About the TIS INTEC GroupWe seek new challenges, always moving ahead to “Go Beyond.”
CONTENTS
What does the TIS INTEC Group do?
History of the TIS INTEC GroupTIS INTEC Group Value Creation Process
Consolidated Financial Summary/
Consolidated Financial/ Non-Financial Highlights
To Our Stakeholders
Third Medium-Term Management Plan “Beyond Borders 2017”
Group Business Summary
IT Infrastructure Services/ Financial IT Services/
Industrial IT Services
Global Business
Platform that Supports Value Creation Process
Communication with Stakeholders
Contributing to Global Environment
Quality Control
Research and Development
Corporate Governance		 Directors and Members of the Audit & Supervisory Board
		 Message from External Director
Financial Review
Financial Statements
Corporate DataQUALICAOn July 1, 2016, ITHD executed anabsorption-style merger with wholly owned subsidiary TIS, Inc., andtransitioned to an operating holding company. In conjunction, ITHD
changed its name to “TIS, Inc.” andalso brought the brands used byindividual corporate groups within
the Group under the banner “TISINTEC Group” to encourage wider
cooperation throughout the Groupand elicit a real sense of togetherness that extends beyond the borders of corporate units and encompasses all employees.
The TIS INTEC Group will­continue to embrace measures,
including business reorganization,
to generate synergies among
Group companies from the perspective of overall optimization,
provide excellent services as acohesive organization, and thereby
earn the trust of clients and betheir choice for IT services.

AJS
AGREX

TIS Inc.

Other
Group
Companies

INTEC

3
5
7
9
11
19
21
21
23
25
26
31
32
33
35
37
43
46
52
59

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 understand the measuresthat 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 cover in the report are updated on
the website, as appropriate.
http://www.tis.com/

Chuo
SystemNEOAXIS

Scope of reporting: TIS (parent) and TIS INTEC Group
Issued: September 2016
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 the subsidiaries 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 toachieve such forward-looking statements. Indeed, various factors may cause
future results to be substantially different from the assumptions presented inthese materials.
The names of the products and services described in this report aretrademarks or else registered trademarks of the respective company.

1

ProfileGroup History

Value Creation Process

2

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

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 60 companies and 20,000 people, we will provide IT services that draw on the

Support lifestylescenarios

Support industrial
competitiveness

Public andGovernment Systems

Utilities (electricity,gas, water)

We provide general administration systems for government
use, including systems related totaxes and national health insurance, and we support efforts tocreate safe, eco-friendly communities where residents feel secureand lifestyles are characterized
by greater convenience throughthe establishment of smart cities
utilizing ICT infrastructure.

We support public and public
service businesses, which arerequired to meet high levels of
reliability and robustness, froman IT perspective with a range ofsolutions, from income/expense
control and card settlement systems to power generation maintenance systems. We are also
actively addressing new demandparalleling liberalization of theelectric power and gas sectors inJapan.

Contribute to build
a better future(Year ended March 31, 2016)

Credit Cards/
Settlement

Banking/
Insurance

Platform
Services

We provide solutions matched
to all stages of the businesslifecycle, starting with system
configuration designed to realize greater efficiency in sales
and distribution processes distinct to industry sectors andtypes of business. We support
food safety and stable distribution through fast and secure
merchandising systems andtraceability systems.

We pursue research into new IT
technologies, such as artificial
intelligence (AI), the Internet ofThings (IoT) and robotics, andexplore options for commercialization of such technologies. In
the field of fintech, we apply
new technologies, sourced not
only in Japan but also fromoverseas, to facilitate access toservices geared to new financetechnology.

We support systems that utilize
credit cards, such as web-based
services linked to core systems,
including systems to screen
applications and issue cards aswell as systems for sales, billing, payment to accounts anddemand for payment, in addition to payment formats related to retail settlement, such as
prepaid cards and debit cards.

We provide systems to support
banking operations, which
require IT services withextremely high levels of reliability and quality. We also offer
total solutions for insurance
operations, including systems
to handle policy applications,screening and other core processes, as well as establishment
and operation of call centers.

With the largest data center
network in Japan, we keep thevaluable information assets ofour clients safe and secure 24
hours a day 365 days a year. In
addition to on-premise operations, we offer high-level services applicable to various platform environments offering
cloud services, including private
cloud and public cloud services.

(As of April 1, 2016)¥382.6 billion

20,067

Consolidated
Operating Income

Number ofGroup Companies(Year ended March 31, 2016)(As of July 1, 2016)¥24.4 billion

58

Group History

Value Creation Process

BPO Services

Number of Clients

Consolidated ROE(Year ended March 31, 2016)(Year ended March 31, 2016)

About 15,000
companies

We offer an extensive menu ofoutsourced solutions and services covering all the administrative processes otherwise
handled by clients, from data
entry to call center operationand direct mail envelope-stuffing and distribution.

7.0%

Aggregate Number of
Solutions

Consolidated
Equity ratio(Year ended March 31, 2016)(Year ended March 31, 2016)

More than

52.5%

500 cases(See page 59)

3ProfileSupport various
businesses

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

Number of Employees,
Consolidated

Consolidated Net Sales

Support financial
functions

Distribution/
Services

Manufacturing
We support the global businessdevelopment of manufacturers
by making business processes
more efficient through a richassortment of packages andtemplates matched to facetsof manufacturing, a business
realm characterized by its variety of business processes, fromdesign work through to sales
control.

individual strengths of each company and its human resources to support the business activities of avast client base in such industries as finance, manufacturing, services and the public sector, at home
and abroad, and contribute to efforts that support personal lifestyles and social infrastructure.

4

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

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.

April 20112008–2009

June 2014

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

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

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

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

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

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

SORUN Corporation joined the
ITHD Group.

First Medium-termManagement Plan
Group management
emphasizing independenceof each company

7.4%

Discussions on Groupreorganization began

March 2015

December 2009

Period ofestablishment

July 2016

May 2015

Beyond Borders 2017

Second Medium-termManagement Plan
Overall optimization of
the Group and greater
sense of unity

Third Medium-termManagement Plan
Portfolio management, ina project sense, combining
exceptional businesses andkey strengths intoa single approach.

6.0%

ROE

15.6
338.3
327.4

As of July 1, 2016, the TIS INTEC Group consists of the parent company, 46 consolidated
subsidiaries, and 38 affiliated companies accounted for under the equity method.
Domestic
Financial IT Services

Industrial IT Services

IT Infrastructure Services

TIS Inc.
INTEC Inc.
AGREX Inc.
QUALICA Inc.
AJS Inc.
Chuo System Corporation
NEOAXIS
Other group companies: Consolidated subsidiaries 19 companies Equity method affiliates 7 companies

OthersIT Service
Force Inc.
Sorunpure
Corporation
Other group companies
Consolidated subsidiaries
3 companies

Fiscal2013

IT Services Industry Market
Scale and Industry Position
TIS INTEC Group belongs
to the IT services industry.
The Company is a leading,
independent prime contractor, ranked as the industry’s
No. 2 system integrator on a­consolidated sales basis.

Fiscal
2014

Fiscal2015

ASEAN●Consolidated subsidiaries 10 companies

1 company

Equity method affiliates 30 companies

Fiscal2017(Target)(Year ended March 31, 2016)(Billions of yen)
1,600

China
●Consolidated subsidiaries

5 companies
Equity method affiliates
1 company

500

421.4 391.6 382.6

Group History

Value Creation Process

15,0006.0

12,50012,144.2 12,341.6 12,536.3 5.0
11,459.9 11,721.7 11,940.9
4.0

10,000

323.9

300

278.0

7,500

218.6

3.2

3.0

2.3

1.9

200

5,000

100

2,500

1.0

0

0

NTT
DATA

NRI

CTC

TIS

SCSK

UNISYSNSSOL

5Profile● IT Services Market Size in Japan (moderate case)
YOY change

1,614.8

400

Fiscal2018(Target)(Billions of yen, %)···Note: The graph data indicates net sales of NTT DATA Corporation,
Nomura Research Institute, Ltd., ITOCHU Techno-Solutions
Corporation, SCSK Corporation, Nihon Unisys, Ltd., NS
Solutions Corporation, and TIS INTEC Group.

Overseas
North America

Fiscal2016● Net Sales of Japan’s Leading IT Companies

0●Consolidated subsidiaries(Billions of yen)

Third Medium-term Management Plan
For details on “Beyond Border 2017,”
please review the section starting on
page 19~20.

1.5%

Fiscal2012

Net sales

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

361.0

Fiscal2011(Billions of yen)

30.0

21.1

Fiscal2010

Operating income

400.0

23.7

Fiscal
2009

(%)

8.0%

1.7

1.6

1.6 2.0

2015
2016
2017
2018
2019
2020
Gartner “Forecast: IT Services, Japan, 2014-2020, 2Q16 Update” August 10, 2016
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 viewpoints published, as part of a syndicated subscription­service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each
Gartner Report speaks as of its original publication date (and not as of the date ofthis Integrated Report) and the opinions expressed in the Gartner Report(s) are
subject to change without notice.

6

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

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

Consulting IT to raise business
value
services

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

High technological capabilities

Outsourcing
services

Ample experience and know-how

One-stop,
optimum support

input

Extensive service menu

Systemintegration
services

Offer IT services to support
increasingly sophisticatedinformation society

Providing one-stop
access to systems
perfectly matchedclient needs

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

Solid financial position

Realize client visions andstrategies, and set on
growth track

outcomeUse IT to help solve social
issuesResearch
into and access Always on a quest for theto leading-edge latest IT technology toprovide systems a step
technology

Medium-term
management plan

Corporate governanceCorporate culture andhuman resourcesGroup management philosophy

Group Vision

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.

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

Deliver shareholder returns
matched to sustainablegrowthahead of expectations

Structures supporting TIS INTEC Groupbusinesses and sustainable growth

The Group acts as an IT brain, delivering the best solutions toaddress clients’ IT needs. At the same time, we create new value
for society and contribute to improvements that pave the way toa better future.

●	We will always provide our very best to clients by combining
Group strengths to foster higher quality and greater sophisticationin our technological capabilities.

Group History

Value Creation Process

Business partners

Local communities● Play an integral role in realizing the comfortable lifestyles of tomorrowthrough IT
As the leading IT services group, we will design the template and develop thebusinesses that support several facets of tomorrow’s society—where IT is thedriving force of brisk activity in all industries as well as the creation of pleasantliving environments where people feel safe and secure.
● Act with initiative and a sense of enterprising spirit
We will be a group with a corporate culture that makes work enjoyable for
employees and an atmosphere that encourages people to quickly pinpoint currentsof change rippling across various realms, including society and technology, andresourcefully tackle emerging issues from a fresh perspective.
● Secure the highest level of technological expertise
We will be a group that is constantly evolving, with an emphasis on newtechnology and innovative R&D, production techniques and quality control, toachieve the highest level of quality and sharpen cost competitiveness.
● Contribute to social and industry advances
As part of the IT services industry, we will be a group that plays a pioneering rolein the overall development of our industry, and as a member of society, we will bea group that faithfully carries out our social responsibility and contributes to thecommunities in which we share a presence. This two-fold commitment will earn usa solid reputation far and wide.

The management philosophy that permeates the TIS INTEC Group stresses the Group’s
development into a corporate citizen whose activities, hinging on the provision of various
services utilizing IT, match its status as a leading corporate group. This philosophy also underpins
the Group’s efforts to raise corporate value, supported in this effort by the high regard of all its
stakeholders, including clients and shareholders as well as employees and their families. The
Group’s stance on corporate social responsibility is evident in its commitment to cultivate avibrant corporate culture that encourages the companies and individuals under the Groupumbrella to work toward higher goals and embrace new challenges, to be honest and fair inbusiness pursuits based on respect for the law, of course, as well as high moral standards, and tofulfill social obligations. This is the Group’s basic direction on CSR.
Ensure sound,transparent management practices

Acknowledge responsibilities as a leading corporate group in 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 and proactively disclose
pertinent corporate information.

Provide optimum
services

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

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 a safe and productive work environment, and give each person
the freedom to reach his or her potential.

Respect the law

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

Maintain fairbusiness practices

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

Protect theenvironment

Recognize that environmental problems warrant universal attention and promote
efforts to save resources and energy in the execution of corporate activities. Also,
through IT services, support clients’ efforts to enhance operating efficiency and reduceenergy 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 crossborder projects, but also contribute to social and economic development in the countries
where TIS INTEC Group maintains a presence by recognizing local culture and customs.

7

ProfileEmployees

Basic Direction on CSR

We help solve social issues throughbusiness activities●	We 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.

