Annual Report 2004

Fiscal Year Ended March 31, 2004

COMSYS Group—Excellence in Telecommunications and Solutions

At a Glance

Establishment of COMSYS Holdings
December 20, 2002

Nippon COMSYS and SANWA ELEC announce their intention to look into a business merger.

April 10, 2003

Nippon COMSYS, SANWA ELEC, and TOSYS reach basic agreement to establish a joint holding company.

May 20, 2003

At extraordinary meetings of the Nippon COMSYS Board of Directors, and of the SANWA ELEC andTOSYS boards of directors, decisions were taken regarding the following items:
The proportion of shares to be transferred.
The company name, location, president, and capitalization.

June 26, 2003

General Shareholder’s Meeting for TOSYS.

June 27, 2003

General Shareholder’s Meetings for Nippon COMSYS and SANWA ELEC.

September 22, 2003

Share listings for Nippon COMSYS and SANWA ELEC withdrawn from the stock markets.

September 29, 2003

Establishment of COMSYS Holdings.
Shares listed on the First Sections of the Tokyo Stock Exchange and the Osaka Stock Exchange.

ip

1

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2.
Gr
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COMSYS Holdings
Goals and Course of Action(Vision)tion
3. Fostering job sa
t
i
s
fac
tio
n

I. Become the top brand,with one-stop solutions.
II. Be seen as the “best choice”
company by all stakeholders.
III. Build a company capable ofcontinuously improving income
and profit for the group.

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an enthusiastic

corp
ora
te

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2. Group unification
Become an organic group sharing dreams andaspirations toward attainment of a group vision,
with COMSYS Holdings at the core.

Cre

1. Reallocation of business resources in the group
Optimize allocation of business resources, including“people, things, money, and information,” andbecome a group that is proactive about building
a business structure capable of the best service
and project effectiveness.

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5.

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COMSYS Holdings Goals and Course of Action (Vision)

3. Fostering job satisfaction
Become a group where employee’s job satisfactionis the energy for growth.
4. Creation of an enthusiastic corporate culture
Become a group with an active corporate culture where
creativity, enthusiasm, and sincerity are clearly evident.
5. Providing strong management leadership
Lead the group forward, demonstrating management
vision and powerful leadership, staying one step aheadof trends in the group’s environment.

Profiles of the Three Major Partners
Nippon COMSYS Corporation
Nippon COMSYS Corporation was established in 1951, during the time of Japan’s postwar recovery, to build telecommunications infrastructure for NTT (the former Nippon
Telegraph and Telephone Public Corporation). Since that time, Nippon COMSYS has
been engaged comprehensively in all aspects of telecommunications facilities work, fromthe laying and installation of telephone communication lines to the installation of switching equipment and construction of wireless base stations. For more than half a century,
Nippon COMSYS has built a high degree of trust and performance as a leader of theJapanese telecommunications construction industry.
Today, the trend in telecommunications is toward IP networks, a shift driven by diversification of customer needs. In response, Nippon COMSYS offers experience and value-added services
in the construction of LAN and WAN computer networks, as well as in the provision of business solutions, all backed by years of software development, system construction, and other computer technologies. The company’s comprehensive sales network of 20 regional offices (including the headquarters
and branch offices) throughout Japan, and one office overseas, as well as its sales offices in all ofJapan’s major cities, constitute a dynamic network focused on increasing customer satisfaction.

The headquarters of
Nippon COMSYS Corporation

SANWA ELEC Co., Ltd.
SANWA ELEC was established in 1947, and since that time has developed into a total
engineering company with balanced experience in Japan and abroad in both the electrical facilities and the information and communications sectors. In so doing, SANWA
ELEC has carved out a firm position as a builder of social and industrial infrastructure.
SANWA ELEC offers support for a broad range of sectors, from telecommunications infrastructure work for telecommunications companies to corporate information network services. Its capacities range from civil engineering work, power supply work, andenvironmental infrastructure, to software applications. In the electrical facilities sector, in particular, SANWA
ELEC offers integration in all kinds of construction work extending well beyond telecommunications
facilities. SANWA ELEC also has much experience in expressway construction, air traffic control andsecurity systems, and other aspects of transportation infrastructure. With the increasing dependence ofsociety on information technology, SANWA ELEC makes the most of its solutions know-how, backed bycomprehensive technology skills and rich experience, to promote technical integration.

The headquarters of
SANWA ELEC Co., Ltd.

TOSYS Corporation
TOSYS was established in 1960 for the purpose of building telecommunications infrastructure in the area spanning Nagano and Niigata prefectures, andsince that time has contributed greatly to the construction and continued
development of telecommunications infrastructure in that region. To this day, TOSYS remains an important player in the region’s telecommunications construction business, and maintains its company headquarters in Nagano, Nagano Prefecture.
TOSYS is a specialist in many sectors related to electrical and telecommunications systems, including the laying of telecommunications cables, wireless base station construction, electricalfacilities for supply of energy, and civil engineering and construction work for telecommunications. Moreover, in the information and communications sector, TOSYS offers total support for the planning,
design, and construction of various network systems, including development of commercial software
for businesses. TOSYS responds to customer needs through the comprehensive integration of its technical skills and experience in each individual sector.

The headquarters of
TOSYS Corporation

About the Logo Mark
Shape: Image of a rotating, expanding “C”
C for COMSYSS for Solutions
G for Group
Colors
Red: Enthusiasm
Green: Harmony with the environment
Blue: Advanced technology
Purple: Spirit of intellectual innovation
Yellow: People (At COMSYS Group, people are everything)

On September 29, 2003, the three companies of Nippon COMSYS Corporation, SANWA ELEC
Co., Ltd., and TOSYS Corporation established COMSYS Holdings Corporation, the first joint
holding company in the Japanese telecommunications construction industry. With this bold
move, the new COMSYS Group made a new beginning in the utilization, selection, and concentration of its combined business resources to maximize corporate value.

Contents
At a Glance ............................................................................................................................. Fold-out
Consolidated Financial Highlight ......................................................................................................... 1
Letter to Our Shareholders .................................................................................................................. 2
Organizational Structure of the COMSYS Group ................................................................................. 4
The First Medium-Term Management Plan ......................................................................................... 7
Review of Operations
Nippon COMSYS Group ......................................................................................................... 9
SANWA ELEC Group ............................................................................................................. 15
TOSYS Group ....................................................................................................................... 19
Research and Development .............................................................................................................. 23
Basic Philosophy Regarding Corporate Governance ........................................................................ 24
Corporate Citizenship ....................................................................................................................... 25
Management .................................................................................................................................... 26
Financial Section .............................................................................................................................. 27
Corporate Directory .......................................................................................................................... 42
COMSYS Holdings Information ........................................................................................................ 44
Corporate Data ...................................................................................................................... 44
Investor Information ...................................................................................... Inside Back Cover

Cautionary Statement with Respect to Forward-Looking Statements
This Annual Report contains forward-looking statements that reflect management’s views and assumptions in the light of information currently
available with respect to certain future events, including expected financial position, operating results and business strategies. These statements canbe identified by the use of terms such as “will,” “believes,” “should,” “projects,” “plans,” “expects” and similar terms and expressions that identify
future events or expectations. Actual results may differ materially from those projected, and the events and results of such forward-looking assumptions cannot be assured. Any forward-looking statements speak only as of the date of this Annual Report, and COMSYS Group assumes no duty to
update such statements.
Factors that may cause actual results to differ materially from those predicted by such forward-looking statements include, but are notlimited to, unanticipated changes in demand for the Company’s principal business, owing to changes in the economic conditions in the Company’s
principal markets; the impact of increased competition; uncertainties as to the results of the Company’s research and development efforts and its
ability to access and protect certain intellectual property rights; and the impact of regulatory changes and accounting principles and practices.

Reviewof Operations
Consolidated Financial Highlights
COMSYS Holdings Corporation and Consolidated Subsidiaries
Year ended 31st March, 2004
Millions of yen

Thousands of
U.S. dollars

2004

2004

New orders received during the year

¥235,747$2,230,552

Net sales

248,961

2,355,578

Operating income

10,786

102,053

For the YearNet income

6,592

62,371

Cash flows from operating activities

12,101

114,499

Cash flows from investing activities

(83)

(786)

Cash flows from financing activities(8,457)(80,018)

At Year-End
Total assets¥211,718$2,003,198

Shareholders’ equity

121,326

1,147,942

Interest-bearing debt

11,484

108,657

Yen

U.S. dollars¥ 45.96$0.43

Per Share of Common Stock:
Net income— Basic— Diluted——

Cash dividends

7.00

0.07

Shareholders’ equity

859.24

8.13

Number of employees

7,091

Note: 1. For convenience only, the accompanying Japanese yen figures for 2004 have been translated into U.S. dollars at the rate of ¥105.69 to $1, the rate prevailing on 31st March, 2004.

