A n n u a l

R e p o r t

2 0 1 2

Year Ended March 31, 2012

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Data1Profi l e

What is the IT Holdings Group?
Formed in April 2008, the IT Holdings (ITHD) Group is made up of the top information technology (IT) companies in Japan. At its core are five principal operating companies, which underpin excellent responses tothe needs of clients in a wide range of industry sectors. As of March 31, 2012, the Group comprised 59
companies—48 of which fell under the scope of consolidation and 11 of which are affiliated companies
accounted for under the equity method—and net sales reached ¥327 billion.
Net Sales by Business Segment (Sales to outside cutomers, excludes intersegment sales)

Other¥ 6,661 million

IT Infrastructure Services

This segment provides incidental
business generated from theprovision of information systems
and other businesses.

Industrial IT Services¥109,234 million

Year ended
March 31, 2012

This segment provides self-administeredTotal

services through large IT facilities, suchcomputer utility and system operation
as data centers.

¥ 327,417million¥141,862 million
This segment supports the shift toward
greater use of IT in business processes andin the execution of business activities, withbusiness know-how and IT expertise in

Financial IT Services

areas other than finance, particularly
industrial and public finance sectors.

¥ 69,659 million
This segment supports the shift toward greater use of
IT in business processes and in the execution ofbusiness activities, with business know-how and IT
expertise specific to the financial sector.

Information and Telecommunication Businesses
IT Infrastructure
Services

Financial IT
Services

Other Businesses

Industrial IT
Services

Others● TIS Inc.

● TIS Leasing Co., Ltd.

● INTEC Inc.

● IT Service Force Inc.

● AGREX Inc.
● QUALICA Inc.

● QUALICA Inc. ● Chuo System● AJS Inc.

● AJS Inc.

Corporation

Other: Group companies
Domestic ● 27 companies ■ 10 companies

Other: domestic

Overseas ● 8 companies

group companies■ 1 company● 5 companies● Consolidated subsidiaries ■ Equity-method affiliates

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Profi l e
• We provide fully complete systems, from upstream to downstream
processes and all the way to transition, implementation training andmaintenance.
• We provide responses to any and all types of systems to improve
quality and productivity, and to facilitate such strategies as
implementing leading-edge technology, using offshore opportunities
to cut costs, applying template and package technologies, andensuring safety through high-security technology.

• As an independent systems integrator,
we provide total solutions, from design
through configuration, operation andmaintenance.

• We address the IT needs of clients inmany industries and provide one-stop
responses, utilizing Group strengths tounderpin first-rate consulting capabilities.

Systems
integration

Consulting

Systemdevelopment

ITHD GroupA corporate group with total IT capabilities tosupport the IT-related operations of clients from every angle.

Network
services• Our next-generation data centers,with national coverage, are bases for
top-class outsourcing and businessprocess outsourcing (BPO) in Japan.

Outsourcing• We connect with client environments through theInternet and dedicated lines to support all sorts of
networking networks, including mobile networks.
• Our security measures emphasize the latest
technologies.

The ITHD Group has 20 data centers in major
cities, including Tokyo, Nagoya, Osaka andToyama in Japan and in Tianjin, China, with a total
floor space of about 152,200m 2.
(See pages 12-13 for details.)

Future Targets
By 2015, the ITHD Group will have built a business portfolio geared for higher growth and higher profit byentrenching core businesses and establishing a presence in new businesses.

New, promising and overseas pursuits
Growth rate

Overseasbusinesses

Consulting
Businessplatform
services

Outsourcing
and network

New businesses

Other new businesses

Core businesses

Softwaredevelopment
Solution
services
Operating income ratio
2015

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3

Financial H i gh l i gh t s
Years Ended March 31/ Consolidated
Net Sales

Net Income, Net Income per ShareNet Sales by Client Sector(Year ended March 31, 2012)(Billions of yen)

338.3

350

323.1

313.8

Public institutions
9.2%

327.4

(Billions of yen)

Credit card
13.8%

Services
21.7%

Net sales¥327 billion
100.0%

200
150

Distribution
8.0%

100
50
2009

2010

2011

Net Assets per Share
(Yen)

2,500

44.4

47.7

44.2

2,000
1,500

1,541.17 1,602.77

4

90

89.25
68.19

2

60

2.1

30

24.33
0

2009

2010

2011

2012

0

Dividends per Share, Payout Ratio

ROE, ROA
ROA

(%)

(Yen)

(%)

50

10

50

100

40

8

46.3

30

6

20

4

2012

0

0

Payout Ratio

Dividends per Share

8.0

74.0

40

7.4

5.7

5.0

4.2

5.2

10

2010

46.9

20

1.5
2009

60

30

4.1

2011

18.00

35.9

28.9

0

2012

80

32.00

32.00

32.00

2

10

2011

6

Other finance
7.1%

120

5.9

ROE

1,636.56 1,636.72

2010

7.6
110.74

(%)

500

2009

150

Equity Ratio

1,000

0

Insurance
7.0%

2012

Net Assets per Share, Equity Ratio

(Yen)

9.4

8

Assembly-based
manufacturing 12.3%

Processing-based
manufacturing 9.5%0

10Banking
8.2%

300
250

Net Income per ShareNet Income

Others
3.2%

2009

40
20

2010

2011

2012

0

IT Services Industry Market Scale and Industry Position
ITHD belongs to the IT services industry. The Company is a leading, independent prime contractor, ranked
as the industry’s No. 2 system integrator on a consolidated sales basis.
Net Sales of Japan’s Leading IT Companies(Year ended March 31, 2012)

IT Services Industry Net Sales(Billions of yen)(Billions of yen)

21,49522,00020,63021,00020,00019,0001,400

18,8951,000

18,843

18,826800

18,000600

17,000400

16,000200

15,000

2006

1,251

1,200

2007

2008

2009

2010

Note: Japan Information Technology Services Industry Association classifies the software
sector, the information processing services sector and the Internet-based service
sector as the IT services industry.

0

335 327 297
255 200
161 133
NTT
Data

NRI

ITHD

CTC

UnisysSCSKNSSOL FUJISOFT ∙∙∙Note: The graph data indicates net sales of NTT Data Corporation, Nomura ResearchInstitute, Ltd., ITOCHU Techno-Solutions Corporation, Nihon Unisys, Ltd., SCSKCorporation, NS Solutions Corporation, FUJISOFT Incorporated, and ITHD.

Source: Data prepared by the Japan Information Technology Services Industry Association,
based on the Ministry of Economy, Trade and Industry’s “Survey of Selected Service
Industries”.

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4

Financial H i gh l i gh t s

Consolidated Financial Summary
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31
2009

2010

2011

Millions of yen

2012

Millions of yen

Thousands of
U.S. dollars

Net income to equity capital ratio (ROE) (%)¥338,302
272,944
65,357
41,56923,787
23,604
9,406
140,799
154,527
295,327
82,051
67,058149,110146,216
295,327
80,532
34,311-20,079-6,87735,104
14,232
13,13910,996
946
1,149
5,053
110.74110.7232.00
28.9%
1,541.17
27.3%
44.4%
7.4%

¥313,856
254,82759,02943,032
15,996
15,7197,659
141,967
171,109
313,077
86,25571,746
158,001
155,075
313,077
91,646
31,400-25,726
6,139
46,987
5,674
15,676
11,978
912
1,389
6,863
89.25
–
32.00
35.9%
1,602.77
29.3%
44.2%
5.7%

¥323,173
261,145
62,02749,20912,818
12,625
5,985
128,455
172,620
301,076
73,09076,875
149,965
151,110301,076
77,454
27,236-18,957-18,755
36,492
8,279
18,32512,308
1,062
1,901
5,551
68.19
–
32.00
46.9%
1,636.56
25.7%
47.7%
4.2%

¥327,417
266,159
61,25845,636
15,621
15,393
2,135
142,442
167,560
310,003
83,06575,972
159,038
150,965
310,003
96,51523,658-15,158-4,23041,1198,500
14,096
12,745
962
1,882
3,672
24.33
–
18.00
74.0%
1,636.72
24.7%
46.3%
1.5%

$3,983,663
3,238,338
745,325
55,260190,065
187,292
25,978
1,733,089
2,038,696
3,771,786
1,010,657
924,347
1,935,004
1,836,781
3,771,786
1,174,301
287,853-184,429-51,468
500,296
103,423
171,517
155,078
11,711
22,902
44,679
0.29
–
0.21
–
19.91
–
–
–

Recurring profit to total assets ratio (ROA) (%)

8.0%

5.2%

4.1%

5.0%

–

Number of employees at the end of the term
Number of new-graduate recruits
Number of regular recruits

15,259919
1,117

20,476974
512

20,831928
370

20,347
649
450

–
–
–

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Recurring profit
Net income
Current assets
Fixed assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Total liabilities and net assets
Total interest-bearing debt
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash and cash equivalents at the end of the termFree cash flow
Capital expenditures
Depreciation
Research and development expenses
Amortization of goodwill
Goodwill balance at the end of the term
Net income per share—basic (yen)Net income per share—diluted (yen)Dividends per share—diluted (yen)Payout ratio (%)
Net assets per share (yen)Interest-bearing debt ratio
Equity ratio (%)

Notes:

Profile2012

1. The U.S. dollar amounts represent the arithmetical results of translating yen into U.S. dollars at the rate of ¥82.19 to US$1.
2. Total interest-bearing debt indicates the total sum of borrowed money and corporate bonds.
3. Free cash flows indicate the total sum of cash flows from operating activities and cash flows from investing activities.

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To Our S t ak eh ol dersSusumu Okamoto
President

We seek to demonstrate truly comprehensive capabilities and will constantly embrace
reforms to achieve this goal.

The IT services industry is being reshaped in what could be called a paradigm shift, and the IT needs of ourcustomers are becoming vastly different due to greater interest in services and accelerating globalization.
In this environment, we have established a platform to underpin business development, especially in
Asia, highlighted by the opening of a state-of-the-art data center in Tianjin, China, and two representative
offices, one in Singapore and one in Thailand. Meanwhile, in Japan we opened up flagship data centersin Tokyo and Toyama, and utilizing access to Japan’s top-class data center resources, we responded tomarket demand for cloud computing and software as a system (SaaS) as well as global sourcing. Goingforward, we will enhance our service provision structure to meet the increasingly global nature of our clients’business pursuits and strive to enrich our menu of marketable services, starting with cloud services.
The bold determination of each and every employee drives our growth, and we will reinforce our services
from a new perspective, evolving as a corporate group with a greater sense of unity to demonstratecapabilities that are truly comprehensive in scope. We will seek depth in such activities as softwaredevelopment, where we boast proven results and top quality. As always, we will strive to sustain theconfidence that clients have placed in us by aggressively entering new domains and adapting to changes in
the operating environment.
Envisioning a future in which IT creates vitality in all industries and makes lives safe and comfortable, wewill constantly embrace reforms to become better. The support and encouragement of our stakeholders is,
as always, integral to success.

