Information Meeting Materials
for the First Two Quarters of the Fiscal Year Ending March 31, 2019
October 31, 2018

Copyright © 2018 TIS Inc. All rights reserved.

Fiscal 2019 First Two Quarters Financial Highlights

Fiscal 2019 Performance Forecast
Progress on Medium-Term Management Plan (2018-2020)
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

2

Fiscal 2019 First Two Quarters: Financial Highlights[Millions of yen]

•Against a favorable business backdrop, sales and income were up over the corresponding period a year ago,
thanks to higher business volume and efforts to improve profitability. Settled above target.

Net Sales

Net Income Attributable to
Owners of the Parent Company

Operating Income

 YOY change: + ¥8,216 million [+ 4.2%]
 YOY change: + ¥ 1,951 million [+ 14.4%]
 YOY change: + ¥ 2,089 million [+ 24.3%]
 Compared with estimate: + ¥2,030 million [+ 1.0%]  Compared with estimate: + ¥1,542 million [+ 11.0%]  Compared with estimate: ＋ ¥1,392 million [+ 15.0%]

194,813203,030 201,000[Estimate]

10,692

15,542
13,591

14,000[Estimate]

Operating
7.0% margin

9,300
8,602

[Estimate]

7.7％

5.3％

4.4%
Net income to
net sales ratio
First Two Quartersof Fiscal 2018

First Two Quartersof Fiscal 2019

In sectors where IT investment is showing
renewed growth, we emphasized accurate
identification of client needs and wererewarded with higher sales, year-on-year.
Exceeded target.
Copyright © 2018 TIS Inc. All rights reserved.

First Two Quartersof Fiscal 2018

First Two Quartersof Fiscal 2019

Increase in gross profit, reflecting higher net sales
starting point and enhanced profitability, absorbed
rising selling, general and administrative expenses,
primarily costs associated with stronger responseto restructuring. Operating income was up yearon-year. Exceeded target.

First Two Quartersof Fiscal 2018

First Two Quartersof Fiscal 2019Year-on-year improvement, paralleling higher
operating income and net extraordinary income.
Exceeded target.

3

Fiscal 2019 First Two Quarters: Sales and Income for Key Segments-1[Millions of yen]
Service IT Business

BPO

Net Sales

Net Sales YOY change: + ¥8,365million [+17.5%]
 Compared with estimate: + ¥7,356million [+15.1%]

56,156
47,79048,800 YOY change: - ¥53million [- 0.3%]
 Compared with estimate: - ¥541million [- 2.9%]

18,259 18,800

18,313[Estimate][Estimate]First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019

First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019

Operating Income

Operating Income

 YOY change: + ¥343million [+11.3%]
 Compared with estimate: + ¥296million [+9.5%]

 YOY change: + ¥217million [+36.3%]
 Compared with estimate: - ¥35million [- 4.1%]

3,396 3,100

3,053[Estimate]

6.4% Operating

margin6.0%

First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019
Expanded payment settlement-related business and greater ERP
replacement demand covered prior investment costs aimed atstrengthening business. Led to higher segment sales and income
year on year. Exceeded target.
Copyright © 2018 TIS Inc. All rights reserved.

815 850[Estimate]597
3.3% Operating

4.5%

marginFirst Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019
Segment sales were stable, reflecting a favorable shift in thebusiness environment. Segment income was up, underpinned byefforts to review transaction profitability. Generally on track withperformance expectations.
*Segment sales include intersegment sales.

4Fiscal 2019 First Two Quarters: Sales and Income for Key Segments-2[Millions of yen]

Financial IT BusinessIndustrial IT Business

Net Sales

Net Sales YOY change: + ¥2,097million [+4.1%]
 Compared with estimate: - ¥ 1,477 million [- 2.7%]

 YOY change: + ¥ 3,887 million [+ 4.5%）
 Compared with estimate: + ¥ 2,264 million [+ 2.6%]

50,62552,723 54,200

85,97689,864 87,600[Estimate][Estimate]First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019

First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019

Operating Income

Operating Income

 YOY change: + ¥ 870 million [+18.0%]
 Compared with estimate: + ¥ 715 million [+14.3%]

 YOY change: + ¥ 629 million [+13.1%]
 Compared with estimate: + ¥ 570 million [+11.8%]

5,420 4,850

4,790

5,715

[Estimate]

5,000

4,845

[Estimate]
9.6%

Operatingmargin10.8%First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019
Sales and income up year on year, fueled by contribution from large
credit card related projects and trend toward greater IT investment
among core clients. Sales fell short of target owing to acceleration ofstrategic reassignment of essential personnel to Service IT Business.
Copyright © 2018 TIS Inc. All rights reserved.

5.6%

Operatingmargin6.0%

First Two Quarters First Two Quartersof Fiscal 2018of Fiscal 2019
Sales and income up year on year, owing to greater IT investment
by a wide range of client groups, including companies in theenergy business. Exceeded target.

