Presentation of Business Results for Asian Investors. August 2016

Transcription

1 Presentation of Business for Asian Investors August 2016

2 Contents I. Corporate Profile Page II. Presentation of Performance for FY March 2016 Page 1. COMSYS Group Progress in Post Solar Development Business Business Segment (1) Electricity Retail Business by Ecosystem Japan Co., Ltd Business Segment (2) M&A Corporate History M&A Measures Stock Information Shareholder Returns Policy (Dividends and Acquisition of Treasury Stock) Organization Chart/Board Members 9 III. Construction IT Platform II. Presentation of Performance for FY March Overview of Construction IT Platform Highlights of Performance for the Fiscal Year Ended March 31, Construction IT Platform Details of Orders Received by Segment Future Outlook for Construction IT Platform Details of Net Sales by Segment 13 IV. Structural Reform and Medium- and Long-Term Vision 4. Details of Operating Income Operating by Year (Supplementary Materials) Full Year Forecasts for the Fiscal Year Ending March 31, Progress on COMSYS WAY a Structural Reforms Trends in NTT Fixed-Line Related Business Medium- and Long-Term Vision Trends in NTT Mobile Business 17 V. Other 8. Trends in NCC Business NTT Telecommunications-related Construction Industry Changes in Mobile Communication Standards Medium- to Long-Term Targets 20 Data Book 11. Outlook for IT Solutions Business 21 VI. for the Fiscal Year Ended March 31, Solar Power Construction (EPC Business) Solar Power Sales (IPP Business) 23 2

3 I. Corporate Profile 3

4 I-1. COMSYS Group COMSYS Holdings Corporation (As of March 31, 2016) Securities code: 1721 (Consolidated for FY March 2016) Date of Establishment: September 29, 2003 Orders Received: billion Paid-in Capital: 10 billion Net Sales: billion Number of Employees: Consolidated 9,994 Operating Income: 23.8 billion Non-consolidated 49 Net Income: 15.4 billion Nippon COMSYS Corporation SANWA COMSYS Engineering Corporation TOSYS Corporation TSUKEN Corporation COMSYS JOHO System Corporation COMSYS Shared Services Corporation Head Office: Shinagawa-ku, Tokyo Establishment: December 20, 1951 Paid-in Capital: 31,140 million Number of Employees: Consolidated 5,044 Non-consolidated 2,902 Intra-Group Consolidation* Net Sales: billion Operating Income: 18.1 billion Head Office: Suginami-ku, Tokyo Establishment: September 12, 1947 Paid-in Capital: 3,624 million Number of Employees: Consolidated 1,456 Non-consolidated 711 Intra-Group Consolidation* Net Sales: 42.3 billion Operating Income: 1.1 billion Head Office: Nagano, Nagano Establishment: January 23, 1960 Paid-in Capital: 450 million Number of Employees: Consolidated 1,069 Non-consolidated 640 Intra-Group Consolidation* Net Sales: 28.3 billion Operating Income: 1.0 billion Head Office: Sapporo Hokkaido Establishment: April 2, 1951 Paid-in Capital: 1,432 million Number of Employees: Consolidated 1,714 Non-consolidated 846 Intra-Group Consolidation* Net Sales: 44.0 billion Operating Income: 2.4 billion Head Office: Minato-ku, Tokyo Establishment: April 1, 2009 Paid-in Capital: 450 million Number of Employees: Consolidated 518 Non-consolidated 370 Intra-Group Consolidation* Net Sales: 8.9 billion Operating Income: 0.6 billion Head Office: Minato-ku, Tokyo Establishment: October 1, 2003 Paid-in Capital: 75 million Number of Employees: Non-consolidated 144 Intra-Group Consolidation* Net Sales: 3.2 billion Operating Income: 0.1 billion Number of Consolidated Subsidiaries: 15 companies Number of Consolidated Subsidiaries: 3 companies Number of Consolidated Subsidiaries: 4 companies Number of Consolidated Subsidiaries: 6 companies Number of Consolidated Subsidiaries: 1 company * Intra-group consolidation means that while transactions within each of the five groups are eliminated, there is no elimination of transactions between any groups within the COMSYS Group. 4

5 I-2. Business Segments (1) Business Segments Net Sales by Business Segment (As of March 31, 2016) Business Overviews Business Domains Principal Business Conducted COMSYS SANCOM TOSYS TSUKEN COMJO CSS NTT Engineering 56.9% The COMSYS Group carries out electrical and telecommunications engineering work for the NTT Group. In recent years, the COMSYS Group has also received contracts for facility management such as maintenance and repair operations. Principal Business Partners NTT East, NTT West, NTT Communications, NTT Docomo, etc. Access ( Outdoor projects) Installation of optical fibers, and so forth. Network ( Indoor projects) Construction and installation of switching and transmission equipment, and so forth. Mobile Construction of mobile phone base stations, wireless relay base stations, etc. NCC Engineering 8.5% The COMSYS Group builds electrical and telecommunications facilities, cable television and ancillary equipment for telecommunications service providers outside the NTT Group, known in Japan as New Common Carriers (NCCs). Principal Business Partners KDDI Group, Softbank Group, and so forth. Telecommunications facilities for NCC Fixed-line and mobile telecommunications facilities Cable TV projects, and so forth. IT Solutions 15.8% The COMSYS Group combines the extensive expertise it has accumulated in the telecommunication carrier business with advanced network technologies to provide total solution services in the IT area, from the design and planning of system integration optimized for customers businesses to the maintenance of their operations. Principal Business Partners Various private companies, national and local government offices, public agencies, and so forth. Network integration-related solutions System integration-related solutions LAN and WAN projects Wi-Fi projects Development and commissioning of all types of software Maintenance and operation Social System-Related and Other 18.8% The COMSYS Group designs, plans, and installs electrical facilities for communication-related civil engineering and general civil engineering projects as well as for facilities and buildings. It also constructs buildings, warehouses, factories and other buildings. In addition, it engages in environment-related businesses covering disaster prevention equipment, solar power generation systems, and urban infrastructure development. Principal Business Partners Public agencies, national and local government offices, various private companies, and so forth. Communication related civil engineering works and general civil engineering works General electrical facilities works Construction of multi-use underground cable conduit facilities (C C BOX) Building construction and ancillary facilities works Environmental solutions Leasing and temporary staff placement business Note: COMSYS Shared Services Corporation (CSS) engages in administrative operations (general affairs, personnel, finance, salaries, social insurance, and so forth), commonly required by the Group companies, along with the temporary staff placement business. 5

6 I-3. Business Segments (2) Business Segments Specific Lines of Business Main Customers NTT Engineering Construction of telecommunications facilities for telecommunications carriers Access projects (NTT Group) Nippon Telegraph and Telephone East Corporation Nippon Telegraph and Telephone West Corporation NTT Communications Corporation NTT DOCOMO, Inc. Others (KDDI Group) NCC KDDI Corporation UQ Communications Inc. Others Engineering Network projects Mobile projects (SoftBank Group) SoftBank Corp. Others Provision of total solution service in IT field IT Solutions Private corporations, government and municipal offices, local governments, etc. Server construction Call center maintenance Data center construction Social System-Related and Other Electrical, civil engineering and other construction projects related to urban infrastructure Private corporations, government and municipal offices, local governments, etc. Electrical facility projects Solar construction projects Communications and civil engineering projects 6

