Annual Report
2015
Corporate
profileYear Ended March 31, 2015
(From April 1, 2014, to March 31, 2015)

Securities Code 3626

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Financial
SectionCorporate
DataIT Holdings (ITHD) Group Value Creation Process
Create value
through IT

Change society
through IT

Open doors to the
future through IT

Helping to Solve Social Issues Through Business Activities
The ITHD Group will, as an IT brain, provide development and support optimized to the IT needs of clients
based on a deep reservoir of know-how and IT solutions utilizing expertise across diverse industries andbusiness sectors and will also create new value for society and help to cultivate a comfortable tomorrow.

Resources of
the ITHD Group

ITHD Group Business Activities

Diverse workforce

Offer IT services tosupport increasingly
sophisticatedinformation society

Consulting
services

High technologicalcapabilities
Ample experience andknow-how

input

Extensive service
menu

Outsourcing
services

One-stop,
optimum support

Plan and propose newpatterns of use for IT

Systemintegration
services

Realize client visions andstrategies, and set on
growth track
outcomeUse IT to help solve
social issues

Largest data center
network in Japan

Cloud
application
providing andservices

IT platform
configuration
services

Broad customer baseSolid financial position

Deliver shareholder
returns matched tosustainable growth
etc

etc

Structures supporting ITHD Group businesses and sustainable growth
Medium-term
management plan

Corporate governanceCorporate culture andhuman resourcesGroup management philosophy

Clients

The ITHD Group will strive to build bonds oftrust through good communication with all
stakeholders—clients, employees, shareholders
and investors, and business partners—and as acohesive enhance corporate value.

Local
communities

Employees

Shareholders,investors

Business
partners

1

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SectionCorporate
DataWhat is the ITHD Group?
The ITHD Group was formed in April 2008 as one of Japan’s leading information technology (IT) businessgroups. At its core are five principal operating companies—TIS Inc., INTEC Inc., AGREX INC., QUALICA INC.
and AJS Inc., which deliver accurate responses to the diverse needs of clients across a wide range ofindustry sectors.
Group Management Philosophy

ITHD Group
companies havebeen leaders in theinformation services
industry since its
inception

1964
Toyama Computer Center, Inc.
(now, INTEC) established.

1971

The ITHD Group seeks to be a corporate citizen whose activities, namely, theprovision of various services utilizing IT, match its status as a leading corporategroup, and will strive to raise corporate value, supported in this effort by the highregard of all its stakeholders, including clients and shareholders as well as
employees and their families.
We will cultivate a vibrant corporate culture that encourages companies andindividuals under ITHD 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 tofoster higher quality and greater sophistication in our technological capabilities.
We will uphold high corporate morals and fulfill our social obligations.

Toyo Information Systems, Co.,
Ltd. (now, TIS) established.

Net Sales by Business Segment

April 2008
ITHD is created through the
management integration of TIS
and INTEC Holdings, Ltd.

2008–2009
ITHD Group is reorganized. INTEC
Holdings is merged into INTEC,
and nine TIS subsidiaries are put
under the direct control of ITHD.

December 2009SORUN Corporation joined the
ITHD Group.

April 2011
ITHD orchestrated a threecompany merger involving TIS,SORUN and UFIT Co., Ltd., with
TIS as the surviving company.

(Sales to outside customers,
excludes intersegment sales)

Others¥6,097 million
This segment provides
incidental business generated from the provision of information
systems and otherb­ usinesses.

Year ended
March 31, 2015

Industrial IT Services¥159,791 million

Total ¥361,025
MillionThis segment supports
the shift toward greateruse 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 andpublic finance sectors.

IT Infrastructure Services¥116,308 million
This segment provides
self-administered computer utility and system
operation services
through large IT facilities, such as data centers.

Financial IT Services¥78,827 million
This segment supports
the shift toward greateruse of IT in business processes and in the execution of business activities,
with business know-how
and IT expertise specificto the financial sector.

As of March 31, 2015, the ITHD Group consists of the parent company, 45 consolidated subsidiaries,
and 11 affiliated companies accounted for under the equity method, for a total of 57 companies.

Information and Telecommunication Businesses

June 2014
ITHD debuted a single logo for all
Group companies and adopted
a new brand message, “GoBeyond”.

Financial IT Services

Industrial IT Services

Other Businesses

IT Infrastructure Services

OthersTIS Inc.
INTEC Inc.

IT Service
Force Inc.
Sorunpure
Corporation

AGREX Inc.
QUALICA Inc.

March 2015

AJS Inc.

ITHD turned AGREX Inc. into a
100% consolidated subsidiary.

Chuo System Corporation
NEOAXISMay 2015

Other group companies
Domestic 17 companies
15 companies
Overseas

Discussions on Groupreorganization began

Consolidated subsidiaries

Other group companies
Domestic 3 companies
Overseas 1 company

9 companies
2 companies

Equity-method affiliates

2

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Financial
SectionCorporate
DataWhat is the ITHD Group?
The ITHD Group provides comprehensive IT-related support to address a wide range of client needs, fromsecure, large-scale backbone systems to leading-edge cloud services.

Consulting Services
Helping clients use IT to raise business value
Consulting
Services

Outsourcing
Services

System Integration Services
Providing one-stop access to systems
perfectly matched client needs

Ideal, one-stop
support

SystemInfrastructure
Services

Outsourcing Services
Everything from system operation to fullbusiness-process outsourcing at state-of-theart data centers

SystemIntegration
Services

System Infrastructure Services
Building safe and secure computer
networks, from host to public, matched toclient needs.

Cloud
Application
Services

Cloud Application Services
Providing cloud-based business applications
under a pay-for-what-is-used approach

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.
IT Services Industry Net Sales

Net Sales of Japan’s Leading IT Companies(Billions of yen, %)22,00021,000YOY change

12.2
9.6

21,495.3

21,145.3

20,630.7

21,505.0

500

4

400

0

300

-4

200

-8

100

-14

0

1.7

18,843.7

19,00018,00017,000

–12.3
2008

2009

2010

2011

2012

1,500

8

4.2

20,00016,00012(Year ended March 31, 2015)(Billions of yen)

Note: Japan Information Technology Services Industry Association classifies the­software sector, the information processing services sector and the Internetbased service sector as the IT services industry. Number of companies under
examination increased in 2008 and 2009, because of the review ofi­ nvestigation targets.
Source: ITHD calculated the data prepared by the Japan Information Technology
Services Industry Association, based on the Ministry of Economy, Trade andIndustry’s “Survey of Selected Service Industries”.

1,511.8

405.9 381.9

361.0

297.6

269.1
206.2

NTT
NRI
CTC ITHD SCSK Unisys NSSOL ···Data
Note: The graph data indicates net sales of NTT Data Corporation,
Nomura Research Institute, Ltd., ITOCHU Techno-Solutions
Corporation, SCSK Corporation, Nihon Unisys, Ltd., NS
Solutions Corporation, and ITHD.

3

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Financial
SectionCorporate
DataIT Solutions Utilizing Expertise Across Diverse Industries andBusiness Sectors
The ITHD Group’s business segments extend to all facets of everyday life.

Net Sales by Client Sector(%)

Publicinstitutions

Others8.3%

3.8%

Credit card

14.9%

Banking

7.0%Year ended
March 31, 2015

Services

21.5%

Insurance

6.9%¥361,025 million
100.0%

Other
finance

6.4%

Distribution

Assembly-based
manufacturing

8.8%

Processing-based
manufacturing

The companies under the Group umbrella will
demonstrate respective strengths and provide
IT services that address the needs of clients
involved a diverse range of businesses activities
and industry sectors. The concerted efforts ofthese companies will help solve the various
issues that society faces. Some of the services
offered recently through the ITHD Group aredescribed below.

12.7%

Using cloud services to watch
over the elderly and improveforestry productivity

9.7%

Activities linked to foodsafety and consumer
confidence

CareQube is a cloud service
developed by QUALICA as asystem for the assembly-based
manufacturing sector that is being
applied in other uses as well,including a system for watchingover the elderly and a system thatraises the level of forestry businessand efficiency in Japan.

i-TRE is a traceability cloudservice from INTEC that supports
food safety public relations
efforts in areas hit by disaster.

Realization of convenient,worry-free cashless society
PAYCIERGE is offered by TIS,
which demonstrates strengths
in the areas of finance andcredit card operations.

Utilizing the features of IT to create various social solutions

Dealing with reality ofsociety with fewer children
and more seniors
The business process
outsourcing (BPO) business is aforte field for AGREX which is
enjoying wider demand forservices while contributing tolabor-saving measures in asociety characterized by fewer
children and more seniors.

Addressing domestic powersystem reform
eneLink, from TIS, is a totalsolution for the energy industry.

Contributing to greater
sophistication in services forresidents and cost reduction
CIVION-7th is a generaladministration information
system independently developedby INTEC which emphasizes its
regional roots.

4

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Financial
SectionCorporate
DataITHD Group Vision:
Third Medium-Term Management Plan “Beyond Borders 2017”“Beyond Borders” evokes the idea of going beyond perceived barriers between companies and businessstructures to achieve cooperation and collaboration, to transform the current business model, to shift froma domestic perspective to a global view, and to see each and every employee within the Group transcendtheir own boundaries. (Details on the medium-term management plan are presented on page 8.)

Three Basic Concepts
Value-added
creation style

Profit Emphasis

IT Brain

VALUE ADDED CREATION

Market-cultivating style

Transform from orderproduction style business toproposal style business. Provide
value, beyond expectations,that is needed in the market
by exploring client insights.

The Group Direction

ITHD(Goal)

Direction

CLIENT INSIGHT DRIVEN

MARKET INNOVATION DRIVEN

Propose client insight–driven
marketing solutions to under­
pin better services by clientcompanies and facilitate
innovative businesses

ITHD(Current)

Assignment solution
style geared to client
requests

ASSIGNMENT SOLUTION

Lead development ofmarket through innovations in value that lead
simultaneously to differentiation and lower
costs.

Third Medium-termManagement PlanFirst Medum-termManagement Plan

(Fiscal 2016 – Fiscal 2018)

Second Medium-termManagement Plan

(Fiscal 2013 – Fiscal 2015)

Business
B(Fiscal 2010 – Fiscal 2012)
BusinessA
as One Company

Overall optimization of the Groupand greater sense of unity

Portfolio management, in a project
sense, combining exceptional
businesses and key strengths intoa single approach.

Second Medium-termManagement Plan

Third Medium-termManagement Plan

Company B
Company C

Group management emphasizing
independence of each company
Period ofestablishment

Business
D

BusinessC

Company D
Company A

First Medium-termManagement Plan

7.4%
6.0%
23.7
15.6

Fiscal
2011

Fiscal
2012

Operating income

400.0

Fiscal2014(%)(Billions of yen)

Net sales(Billions of yen)

361.0

Fiscal2013

Through the third medium-term
management plan, ITHD seeks tointegrate and restructure operations
by establishing a better businessmodel, sharpening recognizablecapabilities distinct to each Group
company, and achieving growththrough groupwide implementationof portfolio management, in a
project sense.

30.0

Numerical Targets(End Year: Fiscal 2018)
Net sales ¥400 billion
Operating income ¥30 billion
Net income attributable to parent
company ¥16 billion
ROE 8.0%

1.5%

Fiscal2010

Ideal Management Structure

ROE

327.4

Fiscal2009

The direction that the ITHD Group
looks to travel points to a change,
away from services under the existing assignment solution style, which
address client requests, and toward
services under value-added creationand market-cultivating styles.

8.0%

21.1

338.3

Portfolio Management

Fiscal2015

Fiscal2016(Target)Fiscal2017(Target)Fiscal2018(Target)5ProfileFinancial/
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SectionCorporate
Data

Consolidated Financial/Non-Financial Highlights
IT Holdings Corporation and Its Consolidated Group Companies
Years Ended March 31

Net Sales

Net Sales by Client Sector(Millions of yen)(%)

323,173

346,647
327,417 337,834

361,025

OthersPublicinstitutions

8.3%

Net Income (Millions of yen)
Net Income per Share (Yen)

Credit card

3.8%

Net Income per Share 10,275

Net Income

14.9%

117.40Banking

Year ended
March 31, 2015

Services

21.5%¥361,025 million
100.0%

Other
finance

9.7%

2015

2014

Net Assets per Share, Equity Ratio

ROE, ROA(Yen, %)

(%)

5,985
68.19

5,868
66.86

2,135
24.33

12.7%

Processing-based
manufacturing

2013

6.9%

Assembly-based
manufacturing

8.8%

2012

Insurance

6.4%

Distribution

2011

7,913
90.16

7.0%

2011

2012

2013

2014

2015

Dividends per Share, Payout Ratio,
Total Return Ratio*(Yen, %)Net Assets per Share
1,636.56 1,636.72

ROA

1,714.88 1,782.23

Dividends per Share
5.7

5.0
49.9

49.8

46.3

47.7

ROE

Equity Ratio 2,108.19

4.2

53.3

6.2

6.4

5.2

6.0

Payout Ratio

Total Return Ratio

74.0
32.00

30.00
25.00

46.9

4.0

18.00

4.1

21.00
31.4

27.7

30.4
25.6

1.5

2011

2012

2013

2011

2015

2014

2012

2013

2014

2015

2011

2012

2013

2014

2015

*Total return ratio: Total amount of dividends andtreasury stock buybacks as a percentage of net income.
0081

0021

006

0

0

600

1200

1800

Employee Composition (As of April 1, 2015)

Non-Financial Data (As of April 1, 2015)
Number of full-time employees Male

0

60–

294

50–54

666

45–49

28.06

Total

12,761 Ratio of annual paid leave taken

62.72%

Male

38.42 Number of employees on maternity leave

Female

33.97

Total

37.21

Average length of service (years) Male

13.68

Average age

227

491

1,259

35–39

88

726

699

40–44

1,585

25–29

1,449

Number of employees inmanagement positions

613

51

868

Percentage of employees inmanagement positions

513 0 331
1,800

1,200

600

0

Management positions (male)Management positions (female)

Number of employees working shorter
number of hours to care for young children

390
20
401

Of this, men

2

10.13 Employees on nursing care leave

Total

12.73

6

Employees working shorter number ofhours to care for elderly family

Number of non-Japanese employees
4.75%(foreign nationals)

1
136

Male

2,766 Percentage of employees with a disability*3

2.0%

Female204 Percentage of employees over the age of 60

1.32%

Total
Number of employees ingeneral positions

808
1

Of this, men (paternity leave)

FemaleTurnover rate

318

411

30–34

–24
(Age)

741

182.26

3,473 Non-scheduled hours worked

57 342 16

55–59

9,288 Average total working hours

Female2,970* Senior employment: Following amendments to
6,522 the Law on Stabilization of Employment of Older
Persons in April 2013, we introduced a continuous
Female3,269 employment system that enables all employees
and anyone who falls under the criteria of this law,
Total
9,791
who are in good health and have the desire toMale29.78% continue working after mandatory retirement, theopportunity to be reemployed and continue
Female 5.87% working up to the age of 65.
Male

Total

600

1,200

1,800(Number of
employees)

General positions (male)
General positions (female)

23.27%

Notes: 1. The above are totals and averages for the ITHD Group’s five principal companies (TIS, INTEC,AGREX, QUALICA and AJS).
2. The numbers above are simple combined averages or weighted averages.
3. The percentage of employees with a disability represents the combined total for ITHD,
SorunPure Inc. and 12 affiliated specially recognized companies under the Group umbrella(employees hired under regular : 20,035.5 people; employees with a disability: 401.5 people).

