governance

Basic Philosophy
ITFOR draws on its corporate philosophy of eliciting
joy through the power of empathy in expressing its
philosophy of corporate governance. It recognizes
that the basis of corporate governance is transparent and fair management systems and efficientbusiness execution underpinned by prompt andresolute decision-making and timely and appropriate information disclosure. The aim of effective,
constantly improved corporate governance is theenhancement of ITFOR’s corporate value.
Corporate Governance Structure
ITFOR has adopted a corporate governancestructure consisting of an Audit and Supervisory
Board to reinforce the supervisory function of theBoard of Directors and to ensure the robustnessof the company’s corporate governance (seeschematic of corporate governance structure on thefollowing page).
1. Board of Directors
The Board of Directors consists of eight members:
two representative directors, three non-audit
directors, and three directors who also serve as
members of the Audit and Supervisory Board. To
strengthen the supervisory function of the Boardof Directors, ITFOR has established a policy toappoint independent outside experts to one-third ofits Board of Directors’ directorships. Of the Board’s
eight directors, three are outside directors.
The Board of Directors holds regular meetings oncea month and extraordinary meetings as necessary.
Directors knowledgeable in the company’s business
operations and independent outside directorsof diverse expertise engage during meetings indynamic discussions leading to swift and flexible
decision-making and the strengthening of theBoard’s supervisory function.
Comprehensive information sharing among
directors, including outside directors, is ensured
by having directors attend Business Executive
Committee meetings (see 4). And the Board’s effectiveness is regularly evaluated through surveys
of its directors.
Number of meetings in fiscal year 2022: 25
2. Audit and Supervisory Board
The Audit and Supervisory Board oversees theinternal controls, the legality, and the appropriateness and efficiency of ITFOR’s business operations.
It consists of three ITFOR directors: one ITFOR
director who is a full-time Audit and Supervisory
Board member and two outside directors.
The Audit and Supervisory Board meets at least
once a month in principle to audit the execution

48of the duties by the company’s directors, to audit
the company’s financial documents and othermaterials, to produce audit reports, and to handle
other matters. It conducts its audits in coordination
with ITFOR’s external auditor, ITFOR’s internal audit
division, and other parties in accordance with its
audit policies and plans.
Number of meetings in fiscal year 2022: 19
3. Nomination and Compensation Committee
ITFOR has established its Nomination andCompensation Committee as a voluntary advisory
body to its Board of Directors. The committee istasked with enhancing and ensuring the transparency and objectivity of procedures regarding thenomination and compensation of directors and withbolstering corporate governance,
The Nomination and Compensation Committee iscomposed of three or more members appointed
through a Board of Directors’ resolution. It adheres
to a policy that the majority of its members are to
be independent outside members, one of whom
will serve as the committee’s chair. The committee
conducts deliberations and provides recommendations to the Board of Directors in response toinquiries therefrom.

The Sustainability Committee meets monthly,reports on its progress to the Board of Directors
semiannually, and receives directives as needed toensure its continuous, effective, and smooth functioning. Its three subcommittees convene monthly
to bimonthly.
6. Compliance and Risk Management Committee

Japan’s Corporate Governance Code
ITFOR implements each principle of Japan’s
Corporate Governance Code. Details regarding
disclosure in this regard are documented in thecompany’s Corporate Governance Report (revisedon June 27, 2023).

ITFOR’s Compliance and Risk Management
Committee reports directly to the Board of Directors
and oversees the overall compliance and risk
management of the ITFOR Group. The committee
is chaired by ITFOR’s president and representative director and includes in addition three ITFOR
directors. It convenes quarterly in principle and may
hold additional meetings as needed, especially inthe event of significant compliance-related incidents(see page 50).
Basic Policy on Corporate Governance (revised onJune 28, 2022)
Basic Policy on the Establishment of an Internal
Control System (revised on June 19, 2015)

Corporate Governance StructureManagement oversightGeneral Meeting of Shareholders

Number of meetings in fiscal year 2022: 2
4. Business Executive Officer Committee
ITFOR has adopted the executive officer system toswiftly respond to changes in the business environment by separating management’s decision-making and supervisory functions from the businessexecution function. Executive officers convene thecommittee twice a month in principle to deliberateon execution policies and to ensure agile business
operations.