7 I-4. Corporate History After the San Francisco Peace Treaty was concluded in in 1951, Japan was was free free to pursue founded; its own its name plans was to build Nippon a telecommunications Telecommunications network. Construction As the Co., country Ltd. Given went ahead to pursue with its this own national plans project, to build it a became telecommunications necessary to network. quickly set As up the a country telecommunication its vital construction role in building company Japan s that new could telecommunications build infrastructure infrastructure, across the county. the went ahead In 1951, with one this year national before project, the establishment it became necessary of Nippon to Telegraph quickly set and up Telephone a company Public was Corporation established (currently by the country s NTT), our captains original of predecessor industry at the was time. founded; its telecommunication name was Nippon construction Telecommunications company that Construction could build Co., infrastructure Ltd. Given its across vital role in building The Japan s founder new of the telecommunications company was Taizo infrastructure, Ishizaka, who the company later became was established the county. by the country s captains of industry at the time. regarded as the prime minister of Japan s business world, while Takeshi Kajii, The In 1951, founder one of year the company before the was establishment Taizo Ishizaka, of who Nippon later Telegraph became regarded and the as first the prime president minister of Nippon of Japan s Telegraph business and Telephone world, while Public Takeshi Corporation, Kajii, the served first president Telephone of Public Nippon Corporation Telegraph and (currently Telephone NTT), Public our Corporation, original predecessor served as the was company s as the advisor. company s advisor. Nippon COMSYS Corporation Dec Founded as Nippon Telecommunications Construction Co., Ltd. (NTK). Aug As the first firm in Japan to hold top certifications in cable laying, machinery installation, and radio facilities projects, designated approved contractor by Nippon Telegraph and Telephone Public Corporation (now NTT). July 1962 Listed on the Second Section of the Tokyo Stock Exchange. Nov Listed on the First Section of the Tokyo Stock Exchange and Osaka Securities Exchange. July 1990 Name changed from Nippon Telecommunications Construction Co., Ltd. to Nippon COMSYS Corporation. Feb Certified as comprehensive contractor for telecommunications construction projects by NTT. Mar Paid-in capital increased to 10 billion. Mar Orders received and net sales exceed 200 billion. Aug Paid-in capital increased to 30 billion. Dec th anniversary of the company s founding. Mar Selected as one of 225 companies included in the Nikkei Stock Price Average. COMSYS Holdings Corporation Sept COMSYS Holdings Corporation established. Shares listed on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange (Securities code: 1721). Oct Apr Apr Oct Sept COMSYS Shared Services Corporation established to be the common provider of business process outsourcing services for the COMSYS Group. SANWA ELEC Co., Ltd. renamed SANWA COMSYS Engineering Corporation, and its business integrated with the telecommunications carrier operations of Nippon COMSYS Corporation. Information systems business related to software development outsourcing spun off from Nippon COMSYS Corporation to form COMSYS JOHO SYSTEM Corporation. TSUKEN Corporation brought under COMSYS Holdings management. 10th anniversary of the COMSYS Holdings Corporation. 7

8 I-5. Stock Information (As of March 31, 2016) Number of Shares Issued and Number of Shareholders Authorized: 580,000,000 shares Issued: 141,000,000 shares Number of Shareholders: 9,024 Treasury stock 21.4% (1 owner) Composition of Shareholders (Number and percentage of shareholders by type) Individuals 10.2% (8,486 owners) Financial Institutions 40.2% (58 owners) Foreign Companies and Individuals 17.8% (293 owners) Securities Companies 4.7% (32 owners) Others 5.7% (154 owners) Shareholders Shares Held (Thousands) of Total (%) COMSYS Holdings Corporation (Treasury Stock) 30, The Master Trust Bank of Japan, Ltd. (Trust Account) 16, Japan Trustee Services Bank, Ltd. (Trust Account) 12, Japan Trustee Services Bank, Ltd. (Sumitomo Mitsui Trust Bank, Limited Retrust Account, Sumitomo Electric Industries, Ltd. Employee Pension Trust Account) 5, Trust & Custody Services Bank, Ltd. (Investment Trust Account) 3, Goldman Sachs Japan Co., Ltd. 2, Nippon Life Insurance Company 2, Meiji Yasuda Life Insurance Company 1, Japan Trustee Services Bank, Ltd. (Trust Account No.9) 1, NEC Corporation 1,

9 I-6. Organization Chart/Board Members (As of June 29, 2016) Organization Chart Directors and Audit & Supervisory Board Members Title Name President and Representative Director Hajime Takashima Representative Director Takashi Kagaya Board of Directors Director Director Noriaki Ito Akio Ogawa Director Yoshihisa Omura Board of Corporate Auditors Director Director Shigemi Sakamoto Tsuyoshi Nishiyama President Director Director Hitoshi Kumagai Kenichi Sato Senior Management Committee CSR Committee Director Director (Outside Director) Hidehiko Ozaki Kenichi Narumiya* Compliance Committee Director (Outside Director) Standing Audit & Supervisory Board Member Masahiko Miyashita* Hiroshi Komori Audit & Supervisory Board Member Koichiro Kamiwaki Risk Management Committee Outside Audit & Supervisory Board Member Takaharu Saegusa* Personal Information Protection and Administration Committee Outside Audit & Supervisory Board Member Kazuyoshi Onohara* * The two Outside Directors and the two Outside Audit & Supervisory Board Members have been reported to the Tokyo Stock Exchange as independent officers. Corporate Planning Department IR Department Finance & Accounting Department General Affairs Department Personnel Department Internal Control Audit Department Internal Control Office Internal Audit Office 9

10 II. Presentation of Performance Fiscal Year Ended March 31,

11 II-1. Overview of Performance for the Fiscal Year Ended March 31, 2016 Significant decline in NCC Engineering business due to their restrained capital expenditure (Unit: 100 million) Performance Performance in previous term Comparisons with the previous term Forecasts Comparisons with forecasts Percent of Net Sales Percent of Net Sales Difference Percent of Net Sales Difference Remarks Orders Received 3,319 3, ,320-0 Orders Received Orders received were generally in line with forecasts as a result of favorable progress in the Net Sales 3,206 3, , Gross Profits Selling, General and Administrative Expenses Operating Income Recurring Profit Net Income Attributable to Owners of Parent % 14.6% -1.1 percentage points 14.5% -1.0 percentage points % 6.2% -0.1 percentage points 6.0% +0.1 percentage points % 8.4% -1.0 percentage points 8.5% -1.1 percentage points % 8.6% -1.0 percentage points 8.6% -1.0 percentage points % 5.1% -0.3 percentage points 5.1% -0.3 percentage points NTT Engineering business. However, they were lower than in the previous fiscal year because of a significant decline in the NCC Engineering business due to restrained capital expenditure by telecommunications carriers and flat non-carrierrelated business (IT and Social System-Related). Net Sales Sales were lower than both the previous fiscal year and forecasts due to sluggish activity in the NCC Engineering business and other segments, even though the NTT Engineering business (access and network) and Social System-Related and Other business remained robust. Operating Income Despite the efforts made for structural reform and increasing productivity, profit was lower than both the previous fiscal year and forecasts due to the decline in net sales and a deterioration of customer interest in the product mix structure. Note: Figures are rounded down to the nearest whole unit. 11