*Segment sales include intersegment sales.

5Fiscal 2019 First Two Quarters:
Net Sales and Operating Income Analysis[Billions of yen]

Net Sales
194.81

BPO-0.05
Service IT[18.31  18.25]
Business+8.36[47.7956.15]

Financial IT
Industrial IT
Business
Business
+2.09
+3.88
[50.62  52.72] [85.97  89.86]

Other
-0.63
[5.21  4.58]

203.03
Inter-segment-5.45[-13.10  -18.56]

First Two Quartersof Fiscal 2018

+8.21[+4.2%]First Two Quartersof Fiscal 2019

Operating Income
13.59
Service IT
Business+0.34[3.05  3.39]

BPO
+0.21
[0.59  0.81]

First Two Quartersof Fiscal 2018
Copyright © 2018 TIS Inc. All rights reserved.

Financial IT
Business+0.87[4.84  5.71]

Industrial IT
Business＋0.62[4.79  5.42]

Other
＋0.00
[0.49  0.50]

Inter-segment-0.11[-0.18  -0.30]

15.54
+1.95
[+14.4%]First Two Quartersof Fiscal 20196

Fiscal 2019 First Two Quarters:
Operating Income Analysis, Increase/Decrease Reasons[Billions of yen]

YOY Change

15.54
13.59
Increased sales+1.77

Improved
profitability+2.63

Increased SGA
expenses
-2.45

+1.95
[+14.4%]

Increased gross profit +4.41

First Two Quartersof Fiscal 2018

Copyright © 2018 TIS Inc. All rights reserved.

First Two Quartersof Fiscal 20197

(Reference) Fiscal 2019 Second Quarter (July-September):Sales and Income for Key Business Segments
Net Sales

8,537+3,527[+3.4%]

2nd Quarter of
Fiscal 2018

Net Income Attributable to
Owners of the Parent Company

Operating Income
106,562

103,035+1,182[+13.9%]9,720

Operatingmargin9.1%

8.3%

2nd Quarter of
Fiscal 2019

2nd Quarter of
Fiscal 2018

Services IT Business

BPO

Net Sales

Net Sales

6,360
4,908

2nd Quarter of
Fiscal 2019

6.0%

2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019

Financial IT BusinessIndustrial IT Business

Net Sales
26,511Net Sales
48,90545,86363,00061,93029,488+4,103[+16.2%]

2nd Quarter of
Fiscal 2018

9,331

2nd Quarter of
Fiscal 2019

Operating Income-225[-2.4%]

2nd Quarter of
Fiscal 2018

Operating Income

1,919

1,846

+73
[+4.0%]

7.3% Operating 6.5%
margin2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019

411
315

+96
[+30.6%]
Operating 4.5%
3.4% margin
2nd Quarter of
2nd Quarter of
Fiscal 2018
Fiscal 2019

Copyright © 2018 TIS Inc. All rights reserved.

-158[-0.6%]

9,106

2nd Quarter of
Fiscal 2019

+1,451[+29.6%]

4.8%

26,67025,384[Millions of yen]

2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019

Operating Income
3,421
2,792

+629
[+22.5%] 12.9%

10.5% Operating
margin2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019（計画）
+3,042[+6.6%]

2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019

Operating
営業利益Income
+382

4,800
5,179
3,815
3,433 [+11.1%]（計画）
7.5% Operating 7.8%
営業利益率
margin2nd Quarter of
Fiscal 2018

2nd Quarter of
Fiscal 2019

*Segment sales include intersegment sales.

8

(Reference) Fiscal 2019 Second Quarter (July-September):Operating Income Analysis, Increase/Decrease Reason[Billions of yen]

YOY Change

9.72
8.53

Increased sales+0.80

Improved
profitability+1.81

Increased SGA
expenses
-1.43

+1.19
[+13.9％]

Increased gross profit +2.61

2nd Quarter of
Fiscal 2018

Copyright © 2018 TIS Inc. All rights reserved.

2nd Quarter of
Fiscal 20199

Fiscal 2019 First Two Quarters: Sales by Client Sector[Millions of yen]
49,07644,81936,931
34,414[+ 9.5%]22,504[+7.3%]

21,537
13,146 12,236

Credit card

12,554

13,41010,277[- 6.9%][+ 6.8%]Banking

Insurance

9,333

19,075

19,062[+ 4.5%]8,516[-3.9%][+ 9.3%]
Assembly-based Processing-based
manufacturing manufacturing

First Two Quarters of Fiscal 2018

First Two Quarters of Fiscal 2018

16,728 16,072[- 0.1%][- 9.2%]Other finance

15,884

14,534

Distribution

Service

7,725

Public institutions[+ 10.2%]
OthersFirst Two Quarters of Fiscal 2019

Credit card

First Two Quarters of Fiscal 2019

Banking

4.0%
8.6%

22.9%

Insurance

17.7%

Net Sales
Breakdown by
ClientSector

7.5%
9.8%
Financial sector: 36.1 %Public sector: 8.6 %Other finance

6.7%
6.4%
5.3%
11.1%

Assembly-based
manufacturing
Processing-based
manufacturing
Distribution

4.2%
18.2%
7.9%

24.2%

Net Sales
Breakdown by
ClientSector

6.0%
6.6%
4.6%

ServicePublic institutions

7.8%

11.1%
9.4%

OthersIndustrial sector: 51.3 %Other sectors: 4.0%

Copyright © 2018 TIS Inc. All rights reserved.