❸Nomination
and Compensation
Committee

Inquiry
Report❶Board of Directors

Determination of management
polices and strategies, andsupervision of business execution

Audit/
Report❷Supervision

ITFOR established its Sustainability Committee
to achieve a basic objective of its third mediumterm management plan: to advance ESG. The
Sustainability Committee is chaired by ITFOR’s
president and representative director and includes
three directors as vice-chairpersons. Collectively,
they drive ESG by addressing its material issues.
Three subcommittees operate under the guidanceof the Sustainability Committee: the Regional
Revitalization Promotion Committee, the Human
Resources Promotion Committee, and theEnvironmental Promotion Committee, each led by
an ITFOR director and each focused on a specificarea. This structure enables agile responses tocritical challenges.

ReportAccounting Auditor

Cooperation❺

Sustainability
Committee

President andrepresentative director

ReportInternal Audit Office

Accounting
audit

Cooperation

Internal
control audit

Internal
auditing

Number of meetings in fiscal year 2022: 22
5. Sustainability Committee

Cooperation

Audit andSupervisory Board

Internal control❻ Compliance andRisk Management
Committee❹

Business execution/internal control

Business Executive
Committee

Security
Committee

Business execution

Executive officers
Office Efficiency
and Environmental
Enhancement
Committee

Quality and
Safety Committee

Divisions/offices

Group companies

49

9. Sustainability Initiatives

10. Message from an Outside Director

Management foundations strengthened
through compliance and risk management
Basic Approach

Key Initiatives

ITFOR strives to be a company trusted by society byadhering to laws and regulations, including internal
regulations. We make every effort to act withintegrity and good judgment.

1. Promoting Compliance and Embedding Risk
Management

Promotion System
Our Compliance and Risk Management Committee
oversees our overall compliance and risk management. It investigates the causes of complianceviolations and other business risks and considers
and implements measures after reviewing laws andregulations to prevent or mitigate recurrence.
In the event of emergencies, such as natural
disasters, the president and representative director
heads up the company’s Emergency Response
Headquarters to promptly and appropriately manage
the crisis. ITFOR has established three subcommittees—the Security Committee, the Office Efficiency
and Environmental Enhancement Committee, andthe Quality and Safety Committee—to analyze fromtheir specialized perspectives operational risks
arising from emergencies. Those subcommittees
report their findings to the Compliance and Risk
Management Committee.

ITFOR’s Strengths
Leveraged for
Sustainable Growth

2. Ensuring Compliance
We have established three internal mechanisms toensure compliance: the Compliance Consultation
and Reporting Liaison Office, the Harassment
Consultation Hotline, and the Mental Health
Consultation Hotline. We have in addition set up an
external liaison office to accommodate employees
who prefer not to report internally.

50

Outline of risk

Key measures

Naturaldisasters, etc.

Business disruption from power
outages and telecommunications failures caused byearthquakes and other disasters

We have data centers in Tokyo and Osaka and have established a business continuity
plan (BCP) that takes into account large-scale earthquakes. We implement safetymeasures such as the introduction of a safety confirmation system, seismic resistancemeasures, and disaster prevention training.

System (product)development andquality management

Costs and damages due toquality-related issues

We have obtained ISO 9001 certification (2015 edition), produced a quality manual, andset quality objectives to ensure thorough quality management. ISO 27001 certification(2013 edition), meanwhile, facilitates our ability to conduct quality assurance, to improve
services, and to enhance customer satisfaction.

Information security

Loss of critical information

Division managers serve as information security officers and oversee security within
their divisions. We have obtained privacy mark certification and have bolstered our
information management with CAT Supporter, a system that monitors access control
and PC operation logs.

Competition

Price declines amid intensecompetition

Our business strategy sees us leverage our extensive business experience tospecialize in systems for regional financial institutions and for distribution and retailindustries. By concentrating on these areas, we accumulate system expertisesuperior to our competitors’. We differentiate ourselves by offering comprehensive
services encompassing tangible and intangible elements and our unique solutions
and network infrastructure.