June 2012

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Summary of Fiscal 2012 and Medium-term Strategies

Summary of Fiscal 2012
In fiscal 2012, ended March 31, 2012, the domestic economy initially showed signs of a gradual recovery after
the Great East Japan Earthquake, but uncertainty remained, largely due to developments that unfolded from thesummer onward, including the sovereign debt crisis and financial crisis in Europe as well as yen appreciation andthe floods in Thailand. In the information services industry, to which we belong, a full-fledged recovery failed tomaterialize despite a positive attitude to IT investment among some clients, and our operating environment haschanged significantly, reflecting a paradigm shift in recent years fueled by heightened interest in cloud computing.
Despite the challenging conditions, ITHD was able to achieve higher sales and higher income on aconsolidated basis, thanks to the diligent efforts of its operating companies. Net sales reached ¥327,417 million,
up 1.3% year-on-year, while operating income soared 21.9%, to ¥15,621 million. Unfortunately, net income
tumbled 64.3%, to ¥2,135 million. We incurred one-time expenses of about ¥7.8 billion related to businessrestructuring in fiscal 2012, which was booked under extraordinary loss.

Looking Back on IT Evolution 2011, Our First Medium-termManagement Plan
Since its establishment in April 2008, ITHD has expanded its business content, marked by the addition of
SORUN Corporation to the Group as a subsidiary in December 2009, and then the merger of SORUN and UFIT
Co., Ltd., into TIS, Inc., in April 2011.
In fiscal 2012—the last year of the first medium-term management plan—we set down a Group management
policy and worked steadily to realize a resilient management structure through an emphasis on four management
goals: to firmly establish a new Group formation, to reinforce the Group management foundation and profit
structure, to achieve top-line expansion and growth of the contract outsourcing business, and to prepare for ashift to services- and solutions-oriented business through new investments.
1) Firmly establish a new Group formation
On April 1, 2011, TIS merged with SORUN and UFIT, and INTEC Inc. merged with Nippon System Gijutsu Co.,
Ltd., and INTEC Systems Institute, Inc., while IT Service Force Co., Ltd., and Web Office Co., Ltd., merged in amove to consolidate shared services companies within the Group.
In addition, TIS transferred its on-site service business to TIS Solution Link Inc. (formerly, CST Inc.) on
October 1, 2011, and AJS Inc. merged with AJS Software Co., Ltd., its subsidiary.
Furthermore, two system operation service providers, TIS System Service Inc. and System Support Inc.,
merged on April 1, 2012.
2) Reinforce the Group management foundation and profit structure
A total of nine ITHD Group companies in the Tokyo area, including ITHD, moved their offices to a centralized
location in Shinjuku-ku, Tokyo, so as to enhance cooperation between the companies, strengthen group
governance and reduce fixed costs.
While Group companies were implementing measures to establish a firm management structure, TIS
introduced a special career change support program paralleling companywide structural reforms aimed at
maximizing merger synergies and the early improvement of business performance, in a comprehensive overhaulof the personnel structure and work assignments.
The ITHD Group made concerted efforts to prevent or at least rein in large-scale unprofitable projects whichsignificantly affected profits in the previous fiscal year.

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Summary of Fiscal 2012 and Medium-term Strategies

3) Achieve top-line expansion and growth of the contract outsourcing businessOver the past several years, the ITHD Group has gradually launched operations at next-generation data centers,
including GDC Gotenyama and INTEC Manyo Square. We believe that these data centers will not only add value
to customers’ business models but also contribute to society by acting as BCP* centers in the event of largescale disasters.
Given that existing customers in the financial sector continue to cut back on IT-related investment and large
development projects, the Group pursued a wider presence in the industrial sector, where IT-related investment is
expected to grow. Orders expanded favorably as steady implementation of measures to reinforce sales
capabilities attracted new customers and brought in more small- to medium-sized projects.
* BCP (Business Continuity Plan): Enables a company to prevent interruption to vital operations in times of emergency, such as adisaster or an accident, and thereby maintain business to the fullest degree possible.

4) Prepare for a shift to services- and solutions-oriented business through new investments
In response to an industrywide trend toward services- and solutions-oriented business, ITHD has been driving
forward development and expansion of multifaceted cloud services that leverage technologies and expertise
accumulated over many years.
Major achievements in this effort include Call Crayons, a solution based on our own PhoneCookie®
technology (patent pending) and aimed at enhancing contacts with customers by linking the Internet andtelephone; expansion of cloud-compatible production control system AToMsQube in Japan and China; promotionof information distribution platform service Skyware, which is based on augmented reality technology, in the
tourism industry and municipalities; and provision of mobile utilization platform service F 3 Mobile Shield Center
Service as an add-on of CRM system F 3 (F cube) targeting local banks.
While promoting the strategies outlined above, the Group encountered challenges, namely, the dramatically
performance-eroding effect of such external events as the Lehman shock, yen appreciation and natural disasters
as well as internal factors, which unfortunately led to sluggish fiscal results. Consequently, the Group fellsignificantly short of the targets set by the Company in the IT Evolution 2011, which were net sales of ¥400
billion, operating income of ¥35 billion and an operating income to sales ratio of 8.8%.
Management has identified six key concerns that the Group must address: 1) Low consolidated net sales
growth; 2) limited IT investment by core clients; 3) poor external evaluation and weakened brand power; 4)
inefficient business investments (company basis); 5) redundant corporate functions; and 6) deteriorating Group
governance capabilities. The key to solving these issues is none other than an ability to demonstrate truly
comprehensive capabilities. Therefore, the theme of the second medium-term management plan must spotlightefforts to achieve reforms as a unified organization.

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Summary of Fiscal 2012 and Medium-term Strategies

External Environment

Internal Environment● More companies entering the IT industry
means more competitors● Overseas IT providers and companies inother industries are entering the IT market● Clients restricting domestic IT investment,
accelerating global expansion● The Asia-Pacific IT market (excluding
Japan’s IT market) is growing rapidly, ataround 7%● Industry peers are pursuing global
expansion, quickly turning opportunities
into revenue-generating services● Existing key clients are limiting IT
investment: increasing pressure to cut
costs, leading to a trend to smaller-sized
projects, is eroding revenue potential● Series of unprofitable projects, squeezing
profits● Insubstantial progress in globalization andin turning new business activities into
marketable services● Progress stalled on uniting the Group● Diminished bargaining power withhardware and software vendors

Business Topics to Address● Business model reform
Acquire new orders ⇒ Provide services● Business structure reform
Labor-intensive ⇒ Knowledge-intensive● Client relationship reform
IT partner ⇒ Value-creation partner● Competitive environment reform
Domestic competition ⇒ International
competition

Bold reforms are inescapable● Even in a difficult economic environment, growth is possible with enterprising efforts inpromising fields. However, the ITHD Group has, to date, been unable to rid itself of its
conventional business style.
● The Group cannot fully demonstrate overall capabilities under a “corporate consortium”
optimized to each subsidiary under the Group umbrella. A blueprint for totally revamping
operations is urgently needed for the Group to demonstrate truly comprehensive
capabilities.

Desired Corporate Group Image
Corporate IT group achieving reforms as a unified organization

Placement of the Second Medium-term Management Plan
Below, net sales and operating income are indexed against fiscal 2009 results, denoted as 1.0.

Net sales11Operating income
Sluggish performance mirrors
difficult external environment

0.9

0.4
Fiscal 2009
ActualFiscal 2010
ActualFiscal 2011
ActualFiscal 2012
ActualFiscal 2013
Plan

Fiscal 2012

(Second Medium-term Management Plan)● Made progress on realigning Group formation, kicked off
by merger of SORUN and UFIT into TIS Inc.

Seek transformation guided by three basic
concepts: “Top-Line Emphasis”, “as One Company”
and “Bold and Enterprising”. Anticipate full-fledged
V-shaped recovery and return to growth.

● Executed relocation/concentration of Group offices into
the Tokyo area.
● Introduced special career-change support program tounderpin corporate restructuring at TIS.

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Fiscal 2013 through Fiscal 2015

Implemented drastic structural reforms to facilitate mediumto long-term growth. Built resilient business structure.

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Summary of Fiscal 2012 and Medium-term Strategies

Second Medium-term Management Plan: Outline
In April 2012, the Group embarked on a new three-year management plan under the banner “Brave Steps 2014.”
This plan highlights three concepts—“Top-Line Emphasis,” “as One Company” and “Enterprising and Bold”—thatwill guide the Group, as a cohesive unit aiming for higher net sales, to thrive amid the paradigm shift thatcharacterizes the IT services industry.
The plans lays out three business strategies—utilize existing businesses to overcome challenges, create
markets through differentiated services, and secure an independent position in overseas markets—that will
establish a firm footing in the industry and enable the Group to boldly pursue a presence in new businessdomains. (See page 11 for details.)
An underlying priority of the second medium-term management plan is to realign the Group. During the three
years of Brave Steps 2014, we will unify the Group through organizational restructuring, eliminate redundant
platform operations, realize optimum personnel assignments and flexible financial strategies, and demonstrateGroup synergies and brand power. Numerical goals to be achieved by the end of fiscal 2015, on a consolidated
basis, are net sales of ¥350 billion, operating income of ¥25 billion, an operating to net sales ratio above 7% andreturn-on-equity of 7.5%.
Second Medium-term Management Plan ( April 2012 - March 2015 )Taking on Transformation「Brave Steps 2014」
Basic Concepts

Top-Line Emphasis

The IT market has shown signs of shrinking over the past few years. Nonetheless, we haveendeavored to expand business with sales in mind. We will prioritize a commitment to growth—that is, achieve higher revenues—by all possible means.

As One Company

To realize a higher level of investment expertise and promote more robust business expansion,
we will cultivate a group atmosphere that evokes a sense of unity and build a corporatecollective centered on ITHD and acting as one company.