Financial sector: 35.4 %Public sector: 7.9 %Industrial sector: 52.5 %Other sectors: 4.2 %10

Fiscal 2019 First Two Quarters: Order Status (Software Development)[Millions of yen]

• Absorbed reactionary decrease in number of large projects in Financial IT Business, and posted year-on-yearincrease in order volume and order backlog as of the end of the first two quarters. (Stronger second quarter
results offset year-on-year drop in first quarter.)

Orders received during first two quarters
 YOY Change: + ¥5,492 million [+5.1%]

Order backlog at end of first two quarters
 YOY Change: + ¥ 4,962 million [+ 7.3%]

112,488
106,996

73,326
68,274

21,389+2,134(+10.0%)23,52331,373＋208(＋0.7%)

31,581

54,2333,151(+5.8%)

57,384First Two Quartersof Fiscal 2018

Services IT
Business
Financial IT
Business

Industrial IT
Business

First Two Quartersof Fiscal 2019

Copyright © 2018 TIS Inc. All rights reserved.

15,227

Services IT
Business

20,519＋1,010(＋4.9%)

21,529Financial IT
Business

34,210+2,269(+6.6%)

36,479Industrial IT
Business

13,544+1,683(+12.4%)First Two Quartersof Fiscal 2018

First Two Quartersof Fiscal 2019

* Percentage figures in columns indicate increase or decrease from the previous term.

11

Changes in Orders Received (Software Development)

108,697
98,648[- 1.6%]

104,569[+ 6.0%]103,737

106,996[- 4.6%][+ 2.3%][Millions of yen]

112,229

112,488[+ 8.2%][+ 5.1%][+10.4%]53,36961,62153,43757,41954,94963,42761,709[+ 6.1%][+ 0.1%][- 6.8%][+ 2.8%][+ 10.5%][+ 12.3%]

47,076

51,13346,31852,04748,802[+ 12.9%]

50,779[- 1.6%][+ 1.8%][+ 5.4%][- 2.4%][+11.8%]45,279[+ 8.7%][- 10.1%]

1st Half
2nd Half
Fiscal 2016

1st Half
2nd Half
Fiscal 2017

Copyright © 2018 TIS Inc. All rights reserved.

1st Half
2nd Half
Fiscal 2018

Second quarter of first half

Fourth quarter of second halfFirst quarter of first half

Third quarter of second half

1st Half
2nd Half
Fiscal 2019

* Percentage figures in columns indicate increase or decrease from the previous term.

12Changes in Orders Received by Segments (Software Development)

Services IT
Business

21,38921,368

10,69911,914

10,6909,454

39,59031,373Financial IT
Business

24,013

17,145
14,22815,57754,233

51,272

Industrial IT
Business

23,523[+ 10.0%]
11,900[+ 11.2%]
11,623[+ 8.7%]31,581[+ 0.7%]
20,810[+ 21.4%]
10,771[- 24.3%]

57,384[+ 5.8%]27,50029,000[+ 7.0%]27,12823,772

28,384[+ 4.6%]

1st Half

2nd Half

1st Half

27,105

Fiscal 2018

Copyright © 2018 TIS Inc. All rights reserved.

[Millions of yen]

2nd Half
Fiscal 2019

Second quarter of first half

Fourth quarter of second halfFirst quarter of first half

Third quarter of second half
* Percentage figures in columns indicate increase or decrease from the previous term.

13

Fiscal 2019 First Two Quarters: Order Status (Total)[Millions of yen]

• Started disclosing order information related to system operation and others. Order backlog higher, as of theend of second quarter (total), and order status favorable. Decrease in orders of Financial IT Business,compared with level at the end of fiscal 2018, due to drop in sales-related projects.
Orders Received (Total)

Order backlog (Total)
At end of
Fiscal 2018

Fiscal 2019first two quarters
Services IT
Business

57,320Services IT
Business

BPO

16,801BPO

Financial IT
Business
Industrial IT
Business
Total

84,985

Financial IT
Business
Industrial IT
Business

209,326

Total

50,218At end of first twoquarters of Fiscal 2019

YOY change

30,69338,257+ 24.6%ーーー

39,25436,885- 6.0%

52,12055,447+ 6.4%

122,067

130,591+ 7.0%

Thoughts on order information related to system operation and others• Started disclosing order information related to system operation and others, effective in fiscal 2019 (with disclosure every six months).
 Order backlog: At March 31, 2018
Order volume: At end of second quarter of fiscal 2019
• Implement reversal for contracts (including system operation contracts), regardless of duration, at end of second and fourth quarters,
respectively.
 Anticipated net sales for the next six-month period are deemed order volume for the fiscal year and booked at the end of the fiscal year.
Same value booked for order backlog.
• BPO orders are transaction-based, so order backlog is considered to be zero.
Copyright © 2018 TIS Inc. All rights reserved.