12 II-2. Details of Orders Received by Segment The NTT Engineering business remained robust and generally in line with forecasts (Unit: 100 million) Comparisons with the Previous Term -49 (-1.5%) Decline due to restrained capital investment by au and Softbank Decline in manufacturerbased network projects Decline due to restrained capital investment by au and Softbank NCC -23.1% NTT-G +13.8% Comparisons with Forecasts -0 (-0.0%) NTT-G +5.2% NCC -20.2% Downturn in P-NET (Japan Post) related projects IT -5.4% Social System-Related and Other -6.5% Social System-Related and Other -11.1% -80 IT -11.5% NTT Business (Access) Increase in utility pole replacement and infrastructure system projects NTT Business (Network) Increase in transmission system equipment replacement process NTT Business (Mobile) 3,369 Increase in LTE-A (3.5GHz band) 3,319 Increase in LTE-A (3.5GHz band) 3,320 negotiation process Downturn from consolidation of Ecosystem Japan Co., Ltd. (projects carried forward) in previous fiscal year Decrease in government and municipal projects, private demand and electrical facility construction projects NTT Business (Access) Increase in utility pole replacement and infrastructure system projects NTT Business (Network) Increase in transmission system equipment replacement process NTT Business (Mobile) negotiation process Performance in Previous Term Performance Target 12

13 II-3. Details of Net Sales by Segment Comparisons with the Previous Term -79 (-2.4%) Decline in sales due to restrained capital expenditure by telecommunications carriers NTT Business (Access) Increase in utility pole replacement and infrastructure system projects NTT Business (Network) Increase in transmission system equipment replacement process NTT Business (Mobile) Downturn from previous fiscal year in LTE-related construction NTT-G -0.6% -10 NCC -23.8% -84 Decline due to restrained capital investment by au and Softbank IT -5.6% -30 Increase in solar construction projects Increase due to newly consolidated subsidiaries Social System- Related and Other +8.3% +46 Social System-Related and Other -7.5% -49 Decline in manufacturerbased network projects Decrease in government and municipal projects, private demand and electrical facility construction projects IT -11.7% NCC -23.4% NTT-G +5.5% (Unit: 100 million) Comparisons with Forecasts -103 (-3.1%) Downturn in P-NET 3,286 3,206 3,310 (Japan Post) related projects -67 Decline due to restrained capital investment by au and Softbank NTT Business (Access) Increase in utility pole replacement and infrastructure system projects NTT Business (Network) Increase in transmission system equipment replacement process Performance in Previous Term Performance Target 13

14 II-4. Details of Operating Income Comparisons with the Previous Term -38 (-13.8%) Decline in profit due to fall in net sales and deterioration in product mix Main measures to increase productivity Streamlining based on construction IT platform (DarwinMobile, etc.) Reducing outsourcing costs and rationalizing personnel allocation Reducing site expenses, etc. (Unit: 100 million Comparisons with Forecasts -41 (-14.8%) 276 Operating Margin (8.4%) Fall in net sales and deterioration in product mix -68 Improved productivity +23 Recovery in performance of Ecosystems Japan Increase due to newly consolidated subsidiaries Operating Margin (7.4%) Recovery in performance of Ecosystems Japan Increase due to newly consolidated subsidiaries +4 Improved productivity +5 Fall in net sales and deterioration in product mix Operating Margin (8.5%) Performance in Previous Term Performance Target 14

15 II-5. Full Year Forecasts for the Fiscal Year Ending March 31, 2017 Planning on sales and profit growth after completion of large number of projects carried forward, as well as consolidation of subsidiaries (Unit: 100 million) FY March 2016 Performance FY March 2017 Targets Comparisons with FY March 2016 Percent of Net Sales Percent of Net Sales Difference Remarks Orders Received 3,319 3, Net Sales 3,206 3, Gross Profits Selling, General and Administrative Expenses Operating Income Recurring Profit % 13.7% +0.2 percentage points % 6.3% +0.2 percentage points % 7.4% +0.0 percentage points % 7.5% -0.1 percentage points Orders Received Forecasting positive expansion in orders received with consolidation of subsidiaries (TOKYO HOSOH KOGYO CO., LTD., etc.) and IT and Social System-Related and Other business, etc., despite a downturn in the NTT Engineering business, which was robust in the previous fiscal year (ended March 31, 2016). Net Sales All-time high sales forecasted due to completion of large number of projects carried forward and consolidation of subsidiaries. 0perating Income Profit is projected to rise due to forecasted sales growth and the effect of structural reforms and measures to increase productivity implemented to date. Net Income Attributable to Owners of Parent % 4.7% -0.1 percentage points Note: Figures are rounded down to the nearest whole unit. 15

16 II-6. Trends in NTT Fixed-Line Related Business NTT East and NTT West capex NTT EAST NTT WEST Second-half First-half 6,266 3,121 Investment in fiber optics 2,240 3,145 FY March FY March ,900 3,000 Investment in fiber optics 2,050 2,900 FY March 2016 Forecast FY March 2016 (Unit: 100 million) 5,450 2,700 2,750 FY March 2017 Target [Source: Application for Approval of NTT Business Operation Plan] Note: Full-year results for year ended March 31, 2016 scheduled to be released on May 13 (Unit: 100 million) FY March 2017 Target Investment in fiber optics 1,650 Orders received at COMSYS Group (NTT Business Network) COMSYS Group materials: Simple total for five companies; NTT Engineering business Network Orders received at COMSYS Group (NTT Business Access) Second-half First-half FY March FY March 2016 (Unit: 100 million) FY March 2017 Target COMSYS Group materials: Simple total for five companies; NTT Engineering business Access Although capital investment by NTT East and NTT West, including investment in fiber optics conversion, is gradually declining each year, COMSYS assumes the following main measures. Sector Main measures Trend Timeframe Utility pole replacement Aiming for fiscal 2020 (NTT East) Aiming for fiscal 2017 (NTT West) Access Expansion of facility operation (maintenance) services Progressive area expansion Undergrounding (in urban areas) Aiming for fiscal 2018 Hikari Collaboration Trend of recovery in new openings Increase in transmission system equipment replacement process Ending in first half of fiscal 2016 Network Intra-prefectural capacity enlargement Aiming for fiscal 2021 Electrical power maintenance process (Introduction of HDVC, etc.) Whenever required Common Tokyo Olympics and Tohoku rehabilitation Aiming for fiscal

17 II-7. Trends in NTT Mobile Business NTT DOCOMO capex Communications business LTE & FOMA Other business (Smart Life business, etc.) 6,618 4,081 2,536 FY March 2015 [Source: NTT DOCOMO Briefing Materials] 5,952 5,850 3,657 2,296 FY March 2016 (Unit: 100 million) 3,390 2,460 FY March 2017 Target LTE Network LTE base stations 97,400 stations 900 stations 138,100 stations Plans 130,000 stations Premium 4G-enabled base stations 22,800 stations Plans 18,000 stations FY March 2015 FY March 2016 PREMIUM 4G Expansion exceeding plans PREMIUM 4G Expanded to 976 cities nationwide Fastest speed in Japan of 300Mbps Expanded to 644 cities nationwide Further increase in speed from June Addition of 3.5GHz CA 370Mbps Major aggregation of three CA frequency bands Fastest in Japan 375Mbps * Carrier aggregation (CA): technology that aggregates multiple frequency bands to increase communications speed. Orders received at COMSYS Group (NTT Business Mobile) Second-half First-half FY March FY March 2016 COMSYS Group materials: Simple total for five companies; NTT Engineering business Mobile (Unit: 100 million) FY March 2017 Target NTT DOCOMO COMSYS will strengthen its network, although due to streamlining, capital investment for year ending March 31, 2017 forecasted to decline below billion, similar to results of fiscal year ended March 31, Provision of 370Mbps through addition of new frequency band (3.5GHz band) to CA and provision of Japan s fastest 375Mbps through major aggregation of three CA frequency bands. Initial cost reductions due to change in depreciation from declining-balance method to straight-line method. COMSYS Group In fiscal year ended March 31, 2016, orders received exceeded full-year forecast of 57.0 billion due to 3.5GHz negotiation and consulting services being brought forward and actually ordered Full-scale implementation of 3.5GHz band add-on cell (miniature base station) projects in urban high-traffic areas from the fiscal year ending March 31, 2017 onward. 17

