Drastic Structural Reforms
Annual Report 2010
Fiscal Year Ended March 31, 2010

COMSYS Holdings Corporation

Profile
COMSYS Holdings Corporation (the “Company”) was established as the holding
company of the COMSYS Group on 29th September, 2003 through sharetransfers from three companies—Nippon COMSYS Corporation, SANWA ELEC
Co., Ltd. (now SANWA COMSYS Engineering Corporation) and TOSYS
Corporation. As of March 31, 2010, the COMSYS Group was made up of 41
subsidiaries and 7 affiliates, centered on 5 major subsidiaries, specifically theabove 3 companies and COMSYS JOHO SYSTEM Corporation and COMSYS
Shared Services Corporation. The COMSYS Group’s main businesses areelectrical and telecommunications infrastructure construction services, whichmainly involve the construction of telecommunications infrastructure andelectrical facilities, and other businesses, such as the information processingrelated business.

Medium- and Long-Term Corporate Management Strategies
The COMSYS Group has established the following three management strategies,
and is making every effort to achieve them.
1.	Fortify the COMSYS Group’s dominant position as Japan’s No. 1 communications infrastructure­construction company
2.	Strive to maximize synergies across the COMSYS Group
3.	Aim to be a knowledge-intensive corporation by increasing knowledge throughout the COMSYS Group

Our Group Formation
Nippon COMSYS Corporation is the core company of the COMSYS

Nippon COMSYS
Corporation

Group. It is mainly engaged in the NTT Group-related information
telecommunications engineering business, the electrical communications engineering-related business, the information processing-related
business and the social infrastructure-related business.
SANWA COMSYS Engineering Corporation is mainly engaged in the

SANWA COMSYSEngineering Corporationelectrical communications engineering-related business targeting
NCCs, the construction of social infrastructure, and the design, construction and maintenance of office facilities and equipment.
TOSYS Corporation is mainly engaged in the NTT Group-related infor-

TOSYS Corporation

mation telecommunications engineering business, the information
processing-related business and the social infrastructure-related business in Nagano and Niigata prefectures.
COMSYS JOHO SYSTEM Corporation was established in April 2009 by

COMSYS JOHO SYSTEM
Corporation

spinning off Nippon COMSYS’s information processing systems business. The company’s operations are centered on software development commissions from the NTT Group and other customers.
COMSYS Shared Services Corporation is responsible for common
administrative operations related to general affairs, personnel, finance

COMSYS Shared Services
Corporationand other areas. Through these operations, the company seeks to raise
the operating efficiency of the COMSYS Holdings Group. In otherareas, the company conducts training, real estate, staff placement andother operations.

b

COMSYS Holdings Corporation Annual Report 2010

Contents
02

Consolidated Financial Summary

04

Letter to Our Shareholders

06

Business at a Glance

08

Review of Operations
08	NTT Information Telecommunication
Engineering Business09	Electrical Communications
Engineering Business10
IT Solutions Business11
Social System-Related Business and Other

12

Corporate Governance15
Directors and Officers

16

Corporate Social Responsibility (CSR)

19Management Discussion and Analysis

24

Consolidated Balance Sheets

26

Consolidated Statements of Income

27

Consolidated Statements of Changes in Net Assets

29

Consolidated Statements of Cash Flows30

Notes to the Consolidated Financial Statements

37

Report of Independent Certified Public Accountants

38

Comsys Holdings Information40

Our Group Formation

41

Investor Information

Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this annual report with respect to COMSYS Holdings’ plans and benefits as well as other statements thatare not historical facts are forward-looking statements, which involve risks and uncertainties. Potential risks and uncertainties
include, without limitation, general economic conditions in COMSYS Holdings’ markets, exchange rates, and COMSYS
Holdings’ ability to continue to win customers’ acceptance of its products, which are offered in highly competitive markets
characterized by continual new product introductions and rapid developments in technology.
COMSYS Holdings Corporation Annual Report 201001

Consolidated Financial Summary
COMSYS Holdings Corporation and Consolidated Subsidiaries
Years ended 31st March, 2005, 2006, 2007, 2008, 2009 and 2010

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2009

2010

2010

New orders received during the year �������������������� ¥287,376 ¥310,005 ¥ 334,172 ¥ 331,920 ¥ 320,462
Net sales ������������������������������������������������������������������ 293,681 307,485
336,519
327,527
321,186
Operating income ��������������������������������������������������
15,062
16,31919,214
16,29915,611
Income before income taxes andother adjustments to net income ������������������������
14,17016,423
19,46818,42816,359Net income ��������������������������������������������������������������
8,349
10,031
12,382
11,641
10,063
Capital expenditure ������������������������������������������������
3,260
4,823
7,240
9,850
9,467
Depreciation and amortization ������������������������������
4,287
3,794
3,957
4,373
4,654
Research and development expenditure ��������������
326
242
190
190
67
Cash flows from operating activities ����������������������
14,735
9,128
18,576
1,034
19,640Cash flows from investing activities ����������������������
(4,831)(5,139)(5,525)(11,118)(6,502)
Cash flows from financing activities ����������������������
(7,426)(3,631)(6,610)(8,315)(7,732)¥284,790
293,086
12,541$3,060,942
3,150,107
134,791

12,648
7,098
12,4704,951
215
10,055(9,257)(7,669)135,941
76,290134,028
53,2142,311
108,072(99,495)(82,427)¥211,809
57,314
11
150,760
46
61,127$2,276,537
616,014118
1,620,378
494
656,997¥   55.18
20.00
1,199.29$      0.59
0.21
12.89

2005

2006

2007

2008

Results of Operations:

Financial Position:
Total assets �������������������������������������������������������������� ¥208,681 ¥220,786 ¥ 229,953 ¥ 224,122 ¥ 220,651
Property and equipment ����������������������������������������
46,96347,41747,62750,89450,009Long-term debt ������������������������������������������������������
2,768
314
72
10
116
Total shareholders’ equity �������������������������������������� 128,063 137,161
145,786
149,152
150,829
Interest-bearing debt ����������������������������������������������
4,692
3,608
451
71
186
Modified working capital ����������������������������������������
65,60967,99567,81865,14967,363

Per Share of Common Stock(in yen and U.S. dollars):
Net income �������������������������������������������������������������� ¥   58.42 ¥   69.65 ¥    87.39 ¥    83.87 ¥    75.60
Cash dividends ��������������������������������������������������������
15.00
15.00
17.00
17.00
20.00
Net assets ����������������������������������������������������������������
906.92964.70 1,033.87 1,091.83 1,151.81

Financial Ratios:
Operating income to net sales (%) ������������������������
Net income to net sales (%) ������������������������������������
R&D expenses to net sales (%) ������������������������������
SG&A expenses to net sales (%) ����������������������������
Equity ratio (%) ��������������������������������������������������������
Return on equity (%) ������������������������������������������������
Return on total assets (%) ����������������������������������������
Interest coverage (times) ����������������������������������������
Debt/equity ratio (%) ����������������������������������������������

5.1
2.8
0.1
7.1
61.4
6.7
4.0
91.00
3.66

5.3
3.3
0.08
6.7
62.1
7.6
4.7
175.59
2.63

5.7
3.7
0.06
6.6
63.4
8.8
5.5
373.72
0.31

5.0
3.6
0.06
6.7
66.5
7.9
5.1
1,510.00
0.05

4.9
3.1
0.02
6.8
68.4
6.7
4.5
2,900.36
0.12

4.3
2.4
0.07
6.9
71.2
4.7
3.3
4,026.51
0.03

Notes:
1. For convenience only, the accompanying Japanese yen figures for 2010 have been translated into U.S. dollars at the rate of ¥93.04 to US$1, the rate prevailing on 31st March, 2010.
2. Consolidated results for fiscal 2005 include 15 months of operating results at a consolidated subsidiary of Nippon COMSYS due to a change in the fiscal year-end (from 31st December to 31st March).

02

COMSYS Holdings Corporation Annual Report 2010

New Orders Received/Net Sales

Operating Income/Net Income

Capital Expenditure/
Depreciation and Amortization(Millions of yen)

(Millions of yen)

(Millions of yen)

400,000

20,00012,500300,000

15,000200,000

10,00010,000

7,500

5,000
100,000

0

5,000

06

07

08

09

10

0

2,500

06

07

08

09

10

0

06

07

08

09

n New Orders Received
n Net Salesn Operating Income
n Net Income

n Capital Expendituren Depreciation and Amortization

Total Assets/
Total Shareholders’ Equity

Interest-Bearing Debt

Cash Dividends per Share/
Payout Ratio(Millions of yen)

(Millions of yen)

(Yen)

250,000

200,000

10

(%)

4,000

20

40

3,000

15

30

2,000

10

20

1,000

5

10

150,000

100,000

50,000

0

06

07

08

09

10

0

06

07

08

09

10

0

06

07

08

09

10

0

n Cash Dividends per Share
Payout Ration Total Assets
n Total Shareholders’ EquitynTopics24th April, 2009

16th March, 2010

Reduction of Minimum Share Purchase Unit;
Partial Amendment of Articles of Incorporation

Installation of Solar Power Generation Systems
at Group Facilities

Effective 1st June, 2009, the Company reduced its minimum share purchase

Reflecting the COMSYS Group’s commitment to environmental protection,

unit from 1,000 shares to 100 shares. This reflects our belief that lowering

two Group companies—Nippon COMSYS Corporation and TOSYS

the minimum investment unit is an effective way to boost share liquidity and­Corporation—introduced 58.55-kilowatt solar power generation systems at

broaden our base of investors, including individual shareholders.

their respective facilities in January 2010. By getting involved in constructionof eco-friendly systems and building solar power generation systems at its

13th May, 2009

own facilities, the Group hopes to further accumulate know-how and thus

Decision on Matters Concerning Share Buybacks

improve customer support.

The Company has been buying back its own shares with the aim of increasing
the return of profits to shareholders and enabling flexible financial policies

20th April, 2010

in response to changes in the business environment. Accordingly, theCompany repurchased 5,250 thousand shares (total value of around ¥5.0

Signing of Basic Agreement to Exchange SharesWith Tsuken Co., Ltd.

billion) by 16th December, 2009.

COMSYS Holdings has signed a basic agreement on management integration
with Tsuken Co., Ltd., a Hokkaido-based provider of services to the NTT
Group, via an exchange of shares. As a result, Tsuken will become a wholly
owned subsidiary of COMSYS Holdings on October 1, 2010.

COMSYS Holdings Corporation Annual Report 201003

Letter to Our Shareholders

Steady Progress,
Drastic Restructuring
Under the slogan above, we will enhance profitability of operations by steadily
pursuing structural reforms and thus maximizing Group-wide synergies. Towards
the end of our “Group Innovation 2010” initiative, we will accelerate the above
mentioned restructuring further.

Performance in Fiscal 2010

demands observed both in optical fiber access services and mobile

In fiscal 2010, ended 31st March, 2010, Japan’s information andphone services which were mainly attributed to declining corporate

communications market saw the shift of customer base from con-

IT investments because of the economic downturn and stagnant

ventional fixed telephone to IP-based telephone service availingpersonal consumption.

optical fiber as an access line which was mainly attributed to the

Faced with these challenges, the COMSYS Group sought toexpansion of broadband services in the fixed communication services,

meet the expectations of all stakeholders while actively advancing

and the intensified competition to attract new customers as well as

its operations in order to realize the COMSYS Group’s management

increasingly fierce service and price competition which were largely

vision. In line with structural reforms aimed at maximizing synergies

driven by the enhanced and diversified cellular handsets in the mobile

across the Group, we promoted “Group Innovation 2010,” under-

communications field. Amid the ongoing advancement of IP-based

pinned by three objectives: increase sales and earnings, enhanceservices, the business environments of the information and com-business efficiency, and promote unified operations. At the samemunications market has drastically changed in the lead-up to thetime, we standardized workflow and took other productivity mea-

realization of the “Smart Ubiquitous Network Society” concept

sures linked to ongoing COMSYS-style kaizen (improvement) initia-

promoted by the Japanese government. These changes include thetives, with “concentration” and “consolidation” as our keywords.

accelerated convergence of fixed-line and mobile communications

New orders received decreased 11.1% year on year to ¥284,790

services, as well as telecommunications and broadcasting services.

million and net sales declined 8.7% year on year to ¥293,086 million,

The business conditions of the COMSYS Group remained

despite the Group’s proactive sales activities. These decreases

extremely tough, despite of the above mentioned change in thewere mainly due to a decline in infrastructure-related projects inmarket place, due to slow-down of capital expenditures made by

the NTT Information Telecommunication Engineering Business, atelecommunications carriers. This trend reflected weak incremental

core business of the COMSYS Group.

Results of Structural Reform Measures Implemented in the Fiscal Year Ended 31st March, 2010
“Innovation 2010” COMSYSStrengthening project management by acting as
prime contractornS hifting to a nationwide centralization structure for
network businessesnR eviewing the business management structure in
mobile communications projects
etc.
n

Improvement in profits: ¥1.4 billion(Target: ¥1.5 billion)–¥0.1 billion“Group Innovation 2010” CHD Group
Integration of joint operations
Extending centralized procurement throughout theGroupnT he building and implementation of Comstar(a new internal system)
etc.
n
n

Improvement in profits: ¥1.25 billion(Target: ¥1.4 billion)–¥0.15 billion“Innovation Project 2010” SANCOM
Streamlining organization by re-assigning excess administrative employees as workers at construction sitesnR e-assigning administrative employees as workers
directly involved in growth fields; reducing temporary employeesnR educing personnel costs and other expenses atconsolidated subsidiaries
etc.
n

Second half improvement in profits:¥0.65 billion(Target: ¥0.5 billion)
Note: Additional measures were implemented during
the second half. Accordingly, the above figures
are not included in the initial forecast.

Profit Improvement Effects: ¥0.4 billion
04

COMSYS Holdings Corporation Annual Report 2010

On the earnings front, we strove to improve productivity throughstructural reforms while cutting expenses during the year. However,with Tsuken Co., Ltd., which is scheduled to merge with COMSYS
Holdings on October 1, 2010.

these initiatives could not fully compensate for the drop in sales.
Accordingly, ordinary income fell 23.5% year on year to ¥13,113

Shareholder Returns

million, and net income slipped 29.5% to ¥7,098 million.