14

Fiscal 2019 First Two Quarters Financial Highlights

Fiscal 2019 Performance Forecast
Progress on Medium-Term Management Plan (2018-2020)
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

15

Understanding the External Environment• Business environment should continue to move in a favorable direction, against a backdrop highlighted bywider IT investment needs among clients increasingly keen to embrace digital management.
• Factors indispensable to business growth are pperceptively identifying changes in the external environment,
including social issues, namely changes in industry structure and new workstyles, and corporatetransformation that helps solve social issues.

Service IT Business Trend toward greater use of cloud services to continue. Cloud procurement likely to account for
majority of services provided in 2020.
 Domestic security market to continue high growth up to 2020, with information security
becoming a major management issue.
 IT investment to remain at high level in wide range of industry sectors, owing to changing
structure of retail payment settlement business.

To dateFrom nowBPO

 BPO business should see sustained increase in demand for outsourced administration services
contributing to improved corporate management.
 Digital innovation demand expanding in response to changing environment caused bypersistent shortage of personnel and evolving workstyle reform.

Financial IT Business In the credit card sector, IT investment will remain high, especially for core system replacement
demand and to address changing structure of retail payment settlement business.
 Sense of uncertainty exists in banking and insurance sectors but IT investment appears to be on
recovery trend, hinging on industry majors, owing to progress on business and service reforms.

Industrial IT Business In manufacturing, service and distribution sectors, companies will continue to invest in frontoffice IT to sharpen competitive edge, especially in marketing-related pursuits.
 IT investment to underpin electric power and gas system reforms should lead to brisk increasein demand for projects related to corporate spin-offs.
Copyright © 2018 TIS Inc. All rights reserved.

* These trends may differ from general industry trends since management’s assumptions also take into consideration
the status of IT investment by TIS INTEC group clients.

16

Fiscal 2019: Performance Forecasts-1[Millions of yen]

• Amid brisk business conditions, absorb reactionary drop in large projects and work toward higher sales andhigher income.
• Vigorously invest into growth domains and forte fields to facilitate structural transformation described in
new medium-term management plan.
No change to initial targets.
Net Sales YOY Change : + ¥8,352million [+2.1%]
405,648

 YOY Change : + ¥ 2,257million [+6.9%]

414,000[Estimate]

Fiscal 2019

Focusing on service IT and industrial IT
demand, strive to expand business throughaccurate responses to IT investment needs ofclients. Expect year-on-year increase in sales.

Copyright © 2018 TIS Inc. All rights reserved.

35,00032,743

8.1%

Fiscal 2018

Net Income Attributable to
Owners of the Parent Company

Operating Income

Fiscal 2018

[Estimate]

Operatingmargin YOY Change: + ¥ 2,680million [+13.0%]

23,300

8.5％
5.1%

Fiscal 2019

Higher sales effect and ongoing effort toboost productivity. Will absorb higher costburden associated with structuraltransformation, including embrace of priorinvestment approach. Should lead to year-onyear increase in operating income.

[Estimate]

20,620Net income to
net sales ratio

Fiscal 2018

5.6％

Fiscal 2019

Increase in operating income and net
extraordinary income should deliver year-onyear improvement in income attributable toowners of parent.

17Fiscal 2019: Performance Forecasts-2[Yen]• Seeking to exceed initial 10% ROE target.

Net Income per ShareROE YOY change: + ¥34.12 [+14.1%]

 YOY change: +0.3%

275.5610.2％

241.44[Estimate]

9.9%

Fiscal 2018

Fiscal 2019

Fiscal 2018

Anticipating year-on-year improvement, parallelinghigher net income attributable to owners of parent.
(Raised from initial estimate, paralleling treasury stock
purchase)

Copyright © 2018 TIS Inc. All rights reserved.

[Current
calculations]Fiscal 2019

Anticipating further growth, mainly due to higher
profitability.