Clients

Plan and propose newpatterns of use for IT

Largest data center network in Japan
Broad customer base

Shareholders, investors

8

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Consolidated Financial Summary

Consolidated Financial/Non-Financial Highlights(Millions of yen)

Fiscal 2011
Net sales
323,173
Cost of sales
261,145
Gross profit
62,027
Selling, general and administrative expenses
49,209Operating income
12,818Recurring profit
12,625
Net income
5,985
Current assets
128,455
Fixed assets
172,620
Total assets
301,076
Current liabilities
73,090Non-current liabilities
76,875
Total liabilities
149,965
Net assets
151,110
Total liabilities and net assets
301,076
Total interest-bearing debt
77,454
Cash flow from operating activities
27,236
Cash flow from investing activities-18,957
Cash flow from financing activities-18,755
Cash and cash equivalents at the end of the term
36,492
Free cash flow
8,279
Capital expenditures
18,325
Depreciation
12,308
Research and development expenses
1,062
Amortization of goodwill
1,901
Goodwill balance at the end of the term
5,551
Net income per share—basic (yen)68.19
Net income per share—diluted (yen)—Dividends per share (yen)
32.00
Payout ratio (%)
46.9%
Total return ratio (%)
46.9%
Net assets per share (yen)1,636.56
Operating income to net sales ratio (%)
4.0%
Net income to net sales ratio (%)
1.9%Interest-bearing debt ratio (%)
25.7%
Equity ratio (%)
47.7%
Net income to equity capital ratio (ROE) (%)
4.2%
Sales to total assets ratio (times)
1.1
Financial leverage (times)
2.2
Recurring profit to total assets ratio (ROA) (%)
4.1%
Number of employees at the end of the term
20,831
Number of new-graduate recruits
928
Number of regular recruits
370

Fiscal 2012
327,417
266,159
61,25845,636
15,621
15,393
2,135
142,442
167,560
310,003
83,06575,972
159,038
150,965
310,00376,51523,658-15,158-4,23041,1198,500
14,096
12,745
962
1,882
3,672
24.33
—
18.00
74.0%
74.0%
1,636.72
4.8%
0.7%
24.7%
46.3%
1.5%
1.1
2.1
5.0%
20,347649
450

Fiscal 2013
337,834
276,935
60,89942,727
18,171
17,4405,868
138,219
164,083
302,302
91,06353,079144,143
158,159
302,30260,55021,515-14,391-19,883
28,433
7,124
12,287
12,920
1,002
1,670
1,914
66.86
66.83
21.00
31.4%
31.4%
1,714.88
5.4%
1.7%
20.0%
49.8%
4.0%
1.1
2.1
5.7%
19,553356
379

Fiscal 2014
346,647
283,881
62,76643,255
19,51018,971
7,913
143,519
170,091
313,610
72,79076,316
149,107
164,502313,61058,86925,770-5,334-5,872
43,142
20,436
12,544
12,454
853
1,166
830
90.16
90.12
25.00
27.7%
27.7%
1,782.23
5.6%
2.3%
18.8%
49.9%
5.2%
1.1
2.0
6.2%
19,065455
549

Fiscal 2015
361,025
294,927
66,09744,97621,121
21,251
10,275
140,450
205,401
345,851
77,666
79,395
157,062
188,789
345,851
52,11422,938-17,744-19,067
29,485
5,194
16,87312,809
1,097
1,052
2,021
117.40
—
30.00
25.6%
30.4%
2,108.19
5.9%
2.8%
15.1%
53.3%
6.0%
1.1
1.9
6.4%
19,090620
499

Fiscal 2016
382,689
312,153
70,53546,09924,436
24,521
12,678
166,666
169,828
336,495
91,50864,447
155,955
180,539
336,495
46,15825,496
8,688-14,979
48,651
34,184
14,21011,952
1,086
339
1,393
145.22
—
33.00
22.7%
35.3%
2,031.07
6.4%
3.3%
13.7%
52.5%
7.0%
1.1
1.9
7.2%
19,393688
687

Notes: 1. Total interest-bearing debt indicates the total sum of borrowed money and corporate bonds.
2. Free cash flows indicate the total sum of cash flows from operating activities and cash flows from investing activities.

Net Sales by Business Segment
IT Infrastructure Services¥123,636 million

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

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

Industrial IT Services¥173,002 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.

Total ¥382,689
million

9.6%

Services

22.1%¥382,689 million
100.0%

Insurance

6.9%

Other
finance

5.3%

Assembly-based
manufacturing

Distribution

8.5%

Processing-based
manufacturing

12.9%

Group History

Value Creation Process

117.40

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

Dividends per Share, Payout Ratio,
Total Return Ratio* (Yen, %)ROE

Net Assets per Share

ROA

5.7
5.0

6.2

6.4

5.2

6.0

Dividends per Share

Equity Ratio

7.2

2,108.19 2,031.07

7.0

1,636.72
46.3

1,714.88 1,782.23
49.8

49.9

53.3

Payout Ratio

74.0
30.00

Total Return Ratio
33.00

25.00

52.5
18.00

4.0

21.00
31.4

27.7

30.4
25.6

35.3
22.7

1.5
Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016
0081

0021

006

0

0

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016
600

1200

1 0
22
89 382 2151
334 735
98
66
664
682
255
44
525 332
678
36
1,178
407 594

60–
55–59

1,523

30–34

1,240

25–29
–24
(Age)

48

Non-Financial Data (As of April 1, 2016)
Number of full-time employees Male

1,800

1,200

600

0

Management positions (male)Management positions (female)

26.73

Total

12,467 Ratio of annual paid leave taken

63.35%

Male

38.66 Number of employees on maternity leave

Female

34.35

Total

37.51

Average length of service (years) Male

13.79

Number of employees inmanagement positions

Number of employees ingeneral positions

735
Percentage of employees inmanagement positions

600

1,200

1,800(Number of
employees)

General positions (male)
General positions (female)9.2%

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

Female10.41 Employees on nursing care leave

Total

12.84

Male

20
476

8
4
137

2,780 Percentage of employees with a disability*3 1.95%
231 Percentage of employees over the age of 60 0.97%

Total

3,011

Male

6,233

Female

3,223

Total

9,456

Male

30.84%

Female 6.69%
Total

424

6

Employees working shorter number ofhours to care for elderly family

Number of non-Japanese employees
4.76%(foreign nationals)

Female527 0 366

178.473,454 Non-scheduled hours worked

Turnover rate

129,013 Average total working hours

FemaleAverage age

822
0

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016
*Total return ratio: Total amount of dividends andtreasury stock buybacks as a percentage of net income.

1800

Employee Composition (As of April 1, 2016)

9

Profile

7,913
90.16

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016

35–39

7.3%

10,275

6.4

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016

14.2%

Year ended
March 31, 2016

5.9

5.6

12,678145.22

2,135
24.33

40–44

Credit card

21,121

19,5105.4

Net Income per ShareNet Income

5,868
66.86

Banking

Financial IT Services¥78,972 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.

4.0%

Publicinstitutions

Operating Income
Operating Income to Net Sales Ratio 24,436
18,171

45–49
Others361,025

346,647(Millions of yen, %)382,689

15,621
4.8

50–54

(%)

Others¥7,078 million

Year ended
March 31, 2016

327,417 337,834

Net Sales by Client Sector(Sales to outside customers, excludes intersegment sales)

Operating Income,Net Income (Millions of yen)
Operating Income to Net Sales Ratio Net Income per Share (Yen)Net Sales(Millions of yen)

* Senior employment: Following amendments to
the Law on Stabilization of Employment of Older
Persons in April 2013, we introduced a continuous
employment system that enables all employees
and anyone who falls under the criteria of this law,
who are in good health and have the desire tocontinue working after mandatory retirement, theopportunity to be reemployed and continue
working up to the age of 65.

24.15%

Notes: 1. The above are totals and averages for the TIS INTEC Group’s five principal companies (TIS,INTEC, AGREX, QUALICA and AJS).
2. The numbers above are simple combined averages or weighted averages.
3. The percentage of employees with a disability represents the combined total for TIS, SorunPure
Inc. and 11 affiliated specially recognized companies under the Group umbrella (employees
hired under regular : 19,881.0 people; employees with a disability: 388.0 people).
4. Percentage of employees over the age of 60 is calculated based on June 1, 2016.

10

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate DataTo Our Stakeholders

To be consistently chosen by clients andthe market as a corporate group burstingwith distinctive capabilities
On July 1, 2016, the ITHD Group marked a new beginning as the TIS INTEC Group. Toru Kuwano, president
and representative director at TIS, which transitioned into an operating holding company, talks about thereasons behind the recent integration and reorganization of Group companies, the new management
direction and structure, and the Group’s future.

Measures to Strengthen Group Management Foundation
The Group will embrace the following measures to achieve a stronger management foundation, in line withthe reorganization of Group companies: (1) create a new Group vision, (2) implement groupwide measuresto raise productivity in software development and operation, (3) promote innovative business plan drawing
on groupwide know-how, and (4) consolidate and share head office functions

Reasons Behind the Recent Integration
and Reorganization of Group Companies

Q1.

Background up to establishment of operatingholding company—Changing IT needs“We’re moving into an era where IT
strategies = management strategies”
In recent years, IT has acquired a significantly different
requirement to fulfill in society. Indeed, the fourth industrial
revolution has dawned, where innovations in technology,
highlighted by the Internet of Things (IoT), big data, robots andartificial intelligence (AI), will transform prevailing social andeconomic systems. The inherent advances of this revolution are
reshaping the business models that companies use. The effectgoes beyond the realm of frontier-driven venture companies,
with all sectors of domestic industry, including the banking
industry and other core industries, catching on to the idea that
“IT strategies = management strategies”. The key to corporate
survival amid increasingly fierce competition in global markets
today is to consistently push toward greater use of IT.
Against this backdrop, the function that the IT services
industry is expected to fulfill is evolving as well. At one time,the mobilizing force of an IT service provider was the numberof system engineers it had on staff, and that pool of talent
ensured competitive superiority. Today, that is not enough.
Competitive superiority depends on a wider ability to anticipate
client needs and identify potential responses even before
clients themselves see the need and to be a step ahead ofindustry peers in delivering the appropriate solutions.
Management at ITHD realized that the Group’s strengths had
to be reinforced—better combined—to keep the Group viablein the industry, and this is what led to the recent integration
and reorganization into the TIS INTEC Group.

President
Toru Kuwano

Overall Image of Integration and Reorganization

Day1
April 2016

● Some operations at TIS will be transferred to INTEC and vice versa● Transfer from TIS to INTEC : Business activities related to national health insurance program● T ransfer from INTEC to TIS : Business activities related to electric power and gas sectors,
overseas business activities

Completed

Day1
July 2016● Transition to operating holding company structure through merger of ITHD and TIS● Corporate name will change from IT Holdings to TIS● Consolidate group brands: Under TIS INTEC Group bannerCompleted

Now
Business­realignment during
gap between
Day 1 and Day 2●  Businesses/operations under consideration for realignment●  IT infrastructure●  Bank-related business● Regional hubs, local area subsidiaries● Service platforms

Day2

Process begins
during current
medium-term
management
plan● Realign and integrate operations under organizational and corporate structures that best
demonstrate business strengths, such as business model and management style

Efforts to reinforce the Group management platform will parallel efforts to redefine the Group formation.

1

Instill new Group vision● Start fostering corporate culture shared throughout the Group. Cultivate shared sense of values
groupwide, establish a vision, and let these qualities and forward-looking perspective be theunifying force that pulls the whole organization together.

2

Promote measures that cut laterally across the Group to improve development and operatingproductivity● Identify best practices from measures undertaken at each company to boost development andoperating productivity, and promote these practices across the Group structure. This will help toimprove the value of the services provided and prevent projects from turning unprofitable.

3

Encourage innovation that draws on groupwide know-how● Encourage innovation that consolidates lead-edge technology know-how, such as IoT, financial
technologies, AI and robotics, from Group companies and link the knowledge to new value
creation for companies, industry and society

4Integrate head office functions and promote common access to such functions● Push toward integration of head office functions and reinforce Group governance.
● Expand scope of applicable shared services, which have been available to some Group companies
already, reduce management and indirect costs within the Group, and raise service levels.

11

ProfileGroup History

Value Creation Process●  BPO business

12

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate DataTo Our Stakeholders

Q2.

About the shift to an operating holding company“Leadership is essential for corporate management with a sense of speed”
The noteworthy features of the TIS INTEC Group are that each company under the Group umbrella has very
distinct strengths and that the overall client base is well-balanced, with an extensive range of top-notch
companies in many different sectors of industry at home and abroad. Even under the previous pure holding
company structure, Group companies worked with each other depending on the project, but situations did arise
in certain segments, such as business processing outsourcing (BPO) and the energy business, where it wasdifficult to formulate medium-term business strategies that could be applied laterally across the Group. We
determined that management with a sense of speed—that is, fast decision-making—was essential for the Groupto provide high-added-value services amid rapidly changing business conditions. An operating holding company
would lead the Group, clarify the direction of business strengths—core competence—under a cohesive
corporate group, and guide investments and measures aimed at lifting overall capabilities to a higher level.

New Management Direction (1)Mission of New Management TeamWork toward blended corporate group, as TIS INTEC Group, andpromote portfolio management to raise corporate value
With market- and client-oriented perspective,● quickly solve internal management issues, and● as a cohesive group, contribute externally to digital management at client companies.
Leverage features of operatingholding company structure

About the Group’s Five Principal Companies
Company Name

Shareholding Ratios—

TIS Inc.

Q3.

Description of Business

Strive to build structure that derives maximum value frommanagement resources a­ vailable within the Group● Reinforce forte capabilities in businesses showcasing competitive excellence● Raise level of excellence even higher in regions where Group enjoys comparative advantage overindustry rivals and in businesses, such as BPO, and connect organically with existing businesses.

Focuses on credit card companies but pursues business opportunities in a wide range ofsectors, including services and manufacturing
Merged with SORUN and UFIT in April 2011 and implemented structural reforms. Mergedwith pure holding company IT Holdings Corporation in July 2016 and became operatingholding company.
100% Focuses on megabanks and life insurers but promotes CRM for regional banks and offers awide selection of services to regional public corporations, particularly in the Hokuriku region.

INTEC Inc.

TISQUALICA Inc.

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

AJS Inc.

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

AGREX INC.

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

Key Strategies
Cultivate corporate culture
with sense of solidarity● Establish Group vision● Strengthen Group brand power

Generate frontline energy andbuild a business portfolio● Train and keep human resourcesin management positions whobring capabilities well suited tothe business model● Improve and expand added-value/market-cultivating businesses

Establish newGroup governance● Promote best practices● Apply Corporate Governance Code● Enhance internal controls

New management direction and structure
Environment surrounding
IT services industry“The Group will build new core competence”
The shift to an operating holding company structure provided an opportunity to reallocate certain operations
between TIS and INTEC in April 2016. In business activities related to the national health insurance program,which were transferred to INTEC from TIS, INTEC was already responsible for systems in eight prefectures, while
TIS handled systems in three prefectures. Joint activities were almost nonexistent. In 2017, system reform is
expected at the prefectural level, paralleling integration of the National Health Insurance Organization’s central
system, so it made good sense to bring business activities related to the national health insurance program
together at INTEC, which has expertise in addressing the needs of municipalities and other regionalorganizations. INTEC will then utilize the Group’s 11-prefecture presence to expand business on a national scale.
Meanwhile, business activities related to electric power and gas sectors were transferred to TIS from INTEC.
The decision to bring business activities related to electric power and gas sectors under TIS was prompted by adomestic energy industry in deregulation mode and TIS’ expertise in this area, highlighted by EneLink, a totalsolution for the energy industry that covers systems to handle customer care and billing operations, supply-anddemand management, and other aspects of energy provider business administration. Reform of the electric
power system led to liberalization of retail sales of electricity in April 2016, which will be followed byliberalization of retail sales of gas in April 2017, and then the unbundling of power production from distribution
and transmission at a later date. Given these unfolding reforms, we felt the reallocation of energy-related
business activities to TIS from INTEC would facilitate wider support to existing energy providers as well ascompanies just entering the deregulated market and would also reinforce corporate capabilities.
The July 2016 transition into the TIS INTEC Group is not our destination; it is our starting point. Goingforward, we will continue to reorganize business activities and companies under the Group umbrella, as
necessary, to create new core competence—strengths that provide our clients with unique value.