COMSYS Holdings views returning earnings to shareholders as animportant management priority. Our basic policy is to pay steady

Outlook for Fiscal 2011

and continuous dividends linked to performance. Based on thisIn fiscal 2011, ending 31st March, 2011, the COMSYS Group expects

policy, in fiscal 2010 we paid an interim dividend of ¥10.00 per sharebusiness conditions to remain difficult. For example, as for the NTT

and a year-end dividend of ¥10.00, bringing total annual dividends

Group, our primary customers, we forecast a decline in optical fiber

to ¥20.00 per share. For fiscal 2011, we plan to pay total annual

network and other infrastructure-related investments in the fixed-line

dividends of ¥20.00 per share (¥10.00 interim dividend and ¥10.00

communications field as well as the continuous decline of orders

year-end dividend), reflecting our performance forecast.

received due to decreases in base station construction and stem-

During fiscal 2010, we bought back 5,250 thousand shares worthming from downsizing of construction projects in the mobile com-

¥4,999 million, with the aim of stepping up the return of earnings

munications field. Moreover, capital expenditures in the private

to shareholders and enabling flexible financial policies in response

sector have remained weak since the onset of the economic crisis

to changes in the business environment. In fiscal 2011, we will lookin 2008.

at further share buybacks after comprehensive consideration of

In this business environment, the COMSYS Group will strive tomeet the expectations of all stakeholders by establishing the solid

various factors, including the Group’s performance, economic
trends, and stock price movements.

foundation for future growth and the expansion of business while

Going forward, the COMSYS Group will target steady growthswiftly addressing any changes in the market place. To this end, we

through business reforms while deploying its technological expertise

will maintain and improve our top-quality construction capabilities

amassed as a leading company in the communication construction

in response to technological innovation. At the same time, we will

field. Our aim is to help realize a safe, reliable, convenient networked

strengthen our market competitiveness and upgrade our operationalsociety and thus increase our contribution to society. We look forward

foundation by rebuilding our construction business structure toto your ongoing understanding and support.

make it even more productive. The year ahead is the final year of“Group Innovation 2010,” a program of structural reforms we have

September 2010

implemented to date. During the period, we will accelerate such
reforms in order to boost earnings. Meanwhile, we will adopt IT
systems Group-wide to ensure systemization of workflows with
deploying the existing Comstar enterprise system and the new
Comlink system for consolidated subsidiaries, soon to become
operational, as we aim to dramatically reassess our operations andbuild a framework for generating sustained profits. We will also

Hajime Takashima
President and Representative Director

increase the enterprise value of the COMSYS Group by collaborating

Status of Treasury Stock Acquisition

20,270thousandshares

Newly acquired portion
5,250 thousand shares(Approximately ¥5.0 billion)

15,027thousandsharesUse in implementing
management integration
with TSUKEN Corporation
8,351 thousand shares(Planned)

9,370

thousandshares

Newly acquired portion
5,544 thousand shares(Approximately ¥5.0 billion)

Newly acquired portion
4,386 thousand shares(Approximately ¥5.0 billion)
Mar. 2008

Mar. 2009

Scheduled number ofshares held
11,919 thousand sharesMar. 2010

Mar. 2011(FY)

COMSYS Holdings Corporation Annual Report 201005

Business at a Glance

NTT Information Telecommunication
Engineering Business
Main BusinessRespective Areas of Business Operations of Group Companies

This segment is mainly engaged in the construction of telecommunications infrastructure for the NTT Group, including the laying

Nippon COMSYSGroup

and installation of telephone lines, installation of exchange equip-n

SANCOM GroupTOSYS GroupCOMSYS JOHOSYSTEM Groupnment, and construction of wireless base stations. The segment is
the COMSYS Group’s core business, and accounts for the largest
share of Group-wide sales.

New Orders Received/Net Sales (Years Ended 31st March, 2010)(Millions of yen)

Business DomainsnCable worksnCommunication related civil engineering worksn

Switching works

n New orders received

56.7%

161,599n

Transmission wireless works

n Net sales

56.6%

165,815n

Mobile communications works

Electrical Communications
Engineering Business
Main BusinessRespective Areas of Business Operations of Group Companies

This segment constructs telecommunications and related facilities
for communication carriers other than the NTT Group. It also

Nippon COMSYSGroup

SANCOM GroupTOSYS Group

provides a wide range of services for general customers, including

n

n

n

COMSYS JOHOSYSTEM Groupthe design and construction of electrical facilities for offices andother commercial buildings, public facilities, plants, condominiums
and residential houses.

New Orders Received/Net Sales (Years Ended 31st March, 2010)(Millions of yen)06

n New orders received

24.7%

70,426n Net sales

25.8%

75,524COMSYS Holdings Corporation Annual Report 2010

Business DomainsnTelecommunications facilities for NCC

nMobile communications constructions for NCC

nGeneral electrical facilities worksnConstruction of multi-use underground cable conduit facilities(C·C·BOX)IT Solutions Business

Main BusinessRespective Areas of Business Operations of Group Companies

This segment combines extensive expertise with cutting-edge
network technologies to provide a comprehensive solutions ser-Nippon COMSYSGroup

SANCOM GroupTOSYS GroupCOMSYS JOHOSYSTEM Group

vice, ranging from developing optimal systems integration services

n

n

n

n

plans optimized for customers’ businesses to providing maintenance services.

New Orders Received/Net Sales (Years Ended 31st March, 2010)(Millions of yen)n New orders received

14.3%

40,635n Net sales

13.5%

39,593Business Domainsn

Network integration-related solutionsn

System integration-related solutionsnDevelopment and commissioning of all types of softwarenMaintenance and operation

Social System-Related Businessand OtherMain BusinessRespective Areas of Business Operations of Group Companies

This segment is engaged in the construction of buildings and public
facilities, civil engineering works, and security systems, as well as

Nippon COMSYSGroup

SANCOM GroupTOSYS Groupthe construction of environmental systems such as wind power and

n

n

n

COMSYS JOHOSYSTEM Groupco-generation systems. It is also closely involved in expressway
operations and supporting air traffic control systems.

New Orders Received/Net Sales (Years Ended 31st March, 2010)(Millions of yen)n New orders received

4.3%

12,130n Net sales

4.1%

12,154

Business DomainsnGeneral civil engineering worksn

Building construction and ancillary facilities worksnEnvironmental solutions

COMSYS Holdings Corporation Annual Report 201007

Review of Operations

NTT Information Telecommunication
Engineering BusinessWorking to strengthen competitiveness and expand business domains in a
rapidly changing business environment

Market Conditions

Fiscal 2010 Business Initiatives and Outlook

In the fixed-line communications market, the total number of sub-In fiscal 2010, we worked to enhance productivity through structural

scriptions for broadband services surpassed 34 million as of 31streforms while actively conducting sales activities with the aim ofDecember, 2009, driven in part by the shift of conventional fixed

increasing our share of the NTT Group business market.

telephone services to optical IP telephony services. At the same

In fiscal 2010, new orders received declined 8.7% year on year
1,000
50.0

time, new reliable services, including video distribution, with assured

to ¥161,599 million, and net sales were down 7.8% to ¥165,815

quality have emerged as a result of the commercial launch of services

million.
These results stemmed from a decrease in infrastructure800
40.0

over the next generation network (NGN) by NTT East and West.

related work for NTT projects that was greater than initially expected.

In the mobile communications market, mobile terminals are

Anotherfactor was a decline in both new orders received and 30.0
net
600

becoming more sophisticated and diversified in today’s saturated

sales in the NTT DOCOMO business.

mobile phone market. In addition to faster packet communication

In fiscal 2011, infrastructure-related investments are expected
20.0
400

speeds and expanded service areas, the development of Long Term

to continue declining in the NTT business. Nevertheless, we will

Evolution (LTE) infrastructure is proceeding apace.

10.0
200 to attract new onsite construction contracts in outside service
striveHowever, the business environment has remained challenging

construction areas and from other communication carriers. At thedue to reduced capital investments by communications carriers

05 will establish
06
07
08
09
0
0 time, we
same
a COMSYS
home-visit
supportcenteramid sluggish growth in mobile phone and fiber-optic access service

and expand our maintenance-related business.

subscriptions stemming from a decline in corporate IT investment,

In the NTT DOCOMO business, we expect the investment

as well as weak personal consumption due to deteriorating eco-environment to remain challenging despite the projected increase

nomic conditions.

in demand accompanying the launch of the LTE service in December
2010. Consequently, we will continue implementing reforms withthe aim of establishing a competitive business structure.

New Orders Received/Net Sales(Millions of yen)
250,000

200,000

Installation of PHS antenna

150,000

100,000

50,000006

n New Orders Received
n Net Sales

08

COMSYS Holdings Corporation Annual Report 2010

07

08

09

10

Electrical Communications
Engineering Business
Expanding market share by raising customer satisfaction

Market Conditions
Despite certain concentrated capital investment has been made insome part of this sector such as the construction of WiMAX networks
on a nationwide scale, existing capital investment plans of telecommunications carriers in general have come to the closing stage.
Thus, both base station and access networks construction works
NCC base station

tends to decline these days. On the other hand, we are of the viewthat the expansion of fiber-optic access networks and the start ofmigration to next-generation high-speed wireless communications
should lead to firm capital investments.

Fiscal 2010 Business Initiatives and Outlook
The NCC business had experienced steady growth in the past.

In fiscal 2011, in the NCC business, though telecommunications

However, in the year under review, unit prices declined markedly

carriers are drawing up tight capital investment plans, we will strivein step with an increase in the adoption of smaller base station

to expand our market share in both the mobile and fixed-line

which can be installed relatively simply. Meanwhile, although thecommunications fields by enhancing customer satisfaction andmarket share of wireless facilities construction works increased, theresponding promptly to customer requests to be their businesssegment recorded a weak performance in terms of orders and sales.

partner in telecommunications infrastructure fields.

Furthermore, other telecommunications carriers also took steps tocurtail investment. As a result, new orders received fell 12.2% year
on year to ¥70,426 million, and segment net sales slipped 2.5% to¥75,524 million.
New Orders Received/Net Sales(Millions of yen)
100,000

80,00060,00040,00020,000

0

06

07

08

09

10

n New Orders Received
n Net SalesCOMSYS Holdings Corporation Annual Report 201009

IT Solutions Business
Reaching out to form alliances and establishing new businesses

Market Conditions

Fiscal 2010 Business Initiatives and Outlook

In the IT solutions business market, there is growing demand fromIn the year under review, we strove to increase revenues by reinforc-

society for comprehensive services that require software and tele-ing initiatives aimed at developing new businesses, including servers

communications technologies convergence. These services include

and data centers. We also promoted business restructuring to better

network solutions involving cloud computing, IP telephony, video

meet
1,000 market needs. Due to sluggish private-sector demand, how50.0

monitoring, and security, as well as systems solutions, such as theever, new orders received declined 6.6% to ¥40,635 million, and net

development of sales support systems driven by wireless technolo-

sales
800 fell 6.9% to ¥39,593 million.

40.0

gies. For this reason, infrastructure development, including putting

In fiscal 2011, we will target expansion of upper layer businesses

in place IT platforms and building data centers, is urgently needed

by600
forming alliances with manufacturers in fields experiencing
30.0

to resolve the digital divide domestically.

sustained growth in demand, such as cloud computing and data
centerbusinesses. Furthermore, in order to enhance corporate
20.0
400
facility operations and maintenance services using data centers,
200upgrade total corporate PC management support services,10.0
andwewill upgrade our existing call center for corporate customers into
05
09
0
0
an integrated
customer06center. At07the same08time, by strengthening

training for personnel involved in these services, we will work toestablish an IT management service business centered on maintenance and operational services as early as possible.

New Orders Received/Net Sales(Millions of yen)
50,00040,000Technological cooperation on
design and construction of­communications facilities

30,00020,0002009 World Table Tennis Championships
in Yokohama

10,000006

n New Orders Received
n Net Sales

10

COMSYS Holdings Corporation Annual Report 2010

07

08

09

10

Social System-Related Businessand Other
Ongoing efforts to improve profitability and prepare for entry
into future growth fields

Construction work on network facilities
for new runway at Haneda Airport

Market Conditions
Demand for projects both in the private sector and public sector
has slumped considerably in response to the recent economic
downturn. Meanwhile, worsening environmental problems, including
global warming, have underscored growth in businesses that seek
to address ecological and environmental issues amid calls for com-

Shield machine for excavating
sewer tunnels

panies to make contributions to the environment and society.

Fiscal 2010 Business Initiatives and Outlook
In fiscal 2010, we strove to increase orders for ecological andenvironmental projects that benefit from government economic
stimulus measures. However, the decline in public-sector investments resulted in a 38.5% fall in new orders received, to ¥12,130

removal, and thermal barrier coatings. We will also bolster initiatives

million, and a 43.4% drop in net sales to ¥12,154 million.

from the previous year aimed at the IRU and terrestrial digitalIn fiscal 2011, we will improve profitability by introducing

broadcasting-related businesses. In addition, we will engage inmore rigorous selection criteria for accepting orders such as

regional environmental projects such as the installation of FTTH

withdrawing from the condominium construction business andcommunications infrastructure and projects aimed at improving

attempting to increase non-residential communications-related

urban environments, such as the removal of electric power poles

civil work projects.

and the construction of sewerage systems. In other initiatives, we

We will continue efforts targeting environment-related busi-

will train project management leaders in order to expand our solar

nesses, such as solar power generation and LEDs, and construction

power business and strengthen alliances with non-Group partners,

work for better residential and work environments, such as asbestos

with the aim of broadening our environment-related businesses.
New Orders Received/Net Sales(Millions of yen)
25,00020,00015,00010,000

5,000

0

06

07

08

09

10

n New Orders Received
n Net SalesCOMSYS Holdings Corporation Annual Report 201011

Corporate Governance

Basic Corporate Governance Philosophy

In addition, the Advisory Board is made up of experts fromOne element of the COMSYS Group’s vision is to earn recognition

outside the Company and is an advisory body to the President. Thisas the “company of first choice” by all stakeholders, and to creatively

board’s advice and recommendations on corporate governanceand dramatically enhance its corporate value in the process. To thisand other issues are reflected in business operations.

end, the Group is taking steps to improve its management structure
and internal control systems, while working hard to conduct IR

Status of an Internal Control System

activities for shareholders and other investors. In this manner, theBased on the Companies Act of Japan, the Company has formulated

COMSYS Group recognizes that one of its top management priori-and implements a “Basic Policy on Establishing an Internal Control

ties is to enhance corporate governance.

System” that has been approved by resolution of the Board of
Directors. In regard to internal control over financial reporting based

Organizational Structureon the Financial Instruments and Exchange Law of Japan, the

COMSYS Holdings Corporation (the “Company”) has adopted theCompany has reinforced measures to eliminate deficiencies bycorporate auditor system, which by Japanese law stipulates anmaking improvements in the organizational structure and coverageorganizational structure consisting of a general shareholders’of these internal controls, through the establishment of an Internal

meeting, Board of Directors, Board of Corporate Auditors andControl Office within the Internal Control Audit Department.

other organizations.
The Board of Directors has decided to structure the Board

Establishing a Compliance Structurearound directors well versed in the Company’s operations with theBased on its internal Compliance Program, the Company has set

aim of enhancing management efficiency. Meanwhile, the Company

forth Compliance Action Guidelines and has established thehas reinforced auditing functions by appointing outside corporate

Compliance Committee within the above framework. This Commit-

auditors who now have stronger legal authority to audit company

tee, which is chaired by the president, is made up of representatives

activities, in order to ensure sound management.

from the Company and each of the core operating subsidiaries, as

The ten-member Board of Directors is the highest decision-

well as outside corporate auditors. The Committee oversees compli-

making body with respect to management strategy. Based onance throughout the COMSYS Group, and strives to increase theinternal rules governing the Board of Directors, the Board meets

COMSYS Group’s awareness of compliance and establish an effec-

regularly and as necessary to discuss matters stipulated by laws andtive compliance structure through various discussions.

regulations and to decide on important management issues.

All COMSYS Group companies have set up similar compliance

Every quarter, the directors responsible for each business seg-committees of their own. These committees work to establish an

ment report to the Board of Directors on progress with business

effective compliance structure by implementing educational andexecution based on policies determined by the Board. Five corpo-

training programs, as part of efforts to deepen employee under-rate auditors, including outside corporate auditors, attend meetings

standing of the corporate philosophy and operating principles ofof the Board of Directors and express their views on issues related

each respective COMSYS Group company.

to business execution, and monitor the directors’ performance of
their duties.