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Data

Consolidated Financial Summary
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31(Millions of yen)

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 (yen)Payout ratio (%)
Net assets per share (yen)Interest-bearing debt ratio (%)
Equity ratio (%)
Net income to equity capital ratio (ROE) (%)
Recurring profit to total assets ratio (ROA) (%)
Number of employees at the end of the term
Number of new-graduate recruits
Number of regular recruits(Millions of
U.S. dollars)

2011

2012

2013

2014

2015

2015

¥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%
4.1%
20,831928
370¥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
310,00376,51523,658-15,158-4,23041,1198,500
14,096
12,745
962
1,882
3,672
24.33
—
18.00
74.0%
1,636.72
24.7%
46.3%
1.5%
5.0%
20,347649
450¥337,834
276,935
60,89942,727
18,171
17,4405,868
138,219
164,083
302,302
91,06353,079144,143
158,159
302,30260,55021,515-14,391-19,883
28,433
7,124
12,287
12,920
1,002
1,670
1,914
66.86
66.83
21.00
31.4%
1,714.88
20.0%
49.8%
4.0%
5.7%
19,553356
379¥346,647
283,881
62,76643,255
19,51018,971
7,913
143,519
170,091
313,610
72,79076,316
149,107
164,502313,61058,86925,770-5,334-5,872
43,142
20,436
12,544
12,454
853
1,166
830
90.16
90.12
25.00
27.7%
1,782.23
18.8%
49.9%
5.2%
6.2%
19,065455
549¥361,025
294,927
66,09744,97621,121
21,251
10,275
140,450
205,401
345,851
77,666
79,395
157,062
188,789
345,851
52,11422,938-17,744-19,067
29,485
5,194
16,87312,809
1,097
1,052
2,021
117.40
—
30.00
25.6%
2,108.19
15.1%
53.3%
6.0%
6.4%
19,090620
499$3,004
2,454
550
374
175
176
85
1,168
1,709
2,878
646
660
1,307
1,571
2,878
433
190
-147
-158
245
43
140
106
9
8
16
0.98
—
0.25

Notes: 1. The U.S. dollar amounts represent the arithmetical results of translating yen into U.S. dollars at the rate of ¥120.17 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.

Consolidated Performance Forecast for Fiscal Year Ending March 31, 2016 (Consolidated)
ITHD expects year-on-year improvement in sales and profits, underpinned by efforts to
expand business by accurately grasping the IT investment needs of customers while leveraging activities to boost profitability, primarily efforts to prevent projects from becoming
unprofitable and efforts to improve productivity.
Net sales¥370,000 million+2.5% year on year

Operating income¥23,500 million+11.3% year on year

Recurring profit¥23,000 million+8.2% year on year

Net income attributable to parent company¥12,800 million+24.6% year on year

Note: The above performance forecast reflects plans and expectations based on information available to ITHD management as of May 8, 2015, and on certain
other information management of the Company believes to be reasonable. These forecasts are not guarantees of future performance, and actual results,
performance, achievements and financial position may differ materially from those expressed or implied herein due to various factors.

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SectionCorporate
DataTo Our Stakeholders

Norio Maenishi, president of ITHD,
talks about the three-year mediumterm management plan

“Beyond Borders 2017”that runs from April 2015 throughMarch 2018.

Background to“Beyond Borders 2017”

1

Question

What is the management direction that ITHD has followed
to date and what will guide the Company forward?

1

AnswerWe seek to enhance businesses and sharpen capabilities
through portfolio management.
In the first medium-term management plan, following the April 2008
formation of the ITHD Group, the focus was on leveraging a management style that emphasized the independence of each operating company. Through the second medium-term management plan, the Grouptransitioned toward a structure that would cultivate a stronger sense ofunity as a group and thereby promote overall optimization. With thethird medium-term management plan, which kicked off in April 2015,
the goal is portfolio management, built on outstanding businesses andstrengths with market superiority distinct to each operating company,
through restructuring and integration of the capabilities that Group
companies have honed over the previous medium-term management
plans and wider intragroup cooperation.
Third Medium-termManagement Plan

Second Medium-termManagement PlanFirst Medum-termManagement Plan

(Fiscal 2016 – Fiscal 2018)(Fiscal 2013 – Fiscal 2015)

Business
B(Fiscal 2010 – Fiscal 2012)
BusinessA

Norio Maenishi, President

as One Company

Overall optimization of the Groupand greater sense of unity

Portfolio management, in a project
sense, combining exceptional
businesses and key strengths intoa single approach.

Company B
Company A

Company C

Group management emphasizing
independence of each company

Business
D

BusinessC

Company D

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SectionCorporate
Data2

Question2

AnswerIn what ways was “Brave Steps 2014,” the second
medium-term management plan, successful? Whatissues remain?

前年比増減率Results achieved and remaining issues form thebuilding blocks of the third medium-term
management plan.
The graphs and chart below highlight what we achieved during
the second medium-term management plan and issues that needfurther attention.

Second Medium-Term Management Plan “Brave Steps 2014” (April 2012 – March 2015)
Top-Line Emphasis

Net Sales(Billions of yen)

Targets

361.0

Actual340.0 337.8

345.0 346.6

Status

Net sales target achieved, but operating income target missed
Insufficient progress in efforts to improve business profitability through higher
productivity
Profits squeezed by continued appearance of unprofitable projects

IssuesProgress on establishment of growth engines — distinctive strengths with anadvantage — and connection of business strengths among Group companies
as well as concentration of resources into core businesses
Major problem with approach to eradicate unprofitable projects and improvebusiness profitability

350.0

327.4
Second Medium-term Management Plan

前年比増減率as One Company
Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Status

Certain degree of success in restructuring businesses under Group umbrella andstrengthening business connections
Progress on centralization of corporate functions and activities to foster greater
sense of unity
Created single brand for Group to underpin centralized management of entire
organization

IssuesStill more to achieve in restructuring businesses under Group umbrella andstrengthening business connections within the Group
Overall optimization must be more pervasive, more extensive

Operating income(Billions of yen)

25.00
Targets

Actual21.00
17.50 18.17

21.12

19.51

Bold and Enterprising

15.62

StatusSteadily built up orders as IT partner for large, priority clients
Progress on approaches to achieve evolution in services and globalize
operations

IssuesNot enough IT business partner connections, need more lateral development
through client industries
Evolution and globalization of services did not lead to businesses with revenuesource potential

Second Medium-term Management Plan

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

“Top-Line Emphasis” produced mixed results. Net sales
exceeded the target. However, operating income missed themark, leaving issues to address with regard to preventing projects from becoming unprofitable and boosting productivity.
“as One Company” was successful to a certain degree. The
biggest achievement was probably the debut of a single logo inJune 2014 shared by all companies under the Group umbrella.
The headquarters relocation and centralization of key subsidiaries under one roof was also good, and various strategies yieldedcommendable results, including the establishment of a “college” where senior staff from companies throughout the Groupgather to talk about the Group’s direction and other topics ofgroupwide importance. In addition, we made progress on

business restructuring and integration within the Group andreinforced intragroup cooperation. In October 2014, employees
involved in the embedded systems field were repositioned from
TIS subsidiaries to QUALICA with the objective being to enhancesolutions in the areas of M2M* and IoT*. In April 2015, seeking
to centralize BPO services within the Group, we made AGREX awholly owned subsidiary and laid the groundwork for smoothinteraction between AGREX and other Group companies
through the company’s forte BPO services. These approaches tobusiness restructuring and integration and stronger ties
between Group companies will remain an important theme during the third medium-term management plan, and we will strive
to accelerate associated processes.

*M2M (Machine to Machine): Technology that enables networked devices to exchange information.
*IoT (Internet of Things): Network of various physical objects—“things”—beyond the scope of computers and other information and communication devices that are embedded with connectivity
features to interoperate through the Internet to facilitate such applications as automated recognition and control and remote measurement.

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“Bold and Enterprising” marked progress on globalizationand the evolution of services. Domestic clients are increasingly
seeking proposal-style services—essentially, the evolution ofservices—that utilize cloud data centers and shared systems
with versatility, and the service menu available from Group companies has expanded from a medium-term perspective, with anemphasis on cloud services. We also made headway on globalization, focusing on China and the ASEAN region, and numerous capital and business alliances were formed during thesecond medium-term management plan. We are still working tobuild global business into a pillar of the revenue base, and thisgoal remains a priority which we will energetically pursue during
the third medium-term management plan as well.
As described above, the second medium-term management
plan ended with achievements as well as issues that require
further attention, and with the added perspective gained
through industry analysis, we formulated “Beyond Borders
2017.” The Group embarked on this new three-year journey inApril 2015

“Emphasis on Profitability”
Over the three years of the third medium-term management
plan, we will promote business pursuits with an even greater
emphasis on profitability. The underlying motivation is that wewere unable to reach the profit targets we set for the second
medium-term management plan so we must try harder, andalso, as I will touch on later, we intend to shift to a value-added
creation—proposal—style of business, which will see the Grouptransition from the current order production style format to an
upfront investment style business format, which requires a solid
profit base. To date, we have stressed operating income and theoperating margin in managing the businesses of the Group, but
going forward, net income will become a particularly importantfactor in Group management.
Numerical targets for the last year of the plan—the fiscal year
ending March 31, 2018—are net sales of ¥400 billion, operating
income of ¥30 billion, net income attributable to shareholders of
the parent company of ¥16 billion, and a return-on-equity of
8.0%. As an indicator of management efficiency, an ROE of 8%
is considered to be the minimum that determines whether or not
an enterprise is creating corporate value, so that will be are initial
target. But we aim to boost ROE to 10% by March 31, 2021.

About“Beyond Borders 2017”

3

Question

What are the basic concepts of the new mediumterm management plan?

3

Answer“Emphasis on Profitability, ” “IT brain” and“Portfolio Management.”

To attain sustainable growth over the medium to long term, weneed to build a structure that utilizes diverse management
resources throughout the Group more effectively—that is, draws
out top-level performance from some 20,000 people—and weneed to reinforce the competitiveness of our businesses on agroupwide basis. The best approach would be to transition to avalue-added creation style of business, and we have outlined
three basic concepts that will support this process.

“IT Brain”
The scale of the domestic IT market is expected to hold steady ata solid ¥11 trillion through 2017, buoyed mainly by wider
demand for outsourcing as a declining birthrate in Japan leads
to a shortage of labor in many industries. However, IT investment at client companies is assuming a different purpose, shifting from a cost-reduction measure into a tool that keeps existing
businesses growing while opening up new businesses—that is,
raises cash-generating potential. Against this backdrop, theapproach within the ITHD Group is to shift from existing assignment solution style services, which address client requests, infavor of value-added creation style services that present systemsuggestions that contribute to clients’ business growth. Also,from a medium-term perspective, we will front load our investments and expand laterally across industries to raise the percentage of market-cultivating style services, such as versatile cloudservices, applicable to multiple companies.

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SectionCorporateDatahave in place by fiscal 2021, ending March 31, 2021. During thecurrent medium-term management plan, we anticipate see brisk
demand from the financial sector and local governments—client
sectors where the Group has built particular expertise—highlighted by large projects for megabanks, increased system sharing
prompted by regional bank realignment, new systems coinciding
with the introduction of the My Number program, and replacement of large card-based systems. In fiscal 2018, the systems
integration business will likely be a pillar of profits, buoyed by anincrease in orders for the aforementioned large projects, but
demand will probably peak in fiscal 2021. To cement a strong
revenue base for when that happens, we must sow the seeds ofmarket-cultivating style services that boost the contribution fromother activities, especially industry platform and global businesses.
This is a priority during the third medium-term management plan.

