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 expertisethat each member brings to the table. It features our
two main corporate colors: “ocean blue” for the
new challenges that we are constantly tackling, and“intelligent gray” for the solid technological foundations
that underpin our business.

Transformation to 2020
Embarking on new medium-term management plan to realize Group vision

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.

TIS Inc.
Sumitomo Fudosan Shinjuku Grand Tower,
17-1, Nishi-shinjuku 8-chome, Shinjuku-ku, Tokyo 160-0023 JapanFor further information, contact:
Corporate Management Dept., Corporate Planning SBU.
Tel: +81-3-5337-4569
E-mail: tis_ir@tis.co.jp
http://www.tis.com/
TIS201809

Integrated Report 2018Year Ended March 31, 2018
(From April 1, 2017, to March 31, 2018)

Securities Code: 3626

About the TIS INTEC GroupWe will achieve structural transformation
as a cohesive corporate group to realize Group Vision 2026.
Corporate Image in 2026

Create Exciting Future
Utilize advanced technologies and know-how
to realize business innovation and market creation

New Medium-Term Management Plan

Transformation to 2020
(From April 2018 to March 2021)— Achieving structural transformation as a corporate family and taking the leadin finding solutions to social issues—
The TIS INTEC Group has embraced a forward-looking group vision for2026 that will raise corporate value of the entire group even higher.
To build a solid foundation for success, the Group embarked on a new
medium-term management plan in April 2018 that runs until 2020.
Under the slogan “Transformation to 2020—Achieving structuraltransformation as a corporate family and taking the lead in finding
solutions to social issues,” we aim to achieve continuous corporate
growth and higher corporate value.
CONTENTS
What does the TIS INTEC Group do?
History of the TIS INTEC GroupTIS INTEC Group Value Creation Process
Consolidated Financial / Non-Financial Highlights
To Our Stakeholders
Looking Back on Third Medium-Term Management Plan “Beyond Borders 2017”
Outline of New Medium-Term Management Plan
Fiscal 2018 Performance Highlights, Fiscal 2019 Performance Forcast
Message from Executive Vice President
Business Strategies by Segment
Global Business Strategy
Technological innovation Strategy

3
5
7
9
11
15
17
23
25
27
29
31

Platform that Supports Value Creation Process (ESG Section)
Basic Direction on Group CSR
Sustainability
Human Resources SBU Roundtable Discussion
Communication with Stakeholders
Contributing to Global Environment
External Officers’ Dialogue
Corporate GovernanceDirectors and Members of the Audit & Supervisory Board
Business Risks
Consolidated Financial Summary
Corporate Data

33
34
35
37
39
46
47
49
51
62
64
66

Editorial Policy
From 2016, we have opted for an integrated report that provides key financial as well as non-financial content to enable all stakeholders, particularly shareholders and investors, to better understandthe measures that we have taken to achieve sustainable improvement in the corporate value of the TIS INTEC Group. Please check our website, as well, for information, as many of the topics we coverin the report are updated on the website, as appropriate.
http://www.tis.com/
Scope of reporting: TIS (parent) and TIS INTEC Group
Issued: September 2018
Disclaimer: Forward-looking statements, such as performance forecasts, described in this report are based on information available to management regarding the TIS INTEC Group—that is, TIS and thesubsidiaries under its umbrella—as of the production date and certain assumptions deemed reasonable at this time. No intent of promise is implied by the Company to achieve such forward-looking
statements. Indeed, various factors may cause future results to be substantially different from the assumptions presented in these materials.
The names of the products and services described in this report are trademarks or else registered trademarks of the respective company.

1

ProfileGroup History

Value Creation Process2
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

What does the TIS INTEC Group do?

The TIS INTEC Group accurately addresses the diverse needs of a client base that extends across
many industry sectors, as one of Japan’s leading IT corporate groups. As a cohesive group,comprising about 20,000 people, we will provide IT services that draw on the individual strengthsof each company and its human resources to support the business activities of a vast client base insuch industries as finance, manufacturing, services and the public sector, at home and abroad, andcontribute to efforts that support personal lifestyles and social infrastructure.
*Market data including market share is calculated/estimated by TIS INTEC Group.

Support lifestylescenarios

Public andGovernment Systems

Utilities(electricity, gas)

Contributing to stable insurance
system platform creation

For Federation of
National Health Insurance
Associations
Track record in system implementation/operation/maintenanceSupport industrial
competitiveness

Manufacturing

Aiding new entrants tothe deregulated power market

EneLink

12 of 47 prefectures
Of the 47 prefecture-based members of
the Federation of National Health
Insurance Associations in Japan, the TIS
INTEC Group has been tapped to install,
operate and maintain systems for 12
members.
About 6.1 million people are coveredby these 12 insurance associations.

40%（外食事業上位200社ベース）

EneLink is used by about 40% ofusers who have switched to PPSs
since deregulation of Japan’s electricity retail market began in April
2016.
The EneLink lineup was expanded
in February 2018 to assist new
entrants to the city gas market.

About(As of March 31, 2018)(Year ended March 31, 2018)19,877

Credit cards

Branded debit card-relatedDomestic market share

ID connections

Electronic data interchange (EDI) services are used in a range of industries,
and our approximately 100,000 ID
connections make us the market
leader. We also have extensive experience in developing and operating
enterprise EDI platforms swiftly
tailored for internet EDI.

Banking/
Insurance

Promoting cashless
settlement in Japan

Number of connections

100,000

About

About

(On annual transaction volume basis for clients served)

Of 25 companies in Japan with significant consumer credit transaction volumes, 10 are in the Group’s client basefor core system development.
Credit extended for card-facilitatedpurchases has reached ¥58 trillion in
Japan. The 10 companies that are in
the TIS INTEC Group client base haveaggregate membership of about 180
million people and credit transaction
volume representing about 50% of thetotal market.

(As of March 31, 2018)

¥32.7

100

Group History

Value Creation Process

Handling volume

Data entry services

CRM implementation

Annually

38 of 64 banks
F3, an integration-type CRM system forfinancial institutions has been installedat more than half the regional banks inJapan.
In addition, the F3 series, which
includes a cloud-type solution, is usedby more than 90 financial institutions.

The TIS INTEC Group is the expert indomestic BPO services, with more than
50 years of history in the field.
Data entry services, facilitated primarily through top-class systems in Japanand networks at home and abroad, havereached about 80 million entries a year.

Rating

Consolidated ROE（At November 10, 2017）(Year ended March 31, 2018)

Aggregate Numberof Solutions(Year ended March 31, 2018,
domestic)

9.9%

80 million entries

About(regional banks)

There are more than five million debit
cards affiliated with an international
brand in Japan. Settlement transactions have reached about 100 million
per year, with an aggregate value ofabout ¥500 billion.
The TIS INTEC Group boasts anoverwhelming share—about 80%—of
the market, on a transaction-handlingfinancial institution basis, throughsuch solutions as DebitCube+, which
provides one-stop access to services
required or branded debit card issuance and operation.

Consolidated
Equity ratio(Year ended March 31, 2018)

A/ Stable(Long-term/Japan Credit
Rating Agency, Ltd.)

60.0%

500 cases

3

ProfileF3 (F Cube)

More than(TIS+consolidated
subsidiaries+equity
method affiliates)

billionHelping to promote management
strategies using BPO services toboost productivity

80%

Number of Clients

BPO Services

Support centralized information
management at financial institutions
and raise efficiency and sophisticationof operations

Domestic market share

50%

About 15,000
companies

Platform
Services

Service provision/systemdevelopment results(Year ended March 31, 2018,
domestic)

Number ofGroup Companies

Support various
businesses

Supporting safe and secure,daily credit card settlement

Core system development
results

Number of
Employees,
Consolidated
Consolidated
Operating Income

Credit Cards/
Settlement

System configuration andoperation track record

About

TastyQube is highly versatile and can beapplied to any restaurant format, helps
to visualize shop operations, and realizes enhanced operating efficiency.
The solution has been applied toabout 20% of market share, mainly forrestaurants, cafes and pubs.

(Year ended March 31, 2018)billion20%(On top 200 companies basis in restaurant sector)

Consolidated
Net Sales¥405.6EDI

System implementation

Support financial
functions

New Technologies(AI, IoT, Fintech, etc.)

Supporting greater operating
efficiency in e-commerce

TastyQube

Share of switchers in Japan
About

Distribution/
Services

Highly evaluated as restaurant
sector-specific shop management
systemUsageContribute to build
a better future4
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

History of the TIS INTEC Group1964

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

1971

April 2008

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

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

2008–2009

June 2014

ITHD Group is reorganized.
INTEC Holdings is merged into
INTEC, and nine TIS subsidiaries
are put under the direct controlof ITHD.

April 2011

December 2009

Period ofestablishment

TIS INTEC Group
companies havebeen leaders in
the information
services industry
since its inception

First Medium-termManagement Plan
Group management
emphasizing independenceof each company

Discussions on Groupreorganization began

Shift to TIS INTEC Group
ITHD executed an absorption-style merger with TIS, adopted its subsidiary’s
high-profile name and transitioned to an operating holding company.

March 2015

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

SORUN Corporation joined the
ITHD Group.

July 2016

May 2015

ITHD debuted a single logo for all
Group companies and adopted a
new brand message, “Go Beyond”.

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

Second Medium-termManagement Plan
Overall optimizationof the Group andgreater sense of unity

May 2017

April 2018

Announced “Group Vision 2026”, theoverall picture of the Group in 2026

Launched new medium-term management planGroup
Vision2026

Medium-termManagement
Plan (2018–2020)

Third Medium-termManagement Plan
Portfolio management, ina project sense, combining
exceptional businesses and key
strengths into a single approach.

Structuraltransformation
ROE
(%)

12.0%
Operating income(Billions of yen)

Net sales

Operating income

10.0%

ROE

9.9%
7.4%

(Billions of yen)¥430.0 Billion

8.1%
6.0%

7.0%

4.8%

¥405.6 Billion
For details on the new medium-term
management plan, please review thesection starting on page 17~24.

5.9%¥361.0 Billion

1.5%¥338.3 Billion

Net sales¥327.4 Billion

Fiscal
2009

Fiscal2012

IT Services Industry Market Scale andIndustry Position
The TIS INTEC Group belongs to the IT­services industry. TIS, a core member of
the Group, is a leading, independent prime
contractor, ranked as the industry’s No. 2
system integrator on a consolidated sales
basis.