Enterprising and Bold

Dealing with paradigm shifts, such as globalization and the evolution of services, is not possible
without an enterprising and bold resolve to take risks. We will prioritize a sense of courage inpursuing business activities.

Major Numerical Targets (to be achieved by March 2015)
Net sales:¥350 billion

Return on equity: 7.5%

Operating income:¥25 billion

Credit rating:

Sustain A rating

Operating income to sales: Above 7%

Net Sales

Operating Income, Operating Income Ratio(Millions of yen)

327,417340,000

345,000(Millions of yen)

350,000
25,00021,00015,621
4.8％(Second Medium-term Management Plan Period)

Profile17,500
5.1％

7.1％
6.1％

(Second Medium-term Management Plan Period)

Fiscal 2012(actual)Fiscal 2013
(plan)

Fiscal 2014
(plan)

Fiscal 2015
(plan)

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Fiscal 2013
(plan)

Fiscal 2014
(plan)

Fiscal 2015
(plan)

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Summary of Fiscal 2012 and Medium-term Strategies

Group Management Basic Strategies and Business Themes

1

Promote new Group formation
Build structure that spotlights core businesses and growth segments.

2
3

Cultivate shared groupwide spirit
Establish ITHD College.

4

Streamline and centralize corporate functions
Expand the range and improve the quality of shared operations.

5

Reinforce product brands and corporate image
Make the names of services consistent.

Lay solid financial foundation to facilitate upfront investment activity
Adopt consolidated tax and unified cash management system.

Over Second Medium-termManagement Plan

This report contains forward-looking statements, including performance forecasts, based on information
currently available to management of the ITHD Group—that is, ITHD and the subsidiaries under its
umbrella—and reflect somewhat objective assumptions deemed reasonable at this time. In this regard, theCompany does not promise to achieve forecasted results, and various factors may cause future results tobe substantially different from those expressed or implied by forward-looking statements.

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11

Key Points of Second Medium-term Management Plan “Brave Steps 2014”
The Group’s business strategies are described below.

Business Domains in the SpotlightMarket creation throughdifferentiated services
Secure independent positionin overseas markets

4. Expand market-launching
services and establish
platform structure

New Business

7. Establish overseas business platform

Services using cloudcomputing technology(SaaS, PaaS, IaaS etc.)

Overseas Business6. Secure position insmart business sector

5. Strive to address
industry platforms

Establish a firm footing whiletackling process of transformation

Existing systems
integration (SI) Business3. Promote strategic businessprocess outsourcing (BPO)
operations

1. Rebuild the client base
2. Address paradigm shift in engineering
Pull through difficult times on
existing businesses

1
Utilize existing businesses to overcome challenges
Business Strategy

We will offer services in growth fields from the perspective of a business partner assisting its
customers.
We will shed the old contract service provider image in favor of a business partner approach that stresses new
business value for our customers, and we will present new services in growing fields, such as smart businesses,
particularly the development of smart cities—planned, energy-efficient communities that integrate environmentfriendly power, transportation and water supply systems utilizing advanced IT and other technologies—todifferentiate ourselves from the competition.

Desired Business Image
Evolving role as business partner

Brisk entry into sectors with growth potential
Growth industries

Corporate activities• Management• IT strategies• Operations• Business• Businessapplication
software• Work• Communications• Construction andcivil engineering• Games

Business
partner

1. From contract service provider tobusiness partner
2. Focused approach into growth fields
3. New types of business solutions

NOW• Tourism• Restaurants• Agriculture
and fishing• Environment /energy• Smart cities

Closer ties

Joint projects

ProfileFinancial
Highlights• Personnel deployment• Contract services• Full outsourcing• Revenue sharing• Joint contributions

To OurStakeholders

Brave Steps
2014

Growth sectors

Key Points

R&D

Corporate
Governance

Areas of untappeddemand for IT

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”

The key to becoming a business partner to our customers is in the right responses to the paradigm shift inengineering requirements. Toward this end, we will reinforce structures, especially human resource development,
R&D and production. We will also strive to enhance the quality of software development and boost productivity.
These efforts will be the building blocks of development methods that facilitate the creation of marketable
services and outsourcing on a larger scale.
Furthermore, amid expanding demand for business process outsourcing (BPO) services, we will strengthen theconnection between the BPO business and the system integration (SI) business and, as a group, promotestrategic, high-value-added BPO services to an eager market.

Topic Group Strength—Data Center Business
The ITHD Group has 20 data centers in major cities, including Tokyo, Nagoya, Osaka and Toyama in Japanand in Tianjin, China, for total floor space of about 152,200m 2. At home, the Group boasts the largest data
center network.
Major Features• High-quality system operation and the latest facilities
The ITHD Group draws on more than 40 years of proven results in operating mission critical systems
24 hours a day, 365 days a year and know-how accumulated in running the country’s largest data
center network to safeguard clients’ vital information assets through strict security measures andstate-of-the-art facilities with extremely sophisticated features that prevent service disruption in such
events as natural disasters and power outages.
• Business Continuity for Clients through Japan’s Largest Data Center Network
Today, system downtime can have an hugely adverse effect on corporate activities. Data centers havetherefore attracted attention as a practical component of disaster recovery plans to keep IT systems working
seamlessly should that one-in-a-million off-line situation arise. The ITHD Group has data centers in major
cities throughout Japan and a facility in China, so operations can be shifted from a primary data center to aremote data center as a backup measure.
For example, INTEC Manyo Square, which opened in July 2010, and Power & IT, which opened in June
2011, are newly built, next-generation data centers located in prefectures where earthquake- and typhoonrelated natural disasters occur less frequently than in other areas of Japan. As backup facilities, these data
centers can be vital components of a highly reliable disaster recovery structure.
• Highly Reliable Cloud Environment Platform
Our highly reliable, highly accessible data centers can be used as portals to cloud services we provide toclients. In addition, our data centers can also be used as worry-free portals to cloud environments, such as
client-only private cloud environments as well as hybrid cloud environments, which combine hybrid andprivate elements, and IT systems for smart devices.
The Group's data business business nework is as follows.

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”
The ITHD Group’s Data Center Business Network
Areas around Tokyo
Hokuriku AreaGDC Gotenyama (TIS)

Osaka Area
Manyo Square (INTEC)Tokyo 1st Center (TIS)
Osaka Center (TIS)Power & IT (INTEC)Tokyo 2nd Center (TIS)

Osaka Building (INTEC)Tokyo 3nd Center (TIS)

Shinsaibashi gDC (TIS)

Other Domestic Areas
Sapporo Building (INTEC)
Niigata Building (INTEC)
Sendai Building (INTEC)
Shikatsu Center (INTEC)
and others

Nagoya Area

Yokohama Building (INTEC)

Nagoya Center (TIS)@Tokyo Chuo Center (INTEC)

Overseas

Tianjin IDC (TIS)(Tianjin, China)

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”2
Market Creation through Differentiated Services
Business Strategy

We are pursuing new businesses in the services realm, starting with cloud computing.
To promote business in the services realm, we will lay an optimum corporate platform—using marketing
expertise, planning, development and business as the building blocks—and then expand share through the
expansion of services pegged to market needs, new services planning and M&A activity. These efforts will turnthe services business into a core ITHD business.
We will raise market share in industries and sectors, such as finance and manufacturing, where the Groupboasts particular expertise, and launch industry platforms with the potential to become de facto standards,
thereby realizing a solid lead over our competitors. In addition, we will maintain an independent position thatallows Group strengths to shine, in promising growth sectors, especially smart businesses, and create newmodels for success.

ITHD Group Cloud Strengths
Cloud Integration

As an independent systems integrator, ITHD utilizes cloud services provided by companies under the Group umbrella aswell as non-Group companies to build cloud environments perfectly suited to clients’ needs.

SaaS for Immediate Application
to Business

We utilize business know-how and proven results for clients in a wide range of industries, including finance,
manufacturing and distribution and the public sector, and offer the best solutions from a client’s perspective.

Highest-quality system operationsin JapanNot only do we have the largest data center network in Japan, we also boast the newest facilities and proven system­operation results to ensure safe and secure service platforms.

Leading-Edge Cloud Services Foster
Value Creation

We aggressively strive to develop the most advanced cloud technology available, leading the way in Japan and the industry
as a whole. We aim to create value for our clients and the communities in which we all work.

Using Technologies, Developing New Services
Cloud
Know-how accumulated
Telephonythrough web page
Technology
development

Know-how accumulated
through network operation

Marketing / Gauge Impact of Advertising
Call Notes is an SaaS-type incoming call management service.
Visualizes response to advertising by tracking incoming calls.
Applications include Hot Pepper Gourmet, a cuisine-focused site operated
by RECRUIT Co., Ltd.

High-level voice communication
combining the Internet and voiceover phone systems (equipment
and networks).

Promotional Push
Call Crayons enhances corporate connection tocustomers.
Service shows exactly where the caller is.
Subscribers include Rakuten Travel, Inc.

Improved Transaction Reliability
Began mobile phone identification service
Creates secure identification step utilizing personal phone number.
Utilizes Call Crayons’ PhoneCookie (patent pending) technology
Shopping site Bidders, operated by DeNA Co., Ltd., is an advance user ofthe service.

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”

Topic Call Crayons
Using PhoneCookie®, an original technology (patent pending), Call Crayons creates new business value byeffectively linking Internet- and phone-sourced transaction information, such as the URL that the web-surfing
caller has called from, the parameters, the time of origin and the duration of the call, and then uses that
information. With Call Crayons, companies can gather marketing information that ties in online and offline
data and apply phone- and Internet-based transaction information for various purposes, including
approaches to improve customer services and make contact processes more efficient. This opens the door
to expanded business possibilities in domains where customer contact is key.
On June 20, 2012, Call Crayons was recognized as an excellent service utilizing
progressive, high-level technology, scooping up an Advanced Technology Prize in the
ASP/SaaS category at the 6th ASP-SaaS-Cloud Awards, an event sponsored by thenonprofit organization ASP-SaaS-Cloud Consortium.

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”

3
Securing an Independent Position in Overseas Markets
Business Strategy

Two major pillars of growth are local support geared to the needs of existing customers as they
establish a wider presence overseas and the cultivation of local markets using know-how
accumulated in Japan.
We will streamline and consolidate the overseas operations of Group companies, with a spotlight on
China and Southeast Asia, and thereby hone a sharper competitive edge. We will also strive to achieve
the strategies that underpin our two pillars of growth while considering such steps as timely M&A activity
to support existing activities.