A huge advantage in this pursuit is that we, as a Group, arewell acquainted with the demands of our clients and wellinformed on industry trends. We will base our proposals not on
preconceived ideas but rather the real needs of our clients andthe industry as gleaned from client contact, and roll out services
that create added value and services that cultivate market
potential—businesses that are a step ahead of the rest.
“Portfolio Management”
Portfolio management is indispensible for combining thestrengths of each operating company under the Group umbrella
and pursuing optimization of the Group overall.
Our vision for the three business styles—the direction that wewill travel—is illustrated on the next page, along with composition graphs of the predicted earnings structure we expect toThird Medium-term Management Plan

“Beyond Borders 2017” (April 2015 – March 2018)“Beyond Borders” evokes the idea of going beyond perceived barriers between companies and business structures to achieve cooperation and collaboration, to transform the current business model,
to shift from a domestic perspective to a global view, and to see each and every employee within
the Group transcend their own boundaries.
Three Basic Concepts

Profit Emphasis

Promote management activities with an even greater emphasis on profitability
Highlight operating income, operating margin and even more importantly, net income
Raise corporate value by introducing ROE and other management indicators

IT Brain

Always look one step beyond clients’ current needs and provide value-added proposals to enhance clients’ earning capabilities
	Shift from existing assignment solution style services, which address client requests, in favor of value-added creation and marketcultivating styles

Portfolio
Management

Utilize distinct strengths of operating companies as growth engines while promoting cooperation — working together — and collaboration— creating together — within the Group
Draft and execute business portfolio strategies
Reinforce and restructure operating platform through pursuit of groupwide optimization of all resource categories

Emphasize ROE as a key performance indicator,
strive to boost corporate value, and realize sustainable growth.
Numerical Targets
Fiscal 2016
TargetFiscal 2015

(Billions of yen)

Net sales
Operating income
Net income
Operating margin
Net income ratio
ROE

Fiscal 2017
TargetFiscal 2018
Target

361.0
370.0
385.0
400.0
21.1
23.5
27.0
30.0
10.2
12.8
14.0
16.0
5.9%
6.4%
7.0%
7.5%
2.8%
3.5%
3.6%
4.0%
6.0%			8.0%

ITHD is targeting an ROE of at least 10% by March 31, 2021.

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Value-added creation

Group Targets

Vision to Achieve

Value-added creation style business

Market-cultivating style businessCurrent themes• Establish distinct strengths (growth engines)• Promote large projects• Improve business profits (cash-generating
Expand solutions
capability) and reduce cost of sales

Current themes• Promote industry platform business• Promote global businessbusinessHuge
increase inorders inforte fields

Promote big
projects

Expand global
business
Proposal ­business

Client insights

Industry platform business(own packages, services)

Pillar of
growthMarket innovation

Expand demand fromexisting clients

Provide BPO
services

We will continue to expand assignment solution
style business targeting client requirements, while
extending the scope of value-added creation stylebusiness and market-cultivating style business,with an increasing shift toward market-cultivatingstyle business.

Higheroutsourcing
demandGroup’s current status
Assignment solutions geared toclient requests
Current themes• Improve quality and productivity• Raise project management to higher level• Improve business profits (cash-generating capability)
and reduce cost of sales

Assignment solutions

View of Medium-term Profit Structure for ITHD GroupIT infrastructure (BPO, system operation)
SI business, IT professional services
Industry platform and global businesses

25%

10%
25%

Operating income¥19.5 billion

35%

Fiscal 2021
(target)Fiscal 2018
(plan)

Fiscal 2014(actual)65%

25%

Operating income¥30 billion

65%

50%
Steadily develop market-cultivating style business, such as industry
platform and global businesses,
into pillars for the next stage of
growth, in the fourth mediumterm management plan

SI business will be a pillar of
growth during third mediumterm management plan anddrive profits higher

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4

Question

A major buzzword in IT investment for social platforms isenergy deregulation. We await such events as the liberalizationof retail sales of electricity, scheduled for April 2016, and thesubsequent unbundling of power production from distribution
and transmission as well as mutual entry into the energy industry by companies providing electric power and gas. Against thisbackdrop, TIS is also response-ready, exploring business opportunities for EneLink, a total solution for the energy industry thatcovers supply-and-demand management systems, customer
information systems and call center operations.
And in the global arena, a major theme in the third mediumterm management plan is our response to the IT demand ofdomestic companies in various sectors that have been building apresence in recent years in markets, such as Thailand and Indonesia, noted for outstanding economic growth. Intent on providing system and solution support to Japanese-affiliated companies in these markets, several operating companies in theGroup established subsidiaries in China and the ASEAN region
and formed capital and business alliances with local companies
in Vietnam, Thailand and Indonesia during the second mediumterm management plan. During the third medium-term management plan, an even more vigorous approach will be made toconnect with business partners that will invigorate our own
inherent capabilities.
→ Please take a look at the special feature—Examples of Activities in Growth Fields.

What would be some specific examples of valueadded creation style and market-cultivating stylebusinesses?

4

Answer

The buds of new growth prompted by market
changes already exist.
As I mentioned earlier, in Japan, we will see an increase in IT
investment, designed to spur business growth, along with accelerated IT investment in social platforms. One catalyst for IT
investment is the My Number program, which will be introduced
in January 2016. On both fronts, INTEC, an ITHD Group company, is response-ready. The company has attracted more than
50% of Japan’s regional and second-tier banks to F 3, a customer
relationship management system for financial institutions, andalso offers CIVION-7th, a general administration information
system developed in-house for local government use. The
company will be promoting proposal-style business for new
systems, such as My Number, as well.

Main Activities of the IT Holdings Group

Main activities in
the proposal-stylebusiness

Develop new markets through social system solutions (INTEC)
Response to My Number system, projects for energy industry, creation of traffic ICT towns, EMS business
Full-scale development of imbedded software solutions (QUALICA)
Establish field of expertise in embedded software business, cultivate new clients, pursue business expansion, including M&A opportunities
Laterally develop distinctive strengths derived through business with the Asahi Kasei Group (AJS)
Sell outside the Group, to members of the chemical, home and building materials, and medical and medical equipment industries
Reinforce settlement system solution (PAYCIERGE), improve earnings (TIS)Expand service-based business by providing not just IaaS or SaaS but rather a set combining applications and infrastructure
Use CLO (Card Linked Offer) to expand services in domain fusing settlement and marketing

Main activities in
the industry
platform business

Reinforce finance-oriented CRM (F 3), improve earnings (INTEC)
Reinforce F 3 series, including application to cloud, and expand sales and income.
Promote construction-oriented cloud-style system services (Kensetsu ASP) business (INTEC)
Enrich services through joint business structure derived from investment in subsidiary of Mitsubishi Corporation
Boost market share for Qube series still higher (QUALICA)
CareQube (IoT/forestry IT/aftermarket), AToMsQube (manufacturing), TastyQube/SpecialtyQube (restaurants/retailing)

Main activities in
the global
business

Expand local business activities, with a focus on Thailand (TIS)Broaden joint activities with alliance partners, take strategic perspective including overseas M&As, identify business in ASEAN region
Full-scale entry into global BPO business (AGREX)
Start services for Japan-affiliated businesses/local companies in overseas markets to complement services for existing domestic client baseCapture larger share for Qube series in China, make inroads to ASEAN region (QUALICA)
Expand sales of stock services (SaaS) at QUALICA Shanghai, establish profile in Indonesia and Thailand and build sales network

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Question
What is the strategy for maintaining the
profitability of current core businesses?

What is the status of shared Group function
integration/centralization?

5

Answer

6

Question

6

Answer

Our quest for overall optimization groupwide goesbeyond business activities.

The data center business is at a critical juncture, andan all-out effort is required to tackle unprofitableprojects.

Nine ITHD Group companies in the Tokyo area, including ITHD,
relocated to central offices as of February 2012, followed bynine companies in the Osaka area moving to a central locationin that region in July 2015, while offices in the Nagoya area arescheduled to move in the summer of 2016. Concurrently, we
will gradually centralize and share IT systems within the Group.
The merits of office centralization do not stop at cost reductions, such as rent. Close physical proximity spurs greater cooperation on projects. I firmly believe that time saved through­digitization, including the use of IT systems, and time madeto actually meet and discuss are both vitally important to­cooperative efforts among Group companies.

In the IT infrastructure segment, the data center business hascome up against rapidly intensifying competition, especially in
the Tokyo area, as the densification of servers facilitates services
out of smaller spaces and foreign-technology cloud services
draw the attention of the domestic market. Within the ITHD
Group, we are considering overall optimization of data centers,
and recognize that the process of compartmentalization withother companies will likely continue in fields where we havestrengths, especially core systems for financial institutions which
are required to handle large amounts of data and maintainhigh-level security. We also see cloud services, such as SaaS* forbusiness use, as a growth field. But in the medium term, thedata center business will represent an increasingly smaller­percentage of the IT infrastructure segment.
To prevent projects from turning unprofitable, we have introduced changes in the development process, such as implementing third-party checks at each stage of system construction after
contract signing and re-estimating the price. However, the more
direct the application to client businesses, the more the projects
require completely different system construction for which there
is no existing model to follow and the more complicated therequirement definitions become at project start. Add to thischallenge a looming shortage of system engineers, mainly due
to the falling birthrate. For our operating companies to prevent
projects from turning unprofitable while reliably addressing
clients needs, the key will be to improve productivity not only
through prevailing project-stage management but also throughenhanced engineering, including software modularization andreuse as well as automated testing. Already, TIS set up a production innovation headquarters in April 2014 and is working on
software reuse and testing that can be shared groupwide. Under
our business model, getting the amount for unprofitable projects to zero is difficult, in practice, but our goal, through various
measures, is to keep the amount within 1% of sales from­system development operations.

7

Question

What is the basic direction for restructuring within
the Group going forward?

7

Answer
Discussions on restructuring have started.

Discussions have started on groupwide restructuring—a processextending to all companies under the Group umbrella, including
ITHD, TIS and INTEC—that will see the Group transition to a
new organizational framework, with ITHD taking the role of an
operating holding company in April 2016.
The operating companies under the Group umbrella demonstrate distinct strengths and, from a Group perspective, present
a well-balanced client base of excellent companies in manyindustry sectors at home and abroad. Of principal operatingcompanies, TIS and INTEC are all-rounders, with TIS’ forte in­systems and solutions for the credit card sector, and INTEC
capitalizing on its regional roots. QUALICA and AJS, withdomain-specific expertise, concentrate expertise drawn fromtheir manufacturing backgrounds to meet the needs of manufacturers, and AGREX has accumulated extensive knowledge
and a wide client base as a frontrunner in the BPO business.

*SaaS (Software as a Service): A subscription-based delivery method that provides access toneeded software, usually over a communication network, whenever the user requires it.

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SectionCorporateDataWe do not necessarily believe that amalgamating some 20,000
employees groupwide into a single company would meet theneeds of the times. Rather, our objective is “portfolio management,” where we draw on and combine the distinct businesses
and associated strengths of each operating company into asingle structure. While the second medium-term management
plan was in force, ITHD appointed the presidents of its fiveprincipal subsidiaries to its Board of Directors. The executive
team talked frankly about how best to utilize the obvious
strengths of each operating company as growth engines tor­ ealize overall optimization of the Group, which led to therealignment of redundant operations and centralized functions.
Our intention is that further restructuring of the Group will
enable TIS and INTEC to accentuate respective strengths against
a backdrop of expanding IT investment needs in Japan whilebuilding stronger links for cooperation and collaboration. ITHD,
by transitioning from a pure holding company to an operatingholding company, will accelerate management processes andsecure solid opportunities for business expansion.

Five Principal Group Companies
Principal
Subsidiaries
TIS
INTEC
QUALICA

Shareholding Ratio

Company Outline

Concentrates on services for credit card sector but is building wider presence in other sectors, including services
ITHD:100% and manufacturing sectors. Absorbed SORUN Corporation and UFIT Co., Ltd., in April 2011 and implemented
structural reforms.
Focuses on services for megabanks and life insurance giants, but expanding presence with wider responses for
ITHD:100% public corporations, particularly in the Hokuriku region, as well as customer relationship management (CRM)
for regional banks.
Former information systems subsidiary of Komatsu Ltd. Currently offers services to assembly-based
ITHD:80%
manufacturers, particularly the Komatsu Group, while expanding services such as system configuration to
Komatsu:20%
members of the distribution and restaurant sectors.

AJS

ITHD:51.0% Former information systems subsidiary of Asahi Kasei Corp. Currently developing services, with a focus on the
Asahi Kasei:49.0% Asahi Kasei Group.

AGREX

ITHD:50.6%

Leading company in Japan’s BPO business. Began BPO services overseas in 2013. Listed on Tokyo Stock
Exchange (4799).

8

QuestionHas the shareholder return policy changed?

What is the status of corporate governanceactivities?

8

Answer9

Question

9

Answer

We will enhance return to shareholders, raising thetotal return ratio to 35%.

Corporate governance is vital to growth.
In Japan, measures to reinforce corporate governance came into
force one after another in 2014, with partial revision to theCompanies Act allowing companies to transition to a structure
under an audit and supervisory committee and introduction of
the Stewardship Code, and then in June 2015, the Corporate
Governance Code was brought in. These are measures that willundoubtedly strengthen the business foundation of Japanese
corporations and promote greater activity on the world stage.
As of June 2015, ITHD had two outside directors and threeoutside auditors, but from April 2015, the outside directors
attend not only Board of Directors meetings but also those of
the Executive Committee, and routine checks are made toensure there is no conflict of interest with shareholders. With
regard to the Corporate Governance Code, as well, we take theperspective of a stakeholder—which is not limited to shareholders—and pursue discussions mindful of sustained growth of theGroup and higher corporate value over the medium to longterm.

