Profile

Financial
Highlights

To OurStakeholders
Key Strategies

Topics

2 0 1 1R e p o r t
A n n u a lYear Ended March 31, 2011

R&D

Corporate
Governance

Financial Review

Financial Section

Corporate Data

1

ProfileProfileWhat is the IT Holdings Group?

ITHD Grouptechnology (IT) companies in Japan. At its core are five principal operating companies, which
The ITHD Group seeks to be a corporate citizen whose activities, namely, the provision ofof March 31, 2011, the Group comprised 72 companies—53 of which fell under the scope ofvarious services utilizing information technology (IT), match its status as a leading corporate

consolidation and 10 of which are affiliated companies accounted for under the equity

group, and will strive to raise corporate value, supported in this effort by the high regard of all its

method—and net sales reached ¥323 billion.

stakeholders, including clients and shareholders as well as employees and their families.

Financial
Highlights

underpin excellent responses to the needs of clients in a wide range of industry sectors. As

ProfileManagement Philosophy

Formed in April 2008, the IT Holdings (ITHD) Group is made up of the top information

We will cultivate a vibrant corporate culture that encourages companies and individuals under
ensure corporate growth.

Net Sales¥124,496

Future Targets

Core businesses

By 2015, the IT Holdings Group will have built a business portfolio geared for higher growth andhigher profit by entrenching core businesses and establishing a presence in new businesses.

For year ended March 31, 2011

Net Sales¥163,889

New, promising and overseas pursuits
million

Sales breakdown by division
50.7%

Software Development

Consulting
Businessplatform
services

Outsourcing
and network

New businesses

Other new businesses

Core businesses
For year ended March 31, 2011

Net Sales

Sales breakdown by division
2.4%

Other Business1

Solution
services
Operating income ratio

Corporate Data

This segment combines supplementary services, such as leasing,extended through the provisionof information systems.

Softwaredevelopment

Financial Section¥7,604

millionFinancial Review

This segment offers total
system integration services,from information system
planning to configuration.

Overseasbusinesses

Corporate
Governance

Growth rate

This segment concentrates on
the sale of software andhardware.

We will uphold high corporate morals and fulfill our social obligations.

R&D

Solution Services

Outsourcing and
Network

Topics¥27,183

quality and greater sophistication in our technological capabilities.
Key Strategies

Net Sales

Sales breakdown by division
8.4%

We will always provide our very best to clients by combining Group strengths to foster higher

Sales breakdown by division
38.5%

This segment utilizes data centers toprovide such services as outsourcing,system operations, network
configuration and related services.

For year ended March 31, 2011

millionmillionTo OurStakeholders

the Group umbrella to work toward higher goals and embrace new challenges, and thereby

For year ended March 31, 2011

2015

2

1

2

ProfileOverall Progress and Results
ITHD Group

Consolidated Financial Highlights (Year ended March 31, 2011)

IT Holdings Corporation and Consolidated Subsidiaries

Millions of yen

For year ended March 31:
Net sales
Operating income
Net income

Other Business ¥7 billion (2.4%)

At year-end:
Total assets

IT Holdings is created through the

Outsourcing and Network¥124 billion (38.5%)

Solution Services¥27 billion (8.4%)

management integration of major

Total net assets
Net cash provided by operating activities
Per share of common stock (¥):
Net income, basic
Net income, diluted

TIS Inc. and INTEC Holdings, Ltd.
Net sales¥323 billion(100.0%)Software Development¥163 billion (50.7%)

The Group is reorganized. Key events

Key ratios (%):
Return on equity

include splitting off companies underEquity ratio

the old TIS Group umbrella andNotes:

merging INTEC Holdings into INTECNet Sales by Client Sector (Year ended March 31, 2011)

Principal Operating
Companies

Public Institutions 8.7%

Net sales¥323 billion(100.0%)Banking 8.0%

Insurance 7.2%

Holdings Group.

TIS Inc.

SORUN
CORPORATIONOther Finance 5.9%
UFIT Co., Ltd.

Processing-Based
Manufacturing 8.1%
Assembly-Based
Manufacturing 14.3%

313,077
155,075
31,401
46,988-3.8%+2.6%-13.3%-22.3%

3,620,878
1,817,321
327,564
438,880¥68.19—1,636.56
32.00¥89.25—
1,602.77
32-23.6%
—
+2.1%
0.0%

$0.82
—
19.68
0.38

4.2%
47.7%

5.70%
44.20%-1.5 points+3.5 points

Consolidated Subsidiaries
Domestic

Overseas

2

10*

3

Addresses IT needs of clients in many industries, including
finance, manufacturing and service. Provides one-stop
responses, ranging from platform system development to data
center services.

3

Focuses on clients in finance and manufacturing sectors but
working to achieve good balance of business with orders fromtelecommunications and public service sectors. Also develops
systems for aerospace industry.

0

Strengths in services for clients in credit card and consumer
finance sectors. Focuses on outsourcing services.

* Including
SORUN China

2

1,161

(Consolidated)¥45 billion(Consolidated)¥38 billion(Consolidated)

INTEC Inc.

10

0

Boasts expertise in services for clients over a diverse industry spectrum,including finance, manufacturing, distribution, medical services and public
services. Provides total solutions, from consultations and systemdevelopment to outsourcing and network services.

AGREX INC.

60

Leading company in business process outsourcing in Japan.
Listed on the First Section of the Tokyo Stock Exchange (4799)

QUALICA INC.

02

Maintains a high profile with services for the manufacturing, distribution and service
industries.

AJS Inc.

20

Focuses on systems for the manufacturing and medical services industries.

¥103 billion(Consolidated)¥27 billion(Consolidated)[For reference]

1000
800
600

326 323 283
252

400

159 140 134 132

Notes: New TIS net sales of ¥166 billion is the combined total for TIS, Inc., SORUN CORPORATION and UFIT Co., Ltd., at fiscal 2011 year-end.

0

NTT
Data

NRI

ITHD

CTC

Unisys NS-SOLCSK FUJISOFT SCS∙∙∙

Note: The graph data indicates net sales of NTT Data Corporation, Nomura Research Institute, Ltd., ITOCHU
Techno-Solutions Corporation, Nihon Unisys, Ltd., NS Solutions Corporation, CSK Corporation, FUJISOFT
Incorporated, Sumisho Computer Systems Corporation (SCS), and ITHD.