Exchange rate
fluctuations

Increased costs due toexchange rate fluctuations

We engage in forward exchange reserve transactions within the scope of foreign
currency accounts payable and order amounts. We select the counterparties for forward
exchange reserve transactions from among highly reputable domestic banks to mitigate
our credit risks.

COVID-19

Constraints on order activities,
delays in software development,
and delays in delivery caused bydisruptions in the supply chain
because of the renewed spreador prolonged impact of infections

We promote work-style reforms that include telecommuting and more. As part of ourintegrated supply chain management, we also exercise procurement based on customer
demands to minimize transportation, inventory, and waste generation, thereby limiting
the impact on performance.

Director of Business Development Office,
SK-Electronics Co., Ltd.

But I feel that ITFOR would benefit from a more
distinctive approach to globalization. It should
employ the expertise and the technology that it
has developed in Japan to tap markets abroad. To
that end, I intend to exploit the network that I’ve
established in my role as a director overseeing new
business ventures at SK-Electronics to facilitate
ITFOR’s globalization. It’s my intention to introduce
ITFOR to foreign companies with which it cangenerate synergies.
Cultivation, Development, and Retention ofDiverse Human Resources
A full 30.3% of ITFOR’s new hires are female,bolstering the company’s already large pool oftalented female employees. There is, however, roomfor growth, in ITFOR’s development of its female
workforce and in its cultivation of a more diverse
workforce overall.
Recognition in Line with Social Contribution

Anticipated key risks and their mitigation
Type of risk

Outside Director

products, such as communication equipment andcontact center systems, from companies in the
United States, Israel, and Taiwan, reflecting a degreeof global expansion in product offerings.

ITFOR has internal regulations governing compliance and risk management. In accordance
therewith, the directors, executive officers, andemployees of ITFOR and its subsidiaries are guided
by the three just-mentioned subcommittees inongoing training and awareness-building activities.
This ensures that everyone views compliance as apersonal responsibility and conducts business witha focus on risk management. Our Corporate Codeof Conduct, moreover, is a universal standard thateveryone at ITFOR must abide by in doing business.

We prioritize user privacy. Nobody who reports
transgressions in compliance will face adverse
treatment for seeking our consultation or cooperating in fact-finding. As required, and only with thereporting individual’s consent, a report may be madeto the company in an effort to resolve the issue.

Waka AbeI joined ITFOR as an outside director in 2021. Initially,
I found myself overwhelmed, as I considered myself
a novice in IT and system development. When,however, I learned that the management teamalready consisted of IT experts and was instead
seeking an unbiased perspective from someone
without a specialized IT or system development
background, I relaxed and embraced the position.
My impression from early on is that ITFOR
possesses high corporate value. It contributes tofostering a sustainable society through a numberof business sectors and displays robust potential
for financial growth. Nevertheless, its visibility ismodest, and its standing in capital markets is notparticularly favorable.
As the company’s outside director, I highlight
ITFOR’s technological strengths and significanceto society wherever I can leverage my expertise. I
believe, meanwhile, that ITFOR should emphasize
public relations.
Promotion of a Unique Form of Globalization
In my view, one of ITFOR’s challenges is globalization. The company did originally import some

For the former, I suggest motivational initiatives
based on career development models that offer
women more opportunities to excel within thecompany. And for the latter, it is critical that ITFOR
nurture a pool of talent whose diversity extends
beyond mere gender.
ITFOR’s involvement with ESG, meanwhile, should beless comprehensive than focused on the company’s
most vital constituents: its human resources.
Because ITFOR has no production facilities, it has
minimal direct impact on the environment. It should,
therefore, prioritize the social and governanceaspects of ESG and target those aspects at developing its current and at cultivating its future humanresources. The company must invest capital intensively to ensure that it has in place, now and later,
the kind of talented employees whose intellects
and skills will raise the company’s productivity andprofitability.
Viable ideas in this regard include the following.
ITFOR should consider recruiting engineers fromoverseas; establishing university courses and ties touniversities, domestic and foreign; and implementing scholarship programs at academic institutions.
Ensuring a rich pool of human resources requires
numerous steps. ITFOR, as an open and changedriven company, is eminently capable of developing
and cultivating human resources that benefit ITFOR
and that benefit from employment at ITFOR.