Accelerating Global Expansion
China

Overseas sales

Overseas
production

Overseas expansion by Japanesecompanies
Local market

Reinforced sector

Offshore BPO

New sector

Offshore development

ASEAN• TISI (Shanghai)• INTEC• QUALICA / QUALICA (Shanghai)• TISI (Singapore)• INTEC Thai

• Ho Chi Minh representative• Tianjin TIS Hi-techoffice• QUALICA / QUALICA (Shanghai)• Tianjin TIS Hi-tech—AGREX• INTEC Thai—AGREX

Used and promoted groupwide

Official names of the companies listed in the table
above.
• INTEC Thai: INTEC SYSTEMS BANGKOK CO., LTD.
• QUALICA (Shanghai): QUALICA (Shanghai) Inc.

March 2012

• T ISI (Shanghai): TISI (Shanghai) Co., Ltd.

Tianjin TIS Hi-tech Information System Service Co., Ltd.

• T ISI (Singapore): TISI (Singapore) Pte. Ltd.

• Macromill China, Inc., adopts PaaS/IaaS-style cloud• T ianjin TIS Hi-tech: Tianjin TIS Hi-tech Information

service “xiang yun.”

System Service Co., Ltd.

• Business alliance with ChinaCache International Holdings
Ltd, a leading provider of content delivery network (CDN)
services in China.

April 2011QUALICA (Shanghai) Inc.
Strengthened structure to enhancebusiness capabilities and results in China.

ProfileFebruary 2012

January 2012

INTEC SYSTEMS BANGKOK CO., LTD.

TISI (Singapore) Pte. Ltd.

Local representative office established in

Local representative office

Thailand.

established in Singapore.

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Key Points of Second Medium-term Management Plan “Brave Steps 2014”

Topic Enhancing IT System Support Structure in ASEAN Region
To enhance the IT system support structure in the ASEAN region, where an increasing number ofJapanese companies are focusing their overseas expansion efforts, TIS established TISI (Singapore)
Pte. Ltd., in January 2012 and INTEC established INTEC SYSTEMS BANGKOK CO., LTD., in February
2012. As a result, the Group’s overseas network now has 15 offices in Asia, excluding Japan, and one
office in the United States.
To date, the Company has emphasized offshore development in China to expand the Group’s
overseas activities. But going forward, efforts will be directed toward improving IT solutions andservices for Japanese companies establishing a presence the ASEAN region and, with an eye tofuture growth, the implementation of surveys to pinpoint customer needs and to promote suitablebusiness responses.

Solution Development Good for Overseas Applications
AToMsQube—Cloud-oriented production-control system

Technology and know-how
accumulated throughsystem development for
major clients

Design principles allowing
for global development• Provided in cloud form
• Early completion of localized
Chinese version

Manufacturers need to install
and/or upgrade
production-control systems
paralleling expanded production
in such growth markets as China

Promoting sales while enhancing structure, including better features and connectivity
between providers and other software. Receiving more inquiries from interested companies
in Asia, particularly China, as well as the ASEAN region.
● Actual applications: About 50 systems in use or in the process of being introduced⇒ Mainly manufacturers in China (Komatsu-affiliated factories, general customers)● Target: Total of 100 orders in China by March 31, 2013

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Research and D ev el opme n t

The Group’s R&D activities hinge on TIS and INTEC, which undertake leading-edge pursuits inthe domains described below. Note that most of the Group’s R&D activities are not specific toindividual business segments but rather expeditions to discover techniques that can be appliedlaterally through operations groupwide.

(1) Software development technology
Seeking to boost the Group’s overall development productivity and enhance quality so that clients
can use integrated systems with peace of mind, TIS and INTEC spearheaded a steady andresourceful approach to software development technology.
INTEC expanded the functions of knowledge-support systems to make its system integration (SI)business more efficient, pursued research on next-generation SI development methods and R&D on
an automated testing tool for web applications, and implemented verification tests to confirm theutility of open source database management systems. Plans are for the automated testing tool for
web applications to be introduced for in-house use in fiscal 2013 to improve test-stage productivity.
TIS has been working to boost software development productivity using Xenlon, a Javadevelopment framework, since fiscal 2011 and recently added a web application using jQuery Mobileand ledger output using JasperReports.
Another area of interest is R&D related to the use of open source software. A major advantage ofopen source platforms is that they are free of licensing fees and carry a much smaller initialinvestment for clients. But open source solutions have a downside—no definitive response in theevent of trouble since the software does not belong, necessarily, to any specific vendor and thus
lacks guarantees of reliability and support. To address this concern, TIS verifies specific open source
arrangements from a technology perspective and, as a recognized systems integrator, acts as asupport partner to provide clients with peace of mind. The company is working on the creation of averification template and associated application to business.

(2) Cloud Technology
Another priority is R&D on platform technologies to support cloud computing.
At INTEC, efforts have been directed into R&D on platforms for multitenancy on servers anddatabases as solutions that transforms existing web applications into SaaS (Software as a Service).
The company is also pursuing research on security models for cloud environments and R&D toautomate the creation and operation of IaaS (Infrastructure as a Service) environments.
With the pool of managed inventory of IPv4 (Internet Protocol version 4) addresses about to dry
up in Japan, as elsewhere, INTEC has been involved in such activities as the shift toward IPv6 forwebsites, participation in World IPv6 Day, and free access to an IPv4/IPv6 meter that shows the ratio
of websites with IPv4 addresses to those with IPv6 addresses.
TIS has been providing a product called SkyWare, which combines smartphone-oriented global
positioning system and augmented reality functions, and in July 2011 launched the service Citywalk
Sightseeing Navigation on SkyWare. There are many examples of this service in use, including an app
for the six big festivals in Tohoku, provided by a telecommunications company as a way to support
recovery in the Tohoku region where the effort to rebuild after the March 2011 earthquake andtsunami is an ongoing endeavor, and a touring app for rest stops along the portion of the Nakasendo
trail through the modern city of Saku, Nagano Prefecture. This trail—literally, “route through themountains”—was a major Edo Period highway linking Edo (now, Tokyo) and Kyoto and along which
inn towns sprang up to cater to travelers. These activities have been featured on television shows
many times.
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Research and D ev el opme n t

The spread of cloud computing has brought about an increase in environments that mix
public clouds, private clouds and on-premises services. Given prevailing conditions, TIS has
undertaken R&D on formats to integrate multiple environments and monitor operations.
Specifically, the company scaled up Zabbix, an open source integration, operation andmanagement tool, and explored approaches for integration, operation and management,
including cloud monitoring.
In the area of Big Data, R&D is under way to utilize Hadoop technology in more familiar
business pursuits. TIS has implemented measures to replace clients’ basic platform system batchprocessing with Hadoop and has come to understand that the Hadoop platform is effective inraising the efficiency of large-volume batch processing. INTEC, too, has emphasized Hadoop,
and working with Riken Genesis Co., Ltd., developed a Japan-launched, cloud-using, humangenome data analysis system.

(3) Smartphone-Related Technology
The explosive spread of smartphones and tablets began in 2010, and TIS and INTEC continued
to tackle R&D related to these devices in fiscal 2012.
INTEC teamed up with the Keio Research Institute at SFC—the Shonan-Fujisawa Campus of
Keio University—to pursue R&D on a micro-advertising system that allows store employees tocommunicate with customers using smartphones to deliver information updates. Also, tapped by
the Ministry of Internal Affairs and Communications for participation in the Strategic Information
and Communications R&D Promotion Programme (SCOPE), the company teamed up with Toyama
University on joint research and implemented proof-of-concept on technology used by Centram,
the streetcar system in Toyama.
Specifically, the system that was developed allows 1) the posting of ads to on-board digital
signage displays synched to a train’s operating location; 2) delivery of augmented reality games
targeting riders; and 3) access to the real-time service status of trains—all by smartphone fromanywhere. Also, with an increase in development projects using smartphones and tablets, thecompany held numerous in-house study sessions for engineers and worked to expand development techniques.
TIS is working with its clients to implement verification of natural user interfaces, utilizing
head-mounted devices and navigation through voice and gestures, which is getting closer andcloser to realization thanks to progress in mobile and cloud technologies.

(4) New Social System
The Group’s R&D plan also targets an assortment of social issues arising from changing conditions and perspectives in society, such as global warming, power shortages, a national demographic characterized by a low birthrate and a high percentage of seniors, and an increasingly
difficult employment environment for young people.
INTEC promoted R&D on Web Portfolio as a next-generation e-learning system for university
students and working members of society and made presentations to several universities andcorporations. The company also emphasized R&D on information platforms for smart cities andsmart grids—next-generation power transmission networks—which are attracting attention fromthe perspective of efficient use of electricity and energy.

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Research and D ev el opme n t(5) Bioinformatics-Related Systems
With the life-science community generating copious amount of genome information and protein
data, bioinformatics—the technology for handling biodata—has become essential to life scienceand innovative drug development research. INTEC has been involved in R&D on bioinformaticsrelated systems for more than 10 years. Successful product development includes the commercialization of a method developed jointly with Tosoh Corporation to detect the ribosomal RNA of abacterium belonging to the genus Legionella. The company’s bioinformatics technologies havebeen instrumental to the improvement of bacteria detection capabilities.
All told, consolidated R&D expenses in fiscal 2012 reached ¥962 million.

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Corporate Gov ernan c e

I. Basic Policy
To maintain the trust of all stakeholders, including clients and shareholders, and to be a corporate citizen meeting the expectationsof society, ITHD strives to reinforce corporate governance, not only by raising the transparency and soundness of management
practices but also by paying constant attention to actions taken in the pursuit of business to ensure suitable levels of corporate
ethics and legal compliance.