In its efforts to maintain and enhance corporate value amid a ­rapidly

and the standing auditor. In principle, this committee meets twicechanging business environment, the COMSYS Group is aware thata month to examine and discuss issues related to key decisions, in

it faces a variety of business risks which must be ­managed appro-

an effort to improve the efficiency of business execution. The heads

priately. Therefore, the Group has established a Risk Managementof each operating department attend meetings of the SeniorCommittee, chaired by the president and made up of directors

Management Committee as observers, to ensure that they fully

from the Company and each of the core operating subsidiaries.

understand the basis for all management decisions.

In August 2006, the Basic Policy on Risk Management was

In each business segment, an Operating Committee under the­formulated and similar risk management committees were estab-supervision of the responsible director holds regular meetings tolished at each group company, among other measures. In thisconduct efficient operational management.

manner, efforts are being made to properly address the business

The term of office for directors is set at one year in order toclarify directors’ management responsibility every fiscal year, andto flexibly structure an optimal management team in step withchanges in the business environment.

12

Establishing a Risk Management Structure

The Senior Management Committee is made up of directors

COMSYS Holdings Corporation Annual Report 2010

risks faced by each Group company, and to minimize the materialization of each risk.

Corporate Governance Structure (As of 29th June, 2010)
Overview of COMSYS Group Operational Structure and Operational Supervision
and Internal Control Structure

General Shareholders’ Meeting

Board of Corporate Auditors

Board of Directors

Audit

Corporate Auditors (5)(including 3 Outside Auditors)

Adviseandmakerecommendations

Advisory Board

Directors (10)Corporate Auditors (5)President

Senior Management Committee
Directors (10)Standing Corporate Auditor (1)Independent Auditor

CSR Committee

Group Operational Standards

Compliance Committee

Audit

Risk Management Committee
Personal Information Protection
and Administration Committee
COMSYS Group Presidents Committee

Corporate Planning Department,
IR Department,
Finance & Accounting Department,
General Affairs Department,
Personnel Department

Internal
audit

Internal Control Audit Department

Internal
auditCore Operating Companies
Nippon COMSYS Corporation, SANWA COMSYS Engineering Corporation,
TOSYS Corporation, COMSYS JOHO SYSTEM Corporation, COMSYS Shared Services Corporation

COMSYS Holdings Corporation Annual Report 201013

The Company has formulated Risk Management Guidelines andIn addition, the Group has formed the COMSYS Group Presi-

Crisis Management Guidelines and will strive to maintain stabledents Committee, which is made up of the presidents of COMSYS

operations and ensure steady growth at the Company and theGroup companies. This committee meets regularly and works to

COMSYS Group by practicing effective risk management.

ensure that management policies and activities are clearly under-

For example, the COMSYS Group manages operational risk bystood by all members.

ensuring that Group companies work to acquire and maintaincertifications for management systems tailored to their operations,Internal Auditing and Corporate Auditors

such as ISO 9001, ISO 14001, COHSMS (Construction Occupational

The Company’s internal auditing organization consists of an Internal

Health and Safety Management Systems), ISMS (Information

Audit Office with a staff of ten employees within the Internal Control

Security Management Systems) and Privacy Mark certifications.

Audit Department.
This Office formulates internal auditing policies based on top

CSR Activities

management requirements, and implements internal audits of the

The Company and the COMSYS Group have established the CSR

Company and all Group companies. These activities are intended

Committee to coordinate CSR activities Group-wide with the aim

to ensure that each business risk faced by the Group is minimized,of ensuring that the Group actively fulfills its economic and social

while maximizing the quality of business operations.

responsibilities, including social contribution activities, as a good
corporate citizen.

The Board of Corporate Auditors has five members, three ofwhom are outside corporate auditors. No employees are specifically

The CSR Committee is engaged in CSR activities addressing

assigned to assist the corporate auditors with their activities. If suchvarious themes, such as compliance, corporate governance, risk

assistance is required, there is a structure in place for addressing

management, information disclosure and protection, security

personnel issues such as determining appointees, and ensuring

countermeasures, social contributions and environmental issues.

independence from directors. In addition, based on the rules(For further details, please see pages 16 to 18.)

governing the Board of Corporate Auditors, directors and employees are required to report on major business activities or issues that

Establishing an Information Management Structure

could affect the COMSYS Group’s operations or performance toImportant documents related to business activities and the perfor-

the corporate auditors.

mance of directors’ duties, including minutes of the Board of

The Board of Corporate Auditors may request further information

Directors and Senior Management Committee meetings and otheron the above mentioned reporting at any time as necessary, as wellreports, are stored and managed appropriately based on theas other required disclosure.

Group’s internal document management rules.

The corporate auditors regularly attend both regular and extraor-

Furthermore, in order to improve the efficiency of operations

dinary meetings of the Board of Directors as well as meetings of theand business execution, after ensuring an adequate level of informa-

Senior Management Committee, the CSR Committee, the Compli-

tion security, the Company is working to deploy various information

ance Committee and other important internal committee meetingssystems to put in place a framework for sharing the latest manage-

or discussions. This structure has been established to allow thement information.

corporate auditors to verify the status of business execution on aregular basis and to express their views on these matters.

Establishing a Group Management Structure

14

The corporate auditors also hold regular meetings with theImportant management decisions within the COMSYS Group arepresident to directly express their views on issues related to business

reported to and discussed by the Senior Management Committee

execution and other topics.

and the Board of Directors in line with Group Operation Standards,

In accordance with audit plans formulated by the Board ofwhich clarify decision-making and reporting rules for the COMSYS

Corporate Auditors, the corporate auditors of COMSYS HoldingsGroup. In this manner, the group management and monitoring

regularly check to see whether business operations are executed

framework is centered on the Company.

appropriately and efficiently by maintaining close ties with the

In order to ensure that all COMSYS Group operations are carriedInternal Audit Department and with the Group’s independentout appropriately, the directors of each core operating subsidiary

auditor. For example, the corporate auditors accompany thealso participate as members in the various Group committees

independent auditor and others on on-site internal and financial

established within the Company, including the CSR Committee,

audits as observers. The corporate auditors of COMSYS Holdings

the Compliance Committee and the Risk Management Committee.

also convene regular meetings with their counterparts at core

In this way, the COMSYS Group ensures that all policies and

COMSYS Group companies, and maintain close ties within thedecisions discussed by these groups are reported to and thoroughly

COMSYS Group mainly by sharing information and exchanging

understood by each Group company.

views, in order to improve the effectiveness of audits.

COMSYS Holdings Corporation Annual Report 2010

Strengthening Disclosure and Accountability

Personal Information Protection

The Company provides timely and appropriate disclosure of crucial

Recognizing that properly protecting and managing personal andmanagement information in order to promote understanding among

other information is crucial to gaining the trust of customers andshareholders, investors and all other stakeholders and obtain a fairsociety as a whole, the Personal Information Protection andevaluation of its activities.

Administration Committee has been established to oversee activi-

The Company discloses information on new orders received onties throughout the COMSYS Group. Concurrently, the Personala monthly basis, as well as financial results on a quarterly basis. In

Information Protection Policy and other guidelines have been

conjunction with interim and full-year earnings announcements, thedrafted and adopted to ensure that information security manage-Company holds business presentations to clearly explain both its

ment is fully implemented at all Group companies.

performance and outlook. Individual and small group meetings withAt the same time, every COMSYS Group company works hardinvestors and securities analysts are also held in both Japan andto protect personal information by establishing similar committees

overseas countries.

and measures of the COMSYS Group, as well as operating manage-

The Company also seeks to enhance its investor relations (IR)website by posting presentation materials, news releases and otherment systems of ISMS and the Privacy Mark to acquire and maintainthese certifications.

information on this website in a timely and straightforward manner.

Directors and Officers
As of 29th June, 2010

Representative Director and President
Hajime Takashima

Tatsufumi Nakajima(President and Representative Director of Nippon COMSYS
Corporation)

Mitsuhiro Watanabe

Directors
Yoji Oku(President and Representative Director of SANWA COMSYSEngineering Corporation)

Hidetoshi Miura(President and Representative Director of TOSYS Corporation)

Yoneki Tahara(President and Representative Director of Tsuken Co., Ltd.)

Kunio Ushioda(President and Representative Director of COMSYS JOHO SYSTEM
Corporation)

Yoshihiro Mimata
Hirofumi Yamasaki

Corporate Auditors
Akinori Ishigaki(Standing Auditor)

Auditors
Takemi Ikari
Masahiko Miyashita*
Masahiro Takeshita*
Kichiroh Akino** Outside auditors

Akio Ogawa

COMSYS Holdings Corporation Annual Report 201015

Corporate Social Responsibility (CSR)

Basic Approach to CSR

CSR Through Business Activities

Helping to Build a Society With Enriched Interpersonal Relationships
and Ties Between People and Society at Large

The COMSYS Group regards its business activities as a part of CSR
efforts. This section introduces some highlights of actual activities.

In recent years, the advancement of broadband and ubiquitous
infrastructure has continued to support the materialization of asociety in which everyone has access to as much information as theywant, regardless of time or place. In this information-rich society,the role of the COMSYS Group is to build reliable, safe and convenient communications infrastructure and support the networks thatconnect every corner of society like clockwork. This is, simultaneously,
our responsibility to society as a corporation.
Our mission is to build high-quality, highly reliable communications infrastructure while giving consideration to the environment
and to help create an information-rich society that coexists harmoniously with the global environment.
In April 2009, COMSYS Holdings Corporation created the CSR
Promotion Office to establish a framework for promoting CSR
throughout the COMSYS Group. Going forward, we intend to ­further
enhance CSR activities at Group companies and make a collective
effort to conduct business with CSR in mind.

Communications Infrastructure Construction Work on Central
Circular Shinjuku Route

A joint venture* of Nippon COMSYS and SANWA COMSYS Engineering conducted communications infrastructure construction work along
an approximately four-kilometer stretch of expressway that opened
in March 2010 running from Shinjuku to the Shuto Expressway No. 3
Shibuya Route, which connects with the Tomei Expressway.
SANWA COMSYS Engineering has a long track record in developing disaster prevention facilities and electric power infrastructure forexpressways, boasting expertise in sophisticated construction
techniques. By combining this track record and expertise with Nippon
COMSYS’s urban civil engineering technologies and experience inconstructing communication lines in large-scale tunnels, we earned
a high degree of customer confidence.
In addition, monthly accounting processes were commissioned
to COMSYS Shared Services, and outsourcing agreements andcontracts related to materials procurement were handled by Nippon
COMSYS’s Procurement Department. This arrangement helped to
improve productivity and reduce costs.
* Joint venture in this context refers to a consortium of multiple companies jointly contracted
to conduct construction work on a single project.

Relationship Between Management Policies and CSRManagement Policies
1.	Fortify the COMSYS Group’s dominantposition as Japan’s No. 1 communications
infrastructure construction company

2.	Strive to maximize synergies across the
COMSYS Group

3. Aim to be a knowledge-intensive corporation by increasing knowledge throughout the COMSYS Group

Measures to Achieve Management Policies
Business structural reforms
and kaizen (improvement) initiatives

Expand high-value-added service fields

Develop new business fields

Realize one-stop solutions addressing the wide-ranging and diverse needs of the communications and network sectors

CSR at the COMSYS Group

Helping to Build a Society Where Communications Networks Enable Enriched Interpersonal Relationships
and Ties Between People and Society at Large* Systems integrators: c ompanies that comprehensively conduct all aspects of communications infrastructure and information systems implementation, from planning and proposal to design,development, operations and maintenance.

16

COMSYS Holdings Corporation Annual Report 2010

Establishment of COMSYS JOHO SYSTEMCOMSYS JOHO SYSTEM Corporation was established in April
2009 by spinning off Nippon COMSYS’s information processing
systems business. Integrating information processing-related
businesses previously dispersed throughout the COMSYS Group
allows development skills and experience to be shared as an overall
Group asset.
Fully harnessing synergies among these elements, we willdevelop exceptional information processing systems in line withcustomer needs and bolster our market competitiveness in the
IT industry.
In addition, the COMSYS Group’s system engineers will begathered to COMSYS JOHO SYSTEM, facilitating the developmentof policies and personnel systems that fit software development
operations. Working conditions and employment systems that makeit easier for system engineers to fulfill their duties should further
raise motivation levels.

The Group companies have established occupational healthand safety (OH&S) policies and safety charters, and operate OH&S
management systems. In these and other ways, the Group companies strive to maintain the quality of working conditions.
We hold mutual discussion and study sessions with partnercompanies to facilitate understanding of our corporate philosophy
and management vision and to build and maintain better business
relationships. In addition, at the Partner Networking Conference
held by COMSYS JOHO SYSTEM, the company explains its own
business policies for a given fiscal year at the corporate and businessdivision levels. COMSYS JOHO SYSTEM conducts a range of uniquecommunication activities, including the awarding of certificates ofappreciation to partner companies for superior performance on
initiatives to meet delivery deadlines or enhance quality.
We intend to continue various initiatives in an effort to build
strong partnerships.
Together With Employees

Together with Stakeholders
The COMSYS Group values communication with stakeholders as ameans of earning the trust of society. This section introduces
approaches and initiatives concerning stakeholders.
Together With Customers

In order to remain a trusted partner of customers, the COMSYSGroup is working to continuously raise quality and maintain information security and to actively create opportunities for communication
with customers.
Quality management systems based on ISO 9001 are adopted
depending on the quality policies of Group companies in order
to continuously enhance quality. We are also strengthening
information security using authentication systems based on eachcompany’s policies.
Nippon COMSYS and SANWA COMSYS Engineering holdcommunication forums to express appreciation to customers andpartner companies for their ongoing support and deepen ties
with them.
Going forward we will work to provide even better products andservices through ongoing communication.

Employees are our most familiar stakeholders supporting the
COMSYS Group. We implement various programs and communication activities in order to maintain a rewarding workplace where all
employees can fully demonstrate their abilities.
COMSYS Group companies create opportunities for directinteraction between the president and employees in which opinions
are exchanged and issues shared with the president. To promote
the success of women in the workplace, Nippon COMSYS andSANWA COMSYS Engineering conduct awareness surveys of malemanagers and female employees as well as organize seminars,
social gatherings for female employees and other events to raise
the awareness of female employees and transform the awarenessof male managers.
Nippon COMSYS offers mental health checkups in order to assist
with the mental and physical health of its employees. Through thesecheckups, employees acquire an objective picture of their mental
condition. Group companies also hold seminars on the subject ofmental health in an effort to improve workplace conditions.
Going forward, we will strive to further develop vibrant workplaces for employees.
Together With Local Communities

Together With Shareholders and Other Investors

COMSYS Holdings conducts a variety of investor relations (IR)activities in Japan and abroad to ensure accurate and timely
disclosure of information on management to shareholders andother investors, who support the business foundations of the
COMSYS Group.
Going forward, we intend to promote IR activities with anemphasis on increased fairness and transparency.
Together With Partner Companies

The COMSYS Group places high importance on its partner companies and endeavors to build fair partnerships with them. At thesame time, we work together with our partners to address issues
concerning quality and safety.