18

Fiscal 2019: Key Business Segment Performances [Forecast]-1[Millions of yen]

Service IT Business

BPO

Net Sales

Net Sales YOY change: + ¥ 15,897 million (＋15.8%)

116,500

100,603

 YOY change: + ¥743 million (+1.9%)

39,00038,257[Estimate][Estimate]

Compared with estimate at beginningof fiscal 2019: + ¥13,500 million
Fiscal 2018

Fiscal 2019

Fiscal 2018

Fiscal 2019

Operating Income

Operating Income

 YOY change: + ¥161 million (＋2.0%)

 YOY change: + ¥362 million (+22.1%)

8,300

8,139

2,000

[Estimate]

1,638
8.1%

Fiscal 2018

Operatingmargin[Estimate]

Operatingmargin

7.1%

4.3%

Fiscal 2019

Fiscal 2018

IT investment activities in growth fields, such as the cloud andnetworks, as well as concrete efforts to expand payment settlementbusiness and steady ERP demand will absorb cost burden of priorinvestments and lead to higher sales and income. Sales target raised,
thanks to accelerated process of strategic reassignment of essential
personnel.
Copyright © 2018 TIS Inc. All rights reserved.

5.1%

Fiscal 2019

Promote enhanced profitability through restructuring, by integrating
BPO business locations and ensuring thorough profitability
management, and through a shift to high-level, combined BPO
services. Sales and income should increase year on year.

*Segment sales include intersegment sales.

19Fiscal 2019: Key Business Segment Performances [Forecast]-2[Millions of yen]

Financial IT BusinessIndustrial IT Business

Net Sales

Net Sales YOY change: - ¥ 2,155million [-2.0%]

 YOY change: + ¥ 3,515million [+2.0%]

106,655

104,500

180,000

176,485[Estimate][Estimate]

Compared with estimate at beginningof fiscal 2019: - ¥3,000 million
Fiscal 2018

Fiscal 2019

Fiscal 2018

Fiscal 2019

Operating Income

Operating Income

 YOY change: + ¥ 469million [＋4.1%]

 YOY change: + ¥ 991million [+8.6%]

11,331

11,80012,50011,509[Estimate][Estimate]
10.6%

Fiscal 2018

Operating 11.3%
marginFiscal 2019

Despite steady execution of big projects and stronger relationships
with core clients, target lowered following strategic reassignment ofessential personnel to Service IT Business. Sales likely to decrease
year on year, but efforts to promote high-value-added businesses
and enhanced productivity will lead to higher operating income.
Copyright © 2018 TIS Inc. All rights reserved.

6.5%
Fiscal 2018

Operatingmargin

6.9%
Fiscal 2019

Will absorb reactionary drop in big projects, mainly by promoting
high-value-added services underpinned by consultations andenhanced upstream operations and by improving productivity.
Should lead to higher sales and income year on year.
*Segment sales include intersegment sales.

20

Fiscal 2019: Return to Shareholders
Basic Policy on Return to Shareholders in Medium-Term Management Plan (2018-2020)
Promote growth investment, maintain financial health and strengthen return to shareholders—all in the right balance.

From Fiscal 2019

To Fiscal 2018

・ Target 35% total return ratio(Stable, continuous dividends + share buybacks)• Total return ratio (yardstick): 40%• Payout ratio (yardstick): 30% (by March 31, 2021)• Set upper limit on treasury stock holdings to 5% of total number
of issued shares, with excess of this amount cancelled.

Acquisition of Treasury Shares

Annual dividend per share
Target for Fiscal 2019: ¥60 (up ¥20 year on year)
Changes in Dividends per ShareTotal ¥ 4.2 billion (actual results)**Actual amount of treasury stock buyback announced May 10, 2018

Total Acquired Treasury Shares [Millions of yen]

Annual: ¥60

4,209[Estimate]

Annual: ¥33

Annual: ¥40

Annual: ¥36

¥22

2,859
39.9%

¥26

¥24
35.2%

¥40

31.9%

2,099
1,599

30.5%
21.8%

22.7%

16.6%

19.0%

¥11

¥12

¥14

Fiscal 2016

Fiscal 2017

Fiscal 2018

Dividends(interim)
中間配当金

Dividends(term-end)
期末配当金

Dividend (interim, estimate)Total
return ratio
総還元性向

¥20
Fiscal 2019

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Payoutratio
配当性向

Dividend (term-end, estimate)

Copyright © 2018 TIS Inc. All rights reserved.

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

21

Fiscal 2019 First Two Quarters Financial Highlights
Fiscal 2019 Performance Forecast
Progress on Medium-Term Management Plan (2018-2020)
Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

22

Outline of Medium-Term Management Plan (2018-2020)

Transformation to 2020
- Achieving structural transformation as a corporate family and taking the lead in finding solutions to social issues Company where diverse humanresources, reliable, proud andcarrying a sense of solidarity,

Increase high-value-added quality(boost value of technology/social
research results) throughBudget for growthinvestment to fuelstructural transfmoration

approach work
enthusiasticallyvalue chain reform¥80 billion
in 3 years¥430 billion
Operating income ¥43 billion
Operating margin
10 %Structuraltransformation

Net sales

to deliver ratio of 50%
from strategic domain sales

ASEAN Region

Becometop classgroup united in IT
Copyright © 2018 TIS Inc. All rights reserved.