Group History

Value Creation Process

Accelerate efforts topromote portfolio management

New business investment

Provider selection
by clientsBusinesses where the Group enjoys
a competitive advantage, namely,
status as top corporate groupin the industry

Improve profitability inapplicable businesses

Lateral application acrossapplicable industries

Reinforce training and redesign approaches to work to enable
employees throughout the Group to maximize their capabilities

13

ProfileOptimize capabilities
within Group

14

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate DataTo Our Stakeholders

Q4.

What will Group reorganization and integration achieve?

“Company with killer contents, first choice of clients at home and abroad”
Amid intensifying competition, the TIS INTEC Group has to expand its portfolio of distinctive, top-class strengths
in each business segment—that is, killer content—and be the first choice of clients and business partners athome and abroad.
For example, with the shift toward a cashless society in mind, TIS was quick to debut PAYCIERGE, a retailpayment solution. This success underpinned the May 2016 capital and business alliance with QUADRAC Co.,
Ltd., a company established by a technician who gained recognition for developing FeliCa contactless IC card
technology used in a range of applications, including platform technology for Suica smartcard ticketing systems.
TIS earned high marks as a potential business partner because of its strength in payment-based services—astrength unquestionably at the top of the domestic industry. Meanwhile, INTEC boasts a high share in systems
for regional banks, mostly, and provides total system services to many companies rooted in local communities.
The reliability inherent in the know-how that supports such services is an asset that translates into long-termbusiness relationships and more orders as a client-chosen provider.
In addition, we seek to secure new markets beyond providing support to Japanese companies operating
overseas and are working to expand business, especially in China and the ASEAN region. We encourage active
investment overseas, favoring partnerships with local companies, simply because local factors, such as culture,social structure, politics and the economy, in each country can significantly affect operations, and our partners
have the necessary market insights to ensure a higher degree of success. Through overseas business pursuits,
where we showcase Group strengths, such as payment services, and promote services jointly with leading local
companies, we gain access to know-how in certain fields, such as the mobile communication business, moreadvanced than in Japan. This know-how can then be utilized in Japan as a new Group strength. We are keen to
realize this positive circle of business growth.

Human Resources Training, Social Role of the Group, Future Ideal

Q5.

Human resources that the TIS INTEC Group needs for the future“Each and every employee will grow and develop as a true professional”
Diverse human resources are vital to any company. For us, our immediate priority is on system engineers withthe ability to properly execute the basic workflow, from determining client requirements to designing theappropriate systems and then possibly operating the systems once live. In recent years, we have also seen
greater need for speed in Japan and overseas, paralleling changes in how and where IT is used, which has
spurred a trend in services that utilize general-purpose systems. As a result, we also need people who are able togo beyond accurately pinpointing client company requirements. They must demonstrate the ability to makeproposals utilizing general-purpose systems and achieve high client satisfaction through the most effective
approaches. They must also promote business and act as consultants. All our human resources, however, share acertain quality: professionalism.
This quality serves another purpose: reducing the number of projects that become unprofitable, which isone of the priorities in our medium-term management plan. We have established several measures, but themost important one requires each and every employee to acquire the ability to guide client companies during
project stages as on-point professionals.
In developing the skills of our human resources, we will review systems, such as hiring methods, and also
increase personnel exchange activities outside the Group, including cooperative efforts with national anduniversity research organizations. In addition, in recent years, we have pursued capital and business allianceswith companies at home and abroad, and we will build on this practice. Through these connections, we gain
direct access to new ideas that lead to better technologies and capabilities. At the same time, we establish
contact points for bringing new people into the Group.

New Management Direction (2)Priority Measures

1.
2.
3.
4.
5.
6.

Steadily undertake big projects
Establish corporate risk monitoring structure different from usual to enhance responsiveness. Apply standardized
development platform approach.
Reduce unprofitable projects
Work at early-stage identification of unprofitable projects through such processes as regular “project healthchecks.”Restructure data center business
Write off impairment losses, mainly conventional data center assets. Reinforce position as service centers.
Promote service-style businesses
Buds of growth steadily appearing, highlighted by EneLink for the energy sector and remote monitoring/
preventative maintenance system CareQube
Promote global businesses
Accelerate business development with focus on ASEAN local markets through M&A opportunities. Also seek tostreamline operations within the Group.
Get more involved, with focus on field of “fintech”—integrating finance and information­technology—IoT and AI
Promote business development through presence in such fields as online settlement (payment market). Establish
corporate venture capital system that facilitates fast, strategic investment activity, and offer new forms ofadded-value through business synergy with venture firms.

From a groupwide perspective, we will encourage investment in growth markets to enhance capabilities inareas of competitive excellence. We will also strive to improve human resources training and create a more
comfortable workplace environment so that employees—the source of the Group’s competitive excellence—
are able to fully demonstrate their abilities. Of note, a topic of particular social importance is to get women
more involved in the workplace, and toward this end, the TIS INTEC Group will promote measures, under theleadership of top management, including skill development, career formation and a review of workstyles.
For example, the TIS INTEC Group is one of Japan’s leading system integrators in the area of settlement
operations, particularly the credit card business. Going forward, the Group will adhere to strategies aimed atdeveloping human resources and executing investments matched to market changes, and will strive tomaintain and further enhance its reputation for excellence.
[Example: Perception of Business Development in Payment Settlement Sector]
Traditional Credit Card Market

Human Resources
Training
Handle platform systems
for multiple credit cardmajorsGroup History

Value Creation Process

Human Resources
Training

Human Resources
Training
Applied investment in
new technology
Developed CreditCube,original solution basedon know-how acquired
through big projects.

Application to servicestyle businesses
Developed DebitCube+and PrepaidCube+ toreflect diversification in
payment settlement
needs

Investment matchedto changing businessenvironment
Tie in “fintech” andutilize Apigee forapplication programinterface responseGroup Excellence: About 1,400 system engineers underGroup umbrella with experience in payment settlement services and IT

15

ProfileMarket Creation Players in Growth Domains:
Steady stream of new entries from other industries

16

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate DataTo Our Stakeholders

Q6.

New management structure“We will strive to boost the corporate value of the Group”
The new management structure at TIS highlights two points. The first is Group management utilizing an
operating holding company structure, with strategies geared toward optimized allocation of resources within
the Group and enhanced cooperation across business segments. The second is to reinforce the monitoring
function of the Board of Directors—a step that includes the appointment of a third outside director, up from
two—and a deeper level of corporate governance. Also, as part of our efforts to strengthen corporate
governance, we will provide outside directors and non-executive directors with more details on agenda topics
before Board of Directors’ meetings and encourage greater activity at these meeting through lively discussion.

Q7.

Social Role of TIS INTEC Group and Future Ideal

New Management Direction (3)The new management team, led by Toru Kuwano, TIS president, promotes multifaceted measuresdesigned to raise the corporate value of the Group.

“We will help people achieve more fulfilling lives.”

Noteworthy Features of New Management Structure

I got my first real job in 1976. In all the years since then, new industries have appeared in line with the times,
and mature industries have undergone realignment. Such changes are imminent in the IT services industry, as
well, as and I see a trend beginning toward realignment in the markets of Asia that involve Japanese companies
as well as overseas companies. A priority theme for management at the reinvigorated TIS, which includes me,
and by extension the companies under the TIS INTEC Group umbrella, is to chart a specific course that
establishes the Group as the leader of industry realignment and ensures the Group remains a viable force inproviding IT services throughout Asia.
Technological innovation using IT makes life and work less effort-intensive, more efficient and brings about
greater convenience. At the same time, IT presents new ways to deal with various social issues. For example,
Elvez, Inc., in which TIS took an equity position in March 2016, is developing order-taking AI, a voice-activatedtechnology that responds to the needs of the elderly. An important mission for IT service providers these days is
to apply IT to solutions that address challenges caused by a low birthrate and the graying of society in Japan. IT
has also become an indispensible tool enabling people to opt for different lifestyles, facilitated by approaches topromote diversity, including greater involvement of women in the workplace, and also in achieving a positive
work-life balance.
Lifestyles and social issues change along with times. The places where people live change, too, whether thatis Japan or overseas or even, one day, outer space. But regardless of the times, our goal is for the TIS INTECGroup to endure and play an ongoing part through the provision of multifaceted IT services that, ultimately, help
people achieve more fulfilling lives.
We will combine the expertise of all Group executives, push ahead on business activities, and raise
corporate value to new heights. On behalf of the entire TIS INTEC Group, I ask for the continued support ofshareholders and investors.

(1) Group management leveraging benefits ofoperating holding company structure(2) Enhanced corporate governance● Better monitoring capabilities for the Board of● Optimum placement of human resources within

Directors

the Group● Stronger cooperation between business segments● Increase number of outside Audit & Supervisory

New Representative

New Management Structure● Representative Director and Pesident:● 10-director structure

Toru Kuwano(Date of appointment: June 24, 2016)

Board members to three, from two(includes three external directors)● 5-member structure for Audit & Supervisory

Board (includes three external members)

TIS Inc.
Board of Directors and Audit & Supervisory Board Members
Chairman:

Norio Maenishi

President:

Toru Kuwano

Representative Director:

Mitsushi Nishida

Director andManaging Executive Officer: Josaku Yanai
Director:

Katsuki Kanaoka

Director:

Shigeki Kusaka

Director:

Yoshiyuki Suzuki

External Director:

Shingo Oda

External Director:

Yoshinobu Ishigaki

External Director:

Koichi Sano

Standing Audit & Supervisory
Board Member:

Takuho ShimodairaStanding Audit & Supervisory
Board Member:

Katsuhiko Ishii

External Audit & Supervisory
Board Member:

Taigi Ito

External Audit & Supervisory
Board Member:

Muneaki Ueda

External Audit & Supervisory
Board Member:

Sadahei Funakoshi

The TIS INTEC Group will chart a specific course that establishes theGroup as the leader of industry realignment and ensure the Groupremains a viable force in providing IT services throughout Asia.

17

ProfileGroup History

Value Creation Process

18

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Medium-Term Management Plan

Third Medium-Term Management Plan
“Beyond Borders 2017”(Fiscal 2016 – Fiscal 2018)“Beyond Borders” evokes the idea of going beyond perceived barriers between companies and businessstructures to achieve cooperation and collaboration, to transform the current business model, to shift froma domestic perspective to a global view, and to see each and every employee within the Group transcendtheir own boundaries.

Three Basic Concepts

Direction TIS INTEC Group Intends to Travel
Promote management activities with an even greater emphasis on
profitability● Highlight operating income, operating margin and even more
importantly, net income● Raise corporate value by introducing *ROE (Return on Equity) and othermanagement indicators
Always look one step beyond clients’ current needs and provide
value-added proposals to enhance clients’ earning capabilities● Shift from existing assignment solution style services, which address client
requests, in favor of value-added creation and market cultivating styles

Profit Emphasis
IT Brain

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

Portfolio Management

Group Targets

Vision to Achieve

Value-added creation

Market-cultivating style business

Value-added creation style businessCurrent themes●Promote industry platform business●Promote global businessCurrent themes●Establish distinct strengths (growth engines)●Promote large projects●Improve business profits (cash-generating
capability) and reduce cost of sales

Expand solutions
businessHuge
increase inorders inforte fields

Promote big
projects

Expand global
business

Pillar of
growthIndustry platform business(own packages, services)

Proposal ­business

Client insights

Market innovation

Accelerate measures under operating holding company structure
Expand demand fromexisting clients

Provide BPO
services

In April 2015, the TIS INTEC Group embarked on “Beyond Borders
2017,” a three-year medium-term management plan running throughMarch 2018. Under this plan, the Group is rolling out strategies
highlighting three basic concepts: emphasis on profitability, IT
brain—essentially, expanding range of value-added businesses—and
portfolio management.
Portfolio management is in a particularly bright spotlight on
the medium-term management plan stage, and our goal is overall
optimization as a group with outstanding businesses and strengths
demonstrating market superiority reflecting the distinctive features ofeach Group company. The recent transition to an operating holding
company structure is part of this process.

Going Forward—
Key Points from Fiscal 2016
Ensure total commitment to profitability
focus (Work toward ROE of 8%)
Optimize overall Group capabilities, utilizing
operating holding company structure
Expand value-added business
Sort out business portfolio
Develop and attract human resources suited
to business model

Emphasize ROE as a key performance indicator,
strive to boost corporate value, and realize sustainable growth.
Initial Numerical Targets(Billions of yen, consolidated)

Fiscal 2016
TargetFiscal 2015

Fiscal 2017
TargetFiscal 2018
TargetOperating income
Net income
Operating margin
Net income ratio
ROE

Assignment solutions geared toclient requests
Current themes●Improve quality and productivity●Raise project management to higher level●Improve business profits (cash-generating capability)
and reduce cost of sales

Assignment solutions

Third Medium-term Management Plan: Status of Key Performance Indicators(Billions of yen, consolidated)

Net sales

Operating income

ROE

Progress trending above target inmedium-term management plan.
Prospects good for reaching fiscal 2018
target.

Fiscal 2016 result surpassed target. Fiscal
2017 result may come in slightly below
target, owing to increased burden fromselling, general and administrative expenses
paralleling revision of tax law. Progress will
get back on track in fiscal 2018 toward ¥30
billion medium-term target.

Improved, paralleling higher performance
results. By current calculations, could
reach medium-term target of 8.0% by
fiscal 2017, a year ahead of schedule.