51

11. Financial Information
Figure 2. Capital Returns vs TSE Average*

A decade of performance

（%）
18.0

16.0

The investment landscape in Japan over the past
decade, from fiscal 2013 to 2022, has broadly
followed the trajectory outlined below. In theaftermath of the supply chain disruptions triggeredby the 2011 Great East Japan Earthquake, thegovernment of the day, unable to devise effective
measures, yielded to the Abe administration of the
Liberal Democratic Party at the close of 2012. Abe
was intent on avoiding deflation and introduced
Abenomics, a growth strategy that combined
financial easing, fiscal policy, and initiatives tostimulate private-sector investment—known as the“three arrows.” Helped by a weak yen and a decline inoil prices, Abenomics fostered a fledgling recovery
in corporate earnings.

Only companies adaptable to the economy’s “newnormal” could look beyond the challenges and see
business opportunities.

14.0

Domestic IT services providers, including ITFOR,
have experienced heightened demand for system
updates to address regulatory compliance insectors such as finance and distribution. There has
also been a surge in demand among businesses for
efficiency improvements that contribute to workstyle reform. The COVID-19 pandemic has accelerated the transformation to digitization to achieve
noncontact and remote interactions. And that digitaltransformation spans the whole of society and notjust business enterprises.

10.0

Corporations’ accumulated retained earnings,
however, did not translate into investments for
growth. In fact, two consecutive consumption tax
hikes hindered Japan’s economic growth, resulting
in two periods of negative growth. Since the early2020s, the global economy has grappled with challenges, such as the COVID-19 pandemic, Russia’s
invasion of Ukraine, inflation due to surging raw
material prices, and worldwide interest rate hikes.

A decade’s worth of changes have, for ITFOR,
increased net sales from ¥10,429 million to ¥18,322
million over the 10-year period. This growth, of
75.7%, corresponds to an annual growth of 5.8%.
The company’s operating income, meanwhile, has
increased from ¥1,315 million to ¥3,217 million, again of 144.7% or, on an annual basis, of 9.4%, asshown in figure 1.

Figure 1. 10-Year Net Sales and Income Trends

Net sales

Income(Millions of yen)

(Millions of yen)

20,0005,000

18,00016,000

ound

Comp

l

annua

: 5.8%

4,500

(AGR)

3,500

12,000

3,000

nnual

me a
g inco

tin
Opera

8,000

h ra

growt

1,000

2,000

500

0

0

Consolidated
net sales

2015

2016

2017

Consolidated
operating income

In figure 2, we examine profitability trends thatreveal that ITFOR’s return on assets (ROA) andreturn on equity (ROE) are consistently and significantly higher than the Tokyo Stock Exchange (TSE)average. ITFOR’s ROA in fiscal 2022, for example, isa notable 15.7%, whereas the TSE average lags at

2.0

0.0
FY

2018

2013

2014

ROA

2015

2019

Consolidated
ordinary income

2016

ROE

2017

TSE ROA average

2018

2019

TSE ROE average

Table 1 breaks down ITFOR’s ROE, with a focus on
fiscal 2022, into three components using DuPont
analysis, which employs formulas to dissect thefinancial condition of a company into multiple
elements and to detail the factors that influence
ROE. ITFOR’s ROE is revealed to be challenged
by the absence of external capital and by a highequity to total assets ratio. But analysis also shows
the company’s ROE to be superior in profitability(net profit margin) and operational efficiency(asset turnover), offsetting the challenges. The
latter contribute heavily to ITFOR’s elevated capitalprofitability.

2020

2021

2022

*The TSE (Tokyo Stock Exchange) average is theaverage value of TSE-listed companies forthe year ended March 31 as sourced fromthe TSE Monthly Report.

ITFOR’s enhanced revenue growth and profit margin
in recent years is attributable to the improved sophistication of the packaged systems that it hasdeveloped for financial institutions over its decades
in business. Also contributing are the company’s
improved customization capabilities, which havegrown its customer base considerably.