New Orders Received(¥ Billions)

Net Income(¥ Billions)

Net Sales(¥ Billions)

300

10

300

240

8

240

180

6

180

120

4

120

60

2

0

04

*
ple summ* Sim
Simple su

03

60

04

Actual**004*
ple summ* Sim
Simple su

03

04

Actual**004*
ple summ* Sim
Simple su

03

04

Actual*** The above figures represent the simple sum of the consolidated figures of Nippon COMSYS, Sanwa ELEC, and TOSYS.
** The Company’s consolidated results for the fiscal year ended March 2004 include the consolidated results of Nippon COMSYS for the fiscal year from
April 1, 2003 to March 31, 2004 and the consolidated results of both Sanwa ELEC and TOSYS for the half-year period from October 1, 2003 to
March 31, 2004 (October 1, 2003 being the deemed date of acquisition).

COMSYS Holdings Corporation — Annual Report 20041

Letter to Our Shareholders

The current term is the first for
COMSYS Holdings (the Company), the new holding company for the three companiesof Nippon COMSYS, SANWA
ELEC, and TOSYS, whichpooled their shares to establish the Company on September 29, 2003.
The three companies
that form the core of COMSYS
Holdings and their affiliates are
re-enterprising to achieve themost effective structure ofbusiness resources for the
COMSYS Group. With thisaction, the core companies
are seeking to align themselves more closely with the
expectations of stakeholders,
and with changes in the corporate environment, and striving
Hironobu Takeuchi
to develop an excellent corpoChairman of the Board
rate group that is capable ofdramatically and creatively
enhancing corporate value, and of continuously improving
income and profits. The specific role of COMSYS Holdings
includes group supervision, group management strategy, groupfinance, quicker release of consolidated results, PR and IR activities,
merging of internal corporate systems, and compliance activities.
Year 1 Consolidated Results(fiscal year ended March 31, 2004)
Orders received by the Company during Year 1 were ¥235.7 billion (US$2,230 million), while total net sales were ¥248.9 billion(US$2,355 million), operating income was ¥10.7 billion (US$102
million), and net income was ¥6.5 billion (US$62 million).
Note that while the Company was established on
September 29, 2003, its consolidated results for the fiscal
year ended March 2004 include the consolidated results of
Nippon COMSYS for the fiscal year from April 1, 2003 to
March 31, 2004, and the consolidated results of both
SANWA ELEC and TOSYS for the half-year period from
October 1, 2003 to March 31, 2004 (October 1, 2003 being
the deemed date of acquisition).
Concerning payment of dividends to shareholders, theCompany positions appropriate return of profits to shareholders as one of its most important management issues, and is
striving to harmonize internal reserves in order to improve the2

COMSYS Holdings Corporation — Annual Report 2004

Hirofumi Shimada
President

financial constitution of thegroup as a whole, and to shore
up management foundations,
toward realization of a stabledividend and an improved
share price over the medium
term. Based on this policy, thedividend that will be paid out
at the end of this fiscal year is¥7 per share.
Moreover, on December
10, 2003, in place of the interim
dividend, shareholders andregistered pledgees listed orrecorded on the final list of
Nippon COMSYS and TOSYS
shareholders (including the listof actual shareholders) were
paid a transfer subsidy of ¥5
per Nippon COMSYS shareheld, and ¥5 per TOSYS shareheld, on the day previous(September 28, 2003) to the
day of the share transfer.

The First Medium-Term Management Plan
In the information and communications market, where thegroup’s business activities are concentrated, the government’s
promotion of the e-Japan Strategy is encouraging developmentof infrastructure that will enable high-speed Internet access for
30 million households, and ultra-high-speed access for 10 million households. At present, the investment structure is shifting
toward development of new business focused on the broadband market, and consumers are looking for faster speeds,
greater diversification, and more globalization, aiming for more
efficient socio-economic activities through the use of IT.
In this environment, the Company moved to maximize
the merger’s effectiveness by adopting the First Medium-Term
Management Plan, which is to serve as a guideline for thegroup’s business management through the fiscal year ending
March 31, 2006. The group’s Management Vision includes: (1)become the top brand, with one-stop solutions; (2) be seen as
the “best choice” company by all stakeholders; and (3) build acompany capable of continuously improving group income andprofits. Based on the plan, the Company intends to focus
efforts on sectors where the group’s core competencies
can be found, to promote the selection and concentrationof business projects, and to further strengthen management foundations.

Moving Forward with the COMSYS Group
While maintaining a technology base in the telecommunications infrastructure construction sector where the group’s
strengths have been positioned in the past (the legacy sector),
the COMSYS Group is turning its focus toward IT-related sectors where potential for more growth lies.
The Company plans to build on its unique concept of“Planning and Proposals to Assist Customers with Management Improvements,” a hardware-to-software solution that links
all aspects of information technology, to bring IT-related business up to about 40% of total sales by the fiscal year ending
March 31, 2006.
Nippon COMSYS GroupAs a comprehensive engineering service company, the Nippon
COMSYS Group actively aims to provide proposal-type onestop solutions on a nationwide scale, and also to develop IP(Internet Protocol) experts capable of responding to theunfolding development of IP networks. In addition, Nippon
COMSYS is engaged in cost analysis and in reviews of outside
vendor expenses to improve on-site operational efficiency,
toward improvement of its income and expenditure balance,
particularly in access-related projects. Nippon COMSYS is also
expanding the mobile solutions business, which involves theinterweaving of mobile terminals and network infrastructure,
toward the goal of expanded business with NTT and NTT
DoCoMo, as well as improved profitability.

Our aim is to make the most of the new holding company structure to build a solid group management structure that maximizes group capabilities, and to provide shareholders with acontinuous, stable flow of dividends.
Finally, on behalf of all the members of the Board, wewould like to extend our sincere appreciation for the support ofour valued shareholders, customers, business partners, andemployees around the world.
June 2004

Chairman of the Board
Hironobu Takeuchi

President
Hirofumi Shimada

SANWA ELEC GroupThe SANWA ELEC Group, which concentrates the electricalfacilities businesses of the three companies, is improving management efficiency in order to achieve expansion of electricalfacilities projects. Particular emphasis is being placed on
expansion of business in the private sector, where SANWA ELEC
has a proven track record. Implementation of these businessprojects will serve to put finances on a sounder footing, by
maintaining profitability, reducing interest bearing debt, andimproving the capital adequacy ratio.
TOSYS GroupThe TOSYS Group aims to create a business project model inthe solutions sector that makes use of added value based onstrong regional ties to improve customer satisfaction. For
access-related projects, TOSYS is working to establish a system of national-scale work projects toward establishment of arational project management model. In addition, TOSYS is
using a review of cost structures implemented in response tocustomer demands for cost reductions in order to promote further improvements in finance and profits.

COMSYS Holdings Corporation — Annual Report 2004

3

Organizational Structure of the COMSYS GroupThe group supporting COMSYS Holdings consists of 33 companies (as of March 31, 2004)

COMSYS Holdings Corporation
As a one-stop solutions provider, the Company performs management control
over subsidiaries engaged in the information and communications construction
business, the electrical facilities construction business, and information
processing-related businesses.

SANWA ELEC Co., Ltd.

Nippon COMSYS Corporation

TOSYS Corporation

Address:
6-17, Aobadai 3-chome
Meguro-ku, Tokyo 153-0042, Japan
Establishment:
September 1947
Paid-in Capital:¥1,374 million*
Number of Employees:
Consolidated 1,444
Non-consolidated 761
URL:
http://www.sanwa-elec.co.jp/
Number of Consolidated Subsidiaries:
9 companies

Address:
17-1, Higashigotanda 2-chome
Shinagawa-ku, Tokyo 141-8647, Japan
Establishment:
December 1951
Paid-in Capital:¥31,140 million
Number of Employees:
Consolidated 4,646
Non-consolidated 3,310
URL:
http://www.comsys.co.jp/
Number of Consolidated Subsidiaries:
13 companies

Address:
1108-5, Higashiyama Aza, Watauchi, Wakaho
Nagano, Nagano 381-0193, Japan
Establishment:
January 1960
Paid-in Capital:¥360 million
Number of Employees:
Consolidated 980
Non-consolidated 365
URL:
http://www.tosys.co.jp/
Number of Consolidated Subsidiaries:
8 companies

Consolidated Subsidiaries:
SANWA Denshi Inc.
SEC Hi Tec Co., Ltd.
Road-Techno Co., Ltd.
SANWA Co., Ltd.***Sannect Co., Ltd.
Ibaraki Denden Kensetsu Co., Ltd.****SEM Co., Ltd.
San Access Co., Ltd.****SANWA Support Engineering Co., Ltd.

