Consolid
dated Financcial Results foor the First Q
Quarter of th
he Fiscal Yearr Ending Maarch 31, 2017
7
(April 1, 20116 through Ju
une 30, 2016
6)
(Prepared purrsuant to Jap
panese GAAPP)
All financcial informatioon has been preparedpin acccord with accoounting princiiples generallyy accepted in Japan.
This is a ppartial Englishh translation ofo the originall Japanese-lan
nguage docum
ment. All inform
mation pertain
ns to
consolidaated results unnless otherwisee noted. Informrmation on thee basis of presentation of coonsolidated fin
nancialstatementts does not apppear in this traanslation.
Julyy 28, 2016
Compaany name:
Stock eexchange listinngs:
Stock ccode:
URL:
Represeentative:
Contactt:Phone:TIS Innc.
The First
F
Section off the Tokyo Stock Exchangge3626
http:///www.tis.com/
m/Toru Kuwano,
K
Pressident
Tsuneeyoshi Ito, Deppartment Man
nager of Finannce & Accountting Dept., Co
orporate
Planning SBU.
+81 3-5337-4232

Scheduuled dates
Submisssion of quarteerly report:
Commeencement of dividenddpaym
ments:

August 10, 2016-

mentary materials to the quuarterly resultss:
Supplem
Quarterrly results presentation heldd:Available
Yes (targeted at institu
utional investtors and analysts)

Figgures in millio
ons of yen aree rounded dow
wn to the neareest million
1. Consoolidated Resu
ults for the FirstF
Quarterr of the Fisca
al Year Endinng March 311, 2017
(Apriil 1, 2016 – June 30, 2016
6)(1) Consoolidated Finanncial Results
Percentaages indicate yyear-over-yeaar changes
ncome
Net inattributtable toNet
N sales
Reecurring profitt
Operating income
ownerss of theparent coompanymillioons of yen%

89,128885,6538

4.1
7.00

First Quuarter., FY20117
First Quuarter., FY20116

millions of yen
n

%

4,017
7 85.1
2,170
0 191.0

milllions of yen%

4,373 44..6
3,025 191..8

millions of yenyNote: Compprehensive incom
me: First Quarter., FY
F 2017: 3,314 m
million yen (68.9%%), First Quarter., FY 2016: 1,961 m
million yen (-%)

Net
N income
per share – basic

Net income
per shaare –diluteed

YenFirst Quuarter., FY20117
First Quuarter., FY20116

yen

31.77722.400-(2) Consoolidated Finanncial Position
Total assets
End of F
First Quarter, FY2017
End of F
FY2016

Net assets

Equuity ratio

millions of yeen

millions of yen%

305,7233
336,4955

179
9,687
180
0,539

57.5
52.5

For referennce: Total equitty: End of first quarter, FY20117: 175,757 million yen End ofo FY2016: 1766,549 million yen.
*Total equuity = Shareholdders’ equity plu
us total accumullated other com
mprehensive income

Dividends forr Shareholderrs of Commoon Stock
2. Cash D
Cash dividends
dper share
Record date End-Q
Q1 End-Q2 End-Q3 Y
Year-endor period
FY20166
FY20177
FY20177(forecasst)

Total
T

y
yen

yen

yen

yen

-

11.00

-

22.00

33.00
3

12.00

-

24.00

36.00
3

Note: Revvisions from thee latest release ofo dividends forrecasts: None

yen

%

2,75
57 40.7
1,95
59 463.5

3. Forecast of Consolidated Results for FY2017 (April 1, 2016 – March 31, 2017)
Percentages indicate year-over-year changes
Net income
attributable to Net income per
OperatingRecurring profit
Net sales
owners of theshare – basic
incomeparent company
First Half of FY2017(six months ending
Sep. 30, 2016)
Full FY2017(year ending Mar. 31,
2017)millions of yen%

millions of yen%

millions of yen%

millions of yen%

Yen

185,000

1.3

10,000

6.7

10,000

1.0

5,500

(1.8)