1. Board of Directors, and Executive Officer System
The Company’s Board of Directors comprises no more than 15 members, as set forth in the Articles of Incorporation. The Board
meets monthly but will also convene whenever necessary to discuss and finalize decisions regarding important business activities
and legal matters pertaining to the execution of operations.
General Meeting of Shareholders
External directors with experience and insight into the
Appointment,
Appointment,
Appointment
industry and corporate management are appointed to theDismissal
Dismissal
Board and offer advice and suggestions from an
independent perspective to ensure that decision-making by
Reports
Advice Board of
Risk
Board ofthe Board is appropriate and reasonable. This underpins
Management
Corporate
Directors Reports
CouncilAuditors Discussion
efforts to reinforce the Board’s supervisory function.
Currently, two of the 11 directors on the Board are from
Appointment,
AdministrationGroupoutside the Company. The responsibilities of individual
Compliancedirectors are clearly defined, and the term of office is limited
Units
Council
involved
to one year to create a management structure ideal for
President
in internal
AuditsDirection
auditsresponding flexibly to changes in the operating environment.
Reports
Compliance
The Company introduced a groupwide executive officer
OfficeReports
Accounting
system and established an executive committee to support
Auditorand expedite decision-making efforts relating to theGroup Risk
Executive
Management
execution of duties by representative directors.
Committee
Committee
The Executive Committee meets as situations require toGroupmonitor progress of the business and affairs of the Group.
ComplianceThis committee also discusses important issues related toCommittee
the execution of operations, shares information and
Group
Group
companies
generally underpins enhanced governance of the Group.
Security
Committee
The Company’s corporate structure and internal control
IT Holdings
systems are illustrated here.

2. Corporate Auditors, Internal Auditing Departments and the Accounting Firm
The Company has a Board of Corporate Auditors and has adopted a corporate auditor structure, believing that the independentand objective perspective of corporate auditors, including external corporate auditors, would effectively support the management
supervision function. The Board of Corporate Auditors comprises four auditors, two of whom are external auditors. Corporate
auditors attend Board of Directors’ meetings, examine important documents, perform audits of subsidiaries and, when necessary,seek the opinion of others, including the Company’s accounting firm, the Compliance Office and other units involved in internal
audits. They also keep close watch over the execution of duties by directors pertaining to business and all operating activities.
The Internal Audit Office, with a staff of three, is an internal auditing unit under the Compliance Division. This office exchanges
information, as necessary, with units involved in internal audits at Group companies, including corporate auditors and accounting
firms, and strives to ensure effective, high-caliber internal audits on a groupwide basis. In addition, the office exchanges information
with the Finance and Accounting Department and the Compliance Office, and verifies explanations based on the results ofimplemented audits and any problem points discovered.

3. Executive Compensation
Compensation for the Company’s directors (excluding external directors) comprises two portions: a base salary and an amountlinked to performance. Compensation is reviewed annually for each director.
Base salary is a fixed monthly amount reflecting the individual rank of the director. The performance-linked portion is also amonthly amount specific to rank but tied to performance and must not exceed a fixed upper limit.
Guidelines have also been established that peg contributions into the executive shareholding association according to basesalary and limit the purchase of stock to a fixed amount.

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Corporate Gov ernan c eCategory

Total base salary

Number of executives

Directors (external directors’ portion)¥205 million (¥12 million)

6 (2)Corporate auditors (external corporate auditors’ portion)¥55 million (¥19 million)

5 (3)Total (external executives’ portion)¥260 million (¥31 million)

11 (5)

Notes:
1. The Company has not introduced a retirement benefits system nor does it pay out bonuses.
2. In fiscal 2012, no employee salary portions were paid to employees who concurrently hold positions as directors.
3. As of March 31, 2012, the Company had 10 directors, two of whom were external directors. The number of directors differs fromthat presented above because four directors did not receive compensation.
4. As of March 31, 2012, the Company had four corporate auditors, two of whom were external corporate auditors. The number ofcorporate auditors differs from that presented above because one external director retired at the end of the Third General Meetingof Shareholders but was included in the total.
5. Total compensation paid to directors and corporate auditors was within ¥400 million per year for directors (within ¥50 million for
external directors) and within ¥85 million for corporate auditors, as approved by shareholders at the First General Meeting of
Shareholders on June 25, 2009.
6. There are no applicable items under total amount of compensation, on a consolidated basis, paid to individual executives
receiving compensation packages exceeding ¥100 million.

Board of Directors and Corporate Auditors (As of June 26, 2012)
Chairman

Katsuki Kanaoka

President

Susumu Okamoto

Executive
Vice
Presidents

Norio Maenishi
Tomoki Sato

Directors

Tetsuo Nakao
Hiroaki Fujimiya
Masaki Chitose
Koju Takizawa

Corporate Auditors

Nobuyuki Yonezawa (standing auditor)
Masaru Takeda (standing auditor)
Taigi Ito *Muneaki Ueda *Katsuhiko Ishii
Shingo Oda *Yoshinobu Ishigaki ** Designated for Independent Director/Auditor as specified by the Tokyo Stock Exchange in Japan.

4. Accounting Audits
The Company has engaged Ernst & Young ShinNihon LLC as independent auditor responsible for accounting audits.
The certified public accountants who conduct audits of the Company’s books are as follows.
Certified public accountant

Osamu Oyama (four years of auditing IT Holdings)

Certified public accountant

Keizo Omura (three years of auditing IT Holdings)

Certified public accountant

Masato Saito (four years of auditing IT Holdings)

Certified public accountant

Masayoshi Zenpo (one year of auditing IT Holdings)

Number of assistants involved in accounting operations
					
					

Certified public accountants 5
Other assistants 11

5. Compensation to Certified Public Accountants
During the fiscal year ended March 31, 2012, the Company paid the accounting firm to provide the following services, in addition
to the services covered in Article 2, Paragraph 1 of the Certified Public Accountants Law:
To verify the implementation and utilization status of the internal control system, based on Auditing Standards Committee Report
No. 18 issued by the Japanese Institute of Certified Public Accountants.

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Corporate Gov ernan c e

The Company has not established a policy regarding compensation for audits executed by certified public accountants. The
Company maintains an appropriate amount in line with the audit plan formed by certified public accountants and determines
compensation for audits with the approval of the Board of Corporate Auditors.
(Millions of yen)

Year ended March 31, 2011
Compensation for audit
certification

Year ended March 31, 2012

Compensation other thanfor audit certification

Compensation for audit
certification

Compensation other thanfor audit certification

Filing company

49

1

45

1

Consolidated subsidiaries

243

43

219

18

Total

292

44

264

18

Notes:(1) Approval Criteria for Election of Directors
In its Articles of Incorporation, the Company sets forth a clause stating that the appointment of a candidate to the Board of
Directors must be approved by a majority vote of shareholders in attendance whose combined shareholdings represent more than
one-third of total voting rights held by shareholders with the ability to exercise such rights. The Articles of Incorporation include aclause preventing cumulative voting in obtaining approval of appointment for director candidates.
(2) Approval Criteria for Special Resolutions at the General Meeting of Shareholders
Special resolutions described under Article 309, Paragraph 2 of the Company Law that are put before the general meeting ofshareholders must, in accordance with a clause provided by the Company in its Articles of Incorporation, be passed with anumber of votes corresponding to more than two-thirds of voting rights held by shareholders in attendance whose combined
shareholdings represent no less than one-third of total voting rights held by shareholders with the power to exercise such rights.
Management believes that this reduced quorum for special resolutions facilitates the execution of the general meeting ofshareholders.
(3) General Meeting of Shareholders’ Agenda Items that Can Be Resolved by the Board of Directors(i) Seeking to achieve a flexible capital policy geared to the operating environment, the Company provides in its Articles ofIncorporation a clause allowing the Board of Directors to approve the purchase of treasury stock from the market, in
accordance with Article 165, Paragraph 2 of the Company Law.
(ii) The Company’s Articles of Incorporation includes a clause that grants the Board of Directors the authority to approve the
distribution of retained earnings to registered shareholders as of September 30 each year, as described in Article 454,
Paragraph 5 of the Company Law, to promote the flexible return of profits to shareholders.
(4) Limited Liability Agreements with External Directors and External Corporate Auditors
In accordance with Article 427, Paragraph 1 of the Company Law, the Company enters into agreements with its external directors
and external corporate auditors that limit their liability for compensation under Article 423, Paragraph 1 of the Company Law. The
liability amount pursuant to such agreements shall be limited to the minimum stated in Article 425, Paragraph 1 of the Company Law.

II. Risk Management System
Management formulated a basic policy on corporate social responsibility, and the president continually conveys the spirit of thispolicy to executives to ensure that the corporate activities are conditioned by compliance with laws and regulations andunderpinned by respect for social morals. The Company has the following structures in place to reinforce compliance and risk
management practices.

1. Compliance Department and Group Compliance Committee
The Compliance Department underpins the laterally extending compliance structure groupwide and identifies trouble spots. The
Group Compliance Committee, chaired by the president, discusses compliance-oriented issues of importance on a groupwide basis
and promotes widespread efforts to address areas in need of improvement.

2. Status of Risk Management System
In the execution of its business activities, the Company is always aware of the various risks that accompany suchactivities. The risks of greatest weight for the Company, as an organization that handles information, are natural disasters,such as earthquakes, which could damage data centers, and information leaks, particularly unauthorized disclosure of
personal information.

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Corporate Gov ernan c e

Risk management is practiced at all Group companies, and the Risk Management Committee plays a key role indirecting and supporting the activities undertaken by risk management committees at each Group company. In addition,
the Company is ready to act quickly with various response teams, if a vulnerability is discovered. This is part of an internal
structure to minimize the impact of a risk situation on operations by ensuring sufficient communication within the Group.
The Group Compliance Committee is a component of the Company’s risk management strategy to reinforce
compliance practices groupwide and thereby enhance risk management.
These groupwide structures will be reviewed as necessary to keep responses current to the changing risks that mirror
the evolution of the Group’s business activities and market conditions.

Basic Direction on CSR
The management philosophy that permeates the ITHD Group stresses the Group’s development into a
corporate citizen whose activities, hinging on the provision of various services utilizing IT, match its
status as a leading corporate group. This philosophy also underpins the Group’s efforts to raise
corporate value, supported in this effort by the high regard of all its stakeholders, including clients andshareholders as well as employees and their families. The Group’s stance on corporate social
responsibility is evident in its commitment to cultivate a vibrant corporate culture that encourages thecompanies and individuals under the Group umbrella to work toward higher goals and embrace newchallenges, to be honest and fair in business pursuits based on respect for the law, of course, as wellas high moral standards, and to fulfill social obligations. This is the Group’s basic direction on CSR.

ProfileEnsure sound, transparent
management practices

Acknowledge responsibilities as a leading corporate group in the IT services
industry and undertake sound corporate activities with integrity and clarity of
purpose. In addition, be sincere and fair in dealings with all stakeholders.

Provide optimum services

Always provide the very best to clients and strive to raise customer satisfactionlevels through excellent quality and technology built on the composite strengthsof the Group.

Develop talent

Cultivate an environment in which employees always look ahead, striving toachieve higher goals and embracing new challenges. Provide opportunities togrow and realize personal goals, create a safe and productive work environment,
and give everyone the freedom to reach their potential.