390.0 400.0
382.6 385.0 [Estimate][Mid-term[Mid-term management
management
plan]
plan]

[Mid-term
management
plan]

Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

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

Higheroutsourcing
demandGroup’s current status

361.0 370.0

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

Net sales23.5 24.4

Group History

Value Creation Process

27.0 26.5[Estimate][Mid-term
21.1 [Mid-term
management
management
plan]
plan]

30.0

[Mid-term
management
plan]

Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 201819

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

8.3% 8.0%

6.0%

7.0%

[Current
calculations][Mid-term
management
plan]

Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018

20

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Group Business Summary

These pages offer a look at the content and status of key segments in the TIS INTEC Group and overseasoriented business strategies.

* Net sales include inter-segment sales.

IT Infrastructure Services
Main business activities

Fiscal 2016 Summary

The segment provides computer utility, that is, operation
services, under in-house control through the use of large
IT facilities such as data centers.

Segment sales rose 6.5% year-on-year, to ¥125,929 million,
and operating income climbed 24.3%, to ¥8,924 million. Key
factors in higher sales were steady growth in the data centerand BPO businesses as well as the revenue contribution fromtwo BPO companies that were turned into subsidiaries in thefirst half of fiscal 2016. Operating income benefited mainly
from the higher sales starting point as well as lower costs,
including a decrease in depreciation expenses paralleling impairment losses on conventional data center assets, which offset
downside factors such as lower profitability on separate projects
and the impact of projects of reduced size among some existingclients.

Fiscal 2016
Net sales¥125,929 million(Up 6.5% year-on-year)¥8,924 million

Operating income(Up 24.3% year-on-year)

Sales and Operating Income

Measures in Fiscal 2017
Efforts will be directed toward restructuring the data center business,
including efforts to respond flexibly to fast-paced changes in the businessenvironment such as wider use of cloud services, and reinforce the positionof data centers as service centers. In the BPO business, the emphasis will
be on expansion, including business concentration within the Group, tocapitalize on sustained growth in demand for outsourcing that contributes
to enhanced corporate management.

(Millions of yen)

Operating income

Net sales

118,200
111,358 112,666 115,360
8,049
7,652 7,179
7,101

Fiscal
2012

Fiscal
2013

Fiscal2014

125,929
8,924

Fiscal2016

Fiscal2015

Financial IT Services
Main business activities

Fiscal 2016 Summary

The segment applies finance-specific business knowhow and IT to support the shift toward greater useof IT in business operations and the execution ofbusiness activities drawing on the power of IT.

Segment sales reached ¥79,519 million—on a par with the levelin fiscal 2015—while operating income retreated 39.4%, to¥3,361 million. While IT investment by clients expanded overall,
maintaining brisk demand for financial IT services, the potential
for an increase in sales was tempered by reduced IT spending
among some existing clients. Operating income was adversely
affected by the drop in segment sales and further eroded by the
impact of unprofitable projects.

Fiscal 2016
Net sales¥79,519 million(No change year-on-year)

Sales and Operating Income

Measures in Fiscal 2017
Efforts will focus on steady execution of large projects for businesses
using credit cards, a demand sector where IT investment is at a high level,
especially to update core systems. For clients in the banking and insurance
sectors, Financial IT Services will accurately respond to existing demand andalso strengthen its response to new IT investment needs, such as fintech,which will fuel reforms in business and service content.

Operating income

Net sales
70,09971,49979,543 79,519

75,148

6,021

6,385

5,549

4,534

¥3,361 million

Operating income(Millions of yen)

(Down 39.4% year-on-year)

Fiscal
2012

3,361

Fiscal
2013

Fiscal
2014

Fiscal2016

Fiscal2015

Industrial IT Services
Main business activities

Fiscal 2016 Summary

The segment applies business know-how and IT
targeting the public sector and companies in industries
other than finance to support clients in their efforts
to make greater use of IT in business operations andexecute business activities drawing on the power of IT.
Fiscal 2016
Net sales

Operating income

Measures in Fiscal 2017

Segment sales grew 8.2%, to ¥180,000 million, and operating
income soared 41.5%, to ¥9,972 million. The improvement insales reflects a positive shift, especially in the energy sector
where robust IT investment activity parallels electric powersystem reform in Japan. The significant change in operating
income is primarily due to the higher sales starting point andsuccessful efforts to boost profitability.

¥180,000 million(Up 8.2% year-on-year)

Sales and Operating Income

Companies will likely continue to expand front-office IT investment to
sharpen competitiveness, especially in marketing-related activities. Against
this backdrop, Industrial IT Services will respond to existing demand while
also strengthening efforts to respond to clients who are increasingly keen
on digital management, such as IoT and AI. The segment will actively
promote services to utilities, especially energy providers, as demand is
expected to grow with brisk IT investment paralleling deregulation of gas
and electric power sales.

¥9,972 million

158,234
149,466 155,689

166,357

180,000
9,972

7,049
4,992

Fiscal
2012

21

Group History

Operating income

Net sales

4,687

2,658

(Up 41.5% year-on-year)

Profile(Millions of yen)

Value Creation Process

Fiscal
2013

Fiscal
2014

Fiscal2015

Fiscal2016

22

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Group Business Summary

Major Steps in the TIS INTEC Group’s Expansion Overseas

Global Business

Step 1Three 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
lateral expansion through the ASEAN region.

Enhance Activity Through Business andCapital Alliances in ASEAN Region
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.

Overseas sales ratio

Currently, about 1%. Seek to boost the ratio.
Step 1 Kicked off in China
Step 2 Established three-point presence—Thailand, Singapore and Vietnam
Accelerate expansion/lateral development in ASEAN region

Step 3 through business and capital alliances

Beijing
Tianjin

Step 1Japan

April 2010
March 2012

Step 2

Step 2Thailand
Vietnam●T ianjin TIS Hi-Tech Information System Service formed business alliance with ChinaCache

International Holdings Ltd., a leading provider of content delivery network (CDN) services in China.
Establish three-point ASEAN presence hinging on Thailand, Singapore and Vietnam● TISI Singapore Pte. Ltd. established.

February 2012

● INTEC SYSTEMS BANGKOK CO., LTD, established.

March 2013

● QUALICA ASIA PACIFIC PTE., LTD, hired more staff and reinforced local support structure.

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

October 2013
December 2013

Vietnam
Launched global BPO business●T IS formed a capital and business alliance with econtext ASIA Limited, a Digital Garage subsidiary

Jointly promoting solutions to e-commerce businesses in Asia
●T IS formed a business alliance with PT Soltius Indonesia, top-class SAP vendor in Indonesia

Strengthen SAP support services offered locally to Japanese companies operating in Indonesia
April 2014

●T
 IS formed a capital and business alliance with MFEC Public Company Limited, a Bangkok-listed

leader in IT solutions for corporate clients
Mutually complement strengths and promote and expand business opportunities for each otherin the IT markets of the ASEAN region and in Thailand, where growth is noticeably robust.
●T IS turned Thai company I AM Consulting Co., Ltd., boasting top-class results as a total solution

Consolidate know-how accumulated overmany years in serving credit card and consumer
finance companies to reinforce businessdevelopment in payment settlement sector
Enter e-money sector through alliances
Goals are to —● establish No.1 settlement solution● turn a profit on new services, and● create No.1 service-style business model

Shanghai● Full-scale start of operations at Tianjin Data Center.

January 2012

Step 3

Examples to expand and promote services
that create added value● O ffer one-stop access to rich assortmentof payment settlement solutions, fromfront to back office.
● A nticipate needs, such as diversifying
payment settlement requirements andincreasingly multifunctional payment
terminals, and establish No.1 servicestyle business model.
● P romote robust market cultivation byforming capital and business allianceswith local companies in growth markets.

Initiated overseas expansion primarily through establishment of local offices as offshore development
sites.

Begin expanding network by shifting presence from offshore development approach to points
February 2008 of business● Established Tianjin TIS Hi-Tech Information System Service Co., Ltd.

Domestic

Wuhan

Step 3Topics

1990s

Expansion into China

June 2014provider for SAP, into a consolidated subsidiary.
Seek to expand business opportunities with local companies as well as Japanese companies operatingin Thailand.
● INTEC formed a business alliance with PT. Bisnis Integrasi Global, a system integrator in Indonesia.

June 2015

Will jointly pursue steps to expand the service lineup for Japanese companies operating locallyand strengthen support for these clients while also offering solutions and services to local­companies.
● AGREX established AGREX (Thailand) Co., Ltd. (I-AGREX (Thailand) succeeded the company’s busi-

ness.)

Overseas

3

Singapore

Provided above solutions and know-how to local
companies in which an equity stake taken toencourage local market cultivation(1) Bangkok, Thailand
MFEC Public Company Limited (PromptNow Co.,
Ltd.): 15% stake (majority shareholder status)(2) Jakarta, Indonesia
Anabatic Technologies: 20% stake (equity
method affiliates)

3

Indonesia

July 2015● TIS formed a capital and business alliance with PT. Anabatic Technologies, an IT company listed on

the Indonesia Stock Exchange.
Jointly launched SI services to Japanese companies operating locally and to locally based­companies.
● PromptNow Co., Ltd., the leader in mobile application development for financial institutions in

May 2016

Thailand, brought into TIS INTEC Group as consolidated subsidiary.
Will utilize reciprocal strengths to expand settlement business in Thailand, where significant
growth is expected.

23

ProfileGroup History

Value Creation Process

24

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

TIS INTEC Group’s Platform forCommunication with Stakeholders

Supporting Corporate Value Process

The TIS INTEC Group strives to build bonds of trust through communication with all
stakeholders, including clients, employees, shareholders and investors, and business
partners, and to boost corporate value.

Communication with TIS INTEC Group’s stakeholders is a what
supports improvement in corporate value. Consideration for
the environment along with efforts in quality control and R&D
are also essential for the business of information systems—akey social infrastructure—to function in harmony with society
and steadily evolve. With this in mind, we strive to enhance
corporate governance and internal controls, which form a vital­cornerstone of business activities within the Group.

● Local event participation● Cooperation and support for NGO/NPO social● Customer service points of contact(call center, website, main number)● Seminars, fairs and forums for clients● Publication of newslettersand technical brochures● Client satisfaction surveys● Regular meetings

contribution activities● Charity concerts● Opinion posts from website● Responses to relevant ministries/agencies andindustry associations

Clients
Community/
Society
Employees● Company news

(pamphlets, website)

Primary methods of communication with stakeholders● Intranet● Personnel exchangegroups, opinion
exchange groups● Day at the office forchildren of employees● President’s Caravan● Information meetings on policy (guidelines)● Creating opportunities for discussion (project

TIS INTEC Group

information)● Engineer development and support (educational

support, seminars)● New Year celebrations, informal social gatherings● Questionnaires, opportunities for opinion exchange

Contents
Communication with Stakeholders

26

Contributing to Global Environment

31

Quality Control

32

Research and Development

33

Corporate Governance

35

Shareholders
and Investors● General meeting of shareholders● Results briefing● Small meetings, domestic and overseas roadshows,participation in conferences● Information disclosure on IR section of corporate websites● Business Report25

ProfileGroup History

Business
Partners

Value Creation Process

26

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Communication with Stakeholders—Employees
Create environment in which each and every employee canfully demonstrate respective capabilities
For the TIS INTEC Group, the cornerstone of business, from an administrative perspective, is none other than employees—
each and every one. We strive to maintain an environment that facilitates diverse approaches to work, which enables
employees to feel they are contributing to society through their jobs and thus encourages personal pride and fuels motivation. Through the Third Medium-Tem Management Plan, we will emphasize the key measures described below as pursuits
common groupwide.
Key Measure
Encourage women to seek
management positions
Utilize human resources andupgrade skills
Promote hiring of disabled persons
Address aging of workforce
Create comfortable work
environment where employees
feel appreciatedCultivate sense of unity groupwide
Collect/organize human resources
information

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

We realize that sustainable growth requires multifaceted perspectives and value perceptions, based on different experience,skills and attributes, and we will strive to ensure diversity in human resources, including efforts to encourage women to
take on positions with more responsibility. Getting women to be more active members of the workforce is an issue ofparticular importance in Japan these days, and the ratio of women in management positions at the five principal companies
under the TIS INTEC Group umbrella averages around 6%. We recognize the pressing need to establish and maintain structures and a work environment that enable female employees to demonstrate even greater potential. Under the leadershipof top management, we will promote measures throughout the Group toward this end, emphasizing skill development,
career formation and consideration of various workstyles.

To provide an environment in which employees can fully demonstrate their capabilities and stay on a career path withconfidence and no work/life balance concerns, companies within the TIS INTEC Group have each reviewed respective
employee vacation and leave of absence structures as well as childcare support programs, such as daycare access, andefforts to retain Kurumin certification, which is awarded in recognition of measures to provide childcare support to­employees.

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

Activities at Principal Group Companies to Promote Greater Involvement of Women in the Workplace
In April 2016, the Act Concerning the Promotion of Women’s Career Activities came into force in Japan, obligating employers
to formulate a plan of action with specific details on duration, targets, measures and schedule, to submit this action plan to
the relevant government office and to make the content publicly available. Against this backdrop, 10 principal companies* in
the TIS INTEC Group began a process of discussions. A summary of the plans formulated by five of these companies is presented below.
Note: C ompanies with 301 or more regular employees are required to formulate an action plan for promoting women to leadership positions, to submit the plan to the relevant government office, and to publicly disclose the content of the plan. There are 10 companies in the TIS INTEC Group subject to the new legislation: TIS, INTEC, AGREX, QUALICA, AJS, Chuo
System, TIS Solution Link, TIS System Service, INTEC Solution Power and KOUSHI INTEC.
Company Plan Duration
Name(Years)TIS

4Plan Targets

Measures● Ratio of women in management positions: 10% (186 women)● Ratio of women promoted to manager level: 17% on average● Ratio of women taking training courses prior to promotion

to manager salary level: More than 20%● Set promotion ratio target for women in each fiscal year of the four-year action plan
● Set quota for women participating in training courses prior to promotion

to manager salary level● Provide training for women with potential to become managers through enhanced

career education for women

INTEC

5

● Ratio of women in management positions: More than 7%● Hold meetings that cross division or section boundaries to exchange information● Talk with employees before and after they return to work from leaves of absence● Set medium- and long-term goals for young female employees and expand content

AGREX

2

● Ratio of women in management positions: More than 20%*●M otivate women to seek promotions and encourage supervisors to● Establish project to promote greater involvement of women in the workplace● Roll out programs that raise awareness about greater involvement of women in theof discussions*5-yeartargetacknowledge potential(Goal to train 60 women for management positions)workplace● Utilize employees with time constraints in management positionsQUALICA5● Ratio of women among recently graduated newly hired employees: ● Enhance disclosure of information to female students
More than 30%● Support career advancement and network creation for female employees●R atio of female employees: More than 20%●C reate comfortable working environment and offer human resources management● Ratio of women in management positions: More than 8.5% (15training to supervisors

AJS

5● Encourage female employees to pursue management positions● Ratio of women taking promotion-oriented training in preparation

women)

for a management position: Up 10%● Initiate project to promote greater involvement of women in the workplace● Implement various programs to cultivate perception conducive to greater involve-

ment of women in the workplace● Make content of promotion requirements course (at Globis University) widely known

Topics.