63.62

390,000

1.9

26,5008.4

26,0006.0

15,00018.3

173.87

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

※ Notes(1) Material reclassifications of subsidiaries during the period: None
(Changes in specified subsidiaries resulting in change in scope of consolidation)
Additions: None
Exclusions: None
(2) Accounting methods specific to quarterly consolidated financial statements: None
(3) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards, etc.: None
2) Changes other than noted in 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Common stock issued
1) Issued shares as of period-end (including treasury stock):
End-First Quarter, FY2017 (June 30, 2016):
87,789,098 shares
End-FY2016 (March 31, 2016):
87,789,098 shares
2) Treasury stock as of period-end:
End-First Quarter, FY2017 (June 30, 2016):
1,699,937 shares
End-FY2016 (March 31, 2016):
864,683 shares
3) Average number of shares (during the respective three-month period):First Quarter, FY2017 (ended June 30, 2016):
86,811,601 sharesFirst Quarter, FY2016 (ended June 30, 2015):
87,468,022 shares*Quarterly review status
These materials are not subject to the quarterly review procedure requirements of Japan’s Financial Instruments
and Exchange Act. As of this report’s publication, a review of the quarterly consolidated financial statements inaccordance with the Act had not been completed.
Caution on Forward-Looking Statements and Other Important Matters
This report contains forward-looking statements that reflect TIS Inc. (“TIS”)’s plans and expectations based on
information available to TIS at the time of preparation and on certain other information TIS believes to bereasonable. These forward-looking statements are not guarantees of future performance, and actual results,
performance, achievements or financial position may differ materially from those expressed or implied herein
due to a range of factors.
For the assumptions underlying the forecasts herein and other notice on the use of earnings forecasts, refer to“(2) Consolidated Earnings Forecast and Caution on Forward-Looking Statements” in the “1. Results ofOperations” section on page 4 in the Accompanying Materials.

Accompanying Materials – Contents

1. Results of Operations

2(1) Analysis of Consolidated Operating Results2(2) Consolidated Earnings Forecast and Caution on Forward-Looking

4Statements
2. Other Information

4(1) Additional Information

4

3. Consolidated Financial Statements

5(1) Consolidated Balance Sheets

5(2) Consolidated Statements of Income and Comprehensive Income

7

Consolidated Statements of Income
For the First Quarter

7

Consolidated Statements of Comprehensive Income
For the First Quarter8(3) Notes on the Consolidated Financial Statements(Notes on the Going-concern Assumption)

9(Notes on Significant Changes in the Amount of Shareholders’ Equity)

9-1-

1. Results of Operations(1) Analysis of Consolidated Operating Results
In the first quarter of fiscal 2017 (April 1, 2016 ~ June 30, 2016), the Japanese economy
continued its moderate recovery owing to solid corporate earnings and an improvement in
employment conditions. Regarding the economic forecast, it will be necessary to consider the
potential impact of rapid market fluctuations caused by slowing economic growth in China andemerging Asian nations as well as Britain’s decision to exit the European Union.
The business environment surrounding the IT services industry, to which the TIS INTECGroup belongs, was robust during the quarter. The Bank of Japan’s Short-term Economic
Survey of Enterprises in Japan (issued in June 2016) revealed growth in corporate IT investment,
as reflected in such economic indicators as a 5.3% year-on-year increase in software investment
plans (all manufacturing & financial institutions).
Under these circumstances, the TIS INTEC Group promoted various measures for
implementing Group-wide reform to achieve further growth and raise corporate value, based on
the Group management strategy developed under the third medium-term management plan(from fiscal 2016 through fiscal 2018) currently being implemented.
Consolidated net sales for the Group in the first quarter increased 4.1% year on year to¥89,128 million. Operating income rose 85.1% to ¥4,017 million from a year earlier, recurring
profit increased 44.6% to ¥4,373 million, and net income attributable to owners of the parent
company rose 40.7% to ¥2,757 million.
Consolidated net sales grew year on year as the Group accurately grasped the IT investment
needs of its customers in areas where IT investment is growing.
Profits also increased as a result of the increase in sales and measures to improve profitability.
Segment results for the fiscal year are as follows. The sales figures for each segment include
inter-segment sales.
1) IT Infrastructure Services
Consolidated sales rose 3.5% year on year to ¥30,374 million and operating income rose
137.0% to ¥2,575 million. Sales and income increased as a result of the steady performance ofthe data center business, the expansion of the BPO business through M&As and other initiatives,
as well as cost reductions generated by business efficiency measures.
2) Financial IT Services
Consolidated sales increased 8.0% year on year to ¥18,404 million, while operating income
increased 26.9% to ¥588 million. Sales and income increased as a result of business expansion
driven by customers’ growing IT investment, mostly among credit card companies.
3) Industrial IT Services
Consolidated sales increased 6.3% year on year to ¥41,925 million, while operating income
increased by 165.0% to ¥759 million. Sales and income grew due to robust IT investment in theenergy field in conjunction with electric power and natural gas system reforms, large-scale
investments by public-sector institutions, along with successful measures to improve
profitability.
4) OtherConsolidated sales declined 31.8% year on year to ¥2,742 million, and operating income
declined 49.9% to ¥230 million. Sales and income declined due primarily to the impact ofGroup reorganization.
As previously stated, the Group is implementing its third medium-term management plan (fromfiscal 2016 through fiscal 2018). For the fiscal year under review, the Group has formulated the-2-following Group management strategy in accordance with the management plan’s basic
concepts, and is promoting various measures for implementing Group-wide reform to achieve
further growth and raise corporate value.
Third medium-term
management plan basic
concepts
Profit Emphasis
IT Brain(expansion of value-added
business)
Portfolio Management