Fiscal2015

Fiscal2018● Net Sales of Japan’s Leading IT Companies(Billions of yen, %)YOY change

2,117.1

15,000.0

471.4

500.0

429.6

400.0

405.6
336.6

7,500.0244.2

5,000.0100.02,500.0
NRI

CTC

TIS

SCSK

4

10,000.0

286.9

200.0

NTT
Data

6

12,399.9512,500.0 11,457.7 11,667.5 11,865.0 12,048.1 12,227.5

300.0

0

2026

● IT Services Market Size in Japan (moderate case)(Year ended March 31, 2018)(Billions of yen)
2,200.0

Fiscal2021

UNISYSNSSOL···* The graph data indicates net sales of NTT DATA Corporation, Nomura
Research Institute, Ltd., ITOCHU Techno-Solutions Corporation (CTC), SCSKCorporation, Nihon Unisys, Ltd., NS Solutions Corporation, and TIS INTECGroup.
* CTC amounts are based on the IFRS (International Financial ReportingStandards).

0

3

2.4

1.8

1.7

1.5

1.5

1.4

2
1

2017

2018

2019

2020

2021

2022

0

Gartner “Forecast: IT Services, Japan, 2016-2022, 2Q18 Update” M. Sawai/September 5, 2018
End user spending based Graph created by TIS based on Gartner research
The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or
150,000
viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), andare not representations of fact. Each Gartner Report speaks as of its original publication date (and not
125,000
as of the date of this Prospectus) and the opinions expressed 114,305
in the Gartner Report(s)116,229
are subject to112,437change without110,363
notice.

118,020

119,78100,000
75,0005

650,000

1.3

1.9

1.7

1.7

1.5

25,000

ProfileGroup History

Value Creation Process

Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

0Group Business Strategies

2016

2017
Platform that
Supports
Value Creation Process(ESG Section)

2018

Consolidated 2019
Financial Summary

2020

Corporate Data

2021

TIS INTEC Group Value Creation Process“Create value through IT” “Change society through IT” “Open doors to the future through IT”

TIS INTEC Group Business Activities
Helping clients use

Resources of the TIS INTEC Group
Diverse workforce
High technological capabilities

Outsourcing
services

Ample experience and know-how
Extensive service menu

Consulting IT to raise business
value
services

Everything from system
operation to full businessprocess outsourcing atstate-of-the art data
centers

One-stop,
optimum support

input

Systemintegration
services

Providing one-stop
access to systems
perfectly matchedclient needs

outcomeLargest data center network in Japan
Broad customer baseResearch
into and access Always on a quest for theto leading-edge latest IT technology toprovide systems a step
technology

IT platform
Building safe andsecure computer configuration
networks, from host toservices
public, matched toclient needs

Solid financial positionetc

We help solve social issues throughbusiness activities

Shareholders, investors

Offer IT services to support
increasingly sophisticatedinformation society

Clients

Plan and propose newpatterns of use for IT
Realize client visions andstrategies, and set on
growth track

Employees

Use IT to help solve social
issues
Deliver shareholder returns
matched to sustainablegrowthahead of expectations

Business partners

Local communities, society

etcStructures supporting TIS INTEC Groupbusinesses and sustainable growth
Medium-term
management plan

The Group acts delivering the best solutions to address clients’ IT
needs. At the same time, we create new value for society andcontribute to improvements that pave the way to a better future.

Corporate governanceCorporate culture andhuman resourcesGroup vision
Group management philosophy

As of March 31, 2018, the TIS INTEC Group consists of the parent company, 45 consolidated
subsidiaries, and 54 affiliated companies accounted for under the equity method.

Group Management Philosophy
The TIS INTEC Group seeks to be a corporate citizen whose activities, namely, theprovision of various services utilizing information technology (IT), match its status
as a leading corporate group, and will strive to raise corporate value, supported inthis effort by the high regard of all its stakeholders, including clients andshareholders as well as employees and their families.

Company Name

Domestic
Financial IT Services

Industrial IT Services

IT Infrastructure Services

TIS Inc.

● W
 e will always provide our very best to clients by combining
Group strengths to foster higher quality and greater sophisticationin our technological capabilities.
● W
 e will uphold high corporate morals and fulfill our social obligations.

QUALICA Inc.
AJS Inc.
Other group companies: Consolidated subsidiaries 20 companies Equity method affiliates 8 companies

Other group companies
Consolidated subsidiaries
3 companies

North America

ASEAN and others

China●Consolidated subsidiaries●Consolidated subsidiaries 11 companies●Consolidated subsidiaries

Equity method affiliates 46 companies

Description of Business—

Focuses on credit card companies but pursues business
opportunities in a wide range of sectors, including services andmanufacturing.
Merged with SORUN and UFIT in April 2011 and implemented
structural reforms. Merged with pure holding company IT
Holdings Corporation in July 2016 and became operatingholding company.

TIS Inc.

Focuses on megabanks and life insurers, and promotes CRM
100% for regional banks and offers a wide selection of services toregional public corporations, particularly in the Hokuriku region.

INTEC Inc.

TISAGREX INC.

Leading company in mainstay BPO field. Began global BPO
TIS100% services in October 2013. Became wholly owned subsidiary inMarch 2015. Efforts to centralize Group’s BPO operations at
AGREX still in progress.

QUALICA Inc.

Formerly, information systems subsidiary of Komatsu. Focuses
TIS80% on assembly-based manufacturers, mainly those under the
Komatsu20% Komatsu Group umbrella, while expanding business withcompanies in the distribution and restaurant sectors.

AJS Inc.

TIS51% Formerly, information systems subsidiary of Asahi Kasei. Focuses
Asahi Kasei
49% on companies under the Asahi Kasei Group umbrella.

Overseas

1 company

Shareholding Ratios

OthersIT Service
Force Inc.*
Sorunpure
Corporation

INTEC Inc.
AGREX Inc.

● W
 e will cultivate a vibrant corporate culture that encourages companies and individuals under TIS INTEC Group umbrella to work
toward higher goals and embrace new challenges, and thereby
ensure corporate growth.

About the Group’s Five Principal Companies

4 companies*As of July 1, 2018, the Company merger It Service Force Inc.

7

ProfileGroup History

Value Creation Process

8Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Consolidated Financial/Non-Financial Highlights

Operating Income,Operating Income to Net Sales Ratio

Net Sales(Millions of yen)

405,648

346,647

361,025

382,689 393,398(Millions of yen, %)Operating Income
Operating Income to Net Sales Ratio 32,743
27,01924,43621,121
5.9

19,510
5.6

6.9

6.4

Net Income Attributable to Owners of
the Parent Company (Millions of yen)
Net Income per Share (Yen)Net Income Attributable to Owners of the Parent Company
Net Income per Share

Orders Received during the Term
(Software Development)

Order Backlog at Year-End(Software Development)(Millions of yen)

(Millions of yen)

20,6208.1

241.4416,306

10,275

207,345

199,842

71,095

172,72169,961

58,86964,751(Millions of yen)

67,71634,184

22,184

20,436

189.02

12,678
7,913

219,225
208,307

Free Cash Flow

145.22117.40

5,194

90.16

-4,536
Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

ROE, ROANet Assets per Share, Equity Ratio(%)(Yen, %)

Dividends per Share, Payout Ratio,
Total Return Ratio* (Yen, %)Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Interest-Bearing Debt Balance,
Interest-Bearing Debt Ratio

Number of Employees at Year-End

Total Assets, Net Assets(Person)(Millions of yen)

(Millions of yen, %)

ROE

ROA

9.9
8.8
7.2

6.2

6.4

5.1

6.0

Net Assets per Share

9.3

8.0

2,602.07

2,108.19 2,031.07
1,782.23
49.9

7.0

Equity Ratio

53.3

Dividends per Share

57.8

60.0

33.00

30.00

36.00

18.8

30.4

35.3
22.7

31.9
19.0

(%)

Industrial IT Services¥179,846 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 in areas
other than finance, particularly industrial andpublic finance sectors.

Year ended
March 31, 2018
Total ¥405,648
millionFinancial IT Services¥92,650 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.

13.7 35,144 32,876

0012

0041

007

0

0

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

234

55〜59
Others4.0%

Credit card

639

50〜54

18.1%

974

45〜49

Services

23.0%

Year ended
March 31, 2018

Banking¥405,648 million

Insurance

6.8%

6.4%

100.0%

Other
finance

5.4%

Distribution

7.1%

Processing-based
manufacturing

9.5%

Assembly-based
manufacturing

1,220

40〜44
35〜39
30〜34

700

2 0
30
582 65
58
791
189
66
654
326
60
630 509

1,496

347

697

1,682

50

938

1,257

25〜29

10.8%

369,504

188,789 180,539 199,202

226,298

2100

Non-Financial Data (As of April 1, 2018)
11,435 Average total working hours

168.37

Female4,203 Non-scheduled hours worked

20.63

Total

15,638 Ratio of annual paid leave taken

67.63

Male

39.87 Number of employees on maternity leave

Female

35.63

Total

38.73

Average length of service (years) Male

15.49

Average age

55

Number of employees working shorter
number of hours to care for young children
Of this, men

Female11.47 Employees on nursing care leave

Total

14.40

463
27
670
12
13

Employees working shorter number ofhours to care for elderly family

3

Turnover rate

156

Number of employees inmanagement positions

Male

Percentage of employees with
3,056
a disability Note 2

2.18

FemalePercentage of employees over the272
age of 60 Note 3

1.97

3,328 Notes: 1.	The above are simple combined averages
or weighted averages for the TIS INTECGroup’s seven principal companies (TIS,
Male
8,379
INTEC, AGREX, QUALICA, AJS, TIS
System Service, and TIS Solution Link).
Female 3,931
2.	The percentage of employees with adisability represents the combined total
Total
12,310for TIS, SorunPure Inc. five affiliatedspecially recognized companies under the
Male
26.72
Group umbrella (employees hired underregular : 8,550.0 people; employees with
Female6.47
a disability: 186.0 people).
3.	Percentage of employees over the age of
Total
21.28
60 is calculated based on June 1, 2018.
Total

Number of employees ingeneral positions

Percentage of employees inmanagement positions

General positions (male)
General positions (female)9

Of this, men (paternity leave)

Number of non-Japanese employees
4.63(foreign nationals)

3

0 685

Management positions (male)Management positions (female)

Value Creation Process

1400

877 0 522

〜24

(Age)

Group History

337,622

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Number of full-time employees Male

8.9%

345,851 336,495

164,502

Employee Composition (As of April 1, 2018) (Number of employees)
60〜

Publicinstitutions

Net Assets

8.9

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

*Based on old business segment

ProfileTotal Assets

19,843 19,877

46,158

10.4

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Net Sales by Client Sector

This segment provides
self-administered computer utility and system
operation services
through large IT facilities,
such as data centers.