Consolidated Subsidiaries:
OT Engineering Co., Ltd.
COMSYS Techno Co., Ltd.
Tokyo Tsuken Co., Ltd.
Nitto Tsuken Co., Ltd.
Taiei Seisakusho Co., Ltd.
COMSYS Tsusan Co., Ltd.
COMSYS Business Service Co., Ltd.
COMSYS Net Corporation
COMSYS Tohoku Techno Co., Ltd.
COMSYS Shinetsu Engineering Co., Ltd.**
COMSYS Kansai Engineering Co., Ltd.
COMSYS Kyusyu Engineering Co., Ltd.
Chuo. C Co., Ltd.

Consolidated Subsidiaries:
Tulip Keibi Co., Ltd.
Tulip Life Co., Ltd.
TOSYS Ryokuka Co., Ltd.
Yoshimoto Kensetsu Co., Ltd.
TOSYS Nagano Co., Ltd.
TOSYS UNITEC Co., Ltd.**
TOSYS Niigata Co., Ltd.
TOSYS Actis Co., Ltd.

* As a result of a capital increase, paid-in capital was ¥3,624 million as of September 30, 2004.
** COMSYS Shinetsu Engineering Co., Ltd. and TOSYS UNITEC Co., Ltd. merged to become a single company on July 1, 2004, and the new company was named Alstar Co., Ltd.
*** This company’s main business was transferred to COMSYS Tsusan Co., Ltd. on August 1, 2004. As a result, starting from the first half of the fiscal year ending March 31, 2005,
this company has not been included in the consolidated financial statements.
**** Ibaraki Denden Kensetsu Co., Ltd. and San Access Co., Ltd. merged to become a single company on October 1, 2004, and the new company was named San Net Com Co., Ltd.

COMSYS GroupOn September 29, 2003, the three companies of Nippon
COMSYS Corporation, SANWA ELEC Co., Ltd., and TOSYS
Corporation, established COMSYS Holdings Corporation, thefirst joint holding company in the telecommunications network
construction industry, to mark the launch of the new COMSYSGroup with core businesses in the information and communications construction business, the electrical facilities construction business, and information processing-related businesses.
Also, on October 1, 2003, COMSYS Shared Service Co.,
Ltd. (CSS) was established for the purpose of optimizing thebusiness resources of COMSYS Group companies. CSS will

4

COMSYS Holdings Corporation — Annual Report 2004

concentrate operations shared by the three core companies,
Nippon COMSYS, SANWA ELEC, and TOSYS, as well as bytheir consolidated subsidiaries, to promote standardization andsystematization of business operations, and rationalization ofbusiness administration.
The COMSYS Group is re-enterprising to achieve themost effective structure of business resources. With thisaction, the COMSYS Group is seeking to align itself more closelywith the expectations of stakeholders, and with changes in thecorporate environment, and aims to maximize the group’s corporate value.

Management of Group Companies
As of September 30, 2004

Division of Responsibilities among Three Companies(Selectivity and Concentration)

I. Establishing and promoting NCC (New Common Carrier) business
II. Expanding telecommunications facilities businessIII. Expanding NEC and other private sector businesses

I. Establishing locally-tailored business model for solutions sector
II. Establishing rationalized business operation model that
addresses network accessIII. Establishing local construction systems

Commitment to COMSYS Holdings Corporation

I. Expanding solutions business
II. Responding to IP networks
III. Expanding NTT and DoCoMo business and improving profit ratios

Business Re-Enterprise Schedule
As of September 30, 2004

2004

4th Quarter2005

1st Quarter

2nd Quarter

3rd Quarter2006

4th Quarter

1st Quarter

2nd Quarter

3rd Quarter2007

4th Quarter

1. Integration of Nagano and Niigata area business (from Nippon COMSYS to TOSYS)

2. Integration of Tokyo Metropolitan area NTT business (from SANWA ELEC to Nippon COMSYS)

3. Integration of Tokyo Metropolitan area electrical facilities business (from Nippon COMSYS to SANWA ELEC)

4. Integration of NCC business (from Nippon COMSYS to SANWA ELEC)

5. Integration of internal systems (infrastructure and main systems)

6. Further concentration of administration, finance, and other operations (folded into COMSYS Shared Service Co., Ltd.)COMSYS Holdings Corporation — Annual Report 2004

5

Organizational Structure of the COMSYS Group

Establishment of COMSYS Shared Services
tion of personnel systems, and administration of training andeducation; general support for finance, including preparation of
consolidated business results and administration of CMS
operations; and general support for personnel pay and social
insurance administration, including management of employee
qualification tests and information about changes, calculation of
wage and bonus payments, and preparation and submission of
documents related to social insurance.
This streamlining of administration for the shared departments of group companies is expected to result in a 30% reduction in costs by the fiscal year ending in March 2006, comparedto the fiscal year ended in March 2003.

Aims to reduce costs through concentration and standardization of shared operations COMSYS Shared Services Co., Ltd.
(CSS) was established on October 1, 2003 to optimize the business resources of the COMSYS Group companies. CSS willconcentrate operations shared by the three core companies,
Nippon COMSYS, SANWA ELEC, and TOSYS, as well as bytheir consolidated subsidiaries, to promote standardization andsystematization of business operations, and rationalization ofbusiness administration.
The major operations at CSS consist of general support
for personnel administration, including management of conferences and events, secretarial services, reform and administra-

Establishment of COMSYS Shared Services Co., Ltd.
Purpose of establishment
To concentrate operations shared by the core companies and their consolidated subsidiaries, review and standardize those operations, and reduce costs in the shared departments in the group.

Vision for establishment
Nippon COMSYS Group Shared operations
SANWA ELEC Group Shared operations
TOSYS Group Shared operations

Concentration of shared operations(finance, administration, pay, welfare, etc.)• Standardize and systematize operations• Rationalize operations by helping to balance busy and slow periods• Increase awareness as services providers

Establishment
of
CSS

Future course of action• Accept administrative operations indirectly related to business operations• Expand acceptance of administrative operations from companies outside of the COMSYS Group• Reduce costs by expansion of outsourcing• Reduce costs through transfer of operations to areas with lower salary levels

Integrating In-House Systems of Group Companies
and TOSYS are being integrated into the IT service centerestablished at Nippon COMSYS. Moreover, COMFORCE is
to be introduced and expanded, to link 330 sites in the group
by April 2005, enabling utilization by more than 7,000 people.
The development of COMFORCE and unified use of
the system will speed up the orders process, reduce project
expenses, and allow quicker release of consolidated results.
Know-how in this area will also help to expand orders in
IT-related business.

To promote sharing of information within the group, and to smoothadministrative processes, COMSYS Group is integrating thein-house systems of group companies.
At Nippon COMSYS, one of the group’s core companies, an IP-VPN system connecting about 200 sites throughout
Japan originally formed the basis of a system handling personnel matters and finance. Now, the COMFORCE system has been
installed to manage front information for sales and bill collection.
Now, the basic systems in operation at SANWA ELECIP-VPN: Internet
Protocol-Virtual
Private Network

E-mailVoice andanimation
Operations company

WebPortal

IT service center

Basic systems(Virtual office, etc.)

Integration of basic systems
Integration of in-house systems

6

Internet
VPN

Mobile site

Local officeIntegration of networks

IP-VPNCOMFORCECOMSYS Holdings Corporation — Annual Report 2004

Introduction of COMFORCEThe First Medium-Term Management Plan

Early Realization of Management Integration Effects
Expanded profits
COMSYS Holdings aims to undertake business restructuring that selects and concentrates projects where group companies are strongest, in order to achieve reduced costs andincreased profits.

Financial Targets in the First Medium-Term Management Plan
(Consolidated basis)
Billions of yen, except where notedYear ending
March 31, 2006
(Target)Year ended
March 31, 2004
(Performance)

Net sales
Operating income
Net income
Operating margin (%)
Net profit margin (%)
Interest-bearing debt

276
9
4
3.5
1.7
11

290
14
7
4.8
2.4
8

Percent change
2006/2004

5.0
42.9
48.9

-29.8

Note. The COMSYS Holdings results of the year ended March 31, 2004 are three-company simple totals.