The COMSYS Group highly values communication with local
community members. And, as a member of the local community
ourselves, we assist with environmental conservation and community revitalization programs. At business offices and branches
around the country, we also conduct activities closely tied tocommunities, utilizing communications infrastructure development
and other technologies.
TOSYS Corporation holds the “Dream Festa” event every year
to promote interaction among employees and community members.
Proceeds from a charity bazaar and other programs at the eventare donated to welfare organizations.

COMSYS Holdings Corporation Annual Report 201017

Nippon COMSYS assists the activities of NPOs that support
organizations for people with disabilities. The company performed
LAN wiring work for Internet streaming at the 14th Japan Powerchair
Football Championship, 38th Japan Wheelchair Basketball Championship, and the 2009 International Wheel Chair Competition in Iizuka.
We plan to actively continue activities that draw on the technologies of the COMSYS Group.

Installation of Environmentally Considerate Technologies

We also help reduce facility costs and maintenance costs while
giving appropriate consideration to the environment by working
on new technologies and construction methods that lead to greater
energy efficiency.

Together With the Environment

The COMSYS Group will help to achieve a sustainable society by
reducing the environmental impact of its business activities andthrough environmental businesses such as building renewableenergy systems.
Environmental management systems are operated based on
ISO 14001 standards depending on the environmental policies ofeach Group company in an effort to reduce environmental impact.
Nippon COMSYS has installed a photovoltaic power system on theroof of its office building as part of its environmental conservation
activities in the office. The energy is used by the company’s offices,and details on power generation by the system are disclosed on
the company website.
We plan to continue to play a part in reducing global environmental impact through our business activities.

Highlights of Initiatives
Utilization of Renewable Energy

The COMSYS Group has extensive expertise in the construction of
eco-friendly systems that use solar power and other clean energies,
and has an extensive track record in the delivery of such systems
to corporations and public facilities throughout Japan. We support
such projects with total engineering technologies, from systeminstallation, operation and maintenance for customers to application
agency services for various subsidy programs.

LED lighting

COMSYS Group Forest Preservation Projects

At Nippon COMSYS and SANWA COMSYS, the “Forest Supporter”
group formed by employees and their families engages in forest
preservation projects at the COMSYS Forest in Saitama Prefecture
and Kirifuri Collaborative Forest in Tochigi Prefecture. The group
regularly conducts activities, such as tree thinning and undergrowth
clearing, that promote the growth of trees, and works to protect
the natural environment.
TOSYS Corporation cuts undergrowth, removes deadwood andrepairs trails at the TOSYS Forest in Nagano Prefecture. Participants
develop an appreciation of the importance of forestland while
increasing their awareness of environmental issues.

Group photo of volunteers
engaged in forest preservation
Large-capacity photovoltaic
power system

For more in-depth reporting on COMSYS Group’s CSR activities,
please visit the website (Japanese only):
http://www.comsys-hd.co.jp/company/outline/outline5.html

18

COMSYS Holdings Corporation Annual Report 2010

Management Discussion and Analysis

Profile of COMSYS Group

However, the business environment of COMSYS Group contin-

COMSYS Holdings Corporation (the “Company”) was establishedued to see challenging conditions, including reduced capitalin September 2003 as the holding company for the COMSYS Group.

investment by telecommunications carriers mainly attributable to

The COMSYS Group is made up of the Company, 4 core operating

weak growth in optical fiber access services and mobile phonecompanies (Nippon COMSYS Corporation, SANWA COMSYS

subscriptions reflecting declining corporate IT spending and weakEngineering Corporation, TOSYS Corporation and COMSYS JOHO

personal consumption amid a worsening economy.

SYSTEM Corporation), 41 other subsidiaries, as well as 7 affiliates.

Facing these challenges, the COMSYS Group sought to meet

The Group’s main businesses are electrical and telecommunications

the expectations of its various stakeholders and actively conduct

infrastructure construction services, which mainly involve the con-its business operations in order to realize the COMSYS Group’s

struction of telecommunications infrastructure facilities, and othermanagement vision. These efforts were led by the Group’s four corebusinesses, such as the information processing related business.

companies: Nippon COMSYS Corporation, SANWA COMSYSThe consolidated financial statements of COMSYS Holdings forEngineering Corporation, TOSYS Corporation, and COMSYS JOHO

fiscal 2010, the year ended 31st March, 2010, include the accounts

SYSTEM Corporation (established 1st April, 2009). As for structuralof 31 consolidated subsidiaries. COMSYS Holdings did not accountreforms to raise Group-wide synergies, the Company promoted thefor any affiliates using the equity method in fiscal 2010.

“Group Innovation 2010” concept, underpinned by three objectives:
increase sales and earnings, enhance business efficiency, andOverview

promote unified operations. At the same time, we standardized

In fiscal 2010, the Japanese economy continued facing difficult

workflow and took other measures to enhance productivity, linked

conditions, such as cutbacks in capital investment and a worsen-

to ongoing COMSYS-style kaizen (improvement) initiatives. Thoseing employment situation. However, signs that the economy has

measures include expanding our information business; integration

bottomed out have been observed, owing to economic stimulusof joint operations through outsourcing to shared services compa-

measures by the government and increased exports to emerg-

nies; extending centralized procurement throughout the Group, foring nations.

both materials for construction work and other indirect products

The COMSYS Group’s main businesses lie in Japan’s informationnecessary for our businesses; and reassessing our regional businessand communications sector. In the fixed-line communications field,

operational system with a view to unifying and streamlining our

the switchover from existing fixed-line telephony to IP-basedorganizational structure with “concentration” and “consolidation”

telephony utilizing optical fiber lines proceeded due to expansion

as our keywords.

of broadband services, while new services such as secure, reliable
and high-quality video distribution service were launched following
the construction of the next generation network (NGN). In themobile communications field, the battle to attract customers andservice- and price-based competition intensified due to saturationin the market penetration of mobile phones. For example, there
were further improvements in WiMAX and other services, alongwith the increasing sophistication and diversity of mobile handsets.
Against the backdrop of progress with the switch to IP technologies,
the convergence of fixed-line and mobile communications services,

New Orders Received
by Operating Segment

and communications, broadcasting and other services is proceeding(Millions of yen)at an increasingly faster pace. At the same time, conditions in the

400,000

information and telecommunications market have been changing
dramatically as Japan moves toward the “Smart Ubiquitous Network

300,000

Society” promoted by the government. This change is highlighted
by the emergence of LTE (Long Term Evolution), a next-generation
mobile phone communication standard as well as cloud computing
and other new technologies for which increased future investment
is anticipated.

200,000

100,000

0

06

07

08

09

10

n NTT Information Telecommunication Engineering Businessn Electrical Communications Engineering Businessn IT Solutions Businessn Social System-Related Business and OtherCOMSYS Holdings Corporation Annual Report 201019

New Orders Received
New orders received decreased 11.1% year on year to ¥284,790

New Orders Received and Results of Operations for the
Four Core Operating Companies

million, despite the Group’s proactive sales activities. This decrease

Nippon COMSYS Groupwas partly due to a decline in infrastructure-related projects in the

The Nippon COMSYS Group has given first priority to the safety,

NTT Information Telecommunication Engineering Business, a corequality, and trustworthiness of its operations, and has ­harnessed its

business of the COMSYS Group.

comprehensive strengths to implement structural reforms based on
the “Innovation 2010” concept and ­COMSYS-style kaizen (improve-

Results of Operations

ment). In the NTT Information Telecommunication Engineering

Net sales declined 8.7% year on year to ¥293,086 million, due toBusiness, for example, the Group sought to enhance productivity

depressed investments in private-sector markets and fallingthrough drastic reassessment of its business operation system, while­public-sector spending, as well as a downtrend in capital invest-

working to ensure stable earnings and business expansion byments by telecommunication carriers that exceeded our initial

growing adjacent businesses. In the IT Solutions Business, the Groupassumptions. The NTT Group-related business accounted for 56.6%

strove to boost sales by stepping up initiatives in new businessesof net sales. Cost of sales fell 8.3% year on year to ¥260,295 million,(including servers and data centers), and rebuilt its business opera-with the cost of sales ratio remaining mostly the same as the previous

tional system to better reflect market needs. In the Electricalyear, at 88.8%. With respect to selling, general and administrative

Communications Engineering Business and Social System-Related(SG&A) expenses, we promoted centralization of business processes

Business and Other, the Group worked to increase orders in busi-

and reductions in personnel costs in line with structural reforms, asnesses derived from government economic stimulus measures,

well as cuts in operating expenses through centralized Group-wide

including the IRU business and environmental protection, while

procurement. Accordingly, SG&A expenses declined 7.3% year oncontinuing to pursue structural reforms and prioritize businesses.

year to ¥20,250 million with the ratio of SG&A expenses to net sales

In this context, new orders received declined 11.9% year on year

held to an increase of 0.1 of a percentage point to 6.9%.

to ¥203,018 million, and net sales fell year on year 10.5% to ¥209,803

As a result, operating income decreased 19.7% to ¥12,541

million. This was mainly due to a decrease in service integration-

million. The ratio of operating income to net sales was 4.3%, down

related projects in construction services related to NTT, as well as

0.6 of a percentage point year on year. Net income decreased 29.5%

falling capital expenditures in construction services related to NTT

year on year to ¥7,098 million. The ratio of net income to net sales

DOCOMO. During the year, we strove to improve productivity

declined 0.7 of a percentage point to 2.4%.

through structural reforms while cutting expenses. However, these
initiatives could not fully compensate for the drop in sales. Accordingly, ordinary income fell 24.0% year on year to ¥10,334 million,
and net income slipped 26.2% year on year to ¥5,912 million.

Net Sales by Operating Segment

Operating Income andOperating Margin(Millions of yen)

(Millions of yen)

400,000

20,0008.0

300,000

15,0006.0

200,000

10,0004.0

100,000

0

(%)

5,000

06

07

08

09

10

n NTT Information Telecommunication Engineering Businessn Electrical Communications Engineering Businessn IT Solutions Businessn Social System-Related Business and Other20

Net Income and Net Profit Margin

COMSYS Holdings Corporation Annual Report 2010

0

2.0

06

07

n Operating Income
Operating Margin
n

08

09

10

(Millions of yen)

(%)

15,0005.0

12,000

4.0

9,000

3.0

6,000

2.0

3,000

1.0

0

0

06

n Net Income
Net Profit Margin
n

07

08

09

10

0

SANCOM Groupand acceptance of orders, reflecting a shift in emphasis from sales

The SANWA COMSYS Engineering (SANCOM) Group worked toto profits. The Group also proactively advanced a business partner

expand orders in the NCC business, as well as in the manufacturer-

evaluation method aimed at enhancing the visibility of the coreand vendor-related business, the telecommunications and electri-

elements of our business—safety, product quality, compliance, andcal construction business (public-sector/private demand), and theinformation security.

ICT facility business. Various measures were also taken to improve

In the fiscal year under review, new orders received decreased

productivity by establishing market-oriented business processes

8.8% year on year to ¥26,935 million, and net sales fell 8.3% tosuch as the “Group Innovation 2010” concept of maximizing¥27,659 million, reflecting declines in capital expenditures forsynergies across the COMSYS Group as well as the “Innovation

projects related to NTT and NTT DOCOMO. During the year, we

Project 2010.”

benefited from cost-cutting activities, including the operation of

In the year under review, the NCC business was affected by

NTT-related projects outside of construction ­service areas, as welldownsizing of construction projects, reductions in unit orderas the reduction of costs for operational outsourcing and materials.

amounts, and restrained capital spending. Meanwhile, the manu-

We also lowered the number of unprofitable projects in the general

facturer- and vendor-related business faced restraint in orders andpublic-sector/private demand business through careful selection

intensified competition for public-sector tenders. Consequently,

and acceptance of orders, and strove to reduce SG&A expenses.

new orders received declined 19.8% year on year to ¥62,944 million,

As a result, ordinary income jumped 38.1% year on year to ¥742

and net sales were down 14.2% to ¥64,161 million. During the year,

million, and net income surged 84.2% to ¥368 million.

we pursued rigorous cost-reduction efforts, but this was unable tofully compensate for the drop in sales. As a result, ordinary income

COMSYS JOHO SYSTEM Groupremained mostly the same at ¥3,769 million, while net income

In the year under review, which is the company’s first fiscal year, thedropped 52.7% to ¥1,061 million.

COMSYS JOHO SYSTEM Group conducted business with anemphasis on two priorities: strengthening sales activities aimed at

TOSYS Group

attracting and expanding orders, and bolstering earnings by

The TOSYS Group embraced the slogan of “Facing outward withenhancing capacity utilization rates and raising project management

courage” for fiscal 2010. For example, the Group focused on foster-

quality. As a result of a decline in orders in the NCC-related anding multi-skilled technicians as part of a drive to promote innovation

private demand-related businesses, new orders received amounted

in human resources development. The Group also sought to shift

to ¥9,871 million, and net sales totaled ¥9,943 million. With respect

legacy technologies to younger workers and ­nurture people toto earnings, the Group sought to lower project costs by prioritizing

become business managers. In the NTT Information and Telecom-core partners when placing orders, and took steps to reduce various

munication Engineering Business, the Group strengthened its

other expenses. Due to the emergence of unprofitable projects,

activities by “putting its heart” into the entrenchment of structural

however, falling unit order amounts and worsening capacity utiliza-

reforms to establish two-tier work systems and other issues, whichtion rates resulted in ordinary income of ¥44 million, and net income

entered their second year. In the private-sector business, meanwhile,of ¥2 million.

the Group executed various measures, including careful selection

Performance of the Four Core Operating Companies(Millions of yen)

Nippon COMSYS GroupSANCOM Group

2010/20092010/2009

TOSYS Group
2010/2009COMSYS JOHOSYSTEM Group
2010/2009

New Orders Received

203,018(11.9)%

62,944(19.8)%

26,935(8.8)%

9,871–

Net Sales

209,803(10.5)%

64,161(14.2)%

27,659(8.3)%

9,943–

Operating Income

9,623(19.9)%

1,988(47.2)%

634

28.4%

41

–

Net Income

5,912(26.2)%

1,061(52.7)%

368

84.2%

2

–

COMSYS Holdings Corporation Annual Report 201021

Financial Position

Capital Resources and Liquidity

AssetsLiquidity

As of 31st March, 2010, total current assets stood at ¥129,035 million,

The Group has introduced a Cash Management System (CMS) in

down ¥16,382 million from a year earlier. This was due to a ¥6,871

order to reduce interest-bearing debt and reinforce fund manage-

million decrease in cash and cash equivalents and a ¥6,624 million

ment on a consolidated basis. In addition, COMSYS Holdings has

decline in notes and accounts receivable—trade and accumulated

established a committed credit facility of ¥6,000 million so that it

cost of construction in progress. Total fixed assets increased ¥7,540

can procure funds in times of emergency.

million to ¥82,774 million as of March 31, 2010, due mainly to a ¥7,305

Cash Flows

million increase in property and equipment.
As a result, total assets at fiscal year-end amounted to ¥211,809

Cash and cash equivalents as of 31st March, 2010 were ¥23,006

million, down ¥8,842 million from a year earlier.

million, a decrease of ¥6,871 million, or 23.0%, from a year earlier.
A breakdown of cash flows for fiscal 2010 and reasons for changes
are provided as follows.