18 II-8. Trends in NCC Business KDDI Capex (payment) (Unit: 100 million) Softbank Capex (Telecommunications business in Japan) Mobile (Includes UQ) 6,677 4,791 5,314 3,380 5,600 3,500 Includes approximately 30.0 billion resulting from change of construction implementation timeframe. 7,125 5,355 (Unit: 100 million) 3,900 3,900 Fixed line, etc. 1,886 FY March ,934 FY March ,100 FY March 2017 Forecast FY March 2014 FY March 2015 FY March 2016 Forecast FY March 2017 Forecast International accounting standards [Source: KDDI Financial Performance Briefing Materials for fiscal year ended March 31, 2016] [Source: Softbank Group Financial Performance Briefing Materials for 1Q of fiscal year ended March 31, 2016] Orders received at COMSYS Group (NCC) Second-half First-half FY March FY March FY March 2017 Target COMSYS Group materials: simple total for five operating companies NCC Engineering business (Unit: 100 million) KDDI (COMSYS assumptions) Capital investment in limited range aimed at achieving double-digit growth of operating profit in fiscal year ended March 31, In fiscal year ending March 31, 2007, KDDI business is likely to increase from the previous fiscal year because of planned 700MHz and 3.5GHz band base station maintenance projects, but downward trend is expected as long-term LTE-related construction has gone full circle. Softbank (COMSYS assumptions) For fiscal year ending March 31, 2017, capital investment in line with previous fiscal year has been announced, and while 700MHZ band, 3.5 GHz band, and 2.5GHz band base station maintenance is anticipated, construction unit price is expected to decline due to promotion of reverse auctions. COMSYS Group Orders received for the fiscal year ending March 31, 2017 are expected to decline by 4.8% overall in the NCC Engineering business due to the decline of Softbank, despite the slight recovery of KDDI. 18

19 II-9. Changes in Mobile Communication Standards Moving from 3.9G to 4G and further to 5G by 2020 Sales Growth Expected at COMSYS due to Technical Innovation in Telecommunications Standards Communications speed (bps) 1G 1G 9.6Kbps Trend in COMSYS NTT mobile sales 1G 2G 28.8Kbps 2G 2G 64Kbps MNP launch 3G 3G 384Kbps 3.5G 3G 3.5G 3.9G 3.9G 4G 14Mbps 3.5G 100Mbps Fiscal 2016 Fiscal 2016 Fiscal G 4G 4G 300Mbps 1980s 1990s 2000s 2010s 2020s 1Gbps 5G 5G 10Gbps Scheduled launch of 3.5GHz band use (DOCOMO in June, au, and Softbank) Fiscal 2016 Scheduled completion of migration of 700MHz band field pick up (FPU) unit and specified radio microphone frequency Scheduled launch of 5G verification testing Scheduled launch of 5G services Non-consolidated Nippon COMSYS Corporation figures Consolidated COMSYS Holdings figures [Source: Prepared by COMSYS based on materials published by Ministry of Internal Affairs and Communications] 19

20 II-10. Medium- to Long-Term Targets Aiming for at least billion in net sales and at least 30.0 billion in operating income (Unit: 100 million) Figures in parentheses: sales composition ratio 4,000 Net Sales 3,206 1,108 (35%) 238 3,400 1, (38%) (50%) 300 Non-Carrier Related bbusiness Relatively low profit margins, with goods and material expenses accounting for high proportion of net sales Aiming for sales ratio of 50% (By means of M&As, alliances, new business launches, etc.) Pursuing high earnings Operating Income 2,097 2,095 (65%) (62%) (50%) Carrier-Related Business Relatively high profit margins with goods and material expenses accounting for low proportion of net sales Net sales gradually declining Securing earnings (Further increase in profitability through structural reform and productivity improvements) FY March 2016 FY March 2017 Target FY March 202X Projection (Notes) Carrier-related business: NTT Engineering business and NCC Engineering business Non-carrier related business: IT Solutions business and Social System-Related and Other business, etc. 20

21 II-11. Outlook for IT Solutions Business Aiming to be a company trusted by customers (system integrators) to deliver a total service Creating a business expansion cycle leveraging network, server and SDX technology skill advantages (1) Total service provision (from delivery through construction, operation and maintenance) (2) Accelerate speed of technical development (Networks: CCIE, Servers: VMware, SDX: Nutanix, Professional, Security: CompTIA) Expand alliance domains to respond to horizontal collaboration model Existing Business Sectors Profitability High Business Expansion Cycle Acquire New Markets Low NI and SI Business Network system construction Select and concentrate on public/ education/healthcare sectors FY Mar billion FY Mar billion Corporate Business Gain new customers Identify projects by strengthening account marketing FY Mar billion FY Mar billion Existing Alliance Business Sectors Provision of solutions [Dell, HP, Microsoft] FY Mar billion (1) New alliances SDX [Nutanix] Security [LAC] FY Mar billion New Business Sectors (2) Strategic businesses Management systems utilizing ICT Education ICT Personal identity number High Market growth rate [ Example of Nippon COMSYS ] Low Priority Initiative Sectors FY Mar billion FY Mar billion 21

22 II-12. Solar Power Construction (EPC Business) Achieved all-time high in orders received and growth expected next fiscal year and beyond Orders received in EPC business EPC Business Environment 19.0 billion (Performance) 22.0 billion 24.0 billion Appearance of new-style solar power stations Due to falling feed-in tariff (FIT) prices and shortage of land for construction, it was thought that market would contract sharply, but new-style solar power stations have appeared. (See below.) Orders received expected to grow New-type solar business Conventional-type solar business FY March 2015 FY March 2016 FY March 2017 Target New-Style Solar Power Stations Diversification of customers due to growth in new customers Acquiring new customers taking advantage of COMSYS construction track record and marketing activities, and establishing stable structure not dependent on particular customers No. of main customers* Previous fiscal year: 2 companies Fiscal year under review: 7 companies Stable volumes expected for orders received next fiscal year and beyond *Main customer refers to a customer from which orders received are at least 1.0 billion or more per year Floating-type [ Installation location ] Ponds and lakes [ Features ] No construction cost, possible to achieve adequate internal rate of return (IRR) even with current feed-in tariff price There are ponds nationwide and plenty of potential locations. Car port-type [ Installation location ] Roofs of large parking lots, etc. [ Features ] Objective is captive consumption, not impacted by falling FIT prices 22