Table 1. DuPont Analysis of ROE
ROE = Net income / Shareholders’ equity =Profitability

Operating efficiency

Financial leverage

ROE

Net profit margin

Asset turnover

Leverage factor

ITFOR

14.0%

12.5

0.9

1.3

TSE average

9.1%

5.0

0.6

3.0

2,000

4,000

2014

4.0

2,500

1,500

2013

6.0

Net profit margin (Net income / Sales) × Asset turnover (Sales / Total assets) × Leverage factor (Total assets / Shareholders’ equity)%
te: 9.4

6,000

FY

8.0

4,000

14,00010,00052

h rate
growt

12.0

2020

2021

2022

Net income attributableto owners of the parent

4.2%. This showcases a substantial advantage for
ITFOR over the market norm. Also in fiscal 2022,
ITFOR’s ROE (including net income attributable toowners of the parent) is 14.0%, surpassing the TSE
average of 9.1% and signifying superiority in thisregard as well.

In this report’s section on our business divisions(pages 30–36), for example, we speak to how
we leverage the expertise that we’ve gained
in developing packaged systems for financial
institutions to develop products and services for
local governments. We also plan to employ our
know-how in retail solutions to offer paymentbusiness solutions for financial institutions. We
intend to maximize our resources to explore newcustomers and products.

ITFOR remains debt free and has achieved steady
growth by offering customers quality systemproducts and services and by benefiting from therecommendations of satisfied customers to garner
further business opportunities and customers. The
rapidly changing social and business landscapes
make it imperative for our growth that we extend
ourselves beyond our usual activities to implement
novel growth strategies. Absent initiatives andinvestments, our further enhancement of ourcorporate value may prove difficult. How best
to sustain our growth is an ongoing issue formanagement.

53

11. Financial Information

Background to change in segment classification

ITFOR recently changed the segment classification
outlined in its securities reports. Until fiscal 2020, it
categorized segments by the form of the solutions
provided: System Solutions, Service Solutions,and Network Solutions. Since fiscal 2021, it has
streamlined its classification into two businesssegments: System Development and Sales andRecurring Business. ITFOR discloses its financial
figures under this revised classification. System
Development covers equipment sales, design, andinstallation until the service launch of contracted
projects. Recurring Business encompasses BPO
and maintenance, activities of stable revenue.

Segment Income

Segment Sales

The company’s reason for this change in segmentclassification was its expanding customer base.
We believe that classifying our operations by
System Development and Sales and by Recurring
Business elucidates our performance better than aclassification based on solutions. To complementthat explanation of our performance for investors,
we also disclose the net sales of our six businessdivisions as categorized by customer industry: theFinancial Systems Division, Public Systems Division,
Retail EC Systems Division, CTI Systems Division,Communications Systems Division, and Payment
Systems Division.

(Millions of yen)

(Millions of yen)

20,0003,500

18,00014,000

3,000

+6.0%

16,000

–5.9%

7,710

7,166

1,529

12,0002,000

10,000

+7.7%

1,500

8,000

6,000

+18.4%

9,855

10,611

1,000

1,501

4,000

Changes in Segment Classification
To FY 2020

System Solutions

500

System Development
and Sales

Customer Service Solutions

Network Solutions

BPO andmaintenance services

Recurring Business

Analysis of fiscal 2022 performance

During ITFOR’s fiscal year 2022, ended March 31,
2023, the Japanese economy showed signs ofgradual normalization as COVID-19 movement
restrictions were eased. Global uncertainties
persisted, however, because of soaring resource
and commodity prices, inflation, and interest rates
in the United States and elsewhere.
The Japanese IT service industry of which ITFOR isa part witnessed rising attention from consumers indigital technologies that help to avoid contact andface-to-face interactions and that promote artificial
intelligence (AI) and blockchain. Some companies
nevertheless limited or delayed investments in IT.
Consequently, robust economic recovery for ourindustry remained elusive.
ITFOR, meanwhile, continues to update its flagshipdelinquent loan management system targetedprimarily at financial institutions. The company isseeing steady sales of that system’s latest iteration,
which combines a personal loan operation support
system SCOPE and the web-based loan application