Liabilities

Total current liabilities at fiscal year-end stood at ¥53,582 million,
down ¥7,840 million from a year earlier. This was mainly due to a

Cash Flows From Operating Activities¥5,244 million decrease in accounts payable—trade and advances

Net cash provided by operating activities amounted to ¥10,055

received on construction in progress. Long-term liabilities declined

million, down 48.8% from the previous year. Major cash inflows¥995 million to ¥6,458 million, due mainly to a ¥1,057 million decrease

included ¥12,648 million in income before income taxes and otherin accrued severance indemnities.

adjustments to net income and a ¥3,755 million decrease in

As a result, total liabilities at fiscal year-end amounted to ¥60,040

receivables—trade. Major outflows included a ¥5,716 million

million, down ¥8,835 million from a year earlier.

decrease in payables—trade.

Shareholders’ Equity

Cash Flows From Investing Activities

Total net assets, including minority interests, were ¥151,769 million.

Net cash used in investing activities totaled ¥9,257 million, up 42.4%

This reflected a ¥4,508 million increase in retained earnings, duefrom the previous fiscal year. This was due mainly to ¥9,267 million

primarily to net income of ¥7,098 million and a ¥4,992 million increasein acquisitions of property and equipment and ¥1,616 million inin treasury stock, which in turn reduced shareholders’ equity.

acquisitions of other assets.

The equity ratio improved from 68.4% at the previous fiscal
year-end to 71.2%. Return on equity (ROE) fell 2.0 percentage points

Cash Flows From Financing Activities

to 4.7% from a year earlier, while return on assets (ROA) was 3.3%,

Net cash used in financing activities was ¥7,669 million, down

down 1.2 percentage points.

0.8% from the previous fiscal year. This mainly reflected ¥5,007
million in acquisitions of treasury stock and ¥2,590 million in cash
dividends paid.

Total Assets andReturn on Total Assets (ROA)

Shareholders’ Equity andReturn on Equity (ROE)(Millions of yen)

(%)

300,000

6.0

250,000

5.0

200,000

4.0

150,000

3.0

100,000

2.0

50,000

1.0

0

06

07

08

09

10

n Total Assets
Return on Total Assets (ROA)n

22

COMSYS Holdings Corporation Annual Report 2010

Equity Ratio(Millions of yen)

(%)

(%)

160,000

10.0

80

120,000

7.5

60

80,0005.0

40

40,000

2.5

20

0

0

0

0

06

07

08

n Shareholders’ Equity
Return on Equity (ROE) (%)
n

09

10

06

07

08

09

10

Business Risks(3) Risk from Changes in Seasonal Business Patterns

The COMSYS Group believes the following risks could affect theIn the COMSYS Group’s mainstay business of electrical and telecom-

Group’s performance and financial position, and have a material

munications infrastructure construction services, as the recording

impact on the decision-making of investors. Forward-lookingof net sales and orders tends to be concentrated in the fourthstatements in the following section were determined by thequarter, at the end of the fiscal year, the Group’s business perfor-

COMSYS Group as of 31st March, 2010.

mance could differ significantly between the first and the second
halves of the fiscal year.

(1) Risk from Dependency on a Specific Customer

Since the NTT Group is the primary customer for the COMSYS(4) Risk Involved in Holding Assets

Group’s mainstay electrical and telecommunications infrastructure

Since the COMSYS Group holds real estate, investment securities

construction services, accounting for more than 50% of business,and pension assets as needed in the course of business, a changechanges in the size and nature of capital expenditures at thein the market value of these assets could have an impact on the

NTT Group could have an impact on the COMSYS Group’sGroup’s business performance.

business performance.
(5) Credit Risk of Business Customers(2) Risk to Safety and Quality

The COMSYS Group conducts strict credit management with regard

With the goal of eradicating accidents involving both personnel

to its business customers in real time using outside research agencies

and facilities based on the motto of “Prioritizing Safety in Every-

and other entities. At the same time, the Group has put in place athing,” the COMSYS Group is working to manage safety and quality

reliable structure for minimizing the materialization of credit risk byin construction by implementing employee training and other

having the Legal Department screen contracts, for example. Never-measures within the Group and among partner companies. Never-theless, deterioration in the credit standing of customers could result

theless, an accident that results in the loss of trust among businessin the inability to recover construction costs in the case of a customer

customers, a loss of potential orders due to a temporary suspension

or cause construction delays in the case of a sub-contractor. This inof the Group’s status as an approved tenderee and the potential

turn could have an impact on the Group’s business performance.

risks associated with the warranty and product liability of any services
the Group renders could have an impact on the COMSYS Group’sbusiness performance.
Furthermore, the COMSYS Group does its utmost to ensure
Group-wide information security management with respect toinformation, including personal information, entrusted from customers by leveraging the Information Security Management System(ISMS) and Privacy Mark certifications obtained at its core operatingcompanies. Nevertheless, a leak of that information by outsourcing
partners or other companies, or due to a crime involving unauthorized access from outside, could result in the loss of trust among
business partners or the assumption of liability for damages due
to accusations of mismanagement. This in turn could have an impact
on the COMSYS Group’s business performance.

COMSYS Holdings Corporation Annual Report 201023

Consolidated Balance Sheets
COMSYS Holdings Corporation and Consolidated Subsidiaries
As of 31st March, 2009 and 2010

2009

Millions of Yen
2010

Thousands of
U.S. Dollars(Note 1)
2010

Cash and cash equivalents (Note 3) ������������������������������������������������������������������������������

¥ 29,877¥ 23,006$  247,270

Short-term investments (Note 3) ������������������������������������������������������������������������������������

5

44

473

Notes and accounts receivable—trade (Note 3) ����������������������������������������������������������

84,23879,824

857,954

Accumulated cost of construction in progress �������������������������������������������������������������

20,24318,033

193,820ASSETS
Current Assets:

Deferred income taxes (Note 6) ������������������������������������������������������������������������������������

3,412

2,735

29,396

Other current assets ��������������������������������������������������������������������������������������������������������

7,802

5,514

59,265

Less: Allowance for doubtful receivables ����������������������������������������������������������������������

(160)

(121)

(1,301)

Total current assets ����������������������������������������������������������������������������������������������������������

145,417129,035

1,386,877

Land ����������������������������������������������������������������������������������������������������������������������������������

27,09132,280346,947

Buildings and structures ��������������������������������������������������������������������������������������������������

32,44935,097377,225

Machinery and equipment ����������������������������������������������������������������������������������������������

19,391

18,351

197,238

Lease assets ��������������������������������������������������������������������������������������������������������������������

19

39

419

Property and Equipment:

Construction in progress ������������������������������������������������������������������������������������������������

344

1,421

15,273

Less: Accumulated depreciation ������������������������������������������������������������������������������������

(29,285)(29,874)(321,088)

Total property and equipment ��������������������������������������������������������������������������������������

50,00957,314

616,014

669

614

6,599

Investments and Other Assets:
Investment securities:
Unconsolidated subsidiaries and affiliates ����������������������������������������������������������������
Other (Note 3) ��������������������������������������������������������������������������������������������������������������

5,495

6,506

69,927Long-term loans receivable ��������������������������������������������������������������������������������������������

2,745

2,519

27,074

Prepaid pension cost ������������������������������������������������������������������������������������������������������

4,217

4,265

45,841

Deferred income taxes (Note 6) ������������������������������������������������������������������������������������

2,548

1,836

19,734

Subscription rights to shares ������������������������������������������������������������������������������������������

11,927

12,038129,385

Less: Allowance for doubtful receivables ����������������������������������������������������������������������

(2,376)(2,318)(24,914)

Total investments and other assets ��������������������������������������������������������������������������������

25,22525,460273,646

Total Assets ����������������������������������������������������������������������������������������������������������������������

¥220,651¥211,809$2,276,537

See Notes to the Consolidated Financial Statements.

24

COMSYS Holdings Corporation Annual Report 2010

2009

Millions of Yen
2010

Thousands of
U.S. Dollars(Note 1)
2010

Short-term bank loans ����������������������������������������������������������������������������������������������������

¥      70¥     35$      376

Accounts payable—trade (Note 3) ��������������������������������������������������������������������������������

46,36441,024440,929

Advances received on construction in progress ����������������������������������������������������������

3,611

3,707

39,843

Income taxes payable ����������������������������������������������������������������������������������������������������

4,146

1,710

18,379LIABILITIES AND NET ASSETS
Current Liabilities:

Other current liabilities ���������������������������������������������������������������������������������������������������

7,231

7,106

76,376

Total current liabilities ����������������������������������������������������������������������������������������������������

61,42253,582575,903

Long-term debt (Note 4) ������������������������������������������������������������������������������������������������

116

11

118

Accrued severance indemnities (Note 5) ����������������������������������������������������������������������

3,520

2,463

26,473

Deferred income taxes (Note 6) ������������������������������������������������������������������������������������

997

1,090

11,715

Deferred tax liabilities for unrealized gains on land revaluation (Note 9) ������������������

2,366

2,366

25,430Long-Term Liabilities:

Other long-term liabilities ����������������������������������������������������������������������������������������������

454

528

5,675

Total long-term liabilities ������������������������������������������������������������������������������������������������

7,453

6,458

69,411

10,00010,000107,481

Net Assets (Note 8):
Common stock, par value ¥51 per share:
Authorized 580,000 thousand shares
Issued 145,978 thousand shares ��������������������������������������������������������������������������������
Additional paid-in capital ����������������������������������������������������������������������������������������������

57,01557,017

612,822

Retained earnings ������������������������������������������������������������������������������������������������������������

107,098

111,606

1,199,549

Unrealized loss on land revaluation (Note 9) ����������������������������������������������������������������

(7,897)(7,897)(84,878)

Unrealized gain (loss) on securities ��������������������������������������������������������������������������������

(857)

(444)

(4,772)

Treasury stock, at cost ����������������������������������������������������������������������������������������������������

(14,530)(19,522)(209,824)

Total shareholders’ equity ����������������������������������������������������������������������������������������������

150,829

150,760

1,620,378

Subscription rights to shares ������������������������������������������������������������������������������������������

70

250

2,687

Minority interests ������������������������������������������������������������������������������������������������������������

877

759

8,158

Total net assets ����������������������������������������������������������������������������������������������������������������

151,776

151,769

1,631,223

Total Liabilities and Net Assets ��������������������������������������������������������������������������������������

¥220,651¥211,809$2,276,537

COMSYS Holdings Corporation Annual Report 201025

Consolidated Statements of Income
COMSYS Holdings Corporation and Consolidated Subsidiaries
Years ended 31st March, 2009 and 2010

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2009

2010

2010

Net Sales ��������������������������������������������������������������������������������������������������������������������������

¥321,186¥293,086$3,150,107

Cost of Sales ��������������������������������������������������������������������������������������������������������������������

283,724

260,295

2,797,668

Gross profits ��������������������������������������������������������������������������������������������������������������������

37,462

32,791

352,439

Selling, General and Administrative Expenses ������������������������������������������������������������

21,851

20,250217,648

Operating income ����������������������������������������������������������������������������������������������������������

15,611

12,541

134,791

310

210

2,257

Other Income (Expenses):
Interest and dividend income ����������������������������������������������������������������������������������������
Interest expenses ������������������������������������������������������������������������������������������������������������

(5)

(3)

(32)

Other, net (Note 10) ��������������������������������������������������������������������������������������������������������

443

(100)

(1,075)

748

107

1,150

Income before income taxes and other adjustments to net income ��������������������������

16,35912,648135,941   Current ����������������������������������������������������������������������������������������������������������������������

6,355

4,301

46,227   Deferred ��������������������������������������������������������������������������������������������������������������������

(35)

1,229

13,209

Income taxes (Note 6): ����������������������������������������������������������������������������������������������������

6,320

5,530

59,436

Minority Interests ������������������������������������������������������������������������������������������������������������

(24)

20

215

Net Income ����������������������������������������������������������������������������������������������������������������������

¥ 10,063¥   7,098$   76,290

Yen

U.S. Dollars(Note 1)

Amounts per Share:
Net income—Basic ������������������������������������������������������������������������������������������������������������������������������

¥   75.60¥   55.18$     0.59

—Diluted ��������������������������������������������������������������������������������������������������������������������������

–

55.15

0.59

Cash dividends ����������������������������������������������������������������������������������������������������������������

20.00

20.00

0.21

See Notes to the Consolidated Financial Statements.

26

COMSYS Holdings Corporation Annual Report 2010

Consolidated Statements of Changes in Net Assets
COMSYS Holdings Corporation and Consolidated Subsidiaries
Years ended 31st March, 2009 and 2010

Balance, 31st March, 2008 ����������������������������������������

Thousands
Outstanding
Numbers of
Shares ofCommonStock136,607

Millions of Yen

CommonStock

Additional
Paid-In
Capital¥10,000¥   56,980

Net income ������������������������������������������������������������

Retained
Earnings

Unrealized
Loss onLand
Revaluation

Unrealized
Gain/(Loss)on Securities¥  99,783¥  (7,897)¥ (330)¥  (7,897)¥ (857)¥(7,897)¥(444)

10,063

Cash dividends paid:   Final for prior year, ¥10.00 per share ����������������

(1,311)   Interim for current year, ¥10.00 per share ��������

(1,387)

Changes of scope of consolidation ��������������������

(10)

Repurchase of treasury stock ��������������������������������

(5,771)

Sales of treasury stock ������������������������������������������

124

(50)
35

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2009 ����������������������������������������

(527)
130,950¥10,000¥   57,015

Net income ������������������������������������������������������������

¥ 107,098
7,098

Cash dividends paid:   Final for prior year, ¥10.00 per share ����������������

(1,310)   Interim for current year, ¥10.00 per share ��������

(1,280)Changes of scope of consolidation ��������������������
Repurchase of treasury stock ��������������������������������

(5,257)

Sales of treasury stock ������������������������������������������

15

2

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2010 ����������������������������������������

413
125,708¥10,000¥57,017¥111,606

Treasury
Stock,
at costTotal
Shareholders’EquitySubscription
Rights toSharesMinority
Interests

Total
Net Assets¥  (9,384)¥ 149,152–¥1,266¥ 150,418

Millions of Yen

Balance, 31st March, 2008 ����������������������������������������
Net income ������������������������������������������������������������

10,063

10,063(1,311)(1,311)(1,387)(1,387)

Cash dividends paid:   Final for prior year, ¥10.00 per share ����������������
   Interim for current year, ¥10.00 per share ��������
Changes of scope of consolidation ��������������������

(16)

(66)

(66)

Repurchase of treasury stock ��������������������������������

(5,201)(5,201)(5,201)

Sales of treasury stock ������������������������������������������

71

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2009 ����������������������������������������

¥ (14,530)

Net income ������������������������������������������������������������

106

106

(527)

70

(389)

(846)

¥ 150,829¥     70¥     877

¥ 151,776

7,098

7,098

   Final for prior year, ¥10.00 per share ����������������

(1,310)(1,310)   Interim for current year, ¥10.00 per share ��������

(1,280)(1,280)(5,007)(5,007)

Cash dividends paid:

Changes of scope of consolidation ��������������������
Repurchase of treasury stock ��������������������������������

(5,007)

Sales of treasury stock ������������������������������������������

15

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2010 ����������������������������������������

¥(19,522)

17

17

413

180

(118)

475

¥150,760¥250¥    759¥151,769

COMSYS Holdings Corporation Annual Report 201027

Balance, 31st March, 2009 ����������������������������������������

CommonStock

Additional
Paid-In
CapitalRetained
Earnings$  107,481$  612,801$   1,151,096

Net income ������������������������������������������������������������

Thousands of U.S. Dollars (Note 1)
Unrealized
Loss onUnrealized
Land
Gain/(Loss)
Revaluation
on Securities$   (84,878)$  (9,211)$(84,878)$(4,772)

76,290Cash dividends paid:   Final for prior year, ¥10.00 per share ����������������

(14,080)   Interim for current year, ¥10.00 per share ��������

(13,757)

Changes of scope of consolidation ��������������������
Repurchase of treasury stock ��������������������������������
Sales of treasury stock ������������������������������������������

21

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2010 ����������������������������������������

4,439$107,481$612,822$1,199,549

Treasury
Stock,
at costTotal
Shareholders’EquitySubscription
Rights toSharesMinority
Interests

Total
Net Assets$  (156,169)$  1,621,120$    752$   9,426$  1,631,298

Thousands of U.S. Dollars (Note 1)

Balance, 31st March, 2009 ����������������������������������������
Net income ������������������������������������������������������������

76,29076,290   Final for prior year, ¥10.00 per share ����������������

(14,080)(14,080)   Interim for current year, ¥10.00 per share ��������

(13,757)(13,757)(53,816)(53,816)

Cash dividends paid:

Changes of scope of consolidation ��������������������
Repurchase of treasury stock ��������������������������������

(53,816)

Sales of treasury stock ������������������������������������������

161

Net change in the fiscal year ��������������������������������
Balance, 31st March, 2010 ����������������������������������������
See Notes to the Consolidated Financial Statements.