Continuing growth
As of September 30, 2004

As a one-stop solutions provider with a core competence ininformation and communications engineering technology,
COMSYS Holdings aims to develop into a corporation that is
capable of continuing growth in a changing market environment.
Company able to realize “continuous increases in revenue and profits”

Ultimate Management Objectives

Establish ourselves as a comprehensive engineering services firm
• Gain the merits of scale by expanding scope of business• Train technicians• Pursue mergers and alliances

Increased revenue
Expandtotal sales

Increased profits

Expandbusiness capacity

Improvement ofManagement

Future Business Direction

Pillars of Corporate Business
I. Construction business

II. Pillars of solution business(NI + SI + SEC + maintenance)

III. Business related
to social systems

COMSYS Holdings Corporation — Annual Report 2004

7

The First Medium-Term Management Plan

Use Solutions Business to Expand Operations
Training engineers
The Company is moving forward with powerful and speedy trainingof engineers, to support customer management reforms
throughout Japan.

Acquisition of Main Vendor Qualifications
Years ended March 31

2004
Nippon COMSYSSANWA ELEC

724
85
42
602
1,453

65
1
10
56
132

Cisco Certified Engineer
Oracle Certified Engineer
Linux
Microsoft
Total

2006
TOSYS

Total

103
3
1
47
154

892
89
53
705
1,739

Focus on sectors with greater added value
The Company aims to provide comprehensive services, fromprior consulting to repair maintenance and operations, so as tobecome the top brand in one-stop solutions.

Smiling curve
High
Sectors warranting
greater attention/expansion

Added
value

Sectors warranting
greater attention/expansion

Current COMSYS Group Status

Low
Consulting

DesignDevelopment

Upstream process

8

COMSYS Holdings Corporation — Annual Report 2004

Constructionengineering

Testing

Facilities
management
Supervision
Maintenance/operation

Estimates
1,500
130
120
1,200
2,950

Nippon COMSYS Group

Review of Operations

83%
Share of Net SalesYear ended March 31, 2004
(Actual)Hirofumi Shimada
President and Representative Director
Nippon COMSYS Corporation

75%
In July 2003, the Nippon COMSYS Group implemented a major reorganization to
streamline and enhance the efficiency of operations, establishing a new Corporate Management Division to unify the sales and operational sides of the business and offer company-wide project support for sales, technology, and cost
reduction strategies. In the IT business, as well, the IT Management Division was
launched to strengthen nationwide support functions for IT-related technology
design and execution, and to propose product plans and new large-scale businesses. With these moves, the Nippon COMSYS Group has achieved a comprehensive engineering services company structure that can dynamically offer
proposal-type one-stop solutions on a nationwide scale.
For sales activities, in August 2003, the IT Management Division andother departments together commenced development of business in the information security sector, taking advantage of the newly certified Information Security Management System (ISMS). Also, in October 2003, the Nippon COMSYSGroup expanded into the IP solutions sector through a business tie-up with NisshoElectronics Corporation and Nissho Techno System Corporation. In the e-Japan
sector, the Nippon COMSYS Group is actively engaged in sales activities promoting construction of regional intranets for merged municipalities and optical fiber
cable constructions using sewer pipe, making the most of its new CF-SS Cable
Method, which achieves shorter construction times at lower costs.
In these conditions, orders received in this fiscal year, while boosted bystrong orders in the NTT Construction Sector for works related to broadband
Internet services (B Flets), and by orders from NTT DoCoMo for FOMA-related
works, were also affected by slower growth in the Domestic Construction andEngineering Sector, where investment in public sector projects was restrained.
As a result, total orders received increased 1.5% to ¥202,560 million (US$1,916
million). Net sales, meanwhile, were boosted by completed construction works
related to B Flets projects, for a 2.9% increase to ¥206,517 million (US$1,953
million). Profits continued to come under pressure, as severe competition drove
down order prices. Nevertheless, as a result of the increase in net sales, and of
reduction in personnel expenses through transfer of personnel to affiliated companies, as well as improved performance through the use of collective purchasing to keep material purchase prices under control, operating income rose sharply,by 23.0%, to ¥7,983 million (US$75 million). In net income, as well, while otherexpenses of ¥1,945 million (US$18 million) including a write-down of investments in securities of ¥1,071 million (US$10 million) was recorded, other incomeof ¥1,393 million (US$13 million) including a gain on transfer of the substitutional
portion of the contributory pension plan of ¥1,104 million (US$10 million) wasrecorded, resulting in growth of 85.7% over the previous year, to ¥4,584 million(US$43 million).

Share of Net SalesYear ended March 31, 2004
(Simple sum)

250
200
150
100
50
0

04
02 03
00 01

New Orders Received (¥ Billions)

250
200
150
100
50
0

04
02 03
00 01

Net Sales (¥ Billions)
10
20

8

16

6

12

4

8

2

4
0

0

04
02 03
00 01

Operating Income (Left)
Operating Margin (Right)

Operating Income andOperating Margin (¥ Billions, %)COMSYS Holdings Corporation — Annual Report 2004

9

Cable Engineering
Works Project(installation of opticalfiber cables)

Cable-Tunnel
Construction Project(underground tunnel
construction)

Switching System
and Transmission
Equipment Projects

Electric Power
Equipment Projects

A Steel Tower for a
Mobile Telecommunications System

NTT Construction
The NTT Construction Sector is the core business for Nippon
COMSYS, and includes the telecommunications infrastructurebusiness for all sectors of NTT and the NTT Group. Ever since its
establishment in 1951, Nippon COMSYS’s NTT Construction
Sector, with its reliable technological strengths, has been a leader inthe telecommunications construction industry, contributing greatly
to the building of Japan’s telecommunications infrastructure. In
the IT revolution of recent years, as well, the NTT Construction
Sector, in contributing to the new communication society, has consistently demonstrated a spirit of determination to pursue the latest
technologies and a strong spirit of challenge.
Nippon COMSYS’s largest customer, Nippon Telegraph andTelephone Corporation (NTT), is making a concerted effort tocreate new services. NTT recently announced its vision for the
next generation, which calls for a transition from fixed telephone
networks to internet protocol (IP) networks and the emergenceof a ubiquitous broadband era over the next four years, throughthe use of optical fiber. In these conditions, the spread of cell
phones, coupled with the introduction of IP phones, means thatworks related to the maintenance and management of the NTT
and NTT DoCoMo circuit switching network will surely develop
into an important market for the industry in the near future.
Moreover, in regards to FTTH construction, progress is expected
toward conversion of the access networks into optical systems,
while works for laying optical cable into customer residences
are also expected to increase as the number of subscribers
rises. At NTT DoCoMo, meanwhile, work projects are expected
to focus on conversion of transmission routes to IP networks,
and FOMA related works for third-generation cell phones.
Intensifying competition among telecommunications carriers,
however, will result in high demand for reducing facilities construction costs as well as the need to further enhance cost competitiveness going forward.
With the shift of telecommunications infrastructure to IP
networks, Nippon COMSYS is actively engaged in the training ofIP specialists to ensure a swift response to IP network issues. As
noted above, the NTT Construction Sector, while improving safety
and operations efficiency, rationalizing and strengthening
outside orders, and developing technology specialists, has set
improvement of profitability as its most important issue, and isexerting all its efforts toward maximization of profits.

60
1,500

5,000

48

1,200

4,000

36

TU-KA Group

Vodafone Group

900

3,000

24

363 (4.5%)

1,500 (18.4%)

600

2,000

12

1,000

0

300
0

01

02

03

04

05 t)

(Forecas

04
02 03
00 01

Planned Construction (Left)

NTT DoCoMo Group

Investment in Optical Fiber Cable (Right)

NTT DoCoMo Share

Projected NTT Operations(¥ Billions)100

au Group

The NTT DoCoMo Group
Subscribers(Ten thousand, %)COMSYS Holdings Corporation — Annual Report 2004

NTT DoCoMo Group

1,695 (20.8%)

4,592 (56.3%)

Number of Subscribers by Carriers
As of March 31, 2004
(Ten thousand)Review of Operations

We are now constructing a wind
power plant, and will in the future
seek involvement in environmentallyfriendly projects

The Mio Castello
Kouhoku ILVIALE
Condominiums,
a COMSYS project

Presentation made at the
11th “NetWorld+Interop
2004 Tokyo”

Cable Engineering Works Project
for TEPCO (installation of opticalfiber cables)

IP phone active screen

Domestic Construction and Engineering
The Domestic Construction and Engineering Sector handles
all domestic telecommunications construction projects otherthan those for the NTT Group’s communications infrastructure construction, as well as construction projects and IT
solutions business. This sector is engaged in a broad spectrum of activities, including the construction of telecommunications infrastructure and electric utility facilities, structural
construction, and the installation of “CC Box” (multi-use
underground cable conduits), cable TV equipment, eco businesses such as wind and solar power, and IT solutions which
has been a recent focus.
The Domestic Construction and Engineering Sector plays an
extremely important role in the process of Nippon COMSYS’s
growth. The sector plans to build on its performance in construction of NTT and NTT DoCoMo telecommunication infrastructure, which have long been core project activities, to develop an
IT solutions business focused on network integration, in order toactively contribute to the Nippon COMSYS performance.