19,393

16.6(Sales to outside customers, excludes intersegment sales)

This segment provides
incidental business generated from the provisionof information systems
and other b­ usinesses.

19,090313,610

52,115

30.5

Net Sales by Business Segment

IT Infrastructure Services¥128,196 million

19,081

58,869*Total return ratio: Total amount of dividends and treasury
stock buybacks as a percentage of net income.

Others¥4,955 million

有利子負債比率

15.1

25.6

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

有利子負債

25.00
27.7

Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

Total Return Ratio

40.00

2,265.76

52.5

Payout Ratio

10
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate DataTo Our Stakeholders

We will restructure into
a cohesive group,
seeking to be an
innovator that cancreate new markets.
Toru Kuwano, TIS Chairman and President,
talks about Medium-Term Management Plan
(2018–2020), which began in April 2018.

Summary of Medium-Term Management Plan (2018 – 2020)
Where is this medium-term management plan placed in the greater scheme of corporate strategy ?

Q1. “It’s a vital three year period that forms the first stage of our journey to achieve Group Vision 2026.”
The new medium-term management plan, which runs from 2018 to 2020, is important because it is the first stageof a journey toward achieving Group Vision 2026. This vision was created through repeated discussions that started
when the new structure for the TIS INTEC Group, with TIS as the operating holding company, took effect on July 1,
2016. The objective of Group Vision 2026 is to move forward as a cohesive corporate group, with everyone traveling in the same direction to boost corporate value. In 2017, we laid the groundwork through activities to promotea deeper understanding and appreciation of Vision 2026 and concurrently drafted the current medium-term management plan. What makes this plan different from those that have come before it is that we planned backwards
from the image defined under Group Vision 2026. With the end point as our starting point, we determined what
we have to do to reach that destination and where our efforts should put us when the current medium-term management plan concludes.
The theme is, in a nutshell, “structural transformation.” Essentially, we will strive for sustainable profit growth
and an emphasis on employee self-fulfillment by realizing structural transformation in three areas—concentratingon core businesses, shifting to a prior investment style of business development and expanding global business. Key
performance indicators for March 2021 are a strategic domain sales ratio of 50%, operating income of ¥43 billion,
an operating margin of 10% and return-on-equity of 12%. In addition, we will actively engage in prior investment
and capitalize on M&A opportunities to leverage structural transformation, with investment up to a maximum of¥80 billion over three years.

What is the objective behind a strategic domain sales ratio of 50%?

Q2. “Growth in IT offering service, which includes service-style business, is essential.”

Toru Kuwano, CEO and PresidentGroup Vision 2026 sees the core businesses of the Group shifting toward four strategic domains— strategic partnership business (SPB), IT offering service (IOS), business function service (BFS) and frontier market creation business(SPB) —by 2026.
Our emphasis on structural transformation and efforts to boost the strategic domain sales ratio, which currently
sits at 35% and hinges on the SPB, is a reflection of a rapidly changing social landscape. Client companies are
struggling with leading-edge digital technologies, notably, artificial intelligence (AI) and the Internet of Things (IoT),
as well as diversifying user needs, and they persist in a trial-and-error process in an attempt to figure out how best
to adjust their business models and services to the new environment. It was typical, at one time, that system development required clear-cut issues and goals and then time and money invested over the medium to long term toaddress those issues and achieve those goals. But today, companies need IT and digital methods to get services andproducts to market as quickly as possible and then constantly update these services and products based on market
response. In this environment, the TIS INTEC Group must also change, responding with flexibility and a sense of
speed. That is, we have a different role to fulfill, moving away from a mission-accomplished style in favor of a solution-proposal style emphasizing speed. Given this situation, management tapped IT offering service as a strategic
domain of particular importance for expansion during the medium-term management plan and placed service-stylebusiness*—at the heart of IT offering service—as a key growth engine.
An example of service-style business is CreditCube+, a retail payment settlement-related business and a Group
strength. Paralleling diversification in business models, the retail payment settlement business has attracted theinterest of companies in distribution, communications and various other industries beyond financial institutions,
including credit card companies. CreditCube+ is a SaaS*-style solution providing a credit card settlement platformsystem and services. It has the potential to reduce the time and cost needed prior to the start of a retail payment
settlement business and will therefore play a part in the spread of cashless settlement by supporting companies thathave entered this realm.

11

ProfileGroup History

Value Creation Process

12
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

The TIS INTEC Group’s retail payment settlement business strategy will continue to emphasize building and operating large-scale core systems for major financial institutions, which is an existing strength. But we will complement
these activities with multi-payment gateways, such as wallet services and QR code settlement using token services*,
through alliances with companies in Silicon Valley, in the United States, and companies in China. We will be making
preparations during the current medium-term management plan. Through these efforts, our retail payment settlement-related business will become more comprehensive. I believe the TIS INTEC Group might be the only provider
capable of offering such a thorough response, so our strengths are bound to shine even more brightly.
* Service-style business: Business that goes beyond building and delivering customized solutions matched to specific requirements for systems andother provided structures to provide standardized services that can be used by an unspecified large number of customers in any given industry orindustry sector.
* SaaS (Software as a Service): Structure or service that distributes software over the Internet or through some other communication network and ison-demand so that the user can access required software whenever needed.
* Token service: A service that substitutes sensitive data with a non-sensitive equivalent—a token—to facilitate payment settlement over the Internet
without putting data at risk.

What is the difference between strategic partnership business and IT offering service?

Q3. “In the SPB we become a strategic business partner to our corporate clients, and in the IOS, we create
services that support a more technologically oriented society.”

It would be no exaggeration to say that today IT = management strategy. TIS has to demonstrate a consulting function that extends to the management strategy of its corporate clients, and this is the ideal that the Strategic partnership business strives (SPB) for. For this business, our first step is to steadily develop account managers in the truest
sense from industry-specific business divisions and significantly expand capabilities by 2026. At the same time, the IT
offering service (IOS) will create vital platform-style services for society through prior investment and promote accessto all sorts of companies that need such services.
The two domains differ in perspective, with the SPB characterized by a per-customer approach and the IOS taking a
per-service approach based on social needs. The billing structures, required personnel and evaluation standards differ
as well. Consequently, we undertook a review of employee performance evaluations and the compensation structure,and in April 2018, we changed the management structure at TIS by adding two new business units—the Industry
Strategy Sector and the Service Strategy Sector—and clarified the role of each unit. In conjunction with this, thereporting segments for TIS were changed. Financial IT and Industrial IT pursue industry-specific business activities withstrategic partnership business in mind, while Service IT focuses on IT offering service. The two other reporting segments are BPO, which provides business process outsourcing services, and Other.

Describe your strategy for human resources.

Q4. “A corporate atmosphere that motivates employees and enables them to achieve personal goals isessential for corporate growth.”

I believe, without a doubt, that people are a company’s most important management resource. So, you could say,of the five basic policies listed in the current medium-term management plan, the emphasis on employee self-fulfillment is the most important. It would be no exaggeration to say that the success of the current medium-term management plan hinges on a good human resources strategy because we have to embrace a much different approach
to work and a different perspective on work to be the kind of company—and corporate group—we aspire to be.
A work environment that provides motivation and job satisfaction leads to enhanced capabilities of diverse
human resources as well as higher corporate value. Aware of the benefits that such an atmosphere can produce,
we started to reshape our human resources structure ahead of the current medium-term management plan andintroduced an employee performance evaluation and the compensation structure, including a high-end professional
position, that is better matched to activities, such as service-style business and consultations, which differ from earlier business pursuits. In addition, we set up Human Resources SBU in April 2018, formulated a corporate manifesto
highlighting such points as creating a comfortable workplace, optimizing assignment of human resources andensuring compliance from a labor perspective. We also disclosed an activity policy on efforts to become a company
where employees love to work, and we established concrete numerical targets for the current medium-term management plan that will be regularly updated with progress reports.
On the management side, we will continue to promote various measures under workstyle reform and healthmanagement to cultivate the skills of each and every one of our diverse employees and realize sustainable corporate growth. Our purpose is to encourage employees to acquire a strong sense of professional awareness and pridein what they do, which will motivate everyone to embrace challenges without fear of failure and ultimately achieve
personal goals. This is what I would like to see.

Any measures to enhance the performance level and efficiency of management overall?

Q5. “We will raise the transparency and social aspect of our operations and fulfill our function as aninnovator to create new markets.”

To enhance the performance level and efficiency of management, we will continue to emphasize corporate governance. From fiscal 2019, independent outside directors represent one-third of all directors, and one of the threeoutside directors is a woman—a first for TIS. We also set up two committees—the Nomination Committee and theCompensation Committee—to ensure objectivity and transparency in the decision-making process for appointing
and compensating directors. Meanwhile, with a view toward such factors as future implementation of international
accounting standards, we intend to cut ¥2 billion, equivalent to 10% of head office costs, by fiscal 2021 throughthe integration of Group core systems between TIS and INTEC. Furthermore, to provide an incentive to directors
and employees, we introduced a performance-linked stock incentive plan for directors and a trust-type employee
stock ownership incentive plan for employees. Another new structure is the Corporate Sustainability Committee,
which is part of an effort to make directors and employees more personally aware of the social aspect of operations
as well as corporate social responsibility, that is, the contribution we can make through our business activities toprovide solutions to social issues and thus support sustainable social development, and also to strengthen groupwide initiatives.
Today might be called the age of digital transformation—a time when various leading-edge technologies create asignificantly different society than before. Against this backdrop, what is the TIS INTEC Group’s raison d’etre? It is vitalfor each and every employee to be aware of our mission to create new markets and a bright future as an innovator,
and that, as the external environment around us changes, so too much we change.
I believe the previous medium-term management plan made it possible for us to exceed all numerical targets and,thanks to measures underpinned by three basic concepts—profit emphasis, IT brain and portfolio management—weachieved growth on a groupwide basis. But is that good enough? No. Through the current medium-term management plan, we will promote structural transformation and build a solid platform to support realization of Group Vision
2026. I am convinced that this will allow us to contribute even more to society through our business activities andconstantly improve corporate value. There are many issues to address, but the path toward solutions is clear. All­directors and employees under the TIS INTEC Group umbrella will strive as a cohesive team to reach new goals. The
continued support of our stakeholders will, as always, be integral to our success.