28

COMSYS Holdings Corporation Annual Report 2010$(209,824)

182

182

4,439

1,935

(1,268)5,106$1,620,378$2,687$ 8,158$1,631,223

Consolidated Statements of Cash FlowsCOMSYS Holdings Corporation and Consolidated Subsidiaries
Years ended 31st March, 2009 and 2010

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2009

2010

2010

Income before income taxes and other adjustments to net income ��������������������������

¥16,359¥12,648$135,941

Depreciation and amortization ��������������������������������������������������������������������������������������

4,654

4,951

53,214

Write-down of investments in securities and other assets ������������������������������������������

749

56

602

Increase (decrease) in allowance for doubtful receivables ������������������������������������������

(1,038)13140

Decrease in accrued severance indemnities ����������������������������������������������������������������

(413)

(548)

(5,890)Interest and dividends received ������������������������������������������������������������������������������������

(310)

(210)

(2,257)

Cash Flows From Operating Activities:

Interest expenses ������������������������������������������������������������������������������������������������������������

5

3

32

Decrease in receivables—trade �������������������������������������������������������������������������������������

10,767

3,755

40,359Decrease (increase) in inventories ����������������������������������������������������������������������������������

(504)

2,191

23,549Decrease in payables—trade ����������������������������������������������������������������������������������������

(6,267)(5,716)(61,436)

Decrease in other assets ������������������������������������������������������������������������������������������������

351

310

3,332

(Decrease) increase in other liabilities ��������������������������������������������������������������������������

358

(909)

(9,770)

Amortization of consolidation adjustments ������������������������������������������������������������������

(1,070)

(87)

(935)

Other, net ������������������������������������������������������������������������������������������������������������������������

300

350

3,762

23,941

16,807

180,643

Cash and cash equivalents received on interest and dividends income ��������������������

310

210

2,257

Cash and cash equivalents paid for interest expenses ������������������������������������������������

(5)

(3)

(32)

Cash and cash equivalents paid for income taxes ��������������������������������������������������������

(4,606)(6,959)(74,796)

Net cash provided by operating activities ��������������������������������������������������������������������

19,64010,055108,072

Decrease in time deposits, net ��������������������������������������������������������������������������������������

150

1,874

20,142

Increase in investment securities, net ����������������������������������������������������������������������������

(179)

(422)

(4,536)

Acquisitions of property and equipment ����������������������������������������������������������������������

(3,454)(9,267)(99,602)

Acquisitions of other assets ��������������������������������������������������������������������������������������������

(3,461)(1,616)(17,369)

Proceeds from sale of property ��������������������������������������������������������������������������������������

129

88

946

Increase in long-term loans ��������������������������������������������������������������������������������������������

(1,321)(1,890)(20,314)

Collection of long-term loans ����������������������������������������������������������������������������������������

1,247

2,094

22,506

Cash Flows From Investing Activities:

Other, net ������������������������������������������������������������������������������������������������������������������������

387

(118)

(1,268)Net cash used in investing activities ������������������������������������������������������������������������������

(6,502)(9,257)(99,495)

Decrease in short-term borrowings, net ������������������������������������������������������������������������

82

(30)

(322)

Proceeds from long-term loans payable ����������������������������������������������������������������������

80

–

–
(344)

Cash Flows From Financing Activities:

Repayment of long-term debt ����������������������������������������������������������������������������������������

(60)

(32)

Proceeds from long-term debt ��������������������������������������������������������������������������������������

(20)

(10)

(108)

Acquisitions of treasury stock ����������������������������������������������������������������������������������������

(5,201)(5,007)(53,816)

Proceeds from sale of treasury stock ����������������������������������������������������������������������������

107

15

161

Cash dividends paid ��������������������������������������������������������������������������������������������������������

(2,697)(2,590)(27,837)

Other ��������������������������������������������������������������������������������������������������������������������������������

(23)

(15)

(161)

Net cash used in financing activities ������������������������������������������������������������������������������

(7,732)(7,669)(82,427)

Net Increase in Cash and Cash Equivalents ����������������������������������������������������������������

5,406(6,871)(73,850)

Cash and Cash Equivalents at Beginning of Year ��������������������������������������������������������

24,29429,877321,120

Increase Due to Business Combination ������������������������������������������������������������������������

177

–

–

Cash and Cash Equivalents at End of Year ������������������������������������������������������������������

¥29,877¥23,006$247,270

See Notes to the Consolidated Financial Statements.

COMSYS Holdings Corporation Annual Report 201029

Notes to the Consolidated Financial Statements
COMSYS Holdings Corporation and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements
COMSYS Holdings Corporation (the “Company”) and its subsidiaries(together, the “Companies”) maintain their accounting records andprepare their financial statements in conformity with accounting principles and practices generally accepted in Japan (the “GAAP of Japan”),
which differ in certain respects as to application and disclosure requirements from International Accounting Standards. The accompanying
consolidated financial statements have been compiled from the consolidated financial statements filed with the Financial Services Agency
as required by the Securities and Exchange Laws of Japan. Certain
reclassifications of account balances have been made so as to present
the consolidated financial statements in a form that is more familiar toreaders outside Japan. Also, certain prior year accounts have been
reclassified to conform to the 2010 presentation, without any impacts
on results of operations or retained earnings reported previously.
The accounts and records of the Companies are maintained inJapanese yen. The accompanying consolidated financial statements
have been presented in Japanese yen and have also been presented
in U.S. dollars by translating all Japanese yen amounts using the rateof ¥93.04 to US$1. The presentation of such dollar amounts is solely forthe convenience of the reader and is not intended to imply that yen
amounts have been or could be converted, realized or settled in dollars
at that or at any other rate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and 31 subsidiaries (see “Our Group Formation” at the 40th page of this annual report) over which the Company
exerts substantial control either through majority ownership of voting
shares and/or by other means. For the purposes of preparing theconsolidated financial statements, all significant inter-company transactions, account balances and unrealized profits among the ­Companies
have been eliminated.
The accounts of other subsidiaries and affiliates were not consolidated, since their aggregate sales, total assets, net income and retained
earnings have little affect upon the total consolidated results of operations and assets. Also, investments in unconsolidated subsidiaries andaffiliates are carried at cost due to their immateriality.
All of the subsidiaries were consolidated on the basis of fiscal periods ending 31st March.
Goodwill, including negative goodwill, is amortized by the straightline method over reasonable economical life up to 20 years; while
goodwill without materiality is amortized at the incurrence.
(b) Use of estimates
Management of the Company has made a number of estimates andassumptions relating to the reporting of assets and liabilities to prepare
the accompanying consolidated financial statements in conformity with
the GAAP of Japan. Actual results could differ from these estimates.
(c) Point of sales—construction contracts
Under the GAAP of Japan effective from the fiscal year beginning fromand on 1st April, 2009, construction contracts with reliable estimates of
their outcome are to be accounted for by percentage-of-completion
method; while construction contracts without reliable estimates of theiroutcome are to be accounted for by completed contract method.
Before applying this new accounting principle, the completed contract method was applied for all construction contracts by the Companies, but the impact of this change was not material.
The percentage of completion is estimated by using cost method.
When the completed-contract method is applied, the accumulated
cost of uncompleted construction is shown as “Accumulated cost of
construction in progress” and the related billings (advances received)on uncompleted construction contracts are shown as “Advances received
on construction in progress” in the accompanying balance sheets.
(d) Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments,
30

COMSYS Holdings Corporation Annual Report 2010

generally with original maturities of three months or less, those arereadily convertible to known amounts of cash and are so near maturity
that they present insignificant risk of changes in value because ofchanges in interest rates.
(e) Short-term investments and investment securities
The GAAP of Japan requires the classification of short-term investments and investment securities (except for “unconsolidated subsidiaries and affiliates”) of the Companies into two categories as follows:i)	Other securities whose fair values are readily determinable: carriedat fair value with unrealized gains or losses included in Stockholders’Equity as “Unrealized gain (loss) on securities,” net of applicable
income taxes.
ii)	Other securities whose fair values are not readily determinable:
carried at cost using moving-average method.
With respect to investments in unconsolidated subsidiaries andaffiliates, the Companies are carrying their amounts at cost, determinedby the moving average cost.
(f) Accumulated cost of construction in progress
In connection with (c) above, “Accumulated cost of construction inprogress” is stated at cost based on an individual project basis.
(g) Property and equipment
Property and equipment are stated at cost. Depreciation is computed
primarily by the declining-balance method; while the straight-line
method is applied to building acquired after 1st April, 1998, both using
estimated useful lives of assets principally as follows:
Buildings and structures   2 to 50 years(h) Intangible assets and deferred charges
Intangible assets including software are carried at cost and amortizedby the straight-line method over the estimated useful lives of assets.
The useful life of software utilized in the Companies is estimated tobe 5 years. Research and development costs are charged to income
as incurred.
(i) Leases
As a lessee, the financial leases that do not transfer ownership of theproperty to lessee are accounted for as transactions of acquisition ofassets; while such financial leases commenced before and on 31st
March, 2008 are allowed to be accounted for as transactions of rent,
but certain “as if capitalized” information in the notes to the consolidated financial statements are required.

(j) Impairment of long-lived assets
The Companies’ long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amountof an asset or assets in a group might not be recoverable. An impairment loss should be recognized if the carrying amount of those assets
exceeds the sum of the expected undiscounted future cash flows
arising from the continual use and subsequent disposition of thoseassets. The impairment loss should be measured by difference between
the carrying amount and their recoverable amount, which is higher ofthe expected discounted future cash flows arising from the continual
use and subsequent disposition of those assets or the net selling priceat disposition.
(k) Income taxes
Deferred tax assets and liabilities arising from temporary differences
between financial and tax reporting are measured using the enacted
tax rates and laws which will be in effect when the differences are
expected to reverse. In the preparation of the consolidated financial
statements, deferred tax assets and liabilities also arose fromthe elimination of unrealized profits among the Companies and theadjustment of the allowance for doubtful receivables caused by theoffsetting of inter-company receivables and payables.
(l) Appropriations of retained earnings
Appropriations of retained earnings of the Company at each year-end
are reflected in the consolidated financial statements for the following
year upon shareholders’ approval (See Note 12).
(m) Net income and cash dividends per share
The computations of basic net income per share are based on theweighted average number of shares outstanding during each year. The
GAAP of Japan requires deductions of the amounts with which stockholders of common stock are not vested (e.g. bonus paid to directors)
from net income when computing net income per share.
Cash dividends per share are based on the cash dividends applicableto the respective years, including dividends to be paid after the end of
the year.

3. Financial Instruments
The Companies raise funds through Cash Management Systemamong the Companies, and hold all cash reserve as short-term bankdeposits. The Companies are trying to minimize the customers’ credit
risk arising from notes and accounts receivable—trade by applying
bylaws of the Companies. There was no derivative transaction among
the Companies.

Information that is required to be disclosed in the Notes to theconsolidated financial statements by the regulations and rules on
disclosures under the Securities and Exchange Laws of Japan, as
amended to conform to certain reclassifications of account balances
made to present the consolidated financial statements, consists ofthe following:(a) Carrying amounts, their fair value and the differences between them as of 31st March, 2010, were as follows:
Millions of yen
Carrying
AmountFair Value

Cash and cash equivalents �������������������������������������������������

¥23,006¥23,006

Notes and accounts receivable—trade ����������������������������

79,824

Accounts payable—trade ��������������������������������������������������

41,024

Thousands of U.S. dollars

Difference

Carrying
AmountFair Value

Difference–$247,270$247,270–

79,824–

857,954

857,954–

41,024–440,929440,929–

Fair value of the items mentioned above were approximately the same as carrying amounts, since they were to be settled in a short period.
(b) Maturities of receivables and investment securities with due date as of 31st March, 2010, were as follows:
Million of yen

Thousands of U.S. dollars
After 5and within
After
10 years
10 yearsWithin1 YearAfter 1and within
5 years

After 5and within
10 years

After
10 yearsWithin1 YearAfter 1and within
5 years

Cash and cash equivalents �������������

¥ 23,006–––$  247,270

–

–

–

Notes and accounts
receivables—trade ������������������������

857,954–––

79,824–––

Investment securities withmaturities ����������������������������������������

45

¥120

¥102

¥300

484

$1,290$1,096$3,224

Total ����������������������������������������������

¥102,875

¥120

¥102

¥300

$1,105,708$1,290$1,096$3,224(c) Other securities whose fair value was readily determinable as of 31st March, 2009 and 2010, were as follows:
31st March, 2009
Gross
Unrealized
LossesFair Value

Millions of yen
31st March, 2010

Cost

Gross
Unrealized
Gains

Cost

Gross
Unrealized
Gains

Stocks ��������������������������������������������������������

¥4,480¥389¥1,252¥3,617¥4,986¥497¥  811¥4,672

Bonds and debentures �����������������������������

569

1

93

477

564

1

92

473

Classification

Gross
Unrealized
LossesFair Value

Others �������������������������������������������������������

860

0

161

699

863

17

107

773

Total �������������������������������������������������������

¥6,015¥486¥  956¥5,545¥6,413¥515¥1,010¥5,918COMSYS Holdings Corporation Annual Report 201031

Thousands of U.S. dollars
Gross
Unrealized
LossesFair Value

Cost

Gross
Unrealized
Gains

Stocks ����������������������������������������������������������������������������������������������������������������������������������������������

$53,590$5,342$ 8,716$50,216

Bonds and debentures �������������������������������������������������������������������������������������������������������������������

6,062

11

989

5,084

Others ���������������������������������������������������������������������������������������������������������������������������������������������

9,275

182

1,150

8,307

Total ���������������������������������������������������������������������������������������������������������������������������������������������

$68,927$5,535$10,855$63,607

Classification(d) Proceeds from sales of other securities and realized gains/losses on such sales, cost of the sales being determined by moving average method,
for the year ended 31st March, 2009 and 2010, were as follows:
Millions of yen

For the year ended 31st March
2009
2010

Thousands of
U.S. dollars
For theyear ended
31st March
2010

Proceeds from sales ��������������������������������������������������������������������������������������������������������������������
Realized gains ������������������������������������������������������������������������������������������������������������������������������

¥111
77

¥130
79

$1,397
849

Realized losses ����������������������������������������������������������������������������������������������������������������������������

0

0

0

For the years ended 31st March, 2009, the Companies made write-down of investment securities, whose fair value was readily determinable,amounting to ¥617 million, following an accounting policy of the Companies which requires a write-down of investment securities whose fair value
at the fiscal year’s end declined to an amount not more than 50% of the book value.