54

1,778

2,000

From FY 2021

From equipment sales anddesign to installation

1,439

2,500

system, WELCOME. This innovative solution facilitates interactions that are not face to face, andwe are constantly adding features to enhance its
functionality.
To address concerns about labor shortages, weoffer Robotic Call, an efficient call center solutionthat has gained widespread adoption by major
financial institutions. ITFOR is also responding toheightened demand for the replacement of legacy
network equipment.
Consequently, we achieved record highs in neworders for our various solutions, which rose to¥18,567 million in fiscal 2022, a 5.8% year-on-yearincrease, and in order backlogs, which reached¥15,300 million, a 1.6% increase. As a result, ourfiscal 2022 net sales were ¥18,322 million, up 7.6%
over the previous fiscal year; operating income
was ¥3,217 million, up 6.1%; ordinary income was¥3,278 million, up 5.5%; and net income attributableto owners of the parent was ¥2,291 million, up 8.5%.

00FY 2021

FY 2022

FY 2021

FY 2022

System Development
and Sales

Recurring Business

System Development
and Sales

Recurring Business

Sales and profits for the year under review
represent record highs. In addition, we surpassed
the operating income target of our medium-term
management plan a year ahead of schedule andenhanced our operating profit margin. We credit
improvements in our financial performance to ourreinforced in-house development, which has led tocost reductions, and to our improvements to ensure
system stability, which contributed to increased
profits. Our emphasis on system sales, moreover,and particularly on packaged systems, has enabled
us to establish a robust and profitable foundation.
By business segment, System Development andSales achieved net sales growth of 7.7% year on
year and an 18.4% increase in operating income.
Recurring Business saw net sales rise 7.6%, but
the segment’s operating income decreased 5.9%.
Whereas System Development and Sales gained
strongly in sales and profit, Recurring Business saw
its profit decline because of an increase in orders
for BPO services. ITFOR’s emphasis on humanresources education and training as a differentiator
in its BPO services resulted in an initial increasein costs during the first year of contract acquisition. When contracts continue over the long term,
however, costs tend to decrease in subsequentfiscal years.

year-end. This growth was predominantly driven by
an increase of ¥2,291 million in net income attributable to owners of the parent but was partially offset
by a decrease of ¥831 million in dividend paymentsfrom retained earnings. As a result, our equity tototal assets ratio rose to 79.1%, up from 77.9% at
the previous fiscal year-end.
As of March 31, 2023, we had cash and cash equivalents of ¥10,796 million, a ¥211 million increasesince the previous fiscal year-end. This uptick is
attributed to funds generated by operating activities of ¥1,714 million as driven by an increase in
net income before taxes. We also allocated ¥758
million to investing activities, mainly in tangible
fixed assets. In addition, we used ¥744 million for
financing activities, including dividend payments.

As of March 31, 2023, ITFOR’s total assets were¥21,667 million, an increase of ¥1,656 million
compared with the end of fiscal 2022. This is mainly
attributed to an increase of ¥1,470 million in notes
and accounts receivable—trade, in contract assets,
and in securities. Total liabilities increased ¥96
million year on year, to ¥4,499 million.
Net assets at fiscal year-end 2023 were ¥17,167
million, up ¥1,560 million over the previous fiscal

55

11. Financial Information

11-Year Summary
11-year financial summary(Millions of yen)

Balance sheet (As of March 31)
FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

Current assets

8,692

10,225

9,886

10,796

10,507

11,322

12,29912,84914,694

16,264

17,676

Fixed assets

3,384

3,213

4,770

4,166

4,411

4,095

3,578

3,445

3,996

3,746

3,990

Current liabilities

2,362

2,830

2,986

2,954

2,445

2,777

3,244

3,459

4,341

4,174

4,243

Fixed liabilities

258

246

351

257

386

427

266

271

248

229

256

Net assets

9,456

10,361

11,31811,75012,088

12,21312,367

12,564

14,101

15,606

17,167

Total assets

12,076

13,43814,656

14,962

14,91915,25915,87816,294

18,69020,01021,667

Income statement (As of the years ended March 31)
Net sales

10,42910,974

11,467

12,154

11,111

11,831

12,554

15,23916,28917,021

18,322Gross profit

3,931

4,248

3,989

4,410

4,079

4,528

4,652

4,840

5,386

6,156

6,734

Operating income

1,315

1,675

1,078

1,540

1,270

1,535

1,637

1,728

2,186

3,031

3,217

Ordinary income

1,344

1,697

1,100

1,588

1,331

1,605

1,709

1,839

2,317

3,106

3,278

823

1,009

658

1,013

906

1,124

1,148

1,232

1,683

2,112

2,291

Net income attributableto owners of parent

Cash flow statement (As of the years ended March 31)
Cash flows fromoperating activities