13

ProfileGroup History

Value Creation Process

14
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Looking Back on Third Medium-Term Management Plan “Beyond Borders 2017”(From April 2015 to March 2018)

Despite some issues still to address, the Group achieved growth overall andexceeded numerical targets in all categories through the previous medium-term
management plan “Beyond Borders 2017”.
Numerical Targets→Exceeded in all categories
Numerical Targets (Fiscal 2018)
Actual results

Net Sales¥400.0 billion¥405.6 billion

Operating Income[Operating Margin]¥30.0 billion¥32.7 billion¥16.0 billion¥20.6 billion

Net Income Attributable to
Owners of Parent Company[Net income to net
sales ratio][8.1%][5.1%][4.0%]

Achieved a year
ahead of schedule

9.9%

8.0%

ROE

Results of Key Activities

Promote total
optimization ofGroup operations● Implemented shift to operating holding company to strengthen Group governance● Executed transfer of businesses (national health insurance, electricity and gas sectors) between
TIS←→ INTEC● Promoted concentration of domestic and overseas BPO operations under AGREX○

Integrate/centralize
shared functions
within Group● Prioritized integration of systems with highly effective components to expand scope of sharedsystems within Group● Integrated offices in Tokyo, Osaka and Nagoya● Realized full Group rollout of CMS, improved capital efficiency of Group overall● Conducted review of strategic stockholdings and data centers, improved asset efficiency△

Realize higher levelof administrative
management● Promoted project to pursue possible introduction of IFRS● Reviewed business segments with eye toward breakdown better matched to new management structure● Strengthened response to taxation topics (BEPS response), mainly at overseas Group companies● Promoted enhanced IR content through production of integrated report, effective from fiscal 2016● Organized and consolidated internal control management systems, and brought unified system
under Group Internal Control Committee supervision● Emphasized efforts to encourage women to be more active in workplace, seeking to build
career-path diversity*F our companies under Group umbrella received highest level certification under “Eruboshi” system, based on the Act Concerning

Profit Emphasis

Estimates[7.5%]

Basic Concepts

Results Made Through Third Medium-Term Management Plan: Portfolio Management

Achieved a year
ahead of schedule● Steadily improve profitability, matched to expanding business results●	Work to prevent appearance of unprofitable projects, and continual
theme to keep at low level
IT Brain●	Wider demand for value-added creation style responses, along withassignment solutions geared to client requests, will fuel expansionof consolidated sales●	Shift toward market-cultivating style services requires greater senseof speed
Portfolio Management●	Steadily leverage measures aimed at optimizing Group capabilities,
including transition into operating holding company○

the Promotion of Women's Career Activities.

Cultivate corporate
culture with senseof solidarity○● Debuted unified Group logo in July 2016
● Formulated Group Vision 2026, and worked to foster widespread awareness of vision content● Published first Group newsletter

Progress Made Through Third Medium-Term Management Plan: IT Brain

VALUE-ADDED CREATION

Actual results +¥20.6 billion

Actual results +¥6.2 billion

Value-added creation styleMarket cultivating style

Sales growth: ¥18 billion

Sales growth: ¥15 billion

Large-scaleorders inforte fields

To New Medium-Term Management Plan
Change in Reporting Segments to Promote Structural Transformation
In April 2018, the Company changed its management system to promote structural transformation and restructured Service Strategy
Sector and Industry Strategy Sector. Consequently, TIS changed its reporting segments from a management approach perspective,
effective from the fiscal year ending March 31, 2019.

Expandsolutionsbusiness
Promote big
projects

To realize sustainable growth and higher corporate value,
we must stay ahead of major changes in society and, through constant transformation of the Group,
promote ­structural renewal and establish a resilient management foundation.

Expand global
business

Proposalbusiness

Industry platformbusiness(own packages,
services)

Pillar of
growthMARKET INNOVATION DRIVEN

CLIENT INSIGHT DRIVEN

Expand demand fromexisting clients
Provide BPO
services

Actual results +¥28.7 billion
Assignment solutions geared
to client requests
Sales growth: ¥17 billion

Reducedincome due toheightenedcompetition

Higheroutsourcing
demandKey Points Regarding Change in Segments● Service IT created as business unit, facilitating visualization of progress in structural transformation into service-style business, whichis positioned as future core operations.
● BPO created as business unit, promoting business through high-level BPO combining service know-how and use of advanced
technologies● Data center business positioned as IT platform supporting SI business and service-style business, and integrated into each segment.
Strategic domains
fueling growth

New Reporting Segments

Value-added creation style●Capture big projects from card industry and public sector●Expand scale of energy-related business
Market-cultivating style●Reinforce forte fields — emphasize payment settlement (PAYCIERGE)
and IoT (CareQube)●Expand capabilities through external connections — contribute
capital to Corporate Venture Capital (CVC) establishment,
CardInfoLink (CIL) and other opportunities●Expand business in ASEAN region through M&As, such as the moveto turn PromptNow into a consolidated subsidiary

ASSIGNMENTSOLUTION

Service IT
Business

Business providing knowledge intensive style IT services that turn TIS’ own service
and industry know-how into universalized, template-oriented solutions. (Includes
default configuration, and ERP)IT Offering
Services

BPO

Business using extensive service and IT know-how to provide BPO, including marketing and sales services and office and contract operations.

Business Function
Services

Financial IT
Business

Business drawing on business and operating know-how specific to financial sector
to make operations more high-value-added, expand application of IT to operations
and support the execution of operations using IT.

Industrial IT
Business

Business drawing on business and operating know-how specific to industries otherthan finance to make operations more high-value-added, expand application of IT
to operations and support the execution of operations using IT.

Strategic
Partnership
Business*In addition to the above, there is an ”Other” segment.

15

ProfileGroup History

Value Creation Process

16
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Outline of New Medium-Term Management Plan

To realize sustainable growth and higher corporate value, we must stay ahead ofmajor changes in society and, through constant transformation of the Group,
promote structural renewal to establish a resilient management foundation.

Transformation to 2020

Group Vision 2026
Taking advantage of the shift to an operating holding company in July 2016, TIS announced a new Group vision for the future in May
2017 to mobilize the capabilities of Group executives and employees alike and take corporate value higher. The new medium-term
management plan is important because it is the first stage of a journey toward achieving Group Vision 2026.

2026 Corporate Ideal(From April 2018 to March 2021)“Create Exciting Future”

Utilize advanced technologies and know-how torealize business innovation and market creation—Achieving structural transformation as a corporate family and taking the leadin finding solutions to social issues—
Seeking Position on Global Stage

Corporate Targets in 2020
Increase high-value-added quality(boost value of technology/social
research results) throughCompany where diverse
human resources, reliable,
proud and carrying
a sense of solidarity,in three years¥80 billion

Key Performance Indicators (Fiscal 2021)

Key Performance Indicators (Fiscal 2021)¥430 billion
Operating income ¥43 billion
Operating margin
10%

Structuraltransformation

Net sales50

to deliver ratio of%from strategic domain sales

ASEAN Region

Budget for growthinvestment tofuel structuraltransfmoration

value chain reform

approach work
enthusiasticallyThroughenhancedmanagement
efficiency

Becometop classROEgroup united in IT

12%

Become corporate groupthat contributes

solutions toenvironment/social issues● With solutions to social issues

up growth engines● Improve value
provided to clients,
reinforce existing
fields throughproductivity
innovation

Frontier
marketcreationbusiness
IT offering
services

Businessfunction
services

Strategic
partnershipbusiness

Medium-Term Management Plan (2018-2020) will guide us in pursuit of structural transformation with a sense of speed to build afoundation for Group Vision 2026 success and expansion of strategic domains.
Medium-Term
Management Plan

2016

2026

(2018-2020)

Strategic Domains in 2026

Business
Creator

Frontier Market
Creation Business● Create environment, culture

and programs that motivate
employees to work hard

SustainableprofitgrowthEmphasis on ● Build human resources
employee self- portfolio that supports
structural transformation,
fulfillment

and optimize deployment
throughout Group

Constant transformation, with sense of speed● Proactively propose

Concentrateon corebusinesses

solutions to markets/clientsand transform structure to
realize business creation● Pursue strategicallydirected, robust investment, mainly throughM&A and service
investment

Shift to priorinvestment
style ofbusinessdevelopment● Become top-class

IT group in ASEAN
region● Hone global
strengths,
emphasizing
payment settlement/banking/ERP
solutions

Expandglobalbusiness

Marketable
services

Evolution ofstrategic
domains

Network
infrastructureservices
BPO services

Group History

Value Creation Process

IT Offering Services

IT system
configuration andoperation

Specific
responses

IT domains

Strategic
domainratio(net sales
basis)

Business Function
Services

Strategic Partnership
Business

Provide IT
engineeringexpertise

Service domains

Fiscal 2018

Fiscal 2021

35%

50%

17

ProfileAdvanced
technologies

both a revenue base and a technology/know-how base
● IT Offering Services: Prior-investment
business functioning as pillar of profit● Business Function Services: Recognized as Group forte, driver of growth● Frontier Market Creation Business:
Driver of explosive growth throughcreative destruction of prevailing walls

TIS INTEC Group management resources

Supportingclients’businesses● Actively invest to rev

different industries as having anappealing presence, always trusted
as a strategic partner● Always embrace reform in existing
industries and markets, and earn
reputation as market-creating
innovator● Transcend the limits of an IT
enterprise; be a leading company
with innovative market concepts● Proudly demonstrate high profileand showcase solid standing as acorporate group chosen by clients,society, employees—everyone● Strategic Partnership Business: Lay

Business Domains in 2016

through business activities

Outline of New Medium-Term Management Plan “Transformation to 2020” Basic Policy
derived through business activities,
establish structure generating
medium- to-long-term benefits forsociety as well as profits to sustain
corporate presence● Achieve cost reduction throughenhanced, more efficient
headquarters function

Strategic Domains● Be seen by leading companies in

IT domains

Service domains

Above

70%

18
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Structural Transformation Strategy

Human Resources Strategy

Promote structural transformation that includes new set of values and systems to achieve sustainable growth through expansion ofstrategic domains

Employees are huge source of power driving the Group’s growth. Prioritize effots to help employees achieve career goals. Strive tocreate framework and corporate culture in which diverse human resources can thrive by boosting motivation and reinforcing humanresource management.