4. Long-Term Debt
Long-term debt as of 31 March, 2009 and 2010 consisted of the following:Thousands of
U.S. dollars
2010

2009

Millions of yen
2010

Loans from banks ������������������������������������������������������������������������������������������������������������������������

¥157

¥ 6

$ 65

Capital lease obligations ������������������������������������������������������������������������������������������������������������

22

34

365

179

40

430

63

29

312

116

11

118

Millions of yen

Thousands of
U.S. dollars

2011 �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������

¥29

$312

2012 �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������

775

2013 �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������

3

32

2014 �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������

1

11

¥40

$430

Less: Current portion ������������������������������������������������������������������������������������������������������������������

Aggregate amounts of annual maturities of long-term debt as of 31st March, 2010 consisted of the following:
Fiscal year ending 31st March

5. Accrued Severance Indemnities
Employees of the Companies are usually entitled to lump-sum severance
indemnities determined by reference to their current basic rate of pay,
length of service and conditions under which the termination occurs.
COMSYS has a contributory and funded defined benefit pension
plan, which is pursuant to the Welfare Pension Insurance Law ofJapan. As qualified and allowed under the GAAP of Japan, the plan
assets include an employee retirement benefit trust to which
COMSYS, SANCOM and TOSYS contributed certain marketable
equity securities.

32

COMSYS Holdings Corporation Annual Report 2010

Other consolidated subsidiaries provide for severance indemnities
based on the liability if all eligible employees were to voluntarily terminate employment on the balance sheet date. In addition, certain subsidiaries have funds for tax qualified defined benefit pension plans anda few subsidiaries have non-contributory and funded defined benefit
pension plans.

“Accrued severance indemnities” recognized in the consolidated balance sheet as of 31st March, 2009 and 2010 were as follows:
Thousands of
U.S. dollars
2010

2009

Millions of yen
2010

Projected benefit obligation ������������������������������������������������������������������������������������������������������

¥(41,411)¥(42,257)$(454,181)

Fair value of plan assets ��������������������������������������������������������������������������������������������������������������

32,99335,967

386,576

Unfunded benefit obligation ������������������������������������������������������������������������������������������������������

(8,418)(6,290)(67,605)

Unrecognized actuarial difference ��������������������������������������������������������������������������������������������

13,38911,541

124,043

Unrecognized prior service cost ������������������������������������������������������������������������������������������������

(3,603)(3,274)(35,189)

Net amount recognized ��������������������������������������������������������������������������������������������������������������

1,368

1,977

21,249Prepaid pension cost ������������������������������������������������������������������������������������������������������������������

4,217

4,265

45,841

Accrued severance indemnities ������������������������������������������������������������������������������������������������

(2,848)(2,288)(24,592)

With respect to directors and corporate auditors of the Companies,
lump-sum severance indemnities are used to be calculated using asimilar formula and are normally paid subject to the approval at theshareholders’ meeting of each of the Companies.
But in June 2009, the shareholders’ meeting of the Company andcertain consolidated subsidiaries approved to discontinue the lumpsum severance indemnities for directors and corporate auditors, andthe amounts calculated on the discontinuance are to be paid on theirretirements. These liabilities amounted to ¥178 million (US$1,913­thousand) as of 31st March, 2010, and included in “Other long-term
liabilities” in the consolidated balance sheet.
“Accrued severance indemnities” in the consolidated balance sheet
as of 31st March, 2009 and 2010 include the provision for accrued
severance indemnities for directors and corporate auditors of theCompanies amounted to ¥671 million and ¥175 million (US$1,881
thousand), respectively.

Net pension cost of the plans included in the consolidated statements of income for the years ended 31st March, 2009 and 2010 wereas follows:
Thousands of
U.S. dollars
2010$20,120

2009

Millions of yen
2010

Service cost

¥ 2,597¥1,872

Interest cost

961

928

9,974

(1,267)(772)(8,297)

Amortization of unrecognized actuarial difference

804

1,261

13,553

Amortization of unrecognized prior service costs (negative)

(327)

(327)

(3,514)

Other

178

440

4,729

¥ 2,946¥3,402$36,565

Expected return of plan assets

Net pension cost
Unrecognized prior service costs are amortized and charged toincome using a straight-line method over the average remaining yearsof service of employees at the incurrence. Unrecognized actuarial differences are amortized and charged to income using a straight-line
method from the succeeding year of the incurrence over the averageremaining years of service of employees at the incurrence.
Significant assumptions used to calculate the above-mentioned
amount for the year ended 31st March, 2010 were as follows:• Allocation method of benefit obligation
Straight-line method• Discount rate
2.0% (mainly)• Expected rate of return on plan assets
2.9% (mainly)• Unrecognized prior service cost is amortized over mainly 15 years.
• Unrecognized actuarial difference is amortized over mainly 15 years
from the succeeding fiscal year of the incurrence.
The GAAP of Japan effective from the fiscal year beginning fromand on 1st April, 2009, requires that the discount rate mentioned above
is to be strictly determined by reference of risk-free rate at the end of
the fiscal year. This change resulted in increasing of unrecognizedactuarial difference of the Companies amounted to ¥1,651 million(US$17,745 thousand) as of 31st March, 2010.

6. Income Taxes
The Companies are subject to corporate (national), inhabitant andenterprise (local) taxes based upon taxable income, which resulted instatutory tax rates of approximately 40%, in aggregate, both for theyear ended 31st March, 2009 and 2010. The effective tax rate reflectedin the accompanying consolidated statements of income differs fromthe statutory tax rate primarily due to such items as permanently nondeductible expenses and timing differences in recognizing certain
income and expense items for financial and tax reporting purposes.

COMSYS Holdings Corporation Annual Report 2010

33

The difference between the statutory tax rate and effective tax rate reflected in the consolidated statements of income for the year ended 31st
March, 2010, primarily consisted of the following:
Statutory tax rate of the Companies ����������������������������������������������������������������������������������������������������������������������������������������������������������������
Effects of;
Expenses permanently not deductible for income tax purpose ��������������������������������������������������������������������������������������������������������������
Local taxes with fixed amounts ��������������������������������������������������������������������������������������������������������������������������������������������������������������������

40.0%

Amortization of negative goodwill ��������������������������������������������������������������������������������������������������������������������������������������������������������������
Valuation allowance ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������

▲0.3
0.1

2.1
1.5

Other, net ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������

0.3

Effective tax rate ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������

43.7%

Deferred tax assets and liabilities of the Companies, except for that relating to land revaluation of COMSYS mentioned in Note 9, as of 31st
March, 2009 and 2010, primarily consisted of the following:

2009

Millions of yen
2010

Thousands of
U.S. dollars
2010

Accrued expenses and enterprise taxes �����������������������������������������������������������������������

¥ 3,241¥ 2,582$ 27,752

Accrued severance indemnities �����������������������������������������������������������������������������������

962

695

7,470

Allowance for doubtful receivables �������������������������������������������������������������������������������

836

892

9,587

Revaluation of land owned by consolidated subsidiaries �������������������������������������������

848

853

9,168

Write-down of investment securities �����������������������������������������������������������������������������

1,104

721

7,749

Others �����������������������������������������������������������������������������������������������������������������������������

1,584

1,328

14,274

8,575

7,071

76,000(1,906)(1,938)(20,830)

6,669

5,133

55,170

Deferred tax assets:

Less: Valuation allowance �����������������������������������������������������������������������������������������������
Deferred tax liabilities:
Deferred gain on exchange of lands �����������������������������������������������������������������������������

(400)

(473)

(5,084)

Revaluation of land owned by consolidated subsidiaries �������������������������������������������

(1,228)(1,135)(12,199)

Others �����������������������������������������������������������������������������������������������������������������������������
Net deferred tax assets �������������������������������������������������������������������������������������������������

(81)

(46)

(494)

(1,709)(1,654)(17,777)¥ 4,960¥ 3,479$ 37,393

7. Leases(As a Lessee)
As mentioned in the Note 1(i) above, the financial leases commenced
before and on 31st March, 2008 are accounted for as transactions ofrent. Pro forma amounts of the acquisition costs (including the interest
portion thereon), accumulated depreciation (depreciation expenses ofthe leased property were computed by the straight-line method over
the respective lease terms) and net book value of leased property asof 31st March, 2009 and 2010, which would have been reflected in the
consolidated balance sheets if capitalized, were as follows:

Thousands of
U.S. dollars
2010$22,367

2009

Millions of yen
2010

Acquisition costs ��������������������������������������������������������������������������������������������������������������������������

¥2,234¥2,081

Accumulated depreciation ��������������������������������������������������������������������������������������������������������

1,160

1,354

14,553

Net book value ����������������������������������������������������������������������������������������������������������������������������

¥1,074¥  727$ 7,814

Lease payments relating to financial leases accounted for as transactions of rent amounted to ¥392 million and ¥287 million (US$3,085 thousand)for the years ended 31st March, 2009 and 2010, respectively.
Obligation (including the interest portion thereon) under financial leases as of 31st March, 2009, were as follows:

34

Millions of yen
2010

Thousands of U.S. dollars
2010

Due within one year ������������������������������������������������������������������������������������������������������������������������

¥256$2,752

Due after one year ��������������������������������������������������������������������������������������������������������������������������

471

5,062

Total ����������������������������������������������������������������������������������������������������������������������������������������������

¥727$7,814COMSYS Holdings Corporation Annual Report 2010

(As a Lessor)
One of the Companies has sales type leases as its business.
The amount, relating to the sales type leases, included in “Other current assets” of the consolidated balance sheet as of 31st March, 2010 wereas follows:

Lease payments receivable ������������������������������������������������������������������������������������������������������������

Millions of yen
2010

Thousands of U.S. dollars
2010¥1,005$10,802

Unguaranteed residual value ����������������������������������������������������������������������������������������������������������

17

183

Unearned interest income ��������������������������������������������������������������������������������������������������������������

(181)(1,946)¥  841$ 9,039

Aggregate amounts of lease payments receivable as of 31st March, 2010 consisted of the following:
Fiscal year ending 31st MarchMillions of yen

Thousands of U.S. dollars

2011 ��������������������������������������������������������������������������������������������������������������������������������������������������

¥  336$ 3,6112012 ��������������������������������������������������������������������������������������������������������������������������������������������������

294

3,160

2013 ��������������������������������������������������������������������������������������������������������������������������������������������������

239

2,569

2014 ��������������������������������������������������������������������������������������������������������������������������������������������������

113

1,215

2015 ��������������������������������������������������������������������������������������������������������������������������������������������������

22

236

2016 and later ����������������������������������������������������������������������������������������������������������������������������������

1

11¥1,005$10,802

8. Net Assets
Under the Corporation Act of Japan, the additional paid-in capital(capital reserves) may be, by resolution of shareholders’ meeting,transferred to stated capital or used to reduce a deficit, but they are
not available for dividend payment. On condition that the aggregate
amount of additional paid-in capital (capital reserves) remains equal toor exceeds 25 per cent of the amount of stated capital, it is available

for distributions by the resolution of the shareholders’ meeting withina certain limit. The amount of the additional paid-in capital (capitalreserves) of the Company included in “Additional paid-in capital” and“Retained earnings” of the accompanying consolidated balance sheets
as of 31st March, 2010, was ¥58,816 million (US$632,158 thousand).

9. Revaluation of Land for BusinessAt 31st March, 2002, land owned by the COMSYS was revalued under
the Land Revaluation Law and related regulations. Net unrealized gains
and losses resulting from the revaluation were debited directly to shareholders’ equity as a negative revaluation surplus after adding the related
deferred tax liabilities as mentioned bellow. The negative revaluation
surplus will be credited as a gain or loss when a part of the land is sold.

The fair value for the revalued land mentioned above as of 31st
March, 2009 and 2010 has been increased by ¥5,599 million anddecreased by ¥342 million (US$3,676 thousand), respectively, in theaggregate from the book value, which has not been restated, as allowedby the GAAP of Japan.

Deferred tax assets and liabilities relating to revaluation of land of the Company as of 31st March, 2010 consisted of the following:
Millions of yen
2010

Thousands of U.S. dollars
2010

Relating to unrealized losses ������������������������������������������������������������������������������������������������������

¥ 4,578$ 49,205

Less: Valuation allowance ������������������������������������������������������������������������������������������������������������

(4,578)(49,205)––

Deferred tax assets:

Deferred tax liabilities:
Relating to unrealized gains ������������������������������������������������������������������������������������������������������

2,366

25,430

Net: Deferred tax liabilities ��������������������������������������������������������������������������������������������������������

¥ 2,366$ 25,430

COMSYS Holdings Corporation Annual Report 201035

10. Other Income and Expenses“Other, net” in “Other Income (Expenses)” for the year ended 31st March, 2009 and 2010 consisted of the following:Thousands of
U.S. dollars
2010$    935

2009

Millions of yen
2010

Amortization of consolidation adjustments/negative goodwill ����������������������������������������������

¥1,070¥   87

Gain on sales of fixed assets ������������������������������������������������������������������������������������������������������

43

7

75

Special payments on employees’ retirement benefits ������������������������������������������������������������

(123)

(135)

(1,451)Gain on payback of insurance payments ����������������������������������������������������������������������������������

120

77

828

Write-down on investments in securities and other assets ������������������������������������������������������

(761)

(55)

(591)

Loss on impairment of fixed assets ��������������������������������������������������������������������������������������������

(8)

(122)

(1,311)Gain on sales of investment securities ��������������������������������������������������������������������������������������

77

79

849

Loss on disposals of fixed assets ������������������������������������������������������������������������������������������������

(151)

(137)

(1,473)

Allowance for doubtful receivables ��������������������������������������������������������������������������������������������

(67)

(80)

(860)

Other ��������������������������������������������������������������������������������������������������������������������������������������������

243

179

1,924

¥  443¥(100)$(1,075)

11. Stock-based Compensation Plans
The stock option plans as of 31st March, 2010 is as follows:
No. 1

Outstanding share subscription rights
No. 2
No. 3

Date of grant ��������������������������������������������������������������������������������������������������

7th October, 2005

29th August, 2008

24th August, 2009

Number of shares granted ����������������������������������������������������������������������������

Common stock
924,000 shares

Common stock
993,000 shares

Common stock
108,400 shares

Category and number of grantees:
Directors of the Company ������������������������������������������������������������������������

10

8

9

Directors of the Companies and affiliates ����������������������������������������������

60

121

19

Senior officers of the Companies ������������������������������������������������������������

29

40

–

Employees of the Companies and affiliates ��������������������������������������������

679

470

–

From and on ����������������������������������������������������������������������������������������������

7th October, 2005

29th August, 2008–

Until and on ������������������������������������������������������������������������������������������������

30th June, 2007

29th August, 2010–

From and on ����������������������������������������������������������������������������������������������

1st July, 2007

30th August, 2010

25th August, 2009

Until and on ������������������������������������������������������������������������������������������������

30th June, 2011

29th August, 2014

24th August, 2039

900,000 shares––
108,400 shares

Target service period:

Exercisable period:

Outstanding balance at 31st March, 2010:
Exercisable ������������������������������������������������������������������������������������������������
Not exercisable ������������������������������������������������������������������������������������������

–963,000 shares

Exercise price ������������������������������������������������������������������������������������������������

¥1,304¥974¥1

Fair value of the stock option at date of the grant ������������������������������������

–

¥227

¥945 (Note 2)

Conditions for determination of the rights ������������������������������������������������

Note 1

Note 1–

Notes: 1.	Among exercisable period, the guarantee must be a director of the Company, the Companies or affiliates, or a senior officer of the Companies, or an employee of theCompanies or affiliates, except in the event of leaving post or resigning with fair reasons.
2. The fair value is estimated using Black-Scholes model with the assumptions of the followings;
		 • Volatility of stock price—40.5%, calculated on the observed share price for the four-year period (beginning 24th August, 2004 and ending 24th August, 2009).
		 • Estimated residual period—5 years, exercise date is assumed at the middle date of the exercisable period due to the difficulties involved in making a rational estimate
arising from the absence of sufficient data.
		 • Estimated dividend—¥20 per share, based on the results for the fiscal year ended 31st March, 2009.
		 • Risk-free interest rate—0.65%, observed interest yield of Japanese Governmental Bonds corresponding to the estimated residual period

Allocated cost for the stock option plan for the year ended 31st March, 2009 and 2010, amounted to ¥69 million and ¥180 million (US$1,935
thousand), respectively, were included in “Selling, General and Administrative Expenses” of the Consolidated Statements of Income.