Group management strategy for fiscal 2017
Thoroughly implement profit-oriented management.
Promote the optimization of the entire Group by leveraging
the new holding company structure, while expanding
added-value business to support customers’ digital-based
management.
Reorganize the business portfolio, while nurturing andattracting talent suited for the business models.

The IT Holdings Group took a new step forward on July 1, 2016 through its reorganization as
the TIS INTEC Group. The purpose of this reorganization is to optimize the overall Group andachieve portfolio management. In the reorganization, IT Holdings Corporation merged with TIS
Inc. through an absorption-type merger and then changed its company name to TIS Inc. in orderto unify the Group brand.
Prior to the reorganization, the Group had operated a decentralized governance systemorganized under a pure holding company. The new governance structure features a central
operating company which can leverage its centripetal force and make overall Group
optimization the primary goal. This new structure will enable the Group to reallocate
management resources rapidly in response to changes in the external environment and strategic
shifts, while facilitating further reforms to the Group’s organizational structure.
The TIS INTEC Group is refocusing its viewpoint on markets and customers in order tosupport “customers’ digital-based management” through unified Group initiatives. To this end,
the Group will establish a business structure to generate the maximum value from the current
management resources within the Group. With the aim of advancing its distinctive competencies
and growth engines, the Group has promoted the consolidation of the BPO business dispersed
throughout the Group into AGREX Inc. In the first quarter, the Group furthered this strategy byreorganizing and consolidating among its core companies the national health insurance-related
business and electric power and gas-related business (April 2016), as well as a part of theoverseas business (May 2016).
Moving forward, the Group will continue to hone the strengths of businesses with acompetitive advantage and further enhance businesses with a relatively superior position versus
competitors (regional and BPO businesses), while promoting organic collaboration between its
businesses to maximize the overall competitiveness of the Group and raise the Group’s
corporate value.
The Group is actively responding to developments in the fields of Fintech, IoT, AI and tovarious industry trends in recognition of the importance of these technologies to performing
customers’ digital-based management. As part of this strategy, the Group raised its shareholding
ratio in Digital Garage, Inc., with which it has a capital alliance, to promote collaborative
development in the EC field (June 2016). This investment bolsters the strategic IT partnershipwith Digital Garage and supports the Group’s participation as a technology development partnerin the open-innovation R&D organization DG Lab, established by Digital Garage, Kakaku.com,
Inc. and Credit Saison Co., Ltd. (July 2016). The Group is also making strategic investments
through various venture companies with the aim of offering new added value. These include
seed money investment in AI company Elvez, Inc. (March 2016) and a capital and businessalliance with settlement company QUADRAC Co., Ltd. (May 2016). The Group has also
strengthened its investment promotion structure by establishing a corporate venture capitalsystem (May 2016) to enable rapid investments in promising technologies.

-3-

The Group is promoting global business development as part of the expansion of its businesssphere. In the settlement solutions field, a core strength, the Group made PromptNow Co., Ltd.,a leading Thai developer of applications in the banking, insurance and other financial industries,
a consolidated subsidiary (May 2016). PromptNow was formerly a subsidiary of MFEC PublicCompany Limited, a listed Thai company with which the Group has a capital and businessalliance.
In the first quarter, TIS Inc. acquired 834,900 shares of treasury stock (aggregate acquisition
cost of ¥2,099 million) as part of its policy of executing a dynamic capital strategy responsive tochanges in the business environment and raising shareholder profit and capital efficiency.
(2) Consolidated Earnings Forecast and Caution on Forward-Looking Statements
As the Group’s consolidated business performance has been proceeding largely in line with theplan, the Group did not make any changes to the consolidated earnings forecast announced on
May 10, 2016.
The Company has adopted a total return ratio benchmark of around 35%. As a result of thepreviously mentioned share buyback, the Company estimates a total return of 35% in thecurrent fiscal year.
*Total return ratio: The ratio of the combined value of dividend payments and share buybacks
versus net income attributable to owners of the parent company.
2. Other Information(1) Additional Information(Adoption of “Guidance on the Recoverability of Deferred Tax Assets”)
The Company has applied “Guidance on the Recoverability of Deferred Tax Assets”(Accounting Standards Board of Japan Guidance No. 26, issued on March 28, 2016) from thefirst quarter of the fiscal year under review.
(Merger between IT Holdings Corporation and Consolidated Subsidiary)
At its meeting on October 29, 2015, the Board of Directors of IT Holdings Corporation
approved a resolution to conduct an absorption-type merger of TIS Inc., a wholly owned
subsidiary and the expiring company in the merger. The merger was executed on July 1, 2016.
Overview of Business Combination(1) Company name and business description of acquired company
Name of acquired company: TIS Inc.
Business description: Outsourcing services, software development, and solutions services
related to information technology investments(2) Combination date (effective date)July 1, 2016
(3) Legal form of business combination
In the absorption-type merger, IT Holdings Corporation is the surviving company and TIS
Inc. is dissolved.
(4) Company name after business combination
TIS Inc.
(5) Overview of transaction, including purpose
The purpose of the merger is to establish an optimal Group organization by reviewing andreorganizing the current Group organizational structure, thereby achieving the goals of
optimizing the overall Group and achieving portfolio management as stated in the third
medium-term management plan.