Current

Desired Status

Values, style

Target emphasis

Speed, flexibility

Perspective

Customer-oriented

Social issue-oriented

Approach

Mission-accomplishedstyle

SystemStandardized

Boost motivation through constantcycle of self-fulfillment

Imaginean ideal

Theory-driven proposals

Structural
Transformation

Designed to matchbusiness characteristics

Labor intensive

Knowledge intensive

Revenue scheme

Man-month units

Various billing systems

Fiscal 2018 Actual Results

Strategic domain ratio

Fiscal 2021 Targets¥142 billion¥ 215 billion

35%

50％

Cycle ofselffulfillment

Realizegoals

Business structure

Strategic domain sales

Highermotivation

Declare/
share

Solve
issuesSelectively develop model
employees to fueltransformation of the Group

Create framework and systems toachieve optimum deployment of
human resources within the Group

Kind of employees who fuel structuraltransformation● A ccount managers and service managers
who drive activity in strategic domains● C onsulting personnel who formulate
business strategies with clients● S ervice production staff who can turnindustry knowledge and businessknow-how into products● In-house entrepreneurs who can plan,
launch and promote new businesses● H igh-level engineers who support activities
in strategic domain through quality andproductivity

Visualize
human
resources
information

Establish
Group humanresources
system

Set up Human Resources SBU at TIS. Vigorously promote measures describedin personnel manifesto.
Plan to promote best practices to all Group companies.
Human resources business unit has three-point mandate
1. Create company where motivation level is high, and quickly and vigorously work toward this fromsystem and environment perspectives.
2. Achieve optimized deployment of human resources while providing an environment conducive toself-fulfillment of career goals.
3. Ensure thorough labor-related compliance and create safe and pleasant company atmosphere.

Raise
motivation

Establish
human
resources
portfolio

Enhancecapabilities ofdiverse personnel

Improve
corporate value*See Human Resources SBU Roundtable Discussion on page 37.

Structural Transformation Strategy: Promoting Service-Style Business

Strategies for Enhanced Management Practices and Improved Efficiency

Turn service-style business—at the heart of IT Offering Service—into growth engine and vigorously leverage global business growth by
expanding accumulated strengths, taking a robust approach to investment and emphasizing open innovation.

Numerical Targets forService-Style Businesses

Net Sales

Operating Income¥120.0 billion¥100.6 billion[Estimate]¥13.00 billion¥8.13 billion
8.1%

Fiscal 2018

Fiscal 2021

Fiscal 2018

[Estimate]

10.8%

Industry Platform
ERP
AI
IoT
Other leadingedge technologies

Stronger Corporate
GovernanceFiscal 2021

Key Themes
Payment

Principal measures

Respond to diversification in retail payment methods and take on role linking individuals andcompanies
Turn know-how into services, integrate with other growth engines, and build industry-standard
digital business platform
Promote thorough application of asset-building, scale-out model for enhanced level of best practices
Expand AI business and also add AI to all types of Group services to contribute to overall growth ofGroup
Mobilize resources inside and outside the Group for creating IoT platform
Drive value-added level higher through robust use of leading-edge technologies, including blockchain, robotics and XR

Promote Enhanced
Function and Greater
Efficiency at Headquarters

Reinforce Steps toEnsure Corporate
Sustainability

Improvement ofobjectivity andtransparency in
the Board of Directors

Group History

Value Creation Process

Established Nomination Committee andCompensation Committee

Greater diversity inBoard of Directors

First female director appointed(Independent outside director)

Promote Headquartersfunction enhancement
project “G20”Integrate Group’s core systems
Cut headquarters‘ costs by 10%

Elicit greater motivation
among directors to boost
corporate value

Introduce performance-linked stock compensation plan for
directors and other executives

Elicit greater motivation
among employees to boost
corporate value

Introduce trust-type employee stock
ownership incentive plan

Strengthen perceptionof social quality inbusiness activities

Set up Corporate Sustainability Committee

19

ProfileIndependent outside director ratio, one-third(new structure where of the nine directors in total,
three are independent outside directors

20
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Toward Further Improvement in ROE

Basic Policy on Return to Shareholders

Seek more appropriate capital composition and enhanced capital efficiency, with efforts to promote growth investment, maintainfinancial health and strengthen return to shareholders—all in the right balance.

●	Raise total return ratio yardstick to 40%, from 35%. Aim for dividend ratio of 30% by fiscal 2021

through stable dividend growth.

Promote growth investment●	Pursue growth investment activity, such as prior investment and M&As, morerobustly. Envision maximum ¥80 billion in investments over three years. Seek
50% contribution from strategic domains and operating margin of 10%
through structural transformation.

Promotegrowthinvestment●	Set upper limit on treasury stock holdings to 5% of total number of issued shares, with excess of

this amount cancelled.

Total return ratio (yardstick)

Payout ratio (yardstick)Upper limit on treasury
stock holdings at(up from 35%)

(by March 31, 2021)(excess cancelled)

40%

Maintain financial health●	Keeping in mind goal to maintain A rating, ensure equity ratio above 50% andallow debt-to-equity ratio around 0.5 times.
Strengthen return to shareholders●	Raise total return ratio yardstick to 40%, from 35%, and then aim for payout
ratio of 30% by fiscal 2021 through stable dividend growth.
●	Set upper limit on treasury stock holdings to 5% of total number of issued
shares, with excess of this amount cancelled.

Strengthen
return toshareholders

Maintainfinancialhealth

9.9％(Fiscal 2018)

Net income ratio

ROE

12.0％
(Fiscal 2021)

6.7％

5.1％

Improved profits through progresson structural transformation

×Total asset(Fiscal 2018)

turnover ratio

×(Fiscal 2018)(Fiscal 2021)

paralleling growth investments

Financial leverage

1.70

Slight riseGreater improvement in equity
ratio offset by new acquisition ofinterest-bearing debt

1.15

(Fiscal 2021)

40% 40.1%

Slight drop Increase in business assets(Fiscal 2018)(Fiscal 2021)

Investment Strategy

35.3%

22.7%

30%
31.9%

30.5%

19.0%

21.9%

11.60

16.6%

9.35

2.90

4.21

4.47
1.59
2.87

5.19
2.09
3.09

6.28
2.85

Fiscal 2016

Fiscal 2017

Fiscal 2018

3.42

5.14

(New Medium-Term
Management Plan)

Fiscal 2019

Fiscal 2020

8.70
Fiscal 2021

Dividends
For fiscal 2018, the Company paid a year-end cash
dividend of ¥26.00 per share (the annual dividendof ¥40.00 per share). For fiscal 2019, the Company
plans to pay an annual dividend of ¥60 per share,including an interim dividend of ¥20 per share.
Acquisition of treasury shares
For fiscal 2018, the Company acquired treasury
stock of 908,300 shares (worth ¥2,859 million).
For fiscal 2019 (From May 2018 to July 2018), theCompany acquired treasury stock of 809,100 shares(worth ¥4,209 million).

Numerical Targets● Pursue growth investment activity, such as prior investment and M&As, more robustly to fueltransformation of business structure. Envision maximum ¥80 billion in investments over three years.
Investment Policy

Actual results

Estimate

Investment in human resources to fuelstructural transformation (¥8 billion)
Investment in R&D to acquire advanced
technologies (¥5 billion)＋[Billions of yen]

Net Sales

Key Investment Objectives (envisioned)

Software investment to create new services(¥17 billion)

Operating Income

430.0[Estimate]405.6

and constantly sharpen competitive edge

32.7

● Develop skills of human resources who will realize switch to

10.0%

strategic domains and advanced technology fields● Build human resources portfolio that facilitates best possible

8.1%

deployment throughout Group

Fiscal 2018

● Pursue research into advanced technologies anticipating trends● Rev up open innovation

Fiscal 2021

ROE

12.0%

29.0
● Invest in new companies to capture know-how and promote services● Increase investment into alliance companies (higher

20.6

Investment Management Policy

5.1%

Fine-tune investment management practices to capture appropriate return from robust investment activity
Carefully select investment targets, based on investment efficiency index and investment cost, andtoughen up rules for exit management

Fiscal 2018

[Estimate]

9.9%

6.7%

Fiscal 2021

21

Value Creation Process

Fiscal 2021

Fiscal 2018

Net Income Attributable to Owners of
the Parent Company

shareholding ratio)

Group History

43.0[Estimate]● Investment into development of own services● Allocate fixed percentage of business profits for investment[Estimate]

Investment to grow strategic domains(¥50 billion, including M&A)

Profile5%

Total return ratio ■ ■ Total dividends ■ ■ Acquisition of treasury shares[Billions of yen][Billions of yen]

Payout ratio

35%

Picture of ROE Success

30%

Fiscal 2018

Fiscal 2021

22
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Fiscal 2018 Performance Highlights, Fiscal 2019 Performance Forecast

Fiscal 2018: Sales and Income for Key Business Segments

Fiscal 2018 Performance Highlights
Actual results

Estimate

Actual results

Estimate

Actual results

IT Infrastructure Services
Point● Against a favorable businessbackdrop, sales and income
were up over the corresponding period a year ago, thanks
to higher business volume
and efforts to improve
profitability. Exceeded target.
● ROE improved year-on-year,

thanks to higher profitability.
Exceeded initial target.

*Segment sales include intersegment sales.

Estimate

Actual results

Financial IT Services

Estimate

Industrial IT Services

Net Sales (Millions of yen)

Operating Income (Millions of yen)

Net Sales (Millions of yen)

Net Sales (Millions of yen)

Net Sales (Millions of yen)

YOY change +¥12,249 million (+3.1%)
Compared with estimate:+¥5,648 million (+1.4%)
400,000

YOY change +¥ 5,724 million (+21.2%)
Compared with estimate:+¥ 2,743 million (+9.1%)

YOY change: +¥5,118 million (+4.0%)
Compared with estimate:+¥2,700 million (+2.1%)

YOY change: +¥8,931 million (+ 10.6%)
Compared with estimate:+¥6,983 million (+8.1%)

YOY change: - ¥782 million (- 0.4%)
Compared with estimate:- ¥5,374 million (- 2.8%)
194,000

393,398

32,743 30,000

405,648 [Estimate][Estimate]

27,019
6.9%

Fiscal 2018

Fiscal 2017

● In sectors where IT investment is showing

renewed growth, we emphasized accurate
identification of client needs and were rewarded
with higher sales, year-on-year. Exceeded target.