3

Cautionary note regarding forward-looking statements
Performance estimates and other forward-looking statements in these materials are based on information available to management and certain
reasonable assumptions at the time of publication. Various factors may cause actual figures to differ considerably from estimates.

4

Corporate Data

200

Financial Section

1200¥81 billion(Note)(Billions of yen)

1400

Fiscal 2011
Net Sales¥166 billion

New TIS Inc.
(From April 1, 2011)

merger involving TIS, SORUNNet Sales of Japan’s Leading IT Companies

Business Content

Financial Review

ITHD orchestrated a three-company

TIS as the surviving company.

301,076
151,110
27,23736,493

Corporate
GovernanceDistribution 7.1%

Corporation and UFIT Co., Ltd., with

$3,886,632
154,160
71,981

R&D

Services 21.7%

SORUN CORPORATION joined the IT

April 2011

+3.0%
-19.9%-21.9%

1. U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥83.15 = US$1, the approximate rate prevailing on March 31, 2011.
2. Return on equity = Net income/Equity capital [(equity capital at the beginning of the term + equity capital at the end of term)/2] x 100
3. Equity ratio = [Equity capital/Total assets] x 100
4. Equity capital = Net assets – [Subscription rights + Minority interests] = ¥143,646 million for the year ended March 31, 2011.

Credit Card 16.3%

December 2009

¥313,856
15,996
7,660

Others 2.7%

subsidiaries under the direct control of
IT Holdings.

¥323,173
12,818
5,985

TopicsInc., and then putting the surviving

ChangeKey Strategies

2008—2009

Net assets
Cash dividends

Millions of yen

To OurStakeholders

Cash and cash equivalents at end of year

domestic information service providers

2011
Thousands of
U.S. dollars

Financial
Financial
Highlights

April 2008

Net Sales by Business Segment (Year ended March 31, 2011)2010

Profile2011

3

To Our Stakeholders

To Our Stakeholders

ProfileImpact from the Great East Japan Earthquake
There were no injuries to employees of the ITHD Group caused by the Great East Japan Earthquake that
occurred on March 11, 2011. Activities at offices in Sendai, Miyagi Prefecture, were temporarily interrupted

Data centers, scattered throughout Japan, are all operating normally. Each location is equipped with its
own power-generation facilities and has concluded contracts with fuel suppliers to ensure continuous on-site

Financial
Highlights

by power outages, primarily, but resumed operations fairly soon and all locations are operating normally now.

operations, so planned and unplanned electricity interruptions, especially rolling blackouts, by Tokyo Electric
Susumu Okamoto
President

Support for People in the Disaster Zone

our shareholders, for your invaluable support. The books for fiscal 2011, the year ended March 31, 2011,
have been closed and it is time to tell you the results.
But first, we would like to take this opportunity to extend our most heartfelt sympathies to everyone in thearea devastated by the Great East Japan Earthquake of March 2011.

In a shift epitomized by growing interest in cloud computing, the information services industry is evolving,with system investment by clients moving away from the establishment of information systems in favor of

the Great East Japan Earthquake. The Group will continue to be involved in whatever capacity it can to help
in the recovery process.

Six Months’ Free Access to IT Resources
The immediate destruction caused by the earthquake and tsunami and then the rolling blackouts implemented todeal with reduced power-generating capacity made it difficult for companies and local governments to keep systems
running and sidelined IT platforms that facilitate the distribution of information. TIS has offered businesses and public
corporations affected by the disaster six months of its TIS Enterprise Ondemand Service, an enterprise-oriented
PaaS/IaaS, at no charge so that they can maintain access to vital IT resources.

outsourcing services.
To address qualitative changes in the business environment as well as the pace at which these changes
are occurring, and to strengthen corporate capabilities and improve management efficiency, ITHD took steps

SORUN CORPORATION and UFIT Co., Ltd.—effective April 1, 2011, and the merger of shared services
subsidiaries. Unfortunately, the business environment continued to present challenges, particularly aboost sales, the prevailing circumstances inevitably led to lower profits.
Going forward, ITHD will emphasize efforts to achieve a more efficient groupwide management structure
and to reinforce business platforms, with the changing environment in mind, while striving to fully

Raising Donations to Finance Restoration
To contribute to the relief effort in the disaster zone and help those directly impacted by the disasters, ITHD Group
companies as well as employees at these companies collected donations which were forwarded to the Japanese
Red Cross Society.

Financial Section

demonstrate the capabilities of the Group.
In this pursuit, we ask shareholders for their continued support. Your encouragement of our efforts is
integral to our success.

Corporate Data

June 2011

5

Financial Review

persistent trend among clients to be more selective in their IT investments, and while the Group was able todisaster zone. Everyone who came had a great time,
especially the kids.

Corporate
Governanceto redefine the Group’s structure. Key to this process was the merger of three subsidiaries—TIS, Inc.,

Tethered Hot-Air Balloon Ride at Evacuation Center inthe Disaster Area
On May 5, 2011—Children’s Day in Japan—SORUNTOUHOKU Inc. and SorunPure Inc. organized a hot-air
balloon ride at the evacuation center in the town of Watari,
Miyagi Prefecture, to boost the spirits of people in the

R&D

enhanced application and operating efficiency of information and communications systems utilizing

TopicsNow to a quick review of fiscal 2011.

The ITHD Group undertook the following activities in support of reconstruction efforts in the area affected by
Key Strategies

On behalf of senior management and employees throughout the ITHD Group, we would like to thank you,

To OurStakeholders
Stakeholders

Power Company, had absolutely no impact on power to run client systems.
Tetsuo Nakao
Chairman6

4

Update on Key Strategies for Medium-term Growth

Update on Key Strategies for Medium-term Growth

Evolution 2011, its first medium-term

Efforts to Expand Business
Extending the Range of Existing Businessdesigned to quickly generate results from the

Joint ordering activities, through which Group

April 2008 management integration that createdcompanies work together to cultivate client

ITHD. It also addresses the paradigm shift that

opportunities, yielded terrific results. The number

characterizes the IT industry and prioritizesof joint orders soared to 200 in fiscal 2011, with abusiness model reform, from tailored software

value of ¥14.0 billion, compared with 121 orders

development for one client to services

worth ¥5.4 billion in fiscal 2010.