23 II-13. Solar Power Sales (IPP Business) Planning investment of approximately 23.0 billion, contributing to net sales and profit through consolidation Actual investment Up to fiscal year ended March 31, 2015 Actual investment Fiscal year ended March 31, 2016 Actual investment Fiscal year ending March 31, 2017 onward Power stations Hitachiota City, Ibaraki Prefecture Showa-mura, Gunma Prefecture and 3 other projects completed Tsukuba City, Ibaraki Prefecture Iga City, Mie Prefecture and 5 other projects completed Northern Kanto Tohoku and 6 other projects completed Volume of power generated Investment Single year 10.1MW Cumulative total 14.7MW 24.8MW 73.7MW Single year 3.3 billion Cumulative total 4.5 billion 7.9 billion 22.7 billion Consolidation of COMSYS Create Corporation COMSYS Create Business Plan [ Net Sales ] 2.0 billion 1.5 billion [ Operating Income ] 0.5 billion 0.7 billion 3.0 billion 1.0 billion Consolidation of COMSYS Create will contribute to net sales of billion and operating income of billion from next fiscal year and beyond FY March 2017 FY March 2018 FY March 2019 *COMSYS Create was established in 2012 to develop new businesses, such as the electricity sales business. It will be consolidated from next fiscal year in line with the expansion of its business. 23

24 II-14. Progress in Post Solar Development Business Areas of Ecological Innovation <Environment and Energy> Areas of Urban Revitalization Innovation <Nationwide Resilience> Areas of Community Revitalization Innovation <Community Development> Already introduced (1) Solar power generation (IPP) (2) Solar power construction (EPC) Develop new customers and markets (3) Power Producer and Supplier (PPS) business Enter electricity retail business (through Jibun Denryoku program) (4) Grey water business (5) Industrial Waste Recycling Business (6) Smart grid Enter the market leveraging accreditation and track record as electrical construction company Aim to expand business area (1) Repair of NTT facilities (2) Full-scale earthquake reconstruction (3) Removal of utility poles (Tohoku area) (4) Water and sewerage facilities (Tokai area) (5) Renovation of Metropolitan Expressway (Kanto area) Expand business areas leveraging track record on Metropolitan Expressway (6) Agricultural engineering Build up know-how and evaluations through ongoing orders received (7) Water treatment electricity First order received for project in Kansai area (1) Make effective use of idle real estate First project completed, accelerate realization of remaining promising projects (2) Establish Okinawa project Launch full-scale operations (3) Participate in overseas projects Develop overseas markets in collaboration with Japanese telecommunications carriers Short- to medium-term (1) Wood biomass (2) Energy Service Company (ESCO) business (3) Small-scale wind power generation Investigate possibility of alliances with overseas manufacturers (1) Removal of utility poles (Kansai area) (2) Water and sewerage facilities (Kansai area) (3) Revitalization and upgrading of urban infrastructure (4) Renovation of Shuto Expressway (Kansai/Kyushu area) Expand business areas leveraging track record in Kanto area (1) Tokyo Olympics-related work (2) Development of area around Shinagawa Station Medium- to long-term (1) Geothermal heat pump Planning onsite verification of geothermal heat pump utilization (2) Small-scale geothermal power generation Implementing joint research with Hokkaido University aimed at construction of heat collection model (3) Smart cities Note: Red text indicates businesses that have made progress in second fiscal half. (1) Concession (1) Region creation projects 24

25 II-15. Electricity Retail Business by Ecosystem Japan Co., Ltd. Jibun Denryoku Program Launch electricity retail business based on solar power generation Note: on April 1, 2016 Advantages for customers No costs associated with installation of solar photovoltaic (PV) system Solar power generation can be used as emergency power source even during power outages Solar generated electricity does not pass through transmission lines, so environment-friendly electricity, uncontaminated by other power sources, is used Size of business Target to cover 10,000 buildings during initial 2 years Investment of 3.6 billion in initial fiscal year Contract duration of 20 years Solar PPS business Volume of PV electricity for captive consumption = [A] Volume of backup electricity for nighttime and non- generating times = [B] Volume of excess PV electricity sold = [C] 3 types of electricity 0:00 12:00 24:00 [A] Customers There are 3 types of electricity in the business: [A] generated by PV and sold to customers; [B] procured from other power sources and sold to customers; and [C] generated by PV and sold through FIT. {B] Electric power supply Roof leasing and PV installation Electricity retail agreement [A] + [B] ENNET [B] Wholesale supply *Demand and supply management for [B] electricity performed by ENNET Corporation. NTT SMILE ENERGY * Ecosystems Japan and NTT SMILE ENERGY will collaborate primarily on the Eco-Megane service and the procurement of remote monitoring equipment. [C] Electricity retailer and general power transmission and distribution businesses Surplus power sales FIT price Payment of electricity charges Electricity retailers Business funding Nippon COMSYS 25

26 II-16. M&A Nippon COMSYS Group growth sectors Increase in communications construction due to promotion of utility pole replacement, etc. Agricultural engineering and water supply and sewerage projects Peripheral projects related to solar power construction Urban infrastructure revitalization and expressway revitalization projects Conversion of TOKYO HOSOH KOGYO CO., LTD. into wholly owned subsidiary through exchange of shares (Effective date: April 1, 2016) M&A objectives and synergies Areas of collaboration with TOKYO HOSOH KOGYO CO., LTD. Pavement restoration work and industrial waste processing General civil engineering, pipeline construction, and pavement restoration work Exterior structure work including land recovery, ground improvement, foundations, etc. Expressway construction management, associated work, and pavement restoration work Profile of TOKYO HOSOH KOGYO CO., LTD. Location Chiyoda-ku, Tokyo Representative Hiromichi Yokota *From Nippon COMSYS Paid in Capital 100 million Date of Establishment May 5, 1947 Number of Employees 197 Main business partners Business areas HAZAMA ANDO CORPORATION, Mitsubishi Materials Corporation, government and municipal offices, other (1) Construction of roads and paving work, (2) Sale of asphalt mixture materials TOKYO HOSOH KOGYO CO., LTD. will take part in Nippon COMSYS growth sectors through areas of collaboration FY March 2016 FY March 2017 Targets Net Sales 12.7 billion 14.2 billion Recurring Profit 0.6 billion 0.7 billion Net Assets 3.2 billion Conversion of VACSLAB into wholly owned subsidiary through acquisition of shares (scheduled for June 1, 2016) Features of TSUKEN Group Has prime customers due to strength of brand in Hokkaido area and track record in metropolitan area M&A objectives and synergies Features of VACSLAB Has development know-how in medical systems, built-in systems, control systems, etc. Aiming to expand development business in medical systems, built-in systems, and control systems to TSUKEN Group s prime customers Profile of VACSLAB Co., Ltd. Location Sapporo City, Hokkaido Representative Masahiro Yoneguchi Paid in Capital 17 million Date of Establishment June 22, 1994 Number of Employees 123 Main business partners NEC Group, TSUKEN Group, etc. Business areas Principal profit/loss items (1) Contracted software development (2) Package software business Net Sales: 1.5 billion, Operating Income: 0.1 billion 26