Through enhanced
management
efficiency

ROE

12%

Become corporate group that contributes

solutions toenvironment/social issues
through business activities
23Basic Policy/Key Performance Indicators
Key Performance Indicators(Fiscal 2021)

Basic Policy
Emphasis on
employeeselffulfillment

SustainableprofitgrowthStrategic Domain Sales Ratio

50%• With solutions to social issues derived
through business activities, establish
structure generating medium- to-longterm benefits for society as well as profits
to sustain corporate presence• Achieve cost reduction through enhanced,
more efficient headquarters function• Create environment, culture andprograms that motive employees to work
hard
• Build human resources portfolio that
supports structural transformation, andoptimize deployment throughout Group

Constant transformation, with sense of speed
Concentrateon corebusinesses• Actively invest to rev up growthengines• Improve value provided toclients, reinforce existing fields
through productivity innovation

Shift to priorinvestment
style ofbusinessdevelopment

Operating Income¥ 43 billion
Operating Margin

10%
Expandglobalbusiness

ROE

12%• Proactively propose solutions to• Become top-class IT
markets/clients and transform structuregroup in ASEAN region
to realize business creation• Hone global strengths,• Pursue strategically directed, robustemphasizing payment
investment, mainly through M&A andsettlement/banking/ERP
service investment
solutions

Copyright © 2018 TIS Inc. All rights reserved.

24

Fiscal 2019 Group Management Direction
Fiscal 2019 Group Management Direction

Progress during First Two Quarters△ Strategic domain ratio hit 42% in first half, moving briskly
upward from 35% a year earlier. While maintaining focus oncore businesses, must drive profitability higher to meet
medium-term target.
 Service IT exceeded target in first half, driven by demand for
payment settlement-related, ERP and network services.
Launched businesses requiring prior investment, including
token requestor service.
 Wider capture of IT investment demand through stronger ties
to strategic partners.

○

 Held number of unprofitable projects low in first half,targeting 0.8% for full-year.
 Gross profit margin also improved, thanks to such efforts asenhancement upgrades.

○ Strengthened ties to PT Anabatic Technologies Tbk throughadditional capital participation and purchase of corporate
bonds. Also drew on leading-edge technologies oftechnology-oriented investment targets to accelerate businessexpansion, including establishment of joint schemes.

△

 Encouraged employees to reach for their own career goals.
Steadily implementing 28 measures planned for fiscal 2019,in line with Human Resources SBU manifesto.
 Efforts to enhance human resources throughout the Groupare in progress and will gradually be expanded.

○ “G20” project to elevate head office functions moving alongas planned.
 Pursuing sustainability-related activities, including
identification of materiality.

Charge forward on switch to service-style business Push vigorously ahead on structural transformation, seeking new set ofvalues and style emphasizing speed and flexibility as well as knowledgeintensive style business structure

Robust prior investment to create new services
 Selectively invest in growth and forte fields to turn service-stylebusinesses into growth engines

Added-value and productivity improvements in domains ofexpertise Focus on forte fields and key client businesses, eliminate unprofitableprojects, implement enhancement reforms, and improve order profitability
in good business environment

Promote growth strategy aimed at becoming a top-class IT groupin ASEAN region
 Expand business domains established through cooperation built over timewith overseas partners in line with global strategy and pursue strategic
investments

Boost motivation and reinforce human resource management
 Strive to create framework and corporate culture in which employees—thedriving force behind the Group’s growth—can thrive, and steadily realize
measures described in personnel manifest

Pursue activities to enhance management practices and boost
efficiency
 Steadily implement “G20” project to elevate head office functions, andstudy and declare key sustainability issues
Copyright © 2018 TIS Inc. All rights reserved.

25

Activities under Medium-Term Management Plan (Topics)
1. Structural Transformation Strategy
Medium-Term Management Plan (2018-2020) guiding structural transformation with sense of speed toward
success of Group Vision 2026. Concerted effort to build content in strategic domains.
 Favorable progress, with ratios in Strategic Partnership Business and IT Offering Service charging upward.
Maintain concentration on core businesses.

Charting Growth in Strategic Domain Ratio(Net sales basis)

As of first twoquarters offiscal 2019

42%

50%

40%

35%

Fiscal 2018

Fiscal 2019

Fiscal 2020
ActualCopyright © 2018 TIS Inc. All rights reserved.

Fiscal 2021

Estimate
26

Activities under Medium-Term Management Plan (Topics)
2. Settlement Payment Business Strategy
Digital Banking Platform Concept — Making banks closer and more personal through API connection —Basic policy
1. Promote wallet service based on token service
2. Promote services, such as QR settlement, based on
multi-payment gateway (connects to overseas brands
and domestic XXXPay)

StatusIoT settlement!
Easy payment
method for visitors
to Japan!