Fiscal 2009
Plan Preparation
Flagship accountstrategy

To acquire a larger share of orders within
Expand activities throughsynergy fusion

client industries, we constantly explored new

in cloud services over the medium term.

Fiscal 2010

approaches to existing and potential clients

Investigation

CandidateCommittee(identifying clientsby industry/sector Manufacturing
for possible
flagship accountstatus)Fiscal 2011
(Goals)Pursuit(3 companies)

Expansion(9 companies)

9 companies

Preliminary discussion(38 projects)

Undertook preliminary
discussion, joint seminars,
six exhibitions.
Secured unofficial OK andorders on six projects

Financeneeds. We also established the Group Solutions

Solution Forum

Preliminary
discussion(35 projects)

Announcement of
results(29 projects/¥2.4 billion)(121 projects/¥5.4 billion)

Forum, an internal structure that supports
information exchange and provides Group(Joint order results)

companies with an opportunity to showcase

valuable tool for securing joint orders.

Foster individuality ofGroup companies while
demonstrating
comprehensive strengths

Cultivate corporate culturethat unites the Group.

scope of businessactivities.

Pursue business activities
underpinned by client trust.

Promote measures thatwill fuel corporate growthand motivate employees.

Past efforts to build and expand data centers
ready to meet growing demand for services such

Expand business presence, especially in the rest of Asia

Dominant position strategy
80% of Tianjin DC first stage
Opened represenin China, specifically, Tianjin
construction (400 m2) has
tative office inand Beijing, through SORUN
Vietnambeen reserved
connection

Started work on
second-stage
construction (500 m2)
at Tianjin DC

Support clients in their globalization
efforts

Business alliancewith BT

Expanded activities of
QUALICA (SHANGHAI)
and began offering
SaaS

Solution business

Combine theknow-how andtechnologies of
TIS and INTEC
into marketable
solutions

Overseas
Business

as cloud computing have already been rewarded
with the April 2011 opening of GDC Gotenyama
in the Shinagawa district of Tokyo and the June
2011 opening of a data center operated by Powerand IT Company, which was jointly established by
Hokuriku Electric Power Company and INTEC.

• Gearing up forPower and IT
Company (July)New
Business

IT support for clients’ overseas bases

Suggested Europe VDC toprincipal clients• Utilize BT alliance to cultivate cloud telephony business• Add to service menu withsolutions targeting theenvironment business• Establish department toaddress IFRS

Promoted cloud telephonysolution services• Call Note (July)• Call Crayon (September)

Encourage greater
management efficiency
as a Group.

Real Cloud
Solution (IUK/INTEC Systems
Institute) tart with three layers ofS
services: SaaS, PaaS,
IaaS

Financial Section

Create business platform businessBusiness platform business(cloud business)

Financial Review

Strengthen financial
position of the Group.

Actively reform production
platform and capitalize
on new business opportunities.

Business

Opened Tianjin DC andINTEC Manyo Square

Corporate
GovernanceMedium-termManagement Direction

Building the Next-Generation Data Center

Tianjin DC, INTEC Manyo
Square under construction

Shinsaibashi gDC• Opened for GDC
Gotenyama

R&D

7
2
6
3
5 4
afforded by groupstructure, and expand

Build and expand next-generation
data centers (DC)(200 projects/¥14.0 billion)

Topics1knowledge of company strengths can be aBusiness Development

respective corporate resources. Reciprocal

Key
Key Strategies
Strategies

Existing
Business

Executed in Fiscal
2012,
as of May 2011

First Medium-term Management Plan

through industry-specific study sessions for Group
companies to gain greater insight into client

Fiscal 2011
(Results)

To OurStakeholders

responding to multiple clients, through progress

Efforts to Expand Business

Financial
Highlights

management plan. This three-year blueprint is

Progress through the Medium-term Management Plan 1

ProfileIn April 2009, the ITHD Group embarked on IT

Corporate Data

7

8

4

Update on Key Strategies for Medium-term Growth

Update on Key Strategies for Medium-term GrowthProfileEfforts to Enhance

Progress through the Medium-term Management Plan 2

In fiscal 2011, the Tianjin Data Center, which

Management Efficiency

Efforts to Enhance Management Efficiency

opened in April 2010, has won high marks for

In fiscal 2011, ITHD introduced a cash

as those available in Japan, thanks to the

management system (CMS) to make procurement

application of data center configuration andand application of funds within the Group more

Plan Preparation

operational know-how accumulated by the Groupeffective and made advances on the reduction of

in Japan. The second phase of construction isinterest-bearing debt.

Group presidents
committee, executive
committee andinformation exchangecommittee

under way. Also, during fiscal 2011, ITHD efforts

Fiscal 2009

Visualization ofmanagement system

In April 2010, the Company set up a

VDC solutions to key customers.

for an employee health and welfare benefits
platform. To create a groupwide communication

Cloud services from the ITHD Group utilize results

services*. Group companies continue to promoteachieved through outsourcing and systemmeasures, such as shared back-office operations,development for clients in various industries,

integrated planning on information systems andincluding finance, manufacturing and distribution.

optimized group formation, initiated in fiscal 2009,

The Group has about 30 types of original cloud

and to direct energy into building a stronger, more

services in its business arsenal, including industry-

efficient group management platform.

and business-specific formats and shared service
environment-friendly next-generation data centers*Social networking services (SNS): Community-based web service

featuring energy-saving technologies—a network

used within the IT Holdings Group as a tool to facilitateof facilities that ITHD is steadily expanding—toFirst Medium-term Management Plan
Introduced
hierarchicalmanagement method

Expand scope ofCash Management
System (CMS)

CMS: 4 companies
13 companies• Introduced management cockpit
systemConcentration ofGroup’s headquarter
operations

Established sharedcompany (IT Service
Force Inc.)(Number of companies
and business activities
targeted)(10 companies/35
operations)(15 companies/60
operations)

Cost reduction throughcentralized purchasing

Implemented Grouppurchasing for indirect materials

Expand scope of
products underGroup purchasing
structure and thenumber of companies
involved(Reduction)(¥20 million)(¥60 million)(¥55 million)

Effective use of capital

Introduce CMS

Made progress
toward reduced interest-bearing debt
through CMS use.