92,983 86,000[Estimate]

84,051

189,409

188,626 [Estimate]

Fiscal 2017

Fiscal 2018

8.1%

OperatingmarginFiscal 2018

Fiscal 2017131,700 129,000[Estimate]

126,581

Fiscal 2018

Fiscal 2017

Fiscal 2018

Fiscal 2017

● Year-on-year improvement in income reflects

higher net sales staring point and successful efforts
to boost profitability, including steps to prevent
unprofitable projects, which absorbed cost
increases incurred to enhance employee benefits
and sharpen competitiveness.Exceeded target.

Net Income Attributable to
Owners of the Parent Company (Millions of yen)

Net Income per Share (Yen)ROE (Percent)Operating Income (Millions of yen)

Operating Income (Millions of yen)

Operating Income (Millions of yen)

YOY change +¥ 4,314 million (+26.5%)
Compared with estimate:+¥ 2,620 million (+14.6%)

YOY change: +¥52.42 (+27.7%)
Compared with estimate:+¥ 30.68 (+14.6%)

YOY change: +1.1%
Compared with preliminary
calculation: +0.9%

YOY change: +¥1,584 million (+15.6%)
Compared with estimate:+¥1,243 million (+11.8%)

YOY change: +¥4,416 million (+121.8%)
Compared with estimate:+¥2,142 million (+ 36.3%)

YOY change: +¥339 million (+2.7%)
Compared with estimate:- ¥265 million (- 2.0%)
13,10012,835 [Estimate]
12,496241.44 210.76

20,620 18,000[Estimate]

16,306

4.1%

OperatingmarginFiscal 2017

[Estimate]189.02

9.9% 9.0%[Estimate]

8.8%

11,743 10,500

8,042[Estimate]

10,1585,900[Estimate]

8.0%

5.1%

Operatingmargin

8.9%

4.3%
Fiscal 2018

● Net income attributable to owners of parent

company was up year-on-year, buoyed mainly byhigher operating income. Exceeded target.

Fiscal 2018

Fiscal 2017

● Year-on-year improvement, paralleling higher

net income attributable to owners of parent
company. Exceeded target.

Fiscal 2018

Fiscal 2017

● Year-on year improvement, mainly reflecting

higher profitability. Better than initially projected.

Fiscal 2017

Fiscal 2018

● Sales and income up year-on-year and above● Vigorously invest into growthdomains and forte fields tofacilitate structural transformation described in new
medium-term management
plan.
● Seeking to exceed initial 10%

ROE target.

target, as wider demand for BPO services as wellas contribution from large management projects
for clients in public-sector and brisk demand fordata center services fueled by interest in cloudbased services absorbed higher costs incurred tostrengthen business capabilities.

YOY changes

Net Sales¥414,000 million

YOY change: +¥8,352 million [+2.1%]

Operating Income¥35,000 million

YOY change: +¥2,257 million [+6.9%][Operating Margin]

YOY change: +0.4 points

8.5%

Net Income Attributable to
Owners of Parent Company¥23,300 million

target, owing to contribution from large development projects for clients in credit card sector aswell as increase in business volume paralleling
greater IT investment by clients in payment settlement sector. Successful efforts to prevent unprofitable projects also helped boost segment results.

(Current

10.2% calculations)

Value Creation Process

Net Sales

Fiscal 2018

investment by clients offset a reactionary drop
in demand for large projects. Operating income
up year on year, owing to higher costs related
to the establishment of an dedicated structureand system improvements amid a push to boost
profitability. Did not meet target.

YOY change: + 0.3 points

Fiscal 2018405,648[Millions of yen]

New Business Segment

Net Sales

Fiscal 2018405,648
100,603

IT Infrastructure Services

131,700

Service IT Business

Financial IT Services

92,983

BPO

38,257

Industrial IT Services

188,626

Financial IT Business

106,655

Other business

10,791

Industrial IT Business

176,485
10,688Intersegment elimination/
adjustments(18,453)

Other business
Intersegment elimination/
adjustments(27,041)

32,743Operating Income

32,743

11,743Service IT Business

8,139

Financial IT Services

8,042

BPO

1,638

Industrial IT Services

12,835

Financial IT Business

11,331Other business

1,006

Industrial IT Business

11,5091,010Intersegment elimination/
adjustments(884)

Other business
Intersegment elimination/
adjustments

IT Infrastructure Services

YOY change: + ¥32.11 [+13.3%]¥273.55

Net Income per Share

Old Business Segment

Operating Income

YOY change: +0.5 points

5.6%[Net income to net sales ratio]

YOY change: +¥2,680 million [+13.0%]

23Group History

Fiscal 2017

● Sales were at a year-on-year par, as greater IT

Fiscal 2018 Performance Results, New Business Segment Basis(Net Sales and Operating Income)Fiscal 2019 estimates

ROE

ProfileFiscal 2018

Fiscal 20176.8%

For references

Point
tions, absorb reactionary dropin large projects and work
toward higher sales andhigher income.

6.6% Operating
marginOperatingmargin● Sales and income up year-on-year and above

Fiscal 2019 Performance Forecast● Amid brisk business condi-

8.6%

3,626

(884)

24
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Message from Executive Vice President

We will reshape thebusiness model from a
profit emphasis whilepursuing robust growthinvestment.

Masahiko Adachi, Representative Directorand Executive Vice President

Higher ROE and return to shareholders
To improve ROE, we will seek appropriate capital composition by balancing efforts to promote growth investments, ensure
financial health and reinforce return to shareholders. We are targeting ROE of 12.0% by fiscal 2021, but the key factor inthis formula is the net profit margin. We will leverage structural transformation through robust growth investment and,with an operating margin of 10% achieved by expanding the strategic domain sales ratio and zero-net assumed extraordinary income, the net profit margin will go up, rising from 5.1% in fiscal 2018 to 6.7% in fiscal 2021. However, underconventional contract development, software is typically a customer asset, while under the service-style business, software
belongs to the TIS INTEC Group. Therefore, as the business expands, so will assets, and total asset turnover may decreaseslightly. Also, because of our emphasis on growth investment, we keen to retain our A-rating and will maintain an equity
ratio of at least 50%. But as a control measure, we intend to procure funds, primarily interest-bearing debt, and we
expect financial leverage to increase slightly but within the acceptable limit for the debt/equity ratio which we have set at
0.5 times.
On the topic of return to shareholders, we will increase the total return ratio yardstick to 40%, from 35%, and aim fora dividend ratio of 30% by fiscal 2021, up from 16.6% as of fiscal 2018, through stable dividend growth. With this inmind, we are thinking of a rather sizable increase in the annual dividend per share for fiscal 2019, with a distribution of¥60 per share, up from ¥40 for fiscal 2018. Note that we have established a policy on holdings of treasury stock, setting
the limit at 5% of the total number of issued shares, with the excess of this amount cancelled.

Investment strategy
Focus on evolving business model to boost strategic domain sales ratio to 50%
One of the themes in the new medium-term management plan is our business model—that is, reshaping it. Specifically,
we set a strategic domain sales ratio of 50% and made this target a top key performance indicator.
Currently, the strategic domain sales ratio sits around 35% and hinges on the strategic partnership business (SPB). Thisis an extremely vital business, forming the backbone of Group operations, and the importance of this business will notchange. But a particularly crucial key in raising the strategic domain sales ratio to 50% is the IT offering service (IOS), withservice-style business at its core. As for the other two domains, we aim to expand the business function service (BFS)
through efforts to enhance value-added features, with an emphasis on existing BPO and back-office service know-how.
The frontier market creation business (FCB), which will involve the Group as a whole, does not carry much weight in terms
of profit contribution in the current medium-term management plan. It will take time for this domain to generate profit,
but we will cultivate demand that ultimately leads to a 70% strategic domain sales ratio by 2026.

Emphasize operating income while emphasizing profitability to prevent diminishing equilibrium
Key performance indicators for fiscal 2021, ending March 31, 2021, which is the last year of the current medium-term
management plan, are operating income of ¥43 billion, an operating margin of 10% and ROE of 12%, along with theaforementioned 50% strategic domain sales ratio.
Net sales is not tapped as a key performance indicator because we are pushing forward on structural transformation.
And it is because, in expanding the service-style business, which is always booking standard system user fees and otherrevenue under sales, we have to change our emphasis from typical contract development, which books huge revenue overthe course of a project in a relatively short period of time, in favor of profit, based on various criteria, including evaluation
standards applicable to corporate structure and personnel. In addition, we have to pay more attention to profitability
given that the number of employees is not going to suddenly rise over the next three years. There is a chance of diminishing equilibrium if the operating margin is one of the key performance indicators used, so we also highlight operating
income.
Fiscal 2019, ending March 31, 2019, is the first year of the current medium-term management plan, and operating
income is held back to a gradual rate of growth, owing to the burden of upfront expenses accompanying various priorinvestments designed to promote growth in the future. But these prior investments are going to deliver results in the second and third years. As the ratio of sales from value-added, high-profit strategic domains, which currently hovers around35%, rises to 50%, operating income and the operating margin—at ¥32.7 billion and 8.1%, respectively, in fiscal 2018—
should expand to ¥43 billion and 10%, respectively, by fiscal 2021.