27 II-17. M&A Measures Promoting expansion of peripheral businesses through capital alliances for top line expansion Type Business segment Area Target Businesses Industry restructuring-type (horizontal integration) Carrier-related business (NTT and NCC Engineering business) Regional Telecommunications construction industry Kokusai Densetsu (in October 2005) TSUKEN (in October 2010) Value chain supplementation-type (vertical integration) Carrier-related business (NTT and NCC Engineering business) Nationwide (particularly Kanto, Meihan, Shinetsu, Hokkaido) Transportation security industry Industrial waste treatment industry Coating industry Logistics and warehousing industry Businesses currently outsourced but to be focused in house in future Hokkaido Denden Yuso (in July 2015) Toa Kenzai Kogyo (in August 2015) IT Solutions Nationwide (particularly Kanto, Meihan, Shinetsu, Hokkaido) System integrators Software development industry VACSLAB (scheduled for June 2016) Business territory expansion-type Social System-Related and Other Nationwide (particularly Kanto, Meihan, Shinetsu, Hokkaido) Air conditioning work Electrical equipment contractors Plant contractors Road paving contractors General construction contractors Building maintenance industry Temporary staffing industry CENTRAL BUILDING SERVICE (in April 2014) Ecosystem Japan (in May 2014) Kawanakajima Kensetsu (in September 2014) Nippon After Kogyo (in December 2015) TOKYO HOSOH KOGYO (in April 2016) 27

28 Planning increase in dividend for fourth year in a row and acquisition of 5.0 billion in treasury stock (Unit: 100 million) 200 II-18. Shareholder Returns Policy (Dividends and Acquisition of Treasury Stock) 150 Net Income (Target) Value of treasury stock acquisition Dividends Dividends per Share (annual) March 2012 March 2013 March 2014 March 2015 March 2016 March 2017 (Planned) Interim Year-end Ordinary dividends: 10 + Commemorative dividends: (Planned) 20 Consolidated Payout Ratio 36.0% 18.7% 18.4% 21.0% 25.6% 27.7% Total Return Ratio Dividends + treasury stock Net income Number of shares of treasury stock at the end of the period (Ownership Ratio) 77.7% 48.7% 66.9% 66.2% 77.2% 59.0% million shares (13.1%) million shares (15.8%) million shares (19.4%) million shares (21.5%) million shares* (21.5%) ROE 4.4% 7.9% 9.4% 9.0% 7.9% *The total number of issued shares changed from million shares to million shares with the cancellation of 4.97 million shares of treasury stock on November 30, million shares of treasury stock (1.5%) were contributed as a result of the exchange of shares with TOKYO HOSOH KOGYO CO., LTD. on April 1,

29 III. Construction IT Platform 29

30 III-1. Overview of Construction IT Platform Creating a Platform To Drive Optimal Progress of Construction Operations Business domain Workflow Mission critical systems Marketing operations Engineering operations Project/daily report Estimates Orders received Contract Design Execution Completion Comstar front-end (IntraMart)/Comstar back-end (SAP) Accounting and account settlement Invoicing/completion Financial accounting Management accounting Comstar database NTT-related business Mobile communication system Client Fixed-line EDI contract Mobile communication construction IT platform Order information (DEAR) Process management (Darwin) Access-related construction IT platform Information delivery supply chain Standard onsite workflow using mobile tools Operation processing systems (USSS, ASSS, IRAKS, NCPC, etc.) Standard onsite workflow using mobile tools Completion information (DEAR) EDI completed Client Private-demand business Private-demand systems such as OBPM *1: Reports on work procedures, detailed instructions/reports on quality, progress, efficiency, time, etc. Data link between systems Data Warehouses (Data application function) 1. Processing and introduction Information matching 2. Reference Integration/information sharing 3. Analysis Business analysis/information use Basic Concepts Figure out transparently on-site work process on mobile devices and automatically optimize system structures according to standardized work flow Build data flow-through system via data warehouse to integrate construction management in each business 30

31 III-2. Construction IT Platform DarwinMobile: Construction IT Platform in Mobile Construction Achieve an increase in productivity of around 5% this fiscal year and aim for an improvement of about 20% in the future Initial fiscal year with limited adoption, but a large number of LTE projects constructed at similar cost to the previous fiscal year, resulting in a 5% increase in productivity this fiscal year Further results expected in the future Increase in adoption rate to 100% Establishment of best practices Improvement in operational efficiency of construction IT platform About 5% Productivity improvement About 20% of adoption Profit Costs Boost sales while curbing cost increases FY March 2014 Before adoption FY March 2015 After adoption at head office From FY March 2016 After adoption nationwide 31

32 III-3. Future Outlook for Construction IT Platform Improve productivity in construction IT platform to enable promotion of M&As in legacy sectors STEP 0. Current situation STEP 1. Adoption for standard projects STEP 2. Expansion to diverse projects STEP 3. Entering construction projects in different construction industries (Contribution on profit front) Improving existing business (Contribution on profit ad sales front) Acquiring new business Aiming to expand scope of adoption Construction projects in different construction industries (as a general contractor) Aiming to expand to entire construction industry based on the COMSYS Group s business performance in the telecommunications construction industry Seeking M&A of construction companies outside the telecommunications industry triggered by productivity improvements due to IT tools IT solutions and social systems projects Aiming to expand to diverse projects from publicand private-sector customers utilizing expertise from STEP 1 Mobile projects Adoption for LTE projects NTT-AC and NTT-NW projects and NCC projects Aiming to adopt for small- to medium-scale, repetitive, standard projects from single customers (each telecommunications carrier) Productivity improvement from adoption of construction IT platform could form catalyst for industry reorganization Present Future 32

33 IV. Structural Reform and Medium- and Long-Term Vision 33

34 IV-1. Operating by Year (Supplementary Materials) Operating Margin (%) 8.3% 8.4% 7.4% 7.1% 3,365 3,275 3,211 3,313 3,286 3,206 3,154 3, % 2,930 2,958 Net Sales (Unit: 100 million) % 4.9% % % % Operating Income (Unit: 100 million) FY March 2007 (Fiscal 2006) FY March 2008 (Fiscal 2007) FY March 2009 (Fiscal 2008) FY March 2010 (Fiscal 2009) FY March 2011 (Fiscal 2010) FY March 2012 (Fiscal 2011) FY March 2013 (Fiscal 2012) FY March 2014 (Fiscal 2013) FY March 2015 (Fiscal 2014) FY March 2016 (Fiscal 2015) 34

35 IV-2. Progress on COMSYS WAY a Structural Reforms FY March 2009 (Fiscal 2008) FY March 2010 (Fiscal 2009) FY March 2011 (Fiscal 2010) FY March 2012 (Fiscal 2011) FY March 2013 (Fiscal 2012) FY March 2014 (Fiscal 2013) FY March 2015 (Fiscal 2014) FY March 2016 (Fiscal 2015) Group Innovation 2010 COMSYS WAY Sustained, More In-Depth Structural Reform COMSYS WAY a Advance of structural reforms and top-line growth Establishment of COMSYS JOHO System, specializing in the information business spun off from Nippon COMSYS Construction of common platform, Comstar Standardization of business process reengineering (BPR) and workflow 4.9% Clarification of roles with prime contractor affiliates (dual stratification) Transition to nationwide construction system for network-related operations Expansion of centralized purchasing within the Group 4.3% Personnel reductions of 500 from Group overall Fair evaluation of software assets Disposal of idle assets 4.3% 7.1% Amalgamation of mobilerelated subsidiaries Amalgamation of COMSYS access-related subsidiaries IT platform development of access-related construction 8.3% 8.4% Amalgamation of TSUKEN access-related subsidiaries Amalgamation of TOSYS access-related subsidiaries IT platform development of mobile-related construction Operation of construction IT platform Nationwide movement of personnel 7.4% Introduction of information technology and standardized workflow to new consolidated companies Enhancement of quantity survey system within the Group 3.7% TSUKEN management integration Restructuring of mobile and network businesses 35