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

POSITIVE ACTION Promotes Involvementof Women

Providing Employment Opportunities tothe Disabled

In 2013, TIS set up a voluntary team—POSITIVE ACTION—
with key participation from female employees. Specificactivities based on activity suggestions from this team havebeen implemented to enhance the workplace environment,
including steps to encourage female employees to pursue
career options with more responsibility. For the action planthat runs from April 2016 to April 2020, we aim to push theratio of women in management positions above 10%—up
from 7.4% as of July 2016—and are promoting several
initiatives, including the establishment of a target for theratio of women in senior management positions, career
training for women, and support for women pursuing careeradvancement.

Through SorunPure Inc, a special subsidiary, the TIS INTECGroup supports the creation of work environments whereas many disabled people as possible can find employment.
As of August 2016, SorunPure had a staff of 64, including
seven guides, who undertake office management services,and helping employees maintain good health (in-housephysiotherapist), at the Tokyo headquarters, the Osaka
office, the Nagoya office and the Matsumoto office.
As of June 2016, the TIS INTEC Group had achieved adisabled employee ratio of 1.95%, based on 388.0 disabled
persons at 11 companies, including TIS, SorunPure andspecially recognized companies.

and encourage women to take the course

27

ProfileGroup History

Value Creation Process

28

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

Platform that supports value creation process

Communication with Stakeholders—Shareholders

Communication with Stakeholders—With Community/Society

Fast, fair and impartial information disclosure

Through activities involving all Group companies

We provide performance results and the latest news on our business activities to analysts as well as institutional and individual investors through events, such as information meetings, the production of pamphlets and other materials, and also in
the investor relations section of the TIS website.

As a corporate group, we participate in various volunteer activities, from Smile Kids Camp to the Ecocap ­Movement—collection of plastic bottle caps— and support for blood drives supervised by the Japan Red Cross.

Activity Case StudyIR Events in Fiscal 2016

Frequency

Results briefings for analysts
and institutional investors  4 times

Quarterly briefings

Small meetings for analysts
and institutional investors

215 times

Provide IR-oriented information for analysts and institutional investors. Of thesemeetings, 45 were for overseas investors. Total coverage: 306 companies (388 people)

Overseas roadshow  1 time

President, director responsible for overseas IR and other members of senior management
met with shareholders and investors in Europe

IR conference  1 time

Participated in conference organized by securities firm in Tokyo

Production of materials forindividual investors  2 times

Issued “Business Report”

Content

Smile Kids Camp—Supporting Seriously Ill and Disabled Children and Their Families

TIS’ IR Activities Recognized with Awards from External Organizations

Smile Kids Camp is an annual event for seriously ill and disabled children and their families. It is a traveling event, under the TIS
banner, that is planned and executed by a committee of volunteers from the Company. The 17th Smile Kids Camp was held in
Saku, Nagano Prefecture, September 17-19, 2016, and drew together a crowd of 112 people: 27 families—a total of 206
children and family members—and 94 volunteers, mostly from TIS and other TIS INTEC Group companies.
Two volunteers were assigned to each child with special needs, and various programs were organized so that the children,
first and foremost, but also brothers, sisters and parents could enjoy different activities. This was an opportunity for everyone—employees, children with special needs and their families, and other children and their families in similar circumstance—
to transcend the typical challenges associated with sickness and disability. The event earned compliments from participants,
exemplified by a comment from one family that Smile Kids Camp “was a really wonderful activity that enabled the children toexperience a whole new world.” Many families said “the event was fun, pure and simple,” and they are keen to be invited
again. From the volunteer side, one employee revealed that “as a first-time volunteer, there were challenges, but connectingwith these kids was fun and more than offset the difficulties.” Another employee said the event “inspired me myself, and I’dlove to participate next year and see the families again.”
Smile Kids Camp is a valuable opportunity for Group employees to understand the real significance of CSR and volunteer
activities through support for children with health and disability issues and their families. We plan to hold more events in the
future.

At TIS, we believe that timely and objective information disclosure to shareholders and investors is an important obligation that any listed company must fulfill. Therefore, we strive to enrich our IR activities and improve the content andfunction of the IR pages of our website. The success of our efforts is substantiated in part by the following awards.
Award for Excellence in Corporate Disclosure, Fiscal 2015
(21st annual presentation) (The Securities Analysts Association of Japan)

http://www.tis.com/ir/

Placed third in the computer software category and also received
letter of commendation as one of six companies recognized foroutstanding improvement in disclosure practices.
Children dressed up in costumes of their choosing enjoyeda high-spirited, fun-filled costume party.

2015 Internet IR Commendation Award(Daiwa Investor Relations Co., Ltd.)
Marked third consecutive year, following wins
in 2013 and 2014, with award for excellence.
Fiscal 2015 Homepage Quality Ranking
Survey of All Listed Companies(Nikko Investor Relations Co., Ltd.)

2015

Received highest award in comprehensive
ranking. Moved up from fiscal 2014 ranking as
excellent website.

The hot-air balloon ride has become thetradition main event. The children feel the
excitement of this ride through their wholebeing.

Gomez IR Site Comprehensive Ranking 2015
(Morningstar Japan K.K.)
Recognized as company with excellent website,and captured bronze medal.

The TIS INTEC Group is involved in various activities that bring employees together with local communities. These include musicalperformances by the TIS’s Gakuyukai (Friends of Music Society), and participation in environment-friendly “Future City” projects andthe Asahi no Mori forest conservation project.
For details, go to http://www.tis.com/group/csr/

29

ProfileGroup History

Group activities over the three-day, two-night event moved
everyone beyond the daily walls of sickness and disability andgenerated a shared energy that powers the potential of a happy
and healthy tomorrow.

Value Creation Process

30

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process

Platform that supports value creation process

Contributing to Global Environment

Quality Control

We actively embrace measures through our business activities to address environmental issues. At our newest data center,
we have taken an environment-conscious approach, emphasizing renewable energy and resources and utilize geothermal
sources for heating, outside air for cooling, rainwater for uses other than drinking water, and solar power for electricity.

The TIS INTEC Group is well aware of the social responsibility inherent in information systems, which underpin social infrastructure, and efforts are constantly directed toward improving the quality of the services provided. We seek to boost
productivity, mainly by promoting greater sophistication at the required definition stage and regular use of standard development platforms, while also preventing projects from turning unprofitable, which is a priority under the current mediumterm management plan.

PUE at Data Centers

1.900 1.882
1.794

1.800

1.795

1.781

1.754 1.763

1.700
1.600
1.500

Fiscal
2011

Fiscal
2012

Fiscal
2013

Fiscal
2014

Fiscal2015

Notes: 1.	PUE (Power Usage Effectiveness)=Electric consumption
by whole facilities/Electric consumption by facilities
related to ­information technology.
2.	Graph data includes amounts recorded by Tokyo
1st/2nd/3rd centers, GDC ­Gotenyama, Nagoya Center,
Osaka Center, Shinsaibashi gDC, and ­Shinsaibashi
gDC-EX.

Fiscal2016

The TIS INTEC Group is taking an environment-conscious approach at offices and data centers, which form the bedrock of
corporate activities, by introducing measures to save energy and cut greenhouse gas emissions.

We will follow a program of best practices in developing the Group and strive to keep unprofitableprojects to between 1.0% and 1.5% of software development sales.
To limit the number of projects that become unprofitable, we will focus on three lines of approach: 1) corporate-level risk
management and process optimization; 2) enhanced engineering capabilities; and 3) training for technicians. We will establish
and then expand standards from a groupwide perspective and promote application, and follow a program of best practices toensure success.

Corporate-level risk management and process optimization● Head office system design x Frontline implementation capabilities = Fewer unprofitable projects(Head office) Will focus on high-risk projects and selectively monitor, follow-up and support activities

Examples of Environment-Conscious Activities at Data Centers● Strengthen project risk monitoring● Take part in/support project management divisions	(Frontline) Small-scale and maintenance projects, in particular, will be checked out on premises and stick to a process
where measures have been drawn up to address issues● Outdoor air for cooling● LED lighting● Use of geothermal energy● Optimized lighting with motion sensors and ambient light sensors● Use of rainwater● High-efficiency equipment● Use of well water● Rooftop greenery● Lighting equipment run on solar power● Landscaping● Green power procurement● External appearance in harmony with the local surroundings● Natural lighting● Noise-damping, heat-insulating sashes

Enhanced engineering capabilities● Turning well-honed production technology

into solutions(C2J, reactive systems)● Better upstream engineering
Synthesis with Nablarch

Training for technicians● More extensive and enhanced teaching materials

for project management and engineer training● Boost partner procurement capability

Establish and then enhance standards from groupwide perspective and promote application
Nablarch: TIS’ original Java application development/ implementation platform comprehensively designed for developing corporate information
systems

Natural light (solar tracking equipment)

Solar power generation monitor

For the TIS INTEC Group, its human capital is a vital management resource. From this perspective, training and development is also a key allocation in our investment activities. Training and development is broken down into three categories.

Rooftop greenery● Select training content from each company related to

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

● Go paperless (monitors set up in meeting rooms)● Power switched off on machine, such as copiers andTraining that cuts
laterally across theGroupshredders, during periods of non-use● Recycle PCs● No heating in washrooms, and hot water setting disabled●C onfidential documents are solution-treated by a­providerTraining based on
strategies at each company● Absolutely no vehicle idling● Garbage is sorted for disposal● Water tap frequently closed● Participate in eco-cap movement● Encourage use of stairs (instead of elevator)● Partner in Table for Two program● End over-wrapping● Lights turned off in work areas during lunch hour

● Encourage employees to use personal thermos bottles,

Basic training common
throughout the Groupand reusable shopping bags.

● Reduced use of lighting (some lights not turned on)● Uniform air conditioner setting (in principle, “blower”)● Encourage employees to take vacation days during summer

31

ProfileGroup History

Value Creation Processskills (specialist domains) that are important groupwide
and foster synergy within the Group, and then implement these programs● Focus on management from a Group perspective,
sharpen ability to respond globally, fine-tune project
management● Each company plans and implements training thatdiffers by respective domain and implementation
content● If a company has difficulty executing a training programon its own, other Group companies will collaborate on
training and provide support● Use e-learning to provide insights and know-how that

employees throughout the Group should have incommon. Create environment that enable employees tolearn anytime, anywhere

32

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Research and Development
In the IT services industry, where the Group is a key player, rapidly responding to advances in IT and the changes in market
needs that they precipitate is critical to sustaining and enhancing competitiveness. The Group’s R&D activities hinge on TIS
and INTEC, which undertake leading-edge pursuits in the domains described below and tirelessly execute surveys andresearch, particularly on IT and production and development technologies that reinforce the Group’s capacity to respondto the changes these technologies precipitate. Note that most of the Group’s R&D activities are not specific to individual
business segments, but rather are expeditions to discover techniques that can be applied laterally across the businesses of
the Group.

i­llustration mapping technologies, and the use of traffic line
analysis technologies.
INTEC is also working on motion recognition technology
using smartwatches to solve issues related to input on tablets.
This technology utilizes the accelerometer built into a smartwatch to detect the motion of a human wrist and then(4) Big Data Processing and IoT Technologies(1) Software Development Technology
Seeking to boost productivity and quality, TIS and INTEC
spearhead resourceful and constant efforts to enhance software development capabilities.
TIS verified the effectiveness of “reactive systems,” whichhave the potential for exceptionally better scalability and failure-resistance than those of Java-based applications. The
company partnered with U.S.-based Lightbend (the former
Typesafe), a provider of the leading Reactive application development platform, and has begun offering consulting services
mainly for clients who need advanced applications.
INTEC continued R&D on the test automation platform
TaaS (Test as a Service) and a test script generator, and appliedthese tools for in-house use. The R&D focused on a tool that
supports generations of test scenarios and regression tests. In
addition, the company seeks to capitalize on the agile development technology of Pivotal Labs, a company in the UnitedStates that is regarded as the world’s foremost agile development team.
In addition to the activities described above, TIS and INTEC
were joined by five other principal Group companies in developing a framework for upgrading requirement definitions
based on knowledge structures such as BABOK. This combined effort will ensure a good response to the growing complexity of requirements for system development.

(2) Cloud Technology
Cloud services are turning into commodities, but platform
technologies that support cloud services have been evolving
as well.
TIS continued to develop CloudConductor, hybrid cloudorchestration software launched in fiscal 2014 as a demonstration project of the Ministry of Economy, Trade andIndustry, while promoting collaborative research on next-generation orchestration technologies with Osaka University andthe University of Electro-Communications. As for automation
technologies, such as Docker, Chef, and Ansible, TIS moved
out of the development stage and toward verification of
applications for actual projects. The company is now offeringsolutions to clients with large-scale infrastructure. In the
fourth quarter, the company began studying the use ofmachine learning and AI in cloud operations and management as a next-generation cloud technology.