2,396

1,118

1,215

1,464

1,531

1,830

899

1,879

2,728

2,811

1,714

Cash flows frominvesting activities–223–1,534–1,239

–186

–155

–203

–306

–714

–429

–353

–758

Cash flows fromfinancing activities

–360

–225

–562

–255

–825

–1,129

–693

–694

–526

–544

–744

Cash and cash
equivalents at year-end

5,687

5,045

4,458

5,480

6,031

6,528

6,428

6,899

8,672

10,585

10,796

ROA (%)

11.4

13.3

7.8

10.7

8.9

10.6

11.0

11.4

13.2

16.1

15.7

ROE (%)

9.1

10.3

6.2

8.9

7.7

9.3

9.4

9.9

12.7

14.3

14.0

ROIC (%)

8.8

10.1

5.8

8.6

7.3

8.4

9.0

9.3

11.8

13.9

13.7

Equity to total
assets ratio (%)

77.1

76.0

75.9

77.5

80.9

79.9

77.7

76.8

75.2

77.9

79.1

Net debt to equity
ratio (times)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Operating profit
margin (%)

12.6

15.3

9.4

12.7

11.4

13.0

13.0

11.3

13.4

17.8

17.6

Key indicators

ROA (return on assets) = (Current ordinary income / Average total assets of the current and previous period) × 100
ROE (return on equity) = (Net income attributable to owners of parent for the current period / Average equity of the current and previous period) × 100
ROIC (return on invested capital) = (Net income attributable to owners of parent for the current period / Average of (Equity - New stock subscription
rights) of the current and previous period) × 100

56

57

12. Corporate Profile

Executive officers(As of March 31, 2023)

Corporate details(As of March 31, 2023)

Corporate name:

ITFOR Inc.

Established:

December 2, 1972

Capital:¥1,124 million

Number of employees:

457

Locations

Back row to front row, left to right: Makoto Sato, Katsuo Nakayama, Hirotaka Oeda,
Masahito Motoyama, Daisuke Koizumi, Waka Abe, Tsunenori Sato, and Koji Sakata

Head Office:

12F Ichibancho Tokyu Bldg., 21 Ichibancho, Chiyoda-ku, Tokyo 102-0082

West Japan Office:

14F Mainichi Intecio, 3-4-5, Umeda, Kita-ku, Osaka 530-0001

Chubu Office:

6F Meieki Imai IMAI Bldg., 4-10-25, Meieki, Nakamura-ku, Nagoya, Aichi 450-0002

Fukuoka Sales Office(now Kyushu Office):

6F Kyukan Hakata Bldg., 3-26-29, Hakata Ekimae, Hakata-ku, Fukuoka 812-0011

Okinawa Sales Office:

4F Shintoshin DL Bldg., 4-19-30, Omoromachi, Naha, Okinawa 900-0006

Tokorozawa Building:

ITFOR Tokorozawa Bldg., 2-5-7, Higashi Tokorozawa Wada, Tokorozawa, Saitama
359-0023

Directors and Audit and Supervisory Committee Members
Tsunenori Sato

Hirotaka Oeda

Masahito Motoyama

March 1998: Joined the Company

April 1981: Joined the Company

April 1981: Joined the Company

October 2009: Executive Officer, General Manager
of Solution Systems Division

June 2004: Executive Officer, General Manager of
Osaka Office

June 2008: Executive Officer, Deputy General
Manager of Corporate Strategy Department

June 2011: Director and Executive Officer,
General Manager of Solution Systems Division

June 2006: Director and Executive Officer,
General Manager of Solution Systems Division

June 2017: Representative Managing Directorand Executive Officer, General Manager ofFinancial Systems Division

October 2009: Director and Managing Executive
Officer, General Manager of Corporate Strategy
Department December

