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 overseasand 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’sregions, 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

22organizations. 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 ofEmpathy 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. We23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. Hearingunfiltered feedback from user group participants,
moreover, contributes to our development of increasingly advanced products and services and toour 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 ofESG on our business, but one in particular came tolight during our engagement with the Bank of theRyukyus, Ltd., which launched cashless transactions

Strategic Initiativesin 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
involvedutilizing
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, inDecember 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 ourRecurring 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

Paymentsystems
Publicsystems

MarketGrowth
Potential

Create high value throughbusiness line synergies
Retail EC
systems

CTIsystems
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
16212%

170

152
1008%

125

5004%

19202122

230%

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 ofthe 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 ofselection 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 theCOVID-19 pandemic, which cast a cloud over thebusiness landscape and society as a whole. Amidthe uncertainty, my priority has been the well-beingof ITFOR’s employees. I believe that protecting ouremployees safeguards society.
ITFOR and its employees do more than simply sell
products and services. Our priority is on maximizing customer convenience. We emphasize ourRecurring 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, NextStage 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 ahead26

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 comprehensiveservice 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 ofyou 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 ofour company.

We are as yet unable to share the specifics of ourupcoming 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 inaddition formulating a plan focused on societal
challenges that sees ITFOR become a comprehensive service company.

Conveying a Message toOur 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 inaddition preserve ITFOR’s financial growth throughflexible business strategies. At the same time, we willremain conscious of our role in assisting society’sevolution 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