Respect the law

Maintain high corporate morals, obey the law and uphold parameters ofsocially acceptable conduct.
Have absolutely nothing to do with antisocial forces.

Maintain fair business practices

Ensure an appropriate perspective on business transactions, based on fairand open competition.

Protect the environment

Recognize that environmental problems warrant universal attention andpromote efforts to save resources and energy in the execution of corporate
activities. Also, through IT services, support clients’ efforts to enhance
operating efficiency and reduce energy consumption, thereby contributing tolower environmental impact.

Contribute to society

Actively participate in community events as a corporate citizen whose social
standing matches its leading industry status.

Be a part of theinternational community

Naturally, obey internationally recognized rules and local laws in the executionof cross-border projects, but also contribute to social and economic
development in the countries where the Group maintains a presence byrecognizing local culture and customs.

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Financial R ev i ew

Note: Amounts in U.S. dollars are included solely for the convenience of non-Japanese readers. A rate of ¥82.19 = US$1,
the approximate rate of exchange prevailing on March 31, 2012, has been used in translation.

As of March 31, 2012, the ITHD Group comprised parent company IT Holdings Corporation (“ITHD” or “the Company”) and48 consolidated subsidiaries, including principal companies TIS Inc., INTEC Inc., AGREX INC., QUALICA INC. and AJS Inc.
Several changes took place within the Group. On April 1, 2011, SORUN Corporation and UFIT Co., Ltd., merged with
TIS, INTEC Systems Institute, Inc., merged with INTEC, and IT Service Force Co., Ltd. merged with Web Office Co., Ltd.
Then, on October 1, 2011, AJS Inc. merged with AJS Software Co., Ltd. Consequently, the non-surviving companies were
removed from the scope of consolidation.

Profit and Loss Analysis
Net Sales
Consolidated net sales edged up 1.3%, to ¥327,417 million ($ 3,983 million), as favorable order activity from clients in theindustrial IT services segment offset such challenges as reduced demand from clients in the financial IT services segment
where the tendency to curb IT investment continued. A breakdown of performance by business segment is presented
below.
Note: Seeking to promote a horizontal management structure within the Group, ITHD shifted away from management
methods that hinged on its subsidiary groups in favor of management methods fined-tuned to service categories andclients/markets. Sales by segment include intersegment sales, and numerical data from the previous fiscal year has
been restated under the new breakdown for comparison purposes.
IT Infrastructure Services
This segment provides self-administered computer utility and system operation services through large IT facilities, such asdata centers. In fiscal 2012, net sales were on a par with the previous fiscal year, settling at ¥111,358 million ($138 million),up 0.4% year-on-year. Over the last few years, the next-generation data center business has really picked up,
compensating somewhat for sluggish results from existing businesses. Operating income slipped 1.0%, to ¥8,049 million($97 million), but the decrease could have been larger, due to the application of funds to front-load investment into nextgeneration data centers, had it not been for successful efforts to trim costs.
Financial IT Services
This segment supports the shift toward greater use of IT in business processes and in the execution of business activities,
with business know-how and IT expertise specific to the financial sector. In fiscal 2012, net sales dipped 3.5%, to ¥70,099
million ($852 million), owing to a persistent trend among credit card companies—a key demand group with a significantly
high contribution to consolidated sales—to curb IT investment and also owing to the fact that large insurers andmegabanks have already brought their IT investment plans to a close. Operating income, however, jumped 15.6%, to¥4,534 million ($55 million), thanks to successful efforts to reduce costs.
Industrial IT Services
This segment supports the shift toward greater use of IT in business processes and in the execution of business activities,
with business know-how and IT expertise in areas other than finance, particularly industrial and public finance sectors.
Against a backdrop of gradual recovery in IT investment led by companies in the distribution and processing-based
manufacturing industries, net sales grew 5.8%, to ¥149,466 million ($1,818 million). Operating income skyrocketed 63.6%,
to ¥2,658 million ($32 million).

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Financial R ev i ew

Millions of yen
2012

2011

% change

Net sales¥327,417¥323,173+1.3

IT infrastructure services

111,358

110,916+0.4

Financial IT services

70,09972,665-3.5

Industrial IT services

149,466

141,294+5.8

Other business

16,234

16,595-2.2

Intersegment elimination/adjustments-19,740-18,298-

Operating income

15,621

12,818+21.9%IT infrastructure services

8,049

8,131

-1.0

Financial IT services

4,534

3,922

+15.6

Industrial IT services

2,658

1,625

+63.6

Other business

2,277

1,313

+73.3

Intersegment elimination/adjustments-1,898-2,174-

Other BusinessThis segment covers activities incidental to the provision of information systems and other businesses. In fiscal 2012, thesegment showed a 2.2% year-on-year decrease in net sales, to ¥16,234 million ($197 million). But operating income soared
73.3%, to ¥2,277 million ($27 million).

Costs, Expenses and Earnings
Although the Company allocated funds for upfront investment in next-generation data centers, concerted efforts to reduce
expenses and capitalize on the crystallizing appearance of positive results from structural reforms implemented in the firsthalf of the fiscal year, led to operating income of ¥15,621 million ($190 million), up 21.9% year-on-year, and recurring profitof ¥15,393 million ($187 million), also up 21.9% year-on-year. Net income tumbled 64.3%, to ¥2,135 million ($25 million),squeezed by the booking of one-time expenses of about ¥7.8 billion related to business restructuring and a reversal of
about ¥1.1 billion on deferred tax assets, paralleling tax system revision in December 2011. A breakdown of major
expenses related to business restructuring shows that about ¥3.0 billion ($36 million) was spent on the relocation andcentralization of Group offices and about ¥4.4 billion ($535 billion) was spent on the introduction of a special career change
program at subsidiary TIS.

Millions of yen

Cost of sales% change¥266,159¥261,145+1.9%

61,258Gross profit

18.7%

Gross profit margin

45,636

Selling, general and administrative expenses

13.9%

Ratio of selling, general and administrative expenses to net sales

15,621

Operating income

4.8%

Operating income ratio

2,135

Net income
Return on sales

Financial
Highlights

2011

81.3%

Cost of sales ratio

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80.8%
62,02719.2%
49,20915.2%
12,8184.0%5,985+0.5 point-1.2%-0.5 point-7.3%-1.3 points+21.9%+0.8 point-64.3%

0.7%

1.9%-1.2 point

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Financial R ev i ew

Disclosed Units
Up to March 2011

From April 2011

ITHD, consolidated

ITHD, consolidated

TIS Group

IT Infrastructure Services

INTEC Group
Financial IT
Services

SORUN Group

Industrial IT
Services

UFIT GroupAGREX Group

Other Business

New Segment Business Content
IT Infrastructure Services

Provide self-administered computer utility or system operation services through large IT facilities, including data
centers.

Financial IT Services

Support clients in their efforts to make greater use of IT in their operations and in the execution of their businessactivities with IT expertise and business know-how specific to the finance industry.

Industrial IT Services

Support clients in their efforts to make greater use of IT in their operations and in the execution of their businessactivities with IT expertise and business know-how in areas other than finance, namely industrial and public sectors.

Other Business

Activities other than those described above.

Basic Correlation between Old and New Segment Classifications
Businesses
IT Infrastructure Services

Software Development

Financial IT
Services

Solution Services

Other Business

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Industrial IT
Services

Service

Service

Outsourcing and Network

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Financial R ev i ew

Financial Position
AssetsTotal assets stood at ¥310,003 million ($3,771 million) as of March 31, 2012, up 3.0% from a year earlier. Of this amount,current assets accounted for ¥142,442 million ($1,733 million), up 10.9% year-on-year, and total fixed assets accounted for¥167,560 million ($2,038 million), down 2.9%. Total liabilities grew 6.0%, to ¥159,038 million ($1,935 million), and total net
assets reached ¥150,965 million ($1,836 million), dipping 0.1% from the end of March 2011. Equity capital, calculated bysubtracting ¥7,267 million ($88 million) in minority interest in consolidated subsidiaries and ¥38 million ($469 thousand) in
subscription rights from net assets, was on a par with the previous fiscal year, at ¥143,658 million ($1,747 million), and theequity ratio retreated 1.4 percentage points, to 46.3%.
Millions of yen
2012

2011

Total assets¥310,003¥301,076+3.0%

Total liabilities

159,038

149,965+6.0

Total net assets

150,965

151,110

-0.1

7,267

7,434

-2.2

38

29

+31.0

143,658

143,646+0.0

Minority interests
Stock acquisition rights
Equity capital
Key ratios:% change%

Equity ratio

1

46.3%

47.7%

-1.4 points

1.5

4.2

-2.7 points

Return on equity

2

Notes: 1.		Equity ratio = (Equity capital / Total assets) x 100
2. Return on equity = Net income /Equity capital [(equity capital at the beginning of the term + equity capital at the end of term)/2] x 100

Cash Flow Status
Cash and cash equivalents (“cash”) totaled ¥41,119 million ($500 million) as of March 31, 2012, up 12.7% from March 31,
2011.
Net cash provided by operating activities fell 13.1%, to ¥23,658 million ($287 million). This change reflects a ¥5,235
million ($63 million) increase in notes and accounts receivable and ¥4,685 million ($57 million) in income taxes paid, which
offset income before income taxes of ¥6,121 million ($74 million) and the positive cash flow effect of ¥12,745 million ($155
million) in depreciation and a ¥2,710 million ($32 million) increase in notes and accounts payable.
Net cash used in investing activities decreased 20.0%, to ¥15,158 million ($184 million), as inflow, mainly ¥2,314 million($28 million) in proceeds from the sale of investment securities, was overshadowed by outflow, mainly ¥9,519 million ($115
million) used for the acquisition of property and equipment and ¥4,927 million ($59 million) for the acquisition of intangible
assets.
Net cash used in financing activities retreated 77.4%, to ¥4,230 million ($51 million). Primary components of cash
inflows, namely, ¥16,637 million ($202 million) in proceeds from long-term bank loans and a ¥4,403 million ($53 million) net
increase in short-term borrowings, were outweighed by outflows of ¥14,662 million ($178 million) for repayment of longterm bank loans and ¥7,500 million ($91 million) for redemption of corporate bonds.