-4-3. Consolidated Financial Statements(1) Consolidated Balance Sheets
As of March 31, 2016

Items
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Lease receivables and lease investment assets
Marketable securities
Merchandise and finished goods
Work in process
Raw materials and supplies
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
Net defined benefit asset
Deferred tax assets
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets-5-

As of June 30, 2016

millions of yen

millions of yen

46,741
84,722
6,381
2,201
4,145
5,278
264
7,161
9,952
(181)
166,666

28,62664,801
5,984
201
4,229
8,716
269
6,111
12,672(165)
131,448

38,497
5,433
22,583
4,092
4,623
75,22938,4176,129
22,485
4,120
4,393
75,546724
17,50918,233

1,066
17,82818,89549,2054,369
6,558
16,465(234)
76,365
169,828
336,495

52,411
4,398
7,010
16,284(272)
79,832
174,274
305,723

As of March 31, 2016

Items
Liabilities
Current liabilities
Notes and accounts payable
Short-term borrowings
Income taxes payable
Accrued bonuses to directors and employees
Provision for loss on order received
Other allowances
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term debt
Lease obligations
Deferred tax liabilities
Deferred tax liabilities from revaluation of land
Accrued retirement benefits to directors
Other allowances
Net defined benefit liability
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Additional paid-in capital
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains on other securities
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

As of June 30, 2016

millions of yen

millions of yen

22,617
13,06911,998
11,8602,472
661
28,82791,50818,837
10,772
1,208
6,150
2,160
185
34,23973,553

31,460
6,050
440
403
76
570
18,363
7,081
64,447
155,955

19,876
5,841
458
403
71
570
18,505
6,754
52,481126,035

10,001
82,92077,485(2,124)
168,282

10,001
82,92078,331(4,225)167,027

13,659(2,375)125(3,141)
8,266
3,990
180,539
336,495

14,136(2,375)101(3,131)
8,730
3,930
179,687
305,723

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
First Quarter, FY2016First Quarter, FY2017
Items(Apr. 1 – Jun. 30, 2015) (Apr. 1 – Jun. 30, 2016)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expense
Interest expenses
Equity in losses of affiliated companies
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on sales of fixed assets
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss
Impairment loss
Loss on valuation of investment securities
Other
Total extraordinary loss
Income before income taxes
Income taxes: current
Income taxes: deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent company-7-

millions of yen

millions of yen

85,65371,806
13,847
11,676
2,170

89,12873,303
15,824
11,807
4,017

36
1,022
181
1,240

16
705
162
884

141
75
168
385
3,025

96
137
294
528
4,373

0
173
173

0
0

228
1
47
277
2,921
841
112
953
1,967
7
1,959

106
67
174
4,199
1,026
365
1,391
2,808
50
2,757

Consolidated Statements of Comprehensive Income
Items
Net income
Other comprehensive income
Net unrealized gains on other securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of equitymethod affiliates
Total other comprehensive income
Comprehensive income(Composition)
Comprehensive income attributable to owners of theparent company
Comprehensive income attributable to noncontrolling interests-8-First Quarter, FY2016(Apr. 1 – Jun. 30, 2015)

First Quarter, FY2017(Apr. 1 – Jun. 30, 2016)

millions of yen

millions of yen

1,967

2,808

76
(50)
(29)

477
51
10

(1)

(33)

(5)
1,961

506
3,314

1,950

3,221

11

93

(3) Notes on the Consolidated Financial Statements(Notes on the Going-concern Assumption)
Not applicable(Notes on Significant Changes in the Amount of Shareholders’ Equity)
Not applicable-9-