(Number of companies
targeted)

4 companies

13 companies(12 companies/63
operations)Targeted products:
10
Targeted companies:
13

Enhance Group communication platform

Introduced groupwide
social networking
systemRegistered users:
2,300

Registered users:
4,282• Established ITSF

• Reassignments:
IUK, Chuo System,
TIS Total Service,
Oartech.

Establish Group
health insurance plan

Established Group
health insurance plan

Personnel,
Corporate
CulturePromote optimization tocreate a leading
corporate group in the
IT industry.

• Established
NEOAXIS• Restructured old
TIS Group• INTEC Holdings
merged into INTEC• SORUN joins Group10

Mergers•T IS, SORUN and
UFIT• ITSF and Web
Office• INTEC, INTEC
Systems Instituteand Nippon
System Gijutsu

Corporate Data

9

• Mergers: Keyport
Solutions and es
Crew, AC Medical
and Cronova, andKoushi INTEC andHuma(n)•E
 xtend the reach ofactivities
undertaken by
SORUN PURE
(special subsidiary)
to the Group

Financial Section

Made preparations
for groupwide healthinsurance plan

Financial Review

Set up employee healthand welfare benefits
program

Corporate
Governance• Integrate SORUN
health insurance
plan into Groupplan

promote wider interest in cloud services.

• NEXWAY joins theGroup

Apply new management approaches

Merge ITSF and Web
Officecommunication among employees.

Group Formation

Executed in Fiscal
2012,
as of May 2011

R&D

formats. Moving forward, the Group will use

Operations,
Assets, Capitaland Finances

Fiscal 2011
(Results)

Topicsplatform, the Company embraced social networking

Business Efficiency

Developing New Businesses

Fiscal 2011
(Goals)Key
Key Strategies
Strategies

were directed toward the promotion of Europe

groupwide health insurance plan as the groundwork

Fiscal 2010

To OurStakeholders

services that are as highly secure and high quality

Financial
Highlights

Promoting Business Overseas

5

Fiscal 2012 Topics

Fiscal 2012 Topics

Realigning the GroupNew TIS

ProfileCompanies under the ITHD Group umbrella are being realigned to reinforce corporate
capabilities and improve management efficiency.

(Billions of yen)

(%)

300

Promote streamlining, integration and realignment by function

Centralize common functions
within the Group with an eye
to enhance efficiency

TIS(Governance-oriented)
Directors exchange
information and pinpoint
status on a monthly basis

KOUSHI INTEC
Nippon System
Gijutsu
Huma(n)Chuo System

INTEC Systems
Institute

Web Office

200.0

6
Strive for evenhigher levels

4

4.6%

2

8.4
0

16.0

Fiscal 2011

Fiscal 2014

(Sum of resultsby three merged companies)(Targets)

SorunPure

0(Governance-oriented)
Dispatch directors from
ITHD to subsidiaries

IUK

3.

4.
60

Special subsidiary

Focus sales on small andmid-sized companies

new TIS will implement steps to hone its

UFIT into TIS to create a new TIS, Inc., which

competitive edge and trim costs, mainly

will draw on the technological strengths andthrough the integration of organizational

know-how accumulated by each company on

structures, offices and internal systems, andits own to provide enhanced services thataims to realize the benefits generated throughmeet all the business needs of its clients. The

the merger as quickly as possible.

Consolidated net sales: ¥ 81,930 million

TIS

SORUN

Consolidated net sales: ¥ 45,787 million

Simple consolidated net
sales total for the new TIS

UFITConsolidated net sales: ¥ 38,373 million¥166,091 million

Strengths

New TIS

Solutions and services• More than 220 solutions• High development platform expertise, exemplified by Xenlon

Data centers

Top-class in all regards, from floor space (100,000m2) and geographical area to service menu,
including cloud computing.

Major clients

Extensive client base comprising more than 3,000 companies from all sectors of industry.

Merger of Group-Oriented Shared Services Companies and Other Realignment Efforts
We merged Web Office and IT Service Force—

facilitate the provision of high-value-added

shared service companies that handle the back-services to companies under the Group umbrella

office operations of Group companies—to

as well as to companies outside the Group.

centralize administrative operations and promote a

We also brought special subsidiary SORUN

greater level of cohesion among Group

PURE CORPORATION under our direct control

companies. This merger will underpin greaterand executed a merger of subsidiaries with INTEC

efficiency in back-office activities that are common

as the surviving company.

Financial Sectiongroupwide, accelerate cost-cutting efforts, andThe new TIS will promote the following strategies,
seeking to expand the scale of net sales andreduce costs.

Steps to Improve Profitability

1. Raise major clients’ inner share.
2. Enhance solutions business.
3. Cultivate a larger base of potential clients and thengrow it bigger.
4. Reinforce data center business.

1. Realize merger benefits as quickly as possible byaccelerating the integration of organizational structures.
2. Promote centralized procurement and joint purchases.
3. Integrate platform systems.

11

Corporate Data

Steps to Expand Top Line

Financial Review

TIS

Steps to Improve Profitability
Centralize procurement functions and do more work in-house.
Integrate platform systems.
Merge head office divisions and consolidate offices.

Corporate
Governance

On April 1, 2011, we merged SORUN and

Raise TIS transactions in major clients.
Enhance solution business.
• Implement strategies conscious of the synergy
between solutions and system integration.
Build a larger base of potential clients.
• Draw out orders from dormant clients and expand
transaction value per company.
Reinforce data center business• Strengthen operations undertaken at data centers inTokyo, Nagoya and Osaka, and in Tianjin.

R&D

SORUN and UFIT merge with TIS

Consolidated net sales for each company are
the actual results achieved in fiscal 2011.

ge

er

M

120

ct

fe

f
re

1.
2.

Shared services company

NEOAXIS

Other Group
company groups

180.9

Form a sales innovation committee, chaired by the president, thatcuts across the whole company to tackle four key objectives.