As for specifics on growth investment, our focus will be on prior investment and M&As to leverage structural transformation during the current medium-term management plan, and we envision a maximum of ¥80 billion directed to such activity over the next three years. This amount will be broken down into two applications—one, totaling ¥30 billion, earmarks¥17 billion for software investment to create new services, ¥8 billion for investment in human resources to fuel structuraltransformation, and ¥5 billion for investment in R&D to acquire advanced technologies; and the other, ¥50 billion, is forinvestment to grow strategic domains, including capital for M&A opportunities. Both applications are important, but the¥8 billion for investment in human resources is definitely a key point. Our approach is to promote investment in humanresources along with the human resources strategy driven by the Human Resources SBU at TIS and described in the personnel manifesto to develop the skills of human resource who will realize the switch to strategic domains and advanced
technology fields and to build a human resources portfolio that facilitates the best possible deployment of talent throughout the Group.
And for investment to grow strategic domains, including capital for M&A opportunities, we envision equity contributions into new companies to access know-how and promote services and additional investment into alliance companies.
Investment up to ¥80 billion is a massive level of investment so, naturally, we will fine-tune investment management practices to capture appropriate return from robust investment activity and carefully select investment targets, based oninvestment efficiency index and investment cost, and also toughen up rules for exit management. This perspective will
guide investment to expand overseas business as well. As represented by PT Anabatic Technologies Tbk, in Indonesia, andMFEC Public Company Limited, in Thailand, which are affiliates accounted for by the equity method, we will not obsess
over a majority stake right off the bat. Our policy is to enter markets through minority stakes in prominent IT companies in
the ASEAN region. And then, after confirming the potential for business expansion through sufficient mutual understanding and joint business activities, we will consider additional investment.
I assumed my current position in April 2018. I will utilize the experience gained in the operating divisions that I haveworked in to date, open wider channels of communication between marketing divisions and the frontlines, and close any
gap in perceptions. This is the role I will fulfill. At the same time, I will draw on numerical analysis know-how acquired
during my early career at a bank and give shareholders and investors numbers, wherever possible, and straightforward
explanations to facilitate a clear understanding of the current status of the TIS INTEC Group and its future prospects.
The TIS INTEC Group will pursue growth investment to fuel structural transformation and thus achieve Group Vision
2026 while steadily charting corporate growth and enriching return to shareholders. TIS will lead the Group in meetingstakeholders’ expectations and fulfilling the responsibility to boost corporate value. The continued support of our stakeholders will be instrumental to our mutual success.

25

ProfileGroup History

Value Creation Process

26
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Business Strategies by Segment

Here is a description of business strategies by segment that we will follow
during the new medium-term management plan.
We will focus on expanding service-style business—one of the Group’s growth engines.
Service IT business is a segment that emphasizes service-style business, which has been positioned
as a growth driver and will fuel the TIS INTEC Group’s efforts at structural transformation.
To achieve anticipated growth, we must redefine the strengths that we, as a corporate group,
have cultivated so far, create IT solution services that are applicable to as many customers as possible under a prior investment format, and provide these services with a sense of speed. The businessmodel that we envision for this purpose is completely different from what we have used in the past,and it brings many challenging aspects. But to turn service-style business into a core business thatpowers the Group’s future prospects, we must always be conscious of change and keep words like“anticipate” and “speed” in mind when we provide services. As this business grows, so will ourability to help as many client companies as possible deal with management concerns.
BPO is also a forte field for the TIS INTEC Group. Going forward, companies are going to be looking at outsourcing various services to deal with the consequences of a smaller workforce, parallelinga falling birthrate and the graying of society. To decisively address these needs, we will promote an
improved level of value-added features, including combination BPO services, and expand businessvolume and profitability through business restructuring.

Yasushi Okamoto,Director, Senior Managing Executive Officer
and Manager of Service Strategy Sector

Service IT Business
ActualEstimate

Net Sales

We will leverage transformation as a true business partner supporting customers’ growth strategies.

BPO(Billions of yen)

ActualOperating Income

120.0[Estimate]
100.6

Financial IT Business

Estimate(Billions of yen)

Net Sales

Operating Income

43.0[Estimate]

13.0[Estimate]

Josaku Yanai,
Director, Senior Managing Executive Officer
and Manager of Industry Strategy Sector

Financial IT business and Industrial IT business are built on expertise and know-how specific tocustomer operations and comprise businesses that support solutions to management issues at clientcompanies. These segments form core pillars of the TIS INTEC Group.
The Group’s strength lies in a diverse customer base—broad and deep, created through IT-related
business expansion achieved to date. Right now, many customers in different industries are engaged
in digital transformation. We will draw on extensive points of contact with customers and actively
present solutions using leading-edge technologies to address identified issues that customers know
they must address as well as latent needs that have not yet surfaced, and thereby support customers
in their transformation process.
We will establish solid partnerships with excellent client companies representing Japan on theworld stage and be a true business partner by supporting their growth strategies. This approach will
not only promote the evolution of our own business pursuits but also benefit the customers of ourcustomers, inevitably serving to solve social issues as well.

3.0[Estimate]

38.2

ActualEstimate(Billions of yen)

Net Sales
106.6

1.6

100.0
[Estimate]

11.3

Fiscal 2021

Fiscal 2018

Estimate

Net Sales

12.0[Estimate]

176.4

185.0
[Estimate]

10.6%

7.0%

(Billions of yen)

Operating Income

14.5[Estimate]

11.5

Operating margin

Operating margin

12.0%

7.8%

6.5%

4.3%

8.1% Operating margin

Fiscal 2018

ActualOperating Income

8.1
10.8%

Industrial IT Business

Operating margin

Fiscal 2021

Fiscal 2018

Business Growth Strategies, Focus Points

Fiscal 2021

Fiscal 2018

Fiscal 2021

Business Growth Strategies, Focus Points● With priority allocation of management resources toward growth engines and● Improve gross profit ratio on existing entry services through BPO

use of advanced technologies, expand business (IT Offering Services) throughshift toward business anticipating prior investment by clientsconcentration effect and business restructurings● Expand business and boost profitability (Business Function Service) through● Watch for changes in structure of payment settlement business and expand

Fiscal 2018

Fiscal 2021

Fiscal 2018

Fiscal 2021

Fiscal 2018

Fiscal 2021

Fiscal 2018

Fiscal 2021

Business Growth Strategies, Focus Points

Business Growth Strategies, Focus Points● Expand business (Strategic Partnership Business) by strengthening connection● Expand business (Strategic Partnership Business) by strengthening connection

to extensive client base of credit card companies, banks and insurers, andcreating business together

to extensive client base in industry and public sectors, and creating business
togethermore sophisticated BPO drawing on shift to high-level, combined BPO anduse of forte business knowledge and advanced technologies.

● Increase provided value by utilizing Mode2 and other digital innovations as well

● Increase provided value by utilizing Mode2 and other digital innovations as well

as AI and other advanced technologies, and boost profitability by promoting
measures, such as enhancement innovation activities, to improve productivity

as AI and other advanced technologies, and boost profitability by promoting
measures, such as enhancement innovation activities, to improve productivity

Fiscal 2019 Performances Forecast

Fiscal 2019 Performances Forecast

Fiscal 2019 Performances Forecast

Fiscal 2019 Performances Forecast

Net Sales: ¥103,000 million
		(YOY Change: + ¥2,397 million, +2.4%)

Net Sales: ¥39,000 million
		(YOY Change: + ¥743million, +1.9%)

Net Sales: ¥107,500 million
		(YOY Change: + ¥845million, +0.8%)

Net Sales: ¥180,000 million
		(YOY Change: + ¥3,515million, +2.0%)

Operating Income: ¥8,300 million
		(YOY Change: + ¥161 million, +2.0%)

Operating Income: ¥2,000 million
		(YOY Change: + ¥362 million, + 22.1%)

Operating Income: ¥11,800 million
		(YOY Change: + ¥469 million, + 4.1%)

Operating Income: ¥12,500 million
		(YOY Change: + ¥991 million, + 8.6%)

prior investment style services not only for debit and prepaid card transactions
but for credit card transactions as well

● IT investment activities in growth fields, such as the cloud and networks,● Promote enhanced profitability through restructuring, by integrating BPO

as well as definite efforts to expand payment settlement business and ERP
demand will absorb cost burden of prior investments and should lead tohigher sales and income.

business locations and ensuring thorough profitability management, andthrough a shift to high-level, combined BPO services. Sales and income
should increase year on year.

● Steady execution of big projects, business expansion through stronger

27

ProfileGroup History

Value Creation Process● Will absorb reactionary drop in big projects, mainly by promoting high-connections to primary clients, including those in credit card, banking andinsurance sectors, and proposals anticipating client needs, and higher
productivity should lead to higher sales and income year on year.

value-added services underpinned by consultations and enhanced upstream
operations and by improving productivity. Should lead to higher sales andincome year on year.

28
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate DataGlobal Business Strategy

We are keen to help solve social issues in the ASEAN region.

Enhance Activity Through Business andCapital Alliances in ASEAN Region

Three Pillars of Global Development
The Group’s global development is supported by three pillars:
local support for existing clients entering one or morecountries; cultivation of local IT markets where know-how
accumulated in Japan can be put to use; and domestic
application of leading-edge technologies sourced abroad andturned into new business strengths. The Group’s overseas
activities kicked off in China and have since expanded to
the ASEAN region where its capabilities are leveraged by athree-point presence—Thailand, Singapore and Vietnam—
mainly through representative offices. In recent years, ourapproach has diversified, drawing on business and capitalalliances with local companies, and thereby accelerating lateralexpansion through the ASEAN region.

I AM Consulting Co., Ltd.

In 2014, then ITHD-subsidiary TIS formed a capital andbusiness alliance with MFEC Public Company, a major local
provider of system integration services in Thailand, and turned I
AM Consulting, a top-class SAP consulting firm in Thailand into
a consolidated subsidiary. In 2015, the company formed acapital and business alliance with PT. Anabatic Technologies, amajor system integrator in Indonesia. The 2016 investment in
PromptNow Co., Ltd., which subsequently became a consolidated subsidiary, is another example of efforts to enhance ourpresence in the ASEAN region. Going forward, the revitalized
TIS will resourcefully promote joint strategies with promisingpartners to build a solid business presence in the ASEAN region.

Thanawat Lertwattanarak, Founder and Director (left photo)
Srirat Chuchottaworn, Founder and Director (right photo)Since its establishment in 2004, I AM Consulting has been actively
engaged in efforts to enhance business management and boost efficiency at many public infrastructure companies in Thailand and at private-sector companies in a wide range of industries.
We have played a key role in the economic development of Thailand and Indochina as the only SAP total solution provider
covering all fields, from IT- and management-related consulting to licensing and training.
We became a TIS subsidiary in 2014 because of the tremendous potential for growth that the connection to TIS would
provide through access to high-level IT engineering capabilities, namely, a solid track record for implementing SAP solutions as well as SAP-related know-how, that the company has built up as a major system integrator in Japan as well as
access to management know-how and an extensive office network. TIS has a deep understanding of the Thai market andlocal business needs and has provided invaluable support from technology and management perspectives, enabling I AM

Leverage business domain expansion and strategic investments to become top-class IT groupin ASEAN region.