To date, ITHD’s basic policy targeted a payout ratio of 30%. Overthe three years of the third medium-term management plan,
investments related to new business pursuits and solution development in growth fields as well as M&As and alliance activities
could reach about ¥24 billion on a consolidated basis. Seeking
an appropriate capital structure and stable shareholder returnfrom a medium- to long-term perspective, while taking into
account performance trends, financial position and the need toenrich internal reserves to underpin business growth, we have
opted for a total return ratio that combines dividends and sharebuybacks to enhance return to shareholders. The new policy
takes effect with the third medium-term management plan. In
view of downward rigidity, we will aim for steady but gradual
dividend increases, pegged to performance improvement, andaugment amounts through share buybacks.
For fiscal 2016, we are planning for a dividend of ¥33 pershare—payout ratio of 22.6%—and may purchase treasury
stock to boost the total return ratio to 35%.

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10

Question

In addition, having all employees approach work knowingthat their jobs serve a social purpose will elicit personal prideand job motivation. I would like to establish this positive cycle
within the Group. It really goes without saying, though, that theGroup’s achievements are a reflection of client trust and satisfaction. Along with our clients, we will contribute to the growthof industries in Japan and the rest of Asia and make society abetter place. I firmly believe that this commitment to our clientsand society will inevitably earn us lofty recognition, maybe even
“Asia’s leading IT services group.”With regard to the third medium-term management, wespent a year in discussions with employees and management tocome up with a practical management plan. The only way toreach the place we want to be in the future is through steadyprogress on the strategies laid out in the plan. We will draw on
the combined capabilities of everyone—staff and management
alike—under the ITHD umbrella, promote our businesses andraise corporate value still higher. The support of shareholders
and investors will, as always, be integral to our success.

Would you comment on the Group’s social mission
and future ideal?

10

Answer

We aim to contribute to society and improve
corporate value through our business activities.
In this day and age, when IT capability is directly related to the
pursuit of a great variety of businesses, the products and services available through the ITHD Group extend to all facets ofeveryday life. Going forward, each company under the Groupumbrella will demonstrate respective strengths, and throughbusiness activities help successfully address various social concerns. For example, TIS’ national presence and INTEC’s local
roots will support regional renaissance. BPO services fromAGREX will help to offset the labor shortage caused by fewer
children and more seniors in the population. CareQube, developed by QUALICA for the assembly-based manufacturing sector,
will find new applications in forestry-oriented IT in monitoring
systems to watch over the elderly.

Group management emphasizing independenceof each company

Period ofestablishment

Overall optimization of theGroup and greater sense of unity

Portfolio management, in a project
sense, combining exceptional
businesses and key strengths into asingle approach.

Second Medium-termManagement Plan

Third Medium-termManagement PlanFirst Medium-termManagement Plan

7.4%

30.0

6.0%
23.7

8.0%

400.0

(%)

Operating income(Billions of yen)

Net sales(Billions of yen)

21.1
15.6

ROE

361.0

1.5%

338.3

327.4

Fiscal
2009

Fiscal
2010

Fiscal
2011

Fiscal
2012

Fiscal
2013

Fiscal
2014

Fiscal2015

Fiscal2016(Target)Fiscal2017(Target)Fiscal2018(Target)16

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Key Points of the Third Medium-Term Management Plan “Beyond Borders 2017”

Point 1 Activities in Growth Fields
Realization of convenient, worry-free cashless society

PAYCIERGE Retail Settlement Solution
By 2018, the cashless settlement market—settlement by meansother than cash—is likely to surpass ¥100 trillion. The need forservice solutions—combined settlement and marketing, mobileand cloud use, and diversification of settlement methods—isexpected to grow. PAYCIERGE*, from TIS, is a service directed

toward card settlement providers and offers a menu of solutions
for these services as well as solutions covering all sorts of settlement-related business domains, including consulting services,
BPO services and cloud services. TIS aims to build PAYCIERGE intoa ¥20 billion business in five years.

1. Combined settlement and marketing
Card linked offer(CLO) solution

Marketing­dashboard

Campaign­management

Marketingdatabase

Options

2. Mobile and cloud use
Mobile payment
solution

Web - cloud

Digital wallet

Mobileremittance

3. Diversification in settlement methods
Settlement
service hubs

PAYCIERGE
Solution Group

Core service
systems

Peripheral systems

Advancedsystems

CARDWORKS
FAMILY
Credit management

CARD WORKS
Merchant credit
monitoring

CONTEXT/CAFISCREDIT WORKS

Planned service
content

BPO services

e-commerce
irregularity detection

VM COM

Contact center
Card-issuing service

Settlement system
consulting

Consulting services

Invoice printing
and mailout

PCI-DSS
consulting* PAYCIERGE: A coined word combining “payment” and “concierge,” PAYCIERGE utilizes TIS’ know-how and solutions in the area of retail settlement andincorporates the company’s concept of a comprehensive guide for the retail settlement sector—like a hotel concierge—able to provide broad-based assistance,from advice on issues of concern to clients to realizing requests.

Response to domestic electric power system reform

EneLink—total solution for energy industry
Amid unfolding electricity system reforms in the domestic energy
market, which will see the liberalization of retail sales of electricity and the unbundling of power production from distribution
and transmission, IT investment to hone a sharper competitiveedge is heating up among existing electric power utilities as wellas companies venturing into the market as power producer andsuppliers (PPS), and selecting a reliable IT partner on the system
front has become a key issue. Against this backdrop, TIS is targeting PPS with a total solution—EneLink—that combines system
configuration technology and know-how accumulated throughservices provided to date to clients in the electricity and gas­sectors.
Customers

Telephone

In-person

AgencyWEB

Membermanagement

Reception

Inquiries about
usage/charges

SNS

Simulations

Visualization

Contents
management

Meter data
management

CRM

CTI

Themes coveredby eneLink

Agent management

Marketing campaigns

SFA

CIS+

CIS

Analysis

BalancingCommunication

Balance+

Data collection
Data check

Customer information management

Receipt of relocation information

Inspection control

Billing

AnticipateddemandPlan

Meter maintenanceContract­management

Computing charges

Credit control

Payment

Supply-anddemand control

Power tradings­ upport

Inquiries

Switching support Power transmission
and distribution
system linkprovider link

Initial lineup

Mobile phone

Customer Portals

Contact center
Call center

Smartphone, tablet

Anticipated lineup

Associated services BPO
Payment­information link

Data center

Print+

Printing
company link

Hosting

Disaster recovery

Cloud* EneLink is being promoted as a full lineup of solutions for the energy industry, and its name reflects the idea of end-to-end system integration and connectivity.
“Link” also evokes the idea of a tie to the future, through steady additions to the lineup.

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DataSupporting food safety PR in Ishinomaki and Kesennuma

i-TRe traceability service
INTEC is participating in an industry-academic partnership—aSanriku-area seafood information disclosure project—launched in
March 2014 by the Recovery Project for Human Coexistenceindustry working group in the Faculty of Business Administration
at Ishinomaki Senshu University. The company is providing i-TRe,a traceability cloud service, to facilitate entry and disclosure of
information concerning processed seafood, such as sourcei­ngredients and radioactive contaminants inspection data.
The purpose of this project is to support recovery of the marine
products industry, a key industry in the cities of Ishinomaki and
Kesennuma, in Miyagi Prefecture, following the disasters that
accompanied the Great East Japan Earthquake.
INTEC
has waved service fees for using i-TRe, including@
information entry and browsing.

@
@
@

@

Seafood processing company

Themes coveredby eneLink@
Seafood processing company@
Seafood processing company

@

@

@

Radioactive contaminants inspection data(processed seafood)Radioactive contaminants inspection data(processed seafood)Consumers@@@

Radioactive contaminants inspection data(processed seafood)Consumers@

Supervision@

Radioactive contaminants inspection data(processed seafood)@Send data

Release data
Ishinomaki Senshu University

Retail/wholesale buyers

Radioactive contaminants inspection data on processed seafood, entered by each seafood processing company, is made public andaccessible online to the average consumer as well as retail and wholesale buyers through a website system built on i-TRe.
Note: i-TRe is a traceability system that INTEC began providing access to in April 2010. The cloud-based service facilitates the collection and management of
information related to food products to support the efforts of the providers of those food products to fulfill accountability.

Contribute to more sophisticated resident services and cut costs

Providing Local Government Cloud Service
INTEC launched a shared-use local government cloud service fortwo cities, three towns and one village in Toyama Prefectureusing CIVION-7th, a general administration information systemdeveloped in-house, to provide local government core systems,
including the basic residents registry system. A merit of this service is the enhanced level of data protection and security
achieved by locating data-storing server equipment at solidly reliable data centers. Also, since several municipalities share access,

General administration information
system lineup

associated IT investment costs can be reduced. In addition,
CIVION-7th can be upgraded and the menu expanded to deal
with system changes and evolving needs arising from such developments as the planned January 2016 introduction of thenational “My Number” system—wherein every resident in Japanis assigned a number that will be used for both taxation andsocial security purposes. INTEC will make shared-use services
available in other regions as well.

Resident
Information

Tax Information

Resident registration

National healthinsurance

Child allowance

Health management

Official seal

Property taxes

Public assistanceElection

Individual
inhabitants tax
Corporate
inhabitants tax

Child-rearing
allowance
Special child-rearing
allowance
Medical expenseassistanceRegister ofschool-aged children

Light vehicle tax

Child-rearing support

National pension

Payments and arrears

Disability assistanceFamily register

Nursing Care/Welfare Information

Nursing careinsurance
Medical services
for the elderly
Self-sufficiency support
for people with disabilities
General purpose
ledger

Separated
Information

Internal
Information

Waterworks utility
charges
Housingmanagement
Burden on users ofsewer system
Farmlandmanagement

Public corporationaccounting
Travel expense
management
Salaries
General affairs work
Document
management
Groupware

Automated issuing machines

CIVION-7th is a comprehensive all-inone package covering the administrative tasks of local government. It
complies with the regional information
platform required by the Ministry ofInternal Affairs and Communications,and the components can be mixed andmatched as necessary for each municipality, thereby facilitating use without
the need for targeted changes.

Fiscal information

Electronic bidding

General inquiries counter/address

EUC, general database, application management, general employee authentication, employee portal
Shared functions for local governments(integrated applications)Application
Log
Employee
management
management authentication

Commonplatform

Shared information for local governments(integrated information resources)
Generaldatabase

Master data

Other

Financial
Review

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SectionRegional information platform

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Contributing to the Aging Society

Using cloud services to watch over the elderlyQUALICA’S CareQube, the industry’s first cloud-oriented system,
is a preventative maintenance support system that visualizes
operating status of equipment used in the assembly-based manufacturing industry. The structure of this system is appropriate
for after-market applications and much more, including social

platform systems. An example is the development of an elderwatch system using CareQube, developed with Tsukushinbo, a
non-profit organization in Gifu Prefecture. The system is being
tested out with seniors in the city of Gujo.

Communication device
Mobile communication
network
Want to see

Automated email notification whenabnormality detected

Data server
Subject home

Elder-Watch System
Using CareQube

Flowmeter
Communication
deviceInternet connection

Mobilecommunication
network
Subject home

Want to see

Automated email notification whenabnormality detected

Flowmeter

Information on water consumption by seniors is collected at QUALICA’s data center
through 3G lines. The data can be ­confirmed at any time over the Internet, and an
email function can be set to deliver regular updates on water-­consumption data tofamily or other authorized individuals living elsewhere.

Enables view of water use at subject
homes by entering ID and password* M2M (Machine to Machine): Technology that enables networked devices to exchange information.

Contributing to sophistication and greater efficiency in domestic forestry industry

System to gather information on bucked log attributes for forestry business
In Japan, where forests cover about 70% of the land, a noteworthy
topic is the introduction of high-performance forestry equipmentthat boost the efficiency of forestry operations. Since 2013, QUALICA
has been working with the University of Tokyo on a forestry projectthrough an industry-academic alliance promoted by the Ministry of
Economy, Trade and Industry, and in December 2014, developed asystem to gather information on the attributes of bucked logs, which
was one of the research themes of the project.
In the forestry business, the efficient collection of standard

data on logs (bucked log attributes and tree diameter and length)
when felled trees are bucked is indispensible to inventory management. The system from QUALICA utilizes two systems developed inhouse—Weblight, a touch panel computer boasting environmental
durability, and CareQube, a cloud service for data transfer—and istough, withstanding conditions of the work environment such asmachinery vibrations and dust and oil, as well as practical, facilitating
picture-taking in the limited space of the operator’s cab.

Forestry Equipment
Front end

LAN

System to collectinformation on
the attributes ofbucked logs

Camera❶ Take picture of lateral surfaceof felled tree while watching
image sent from camera attached to front end of forestry
equipment.
Cut

Confirm

Forest owners’
association

Inside Operator’s Cab

GPS, 3G(mobile phone network),
Internet

Serialconnection
Touch panel device

Probe❷ Add details, such as operator and worksite location, to diameter information
on felled trees obtained through visual
analysis of photographed lateral surface,
and upload data to cloud environment.
Image
analysis

PictureData
processing

Datatransfer

Local forest
information
platform
management server

Sawmill,❸ Connect to cloudcontractor
environment fromnetwork-linked device
to confirm bucking
Bucking Information
information.
Operator, work date/time, timber characteristics, latitude/longitude (GPS)19

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Key Points of the Third Medium-Term Management Plan “Beyond Borders 2017”

Point 2 Promote Globalization Through Alliances with Local Companies­ resence—Thailand, Singapore and Vietnam— mainly throughp
representative offices. In recent years, the approach has diversified, with an emphasis on business and capital alliances withlocal companies, thereby accelerating lateral expansion throughthe ASEAN region.