Millions of yen

Profile

2012

2011

Cash and cash equivalents at end of year

¥41,119¥36,492+12.7%Net cash provided by operating activities

23,65827,236-13.1

Net cash used in investing activities(15,158)(18,957)-20.0

Net cash used in financing activities(4,230)(18,755)-77.4

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Financial R ev i ew

Dividend Policy
ITHD has made the long-term, comprehensive return of profits to shareholders a management priority and seeks tomaintain stable dividends—targeting a consolidated payout ratio of 30%—while taking into account performance trends,
financial status, and the need to enrich retained earnings to support business growth.
In fiscal 2012, the Company booked a consolidated extraordinary loss of about ¥7,800 million, mainly from one-time
expenses of ¥3,000 million to relocate and centralize Group offices—a move designed to elicit greater synergy throughout
the Group by reinforcing cooperation between Group companies, strengthening Group governance and cutting costs—andabout ¥4,400 million for a special career change program at subsidiary TIS paralleling companywide structural reforms. The
Company also had to deal with the impact of December 2011 tax system reforms, which caused a ¥1,100 million reversal
in deferred tax assets. Taking these developments into account, as well as the need to build sufficient internal reserves tofund continued growth, management decided on an annual dividend of ¥18 ($0.21) per share.
For fiscal 2013, management anticipates an annual dividend of ¥21 per share, including an interim dividend of ¥7 pershare.
Yen
2012

2011

% change

Per share data:¥

Net income per share

24.33

¥

68.19

-64.3%Net assets per share

1,636.72

1,636.56+0.0%

Dividends per share

18.00

32.00

-43.8%

Business and Other Risks
Risk specific to each business segment may arise. In the software development business, for example, projects could
turn unprofitable, while system malfunctions could interrupt services in the outsourcing business. The Company applies
various measures to prevent the manifestation of such risks.
In the IT infrastructure business, data centers under the Group umbrella offer outsourcing and cloud computing
services at home and abroad—in Tokyo, Osaka, Kanagawa Prefecture, Tochigi Prefecture, Toyama Prefecture and Aichi
Prefecture as well as in Tianjin, China, and other locations—24 hours a day every day of the year. A variety of a
installations, such as a base-isolation structure for enhanced earthquake tolerance, an on-site generator to ensure
uninterrupted power supply, and crime-prevention systems to thwart unauthorized access, have been incorporated into
the buildings to control foreseeable risk. Nevertheless, if an extraordinarily significant event, such as an extended power
failure, a large-scale natural disaster, international conflict or an act of terrorism, or major criminal activity, were to occur
and disrupt the smooth execution of data center activities, the Group’s business results and financial position could be
adversely affected.
All forward-looking statements in this document are based on information available to management as of May 10,
2012.

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Financial S ec t i on

Consolidated Balance Sheets
IT Holdings Corporation and Its Consolidated Group Companies
As of March 31, 2011 and 2012

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

2011

2012

Millions of yen

Millions of yen¥ 36,729
59,040
8,710
301
2,295
6,554
197
7,741
7,085
(199)
128,455¥ 41,365
64,591
8,942
201
2,633
8,278
209
8,027
8,305
(112)
142,442

60,2305,009
22,4682,539
5,209
95,45758,635
4,360
22,2663,455
6,074
94,792

5,516
13,073
18,5893,471
14,047
17,51931,794
8,115
20,995(2,331)58,573
172,620¥301,076

28,693
8,597
19,986(2,028)55,248167,560¥310,003

Basis of Presenting the Consolidated Financial Statements
The accompanying consolidated financial statements have been compiled from the consolidated financial statements
prepared by the Company as required under the Financial Instruments and Exchange Act of Japan, and have been
prepared in accordance with accounting principles generally accepted in Japan.

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Financial S ec t i on

Consolidated Balance Sheets
IT Holdings Corporation and Its Consolidated Group Companies
As of March 31, 2011 and 2012

Liabilities
Current liabilities
		 Notes and accounts payable
		 Short-term borrowings
		 Corporate bonds (redeemed within one year)
		 Income taxes payable
		 Accrued bonuses to directors and employees
		 Other allowances
		 Other current liabilities
		 Total current liabilities
Non-current liabilities
		 Corporate bonds
		 Long-term debt
		 Lease obligations
		 Deferred tax liabilities
		 Deferred tax liabilities from revaluation of land
		 Accrued retirement benefits to employees
		 Accrued retirement benefits to directors
		 Other non-current liabilities
		 Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
		 Common stock
		 Additional paid-in capital
		 Retained earnings
		 Less treasury stock, at cost		 Total shareholders’ equity
Accumulated other comprehensive income
		 Net unrealized gains on other securities
		 Revaluation of land		 Foreign currency translation adjustments
		 Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

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2011

2012

Millions of yen

Millions of yen¥ 14,944
14,8007,500
3,401
11,041464
20,93873,090¥ 17,917
23,126100
2,341
11,115322
28,141
83,065100
55,054
3,981
674
993
11,509244
4,317
76,875
149,965—
53,288
4,723
503
869
12,359107
4,120
75,972
159,038

10,00186,78847,298(24)
144,062

10,00186,78747,673(25)
144,436

1,729(1,841)
(303)
(415)
29
7,434
151,110¥301,076

1,210(1,718)
(270)
(778)
38
7,267
150,965¥310,003

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Financial S ec t i on

Consolidated Statements of Income and Comprehensive Income
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2011 and 2012

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Dividend income
Rental income from real estate
Reversal of allowance for doubtful accounts
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of non-consolidated subsidiaries and affiliates
Other
Total non-operating expenses
Recurring profit
Extraordinary profit
Gain on sale of investment securities
Reversal of allowance for doubtful accounts
Negative goodwill gains
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Merger-related expenses
Structural reform-related expenses
Effect of adoption of new accounting standards for asset retirement obligations
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes: current
Income taxes: deferred
Total income taxes
Income before minority interests
Minority interests in earnings (losses) of consolidated subsidiaries
Net income

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2012

Millions of yen

Millions of yen¥323,173
261,145
62,02749,20912,818¥327,417
266,159
61,25845,636
15,621

554
273
—
192
520
1,541

619
266
270
150
339
1,646

1,023
46
663
1,733
12,625

898
202
773
1,874
15,393

1,782
119
3,004
153
5,060

1,142
—
5
160
1,307

1,074
2,324
—
2,199
1,943
7,541
10,145
4,382
(308)
4,073
6,071
86
¥ 5,985

766
381
7,852
—
1,578
10,579
6,121
4,068
(170)
3,897
2,224
89
¥ 2,135

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Financial S ec t i on

Consolidated Statements of Comprehensive Income
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2011 and 2012

Income before minority interests
Other comprehensive income
Net unrealized gains on other securities
Revaluation reserve for land
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted forusing the equity method
Total other comprehensive income
Comprehensive income
Components:
		 Comprehensive income attributable to owners of the parent
		 Comprehensive income attributable to minority interests

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2012

Millions of yen

Millions of yen¥6,071¥2,224

328
—
(170)

(514)
123
33

(8)
149
6,221

(5)
(363)
1,860

6,407
¥ (185)

1,772
¥ 87

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Financial S ec t i on

Consolidated Statements of Changes in Net Assets
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2011 and 2012

Shareholders’ equity
Common stock		 Balance at end of previous fiscal year
		 Balance at end of fiscal year
Additional paid-in capital
		 Balance at end of previous fiscal year
		 Changes during the fiscal year			 Disposal of treasury stock			 Increase from share exchange
			 Total changes during the fiscal year
		 Balance at end of fiscal year
Retained earnings
		 Balance at end of previous fiscal year
		 Changes during the fiscal year			 Dividends from surplus
			 Net income
			 Change in scope of equity method
			 Increase from merger of consolidated and non-consolidated subsidiaries
			 Decrease from merger of consolidated and non-consolidated subsidiaries
			 Net changes during the fiscal year
		 Balance at end of fiscal year
Treasury stock		 Balance at end of previous fiscal year
		 Changes during the fiscal year
			 Acquisition of treasury stock			 Disposal of treasury stock			 Net changes during the fiscal year
		 Balance at end of fiscal year
Total shareholders’ equity
		 Balance at end of previous fiscal year
		 Changes during the fiscal year			 Dividends from surplus
			 Net income
			 Acquisition of treasury stock			 Disposal of treasury stock
			 Change in scope of equity method
			 Increase from share exchange
			 Increase from merger of consolidated and non-consolidated subsidiaries
			 Decrease from merger of consolidated and non-consolidated subsidiaries
			 Net changes during the fiscal year
		 Balance at end of fiscal year

2011

2012

Millions of yen

Millions of yen¥ 10,001
10,001¥ 10,001
10,001

85,20786,788

(30)
1,610
1,580
86,788(0)—(0)
86,78744,08847,298(2,780)
5,985
—
4
—
3,209
47,298(1,755)
2,135
(0)
—
(3)
375
47,673

(57)

(24)

(4)
37
33
(24)

(1)
0
(1)
(25)

139,239

144,062(2,780)
5,985
(4)
7
—
1,610
4
—
4,823
¥144,062(1,755)
2,135
(1)
0
(0)
—
—
(3)
374
¥144,436

Continued on the next page

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Financial S ec t i on

Consolidated Statements of Changes in Net Assets
Continued from the previous page

Accumulated other comprehensive income
Net unrealized gains on other securities
		 Balance at end of previous fiscal year
		 Changes during the fiscal year
			 Items other than changes in shareholders’ equity, net
			 Net changes during the fiscal year
		 Balance at end of fiscal year
Revaluation reserve for land
		 Balance at end of previous fiscal year
		 Items other than changes in shareholders’ equity, net
Total change during the fiscal year
Balance at end of the fiscal year
Foreign currency translation adjustments
		 Balance at end of previous fiscal year
		 Changes during the fiscal year
			 Items other than changes in shareholders’ equity, net
			 Net changes during the fiscal year
		 Balance at end of fiscal year
Accumulated other comprehensive income
		 Balance at end of previous fiscal year
		 Changes during the fiscal year
			 Items other than changes in shareholders’ equity, net
			 Net changes during the fiscal year
		 Balance at end of fiscal year
Stock acquisition rights
Balance at end of previous fiscal year
Changes during the fiscal year
		 Items other than changes in shareholders’ equity, net
		 Net changes during the fiscal year
Balance at end of fiscal year
Minority interests
Balance at end of previous fiscal year
Changes during the fiscal year
		 Items other than changes in shareholders’ equity, net
		 Net changes during the fiscal year
Balance at end of fiscal year
Total net assets
Balance at end of previous fiscal year
Changes during the fiscal year
		 Dividends from surplus
		 Net income
		 Acquisition of treasury stock		 Disposal of treasury stock
		 Change in scope of equity method
		 Increase from share exchange
		 Increase from merger of consolidated and non-consolidated subsidiaries
		 Decrease from merger of consolidated and non-consolidated subsidiaries
		 Items other than changes in shareholders’ equity, net
		 Net changes during the fiscal year
Balance at end of fiscal year