In other construction projects, the sector actively
develops proposals for the IT conversion of apartment complexes
and other residential structures, and makes the IT solutions businessa core part of the sector’s activities.
As part of its efforts to develop IT solutions business asa core area, the sector is strengthening its nationwide support
functions for IT-related technology design and implementation
programs, and has also launched an IT Management Division
for developing product planning and new large-scale businessproposals. With these efforts, the Domestic Construction andEngineering Sector has successfully built up a comprehensive
engineering services organization capable of offering dynamic
one-stop solutions on a nationwide scale.
Moreover, Nippon COMSYS is making aggressive
efforts in the eco business, in fields such as the environment,
resources, and energy that hold promise for future growth. The
Domestic Construction and Engineering Sector will work to
expand the scope of its business going forward.

Promotion of Business Tie-up in the IP Solutions Sector
On September 30, 2003, Nippon COMSYS formed a business tie-up with Nissho Electronics Corporation and NisshoTechno System Corporation for construction of network infrastructure and provision of IP (Internet Protocol) solutions.
The companies participating in the tie-up plan to develop business targeting NTT and others in the telecommunications industry, as well as other corporations, on a nationwide scale, and will provide solutions such as high-end
routers for IP networks, which are showing strong growth worldwide.
Moreover, in the area of network engineering and technical support, as well, the tie-up participants plan to build
mutually complementary structures in order to provide one-stop services for network design, consulting, construction, andtesting, development of new technologies and services, and constant network monitoring.
The tie-up agreement is expected to bring in sales of ¥20.0 billion for the three participating companies in thefiscal year ending March 2006.

COMSYS Holdings Corporation — Annual Report 200411

An outside plant projectin Cebu, the Philippines’
second most developed
island after Luzon.

Installing aerial opticalfiber cables in Bangkok.

Installing undergroundcables in Bangkok.

Optical fiber cableinstallation projects
in Manila.

Improvement of the watersupply in the Philippines.

International Operations
Since Nippon COMSYS was founded, we have contributed
to development in a number of countries in Asia, Africa, theMiddle East, South America, and other areas attempting todevelop needed telecom infrastructure. Over the course of these
myriad projects, and from its participation in the domestic
telecommunications market and construction projects, Nippon
COMSYS has developed a wealth of experience and technological expertise. This, in turn, has facilitated Nippon
COMSYS’s access to these competitive overseas markets.

Nippon COMSYS conducts its overseas business under its
basic strategy, with a special emphasis on Southeast Asia.
Nevertheless, with the global economic slowdown
brought on by the Asian currency crisis of 1997, and with therapid changes in telecommunications technology seen in recent
years, infrastructure investment in various countries dropped
sharply, and opportunities for orders unavoidably declined.
Specific actions include the following:(1) Expand business in Southeast Asia, mainly in Thailand.
(2) Closely monitor project trends in other regions, and respondas needed.
(3) Pursue sales, in conjunction with domestic business sectors,
to foreign-affiliated clients and the overseas operations ofdomestic clients.

Information Systems
Nippon COMSYS is engaged in the development of commercial systems, and has built a strong track record through thedevelopment of many business applications, networks, anddatabase solutions. Nippon COMSYS has also developed many
applications and control systems for various types of infrastructure for the NTT Group and other telecommunications firms,
offering total solutions service packages encompassing everything from design to maintenance and administration.
Other information systems businesses include the productionof interactive programming for digital satellite broadcasts, whichallow viewers to interact with broadcast stations. Nippon
COMSYS will be watching the rapid progress of IT for opportu-

12

COMSYS Holdings Corporation — Annual Report 2004

nities to employ its high level of technological expertise in crafting
proposals for new services.
In order to achieve a “paradigm shift to become a comprehensive engineering services company,” Nippon COMSYS
aims to deliver high value-added solutions services, shift fromcontract software development to systems integration, and participate in upstream processes. It is also working to strengthen
its information business by training engineers and developing
an organization capable of providing integrated network, software, and hardware solutions. Going forward, given the increasingly competitive economic environment, Nippon COMSYS
hopes to differentiate itself from other companies and gain
a competitive advantage by moving forward aggressively indeveloping Nippon COMSYS brand products.

Review of Operations

Development of Application forElectronic Signature System

CRM Solutions—Contact Center
Construction Template—Quick Builder

Disaster Survivor Detection System

MR Sales Support System

Construction Revenues for Last Three Years

Major Overseas Projects Completed
Nigeria
Iraq
Egypt
ThailandTaiwanSri Lanka
Nepal
Thailand
KuwaitTanzania
ThailandPhilippines
Philippines
Philippines
ThailandPhilippines
Philippines
ThailandPhilippines

Over ¥4,000 million

Ibadan new local line projectOver ¥50 million
Installation of telephone lines for 17 local exchanges
Over ¥25 million
Supply and installation of telecommunication cable network in Ismailia and Suez
Less than ¥25 million
Installation of digital exchange equipment
Installation of highway traffic control system
Installation of local telephone lines in the Badulla and Anuradhapura regions
Installation of microwave telecommunications system (inside and remote)
Fifth local cable network installation for TOT in Bangkok and provinces
Installation of digital loop coil system in Farwaniah Exchange
Rehabilitation of telecommunications network in Dar es Salaam
Seventh local cable network for TelecomAsia and TT& T
Supply and installation of local cable network for Major Telecom Inc. in Mindanao
Supply and installation of OSP equipment and optical fiber cable for ICC in Manila
Installation of trunk lines and local network for GLOBE Telecom PHASE-2 in Manila and the provinces
The telephone expansion project to overcome short-term line shortage/B. E. 1996-1998 for TOT (800K)
Supply contract for OSP & optical fiber cable (BAYANTEL 40K)
Turnkey backhaul fiber optic network construction for DCI in Philippines
100,000 Telephone Line Expansion Project in the North-East, North, South and Central Regions for TOT
Supply and installation of local cable and junction network for GLOBE Telecom PHASE-4 in Manila and the provinces

Overseas Projects in Progress
As of June 2004
Thailand
Optic Fiber Transmission Network Expansion Project for TOT
ThailandThailand wireless Local Loop Project for TOTCOMSYS Holdings Corporation — Annual Report 2004

13

Features
Implementation of the Construction Occupational Health & Safety
Management System (COHSMS)
Thorough safety and health management can strengthen the risk management structure
Effective January 1, 2004, Nippon COMSYS implemented theConstruction Occupational Health & Safety Management System(COHSMS), which was recently adopted by the Japan Construction Safety and Health Association and is currently being promotedby the Ministry of Land, Infrastructure, and Transport for implementation throughout the construction industry. Nippon COMSYS
is the first company in the Japanese information and communications infrastructure construction industry to introduce the system.
Where previously the normal method in the construction industry
was to utilize OHSAS18007 (Occupational Health and Safety
Assessment Series) to respond to labor safety and health management issues, the introduction of COHSMS, with its specifictargeting of construction industry safety and health issues, should
serve to raise standards throughout the construction industry.

Nippon COMSYS is always striving to improve management systems, and has to date received certification underISO9001 (quality management system standards), ISO14001(environmental management system standards), and ISMS
(Information Security Management System), culminating now in
implementation of COHSMS, a new management system for
more thorough safety and health management. Nippon COMSYS
has now enhanced development of a total risk management structure that aims for safer information and communications construction work through reduction of potentially hazardous
occupational elements in project operations and among employees, and that strives to promote worker health and comfortableworking environments.

Company-Wide Certification under the Information Security Management System (ISMS) Acquired, First in the Japanese Information and Communications
Infrastructure Construction Industry
Scope widens to all parts of the company, to strengthen information security policies
Effective August 4, 2004, Nippon COMSYS acquired certification under the Information Security Management System (ISMS)
conformance evaluation system (in accordance with ISO/
IEC17799) throughout all parts of the company, becoming thefirst company to do so in the Japanese information and communications infrastructure construction industry.
Through this certification, Nippon COMSYS hasboosted the security awareness of all employees, ensured
information security at a higher level through implementationof security measures, and built the capacity to provide thesafe and reliable total solutions service expected of a one-stop
solutions provider.
In future, Nippon COMSYS hopes to make use of thecompany-wide acquisition of ISMS for expansion of the IT
business. Already, in August 2003, Nippon COMSYS successfully
implemented ISMS in two divisions, the IT Management
Division-Sales Engineering Group and the Corporate Management

14

COMSYS Holdings Corporation — Annual Report 2004

Division-Technology Research & Development Center, for the
first such certification in the Japanese information and communications construction industry.