Global expansion of the ITHD Group is driven by two primaryobjectives: provide local support for existing clients entering
these overseas markets, and cultivate local IT markets usingknow-how accumulated in Japan. The Group’s overseas activities kicked off in China and have since expanded to the ASEAN
region where its capabilities are leveraged by a three-point

Major Steps in the ITHD Group’s Expansion Overseas
Step ①

Expansion into China

1990s

Initiated overseas expansion primarily through establishment of local offices as offshore development sites.
Begin expanding network by shifting presence from offshore development approach to points of business● Established Tianjin TIS Hi-Tech Information System Service Co., Ltd.
● Full-scale start of operations at Tianjin Data Center.
●T ianjin TIS Hi-Tech Information System Service formed business alliance with ChinaCache International
Holdings Ltd., a leading provider of content delivery network (CDN) services in China.

February 2008
April 2010
March 2012
Step ②

Establish three-point ASEAN presence hinging on Thailand, Singapore and Vietnam

January 2012
February 2012
March 2013

● TISI Singapore Pte. Ltd. established.
● INTEC SYSTEMS BANGKOK CO., LTD, established.
● QUALICA ASIA PACIFIC PTE., LTD, hired more staff and reinforced local support structure.

Step ③

Accelerate expansion/lateral development in ASEAN region through business and capital alliances●A GREX established a joint venture, F-AGREX GLOBAL Co., Ltd., with FPT Software Company in Vietnam

October 2013

Launched global BPO business●T IS formed a capital and business alliance with econtext ASIA Limited, a Digital Garage subsidiary
December 2013
Jointly promoting solutions to e-commerce businesses in Asia
●T IS formed a business alliance with PT Soltius Indonesia, top-class SAP vendor in Indonesia
Strengthen SAP support services offered locally to Japanese companies operating in Indonesia●T IS formed a capital and business alliance with MFEC Public Company Limited, a Bangkok-listed leader in IT
April 2014
solutions for corporate clients
Mutually complement strengths and promote and expand business opportunities for each other in the IT
markets of the ASEAN region and in Thailand, where growth is noticeably robust.
●T IS turned Thai company I AM Consulting Co., Ltd., boasting top-class results as a total solution provider for
June 2014
SAP, into a consolidated subsidiary.
Seek to expand business opportunities with local companies as well as Japanese companies operating in Thailand.
●T IS formed a capital and business alliance with PT. Anabatic Technologies, an IT company listed on theIndonesia Stock Exchange.
June 2015
Jointly launched SI services to Japanese companies operating locally and to locally based companies.
● INTEC formed a business alliance with PT. Bisnis Integrasi Global, a system integrator in Indonesia.
July 2015
Will jointly pursue steps to expand the service lineup for Japanese companies operating locally andstrengthen support for these clients while also offering solutions and services to local companies.
●A GREX established AGREX (Thailand) Co., Ltd.
July 2015
Began BPO services for Japanese companies operating locally.

■ Overseas sales ratio
Fiscal 2013

Fiscal 2014

Fiscal 2015

1.0%

1.4%

1.6%

Step 1

Step 1

Kicked off in China

Step 2

Established three-point presence—Thailand, Singapore and Vietnam

Step 3

Step 3

Step2

3
3

Accelerating lateral expansion through the ASEAN region

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Basic Direction on CSR

The management philosophy that permeates the ITHD Group stresses the Group’s development into a corporate citizen whose­activities, 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, including­clients and shareholders 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 the companies and individuals under the Group umbrella towork toward higher goals and embrace new challenges, to be honest and fair in business pursuits based on respect for the law, ofcourse, as well as high moral standards, and to fulfill social obligations. This is the Group’s basic direction on CSR.
Acknowledge responsibilities as a leading corporate group in the IT services industry and undertake soundEnsure sound,transparent manage- corporate activities with integrity and clarity of purpose. In addition, be sincere and fair in dealings with all
stakeholders and proactively disclose pertinent corporate information.
ment practices
Provide optimum
services

Always provide the very best to clients and strive to raise customer satisfaction levels through excellent quality
and technology built on the composite strengths of the Group.

Develop talent

Cultivate an environment in which employees always look ahead, striving to achieve higher goals andembracing new challenges. Provide opportunities to grow and realize personal goals, create a safe andproductive work environment, and give each person the freedom to reach his or her potential.

Respect the law

Maintain high corporate morals, obey the law and uphold parameters of socially acceptable conduct, andrespect the spirit of such standards. Have absolutely nothing to do with antisocial forces.

Maintain fairbusiness practices

Ensure appropriate business transactions, based on fair and open competition.

Protect theenvironment

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

Contribute tosociety

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

Be a part of theinternational
community

Naturally, obey internationally recognized rules and local laws in the execution of cross-border projects, butalso contribute to social and economic development in the countries where the Group maintains a presence
by respecting local cultures and customs.

Activities of the ITHD Group
The Basic Direction on CSR guides the ITHD Group in all CSR activities, enabling the Group as awhole to meet the expectations of all stakeholders.
With our shareholders
Coinciding with quarterly disclosure, we hold information
meetings for analysts and institutional investors. For individual
investors, we issue two business reports a year and r­ egularly
post business results and information updates on our website.

For the global environment
We actively integrate responses to environmental concerns in
the course of business. At our most recently completed data
centers, we have implemented measures to utilize renewableenergy and resources, such as solar and ­geothermal energy,
rainwater harvesting for non-drinking applications and outside air for cooling.

With our employees
To provide an environment in which employees can demonstrate their full potential and work in safety and comfort,
each Group company reviews vacation and other entitlements
and sets up programs to support employees’ child-rearing
efforts, such as access to daycare centers. Group companies
also take steps to obtain “Kurumin” certification from the
Ministry of Health, Labour and Welfare, which r­ ecognizes
companies that implement programs to enable employees tobalance work with family responsibilities.

With the community
We participate in various volunteer activities, including the
Ecocap Movement, which collects and sells plastic bottle caps
to recyclers and donates the profits to buy vaccines for theworld’s children. In addition, we support efforts coordinatedthrough the non-profit organization Good Earth Japan toremove landmines in war-torn regions and help shatteredcommunities rebuild.

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Creating Environment Enabling Employees to Fully Demonstrate Capabilities
People are without a doubt the foundation of business within the ITHD Group—a foundation firmly
planted for growth. We strive to create a work environment that enables employees feel that they
contribute to society through their work and facilitates diverse workstyles, which translates into
­personal pride and greater motivation for the job. Through the third medium-term management
plan, we will promote the key measures described below as strategies common groupwide.
Key Measure

Content

Encourage women to seek management
positions

Address national policies, including law aimed at promoting role of women in
the workplace, and promote diversity in hiring.
Consider utilization and training of employees from groupwide perspective toachieve sharper business edge at all Group companies.
Achieve mandated 2.0% ratio as quickly as possible and maintain it, anddevelop further steps to promote hiring.
Address issue of shrinking working-age population that parallels falling birthrate and rising number of seniors in society as well as associated increase inage composition of employees, and promote continuous recruitment activities
and establishment of appropriate personnel system matched to employee age
composition.
Create structure for comfortable workplace by boosting the acquisition rate ofpaid holiday time (goal at each company is rate above 80%) and trimming
overtime work (goal to keep overtime under 20 hours at each company).
Implement programs that cut laterally across the Group, highlighting “management,” “global,” “services” and “technology,” to cultivate united perspective and to reinforce the skills of human resources.
Realign functions with the Group and, as a strategy for job mobility, collectand organize human resources information, not only basic personnel data but
also skills, and share the information.

Utilize human resources and upgrade skills
Promote hiring of disable persons

Address aging of workforce

Create comfortable work environment
where employees feel appreciatedCultivate sense of unity groupwide
Collect/organize human resources
information

Major Activities
Noteworthy pursuits undertaken at Group companies are presented below.
1. Work/life balance, diversity (includes promoting role of womenin the workplace)● Promoting better structures for work at home and shorter working
hours (expand number of hours possible, extend period of applicability)● Promoting reduction in overtime through no overtime days and otherapproaches● Encouraging employees to take allocated annual paid leave● Special paid leave categories, including refreshment leave, convalescentleave following injury or illness, and childcare/nursing care leave● Visit-the-office opportunities for families● Morning flextime work structure with 9am-11am core time
● Program for return to work after maternity leave● Office-based daycare facilities for children of employees● Committee set up to explore the issue of creating a corporate culture inwhich women feel empowered to work
● Promoting projects aimed at improving the work environment● Promoting “Thin Office” to raise administrative efficiency● Acquired “Kurumin” mark from Ministry of Health, Labour and Welfare
in Japan for efforts supporting development of the next generation● Information exchange opportunities for women on childcare leave(includes other employees on leave as well)

2. Training and utilization of human resources, and fair evaluationand treatment● Talent management to systematically execute such processes as hiring,assignment, skill development and performance evaluation● System to invite applications for job openings in-house, a system thatallows individuals to apply for preferred positions, a system to monitor
goals determined through discussions with superiors once every six
months on job-related goals, a specialist system (type of multi-track personnel system tapping people with specialized know-how for suitable
positions), and a non-territorial office (where employees do not havetheir own desks)● Occupation-specific courses, e-learning, correspondence education andother training opportunities.
● President’s award program for employees (recognizing noteworthy individuals, projects and activities)● Evaluation training to ensure that evaluations are fair and equitable● Debuted “coming home” system that enables retired employees toreturn to work
● Incentive awards and financial assistance to help employees acquire new
qualifications
3. Health management, other programs● Consultation point for physical and mental health questions, and mental
stress checks● “Pink Vouchers” available through the IT Holdings Group Health
Insurance Association to offset some of the costs incurred to refresh the
body and mind
● Employee awareness surveys and human rights education

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TOPICS
Proving Employment Opportunities to the Disabled
Through SorunPure Inc, a special subsidiary located in
Shinjuku-ku, Tokyo, the ITHD Group supports the creationof work environments where as many disabled people aspossible can find employment. SorunPure was establishedin 2002, and as of July 2015 had a staff of 54, including six
guides, who undertake office management services (cleaning inside and outside Group buildings, collection duties,
attending to small tasks, replacing supplies, setting out
lunch boxes and distributing mail), providing on-demandprinting (copy services, printing/outputting materials) andhelping employees maintain good health (in-house physiotherapist), at the Tokyo headquarters, the Osaka office, theNagoya office and the Matsumoto office.
As of June 2015, the ITHD Group—specifically, 14
companies including ITHD, SorunPure and specially recognized companies—have achieved a disabled employee ratioof 2.00%, based on 401.5 disabled persons.

In addition to office management services, SorunPure Inc. provides in-house physiotherapy services (massage, acupuncture, moxibustion) for employees ofGroup companies, which keep employees healthier and thus contributes to improved office efficiency.

Improved Work Environment Through
POSITIVE ACTION

Daycare—Kids Home—within Office Structure

In January 2013, TIS voluntarily set up a POSITVE ACTION
team, with key participation from female employees, topursue discussions not only on measures to support awider role for women in the company but also on a spectrum of topics designed to improve the workplace environment. Suggestions based on these discussion are then presented to the Executive Committee. Such suggestions provided a launch pad for the company’s return-to-work program for women who have taken maternity and/or childcare leave and led to a better work-at-home system and astring of other measures.
TIS also utilizes talent management to systematically
execute such processes as hiring, assignment, skill development and performance evaluation, and in fiscal 2015,
to spur greater activities among capable seniors, the company ended the system that had canceled managementlevel assignments at the end of the fiscal year in which a
candidate employee turns 55, and established a new level
called “senior professional” that enables employees who
are rehired after mandatory retirement at 60 to handle
duties that utilize accumulated expertise.

In March 2007, INTEC opened a daycare within its INTEC
Kids Building, in Toyama, to create an environment inwhich employees of the INTEC Group can raise their children and continue working with peace of mind. Kids
Home is primarily for use by employees of the INTECGroup, but if there is space, people who work at companies in area around the north side of Toyama Station may
bring their children to this daycare as well.

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Contributing to Global Environment
The ITHD Group promotes environment-conscious activities at data centers—the bedrock of corporate activities—and at offices, including steps to save energy and cut greenhouse gases.

Examples of Environment-Conscious Activities at Data Centers● Outdoor air cooling● LED lighting● Use geothermal energy● Optimized lighting with motion sensors and ambient light sensors● Use rainwater● High-efficiency equipment● Use well water● Rooftop greenery● Lighting equipment run on solar power● Landscaping● Green power procurement● External appearance in harmony with the local surroundings● Natural lighting● Noise-damping, heat-insulating sashes

Natural light (solar tracking equipment)

Solar power generation monitor

Rooftop greenery

Examples of Environment-Conscious Activities at Offices● Cool Biz● Stop running air barrier fans

● Go paperless (monitors set up in meeting rooms)● Power switched off on machine, such as copiers andshredders, during periods of non-use● Recycle PCs● Confidential documents are solution-treated by a provider● Garbage is sorted for disposal● No heating in washrooms, and hot water setting disabled● Absolutely no vehicle idling● Water tap frequently closed● Participate in eco-cap movement● Encourage use of stairs (instead of elevator)● Partner in Table for Two program● End over-wrapping● Lights turned off in work areas during lunch hour
● Reduced use of lighting (some lights not turned on)● Uniform air conditioner setting (in principle, “blower”)● Encourage employees to use personal thermos bottles, andreusable shopping bags.