Topics

Es-Crew

AJS

UFIT

180

8

Key Strategies

AGREX

KeyportSolutionsQUALICASORUN

Special function companies(Services for the Group)

IT Service Force

INTEC
Focus on specific largeaccount clients

BPO focus

8.0%

To OurStakeholders

Operating companies

Establish Sales Innovation Committee

240

matched to major changes in the operating environment

Steps to Expand Top-Line Operations

Financial
Highlights

Push ahead with integration of Group companies from a perspective of sharper competitive capabilities

ITHD

10

Net sales
Operating income
Operating income ratio

12

5

Fiscal 2012 Topics

Fiscal 2012 Topics

Top Plan Strategy: Expand Data Center Business

Top Plan Strategy: Cloud Computing
aspirations with a rich assortment of services, newdata center business and expanding its stock

mic isolation foundations to better withstand theintegrated business under the catchphrase “Ourideas and high-value-added cloud technologies.

business platform. In fiscal 2011, the data center

force of earthquakes. Even with the devastation

Cloud, Your Dream” to support corporate businessnetwork grew in Japan with the opening of thecaused by the Great East Japan Earthquake in

INTEC Manyo Square and overseas with the

March 2011, domestic data centers were able to

Tianjin Data Center. The network grew some more

operate normally. In addition, they are located out-

ITHD Group Cloud Strengths

in April 2011 with the opening of the GDC

side the area affected by rolling blackouts and a

Cloud Integration

Gotenyama in Tokyo.

system is in place to ensure uninterrupted power

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

SaaS for Immediate Application
to Business

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

Quality of System Operations Is
Highest in Japan

With the largest data center network in Japan, we boast the newest facilities and proven system operation results toensure safe and secure service platforms.

Leading-Edge Cloud Services Foster
Value Creation

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

through on-site generators and contracts with fuel

The Group’s data centers are noteworthy not
only for reliable, high-quality system operation

suppliers so that power outages, planned or not,capabilities but also for location—geographicallywill have absolutely no impact on the power need-safer and more secure in a disaster situation—anded to run client systems.

X

Facilities

X

Location

Business- and Industry-Specific Services

Business-Specific, Industry-Crossing Services

Key Strategies

Operating Capabilities

To OurStakeholders

The ITHD Group is nurturing cloud services as an

Financial
Highlights

for facility design, in that the buildings feature seis-

ProfileThe ITHD Group is promoting its next-generation•Located outside rolling power failure zones.
デジタルペン
ソリューション

rating a base-isolation structure for enhanced earthquake tolerance.

Topics•Built in areas less susceptible to damage in a natural disaster and incorpo•Large, in-house power generator and priority supply
contracts for fuel.
•Newest data center facilities.
INTEC Manyo Square (Toyama)

R&D

Kentucky Fried Chicken Japan, Ltd.
Introduced i-TRe cloud-format product specification traceability service.

Services Providing Platform Stability

AS クラウドサービス

Rakuten Travel, Inc.
Subscriber to combination service featuring Call Crayon SaaS system and Fusion
Communications Corp. phone network.

Corporate
Governance

OSGi サービス
アプリケーション
配信プラットフォーム
Shochiku Co., Ltd.
Subscriber to TIS Enterprise Ondemand Service.

Financial Review

GDC Gotenyama (TIS) (Tokyo)

Shinsaibashi gDC (TIS) (Osaka)

低解像度

Financial Section

22 centers worldwide,boasting 122,000m2 of floor space• Offer services matched to clients’business activities and their purpose for using a data center.
• Develop high-value-added services.

Corporate Data

13

14

5

Fiscal 2012 Topics

Fiscal 2012 Topics

ITHD Group Launches Cloud Telephony Businessstrategic market for the Group’s services. INTEC

the ITHD Group, management promoted efforts tosplit off activities undertaken by an existing

expand operations abroad, especially in Asia. As

subsidiary in China and established a newpart of this emphasis, the Group’s view of thesubsidiary, INTEC Shanghai Co., Ltd., with a local

Chinese market has evolved from its original

business network of 11 points staffed by more

purpose as a hub for offshore development to athan 600 people.

Example of Application
Customer

ITHD Group Strategy in China

Accesses website

Highlights

Fiscal 2012
(plans)Fiscal 2011•E xpand Tianjin Data
Center

Merits of
the telephone
Securing a market presence
000-xxx-0000

Call Center
Responds to called-in customer
inquiries.

Overseas investment by clients(Japanese companies)• Japanese know-how• System configuration • Local hiring ofessential personnel• T ianjin Data Center
fully open for business• Accelerate assignment of personnel tofactories being set
up in China by major
ITHD Group clients•B usiness alliancewith Dawning
Information Industry
Ltd. to promote
cloud services.
•E xpand activities of
QUALICA (SHANGHAI)
Inc. and start ­offering SaaS
AToMsQube and
JSCASTTISINTECQUALICAAJS

Topics

AToMsQube is a cloud-oriented production control system for processing- andassembly-based manufacturers.
JSCAST is a casting design computer-aided-engineering system.

PhoneCookie—patented new technology
connects companies with their customers.

Key Strategies

Call Crayons seamlessly draw on the
merits of both modes of communication.

• Data center business • Alliances (businesstie-ups and agency• Solution services
connections)business

Key Players

To OurStakeholders

Goals

Merits of
the Internet

Financial
Highlights

Dubbing fiscal 2011 “Globalization Year One” forProfileIn July 2011, the ITHD Group launched a cloud telephony business, in which high-level voice communication combining
the Internet and voice over telephone equipment or networks is offered as a cloud service.
The business currently comprises two services jointly offered by TIS and INTEC. They are Call Notes, an SaaStype incoming call management service, and Call Crayons, an Internet- and phone-linked solution for enhanced
corporate contact to customers. The noteworthy feature of these services is that they issue virtual phone numbers thatutilize the Internet rather than a phone line or phone network and thereby facilitate access to a range of information.
These services have been embraced by major Internet-based companies.

Top Plan Strategy: China

Beijing
Tianjin

R&D

Both sides view the same screen while
talking, and there is no cost burden on
the customer.

Xi'an
Wuhan

ShanghaiCorporate
GovernanceOffshore development baseBusiness office
Data center

16

Corporate Data

15

Financial Section

ITHD Group company QUALICA INC. enhanced the business execution structure of its Shanghai subsidiary,
QUALICA (SHANGHAI) Inc., and relocated the office. There will be a staffing increase from Japan as well as
local recruitment. Through these steps, QUALICA aims to provide a wider range of solutions to Japanesecompanies developing a presence in China as well as to Chinese companies and to improve its
responsiveness to local needs.
Specifically, the company will complement JSCAT, an existing solution for the casting industry, byoffering to the local market AToMsQube, a cloud-based production management system for the casting
industry; TastyQube, a business support system for companies in the food service industry and services
industry and their respective outlets; and SpecialtyQube, a similar business support system for retail specialty
shops.