INTEC collaborated with various institutions, including
Osaka University, Hiroshima University, Kanazawa University,and the National Institute of Informatics, in developing
DESTCloud, a distributed system evaluation platform. In addition, the company joined the Transparent Cloud-computing
Consortium (T-Cloud Consortium), an academic-industry
research group, to conduct R&D aimed at realization of newservice models that transparently interface “device” and“cloud.” Based on successful results, the company began
R&D on a data sharing platform to which multiple cloud services will be linked. Also of note, SO-Sola, the synchronous
file sharing service already released following successful R&D,
won the Advanced Technology Prize in the ASP SaaS category
at the 9th ASPIC Cloud Award 2015 hosted by the specified
nonprofit corporation ASP- SaaS-Cloud Consortium.

(3) Smartphone and Tablet Technology

IoT technology was a topic in the spotlight in fiscal 2016. A
notable the issue regarding IoT was how to efficiently process
the huge amounts of data that get sent out from all sorts ofdevices.
Based on R&D results accumulated to date, INTEC
launched Common IoT Platform services. This is an open
Platform as a Service (PaaS) response that enables a system toreceive a massive amount of data on people, things and theenvironment, identify the status of the external world in real(5) Artificial Intelligence and Robot-related Technologies
Along with significant progress in AI through deep learning
has come the spread of humanoid robots, and as open source
software for robotic use becomes more readily available, morecompanies are entering the field. The TIS INTEC Group goesbeyond robot-related technology to R&D that combines robotrelated technology with AI, IoT, and cloud technology.
At TIS, efforts in AI and robot-related technologies thatthe company has been working on for the past five years blossomed in fiscal 2016. The company began joint research with
Meiji University and the Nara Institute of Science andTechnology to develop a concierge robot with the “sensitivity”
of a human being. In addition, the company took an equity
stake in Elvez, Inc., to acquire the agent technology that led torealization of this concierge robot.
TIS pursued client-assisted verification tests, and in
September 2015, the company welcomed the debut of
Pepper, a humanoid robot, at a shopping mall. Pepper­exemplified the potential of robots in a service capacity.
In addition, the company was involved in activities associated with IBM Watson prior to the release of the Japanesephones and web applications. i-LOP was awarded the Best
Innovation Award in the IaaS and PaaS category at the 9th
ASPIC Cloud Awards in 2015.
In December 2015, INTEC hosted Shopping Street
Hackathon in Toyama, an event on the theme of local community revitalization and 020 applications. The company willcontinue to promote R&D on new positioning technologies,
connectivity with wearable terminals, advancement of

TIS continued to disclose R&D activities on Tech Sketch, a
website with information posted by technicians.
INTEC announced the results of its R&D pursuits at various
scientific meetings and through external lectures, publishedpapers in the INTEC Technical Journal, and conducted publicv­ ersion, and received the Softbank Award in the IBM Watson
Hackathon in December 2015. Such results earned TIS recognition as an IBM Watson Eco System Technology Partner aswell as a Pepper Robot Applications Partner in March 2016.
Thereafter, in April 2016, the company established the AI
Business Promotion Office within the Business Creation
Division as a structure for delivering Watson and Pepper solutions.
At INTEC, the emphasis was on cloud robotics. Specifically,
the company made progress on a system that guides a carttype robot over the floor to create an indoor environment map
while collecting and storing environmental data, including
geomagnetism. The company also pursued R&D on a telepresence robot that facilitates communication between remoteplaces and creates the impression of being there. Anothertheme was the technology that enables Pepper to be controlled with a robot-oriented operating system (ROS). These
results were exhibited at TEDxHimi held in January 2016 in
Himi, Toyama Prefecture.

Value Creation Process

relations activities. The company also sent representatives topresent special lectures at institutions of higher learning, suchas Kyushu University, Keio University, Toyama University, andToyama Prefectural University.

In total, TIS recorded consolidated R&D expenses of ¥1,086 million in fiscal 2016, ended March 31, 2016.

33

Group History

time, and execute required processing as the situation
demands. The company also promoted M2M gateway R&D as
a part of Edge Computing, in which processing is executed in
proximity to where data is generated, and realized a positioning information detecting function based on radio waves generated by BLE devices. The company aims to apply the newfunction to services for the manufacturing and distribution
industries.

(6) Other Research Activities

The Group continued to work on R&D applicable to mobile
technologies.
Based on R&D results accumulated to date, INTEC
released the official version of i-LOP, a cloud-based Integrated
Location Information Platform service. This new service allows
users to easily and seamlessly handle multiple positioning
technologies, including GPS, Wi-Fi, inaudible sound—that is,sound waves—and Bluetooth Low Energy (BLE), from smart-

Profilee­ xecutes various corrections and eliminates noise. It has
potential application in wearable terminals for use in places,such as factories and farms—food and livestock—and on thefrontlines of the medical profession, where conditions haveprecluded the use of conventional terminals.

34

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Platform that supports value creation process
Corporate Governance
Organizational Chart

Based on our Group Management Policy and Group Vision, we have formulated basic corporate governance policies aimed
at improving the Group’s corporate value over the medium and long terms. We are working constantly to enhance corporate
governance.

Appointment, dismissal

Group Internal Control Committee

Direction

Direction

Reports

Group
Security
Committee

Direction

Reports

Election,
dismissal,
supervision

Reports

Reports

Supervision

Units involved
in internal audits Cooperation

Management
Committee,
Group
Management
Committee
Discussion/
report on
significant
issuses

Cooperation

Cooperation

President

Reports

Group Risk
Management
Committee

Audit &
Supervisory
Board

Internal audits

Execution of operations
Delegation of authority

Divisions (Executive Officers)
Department Department Department Department

Direction

Reports

Direction

Reports

Direction

Reports
Direction

Corporate Governance Structure

Organizational Structure

Reports

Subsidiaries

Accounting Auditor

Reports

Group
Compliance
Committee

Reports

Group Risk
Management
CouncilGroup
ComplianceCouncil

Direction

Board ofDirectors

Appointment, dismissal(Cooperation with Audit & Supervisory Board and Internal audit sections)Improvement
instructions

Appointment, dismissal
Audit, reports
Statement of
opinionAccounting audit

1. To respect the rights of shareholders and to ensure their equality.
2.	To consider the interests of stakeholders including shareholders, and to cooperate
appropriately with them.
3. To disclose corporate information appropriately and to ensure its transparency.
4.	To engage in constructive dialogue with shareholders based on a medium- to long-term
investment policy.

General Meeting of Shareholders

Improvement instructions

Basic Policy
TIS will constantly strive to pursue, sustain, and enhance the highest level of corporate governance.
TIS believes that the key to corporate governance is to ensure transparency and fairness indecision-making, make full and effective use of its management resources, and increase the vitalityof management through swift and accurate decision-making, from the viewpoint of ensuring theCompany’s sustainable growth and enhancing its medium- and long-term corporate value.
Accordingly, TIS will strive to enhance its corporate governance in line with the following basic
principles.

Company with Audit & Supervisory Board

Chairman of the Board

Chairman

Number of Directors

10, including three external directors

Director’s Term of Office

One year

Company’s Board of Directors will comprise at least three

Furthermore, materials are provided for all Board

Number of Audit & Supervisory Board Member

Five, including three external audit & supervisory board members

and no more than 15 directors, and to strengthen theof Directors meetings as well as agenda items raised insupervisory functions of the Board of Directors, a policy

important meetings to the external directors and external

Term of Office for Audit & Supervisory Board Members

Four years

has been established that two or more of the directors

auditors in advance for them to raise questions. In

Number of Independent Directors

Six, including three external directors and theee external audit& ­supervisory board members

must be independent external directors. At present, three

addition, support is provided when necessary, such as

independent external directors have been appointed.

having the parties involved provide explanations in

Directors and Board of Directors
As stipulated in its Articles of Incorporation, thewhenever necessary.

For swift and dynamic decision-making by the Board

advance to promote active discussion in order to vitalizeof Directors, the Board of Directors convenes in principle

the meetings.

once monthly and also meets on an ad hoc basis

35

ProfileGroup History

Value Creation Process

36

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Audit & Supervisory Board Members
Takuho Shimodaira, Standing Audit & Supervisory Board Member
Date of Birth: January 19,1952
April 1975
Joined the Sanwa Bank, Limited (currently, the Bank of TokyoMitsubishi UFJ, Ltd.)May 2003
Executive Officer of UFJ Bank Limited (currently, the Bank of TokyoMitsubishi UFJ,Ltd.)
June 2003
Director and Executive Officer of UFJ Bank Limited
May 2004
Executive Officer of UFJ Bank Limited
June 2004
Full-time Advisor at kokusai Motorcars, Co., Ltd.
May 2005
Audit & Supervisory Board Member at The Daiei, Inc.
June 2007
Director of The Midori kai, Co., Ltd.
February 2008 Executive Director and Tokyo Branch Manager of The Midori-kai, Co.,Ltd.
June 2010
President and Representative Director of T&T ADVERTISING CO., LTD.
June 2013
Full-time Audit & Supervisory Board Member of TIS Inc. (to present)
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

Katsuhiko Ishii, Standing Audit & Supervisory Board Member

Front row from the left, Mitsushi Nishida, Representative Director, Norio Maenishi, Chairman, Toru Kuwano, President, and Josaku Yanai, Director and Managing Executive Officer.
Back row from the left, Yoshinobu Ishigaki, External Director, Yoshiyuki Suzuki, Director, Katsuki Kanaoka, Director, Shigeki Kusaka, Director, Shingo Oda, External Director,
and Koichi Sano, External Director

Standing Audit & Supervisory Board Members, front row from the left,
Takuho Shimodaira, and Katsuhiko Ishii.
Back row from the left, Muneaki Ueda, Taigi Ito, and Sadahei Funakoshi.

Board of Directors
Norio Maenishi, Chairman

Josaku Yanai, Director and Managing Executive Officer

Yoshiyuki Suzuki, Director (Executive Vice-President of INTEC Inc.)

Date of Birth: April 19, 1949
April 1972
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 1996
Director of TIS Inc.
June 2001
Executive Director of TIS Inc.
April 2004
Representative Director and Executive Managing Director of TIS
Inc.
April 2008
Executive Vice-President and Representative Director of TIS Inc.
April 2010
Director of TIS Inc. Executive Vice President and Executive Officerof IT Holdings Corporation
June 2010
Director and Executive Vice-President of IT Holdings Corporation
June 2013
President and Representative Director of IT Holdings Corporation
June 2016
Chairman and Representative Director of IT Holdings Corporation(currently, TIS Inc.) (to present)

Date of Birth: November 14, 1963
April 1987
Joined the Long-Term Credit Bank of Japan, Limited
January 2000 Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
December 2006 Department Manager of Card Systems Sales Dept., Card Systems Div.1 of
TIS Inc.
April 2009
Executive Officer and Department Manager of Corporate Planning & Control
Dept., Corporate Planning & Control Div. of TIS Inc.
October 2010 Executive Officer and Department Manager of Corporate Planning & Control
Dept, Corporate Planning & Control Div. and Section Manager of Merger
Promotion Office of TIS Inc.
April 2011
Executive Officer and Division Manager of Corporate Planning Division of IT
Holdings Corporation
May 2015
Managing Executive Officer and Division Manager of Corporate Planning
Division of IT Holdings Corporation
April 2016
Managing Executive Officer and Division Manager of Corporate Planning
SBU. of TIS Inc. (to present)
June 2016
Director, Executive Officer and Division Manager of Corporate Planning
Division of IT Holdings Corporation
July 2016
Director, Executive Officer and Division Manager of Corporate Planning
Division of TIS Inc. (to present)

Date of Birth: May 25, 1952
April 1975
Joined INTEC Inc.
April 2003
Director of INTEC Inc.
April 2005
Executive Officer of INTEC Inc.
June 2007
Managing Executive Officer of INTEC Inc.
June 2009Managing Director of INTEC Inc.
President and Representative Director of INTEC Systems Institute,Inc.
April 2011
Senior Managing Director of INTEC Inc.
June 2014
Director and Executive Vice-President of INTEC Inc.
May 2015
Executive Vice-President and Representative Director of INTEC Inc.
(to present)
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Toru Kuwano, President
Date of Birth: May 3, 1952
April 1976
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 2000
Director of TIS Inc.
April 2004
Executive Director of TIS Inc.
April 2008
Executive Managing Director of TIS Inc.
April 2010
Executive Vice-President and Representative Director and General
Manager of Financial Industry HQ. of TIS Inc.
April 2011
President and Representative Director of TIS Inc.
April 2013
Chairman, President and Representative Director of TIS Inc.
June 2013
Director of IT Holdings Corporation
June 2016
President and Representative Director of IT Holdings Corporation(currently, TIS Inc.) (to present)

Katsuki Kanaoka, Director (Chairman of INTEC Inc.)