3. Propose credit SaaS-type service as follow-up to
debit/prepaid services (anticipate service-sharing stylebusiness expansion)
Stores/users

API-based

PAYCIERGE services

Legacy service

CAFIS
E-money

Card platform system
Various wallet platformsystems (XXXPay)
Shared point system
Regional point system

Payment settlement back-office

・IoT settlement service
・Wallet service(Zengin IC/Visa touch
settlement, etc.)• Authentication/approval API• Usage details API• Real-time transaction API• Affiliated merchant web API

Loyalty• Data usage API

・CLO service

Other APIs
Brand API Service

Security

・Alert service
・Control service

Core systems connectedCore systems
Banking account system(real accounts)

3.

Copyright © 2018 TIS Inc. All rights reserved.

• Brand token• Checkout etc.

FintechventureFintechventureBank
Non-bank
Transportation/stores(all Pay)

Internet

2.

Multi-payment gateways• QR-gateway connection• Instant payment gateway connection• Thin client settlement gateway connection• Real-time account connection
Token service• Update system API connection• IoT settlement service• Credit API connection

FintechventureDevelopers Portal

Turn service into open
API

JCN

Major payment networks
connected

Mastercard

Token service

Access point service

API
Settlement back-office API suite

Payment settlement 1.
networks
Visa

1. Working with MUFG Bank to create first token requestor service featuring
technology (token) for MUFG Wallet (provisional name).
2. Preparing to gradually link QR code-using brands at home and abroad tocomplement access to Alipay, WeChat and UnionPay gateways, linked by
CardInfoLink, affiliated with TIS through capital and business alliance.
3. Working to expand credit SaaS-type service. Progress on track, including startof projects with companies using service for first time.

Railways (ticket gate)
Cars
XXXPayConnection to
CardInfoLink

Overseas brand QR codes:
Alipay, WeChat, UnionPay

27

Reference: Token Requestor Agency Service
Launch of token requestor agency service* with MUFG Bank primed for the IoT era.
*Service securely stores payment ID information as a token on various devices, such as wearable devices and IoT equipment, not only smartphones.

TIS’ technology used in MUFG Wallet (provisional name) Use TIS’ secure technology for tokenization (encryption) of payment settlement information and credit card information for
MUFG Wallet (provisional name), a service that MUFG Bank is thinking of starting in spring 2019.

Work with MUFG Bank to develop token requestor agency services as a business Draw on strengths of both companies—TIS’ expertise accumulated in configuration and operation of payment settlement IT
platforms and MUFG Bank’s specialized knowledge in the payment settlement business—and extend services to mobile/digitalwallet providers (token requestors).
Image of Token Requestor Agency Services

Token requestors

TIS

Various devices/venues

MUFG Bank

Token Service Provider (TSP)

Token requestor agency
Extend payment settlement services• Banks• Card providers• New payment
settlement
providers

MobileWalletEVO

Wearable

Wearable
EVO
IoT consumer
electronics

Tokenstorage/management(provisional)• Internationallybranded TSP• 3rd Party TSP

Issue token
・・・

Connected cars

E-commerce sites/stores

Request token

JCB
Visa
Mastercard

Plan gradual service expansion

 We aim to play a part in building the security infrastructure of the future, giving people peace of mind
when paying for purchases in the IoT society, where all sorts of devices are connected to the Internet.
Copyright © 2018 TIS Inc. All rights reserved.

28

Activities under Medium-Term Management Plan (Topics)
3. Global Business Strategy
Seeking to realize formation of top-class IT corporate association in the ASEAN region, promote global
business expansion through integration of customer base and leading-edge technologies.
Accelerate business development by enhancing joint activities with Anabatic and pursuing greater
cooperation with companies tied through capital or business alliances.
Capital/business alliance(10% stake)Japan

Capital/business alliance(1.4% stake)

UnitedStatesChina
CardInfoLink
Fintech

Capital/business alliance(30.5% stake and CB purchase)
Provide insights/know-how from projects for clientsin payment settlement and banking businesses

R3 HoldCo LLC
Blockchain

Indonesia
PT Anabatic Technologies Tbk
Top domestic IT company in Indonesia

Through Anabatic, strive to expand business in outstanding growth market of Indonesia
Accelerate efforts to develop new businesses using QR codes, blockchain and other data innovations
Expand new payment settlement services for people without bank accounts
Copyright © 2018 TIS Inc. All rights reserved.

Promote payment gateway configuration and acquirer capture in Indonesia

29Activities under Medium-Term Management Plan (Topics)
4. Human Resources Strategy
Desired Status by Fiscal 2021
Boost motivation through constantcycle of self-fulfillment

Selectively develop model employees tofuel transformation of the Group

Create framework and systems toachieve optimum deployment of
human resources within the GroupTIS Human Resources SBU Manifesto — Three objectives
1. Create company where motivation level is high, and quickly and vigorously work toward this from system and environment
perspectives.
2. Achieve optimized deployment of human resources while providing an environment conducive to self-fulfillment of career goals.
3. Ensure thorough labor-related compliance and create safe and pleasant company atmosphere.
 Paralleling the above, define various measures from a three-point perspective highlighting 1) evaluation, working conditions andcompensation; 2) workstyle reform, health management and diversity; and 3) hiring, training and assignment.