36 IV-3. Medium- and Long-Term Vision Financial Briefing Materials for FY March 2014 (Unit: 100 million) 4,000 (Net Sales) 345 billion + 55 billion 400 billion 3,500 3,000 2,500 2,000 1,500 1, Non-NTT business NTT business Social System Electrical Communications Engineering (not including NCC) IT NCC NTT-Mobile NTT-Network NTT-Access Business relating to National Resilience measures and the 2020 Tokyo Olympics Solar power generation business (mega and small-scale systems) Participation in Smart Grid, Smart City development Expansion of business with existing clients and expansion of alliance business Increase project orders from government and municipal offices Participate in Realization of ICT Smart Towns LTE (3.9G) construction New frequency band (700M) related construction: au and eaccess LTE (3.9G) construction Migration to new nodes New frequency band (700M) related construction Full-scale earthquake reconstruction Optical fiber collaboration Olympics preparations LTE-Advanced (4G: LTE-A) construction Wireless MAN-Advanced construction LTE-Advanced (4G: LTE-A) construction 5G (LTE-B) construction IP network creation Building high-speed, high-capacity networks (Internet traffic: Annual increase of 10% to 20%) (Mobile communication: Annual increase of 100% or more) Installation of smart TV compatible infrastructure (includes 4K and 8K compatible) Removal of utility poles 0 FY (Target) 36

37 V. Other 37

38 NTT Telecommunications-related Construction Industry COMSYS Holdings Corporation West Japan Area East Japan Area KYOWA EXEO Group MIRAIT Holdings Corporation Hokkaido region Regional independent company TSUKEN Corporation Tokai region Tohoku region Hokuriku region NDS Co., Ltd. Shinetsu region TTK Co., Ltd. Hokuriku Denwa Kouji Co., Ltd. C-Cube Co. Ltd. TOSYS Corporation Daiwa Densetsu Corporation Chugoku region Kinki region Nationwide Kanto region SOLCOM Co., Ltd. Kyushu region Seibu Electric Industry Co., Ltd. MIRAIT Technologies Corporation Nippon Dentsu Co., Ltd. Shikoku region Nippon COMSYS Corporation SANWA COMSYS Engineering Corporation Certification relinquished March 2005 KYOWA EXEO CORPORATION EXEO TECH CORPORATION * WAKO ENGINEERING CORP. and Ikeno Tsuken Co., Ltd. merged on July 1, 2015 to become EXEO TECH CORPORATION. SYSKEN Corporation Shikokutsuken Co., Ltd. MIRAIT Corporation 38

39 Data Book VI. for the Fiscal Year Ended March 31,

40 Contents Detailed Data 01 Consolidated Statements of Income 02 Statements of Income for Each Company ( for Fiscal Year Ended March 31, 2016) 03 Statements of Income for Each Company (Forecasts for Fiscal Year Ending March 31, 2017) 04 Orders Received, Net Sales, and Contract Backlogs by Business Area 05 Orders Received and Net Sales by Detailed Business Area for Five Companies on a Non-Consolidated Simple Sum Basis 06 Capital Expenditure, Depreciation and Amortization Reference 07 Consolidated Balance Sheets (Condensed) 08 Consolidated Cash Flow (Condensed) Cautionary Statement with Respect to Forward-Looking Statements Some of the information in this document contains forward-looking statements, which are subject to various risks and uncertainties. As a result, the Company s actual activities and business results could differ significantly. Important factors bearing on the Company s actual business results include, but are not limited to, changes in the economic environment for the Company s business domains, social trends, trends in demand for the services that the Company offers, or downward pressure on prices and fees due to intensifying competition.

41 01 Consolidated Statements of Income FY March 2015 FY March 2016 FY March nd Quarter Full Year 2nd Quarter YoY Full Year Targets Full Year YoY vs. Forecast 2nd Quarter Targets YoY Full Year Targets (Unit: 100 million) YoY (a) (b) (c) ((c) (a)) (a) (d) (e) ((e) (b)) (b) ((e) (d)) (d) (f) ((f) (c)) (c) (g) ((g) (e)) (e) Orders Received 1,735 3,369 1, % 3,320 3, % -0.0% 1, % 3, % Net Sales 1,442 3,286 1, % 3,310 3, % -3.1% 1, % 3, % Gross Profits % % -9.6% % % (Gross Profit Margin) (14.9%) (14.6%) (12.5%) (14.5%) (13.5%) (12.8%) (13.7%) Selling, General and Administrative Expenses % % -2.3% % % Operating Income % % -14.8% % % (Operating Margin) (7.7%) (8.4%) (5.1%) (8.5%) (7.4%) (4.9%) (7.4%) Recurring Profit % % -15.0% % % (Recurring Profit Margin) (7.8%) (8.6%) (5.3%) (8.6%) (7.6%) (5.2%) (7.5%) Net Income Attributable to Owners of Parent % % -9.3% % % (Net Profit Margin) (4.8%) (5.1%) (3.5%) (5.1%) (4.8%) (3.3%) (4.7%) Note: Figures are rounded down to the nearest whole unit. Profit margin, and percentages of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

42 02 Statements of Income for Each Company ( for Fiscal Year Ended March 31, 2016) Comparisons with the Previous Term Mar (Unit: 100 million) Nippon COMSYS-G SANCOM-G TOSYS-G TSUKEN-G Mar Mar Mar Mar Mar Mar Mar Orders Received 2,191 2, % % % % Net Sales 2,090 2, % % % % Gross Profits (Gross Profit Margin) 331 (15.9%) 305 (14.5%) -8.1% 62 (10.9%) 34 (8.1%) -44.8% 21 (7.8%) 25 (8.9%) 14.8% 48 (11.9%) 52 (12.0%) 9.3% Selling, General and Administrative Expenses % % % % Operating Income (Operating Margin) 199 (9.6%) 181 (8.6%) -9.2% 37 (6.6%) 11 (2.8%) -68.8% 8 (3.2%) 10 (3.8%) 22.8% 22 (5.5%) 24 (5.6%) 10.5% Recurring Profit (Recurring Profit Margin) 203 (9.7%) 184 (8.8%) -9.0% 37 (6.7%) 11 (2.8%) -68.5% 9 (3.4%) 11 (4.0%) 16.8% 23 (5.7%) 25 (5.8%) 10.2% Net Income Attributable to Owners of Parent (Net Profit Margin) 122 (5.9%) 116 (5.5%) -5.2% 23 (4.1%) 7 (1.7%) -69.1% 5 (2.1%) 6 (2.4%) 13.6% 12 (3.2%) 18 (4.3%) 46.5% Comparisons with Forecasts Orders Received Net Sales Gross Profits (Gross Profit Margin) Selling, General and Administrative Expenses Operating Income (Operating Margin) Mar Targets (Unit: 100 million) Nippon COMSYS-G SANCOM-G TOSYS-G TSUKEN-G 2,090 2, (15.5%) (9.7%) Mar ,195 2, (14.5%) (8.6%) 5.0% 0.6% -5.8% 2.1% -10.5% Mar Targets (10.9%) (6.6%) Mar (8.1%) (2.8%) -23.1% -26.5% -45.6% -9.8% -69.1% Mar Targets (8.8%) (3.6%) Mar (8.9%) (3.8%) 2.5% -0.4% 0.2% -3.8% 5.9% Mar Targets (11.9%) (5.6%) Mar (12.0%) (5.6%) 2.3% 3.8% 4.4% 4.0% 4.9% Notes: 1. Figures are rounded down to the nearest whole unit. Profit margin, and percentages of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place. Notes: 2. No elimination of intergroup transactions between groups