● Encourage employees to take vacation days during summer* The ITHD Group is involved in various activities that bring employees together with local communities. These include musical performancesby the ITHD’s Gakuyukai (Friends of Music Society), the Smile Kids Camp, and participation in environment-friendly “Future City” projects
and the Asahi no Mori forest conservation project. For details, go to http://itholdings.co.jp/e/csr/report

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Basic Policy
To maintain the trust of all stakeholders, including clients and shareholders, and to be a corporate citizen
meeting the expectations of society, ITHD strives to reinforce corporate governance, not only by raising thetransparency 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.
Form of Organization

Company with audit & supervisory board

Chairman of the Board

Chairman

Number of Directors

9, including 2 external directors

Director's Term of Office

1 yearNumber of Audit & Supervisory Board Members

4, including 3 external audit & supervisory board members

Term of Office for Audit & Supervisory Board Members

4 years

Number of Independent Directors

5, including 2 external directors and 3 external audit & supervisory board
members

General Meeting of Shareholders
Appointment, dismissal

Group Internal Control Committee

Direction

Reports

Reports

Group
Compliance
Committee

Reports

President

Group
Security
Committee

Direction

Audit &
Supervisory
Board

Discussion/
report on
significant
issuses

Group Risk
Management
Committee

Reports

Units involved
in internal audits Cooperation

Internal audits

Execution of operations
Delegation of authority

Divisions (Executive Officers)
Department Department Department Department

Direction

Reports

Direction

Reports

Direction

Supervision

Cooperation

Executive
Committee

Reports

Cooperation

Reports
Direction

Reports

Subsidiaries

Accounting audit

Direction

Reports

Election,
dismissal,
supervision

Group Risk
Management
CouncilGroup
ComplianceCouncil

Board ofDirectors

Accounting Auditor

Improvement instructions

Direction

Reports

Audit, reports
Statement of
opinionAppointment, dismissal(Cooperation with Audit & Supervisory Board and Internal audit sections)Improvement
instructions

Appointment, dismissal

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SectionCorporate
DataCriteria Concerning Independence of External Officers
Stock Exchange, in addition to the requirements of theCompanies Act. (Please visit our website to find out more
about criteria.)

To reinforce the supervisory function of the Board of
Directors, the Company has prescribed the criteria to ensure
the independence of outside directors and outside auditors,
with reference to the rules and regulations of the Tokyo

Outline of Policy on Officers’ Remuneration
performance-linked remuneration.
Remuneration paid to corporate auditors is determinedin consultation with the Board of Corporate Auditors. To
ensure a high degree of independence, remuneration is
not linked to performance and consists solely of basic­remuneration.
In order to provide a reflection of medium to long-term
performance, directors shall contribute at least a certain portion of their basic remuneration to purchase the Company’s
own stock, which they shall retain in full for the duration of
their period in office.
The Company does not operate a retirement benefits
system for retiring officers and does not pay bonuses to­officers.

Basic policy on determination of officers’ remuneration isto provide incentives to improve performance through a­system of remuneration linked to measures of company­performance.
Remuneration paid to full-time directors of theCompany consists of basic remuneration and performancelinked remuneration, and is revised annually for each individual. Basic remuneration is paid according to the size ofthe role and scope of responsibilities of each position.
Performance-linked remuneration is linked to attainment of
the measures of company performance established on thebasis of the business plan for each fiscal year, and shall not
exceed the proportion of basic remuneration (up to a maximum of 30%) determined for each position. External directors are paid solely basic remuneration and do not receive*Please visit our website to find out more about our CSR activities.
Corporate Governance http://www.itholdings.co.jp/e/investors/policy/governance/
Basic Policy on Internal Control System http://www.itholdings.co.jp/e/group/internal_control/

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

(1) Software Development Technology
At TIS, efforts were made to improve functions ofNablarch, the original Java application framework that offersa full range of essential features for mission critical core systems. In addition, TIS conducted studies on the introduction
and use of functional programming languages, such as Scala
and Clojure, in order to achieve better productivity on Java
Virtual Machines. TIS is continuing to make the results­generally available through public events, etc. for engineers.
In ­fiscal 2015, ended March 31, 2015, the problems arisingfrom security issues were widely reported, such as theHeartbleed bug, a vulnerability of the Open SSL software.
Our architects of each project investigated the impact of
the bug and developed a structure to promptly deliver the
information to our customers.

Each Group company is actively making efforts on boostingproductivity and quality in system development.
At INTEC, efforts centered on the R&D for the test automation platform TaaS (Test as a Service) and a test script generator, which were initiated in the fiscal 2014, and have beenfurther advanced. Incorporating the results of the R&D, thecompany continued to promote these tools for in-house use.
The platform is now available for a wider range of projects
as it accepts .NET and Java applications in addition to web
applications. Such efforts drew attention from outside thecompany. INTEC was awarded the Bronze Prize at the 52nd
IBM User Symposium for the submitted paper. In addition,
INTEC delivered lectures at the Borland User Conference,
Software Testing Symposium 2015, etc.

(2) Cloud Technology
Economy, Trade and Industry (METI) for “Fiscal 2014
Demonstration of Cloud Infrastructure Software for Support
on SMEs’ Introduction of Demonstration of Innovative
Energy Conservation by Use of the Cloud.” The company
accordingly developed technology regarding “Software
Defined Infrastructure (SDI),” which is assumed to become apopular in-system construction, and released the technology
in the open-source software CloudConductor V1.0 in March2015. In November 2014, TIS conducted demonstration
experiments in Tome City, Miyagi Prefecture regarding therecovery of information sharing systems in the event of­natural disasters. The experiments proved that the SDI­technology was effective for measures against disasters.
CloudConductor proceeded to the phase of utilization forsolutions and proposals in each department of the company.

INTEC and TIS engage in research and development on coretechnologies for cloud computing.
INTEC joined a project for a widely distributed virtualization infrastructure (Distcloud), consisting of researchers at
Osaka University, Hiroshima University, Kanazawa University,
National Institute of Informatics, etc. The team performed
various demonstration experiments using widely distributed
storage systems and published the results at the international conference of IEEE COMPSAC 2014. In addition,
INTEC joined the Transparent Cloud-computing Consortium(T-Cloud Consortium), a research group of academic-­industry collaboration, to conduct research and development aiming for the realization of new service models by atransparent collaboration between “device” and “cloud.”
At TIS, a subsidy was granted from the Ministry of(3) Open Source
We are working on the widely expanded area of open
source software, especially at TIS.
TIS officially started a support of open source softwarefrom fiscal 2015. Focusing on administration programs that
TIS excels in, the company plans to reinforce the comprehensive support structure of general application middlewaresuch as the database management system PostgreSQL andthe application server JBoss, with a focus on administration
program middleware, such as the monitoring tool Zabbix

and the job management tool JobScheduler. In addition, inthe second half of fiscal 2015, as consigned by METI under
its project of “Fiscal 2014 Infrastructure Development for
the Information and Service-Oriented Economic Society inJapan (Project of Open Source Software Utilization
Infrastructure Development in the Cloud Computing Era),”TIS performed studies on the matter and reported the results
while running the symposium “Cloud XOSS - Shifting to‘Aggressive use of IT’” hosted by METI.

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SectionCorporateData(4) Smartphone and Tablet Technology
infringement and generation of random MAC addresses
coming in the future. Furthermore, INTEC promoted R&Dof “Integrated Location Information Platform i-LOP” thatseamlessly combines the positioning technologies of GPS,
non-audible sounds and Bluetooth Low Energy (BLE). At theend of January 2015, the company joined the demonstration experiment conducted by the “Committee of High
Precision Positioning Society around Tokyo Station” of the
Ministry of Land, Infrastructure, Transport and Tourism, andconducted positioning in various locations: from outdoors
to indoors, the first floor to the basement, and from underground buildings to underground areas, and performed ademonstration using illustrative maps.

Another priority theme in R&D addresses the accelerating
popularity of smartphones and tablets. We worked on theassociated technology, especially at INTEC.
Continued from the fiscal 2014, INTEC conducted R&Dof the indoor positioning technology using non-audible
sounds and applied the technology to "T-Location H" of theTaisei Corporation with which the locations of doctors andnurses can be detected. As an original research theme, thecompany studied Wi-Fi-based positioning technology thatenables positioning of smartphones and tablets without
launching an application. As this technology does not use“MAC addresses” that uniquely and permanently identify
a device, it can avoid such problems as concern on privacy(5) Big Data Processing, IoT and Artificial Intelligence Technologies
of agriculture, manufacturing, home energy management
systems (HEMS) and transportation.
At TIS, we started developing technologies relating to
artificial intelligence from fiscal 2015. By combining element
technologies such as machine learning, natural language
processing, question answering and image recognition, thecompany conducted research on the system, etc. for evaluating performance of meetings using a neural network anda product recommendation system in the Japanese language. In response to the research result, TIS will developa practical prototype system in fiscal 2016 while promoting
collaborative studies with customers (early adapters) who
can support activities in advanced technologies.

Technology to process huge amounts of business data thatwas previously impossible to process is becoming accessible.
Similarly, technology is steadily appearing that will processhuge amounts of data generated by different kinds of sensors. Further, artificial intelligence has been increasingly utilized in the interface between data processing and humans.
INTEC and TIS are tackling R&D on Big Data, IoT and artificial intelligence and are working on platforms to support
various applications that use such technologies.
INTEC utilized the proprietary scalable cloud platform
EXAGE while working ahead with a ubiquitous platformarchitecture. We aim that by providing such functions asdata collection/accumulation, real-time analysis and datavisualization, our technologies will be utilized in the fields(6) Other Research Activities
University.
TIS typically describes its R&D activities in Tech Sketch(a website addressing engineering information). The company creates many different opportunities for engineers to
exchange opinions.

INTEC announces the results of its R&D pursuits at various
scientific meetings and holds external lectures as well. In
addition, the company publishes the INTEC Technical Journal
and undertakes public relations activities. The company also
sends representatives to deliver special lectures at Keio
University, University of Toyama and Toyama Prefectural

Given these various pursuits, ITHD booked consolidated R&D expenses of ¥1,097 million in fiscal 2015, ended March 31, 2015.

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Financial Review
As of March 31, 2015, the ITHD Group comprised parent company IT Holdings Corporation (“ITHD” or “theCompany) and 45 consolidated subsidiaries, including principal companies TIS Inc., INTEC Inc., AGREX INC.,QUALICA INC. and AJS Inc., and 11 companies accounted for by the equity method.
Through additional acquisition of shares, I AM Consulting Co., Ltd., and six of its subsidiaries, as well as
TISI (Thailand) Co., Ltd., a newly established company, fall under the scope of consolidation from fiscal 2015.
TIS First Manage Inc. was absorbed by TIS Solution Link Inc., all shares in Keyport Solutions, Inc. were sold,and TIS Leasing Co., Ltd. was liquidated, excluding them from the scope of consolidation.

Profit and Loss Analysis
Net Sales

Industrial IT Services

Net sales rose 4.1% from fiscal 2014, to ¥361,025 million,
thanks to sustained improvement from the three principal­segments IT infrastructure services, financial IT services andindustrial IT services.

Segment sales climbed 5.1%, to ¥166,357 million, thanks toa favorable shift in demand from the services and distributionsectors. Operating income improved dramatically, jumping
50.4%, to ¥7,049 million, owing to the higher sales starting
point and successful efforts to prevent projects from becoming
unprofitable.

A breakdown of performance by business segment is presented
below.
(Sales by segment include intersegment sales.)

Other
Segment sales dipped 1.1%, to ¥14,667 million, but operating
income edged up ever so slightly—0.3%—to ¥2,159 million.
This is primarily due to the sale of lease assets belonging to
TIS Leasing Co., Ltd., as part of restructuring to focus on corebusinesses and growth fields, along with the effect caused bywithdrawal from the leasing business at the end of the previous
fiscal year.

IT Infrastructure Services
A favorable shift in demand for data center services nudged
segment sales 2.5% higher year-on-year, to ¥118,200 million,
but operating income dropped 6.2%, to ¥7,179 million, largely
due to the impact of the reduced size of high-revenue projects
for some clients.

Financial IT Services
A trend toward greater IT investment by clients in the credit
card sector and progress in providing solutions to the non-cash
settlement sector led to a 5.8% increase in segment sales overthe previous fiscal year, to ¥79,543 million. Operating income
declined 13.1%, to ¥5,549 million, reflecting an increase in
expenses associated with efforts to reinforce the structure toacquire and execute large development projects and anincrease in upfront expenses incurred in providing solutions.

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DataSales and Income by Business Segment

Millions of yen

2015

2014

% change¥361,025¥346,647+4.1%

IT infrastructure services

118,200

115,360+2.5

Financial IT services

79,54375,148+5.8Industrial IT services

166,357

158,234+5.1

Other business

14,667

16,498-11.1

Operating income

21,121

19,510+8.3

IT infrastructure services

7,179

7,652

-6.2

Financial IT services

5,549

6,385

-13.1

Industrial IT services

7,049

4,687

+50.4

Other business

2,159

2,152

+0.3

Intersegment elimination/adjustments(816)(1,367)—(Years ended March 31)

Net sales

Note: Sales by segment in the above chart include intersegment sales.

Segment Business Content
Provide self-administered computer utility or system operation services through large
IT facilities, including data centers.
Support clients in their efforts to make greater use of IT in their operations and in theexecution of their business activities with IT expertise and business know-how specificto the finance industry.
Support clients in their efforts to make greater use of IT in their operations and in theexecution of their business activities with IT expertise and business know-how in areas
other than finance, namely industrial and public sectors.

IT Infrastructure Services
Financial IT Services

Industrial IT Services
OthersActivities other than those described above.

Expenses and Earnings
increased 8.3%, to ¥21,121 million. Ordinary income expanded
12.0%, to ¥21,251 million. Net income jumped 29.8%, to¥10,275 million, buoyed by better operating income.