Mitsushi Nishida, Representative Director
Date of Birth: September 29, 1951
April 1977
Joined Toyo Information Systems Co., Ltd. (currently TIS Inc.)
June 2001
Director and Department Manager of Corporate Planning &Control Dept., Corporate Planning & Control Div. of TIS Inc.
April 2003
Director and Department Manager of Corporate Planning &Control Dept. and Section Manager of Business Development andPlanning Office of TIS Inc.
April 2004
Director and Division Manager of Financial Card Systems Div.1 of
TIS Inc.
October 2005 Director and Division Manager of Card Systems Div. 2 of TIS Inc.
April 2006
Director and Division Manager of Card Systems Div. 2, BusinessGroup of TIS Inc.
April 2008
President and CEO of QUALICA Inc.
April 2013
Executive Vice-President and Representative Director of TIS Inc.
April 2016
Executive Vice-President and Representative Director andExecutive Officer of TIS Inc.
June 2016
Representative Director of IT Holdings Corporation
July 2016
Representative Director, Executive Vice President of TIS Inc. (topresent)

Date of Birth: February 24, 1956
May 1985
Joined INTEC Inc.
June 2000
Director of INTEC Inc. President and Representative Director of AT TOKYO
Corporation
June 2003
Managing Director of INTEC Inc.
April 2005
Director, Senior Managing Executive Officer of INTEC Inc.
April 2007
Representative Director, President and Executive Officer of INTEC Inc.
June 2007
Representative Director, President and Executive Officer of INTEC Inc.,
Director of INTEC Holdings Ltd.
April 2008
Director of IT Holdings Corporation President, Representative Director andExecutive Officer of INTEC Inc.
June 2009
Director of IT Holdings Corporation President and Representative Directorof INTEC Inc.
June 2012
Chairman and Representative Director of IT Holdings Corporation Director
and Corporate Advisor of INTEC Inc.
May 2015
Chairman of INTEC Inc. (to present)
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Shigeki Kusaka, Director (President of INTEC Inc.)
Date of Birth: November 26, 1952
April 1977
Joined Mitsubishi Corporation
April 2007
Senior Vice President of Mitsubishi Corporation
April 2009
Representative Director, Executive Officer, President and COO of IT Frontier
Corporation
April 2011
Managing Director of INTEC Inc.
May 2015
President and Representative Director of INTEC Inc. (to present)
June 2015
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Shingo Oda*, External Director
November 8, 1944
July 1970
Joined Yokogawa-Hewlett-Packard Japan, Ltd. (currently HewlettPackard Japan, Ltd.)
January 1997 Director of Hewlett-Packard Japan, Ltd.
January 1999 Executive Director of Hewlett-Packard Japan, Ltd.
November 2002 Executive Vice-President and Director of Hewlett-Packard Japan, Ltd.
February 2005 Executive Vice-President and Representative Director of HewlettPackard Japan, Ltd.
May 2005
President and Representative Director of Hewlett-Packard Japan,
Ltd.
February 2007 President and Representative Director, Executive Officer of HewlettPackard Japan Ltd.
December 2007 Executive Advisor of Hewlett-Packard Japan. Ltd.
April 2008
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Yoshinobu Ishigaki*, External Director
Date of Birth: October 6, 1946
April 1969
Joined IBM Japan Ltd.
April 1998
Executive Director of IBM Japan Ltd.
October 2001 Retired from IBM Japan Ltd.
November 2001 President and CEO of Sapient K.K.
October 2004 President and CEO of AT TOKYO Corporation
June 2009
Board Chairman of AT TOKYO Corporation
June 2010
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)

Koichi Sano*, External Director
Date of Birth: August 30, 1948
April 1971
Joined Mitsui Petrochemical Industries, Ltd. (currently, Mitsui
Chemicals, Inc.)
June 2003
Executive Officer and Manager of Finance Department of Mitsui
Chemicals, Inc.
June 2005
Executive Director of Mitsui Chemicals, Inc.
June 2009
Executive Vice-President and Representative Director of Mitsui
Chemicals, Inc.
June 2013
Special Councilor of Mitsui Chemicals, Inc.
June 2016
Director of IT Holdings Corporation (currently, TIS Inc.) (to present)* Designated for Independent Director/Auditor as specified by the Tokyo Stock Exchange in Japan.

37

ProfileGroup History

Value Creation Process

Date of Birth: November 5,1953
April 1976
Joined the Long-Term Credit Bank of Japan, Limited
October 2001 Joined SORUN Corporation
June 2007
Director and Executive Officer of SORUN Corporation
April 2011
Managing Executive Officer, Division Director of the Financial Industry
SBU., Financial Industry HQ. and Division Manager of the Financial
Systems Div. 3 of TIS Inc.
October 2011 Managing Executive Officer and Deputy Division Manager of Financial
Industry SBU. Of TIS Inc.
April 2012Managing Executive Officer and Deputy Division Manager ofCorporate SBU. of TIS Inc.
June 2012
Director of IT Holdings Corporation. Managing Executive Officer and
Deputy Division Manager of Corporate SBU. of TIS Inc.
June 2013
Managing Executive Officer and Deputy Division Manager ofCorporate SBU. of TIS Inc.
April 2014
Managing Executive Officer and Division Manager of Corporate SBU.
of TIS Inc.
April 2016
Advisor to TIS Inc.
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

Taigi Ito*, External Audit & Supervisory Board Member(Certified Public Accountant and President, Ito Office)Date of Birth: October 13,1946
January 1970 Joined Tsuji Audit Corporation
February 1989 Representative Partner of MISUZU Audit Corporation
July 2004
Deputy Chairman of the Japanese Institute of Certified Public
Accountants
August 2007
Chief of Ito CPA Firm(to present)
April 2009
Professor at Graduate School of Accountancy, Waseda University
June 2012
Audit & Supervisory Board Member of IT Holdings Corporation(currently, TIS Inc.) (to present)

Muneaki Ueda*, External Audit & Supervisory Board Member (Chairman,
Professional Bank, Inc.)
Date of Birth: January 1,1948
August 1983
Joined Temporary Center Inc. (currently, Pasona Inc.)
January 1988 Executive Director and Manager of International Division andManager of Business Development Dept. of Pasona Inc.
President and Representative Director of Pasona N A, Inc.
April 1991
Executive Managing Director and General Manager of Sales Divisionof Pasona Inc.
June 1993
Director and Vice-President of Pasona Inc.
June 2000
President and Representative Director of Pasona Inc.
August 2004
President and Representative Director of Professional Bank Inc.
April 2007
Chairman and Representative Director of Professional Bank Inc. (topresent)
June 2012
Audit & Supervisory Board Member of IT Holdings Corporation(currently, TIS Inc.) (to present)

Sadahei Funakoshi*, External Audit & Supervisory Board Member
August 15,1954
April 1977
Joined Mitsubishi Corporation
March 2003
Transferred to Mitsubishi Corporation Financial & Management
Services (Japan) Ltd. as Director and Vice-President
April 2009
Transferred to Mitsubishi Corporation LT, Inc. as Advisor
June 2009
Director and Managing Executive Officer of Mitsubishi Corporation LT,
Inc.
June 2011
Director and Senior Managing Executive Officer of Mitsubishi
Corporation LT, Inc.
January 2013 Representative Director and Senior Managing Executive Officer of
Mitsubishi Corporation LT, Inc.
May 2013
Statutory Auditor of IT Frontier Corporation
July 2014
Statutory Auditor of TATA Consultancy Services Japan, Ltd.
June 2016
Full-time Audit & Supervisory Board Member of IT Holdings
Corporation (currently, TIS Inc.) (to present)

38

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Mitsushi
NishidaMr. Nishida had many years of experience in the planning and development of financial and industrial systems at TIS
Inc., formerly the Company’s major subsidiary (merged with the Company in July 2016). After assuming the officeof President and CEO of the Company’s Group company, he has served as Executive Vice-President andRepresentative Director of TIS Inc. since April 2013. Based on this experience, he was appointed as a Director andcan be fully expected to fulfill the duties of significant decision-making for the Company Group and the oversightof management.

JosakuYanai

Mr. Yanai has worked in the Corporate Planning Department, etc., at TIS Inc., formerly the Company’s major
subsidiary (merged with the Company in July 2016). Since April 2011, he has served as an Executive Officer andGeneral Manager of the Corporate Planning Division of the Company, and has a wealth of experience in the
Company Group’s business, as well as in business execution from a management perspective. Based on thisexperience, he was appointed as a Director and can be fully expected to fulfill the duties of significant decisionmaking for the Company Group and the oversight of management.

KatsukiKanaoka

Mr. Kanaoka has worked in the Corporate Department, Financial System Department, Infrastructure Department,
etc., at INTEC Inc., the Company’s major subsidiary. After assuming the office of President and Representative
Director of INTEC Inc., he has served as Chairman and Representative Director of the Company since June 2012,and has a wealth of experience in the Company Group’s business, as well as in business management. Based on
this experience, he was appointed as a Director and can be fully expected to fulfill the duties of significant decisionmaking for the Company Group and the oversight of management.

Shigeki
KusakaMr. Kusaka was involved in the management of the industrial system business division at INTEC Inc., the Company’s
major subsidiary. He has served as President and Representative Director of INTEC Inc. since May 2015, while
concurrently serving as Director of the Company since June 2015, and has a wealth of experience in the Company’sGroup business, as well as in business management. Based on this experience, he was appointed as a Director andcan be fully expected to fulfill the duties of significant decision-making for the Company Group and the oversightof management.

Yoshiyuki
SuzukiMr. Suzuki worked in the Corporate Department, Technology Department, etc., at INTEC Inc., the Company’s major
subsidiary. Since May 2015, he has served as Executive Vice-President and Representative Director of INTEC Inc.
Based on this experience, he was appointed as a Director and can be fully expected to fulfill the duties of significant
decision-making for the Company Group and the oversight of management.

ShingoOda

Mr. Oda served as President and Representative Director of Hewlett-Packard Japan, Ltd. and has a wealth ofexperience and deep insight into industry trends and global corporate management, especially in the area of IT.
Based on this experience, his advice and suggestions from an independent perspective will help ensure that thedecisions made by the Company’s Board of Directors are reasonable and appropriate. For this reason, he wasappointed as an External Director.

Yoshinobu
Ishigaki

Mr. Ishigaki holds extensive experience and broad insight as a corporate executive with wide-ranging experienceand a wealth of expertise in the IT service industries. His advice and suggestions from an independent perspective
will help ensure that the decisions made by the Company’s Board of Directors are reasonable and appropriate. For
this reason, he was appointed as an External Director.

KoichiSano

Mr. Sano worked mainly in the Finance and Accounting Departments, and served as Executive Vice-President andRepresentative Director of Mitsui Chemicals, Inc., and has a wide range of experience and a wealth of expertise incorporate management. Based on his experience, he was appointed as an External Director since his advice andsuggestions from an independent perspective will help ensure that the decisions made by the Company’s Board of
Directors will be reasonable and appropriate and are expected to be highly beneficial to the strengthening ofcorporate governance.

Management Committee and Group Management Committee
The Company has established the Managementbusiness execution at the Company and the Group as aCommittee and Group Management Committee towhole.

deliberate and report on important matters affecting

Executive Officer System
The Company has adopted an executive officer system tobusiness execution to Executive Officers, and theseaccelerate management decision-making and supervisory

Executive Officers provide specific direction, orders, andfunctions of the Board of Directors. Directors delegate

supervision to each business unit head.

Audit & Supervisory Board Members and Audit & Supervisory Board
The Audit & Supervisory Board comprises five auditors

basis in addition to receiving the annual financial audit(of which three are external auditors). Each auditor

plan and reporting on results of financial audits from Ernst

will perform audits of directors’ business execution& Young ShinNihon LLC, with which the Company hasin accordance with the audit & supervisory policies

entered and auditing contract. Furthermore, the Audit

established by the Audit & Supervisory Board. In addition,& Supervisory Board receives the audit reports of thethe Company works closely with its financial auditors,

auditing department and exchanges opinions on a regularexchanging information and sharing opinions on a regularbasis.

Reason for Election of External Directors and External Audit & Supervisory Board Members● External Directors

Norio
Maenishi

Toru
KuwanoMr. Maenishi had many years of experience in the planning and development of industrial systems at TIS Inc.,
formerly the Company’s major subsidiary (merged with the Company in July 2016), and after a stint at the
Corporate Department, he assumed the office of Executive Vice-President and Representative Director of TIS Inc., aswell as Director and Executive Vice-President of the Company. Since June 2013, he has served as President andRepresentative Director of the Company. He has a wealth of experience in the Company’s Group business, as wellas in business management. Based on this experience, he was appointed as a Director and can be fully expected tofulfill the duties of significant decision-making for the Company Group and the oversight of management.
Mr. Kuwano had many years of experience in the planning and development of financial systems at TIS Inc.,
formerly the Company’s major subsidiary (merged with the Company in July 2016). Since April 2011, he has served
as President and Representative Director of TIS Inc., and since June 2013, he has concurrently served as a Director of
the Company. He has a wealth of experience in the Company Group’s business, as well as in business management.
Based on this experience, he was appointed as a Director and can be fully expected to fulfill the duties of significant
decision-making for the Company Group and the oversight of management.

39

ProfileGroup History

Value Creation Process

40

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process● External Auditors

For reference: Criteria Concerning Independence of External Officers

TakuhoShimodaira

Mr. Shimodaira served as president and representative director and audit and supervisory board member etc. atvarious companies including a financial institution, and since June 2013, has served as a full-time Audit &Supervisory BoardMember of TIS, Inc., formerly the Company’s major subsidiary (merged with the Company in July2016). Based on his experience, he was appointed as an Audit & Supervisory Board Member as he can be expected
to oversee the execution of duties of the Company’s Directors in a fair and appropriate manner.

Katsuhiko
Ishii

Mr. Ishii worked for a financial institution and served as a General Manager of the Corporate Department of TIS
Inc., formerly the Company’s major subsidiary (merged with the Company in July 2016). He also served as anadvisor of TIS Inc. Based on these experiences, he was appointed as an Audit & Supervisory Board Member as hecan be expected to oversee the execution of duties of the Company’s Directors in a fair and appropriate manner.

Taigi
Ito

Mr. Ito is a licensed Certified Public Accountant. His expertise and knowledge in the field of finance and accounting
and professional experience are beneficial to the Company in enforcing its audit system. Although he was notdirectly involved in corporate management, he was appointed as an External Audit & Supervisory Board Member as
he was considered to be well qualified to appropriately perform the duties of Audit & Supervisory Board Members
given the above credentials.

MuneakiUeda

Mr. Ueda has a wealth of experience and wide-ranging insight as a corporate executive. He was appointed as anExternal Audit & Supervisory Board Member in expectation of obtaining his overall management advisory andmanagement oversight on execution of duties from an external perspective.

Sadahei
Funakoshi

Mr. Funakoshi has a wealth of experience and knowledge in corporate management, with his experience in the
management of investment and loan, credit and administrative departments of Mitsubishi Corporation, as well as
his service as an auditor at IT companies. He was appointed as an External Audit & Supervisory Board Member in
expectation of obtaining his overall management advisory and management oversight on execution of duties froman external perspective.

External Directors and External Auditors
The Company has three external directors and three

judgement criteria to ensure the independence of external

external auditors. The determination of the independence

directors and external auditors (referred to as “externalof external directors and external auditors is prescribed by

officers” hereafter) as described below, with reference tothe requirements of the Companies Act as well as

the rules and regulations of the Tokyo Stock Exchange.