SANWA ELEC Group

Review of Operations
11%

Share of Net SalesYear ended March 31, 2004
(Actual)

Chusei Sonta
President and Representative Director
SANWA ELEC Co., Ltd.

16%

Based on the changing market environment with its expanding broadband services and progressive implementation of corporate IT, the SANWA ELEC Grouphas drawn up some basic tactics for expansion of orders and sales in the telecommunications infrastructure sector. The group is also actively cultivating newcustomers and sectors, in IP networks and solutions, and in improving cell phonesensitivity and maintenance, etc. In the electrical facilities sector, the difficult
market environment due to declining public-sector investment and increasing
competition in the private sector brought orders and net sales down, but development of sales strategies that emphasize profitability through entry into therenewal sector resulted in an improved profit margin.
To enhance competitiveness, meanwhile, the SANWA ELEC Group introduced the Special Early Retirement Program to reduce employee numbers, madechanges to retirement age and retirement benefit programs, and worked to redesign cost control methods. Furthermore, introduction of the 2000 version of
ISO9001 brought about a revolution in awareness, with more emphasis being
placed on customer satisfaction.
In this situation, orders received in the fiscal year ended March 2004,
while boosted by strong orders for works related to NTT’s B Flets, and for mobilerelated works, also saw steep declines switching works of information and communications related business, and in works related to wireless transmission andelectrical facilities related business, stood at ¥20,486 million (US$193 million),and net sales were ¥28,098 million (US$265 million). Operating income was¥1,596 million (US$15 million), and net income was ¥559 million (US$5 million).
Though COMSYS Holdings was established on September 29, 2003, for
SANWA ELEC, with October 1, 2003 being the deemed date of acquisition, theconsolidated performance described above is for the half-year period from
October 1, 2003 to March 31, 2004.
For SANWA ELEC’s performance for the full fiscal year, net sales were¥44,318 million (US$419 million), a decline of 10.4% from the previous year.
Nevertheless, compression of sales costs and reduction of personnel expenses
resulted in a 7.0% increase in operating income to ¥942 million (US$8 million).
However, as a result of introduction of the Special Early Retirement Program andother system reforms, extraordinary losses of ¥1,240 million (US$11 million) wererecorded, which included special payments on employees’ retirement of ¥290
million (US$2 million), reserve for directors’ retirement allowance of ¥212 million(US$ 2 million), loss from financial support of affiliated companies of ¥187 million(US$1 million) and allowance for doubtful receivables of ¥152 million (US$1 million).
As a result, a net loss of ¥165 million (US$1 million) was recorded for the term.

Share of Net SalesYear ended March 31, 2004
(Simple sum)

60,00048,00036,00024,00012,000
0

04
02 03
00 01

Net Sales (¥ Millions)
5
2,000

4

1,600

3

1,200

2

800

1

400
0

0

04
02 03
00 01

Operating Income (Left)
Operating Margin (Right)

Operating Income andOperating Margin (¥ Millions, %)COMSYS Holdings Corporation — Annual Report 2004

15

C.C. Box Installation Work

Digital Switchboard
Installation

Wireless LAN (hotel)

VHF Omni-directional Radio
Range/Distance Measuring
Equipment station (VOR/DME)The SANWA ELEC Group business spans a broad range of sectors—from telecommunications infrastructure, electrical facilities,
solutions, and transport infrastructure to environment and energy, and overseas projects—developed in a comprehensive balance, and the group works daily to be realize its corporate philosophy, “Build a society where people can live truly abundant lives.”

Information and Communications Related BusinessThis Business Division is engaged in the design and implementation of telecommunications facilities for information and communications companies, and also in the design andimplementation of information and communications systems,
as well as software development, for NEC Corporation andpublic authorities at various levels.
Diversification of telecommunications methods is changing and affecting the environment, education, welfare, and otheraspects of people’s lives. With projects to bury electrical powerlines underground now being implemented by the Ministry ofLand, Infrastructure and Transport, and by local government
entities, as well as the information box project to link the entire
nation with fiber optic cable, SANWA ELEC is responding to abroad array of needs to build the next-generation telecommunications society.
Moreover, SANWA ELEC is participating in the next-generation transport system ITS project, to support safer, more
comfortable transport for people. SANWA ELEC has a great
deal of experience in dealing with expressway safety andoperation, from transformers, illumination, telecommunications,
wireless infrastructure, and ITS systems, to maintenance andrepair of disaster prevention facilities.

Furthermore, SANWA ELEC is taking advantage of its
strengths as a multi-vendor to provide IT solutions that support
the total business, from proposals for the construction of LAN,
WAN, and Internet systems, to their design, execution, maintenance, and operational management, and to contribute todevelopment of a comfortable information systems environment.
SANWA ELEC’s information and communications related
business is not limited to Japan, but extends overseas as well.
SANWA ELEC assists in the construction of systems based onsuch new technologies as WDM, SDH, and CDMA, throughthe laying of international undersea cables, fiber optic cables
and other telecommunications lines, and the construction of
microwave stations, etc., and has made large contributions tothe construction of the international telecommunications backbone network in the Americas, Europe, Africa, and Asia.
At a time when infrastructure investment by informationand communications companies is on the decline, SANWA
ELEC intends to continue growing by taking more orders forworks related to fiber optic cables, LANs, and local intranets,
and to develop a proposal-type solutions business to develop
new customers.

NTT Related BusinessThis Business Division designs and executes telecommunications infrastructure for NTT and its group companies. SANWA
ELEC has been a certified general contractor for NTT for many
years, and has made important contributions to the construction to Japan’s electrical and telecommunications network. In

16

COMSYS Holdings Corporation — Annual Report 2004

addition, the arrival of diversified media has made developmentof the telecommunications infrastructure a social imperative. In
particular, with the rapid progress in globalization of wirelesstelecommunications networks, the mobile business can be
expected to see further expansion of services. SANWA ELEC

Review of Operations

Tokyo International Forum
Electrical Installation Work

Mobile phone base stationin Portugal

has developed telecommunications formats that are capableof handling both next-generation mobile telephone services andhigh-speed, diverse broadband services.
At the present time, services are moving away from thefixed landline telephone network to IP networks, and construc-

Submarine optical fiber
cable installation

Installation of ETC system(Yokohama-Yokosuka Road)

tion of NTT telecommunications infrastructure is moving alongwith this trend. SANWA ELEC intends to expand its orders
related to fiber optic cables, IP networks, and ADSL and otherbroadband works.

Electrical Facilities Related BusinessThis Business Division engages in comprehensive operations,from design of electrical related facilities for various types ofstructures, to their execution and maintenance, and SANWA
ELEC offers combined capabilities for both electrical and information and communications facilities needs.
The range of services offered by SANWA ELEC includes
support for intelligent buildings, Internet apartments, hospitals,
schools, and other facilities with high public profiles and which
utilize the latest business IT facilities, as well as construction of
all types of information and communications systems fornational and local institutions.
In recent years, SANWA ELEC has demonstrated its
expertise in responding to increased demand for renewal ofelectrical facilities. Services offered include a total management
package that begins with inspection and diagnosis of current
conditions, follows up with execution and maintenance, andextends to planning of renewals for the future.
SANWA ELEC is also actively involved in the next-generation energy sector, and is targeting projects that contributeto environmental conservation. Specifically, areas where SANWA
ELEC is a participant include wind power generation systems,
solar power generation systems, co-generation systems, airconditioning duct cleaning systems, and other projects that takethe environment into careful consideration.
With investment in conventional public works projects
declining sharply, SANWA ELEC is exerting efforts to develop
new business sectors.

Aeronautical Information System Related BusinessThis Business Division operates as a sales representative forNEC, for the sale, installation, and maintenance of aviation control information systems.
For support of air transport, SANWA ELEC has richexperience in the construction and maintenance of aviation
security facilities, air traffic control facilities, and information processing systems, including Air Route Surveillance Radar (ARSR/SSR), Very High Frequency Omnidirectional Range facilities(VOR/DME), Remote Communication Air-Ground facilities(RCAG), Airport Surveillance Radar (ASR/SSR), Instrument
Landing Systems (ILS), Flight Data Processing System (FDP),
Radar Data Processing systems (RDP), and the Common Aeronautical Data Interchange Network (CADIN).
In the future, SANWA ELEC will strive to continue earning customer trust in support of safe air transport with comprehensive electrical and telecommunications technologies andservice structures.

