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 toROIC 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’sprofit 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 withoutentanglement.
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 ourmedium-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

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