Financial Review

QUALICA Reinforces Business Structure of Shanghai Subsidiary6

Research and Development

Research and Development(1) Software development technology

Financial Section
Corporate Data

18

Financial Review

With the life-science community generating copious amount of genome information and protein data, bioinformatics—the technology for handling biodata—has become essential to life science and innovative drug development
research. INTEC Systems Institute embarked on R&D on bioinformatics-related systems more than 10 years ago.
At the request of the Functional RNA Project, an initiative funded by the New Energy and Industrial
Technology Development Organization, or NEDO, INTEC Systems Institute joined the Computational Biology
Research Center in research activities, the results of which were announced at the 18th International Conferenceon Intelligent Systems for Molecular Biology, held in Boston, Massachusetts, in July 2010.
Also, in a similarly named strategic R&D project launched by the Ministry of Economy, Trade and Industry,efforts led to the identification of a cancer marker. INTEC Systems Institute filed an international application inaccordance with the Patent Cooperation Treaty on the patent related to this biomarker. Next, the company will
move forward on research that links newly developed technology to discoveries, especially new diagnostic drugs
and therapies.
All told, consolidated R&D expenses in fiscal 2011 reached ¥1,062 million. By operating segment, the TIS
Group used ¥221 million, the INTEC Group used ¥720 million, and the SORUN Group used ¥81 million.

Corporate
Governance(5) Bioinformatics-Related Systems

R&D

17

The Group’s R&D plan also targets an assortment of social issues arising from changing conditions and perspectives in society, such as global warming, a national demographic characterized by a low birthrate and a high percentage of seniors, and an increasingly difficult employment environment for young people.
INTEC teamed up with Keio Research Institute at SFC—the Shonan-Fujisawa Campus of Keio University—
and Tulip TV to pursue joint research on the design of Toyama Media Platform, a media business to maintain andthen expand information distribution in the Toyama area.
INTEC Systems Institute promoted R&D on Web Portfolio as a next-generation e-learning system for university students and working members of society and collaborated with several universities to run field tests of thesystem. The results were presented at Learning Forum London ePortfolio 2010, held in London in July 2010.
Seeking to realize customized health care services, the company also investigated trends among government
agencies and health insurance associations regarding medical treatment, insurance content and welfare programs. Another study was done on the information distribution technology needed to establish smart cities andsmart grids—next-generation power transmission networks—which are attracting attention from the perspectiveof efficient use of electricity and energy.

TopicsAnother priority is R&D on platform technologies to support cloud computing.
At INTEC, efforts have been directed into various areas, including R&D on platforms to simplify the transitionof existing web applications into SaaS (software as a service), research into the implementation of data analysis
services using Hadoop, research on security models for cloud environments, and R&D on data center automationand connection systems.
With the pool of unallocated IPv4 (Internet Protocol version 4) addresses about to dry up, INTEC Systems
Institute focused on activities linked to two announcements. One was a checklist for software applications thatdeal with the inevitable end of available IPv4 addresses. The company drew on accumulated expertise to create
this checklist. The other was a countdown clock that shows the remaining inventory of IPv4 addresses by region.
TIS directed efforts toward new configuration techniques for web applications, such as ARC (Agile x Ruby x
Cloud), through the development and use of youRoom, a free collaboration tool, from SonicGarden, an in-house
venture company.
Putting this new development technique to work, SonicGarden created the youRoom prototype in just one
week, after which the company raised the performance level with flexible, speedy improvements underpinned by
Ruby technology. Services utilizing youRoom are now available in eight countries.
youRoom was singled out for excellence at the Third Fukuoka Ruby Awards, an event sponsored by Fukuoka
Prefecture and the Fukuoka Ruby Business Hub Promotion Committee to recognize achievements maximizing theutility of Ruby.
TIS Enterprise Ondemand Service, an enterprise-oriented cloud service from TIS, was enhanced with therelease of a customizable template that allows users to retain virtual machines as templates on the portal screen
and to access these templates at any time. This feature trims the time required to create virtual machines andenables users to boost work efficiency.

(4) N ew Social System

Key Strategies(2) Cloud Technology

related to these devices had initially focused their efforts on platform technology. Now, however, an independent
theme—AR (augmented reality) technology—is in the spotlight. Realizing the immense level of sophistication that
AR technology brings to smartphones and tablets, each of the Group companies involved in R&D pursuits is moving forward on technology verification and field tests.
INTEC directed its attention toward R&D on smartphone remote control technology that addresses the risk ofdevice loss or data leaks. In November 2010, the company revealed the creation of Smart-let, a smartphone
remote control service.
INTEC Systems Institute focused on R&D for AR technology and navigation based on positioning data andinitiated on-site data navigation field tests in November 2010 at Toyama Family Park, a zoo operated by the cityof Toyama. The company looked to the general public for participants, and the parents and children who took
part had favorable comments to make. The system was even featured on a television program.
TIS was also engaged in efforts to verify the use of AR technology for smartphone- and tablet-based corporate systems. Specifically, the company confirmed the practicality of AR technology for use in global positioning
systems and image recognition and discovered that the technology could present innovative utilization solutions
for smartphones and tablets used as devices to execute system-based enterprise services. TIS plans to introduce
this technology to corporate customers in fiscal 2012 and to link the technology to joint verification and service
application solutions.
SORUN created a system geared to mobile devices, particularly smartphones, that utilizes AR technology todeliver easy-to-understand details on places of interest, souvenir shops, local cuisine and other tourist-related
information to assist visitors with these devices to enjoy their sightseeing activities. The company worked withmunicipalities to run local field tests of the system and will use these results as well as other resources toenhance the system. Plans are to develop the system into a new business after fiscal 2012.

To OurStakeholders

In addition, TIS is making progress on verification of MapReduce technology, which dramatically shrinks batchprocessing time by spreading work across multiple, low-cost IA (Information Architecture) servers. Actual project
verification confirmed that a weekly batch of complex computations on transaction data comprising several tens of
millions of jobs, which initially took 15.5 hours to process, was wrapped up in under an hour when reimplemented
with MapReduce.
TIS plans to introduce this technology to corporate customers in fiscal 2012 and will link the technology tojoint verification and system replacement solutions.