The Company has three external directors and three external auditors. The determination of the independence of external
directors and external auditors is prescribed by the requirements of the Companies Act as well as criteria to ensure theindependence of external directors and external auditors (referred to as “external officers” hereafter) as described below,
with reference to the rules and regulations of the Tokyo Stock Exchange.
1.	External directors (including candidates) are defined by Article 2, Paragraph 15 of the Companies Act (Requirements ofExternal Directors) and have never served as an executive director, manager or other employee of the TIS INTEC Group(Note 1) even in the past.
2.	External auditors (including candidates) are defined by Article 2, Paragraph 16 of the Companies Act (Requirements ofExternal Company Auditors) and have never served as a director, manager or other employee of the TIS INTEC Groupeven in the past.
3.	In the current fiscal year and during the past nine fiscal years, none of each of the following items shall apply to external
officers.
I.	A counterparty which has transactions principally with the Company (Note 2) or a person who executes thatcounterparty’s businessII.	A counterparty which has transactions principally with the TIS INTEC Group (Note 3) or a person who executes thatcounterparty’s businessIII.	A consultant, accounting professional or legal professional (Note 4) who has received a large amount of money orother assets (Note 5 ) other than remuneration of officers from the Company. In addition, when these are received byan organization such as a corporation or partnership, this includes persons who belong to the applicableorganization.
IV.	A major shareholder of the Company (Note 6). In addition, when the major shareholder is a corporation, this includes
a person who executes the business of the corporation.
V.	A person other than those in (I), (II) and (III) above who executes the business of a counterparty of the Company(Note 7)VI.	A person who was formerly a member of a counterparty which is in a situation of cross-assumption of offices ofexternal officers
VII. A counterparty or former member of the counterparty that receives donations from the Company
4. External officers must not be a relative within the second degree of a person who falls under each of the following items.
I.	A person mentioned in (I) to (III) of the previous clauseII.	A person who executes the business of a subsidiary of the Company
III.	A non-executive director of a subsidiary of the Company (limited to external auditors)IV.	A person who fell under (II) or (III) above or a person who executes the business of the Company (including a nonexecutive director in the case of an external auditor) recently (in the current business year and during the past fourbusiness years)
5.	In addition to the above, there exist no circumstances in which duties imposed on an independent external officer arereasonably deemed not to be achieved.
Note 1: The “TIS INTEC Group” means the Company and its subsidiaries.
Note 2:	A “counterparty which has transactions principally with the Company” means a counterparty which provides
products or services to the Company and, in terms of the Company, which is a pure holding company, this refers
chiefly to the main bank (The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and the lead managing underwriters (Nomura
Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co, Ltd., and SMBC Nikko Securities Inc.)
Note 3:	A “counterparty which has transactions principally with the TIS INTEC Group” means a counterparty with sales
exceeding 2% of the total consolidated sales of the TIS INTEC Group.
Note 4: “A large amount of money or other assets” means the total value exceeds 10 million yen per fiscal year.
Note 5:	Despite Note 4 above, the following consultants, accounting professionals or legal professionals shall be treatedas falling under (III).Ernst & Young ShinNihon LLC, Ernst & Young Tax Co., Yodoyabashi & Yamagami Legal
Professional Corporation, TMI Associates, and ASUKA CPTA Corp.
Note 6:	A “major shareholder” means a person or company, and the like, that directly or indirectly holds 10% or more of
total voting rights. However, the Company’s leading shareholders (the top 10 approximately) shall be treated as“major shareholders.”
Note 7:	A “counterparty which has transactions with the Company” means the case when transactions with theCompany exceed 10 million per fiscal year.

41

ProfileGroup History

Value Creation Process

42

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Platform that Supports Value Creation Process

Primary Activities of External Directors and External Auditors (Fiscal 2016)

Outline of Liability Agreements

StatusName

Primary Activities

Director

ShingoOda

Mr. Oda attended all 16 meetings of the Board of Directors held in fiscal 2016. He provided
comments as necessary in discussions of matters for resolution, based on his experience in
the industry and in corporate management and the insights thus gained.

Director

Yoshinobu
provided comments as necessary in discussions of matters for resolution, based on his
IshigakiIn accordance with Article 427, Paragraph 1 of thelimits legal responsibility for liability compensation as set

Companies Act, each external director and external

forth under Article 423, Paragraph 1 of the same law.

auditor enters into an agreement with the Company that

Mr. Ishigaki attended all 16 meetings of the Board of Directors held in fiscal 2016. He

Outline of Policy on Officers’ Remuneration

experience in the industry and in corporate management and the insights thus gained.

Auditor

AuditorThe basic policy on determination of officers’ remuneration

will not be paid. In addition, remuneration is paid to

Taigi
Ito

Mr. Ito attended 15 of 16 meetings of the Board of Directors and 14 of 15 meetings of the
Audit & Supervisory Board held in fiscal 2016. He provided comments as necessary indiscussions of matters for resolution, from the specialized perspective of a Certified Public
Accountant.

is to provide incentives to improve performance throughauditors after being determined through consultation at thea system of remuneration linked to measures of company

Audit & Supervisory Board and is not linked to performance

performance.

and consists solely of basic remuneration in order to ensure

MuneakiUeda

Mr. Ueda attended 15 of 16 meetings of the Board of Directors and all 15 meetings of the
Audit & Supervisory Board held in fiscal 2016. He provided comments as necessary indiscussions of matters for resolution, based on his experience and insights into corporate
management.

The Company’s remuneration for Directors consists ofNote:	Standing Audit & Supervisory Board Member, Masaru Sasakura fulfilled his term as of the 8th Annual General Meeting of Shareholders convened onJune 24, 2016, and retired from his position.

Message from External Director

Shingo Oda,
External Director

This is my nineth fiscal term since becoming an external director of TIS, Inc. in 2008. I have beena part of the IT services industry for many years, including a role in the management of HewlettPackard Japan, Ltd. Since my appointment as an external director, however, I gained a renewed
awareness of the excellent foundations that the TIS INTEC Group is built on. In all aspects of“human resources, goods, and capital,” the Group companies hold superior t­ alent, technologies,
services, data centers, and other business assets. There is a range of strengths, from TIS’s credit card
settlement business to INTEC Inc.’s integrated system solutions services for regional public-sector
entities. Having said that, there remained unexploited opportunities as these strengths tended to lie
in isolation within each company, and the TIS INTEC Group as a whole—even as the IT HoldingsGroup—did not always represent an imposing presence to its competitors.
Going forward, the increasingly competitive IT services industry is anticipated to undergo arapid realignment. To win in this battle for survival, I believe the TIS INTEC Group must leverage its
current group reorganization to strategically align itself and convey to external parties a core competence that is attractive to client companies. Above all, speed is critical and strong leadership isneeded to steer the group as a whole in a common direction.
From my vantage point on the outside looking in, I see the employees in charge of corporate
governance, internal controls, risk management, and other management controls as fully understanding the importance of these functions and supporting a solid management foundation. One
could say a company’s employees are everything. From this perspective, the TIS INTEC Group needs
to build a specific framework looking five to 10 years into the future, such as human resources
training and development systems that cross the group laterally according to title and rank.
I personally believe that it is my role as an external director is to advise and monitor corporate
activities through the Board of Directors and other corporate structures and thereby ensure thatmanagement practices are transparent, fair and efficient, from a stakeholder’s perspective. In addition, I will offer suggestions from an external view to improve the corporate value with respect tosustained growth of TIS and by extension, the TIS INTEC Group.

basic remuneration and performance-linked remuneration.

Furthermore, to provide a reflection of medium- to long-

Basic remuneration is paid according to the size of the roleterm performance, Directors shall contribute at least a certain

and scope of responsibilities of each position. Performance-

portion of their basic remuneration to purchase thelinked remuneration is linked to attainment of the measures

Company’s own stock through the share ownership plan ofof company performance established on the basis of thedirectors and officers, which they shall retain in full for the

management plan for each fiscal year, and shall not exceed

duration of their period in office. The Company believes

the proportion of basic remuneration (up to a maximum ofthat the current remuneration system contributes to sound30%) determined for each position.

motivation and has not introduced a remuneration system

Remuneration paid to external directors consists only ofGroup History

Value Creation Process

utilizing the Company’s own shares (stock option system).

basic remuneration and performance-linked remuneration

Remuneration for Directors and Audit & Supervisory Board Members (Year ended March 31, 2016)
Recipients (Persons)Remuneration (Millions of yen)

Directors (including external directors)

4 (2)127 (16)

Audit & Supervisory Board Members(including external members)

4 (3)

50 (28)

Total (including external officers)

8 (5)178 (45)

Note 1:	Remuneration for directors does not include the employee portion in the case of directors who serve concurrently as employees.
Note 2:	As of March 31, 2016, the Company had nine (9) directors, including two (2) external directors. The discrepancy between the number of directors
and the number shown under “Recipients” is because five (5) directors, including one (1) director who retired in the fiscal year ended March 31,
2016 , served without compensation and are thus excluded from the above figure.
Note 3:	Per resolution of the 1st Ordinary General Shareholders’ Meeting held on June 25, 2009, the combined remuneration for directors and Audit &Supervisory Board Members is limited to ¥400 million (¥50 million for external directors) and ¥85 million per year, respectively.
Note 4:	The Company does not maintain a retirement bonus system for directors, and does not pay any directors’ bonuses.

Takeover Defense Measures
TIS has not introduced takeover defense measures.

43

Profilea high degree of independence.

44

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data

Financial Review

Platform that Supports Value Creation Process

As of March 31, 2016, the Group mainly comprised parent company IT Holdings Corporation (“ITHD” or “theCompany) and 46 consolidated subsidiaries, including principal companies TIS Inc., INTEC Inc., AGREX INC.,QUALICA INC. and AJS Inc., and 37 companies accounted for by the equity method.*
Through additional acquisition of shares, KOUSHIN INC., and MicroMates Corp., fall under the scope of
consolidation from fiscal 2016.

Approaches to Internal Controls
The Company enhances and implements its internal controls in accordance with its “Basic Policies Regarding
Internal Control Systems.” At the same time, it has established basic policies for internal controls within the Group
that set forth specific activities related to internal controls
so that the internal control policies permeate throughout
the Group as a whole. In particular, it has set the following

as key themes for internal controls: 1) compliance, 2) risk
management, 3) information security, and 4) enhancing
internal audits. Furthermore, the Group Internal Control
Committee, chaired by the President and Representative
Director, encourages the improvement of internal controls
in the Group as a whole and implements and evaluates
their progress on an ongoing basis.

Furthermore, a Group Compliance Committee has
been established. Its functions are to understand issues
related to compliance, discuss countermeasures, boost
awareness in executives, deliberate and demand corrective
action regarding items raised by whistle-blowers, deliberate and decide on measures to prevent recurrence of incidents, and manage the progress in implementation ofsuch countermeasures.

Approaches to Risk Management
The Company has established its Risk Management
Policies to strengthen its risk management structure. The
Company and its Group companies have segmented its
risks into hazard risk, operational risk, financial risk, andstrategic risk. It has established a risk management structure and structure for accountability for each of these risks

should they materialize.
The Group Risk Management Committee has been
established to identity and mitigate risks affecting theGroup as whole. The committee formulates risk management policies for the Group as a whole and confirms thestatus of risk mitigation measures.

Net Sales(A breakdown of performance by business segment is presented on page 21~22 under “Group Business Summary”.)

Sales and Income by Business Segment

Millions of yen

Fiscal 2016

Fiscal 2015

% change¥382,689¥361,025+6.0%

IT infrastructure services

125,929

118,200+6.5

Financial IT services

79,51979,543-0.0

Industrial IT services

180,000

166,357+8.2(Years ended March 31)

Net sales

Other business

16,095

14,667+9.7

Intersegment elimination/adjustments(18,855)(17,742)—

24,43621,121+15.7

IT infrastructure services

8,924

7,179

+24.3

Financial IT services

3,361

5,549

-39.4

Industrial IT services

9,972

7,049

+41.5

Other business

2,649

2,159

+22.7

Intersegment elimination/adjustments

(471)

(816)

—

Operating income

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

Approaches to Information Security
The Company has established the Group Information
Security Policy and Group Information Security Promotion
rules. It has also established management systems to
respond to a variety of information security risks affecting
the Group as a whole. Appropriate measures are taken
based on risk assessments to protect against the loss of
information assets, accidents, disasters, criminal activities,
and all other threats.

Profit and Loss Analysis
Net sales rose 6.0% from fiscal 2015, to ¥382,689 million, as
the Group accurately grasped the IT investment needs of its
customers in areas where IT investment is growing.

Approaches to Compliance
The Company has set its basic direction on CSR, compliancerules, and other internal rules and regulations to strengthen
its compliance-related systems to implement measures inorder to prevent illegal activities from occurring. It has alsoestablished a whistle-blowing system within the Group andwhistle-blowing hotlines to detect and remediate such illegal activities at an early juncture and raise awareness oflegal compliance within the Group as a whole.

* Effective July 1, 2016, wholly owned subsidiary TIS, Inc., was merged into ITHD, which then transitioned into an operating holding company.
Paralleling this shift, the name of the Company changed to TIS, Inc..

A Group Security Committee was established to makethis management system a reality. The committee formulates plans to promote measures to enhance information
security, understand the status of implementation of information security measures, and to play a supervisory rolefor implementing measures when security incidents occur
and for the status of improvement when proposals are
made to prevent the recurrence of such incidents.

Approaches to Internal Audits
Audits are implemented in accordance with the internal
audit plan at each of the Company’s business units and at
TIS INTEC Group companies without internal audit divisions. In addition, the Company makes necessary recom-

mendations and follows up on corrective action plans
based on audit findings. Furthermore, sharing information
among the internal audit divisions within the TIS INTECGroup’s companies raises the quality of its audits.

45

ProfileGroup History

Value Creation Process

46

Financial/
Non-Financial Highlights

To Our Stakeholders

Medium-Term
Management Plan

Group Business Summary

Platform that Supports
Value Creation Process

Financial Review
Financial Section

Corporate Data