36

COMSYS Holdings Corporation Annual Report 201012. Subsequent Event(a) On 12th May, 2010, the Board of Directors approved the acquisitionof Tsuken Corporation (“TSUKEN”) as a wholly owned subsidiary bytransfer of 8,351,286 shares from treasury stock of the Company toshareholders of TSUKEN, as based on the contracted ratio (0.4 sharesof the Company to 1 share of TSUKEN). The number of shares transferred to TSUKEN’s shareholders was calculated from the number ofcommon stock of TSUKEN issued as of 12th May, 2010, and would vary

until the date of transfer, 1st October, 2010, due to change of thenumber issued by TSUKEN, if any.
(b) On 29th June, 2010, the shareholders of the Company approved thefollowing appropriations of retained earnings:

Cash dividends ��������������������������

Millions of yen

Thousands of
U.S. dollars¥1,257$13,510

Report of Independent Certified Public Accountants

To the Board of Directors,
COMSYS Holdings Corporation

We have audited the accompanying consolidated balance sheets of COMSYS Holdings Corporation (the “Company”) and its consolidated
subsidiaries as of 31st March, 2009 and 2010, and the related consolidated statements of income, changes in net assets and cash flows foreach of the two year ended 31st March, 2010, expressed in Japanese yen. Preparing these consolidated financial statements is the responsibilityof the Company’s management. Our responsibility is limited to express an independent opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan, which require that we plan and performthe audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audits include
examining evidence supporting the amounts and disclosures of the financial statements on a test basis, and also include assessing theaccounting policies adopted and significant estimates made by the Company’s management, as well as evaluating the overall presentationof the financial statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of COMSYS Holdings Corporation and its consolidated subsidiaries as of 31st March, 2009 and 2010, and the consolidated resultsof their operations and cash flows for each of the two year ended 31st March, 2010, in conformity with accounting principles and practices
generally accepted in Japan as described in Note 1 to the consolidated financial statements.
Without qualifying our opinion, we draw attention to the following:
As described in Note 12(a), on 12th May, 2010, the Board of Directors approved the acquisition of Tsuken Corporation as a wholly owned
subsidiary by transfer of treasury stocks of the Company.
The U.S. dollar amounts, presented solely for the convenience of the readers, have been translated on the basis as described in Note 1
to the consolidated financial statements.

Hideo Niwa

Tomoyoshi Suzuki

Satoshi Okawara

O-Yu Kyodo Jimusho, Certified Public Accountants of JapanTokyo, Japan
29th June, 2010

COMSYS Holdings Corporation Annual Report 2010

37

COMSYS Holdings Information

Corporate Data

Corporate History

As of 31st March, 2010

Name:

COMSYS Holdings Corporation
Head Office:17-1, Higashigotanda 2-chome, Shinagawa-ku,
Tokyo 141-8647, Japan
URL:

http://www.comsys-hd.co.jp/english/
Date of Establishment:

29th September, 2003
Paid-in Capital:¥10 billion
Number of Employees:

8,407 (Consolidated)

April 2009

The information systems business related to software development
outsourcing was spun off from Nippon COMSYS Corporation toform COMSYS JOHO SYSTEM Corporation.
April 2007

COMSYS Holdings Corporation converted COMSYS Shared
Services Corporation, previously a consolidated subsidiary of
Nippon COMSYS Corporation, into a wholly owned consolidated
subsidiary in order to clarify its role as a common provider of business process outsourcing services for the COMSYS Group.
October 2005

COMSYS Holdings Corporation converted Kokusai Densetsu Co.,
Ltd. (now COMSYS WING Corporation) into a wholly owned subsidiary through a stock exchange, and made Kokusai Densetsu awholly owned subsidiary of Nippon COMSYS Corporation on thesame day.
April 2005

SANWA ELEC Co., Ltd. was renamed SANWA COMSYS Engineering
Corporation.
January 2005

The NTT Information Telecommunication Engineering Business of
SANWA ELEC Co., Ltd. was centralized at Nippon COMSYS
Corporation.
September 2004

COMSYS Holdings Corporation subscribed to a third-party allotment of shares by SANWA ELEC Co., Ltd.
September 2003

COMSYS Holdings Corporation listed its shares on the First Sectionof the Tokyo Stock Exchange and Osaka Securities Exchange.
September 2003

Nippon COMSYS Corporation delisted its shares in line with theestablishment of the holding company.
March 2002

Nippon COMSYS Corporation was selected as one of the 225
components of the Nikkei Stock Average.
December 2001

Nippon COMSYS Corporation celebrated its 50th founding
anniversary.
July 1990

The Company was renamed Nippon COMSYS Corporation.

38

COMSYS Holdings Corporation Annual Report 2010

Organization Chart
As of 29th June, 2010

Board of Directors
Board of Corporate Auditors

President
Advisory Board

Senior Management Committee

CSR Committee
Compliance Committee
Risk Management Committee
Personal Information Protection
and Administration Committee

Corporate Planning
Department

Finance & Accounting
Department

IR Department

General Affairs
Department

Personnel
Department• General Affairs Unit
• Legal Unit
• PR Unit• CSR Office• Corporate Planning Unit
• Corporate Strategy Unit
• Strategy Planning Unit
• Corporate Information Unit

Internal Control
Audit Department• Internal Control Office• Internal Audit Office

Hokkaido

Akita

Kanto Naka

TohokuNIIGATA

Niigata

NAGANO

Hokuriku

NaganoUeda/Saku/Shiojiri/Ina

TOKYO

IbarakiTochigi
Chiba

Kanagawa

Chugoku

Kanto Minami

KyushuShizuoka
KansaiTokai

Nishi Nippon
Takamatsu
ShikokuHead Office/COMSYS Holdings Corporation
Head Office/Nippon COMSYS Corporation
Head Office/SANWA COMSYS Engineering Corporation

Jakarta Branch Office
Okinawa

Head Office/TOSYS Corporation
Branch Office/TOSYS Corporation
Branch/Nippon COMSYS Corporation
Branch/SANWA COMSYS Engineering Corporation
Branch/TOSYS Corporation

COMSYS Holdings Corporation Annual Report 201039

Our Group Formation

The COMSYS Group’s (COMSYS Holdings and subsidiaries and afﬁliates) main businesses comprise electrical and telecommunications infrastructure construction services centered on telecommunications infrastructure and electrical facilities, andother businesses, including the information processing-related business. As of March 2010, the Group included 31 consolidated subsidiaries.

As of 31st March, 2010

Nippon COMSYS
Corporation

SANWA COMSYSEngineering Corporation

TOSYS Corporation

COMSYS JOHO SYSTEM
Corporation

COMSYS Shared
Services Corporation

Address:

Address:

Address:

Address:

Address:

17-1, Higashigotanda
2-chome, Shinagawa-ku,
Tokyo 141-8647, Japan

12-3, Koenji-Minami
2-chome, Suginami-ku,
Tokyo 166-0003, Japan
Establishment:

23-14, Takanawa
3-chome, Minato-ku,
Tokyo
108-0074, Japan

17-1, Higashigotanda
2-chome, Shinagawa-ku,
Tokyo 141-8647, Japan

Establishment:

1108-5, Higashiyama Aza,
Watauchi, Wakaho,
Nagano, Nagano 3810193, Japan

December 1951

September 1947

Establishment:

Establishment:

October 2003

Number of Employees:

Number of Employees:

January 1960

April 2009

Number of Employees:

Consolidated
5,021
Non-consolidated 3,315

Consolidated
1,624
Non-consolidated 871

Number of Employees:

Number of Employees:

Non-consolidated

URL:

ConsolidatedNon-consolidated

URL:

URL:

Consolidated
1,142
Non-consolidated 757

http://www.comsys.co.jp/

http://www.sancom-eng.
co.jp/URL:

URL:

http://www.tosys.co.jp/

http://www.comjo.co.jp/

Number of Consolidated
Subsidiaries:

Number of Consolidated
Subsidiaries:

Number of Consolidated
Subsidiary:

4 companies

6 companies

1 company

Consolidated Subsidiaries:
SANWA Denshi Inc.
SEC Hi Tec Co., Ltd.
SUNCOM Technology
Corporation
Road-Techno Co., Ltd.

Consolidated Subsidiaries:
TOSYS Nagano Co., Ltd.
Alstar Co., Ltd.
TOSYS Niigata Co., Ltd.
TOSYS Actis Co., Ltd.
Tulip Life Co., Ltd.
Yoshimoto Kensetsu Co.,
Ltd.

Consolidated Subsidiary:
COMSYS Techno Co., Ltd.

Number of Consolidated
Subsidiaries:

15 companies

Consolidated Subsidiaries:
Tokyo Tsuken Co., Ltd.
Nitto Tsuken Co., Ltd.
COMSYS Engineering Co.,LtdCOMSYS ADVANCE
Corporation
COMSYS WING
Corporation
COMSYS E TIQ Co., Ltd.
COMSYS Kansai
Engineering Co., Ltd.
COMSYS Kyushu
Engineering
Co., Ltd.
Tokushima TsushinkensetsuCo., Ltd.
Tsushin Densetsu Co., Ltd.
Nihonkai TsushinkensetsuCo., Ltd.
COMSYS Net Corporation
COMSYS Tohoku TechnoCo., Ltd.
COMSYS Tsusan Co., Ltd.
Taiei Seisakusho Co., Ltd.

Establishment:

447
311

130

http://www.comsys-ss.co.jp/

Notes: 1.	On April 1, 2009, COMSYS Holdings Corporation converted COMSYS JOHO SYSTEM Corporation, which was newly established through a spin-off from Nippon COMSYS
Corporation on the same day, into a wholly owned subsidiary.
2.	On April 1, 2009, COMSYS Techno Co., Ltd., previously a consolidated subsidiary of Nippon COMSYS Corporation, was converted into a wholly owned subsidiary of COMSYSJOHO SYSTEM Corporation.
3.	From the fiscal year ended March 31, 2010, Sannect Co., Ltd. was removed from the scope of consolidation of COMSYS Holdings Corporation, following the sale of all shares ofSannect Co., Ltd. by COMSYS Holdings Corporation on May 16, 2009.
4. On July 1, 2009, Tulip Keibi Co., Ltd. and Tulip Life Co., Ltd. merged, with the latter as the surviving company.

40

COMSYS Holdings Corporation Annual Report 2010

Investor Information
As of 31st March, 2010

Fiscal Year-End:

Major Shareholders:

31st March, 2010

As of 31st March, 2010

Annual Shareholders’ Meeting:Shareholders

29th June, 2010

Common Stock:
Authorized: 580,000,000 shares
Issued: 145,977,886 shares

Number of Shareholders:
8,474

Date of Listing:
September 2003

Stock Exchange Listings:
First Section of Tokyo Stock Exchange
and Osaka Securities Exchange(Securities code: 1721)

Transfer Agent:
Mitsubishi UFJ Trust and Banking Corporation
Securities Department
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212

Auditor:
Certified Public Accountants of Japan
O-Yu Kyodo Office

For Further Information of This Annual Report,
Please Contact

The Master Trust Bank of Japan, Ltd.
(Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)
Japan Trustee Services Bank, Ltd.
(Mitsui Asset Trust and Banking Company
Retrust Portion, Fujikura Ltd.
Employee Pension Trust)Japan Trustee Services Bank, Ltd.
(The Sumitomo Trust & Banking Co., Ltd.
(Re-Trust Account), Sumitomo ElectricIndustries, Ltd. (Employee Pension Trust Account))
JPMorgan Securities Japan Co., Ltd.
Trust & Custody Services Bank, Ltd.
(Investment Trust Account)
Nippon Life Insurance Company
The Furukawa Electric Co., Ltd.
FUJITSU LIMITED
Meiji Yasuda Life Insurance Company

Shares Held(Thousands)

Percentage
of Total (%)

8,920

6.11

8,768

6.00

6,834

4.68

5,166
3,248

3.53
2.22

2,934
2,683
2,583
2,413

2.01
1.83
1.76
1.65

1,704

1.16

The Company held 20,180,838 shares of treasury stock (representing a shareholding of
13.82%) as of 31st March, 2010. This shareholding has been excluded from the list ofmajor shareholders.

Composition of Shareholders:
As of 31st March, 2010

IR Department
Tel: +81-3-3448-7000 (direct)
Fax: +81-3-3448-7001
E-Mail: chd-ir@comsys.co.jpnSecurities Companies

5.55%

n

Financial Institutions

36.38%n

Domestic Companies

9.21%

Foreign Companies
and Individuals

24.06%

Individuals and Others

24.80%

nn

Stock Price Range(Yen)(Thousand of Shares)

1,200

120,000

1,100

110,000

1,000

100,000

900

90,000800

80,000700

70,000600

60,000500

50,000400

40,000300

30,000200

20,000100

10,0000008/4 08/5 08/6 08/7 08/8 08/9 08/10 08/11 08/12 09/1 09/2 09/3 09/4 09/5 09/6 09/7 09/8 09/9 09/10 09/11 09/12 10/1 10/2 10/3 (Month)n n Stock Price (Left Scale)   n Monthly Trading Volume (Right Scale)COMSYS Holdings Corporation Annual Report 201041

COMSYS Holdings Corporation
17-1, Higashigotanda 2-chome, Shinagawa-ku, Tokyo 141-8647, Japan
Tel: 81-3-3448-7100
http://www.comsys-hd.co.jp/