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2011

2012

Millions of yen

Millions of yen

¥

¥

1,182

1,729

547
547
1,729

(519)
(519)
1,210

(1,841)——(1,841)(1,841)
123
123(1,718)

(178)

(303)

(125)
(125)
(303)

33
33
(270)

(837)

(415)

422
422
(415)

(362)
(362)
(778)

18

29

10
10
29

9
9
38

16,654

7,434(9,220)(9,220)
7,434

(166)
(166)
7,267

155,075

151,110(2,780)
5,985
(4)
7
—
1,610
4
—
(8,788)(3,964)¥151,110(1,755)
2,135
(1)
0
(0)
—
—
(3)
(519)
(145)
¥150,965

Corporate
Governance

Financial
Review

Financial
SectionCorporate
Data

36

Financial S ec t i on

Consolidated Statements of Cash FlowsIT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2011 and 2012

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
Loss on disposal of fixed assets
Valuation (gain) loss on investment securities
Amortization of goodwill
Increase (decrease) in accrued bonuses to directors and employees
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued retirement benefits to employees
Interest and dividend income
Interest expenses(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Negative goodwill gains
Structural reform-related expenses
Effect of adoption of new accounting standards for asset retirement obligations
Other, net
		 Subtotal
Interest and dividend income received
Interest expenses paid
Income taxes paid
		 Net cash provided by operating activities
Cash flows from investing activities
Acquisitions of property and equipment
Acquisitions of intangible assets
Proceeds from sale and redemption of investment securities
Payment of lease and guarantee deposits
Acquisition of subsidiaries’ shares
Other, net
		 Net cash used in investing activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings, net
Proceeds from long-term debt
Repayments of long-term debt
Redemption of bonds
Dividends paid
Dividends paid to minority shareholders
Other, net
		 Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of year

ProfileFinancial
Highlights

To OurStakeholders

Brave Steps
2014

Key Points

R&D

2011

2012

Millions of yen

Millions of yen¥10,145
12,308
1,074
558
681
1,901
210
(446)
836
(615)
1,023
3,173
225
1,046
(3,004)
—
2,199
(651)
30,665627(1,058)(2,998)27,236¥ 6,121
12,745
766
249
318
1,882
(8)
(391)
547
(642)
898
(5,235)(2,214)
2,710
(5)
2,388
—
8,453
28,585656(897)(4,685)23,658(10,509)(6,311)
4,197(2,068)(4,313)49(18,957)(9,519)(4,927)2,314(2,009)(147)(868)(15,158)(21,266)
25,495(14,680)(4,000)(2,780)(459)(1,059)(18,755)(45)(10,520)
46,987
25¥36,492

4,403
16,637(14,662)(7,500)(1,755)(155)(1,197)(4,230)31
4,301
36,492
325¥41,119

Corporate
Governance

Financial
Review

Financial
SectionCorporate
Data

37

Corporate D at a

IT Holdings Group (As of August 1, 2012)• Principal Companies• Regional Companies in JapanTIS Inc.

KOUSHI INTEC Inc.

INTEC Inc.

SORUN WEST JAPAN CORPORATIONAGREX INC.

SORUN Hokkaido Inc.

QUALICA INC.

SORUN-TOUHOKU Inc.

AJS Inc.

HOKKOKU INTEC SERVICE Inc.

• Marketing Solution Services• Overseas Businesses

NEXWAY Co., Ltd.

BEIJING SORUN COMPUTER CO., LTD.

April 2008
IT Holdings is created throughthe management integration ofmajor domestic information
service providers TIS Inc. and
INTEC Holdings, Ltd.

INTEC Information Technology (Wuhan) Co., Ltd.

• Solution Services and SalesTISI (Shanghai) Co., Ltd.

IUK Inc.

INTEC Information Technology (Shanghai) Co., Ltd.

AGMS CORPORATIONQUALICA (SHANGHAI) Inc.

Cloud Scope Technologies, Inc.

TIS R&D Center, Inc.

NEOAXIS Co., Ltd.

TIANJIN LARGE INFORMATION TECHNOLOGY CO., LTD.

2008—2009
The Group is reorganized. Key
events include splitting off
companies under the old TIS

TIANJIN SORUN DIGITAL SOFTWARE CORPORATION• Financial IT Services

Tianjin TIS Hi-tech Information System Service Co., Ltd.

Oartech, Inc.

SORUN CHINA CORPORATION

Keyport Solutions, Inc.

INTEC Information Technology (Dalian) Co., Ltd.

First Manage Inc.

INTEC SYSTEMS BANGKOK CO., LTD.

Group umbrella and merging
INTEC Holdings into INTEC Inc.,and then putting the surviving
subsidiaries under the directcontrol of IT Holdings.

TKSOFT SINGAPORE PTE. Ltd.

• System Development,
Management and Operations

TISI (Singapore) Pte Ltd.

AGREX FINE TECHNO INC.

• Other Specific Businesses

INTEC Solution Power Inc.

IT Service Force Inc.

IN-X Co., Ltd.

INTEC Amenity Inc.

TIS Solution Link Inc.

SKY INTEC Inc.

System Support Co., Ltd.

Registration Network, Ltd.

Chuo System Corporation

TIS Total Service Co., Ltd.

TIS System Service Inc.

SorunPure Inc.

December 2009SORUN CORPORATION joined
the IT Holdings Group.

April 2011

MITEC Inc.

• Consulting Services and Research

INTEC IT Capital, Inc.

BM Consultants Inc.

WITH INTEC Inc.

ITHD orchestrated a threecompany merger involving TIS,SORUN Corporation and UFIT

TIS LEASING Co., Ltd.

Co., Ltd., with TIS as the• Contract Research Organization(CRO)

surviving company.

AC MEDICAL INC.
UPSHE Co., Ltd.
ALMEC Co., Ltd.
Medical Toukei Co., Ltd.

ProfileFinancial
Highlights

To OurStakeholders

Brave Steps
2014

Key Points

R&D

Corporate
Governance

Financial
Review

Financial
SectionCorporate
Data

38

Corporate D at a

Corporate Data (As of March 31, 2012)
Company name

IT Holdings Corporation

Established

April 1, 2008

Main business

Management and business execution of group companies
that carry on information and communication businessTokyo head office

21F Sumitomo Fudosan Shinjuku Grand Tower,
17-1 Nishi-shinjuku 8-chome, Shinjuku-ku, Tokyo 160-0023 Japan
Tel. +81-3-5338-2277
Fax. +81-3-5338-2266

Toyama head office

5-5 Ushijima-shinmachi, Toyama 930-0856 Japan
Tel. +81-76-444-8011
Fax. +81-76-444-8012

Paid-in capital¥ 10 billion

Number of shares
Authorized

280,000,000 shares

Issued87,789,098 shares

Number of shareholders

17,072

Stock listing

Tokyo Stock Exchange, First Section (Securities code: 3626)

Major Shareholders (As of March 31, 2012)
Name

ProfileFinancial
Highlights

Number of Shareholding
sharesratio(Thousands)(%)

Japan Trustee Services Bank, Limited (Trust Account)

7,344

8.4

The Master Trust Bank of Japan, Limited (Trust Account)

5,330

6.1

Japan Trustee Services Bank, Limited (Trust Account 9)

3,619

4.1

Nippon Life Insurance Company

2,591

3.0

Employees’ Shareholding Association of IT Holdings
Corporation

2,372

2.7

Japan Trustee Service Bank, Ltd. (Trust Account 4)

1,717

2.0

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1,654

1.9

The Master Trust Bank of Japan, Ltd. (Retirement Benefit
Trust Account, Mitsubishi Electric Corporation Account )

1,598

1.8

SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTS

1,167

1.3

OBAYASHI Corporation

1,161

1.3

JCB Co., Ltd.

1,161

1.3

Corporate
Governance

Financial
Review

To OurStakeholders

Brave Steps
2014

Key Points

R&D

Financial
SectionCorporate
Data

39

Corporate D at a

Share Composition by Shareholder (As of March 31, 2012; Thousands of Shares)
Individuals and others

18,366 (20.9%)

Total

87,789Overseas Institutions

Financial institutions

36,711 (41.8%)

19,672 (22.4%)
Financial Instruments Business Operator

Other Domestic Institutions

837 (1.0%)

12,201 (13.9%)

Share Composition by Number of Shares Held (As of March 31, 2012; Thousands of Shares)
Less than 100 shares

100–999 shares

96 (0.1%)

3,764 (4.3%)
1,000–9,999 shares

8,746 (10.0%)
10,000–99,999 shares

6,428 (7.3%)

Total

More than 500,000 shares

87,78945,685 (52.0%)

100,000–499,999 shares

23,070 (26.3%)

Stock Price Range

(Yen)
1,200

Financial
Highlights

To OurStakeholders(Thousands of shares)
24,0001,000

20,000800

16,000600

12,000

400

8,000

200

4,000

0

ProfileTrading volume

Stock priceJan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.
2011
2012

Brave Steps
2014

Key Points

R&D

Corporate
Governance0

Financial
Review

Financial
SectionCorporate
DataITHD GroupManagement Philosophy
The ITHD Group seeks to be a corporate citizen whose activities, namely, the provision of various services
utilizing information technology (IT), match its status as a leading corporate group, and will strive to raise
corporate value, supported in this effort by the high regard of all its stakeholders, including clients andshareholders as well as employees and their families.
We will cultivate a vibrant corporate culture that encourages companies and individuals under the Group umbrella
to work toward higher goals and embrace new challenges, and thereby ensure corporate growth.
We will always provide our very best to clients by combining Group strengths to foster higher quality and greater
sophistication in our technological capabilities.
We will uphold high corporate morals and fulfill our social obligations.

For further information contact:
Public Relations Department, Administration Division
Tel: +81-3-5338-2272
Fax: +81-3-5338-2266
E-mail: ir_info@itholdings.co.jp
Any revisions to information in this annual reportsubsequent to publication will be posted at:
http://www.itholdings.co.jp/e/