The explosive spread of smartphones and tablets began in 2010, and ITHD Group companies involved in R&D

Financial
Highlights

Seeking to enhance the quality of software development services and associated productivity, the four R&Doriented companies under the Group umbrella maintain a steady and resourceful approach to softwaredevelopment technology.
INTEC launched services for its Companywide Shared Development Platform for in-house development
projects. The company also expanded the functions of knowledge-support systems to make its system integration(SI) business more efficient, pursued research on next-generation SI business models, and investigated andevaluated HTML5 as a next-generation RIA (Rich Internet Application) technology.
In September 2010, TIS began companywide application of the newly developed Xenlon, a Java development
framework. Xenlon is a compilation of know-how based on proprietary technology and actual results accumulatedby the company. It embodies the following concepts.
1. Development platform capitalization and sharing: Shares generic engineering platforms to facilitate use in aformat that can be applied by anyone whenever needed, and also shares development know-how.
2. Automated generation of programming code: Eliminates monotonous work and provides an environment inwhich engineers can concentrate on work that actually requires the skills of an engineer.
3. Enhanced programming quality: Configures frameworks allowing programming quality to be visualized
automatically in real time. Results gleaned from an actual system development project show that Xenlon
automatically generated about 50% of the code in the general processing area, excluding the customer’s own
business logic, from programming specifications, and demonstrate its capacity to boost development productivity.

(3) Smartphone-Related Technology
ProfileFour companies—TIS Inc., INTEC Inc., INTEC Systems Institute, Inc., and SORUNCORPORATION— underpin the Group’s efforts in leading-edge R&D in the domains described
below. Note that INTEC Systems Institute merged with INTEC NetCore in April 2010, with INTEC
Systems Institute the surviving company.

7

Corporate GovernanceCorporate GovernanceI. Basic Policy

Category

General Meeting of Shareholders

Appointment, Dismissal

Appointment, Dismissal

AdviceRisk Management
Council

Board of Directors
Reports

Appointment¥234 million (¥12 million)

8 (3)Corporate auditors (external corporate auditors’ portion)¥55 million (¥34 million)

4 (3)Total (external executives’ portion)¥290 million (¥46 million)

12 (6)

Notes:
1. The Company has not introduced a retirement benefits system nor does it pay out bonuses.
2. In fiscal 2011, no employee salary portions were paid to employees who concurrently hold positions as directors.
3. As of March 31, 2011, the Company had 10 directors, two of whom were external directors, and four corporate auditors, three of whom were
external corporate auditors. The number of directors and the number of corporate auditors differ from those presented above because three
directors did not receive compensation and one external director retired at the end of the 2nd General Meeting of Shareholders on June 24, 2010,
but was included in the total.
4. Total compensation paid to directors and corporate auditors was within ¥400 million per year for directors (within ¥50 million for external directors) andwithin ¥85 million for corporate auditors, as approved by shareholders at the 1st General Meeting of Shareholders on June 25, 2009.
5. Applicable items under total amount of compensation, on a consolidated basis, paid to individual executives receiving compensation packages
exceeding ¥100 million are presented below.
Consolidated Compensation (Millions of yen)

Reports

Board ofCorporate Auditors

Name

Company

Appointment,
Administration

Junji Kitagawa

Director
Director

Retirement
benefits

Basic Salary

Stock options

Bonuses

IT Holdings

17

-

-

-

SORUN

44

-

-

300

Discussion

Total Compensation

362

Group ComplianceCouncilPresident
AuditsReports

Direction

Units involved ininternal audits

Compliance
OfficeAccounting
AuditorReports

Executive
Committee

Group Compliance
Committee

Board of Directors and Corporate Auditors (As of June 24, 2011)
Chairman

Tetsuo Nakao

President

Susumu Okamoto

Director and Senior Advisor

Junji Kitagawa

Directors

Hiroaki Fujimiya
Katsuki Kanaoka
Masaki Chitose* External Director
Group Security
Committee

Group companies

Executive
Vice
Presidents

Norio Maenishi
Tomoki Sato

Corporate Auditors** External Corporate Auditor

Group.
The Company’s corporate structure and internal control systems are illustrated above.

Nobuyuki Yonezawa (standing auditor)
Tadamasa Hayashi (standing auditor)
Jun Ito **Shigekazu Takeuchi **19

Keizo Omura (two years of auditing IT Holdings)

Certified public accountant

Masato Saito (three years of auditing IT Holdings)

Number of assistants involved in accounting operations
					
					

Certified public accountants 5
Other assistants 11

5. Compensation to Certified Public Accountants
During the fiscal year ended March 31, 2011, the Company paid the accounting firm to provide the following services, inaddition to the services covered in Article 2, Paragraph 1 of the Certified Public Accountants Law:
To verify the implementation and utilization status of the internal control system, based on Auditing Standards Committee
Report No. 18 issued by the Japanese Institute of Certified Public Accountants.
The Company has not established a policy regarding compensation for audits executed by certified public accountants.
The Company maintains an appropriate amount in line with the audit plan formed by certified public accountants and determines compensation for audits with the approval of the Board of Corporate Auditors.

20

Corporate Data

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

Osamu Oyama (three years of auditing IT Holdings)

Certified public accountant

Financial Section

3. Executive Compensation

Certified public accountant

Financial Review

The Company maintains a corporate auditor system. The Board of Corporate Auditors comprises four auditors, two of whomare external auditors. Corporate auditors attend Board of Directors’ meetings, examine important documents, perform auditsof subsidiaries and, when necessary, seek the opinion of others, including the Company’s accounting firm, the Compliance
Office and other units involved in internal audits. They also keep close watch over the execution of duties by directors
pertaining to business and all operating activities.
The Internal Audit Office, with a staff of three, is an internal auditing unit under the Compliance Division. This officeexchanges information, as necessary, with units involved in internal audits at Group companies, including corporate auditors
and accounting firms, and strives to ensure effective, high-caliber internal audits on a groupwide basis. In addition, the officeexchanges information with the Finance and Accounting Department and the Compliance Office, verify explanations based on
the results of implemented audits and any problem points discovered.