The higher net sales starting point and successful efforts to prevent projects from becoming unprofitable absorbed expenses
associated with efforts to reinforce the structure for acquiringand executing large development projects. Operating income

Millions of yen

2015

2014

¥294,927¥283,881+3.9%

Cost of sales ratio

81.7%

81.9%

-0.2 point

Gross profit

66,09762,766+5.3%

Gross profit margin

18.3%

18.1%

+0.2 point

Selling general and administrative expenses

44,97643,255+4.0%

Ratio of selling, general and administrative expenses to net sales

12.5%

12.5%

-0.0 point

Operating income

21,121

19,510+8.3%

Operating income ratio

5.9%

5.6%

+0.3 point

Net income

10,275

7,913+29.8%

Return on sales

2.8%

2.3%

+0.5 point(Years ended March 31)

Cost of sales% change

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Financial Position
Assets, Liabilities and Net Assets
14.8%. Equity capital, derived by subtracting minority interestsof ¥4,388 million from net assets, rose 17.9% year-on-year, to¥184,400 million, pushing the equity ratio to 53.3%, up 3.4
points.

Total assets stood at ¥345,851 million at the end of March
2015, up 10.3%. Current assets accounted for ¥140,450 million, down 2.1%from a year earlier, and fixed assets accountedfor ¥205,401 million, up 20.8%. Liabilities came to ¥157,062
million, up 5.3%, and net assets were ¥188,789 million, up

Millions of yen

2015

2014

Total assets¥345,851¥313,610+10.3%

Total liabilities

157,062

149,107+5.3

Net assets

188,789

164,502

+14.8

4,388

8,004

-45.2

—

45

—

184,400

156,452+17.9(As of March 31)

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

Equity ratio (*1)

53.3%

49.9%

+3.4 points

Return on equity (*2)

6.0

5.2

+0.8 point

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¥7,482 million in payments for the acquisition of property andequipment, ¥5,150 million for the acquisition of securities and¥5,400 million for the acquisition of intangible assets—greatly
surpassed inflows, mainly 2,423 million in proceeds from thesale and redemption of marketable securities.
Net cash used in financing activities: Financing activities
consumed a net ¥19,067 million, soaring 224.7% year-on-year.
This sizable change is primarily due to the fact that outflows—
mainly ¥13,949 million for repayment of long-term debt,¥7,031 million for purchasing shares in subsidiaries not accompanying changes in the scope of consolidation, and ¥2,367­million for dividends paid—negated inflow of ¥7,300 million inproceeds from long-term debt.

Cash and cash equivalents (“cash”) totaled ¥29,485 million asof March 31, 2015, dropping 31.7%, from a year earlier.
Net cash provided by operating activities: Operating­activities generated a net ¥22,938 million, down 11.0% yearon year. This change reflects income before income taxes of¥18,184 million and the net effect of outflows, mainly a¥10,229 million increase in notes and accounts receivable and¥6,067 million in income tax payments, overshadowing inflows,
mainly ¥12,809 million in depreciation and amortization
expense.
Net cash used in investing activities: Investing activities­consumed a net ¥17,744 million, skyrocketing 232.7% yearon-year. This major change is because outflows—notably,

Millions of yen

2015

2014

% change

Cash and cash equivalents at end of year

¥29,485¥43,142-31.7%Net cash provided by operating activities

22,93825,770-11.0

Net cash used in investing activities(17,744)(5,334)+232.7

Net cash used in financing activities(19,067)(5,872)+224.7(As of March 31)

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Dividend Policy
has targeted a consolidated payout ratio of about 30%. But
from fiscal 2016, the benchmark will be raised, for a total
return ratio in the vicinity of 35%, which will include share­buybacks as well as dividends, to further enhance shareholder
returns. Given this change in policy, management intends todistribute an annual dividend of ¥33 per share, including aninterim dividend of ¥11 per share, for fiscal 2016, and will
­pursue share buyback activities.

Taking into account the need to enrich internal reserves to­support business growth, the Company paid a year-end dividendof ¥20 per share (an annual dividend of ¥30 per share) for­fiscal 2015.
ITHD’s basic policy has been to ensure a stable dividend
based on performance trends while ensuring a suitable level ofinternal reserves to underpin business growth from a mediumto long-term management perspective. To date, the Company

Yen

2015

(For the years ended March 31)

2014% change

Per share data
Net income per share¥117.40¥90.16+30.2%Net assets per share

2,108.19

1,782.23+18.3%

Dividend per share

30.00

25.00

+20.0%

Payout ratio

25.6%

27.7%

-2.1 points

Total return ratio*

30.4%

27.7%

+2.7 points*Total return ratio: Total amount of dividends and treasury stock buybacks as a percentage of net income.

Business Risks
Legal system and compliance

Risks with the potential to significantly impact the operations—business results and financial position—of the ITHD Group aredescribed below. Note that forward-looking statements mentioned in these materials are based on information available tomanagement as of May 8, 2015.

Group companies pursue respective business activities in linewith prevailing laws and regulations in Japan and overseas. In
developing these activities, each company establishes a compliance system, in accordance with the ITHD Group’s basic policy
on CSR, and strives to ensure thorough legal compliance.
However, if a law is broken or if additional laws or regulations
are put into force, the Group’s business and business results
could be adversely affected.

Price wars and heightened competition
In the information services industry, competition among sectors is fierce and the situation is further exacerbated by suchchallenges as the increasing entry of companies from otherindustries into our industry. In addition, clients are cuttingback on IT investment. These factors could fuel price wars.
Within the ITHD Group, we seek to distinguish ourselves fromour competitors, primarily by adding greater value to theinformation services we provide, and we also work to improve
productivity. However, if price wars erupt beyond the scope
we have conceived, our business results could be adversely
affected.

Overseas businessAs part of its growth strategy, ITHD seeks to expand theGroup’s presence overseas, especially in the ASEAN (Associationof Southeast Asian Nations) region. Various factors can have an
impact on activities abroad, including legal restrictions, particularly regulations pertaining to investment and competition, as
well as business customs and labor-management relations. If
these risks appear, the Group’s business results could be
adversely affected.

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Business Risks
System development

specialized, high-value-added services to clients. If the companies of the Group are unable to keep and train individuals withexcellent capabilities as planned, the business results of theGroup could be adversely affected.

The ITHD Group is involved in contract system development­services and information systems for client companies. In thedevelopment of systems that are increasingly larger in scaleand on shorter delivery schedules, costs could rise significantly
beyond the estimate if quality cannot be achieved according
to plan or a project cannot be completed within the promised
timeframe. Also, in system development, certain services arecontracted to a number of companies, mainly to secure production capacity, boost production efficiency and utilize external
technology, and there is always a chance that these outsourced
providers will not meet productivity and quality expectations.
Such situations could adversely affect the Group’s businessresults.

Technological innovation
In the information services industry, providers must respondquickly to advances in information technology and to changing
market needs that parallel these advances. The Group constantly promotes studies and research, with an emphasis on
information technology and production and development­techniques, to reinforce efforts to respond to market needs.
However, in the vast domains of the industry, the pace of­technological innovation is lightning fast, and if the Group’s
responses are not appropriate, its business results could be
adversely affected.

System operation
The ITHD Group offers round-the-clock outsourcing and cloudservices 365 days a year through data centers and other large IT
facilities. In developing this business, a vast amount of capital isrequired, from start-up investment through constant upkeep
and operation. In addition, utilization of facilities could sink to
a conspicuously low level in times of sluggish demand, which
could adversely affect business results. Furthermore, if, in providing system operation services, losses are incurred because aclient company’s system crashes or malfunctions, the Group’s
reputation for reliability may be tarnished and the brand may
lose credibility, and compensation may be required to cover­client losses. Such situations could adversely affect the Group’sbusiness results.

Intellectual property rights
Members of the Group apply for and obtain patents on technologies and business models necessary to conduct businessand also register trademarks in Japan and overseas. Businessactivities are always undertaken with careful attention to prevent third-party infringement of intellectual property rights, but
it is possible that Group activities may infringe on the intellectual property rights of other companies and lead to claims forcompensation. If that occurs, the business activities and business results of the Group could be significantly impacted.

Natural disasters
The ITHD Group offers outsourcing and cloud services throughdata centers and other large IT facilities. These facilities areequipped with various systems and structures to deal with arange of disasters. However, if a power outage that lasts longer
than might reasonably be prepared for, a large-scale natural
disaster, international disputes, acts of terrorism or serious criminal activity were to interrupt smooth data center operations,the business results of the Group could be adversely affected.

Information security
The Group may gain access to confidential information, suchas personal information in possession of client companies aswell as system technology information belonging to client­companies, during the stages of a project running from system­development through operation. Efforts are made to properly
manage information, in accordance with the IT Holdings Group
Information Security Policy. But if confidential information isleaked, altered or otherwise impacted by such means as a­computer virus or unauthorized access, client companies orother relevant parties could demand compensation for damages, and the Group could lose the market’s confidence. This
could adversely affect the Group’s business results.

Securities portfolio
Companies within the Group hold stock to strengthen relationships with suppliers and bonds to utilize surplus capital. Whenacquiring these marketable securities, efforts are made to pinpoint financial status, performance trends, credit rating andother key factors of the issuer, and thereby ensure investment
stability. But obvious changes in the stock market and othersecurities-related developments could lead to situations, such as
losses on the books, which could have an effect on the Group’s
financial status and its business results.

Human resources
The business activities of the Group rely heavily on humanresources and are greatly influenced by the Group’s ability tokeep talented individuals and upgrade their skills to provide

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Financial Section
Financial Statements
Consolidated Balance Sheets
IT Holdings Corporation and Its Consolidated Group Companies
As of March 31, 2014 and 2015
Millions of yen

2014

2015

¥ 43,248¥ 29,211

AssetsCurrent assets
		Cash and deposits		

Notes and accounts receivable

68,301

78,874

		

Lease receivables and lease investment assets

6,654

6,711

		

Marketable securities

226

661

		

Merchandise and finished goods

3,207

4,552

		

Work in process

6,757

5,546

		

Raw materials and supplies

229

243

		

Deferred tax assets

6,603

6,007

		

Other current assets

8,450

8,784

		

Allowance for doubtful accounts

(159)

(143)

		

Total current assets

143,519

140,450

Fixed assets
		Property and equipment

			

Buildings and structures, net

56,56553,670			

Machinery and equipment, net

4,428

4,853

			Land20,72624,342

			

Leased assets, net

4,738

3,995

			

Other property and equipment, net

5,153

4,552

			

Total property and equipment

91,612

91,413771

1,197

Other intangible assets

14,802

15,555

Total intangible assets

15,573

16,75238,787

71,256

4,103

7,028

		

Intangible assets

			Goodwill
			
			
		

Investments and other assets

			Investment securities
			Net defined benefit asset			

Deferred tax assets

			Other assets

6,881

5,199

13,362

14,034

			Allowance for doubtful accounts

(229)

(283)

			

Total investments and other assets

62,905

97,235

		Total fixed assets

Total assets

170,091

205,401¥313,610¥345,851

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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Consolidated Balance Sheets
IT Holdings Corporation and Its Consolidated Group Companies
As of March 31, 2014 and 2015
Millions of yen

2014

2015

¥ 18,828¥ 21,681

Liabilities
Current liabilities
		

Notes and accounts payable		

Short-term borrowings

14,29912,521

		Income taxes payable

3,495

3,140

		

Accrued bonuses to directors and employees

10,932

11,331		

Other allowances

1,007

1,318

		

Other current liabilities

24,226

27,673

		Total current liabilities

72,79077,666

Non-current liabilities		Long-term debt

44,57039,593		

Lease obligations

6,160

5,497

		

Deferred tax liabilities

470

10,720		

Deferred tax liabilities from revaluation of land

732

663

		

Accrued retirement benefits to directors

88

90

		

Net defined benefit liability

18,68816,874		

Other non-current liabilities

5,606

5,955

		

Total non-current liabilities

76,316

79,395

149,107

157,062

Total liabilities
Net assets
Shareholders’ equity
		Common stock

10,001

10,001		Additional paid-in capital

86,786

83,601		Retained earnings

57,57967,019		Less treasury stock, at cost

(6)

(514)

		

Total shareholders’ equity

154,360

160,107

Accumulated other comprehensive income		

Net unrealized gains on other securities

5,975

26,191

		

Revaluation of land

(1,967)(1,898)		Foreign currency translation adjustments

48

396

		

Remeasurements of defined benefit plans(1,964)(397)

		Total accumulated other comprehensive income

2,092

24,292

45

—

8,004

4,388

Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

164,502

188,789¥313,610¥345,851

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Consolidated Statements of Income
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2014 and 2015
Millions of yen

Net sales

2014¥346,6472015¥361,025

Cost of sales

283,881294,927

Gross profit

62,766

66,097

Selling, general and administrative expenses

43,25544,976

Operating income

19,51021,121

Interest income

38

74

Dividend income

644

744

Foreign exchange gains

88

206

Rental income from real estate

259

265

Other

626

472

1,656

1,762

Interest expenses

598

519

Equity in losses of non-consolidated subsidiaries and affiliates

470

205

Rent expenses on real estates

211

238

Non-operating income

Total non-operating income
Non-operating expenses

Financing expenses

350

—

Other

564

668

2,195

1,632

18,971

21,251Gain on sale of investment securities

817

377

Gain on termination of retirement benefit plan—

59

Gain on reversal of stock acquisition rights

—

58

Other

45

3

Total extraordinary income

862

500

Total non-operating expenses
Recurring profit
Extraordinary income

Extraordinary losses
269

354

1,073

1,566

Loss on liquidation of business

463

67

Special severance pay

608

44

Loss on partial termination of retirement benefit scheme

148

—

Other

834

1,533

Loss on disposal of fixed assets
Impairment loss

3,398

3,567

Income before income taxes and minority interests

16,43518,184

Income taxes: current

5,459

5,417

Income taxes: deferred

2,353

1,865

Total income taxes

7,813

7,282

Income before minority interests

8,622

10,901

708

626

7,913

¥ 10,275

Total extraordinary losses

Minority interests in earnings (losses) of consolidated subsidiaries¥

Net income

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Consolidated Statements of Comprehensive Income
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2014 and 2015
Millions of yen