COMSYS Holdings Corporation — Annual Report 2004

17

FeaturesConstruction of Electrical Facilities
for the Kodama General Park Gymnasium
In June 2003, the Kodama General Park Gymnasium was completed in
Kodama, Saitama Prefecture. The building is a two-story reinforced concrete structure, and the roof is covered with 60,000 locally made tiles.
In regards to construction of this gymnasium, SANWA ELEC
received an order from the Urban Development Corporation for electricalfacilities work. Because the ceiling was concrete surfacing formed into anarch, installation work for the interior illumination (96 lights) necessitatedcareful precautions for each light fixture to ensure that each one was horizontal against the curve of the ceiling, and that each part of the floor
received the same amount of illumination. As a result, the work proceededwith careful inspections each step of the way.
Kodama is a sports-oriented town, and is particularly known all
across Japan for its strong youth basketball programs. This gymnasium
will contribute greatly to development of local sports.

Participation in the Shiodome Redevelopment Project
For the Tokyo Shiodome Urban Redevelopment Project, SANWA ELEC
received orders from the Urban Development Corporation for electricalfacilities work in the H-block parking garage being built for the high-riserental apartment complex Acti Shiodome, and the project was completed
in March 2004.
The parking garage is conveniently positioned, with the Metropolitan Expressway on the east side, and the Tokyo Waterfront New Transit
YURIKAMOME on the west side. Improvement of the Shiodome skyline
was an important factor in the design and execution. As a result specialized light sources were used for illumination, including garden lights, andlighting that illuminates the entire structure. The design has won plaudits
from local residents and many others from farther afield, and is alreadybecoming a well-known “oasis” for urban relaxation.

18

COMSYS Holdings Corporation — Annual Report 2004

TOSYS Group

Review of Operations
6%

Share of Net SalesYear ended March 31, 2004
(Actual)Joichi Magara
President and Representative Director
TOSYS Corporation

9%

The TOSYS Group operates on the basis of the “customer satisfaction first” principle, developing projects from the customer point of view. In April 2002, thesolutions business and SI business were launched to add value to construction
work on telecommunications infrastructure through the provision of comprehensive information and communications services for all processes, ranging fromplanning proposals and other upstream processes to maintenance, operations,and other downstream processes, so as to respond firmly to diversified customer
needs. These efforts to strengthen operations will lead to realization of even more
added value.
In addition, TOSYS is actively engaged in the development of TOSYS
original products, including the development and sales of the TOSCOM basic
accounting system for the construction industry.
Moreover, in order to ensure stable profits in the midst of ever more
severe price competition, TOSYS is enhancing price competitiveness throughcontinuous implementation of cost restructuring measures, and also through concentration of operations shared within the group, and other new measures.
In this situation, orders received in this fiscal year were stronger on
increased works related to NTT’s B Flets, and to the solutions business, reaching¥13,071 million (US$123 million). Net sales moved generally with orders, registering ¥15,359 million (US$145 million). A combination of increased net sales
and cost reduction measures resulted in operating income of ¥945 million (US$8
million) and net income of ¥434 million (US$4 million).
Though COMSYS Holdings was established on September 29, 2003, for
TOSYS, with October 1, 2003 being the deemed date of acquisition, so that theabove consolidated performance is for the half-year period from October 1, 2003
to March 31, 2004.
For TOSYS’s performance for the full fiscal year, net sales were ¥25,379
million (US$240 million), an increase of 5.2% from the previous year. As a resultof a review of materials and subcontract costs, which reduced the sales cost ratio
by 0.6 percentage points, operating income rose by 35.5% to ¥947 million (US$8
million). Income before income taxes rose by 39.7% to ¥902 million (US$8 million).
Current income taxes were ¥501 million (US$4 million), and accrued deferredincome taxes totaled ¥115 million (US$1 million). After minority interests of ¥156
million (US$1 million), net income rose by 15.6% to ¥360 million (US$3 million).

Share of Net SalesYear ended March 31, 2004
(Simple sum)

30,00024,00018,00012,000
6,000
0

04
02 03
00 01

New Orders Received (¥ Millions)

30,00024,00018,00012,000
6,000
0

04
02 03
00 01

Net Sales (¥ Millions)
5
1,500

4

1,200

3

900

2

600

1

300
0

0

04
02 03
00 01

Operating Income (Left)
Operating Margin (Right)

Operating Income andOperating Margin (¥ Millions, %)COMSYS Holdings Corporation — Annual Report 2004

19

Cable Engineering Works
Project (installation of
optical fiber cables)

Cable Engineering Works
Project (installation of
optical fiber cables)

Switchboard Expansion
and Testing

Connection to Optical Fiber
Cable Terminal Board

TOSYS Corporation was originally created as a regional company for handling NTT telecommunications infrastructure construction, utilizing advanced technological skills for the construction of electrical and telecommunications systems, mainly in thetwo prefectures of Nagano and Niigata, to generate steady business performance. TOSYS has accumulated much know-how inthe construction and development of Japan’s information and communications network, and its strengths lie in its ability toprovide powerful network solutions.

Business Operations
TOSYS business operations can be divided into four construction sectors, including NTT related electrical and telecommunications operations, which include work laying
telecommunications lines for NTT and the NTT Group, telecommunications civil engineering work, and switching, transmission, and power construction work; telecommunications
systems work, network integration, and other information andcommunications related operations for New Common Carriers(NCC), private-sector corporations, and government and public offices; electrical facilities related work, including non-NTT
electrical facilities work and highway infrastructure work; andcivil engineering related work. A fifth sector is handled by a
subsidiary company, Tulip Life Co., Ltd., and includes suchdiverse activities as automobile inspections, insurance agency
work, and petroleum sales, etc.
TOSYS is a telecommunications construction company
specializing in a certain region (Nagano and Niigata prefectures)
where it has deep roots and can handle projects of differing
scale. Other than this regional focus and scale difference, however, TOSYS basically covers the same types of business
operations as Nippon Comsys Corporation.

Maximization of Shareholder ValueOn September 29, 2003, TOSYS transferred its shares to the
COMSYS Holding Corporation, and integrated its management
into the holding company. On the same day, COMSYS Holdings listed its shares on the Tokyo Stock Exchange and the
Osaka Stock Exchange.
With this action, TOSYS was in effect also listed on the

20

COMSYS Holdings Corporation — Annual Report 2004

stock exchange, so that its corporate activities became more
widely recognized by society and value could be returned toshareholders. Moreover, as part of efforts to respond to theincreased social responsibility that comes with a listed company, TOSYS is strengthening its compliance capabilities.

Review of Operations

PC Set-up for LAN
Construction

Shiga Kogen Ski Resort
Surveillance Camera
Installation Work

Mercury Lamp Stabilizer
Check Test in Gymnasium

Telecommunications Carrier
Switchboard Installation Work

Toward Early Realization of the Effects of Management Integration
As the first salvo in the pursuit of greater effectiveness throughmanagement integration, the COMSYS Group launched COMSYS
Shared Service Co., Ltd. on October 1, 2003, and entrusted it withthe group’s shared operations. At that time, Nippon COMSYS andSANWA ELEC transferred their shared administrative operations
to the new company, to promote more efficiency and rationalization. In the TOSYS Group, shared group operations are alreadybeing outsourced to the subsidiary company Tulip Life, and studies into how to optimize operating procedures at COMSYS Shared
Services and Tulip Life are now in progress.
The maximum objective for TOSYS for the moment is
to secure greater efficiency through the merger of operations in
the Nagano and Niigata areas. In this regard, all Nippon
COMSYS execution and operations in the two prefectures, andalso NTT construction operations in the area, are to be unified
by the spring of 2005. In particular, merger of the execution
departments is expected to result in huge gains in efficiency
and improved quality.
In the area of materials procurement and capital procurement, as well, TOSYS is taking advantage of the merits of scaleoffered by the COMSYS Group. Furthermore, in the solutions
business, unification with the large-scale operations promoted
by Nippon COMSYS and SANWA ELEC will help to ensure thequality and scale of TOSYS solutions. In this area, the groupcompanies can expand their businesses by sharing case studies of successful solutions, and through mutual deployment ofsystem engineers and other effective collaborative efforts.