■Status of Fiscal 2019 Efforts
Evaluation, working conditions
and compensation
Workstyle reform, healthmanagement and diversity

Hiring, training and assignment

Raise compensation level, boost promotion ratio and implement systems that enable
employees to continue working regardless of age if they are able and willing (includes
retirement at 65 program, where working conditions remain the same even after theage of 60),
Introduce super flex work hours with no core time, broaden systems related tochildcare and nursing care and relax requirements, and establish work structure
premised on telework.
Achieve top-of-industry training days per employee, and work to hire and train people
with skills or expertise that will contribute to Group reforms. Going forward, defineGroup personnel portfolio and utilize talent pool, and consider strategic rotation
approach for management-level personnel.

Plan to implement 28 measures in fiscal 2019 is on track. Intend to gradually expand best practices at companies groupwide.
Copyright © 2018 TIS Inc. All rights reserved.

30

Fiscal 2019 First Two Quarters Financial Highlights
Fiscal 2019 Performance Forecast
Progress on Medium-Term Management Plan (2018-2020)

Reference Materials

Copyright © 2018 TIS Inc. All rights reserved.

31

Fiscal 2019 Second Half:
Sales and Income for Key Business Segments [Forecast]
Net Sales[Millions of yen]

Net Income Attributable to Ownersof the Parent Company

Operating Income

210,970

210,835[Estimate]+135[+0.1%]

Second Halfof Fiscal 2018

Second Halfof Fiscal 2019+306[+１.6%] [Estimate]

9.1%

OperatingmarginSecond Halfof Fiscal 2018

12,60812,01819,45819,152+590 [Estimate][+4.9%]

9.2%

Second Halfof Fiscal 2019

5.7%

6.0%

Second Halfof Fiscal 2018

Second Halfof Fiscal 2019

Services IT Business

BPO

Financial IT BusinessIndustrial IT Business

Net Sales

Net Sales

Net Sales

Net Sales
90,13690,50863,00061,930[Estimate]

56,02960,344

52,812[Estimate]

Second Halfof Fiscal 2018+797[+4.0%]

Operating Income
4,904
5,086
-182 [Estimate][-3.6%]

Second Halfof Fiscal 2018

[Estimate][Estimate]

Second Halfof Fiscal 20199.6% Operating
margin20,741

19,944+7,531[+14.3%]

8.1%

Second Halfof Fiscal 2019

Second Halfof Fiscal 2018

Second Halfof Fiscal 2019

Operating Income
1,041

1,185

-4,253[-7.6%]

Second Halfof Fiscal 2018

6,486

Second Halfof Fiscal 2018

Second Halfof Fiscal 2019

11.6%

Second Halfof Fiscal 2019

6,085
-401
[-6.2%] [Estimate]
OperatingmarginSecond Halfof Fiscal 2018

（計画）

-373
[-0.4%]

Operating Income+144[Estimate][+13.8%]

5.2% Operating 5.7%
marginCopyright © 2018 TIS Inc. All rights reserved.

51,777

11.8%

Second Halfof Fiscal 2019

Second Halfof Fiscal 2018

Second Halfof Fiscal 2019

Operating Income
営業利益
7,080
6,719
5,179
+361 4,800[Estimate][+5.4%]（計画）
営業利益率
Operating 7.9%
7.4%
marginSecond Halfof Fiscal 2018

Second Halfof Fiscal 2019

*Estimated amounts for the second half of Fiscal 2019 are calculated by subtracting the first half results from the annual
estimates of Fiscal 2019. *Segment sales include intersegment sales.

32

TIS INTEC Group Logo Underlying Concepts
The logo portrays the TIS INTEC Group as a tightly knit team, powered forward by the different sets of expertise that each member brings to the table. Itfeatures our two main corporate colors: “ocean blue” for the new challenges that we are constantly tackling, and “intelligent gray” for the solid technologicalfoundations that underpin our business.
Brand Message “Go Beyond”
The brand tagline, “Go Beyond,” embodies our constant quest into the beyond in search of new challenges. It represents our firm commitment as a group to
delivering solutions that are always one step ahead, not only solving clients’ problems but anticipating and meeting their own customers’ needs too.
Cautionary Statements• All statements described in these materials are based on information available to management regarding the TIS INTEC Group—that is, TIS and thesubsidiaries under its umbrella—as of the presentation date and certain assumptions deemed reasonable at this time. No intent is implied of promise by
the Company to achieve such forward-looking statements. Indeed, various factors may cause future results to be substantially different from theassumptions presented in these materials.
• Amounts for each three-month quarter are calculated by subtracting data for the respective period from the cumulative total.
• From the fiscal year ending March 31, 2019, Business segments were reclassified at TIS, paralleling changes in the management structure designed topromote the shift to a new business structure. For comparison purposes, figures for fiscal 2018 have been recalculated and are presented according to the
new segment breakdown