June 2011: Director and Executive Officer,
Deputy General Manager of Corporate Strategy
Department

June 2018: Representative Senior Managing
Director and Executive Officer, General Manager
of Corporate Strategy Department and Financial
Systems Division

2018: Director and Executive Officer, General
Manager of CTI Systems Division andCommunications Systems Division

President and Representative Director

April 2019: President and Representative
Director, General Manager of Corporate Strategy
Department
April 2021 to present: President andRepresentative Director

Koji Sakata

Representative Senior Managing Directorand Executive Officer
April 1987: Joined the Company
October 2008: Executive Officer, General Manager
of Software Development Department

April 2021: to present: Director and Executive
Officer, General Manager of Corporate Strategy
Department and Retail EC Systems Division

Katsuo Nakayama

Director and Executive Officer
October 1991: Joined Showa Ota & Co. (nowErnst & Young ShinNihon LLC)
June 2003: ITFOR Outside Corporate Auditor
June 2010 to present: Director and Executive
Officer, General Manager of Administration
Department

Director (Audit and Supervisory Board Member)

ICR Co., Ltd.

2F Yahagi Higashisakura Bldg., 2-10-1, Higashisakura, Higashi-ku, Nagoya 461-0005(Commissioned to assist in the collection of insurance fees for the National Health
Insurance System, etc.)

Aisel Co., Ltd.

12F Ueno Frontier Tower, 3-24-6, Ueno, Taito-ku, Tokyo 110-0005(Development of computer software)

EeB Corporation

Ishikawa Frontier Lab, 2-5-1, Asahidai, Nomi, Ishikawa(Development of computer software)

Makoto Sato

CVC Co., Ltd.

2F Hakata Ekimae City Bldg., 1-9-3, Hakata Ekimae, Hakata-ku, Fukuoka 812-0011(Corporate surveys and work involved in corporate surveys related to accounts receivablebusiness processes)

April 2005 to present: Registered as certified
public accountant and established M. Sato CPA
OfficeSyddy Inc.

12F Ichibancho Tokyu Bldg., 21, Ichibancho, Chiyoda-ku, Tokyo 102-0082(Digital services and payment agency services)

June 2021 to present: Director and Audit andSupervisory Board Member

Outside Director (Audit and Supervisory
Board Member)

February 2006 to present: Registered as certified
public tax accountant and established M. Sato
CPTA Office
August 2007 to present: Representative Partner,
Asunaro Audit Corporation
June 2015 to present: ITFOR Outside Director and
Audit and Supervisory Board Member

Daisuke Koizumi

Waka Abe

Outside Director (Audit and Supervisory
Board Member)June 2014: Director and Managing Executive
Officer, General Manager of Technology
Development Headquarters

March 2004: Joined SK-Electronics Co., Ltd.

April 1999: Registered as certified public
accountant

June 2019: Director and Representative Senior
Managing Director, General Manager of Public
Systems DivisionDecember 2019: to present SK-Electronics
Director, head of Business Development Office
and Solutions Division

October 2020 to present: Representative Senior
Managing Director and Executive Officer,
General Manager of Technology Development
Department

June 2021 to present: ITFOR Outside Director

June 2013: Director and Executive Officer,
General Manager of Technical Support Division

58

Director and Executive Officer

Outside Director

April 2014: Joined Shashin Kagaku Co., Ltd.

Group Companies

July 2003 to present: Representative Director,
KIA Professional Co., Ltd. (now Owner’s BrainCo., Ltd.)
September 2004: Registered as certified public
tax accountant
June 2015 to present: ITFOR Outside Director and
Audit and Supervisory Board Member

Stock Information
Listing:

Tokyo Stock Exchange, Prime

Shareholder Distribution by Ownership

Securities code:4743

In own name: 5.39%

Number of authorizedshares:Non-Japanese: 15.50%

110,000,000

Other domestic
corporations: 3.91%

Number of shares issued:

29,430,000 (Including 1,586,213
treasury shares)Securities
companies: 1.46%

Stock trading unit:

100

Financial
institutions: 30.86%

Number of shareholders:

10,000Individuals/
other: 42.88%

29,430,000
shares59

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