Consulting to realize a higher level of success. We are proud to be included under the TIS corporate umbrella.
To date, we have steadily pursued joint activities with TIS and companies in business alliances with TIS in the ASEAN
region. And we are pleased, through the start of TIS ONE, which targets a wider response to SAP-related demand

Step1:
Expansionin China

Step2:
Three-point
expansion in
Thailand, Singapore,
Vietnam

Expand global business in ASEAN
region through capital andbusiness alliances and acceleratearea development

Development Points in China/ASEAN

MFEC Public Company Limited [Net sales: ¥10.2 billion]● Thai-listed, leading provider of enterprise IT solutions● April 2014: Capital and business alliance (20% equity = equity-method affiliate)

Hong Kong

YangonHanoi

ManilaBangkok

Ho Chi Minh
Kuala Lumpur
Singapore

I AM Consulting Co., Ltd. [Net sales: ¥2.2 billion]● Thai-based consulting group producing total SAP-related IT solutions● June 2014: Turned into consolidated subsidiary

PromptNow Co., Ltd. [Net sales: ¥260 million]● Leading FinTech player with multiple proprietary mobile services for financial institutions● May 2016: Turned into consolidated subsidiary

Shanghai CardInfoLink Data Service Co., Ltd. (CardInfoLink)● FinTech company developing presence in China and around the world, with particular strength in QR

Jakartacompanies as possible.
Thailand and the rest of the ASEAN region is enjoying remarkable growth. But to maintain this direction, local industries
must become more efficient and provide higher added value through even greater use of IT. Therefore, we need to beable to contribute significantly to solutions that address social issue not only within Thailand but throughout the ASEAN
region. This is certainly possible through collaborative efforts with TIS.

● TIS forges capital and business alliance with R3 Holdco LLC of the U.S. (June 2018)
R3 Holdco LLC is the developer behind Corda, the world’ s only enterprise blockchain platform suitable for tightly regulated
business environments, and it is a world-class brand with an unsurpassed track record in blockchain technologies for B2Btransactions in both the financial and non-financial sectors. Moving forward, we will be stepping up our collaboration withR3 Holdco on development and adoption of blockchain applications in Japan and ASEAN.

● July 2015: Capital and business alliance (28% equity = equity-method affiliate)Wuhan

throughout the ASEAN region, to be part of solutions that address the business management issues of as many client

TopicsRecent Key M&A and Investment Results● Indonesia-listed, top-tier IT company in Indonesia

Tokyo
Shanghai （Head Office）

Local subsidiary
Representative office
Portfolio investments

and emphasize greater cooperation between locations● Invest in promising products and the most advanced
technologies in the West (Europe/U.S.), China and ASEAN● Actively leverage strategic investments and expand portfolio● Work to develop and expand scope of global human resources

PT Anabatic Technologies Tbk [Net sales: ¥38.5 billion]

Beijing
TianjinBangalore● Prioritize areas of retail payment settlement, banking and ERP,

Step3:

code payment settlement services● September 2017: Capital and business alliance (10% equity)● TIS establishes capital and business alliance with TinhVan Technologies JSC of Vietnam (June 2018)
One of Vietnam’s leading IT firms, TinhVan Technologies JSC is a recognized developer of software and large-scale IT systems. TIS and TinhVan Technologies will be working together to deliver payment solutions such as QR payment services inVietnam.
● TIS strengthens collaboration with PT Anabatic Technologies Tbk of Indonesia (July 2018)
TIS has purchased convertible bonds issued by Indonesia-listed IT major PT Anabatic Technologies Tbk to bolster cooperation
with its equity-method affiliate. The two companies will strengthen their global presence by stepping up development andprovision of IT services and other solutions needed by Japanese affiliates and local firms in ASEAN.

* Net sales for fiscal ended December 31, 2017, converted at exchange rate prevailing at year-end.

29

ProfileGroup History

Value Creation Process

30
Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data

Technological Innovation Strategy

Technological Innovation Platform that Leads Shift to Digital Services Business
Here is a description of the technological innovation platform at TIS, with a focus on measures to reinforce
development capabilities.
For a technological society arising from a paradigm shift
Naoto Kita, Executive Officer, Division Manager of Technology & Engineering SBU and
Strategic Technology Center and Incubation Center
These days, advances in technology are generating major change—dubbed a paradigm shift—across all levels of society and prompting a rebuild of social, economic and business relationships.
All industries are going digital and linking various systems, which makes it easier to align key information, things and people. At the same time, transaction costs are moving as close to zero as possible and a new economy is taking shape—a platform that encompasses transactions throughvarious methods not brokered by currency.
With regard to the technology strategy we are following against this backdrop, I’d like to take this opportunity tohighlight efforts to reinforce service development capabilities. Honing a sharper competitive edge in service development requires efforts on two fronts: the added-value front and the pricing front. Measures to boost competitiveness on
both fronts will emphasize shared values and joint activities with in-house and outside experts and specialist organizations, and the results will be used to realize structural transformation as a corporate family and take the lead in finding
solutions to social issues. This is central to the new medium-term management plan.

Toward an Era of Open Innovation
TIS’ Development Structure Based on
Open Innovation

Today, technology to bring transaction costs down to zero isadvancing at a fast pace. At one time, companies worked on
their own to boost the efficiency of structures that kept
business profits rising and underpinned continuous corporate
growth. But the advantages afforded by such efforts are fading.
Even for system integrators, like TIS, open innovation has
become mainstream, highlighted by increased industry-academic-government collaboration and joint development withcompanies in different industries and with startups.
Behind this expanding trend in open innovation are suchfactors as greater ease in finding business partners with highly
original, excellent technologies and in deriving new businessmodels from startups with promising solutions to social issues.
In addition, open innovation is a means to solving a structuralissue—an “innovation dilemma”—that has been around for along time. It reflects the challenges inherent in creating new
businesses, especially under a structure that has alreadyachieved business growth, because underlying concepts for
growing a business and creating a business are fundamentallydifferent. It is difficult to switch to an idea, function andstructure in line with the creation of a new business. Consequently, open innovation is not a passing trend but a vital
corporate pursuit.
TIS has three structures that pursue activities laterally acrossthe Company to strengthen service development capabilities.
They are the Strategic Technology Center, which conducts R&D
looking five to 10 years ahead; the Incubation Center, which
cultivates new businesses for the future; and the Technology &Engineering SBU, which strives to sharpen development
capabilities and boost productivity.
The Strategic Technology Center takes a long-term view,
focusing on technology with the potential to lead to future

Joint research
Strategic Technology Center(about 30 people)

Government/
municipalities

Universities
Cooperation

Operating divisions

Support forstartups
New businesscreation support

Incubation Center(about 15 people)

TIS R&D
Center(San Jose)
Cooperation

Technical
support/joint efforts

Startups

Venture capitalcommunity

business creation, and pursues joint research with external
partners, including government/municipalities and universities.
At the Incubation Center, staff identifies startups with thepotential to generate a synergistic effect with TIS and coordinates joint activities with operating divisions. Aside from this, TIS
is engaged in activities to support various startups. Such activities
include speedy capital participation through corporate venture
capital and an accelerator program that helps startups turn ideas
into businesses under specific themes. In addition, TIS set up bit& innovation, a co-working space at the head office in Tokyo
that functions as a place where people from across business andindustry lines gather to create new businesses.

In the Technology & Engineering SBU, architects andspecialists with high-level expertise handle some aspects ofdevelopment and also provide technical support to operating
divisions. In addition, the business unit supports startups where
staffing levels are low. Joint efforts like this, with in-housestructures and external organizations, lead to innovative or
quality products and services at a reasonable price. In otherpursuits, the business unit strives to build new win-win
relationships by shifting away from an in-house oriented
structure to an open structure and by sharing development
processes and results with stakeholders.

Reinforcing Service Development Capabilities

es have been prepared. Going forward, the Technology &Engineering SBU will enhance content with additions andupdates based on its own technology development activities.

In recent years, application development has become increasingly bimodal. One is optimized for areas that are morepredictable, such as SoR and Mode 1, to steadily execute
regular functions like those in payment systems. The other is
optimized for areas of uncertainty, such as SoE and Mode 2, totrack customer responses following release and constantimprove the system. The predictable model is often a largescale system development project emphasizing quality andrequiring a large number of people. It utilizes the waterfallstyle methodology and demands price competitiveness. In
comparison, the uncertainty model tends to be more agile,
represented by on-site development = scrum-style methodology with a small number of people and emphasizes speed. A
sharper level of added value competitiveness is demanded in
the form of valuable ideas for users. Given this environment,
the Technology & Engineering SBU will strive to reinforce
service development capabilities by creating frameworks whereservice development technologies are shared inside and outside
the Company. Key recent examples are presented below.

Group History

In June 2018, TIS released canal, a technology support and
Q&A service site, for employees. When an employee fires off atechnical question to canal, that question is automaticallyforwarded to 28 certified experts within the Company who canthen offer helpful answers backed by an extremely high level ofexpertise. In addition, all employees can browse the site, whichallows people other than the designated experts to comment
as well and enables employees to search posted answers.
Currently, the number of employees at TIS is around 5,000.
Such scale in human resources underpins industry-leading
development results and a very deep reservoir of technicalknow-how. But a single business unit would be hard-pressed tocollect and manage all this information. With the recent
establishment of canal, engineers can draw on all the knowledge available within the Company to swiftly address customer
needs and solve technical issues while also demonstrating thevalue that big enterprises require. The number of in-houseusers of canal has steadily increased since it was released, andwe expect it will also help cultivate a corporate culture ofmutual support.

● Fintan — Open site filled with development know-how tools

We are working on preparations for the release of Fintan, acollection of various know-how tools useful in softwaredevelopment, irrespective of mode. It includes the application
framework Nablarch, standards and guides for each stage fromrequired definitions to tests, and agile development know-how
highlighting scrum.
Anyone can use the content in Fintan. For client companies,
a learning program through training and seconded acceptanc-Client companies

Partner companies
Technology & Engineering SBU(about 100 people)
Group companies
Technical support/joint efforts*Fintan is a Celtic mythical salmon that possessed all the world’s knowledge.
The name has been used for this site to convey the idea of access to all sorts of system­development knowledge.

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Profile● canal — Technology support/Q&A service site

Value Creation Process*canal named after idea of information flowing like water in a canal.

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Consolidated Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Strategies

Platform that Supports
Value Creation Process(ESG Section)

Consolidated
Financial Summary

Corporate Data