Income before minority interests

2014¥ 8,6222015¥10,901

1,689

20,239Other comprehensive income
Net unrealized gains on other securities
Difference in revaluation of land—

68

Foreign currency translation adjustments

249

379

Remeasurements of defined benefit plans

—

1,569

Share of other comprehensive income of associates accounted forusing the equity method

24

14

1,963

22,271

10,58633,173

Total other comprehensive income
Comprehensive income
Components:		Comprehensive income attributable to owners of the parent		Comprehensive income attributable to minority interests

9,813
¥

773

32,474¥

698

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Consolidated Statements of Changes in Net Assets
IT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2014 and 2015
(Millions of yen)
Shareholders’ Equity

Fiscal 2014
Commonstock

Balance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

Additional
paid-in capital

Retainedearnings

Treasurystock

Total shareholders’equity10,00186,78751,596(27)

148,357

10,00186,78751,596(27)—
148,357(8)
29(1,930)
7,913
(8)
27

(1,930)
7,913
(1)

—

—
10,001(1)
86,786

5,982
57,579

21
(6)

—
6,002
154,360

Accumulated other comprehensive income

Fiscal 2014

Net
Foreign Remeasure- Total accu- Stockacquisiunrealized Revaluation currency ments of mulatedtion
gains onreserve translation defined other comotherfor landadjustbenefit prehensive rights
securities
ments
plans
incomeBalance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

4,271

4,271

(1,967)(1,967)

(147)

(147)

—

—

2,157

2,157

Minority
Totalinterests net assets

42

7,602 158,159

42—
7,602 158,159(1,930)
7,913
(8)
27
—

1,703
1,703
5,975

—
—
(1,967)

196
196
48

(1,964)(1,964)(1,964)

(64)
(64)
2,092

3
3
45

402
341
402
6,343
8,004 164,502

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Data

Consolidated Statements of Changes in Net Assets(Millions of yen)
Shareholders’ Equity

Fiscal 2015
Commonstock

Balance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

Additional
paid-in capital

Retainedearnings

Treasurystock

10,00186,786

57,579(6)

154,360

10,00186,786

1,532
59,111(6)

1,532
155,892(2,367)
10,275(508)(3,184)—10,001(3,184)
83,601

Balance at beginning of fiscal year
Cumulative effects of changes inaccounting policies
Restated balance
Changes during the fiscal year
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Items other than changes in shareholders’equity, net
Net changes during the fiscal year
Balance at end of fiscal year

(2,367)
10,275(508)—(3,184)

7,908
67,019

(508)
(514)

Accumulated other comprehensive income
Net
Foreign Remeasure- Total accu- Stockacquisiunrealized Revaluation currency ments of mulatedtion
gains onreserve translation defined other comotherfor landadjustbenefit prehensive rights
securities
ments
plans
incomeFiscal 2015

Total shareholders’equity—4,215
160,107

Minority
Totalinterests net assets

5,975(1,967)48(1,964)2,092

45

8,004 164,502

5,975(1,967)48(1,964)

2,092

45

1,532
8,004 166,035(2,367)
10,275(508)—(3,184)

20,216
20,21626,19168
68(1,898)

347
347
396

1,566
1,566
(397)

22,19922,19924,292

(45)
(45)
—

(3,615) 18,538(3,615) 22,753
4,388 188,789

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Consolidated Statements of Cash FlowsIT Holdings Corporation and Its Consolidated Group Companies
For Years Ended March 31, 2014 and 2015
Millions of yen

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
Loss on disposal of fixed assets
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
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Increase (decrease) in consumption tax payable
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
Purchase of marketable securities
Proceeds from sale and redemption of marketable securities
Acquisitions of property and equipment
Acquisitions of intangible assets
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Payment of lease and guarantee deposits
Collection of lease and guarantee deposits
Proceeds from transfer of business
Purchase of shares of subsidiaries resulting in change in scope of consolidation
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
Acquisition of treasury stock
Dividends paid
Dividends paid to minority shareholders
Purchase of shares of subsidiaries not resulting in change in scope of consolidation
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

2014

2015

¥ 16,435
12,454
1,073
269
1,095
(151)
(1,513)(12,762)
13,958(682)
598(1,597)
142
1,138
157
685
31,304695(626)(5,602)
25,770¥ 18,184
12,809
1,566
354
863
388
38
—
(389)
(819)
519
(10,229)
(148)
2,516
3,466
(414)
28,707831(533)(6,067)22,938(22,499)
27,699(6,220)(5,409)(8,388)
4,709
(397)
758
4,920
—
(505)
(5,334)(3,400)3,425(7,482)(5,400)(5,150)
2,423
(967)
537
259
(926)
(1,062)(17,744)(223)
30,850(32,664)(8)(1,930)(323)—(1,571)(5,872)140
14,70328,433
4
43,142(412)
7,300(13,949)(508)(2,367)(351)(7,031)(1,747)(19,067)217(13,656)
43,142—
29,485

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DataCorporate Data

IT Holdings Group (As of August 1, 2015)
Domestic Subsidiaries

TIS Beijing Inc.

CODE IT Consulting Co., Ltd.

TIS Business Consultants Inc.

ECM Consulting Co., Ltd.

TIS Inc.

TIS Hokkaido Inc.

I Coach Co., Ltd.

INTEC Inc.

TIS Nagano Inc.

IHR Consulting Co., Ltd.

AGREX INC.

TIS Solution Link Inc.

ITS–Tradeship Co., Ltd.

QUALICA INC.

TIS System Service Inc.

AJS Inc.

TIS Total Service Inc.

[Principal Companies][Vietnam]

TIS Tohoku Inc.

INTEC Vietnam Co., Ltd.

AC MEDICAL INC.

TIS West Japan Inc.

AGREX FINE TECHNO INC.

UPSHE Co., Ltd.

[United States]

ALMEC Co., Ltd.

INTEC Innovative Technologies USA, Inc.

Cloud Scope Technologies, Inc.
Chuo System Corporation

Overseas Subsidiaries

TIS R&D Center, Inc.

[China]

HOKKOKU INTEC SERVICE Inc.

INTEC Information Technology (Shanghai) Co., Ltd.

iBPS, Ltd.

INTEC Information Technology (Dalian) Co., Ltd.

IN-X Co., Ltd.

INTEC Information Technology (Wuhan) Co., Ltd.

INTEC IT Capital, Inc.

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

INTEC Solution Power Inc.

TISI (Shanghai) Co., Ltd.

IT Service Force Inc.

QUALICA (SHANGHAI) Inc.

Consolidated Subsidiaries

IUK Inc.

Non-Consolidated Subsidiaries[Singapore]

KOUSHI INTEC Inc.
KOUSHIN INC.

TISI (Singapore) Pte. Ltd.

Medical Toukei Co., Ltd.

QUALICA ASIA PACIFIC PTE. LTD.

MicroMates Corp.
[Thailand]

MITEC Inc.
NEOAXIS Co., Ltd.

AGREX (Thailand) Co., Ltd.

Nexway Co., Ltd.

INTEC SYSTEMS BANGKOK CO., LTD.

Registration Network, Ltd.

TISI (Thailand) Co., Ltd.

SKY INTEC INC.

I AM Consulting Co., Ltd.

SorunPure Inc.

Baseline Technology Consultants Co., Ltd.

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SectionCorporate
DataDomestic Business Hubs
We have an extensive business presence, particularly in Tokyo, Nagoya, Osaka and Toyama.
We have the largest data center network in Japan, with locations in major urban centers.
Hokuriku Area
Manyo Square

Areas around TokyoGDC Gotenyama ITHD head officeToyama CenterTokyo 1st Center
Nagoya Area

Tokyo Center

Nagoya CenterTokyo 2nd Center

ToyamaTokyo 2nd Center

Tokyo

Tokyo 3rd Center

NagoyaOsaka
Yokohama Center

Osaka Area
Osaka Center

Other Areas

Osaka 2nd
Shinsaibashi gDC Shinsaibashi gDC-EX Center

International Business Hubs
We are pursuing development in the ASEAN region
as well as maintaining a focus on China.
(Shifting from offshore development hub to­business hub)

Sapporo Center
Sendai Center
Niigata Center
Shikatsu Centerand others

Tianjin IDC

DalianBeijing
Xian Tianjin
Wuhan
Shanghai
Bangkok

Hanoi
Ho Chi Minh

Singapore
Jakarta
The ITHD Group has 22 data centers—154,100 m —in major cities in Japan, including Tokyo, Nagoya, Osakaand Toyama, as well as in Tianjin, China. The Group, as a whole, has earned a solid reputation for reliability
from clients for providing a cloud environment that boasts the experience and know-how accumulated overmore than 40 years through round-the-clock, 365-day operation of data centers equipped with state-of-the-art
facilities and highly secure features to protect against the risk of natural disasters and power failures.
2

Key Features of the ITHD Group Data Center Network● High operating quality and latest equipment● Enables clients to achieve business continuity through access to Japan’s largest data center network● Highly reliable cloud environment platform

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DataCorporate Data (As of March 31, 2015)
Company name

IT Holdings Corporation

Established

April 1, 2008

Main business

Management and business execution of group companies thatcarry on information and communication business

Head office

21st Floor, 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

Paid-in capital¥10 billion

Number of shares authorized

280,000,000 shares

Number of shared issued

87,789,098 shares

Number of shareholders

12,563

Stock listing

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

Number of employees (consolidated) 19,090 (full-time employees)

Board of Directors and Audit & Supervisory Board Members (As of June 24, 2015)
Chairman

Katsuki Kanaoka

President

Norio Maenishi

Director

Toru Kuwano (concurrent, Chairman and President, TIS Inc.)

Director

Shigeo Morita (concurrent, Executive Senior Corporate Advisor,
INTEC Inc.)

Director

Shigeki Kusaka (concurrent, President, INTEC Inc.)

Director

Kazunori Kawasaki (concurrent, President, AJS Inc.)

Director

Akira Kato (concurrent, President, QUALICA Inc.)

Director

Shingo Oda

Director

Yoshinobu Ishigaki

Standing Audit & Supervisory
Board Member

Nobuyuki Yonezawa

Standing Audit & Supervisory
Board Member

Masaru Sasakura

Audit & Supervisory Board Member Taigi Ito
Audit & Supervisory Board Member Muneaki Ueda
Notes: 1. Shingo Oda and Yoshinobu Ishigaki serve as external directors.
2. Masaru Sasakura, Taigi Ito and Muneaki Ueda serve as external Audit & Supervisory Board Members.
3. Shingo Oda, Yoshinobu Ishigaki, Masaru Sasakura, Taigi Ito and Muneaki Ueda serve as Independent Directors/Auditors
as specified by the Tokyo Stock Exchange in Japan.

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DataMajor Shareholders (As of March 31, 2015)
Number of
Shareholding
sharesratio（%）(Thousands)

Name

The Master Trust Bank of Japan, Limited (Trust
Account)
Japan Trustee Services Bank, Limited (Trust Account)
ICHIGO Trust
Employees’ Shareholding Association of IT Holdings
Corporation
Nippon Life Insurance Company
Japan Trustee Services Bank, Limited (Trust Account 9)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Master Trust Bank of Japan, Ltd.
(Retirement Benefit Trust Account, Mitsubishi Electric
Corporation Account)
Japan Trustee Services Bank, Limited (Trust Account 4)
Northern Trust Co. (AVFC) RE 15PCT Treaty Account

5,064
4,979
4,870

5.8
5.7
5.5

2,438
2,073
1,861
1,654

2.8
2.4
2.1
1.9

1,598
1,227
1,185

1.8
1.4
1.4

Share Composition by Shareholder(As of March 31, 2015; Thousands of Shares)
Individuals andothers13,828(15.7%)
Overseas
Institutions
29,904(34.1%)

Total 87,789(100%)

Financial
institutions
30,529(34.8%)

Financial Instruments
Business Operator
2,098(2.4%)

Other Domestic
Institutions
11,427(13.0%)

Stock Price Range
Trading volume

Stock price
(Yen)
2,500

(Thousands of shares)
50,0002,000

40,0001,500

30,0001,000

20,000500

10,0000Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.
2014
2015

0

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DataITHD Group Logo
Underlying Concepts of Group Logo
The logo portrays the IT Holdings Group as a tightly knit
team, powered forward by the different sets of expertisethat each member brings to the table. It is in our two
main corporate colors: "ocean blue" for the newchallenges that we are constantly tackling, and"intelligent gray" for the solid technological foundations
that underpin our business.
Brand message
The brand tagline, "Go Beyond," embodies our constantquest into the beyond in search of new challenges. It
represents our firm commitment as a group to deliveringsolutions that are always one step ahead, not only solving
clients' problems but anticipating and meeting their own
customers' needs too.

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グループブランドについてロゴマークに込めた思い
グループ各社が様々なエキスパートであり、その集合体としての ITホールディングスグループの一体感、そして未来へ向かって進み続ける躍動感を表現しています。新たなる挑戦の場を表す
オーシャンブルーと、堅実さと確かな技術の裏付けを象徴する
インテリジェントグレーがコーポレートカラーです。
ブランドメッセージ
常に新たなチャレンジを求めて「その先に向かって」歩み続ける。
クライアントの課題をクリアするだけではなく、クライアントのさらにその先にあるお客様のニーズを先取りして「一歩進んだ提案をしていく」というITホールディングスグループの強い意思を表明しています。

For further information contact:
PR & IR Department, Corporate Planning Division
Tel: +81-3-5338-2272
Fax: +81-3-5338-2266
E-mail: ir_info@itholdings.co.jp

ITHD 2015.07

Any revisions to information in this annual report subsequent
to publication will be posted at:
http://www.itholdings.co.jp/e/