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

Corporate
Governance4. Accounting Audits
2. C
 orporate Auditors, Internal Auditing Departments and the Accounting Firm

R&D

IT Holdings

Shingo Oda *Yoshinobu Ishigaki *TopicsGroup Risk
Management
Committee

Key Strategies

Executive Position

To OurStakeholders

The Company’s Board of Directors comprises no morethan 15 members, as set forth in the Articles ofIncorporation. The Board meets monthly but will also
convene whenever necessary to discuss and finalize
decisions regarding important business activities and legal
matters pertaining to the execution of operations.
To strengthen the supervisory function of the Board of
Directors, two of the 10 directors on the Company’s Boardof Directors are from outside the Company. The
Group
responsibilities of individual directorsComplianceare clearly defined,
Committee
and the term of office is limited to one year to create thebest possible management structure to respond flexibly tochanges in the operating environment.
The Company introduced a groupwide executive
officer system and established an executive committee tosupport and expedite decision-making efforts relating to
the execution of duties by representative directors.
The Executive Committee meets as situations require
to monitor progress of the business and affairs of theGroup. This committee also discusses important issues
related to the execution of operations, shares informationand generally underpins enhanced governance of the

Directors (external directors’ portion)

Financial
Highlights

1. B
 oard of Directors, and Executive Officer System

Number of executives

ProfileTo maintain the trust of all stakeholders, including clients and shareholders, and to be a corporate citizen who meets the
expectations of society, the Company will strive to reinforce corporate governance, not only by raising the transparency andsoundness of management practices but also by paying constant attention to the actions taken in the pursuit of business toensure suitable levels of corporate ethics and legal compliance.
The Company’s governance structure relies on the holding company’s board of directors to achieve flexible and efficientmanagement of the Group while respecting the individuality and independence of each Group company.

Total base salary7

Corporate GovernanceCorporate Governance(Millions of yen)

Year ended March 31, 2010
Compensation other thanfor audit certification

Compensation for audit
certification

Compensation other thanfor audit certification

The filing company

52

1

49

1

Consolidated subsidiaries

228

53

243

43

Total

280

55

292

44

Basic Direction on CSR
The management philosophy that permeates the ITHD Group stresses the Group’s
services utilizing IT, match its status as a leading corporate group. This philosophy also

(2) Approval Criteria for Special Resolutions at the General Meeting of Shareholders
Special resolutions described under Article 309, Paragraph 2 of the Company Law that are put before the general meeting of shareholders must, in accordancewith a clause provided by the Company in its Articles of Incorporation, be passed with a number of votes corresponding to more than two-thirds of voting
rights held by shareholders in attendance whose combined shareholdings represent no less than one-third of total voting rights held by shareholders with thepower to exercise such rights. Management believes that this reduced quorum for special resolutions facilitates the execution of the general meeting ofshareholders.

commitment to cultivate a vibrant corporate culture that encourages the companies andregard of all its stakeholders, including clients and shareholders as well as employees
and their families. The Group’s stance on corporate social responsibility is evident in its
individuals under the Group umbrella to work toward higher goals and embrace newchallenges, to be honest and fair in business pursuits based on respect for the law, ofcourse, as well as high moral standards, and to fulfill social obligations. This is theGroup’s basic direction on CSR.

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

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

Protect the environment

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

Contribute to society

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

Be a part of theinternational community

Naturally, obey internationally recognized rules and local laws in
the execution of cross-border projects, but also contribute tosocial and economic development in the countries where theGroup maintains a presence by recognizing local culture andcustoms.

2. Status of Risk Management System
In the execution of its business activities, the Company is always aware of the various risks that accompany suchactivities. The risks of greatest weight for the Company, as an organization that handles information, are natural
disasters, such as earthquakes, which could damage data centers, and information leaks, particularly unauthorized
disclosure of personal information.
Risk management is practiced at all Group companies, and the Risk Management Committee plays a key role indirecting and supporting the activities undertaken by risk management committees at each Group company. In
addition, the Company is ready to act quickly with various response teams, if a vulnerability is discovered. This is partof an internal structure to minimize the impact of a risk situation on operations by ensuring sufficient communication
within the Group.
The Group Compliance Committee is a component of the Company’s risk management strategy to reinforce
compliance practices groupwide and thereby enhance risk management.
These groupwide structures will be reviewed as necessary to keep responses current to the changing risks thatmirror the evolution of the Group’s business activities and market conditions.

21

22

Corporate Data

Maintain fair business practices

Financial Section

Respect the law

Maintain high corporate morals, obey the law and upholdparameters of socially acceptable conduct.
Have absolutely nothing to do with antisocial forces.

management practices.

Financial Review

Develop talent

Cultivate an environment in which employees always look ahead,
striving to achieve higher goals and embracing new challenges.
Provide opportunities to grow and realize personal goals, create asafe and productive work environment, and give everyone thefreedom to reach their potential.

Corporate
Governance

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

R&D

Provide optimum services

Topics

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

Key Strategies

Ensure sound, transparent
management practices

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

To OurStakeholders(4) Limited Liability Agreements with External Directors and External Corporate Auditors
In accordance with Article 427, Paragraph 1 of the Company Law, the Company enters into agreements with its external directors and external corporate
auditors that limit their liability for compensation under Article 423, Paragraph 1 of the Company Law. The liability amount pursuant to such agreements shallbe limited to the minimum stated in Article 425, Paragraph 1 of the Company Law.

underpins the Group’s efforts to raise corporate value, supported in this effort by the highFinancial
Highlights

development into a corporate citizen whose activities, hinging on the provision of various
Notes:(1) Approval Criteria for Election of Directors
In its Articles of Incorporation, the Company sets forth a clause stating that the appointment of a candidate to the Board of Directors must be approved by amajority vote of shareholders in attendance whose combined shareholdings represent more than one-third of total voting rights held by shareholders with theability to exercise such rights. The Articles of Incorporation include a clause preventing cumulative voting in obtaining approval of appointment for director
candidates.

(3) General Meeting of Shareholders’ Agenda Items that Can Be Resolved by the Board of Directors(i) Seeking to achieve a flexible capital policy geared to the operating environment, the Company provides in its Articles of Incorporation a clause allowing theBoard of Directors to approve the purchase of treasury stock from the market, in accordance with Article 165, Paragraph 2 of the Company Law.
(ii) The Company’s Articles of Incorporation include a clause that grants the Board of Directors the authority to approve the distribution of retained earnings toregistered shareholders as of September 30 each year, as described in Article 454, Paragraph 5 of the Company Law, to promote the flexible return ofprofits to shareholders.

ProfileCompensation for audit
certification

Year ended March 31, 2011