43 03 Statements of Income for Each Company (Forecasts for Fiscal Year Ending March 31, 2017) Forecasts for the full year Mar (Unit: 100 million) Nippon COMSYS-G SANCOM-G TOSYS-G TSUKEN-G Mar Targets Mar Mar Targets Mar Mar Targets Mar Mar Targets Orders Received 2,195 2, % % % % Net Sales 2,101 2, % % % % Gross Profits % % % % (Gross Profit Margin) (14.5%) (14.5%) (8.1%) (8.5%) (8.9%) (8.8%) (12.0%) (12.0%) Selling, General and Administrative Expenses % % % % Operating Income % % % % (Operating Margin) (8.6%) (8.4%) (2.8%) (3.3%) (3.8%) (4.1%) (5.6%) (5.7%) Note: Figures are rounded down to the nearest whole unit. Profit margin, and percentages of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

44 04 Orders Received, Net Sales, and Contract Backlogs by Business Area Orders Received Business Area NTT Engineering NCC Engineering IT Solutions Social System-Related and Other Total Net Sales Business Area NTT Engineering NCC Engineering IT Solutions Social System-Related and Other Total (Unit: 100 million) FY March 2015 FY March 2016 FY March 2017 YoY YoY vs. Forecast YoY YoY 2nd Quarter Full Year 2nd Quarter Full Year Full Year 2nd Quarter Full Year Targets Targets Targets (a) (b) (c) ((c) (a)) (a) (d) (e) ((e) (b)) (b) ((e) (d)) (d) (f) ((f) (c)) (c) (g) ((g) (e)) (e) % 1,655 1, % 13.8% % 1, % % % -23.1% % % % % -11.5% % % % % -11.1% % % 1, , ,369 1, % 3,320 3, % -0.0% 1, % 3, % FY March 2015 FY March 2016 FY March 2017 YoY YoY vs. Forecast YoY YoY 2nd Quarter Full Year 2nd Quarter Full Year Full Year 2nd Quarter Full Year Targets Targets Targets (a) (b) (c) ((c) (a)) (a) (d) (e) ((e) (b)) (b) ((e) (d)) (d) (f) ((f) (c)) (c) (g) ((g) (e)) (e) % 1,730 1, % 5.5% % 1, % % % -23.4% % % % % -11.7% % % % % -7.5% % % 1,442 1, ,286 1, % 3,310 3, % -3.1% 1, % 3, % Contract Backlogs NTT Engineering NCC Engineering IT Solutions Business Area Social System-Related and Other Total FY March 2015 FY March 2016 YoY YoY 2nd Quarter Full Year 2nd Quarter Full Year (a) (b) (c) ((c) (a)) (a) (e) ((e) (b)) (b) % % % % % % % % 1, , % 1, % Note: Figures are rounded down to the nearest whole unit. s of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

45 05 Orders Received and Net Sales by Detailed Business Area for Five Companies on a Non-Consolidated Simple Sum Basis Orders Received Business Area Access NTT Engineering Network Mobile Subtotal NCC Engineering IT Solutions Social System-Related and Other Total FY March 2015 FY March 2016 FY March % % 10.7% % % % % -23.4% % % % % -12.0% % % 359 2,914 (Unit: 100 million) YoY YoY vs. Forecast YoY YoY 2nd Quarter Full Year 2nd Quarter Full Year Full Year 2nd Quarter Full Year Targets Targets Targets (a) (b) (c) ((c) (a)) (a) (d) (e) ((e) (b)) (b) ((e) (d)) (d) (f) ((f) (c)) (c) (g) ((g) (e)) (e) % % 32.9% % % % % 14.2% % % ,484 1, % 1,635 1, % 14.4% % 1, % % % -7.6% % % 1, % 2,880 2, % 2.2% 1, % 2, % Net Sales FY March 2015 FY March 2016 FY March nd Quarter Full Year 2nd Quarter YoY Full Year Targets YoY vs. Forecast 2nd Quarter Targets YoY YoY Business Area (a) (b) (c) ((c) (a)) (a) (d) (e) ((e) (b)) (b) ((e) (d)) (d) (f) ((f) (c)) (c) (g) ((g) (e)) (e) Access % % 7.1% % % NTT Engineering Network % % 20.2% % % Mobile % % 0.9% % % Subtotal 828 1, % 1,705 1, % 6.3% % 1, % NCC Engineering % % -23.8% % % IT Solutions % % -13.9% % % Social System-Related and Other % % -12.4% % % Total 1,234 2,863 1, % 2,880 2, % -3.0% 1, % 2, % Notes: 1. The non-consolidated simple sum data are for the following five companies: Nippon COMSYS Corporation; SANWA COMSYS Engineering Corporation; TOSYS Corporation; TSUKEN Corporation; and COMSYS JOHO SYSTEM Corporation. 2. Figures are rounded down to the nearest whole unit. s of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place. Full Year Full Year Targets

46 06 Capital Expenditure, Depreciation and Amortization March 2015 March 2016 March 2017 (Unit: 100 million) Comparisons with the previous term Comparisons with FY March 2016 Targets Difference Difference Tangible Assets % % Capital Expenditure Intangible Assets % % Total % % Depreciation and Amortization % % Note: Figures are rounded down to the nearest whole unit. s of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

47 07 Consolidated Balance Sheets (Condensed) +20 2,640 2,660 Current Assets 1,518 ASSETS (+36) Accounts receivable trade Cash and cash equivalents Other current assets (Unit: 100 million) 1,555 LIABILITIES AND NET ASSETS +20 2,640 2,660 Current Liabilities 607 Long-Term Liabilities 91 (+4) Accounts payable trade Advances received on construction in progress Other current liabilities (-8) (Unit: 100 million) (+25) Fixed Assets 1,121 (-16) Property, plant and equipment, including buildings Loans receivable ,105 Net Assets 1,940 Net Income attributable to owners of parent Cash dividends Treasury stock, at cost Other ,965 Investment securities -22 Other assets -31 *Equity ratio From 73.0% to 73.4% As of March 31, 2015 As of March 31, 2016 As of March 31, 2015 As of March 31, 2016

48 08 Consolidated Cash Flow (Condensed) Cash Flows from Operating Activities +130 Cash Flows from Investing Activities -73 (Unit: 100 million) Income before income taxes and other adjustments to net income Depreciation and amortization Increase in payables trade Increase in receivables trade Cash and cash equivalents paid for income taxes Other Acquisitions of property and equipment Acquisitions of intangible fixed assets Increase in loans receivable, net Proceeds from sale of investment securities Other Cash Flows from Financing Activities -113 Cash dividends paid Acquisitions of treasury stock Other Newly consolidated subsidiaries +9 Cash and Cash Equivalents at End of Year Cash and Cash Equivalents at End of Year As of March 31, 2015 As of March 31, 2016