Medium-Term Issues for the TOSYS Group
Reduction of general administrativeand selling expenses and sales expenses
At the present time, TOSYS has the highest expense ratio within
the COMSYS Group, an artifact of its smaller business scale.
The TOSYS group plans to fully utilize shared companies andmaterials procurement companies to reduce the expense ratio.

Eliminating interest-bearing debt
While TOSYS has to date worked to maintain virtually debtfree management operations, use of cash management services (CMS) to improve its capital investment activities should
reduce the level of interest-bearing debt completely to zero.

Reinforcing solution business initiatives
Improvement of net sales per employee
While net sales per employee at TOSYS is near the top for its
industry on a non-consolidated basis, the rate is the lowest of
the three companies in the COMSYS Group when calculated
on a consolidated base. TOSYS plans to improve this situation
by taking such measures as reducing about 180 employees
from its consolidated subsidiaries to bring net sales per
employee to over ¥30 million (US$283 thousand).

TOSYS’ solution business accounted for about 15% of total sales
in the fiscal year ending March 2003. The specific sales goal forthe fiscal year ending March 2006, however, is ¥4.0 billion (US$37
million), or reaching 20% or more of total net sales.

Improvement in the operating margin
Implementation of the above measures should ensure an operating margin of more than 4%, thus contributing to the goal of¥14.0 billion (US$132 million) in operating income for the
COMSYS Group as a whole in the fiscal year ending March 2006.

COMSYS Holdings Corporation — Annual Report 200421

FeaturesRole in Conversion of Shiga Kogen to Broadband Resort
IT hotels are on the increase in the town of Yamanouchi in
Shimotakai of Nagano Prefecture. In response to a “broadband
resort declaration” issued by the Shiga Kogen Tourist Association,
TOSYS proposed introduction of various services to places of lodging in the town, and then built the facilities, to launch the first fiber
optic B Flets service ever seen at a tourist destination in Japan.
The B Flets service was incorporated into every lodging
facility, allowing short-range, large-volume cable VDSL in therooms, as well as wireless LAN, which can be used anywhere,

to create a convenient Internet environment. Moreover, PCs foraccessing Internet content were installed in hotel lobbies andelsewhere, to enhance convenience for hotel guests.
In addition, large-throughput fiber optic cable was installed
to facilitate live web cams of the area, displayed on real-timecamera monitors. The live views of the hotels or of the mountainscenery have been received with great satisfaction by prospective tourists, as well as local residents who now have the ability
to check traffic conditions in real-time using live camera feeds.

View inside the hotel

3rd Floor

Room No. 301

IDF
2nd Floor

Room No. 201

IDF
1st Floor

VDSL device

MDF
Telephone lines
Media converter

Access point
PBX
BB router

Lobby or free space

Construction of Resort Hotel System for Sala Karuizawa Hotel
In Karuizawa, the resort that is most representative of Nagano
prefecture, and which hosts 8 million visitors per year, the Sala
Karuizawa Hotel was reopened in April 2004 after undergoing an
extensive renovation, based on the concept of maintaining repeat
visitors while also attracting new visitors. The renovation projectmade use of proposal for a “hotel system” presented by TOSYS,
and an IT-driven hotel service program was implemented.
In this system, a marketing support system based on CRM
was implemented, enabling effective utilization of reservation andlodging history, and other guest data, to increase the capacity
usage ratio, strengthen guest management, and improve services. In addition, the data can be used to set up planning proposals for highly accurate marketing strategies, using the following
flow sequence: analysis, segment model adoption, action plan
adoption, action verification, and feedback.

22

COMSYS Holdings Corporation — Annual Report 2004

Future proposals include plans to link up with the CTI
reservation system for assurance of smooth guest arrivals, andexpansion of channels, as well as proposals to implement thesystem at other resort hotels.

Research and Development

In the market for the information and communications sector, which is expected to see
further expansion as the IT revolution progresses, the COMSYS Group is engaged inresearch and development for the efficient and safe execution of its primary businessfocus, which is construction of electrical and telecommunications infrastructure. Moreover,with society undergoing a rapid shift from the telephone era to the IP broadband era, thegroup is prioritizing R&D into technologies for new sectors to prepare for moving into newmarkets, as well as development of systems related to rationalization of management.
Research and development expenses in the fiscal year ended March 31, 2004,
were ¥385 million (US$3 million). The research and development structure for the
COMSYS Group includes Nippon COMSYS’s Technology Research & Development
Center, SANWA ELEC’s Technology Research & Development Center, and TOSYS’s
Technology Research Center.
Research and development results obtained in the electrical telecommunications
infrastructure construction sector were as follows.
Note that there are no exceptional R&D activities taking place outside of this sector.

(3) R&D into new technologies and systems
a. Development of technology for FTTH
b. Development of IP maintenance technology (using RFID tags)c. Development of system (ledger) for preparation of integration systemdata estimates
Sanwa ELEC Co., Ltd.

(1) Development of laborsaving equipment and tools
a. Development of terminal box adaptor for laying additional optical cables, etc.,
along existing underground lines
b. Development of LIVIS Test device for motion check tests of low-pressure insulatedmonitoring devices
c. Improvement of concrete pillar cutting tool(2) Development of safety equipment and tools
a. Development of hands-free speaker for mobile phonesb. Development of power line evacuation cable device

Nippon Comsys Corporation(1) R&D into technologies for more efficient execution
a. Development of omnidirectional inspection camera inside pipes
b. Development of all-purpose waterproof framec. Development of peripheral jig tool for B Flets work
d. Development of inner tube (MaxCell) peripheral technology
e. Development of bedrock and concrete boring tool, “Hole in One”

TOSYS Corporation(1) R&D into technologies for construction safety and improvement of quality
a. Development of fixed support tool for optical cable connections (7SC connection)
Aside from the three main companies, no exceptional research and development activities are in progress at subsidiary companies.

(2) R&D into technologies for construction safety and improvement of quality
a. Development of operations platform with ladder (for optical connections)b. Development of optical test code for IDM and FTM bracing

Features
Nippon COMSYS Develops New Method for Laying Fiber Optic Cable Inside Sewer
Pipes—CF-SS (Self-Support) Cable Method
Nippon COMSYS has developed a new method for laying fiber optic cable inside sewer
pipes, called the CF-SS Cable Method.
This method involves laying self-support type cable directly inside sewer pipes,
using an anchor tool to prevent damage to the pipe and fix the cable in place at the headof the pipe with virtually no slack. Compared to previous methods, the burden on thesewer pipe is small, there is no need to stop sewerage flow, and the operation can becompleted in a short time at low cost.
With the government’s e-Japan plan, greater demand is expected for the layingof optical fiber cable inside sewer pipes, because of its low cost and high reliability. Nippon
COMSYS is promoting use of this method, and is approaching local government entities
as clients in the construction of a nationwide optical fiber cable network.
Hoist jig line
Intermediate hoist jig
CablingWiring cable support line

Cable protection pipe
Wiring cable
MH port anchor tool

Tuned Rotary-Mass Damper

Rotary-Mass for
Vibration 1

Rotary-Mass for
Vibration 2

Vibration 1
Vibration 2

Vibration-Damping Multi-Mode Device for Cancellation of Two Streetlight Pole
Vibrations Developed, Joining the Tuned Rotary-Mass Damper Jointly Developed by Nippon COMSYS and Tokai University

Low-cost device with excellent vibration-damping effects based on roller theory
proposed in industry-academia cooperation
The tuned rotary-mass damper for damping vibrations in structures was jointly developedin November 2001 by Nippon COMSYS and the Engineering Department of Tokai University, based on Nippon COMSYS’s own roller theory. Now a new multi-mode type capableof damping two different vibrations at once has been developed, and Nippon COMSYS willcommence sales activities based on the new product.
The tuned rotary-mass damper is used to control vibrations that may arise instructures due to earthquakes, wind, or traffic vibrations. It has an extremely simple
structure, consisting solely of a cylindrical weight (roller) fitted inside a cylindrical vessel (shell). It has already been tested on streetlight poles, and its damping effectivenesswas clearly demonstrated.
The new multi-mode type retains the damping performance of the previous
type, and uses the device’s compactness to form an expanded version that enables adamping response on two different kinds of vibrations at once. The multi-mode typedemonstrated its effectiveness in damping out wind-swayed images taken by road surface surveillance cameras mounted on streetlight poles. Wind swaying had become aproblem because wind direction and wind speed were generating different kinds ofstreetlight pole vibrations. The multi-mode type meets this problem by damping the twomost likely types of vibrations, thus providing an effective vibration control measure.
Besides the tuned rotary-mass damper, Nippon COMSYS and Tokai University
are currently engaged in research and development on other vibration-damping technologies, as well. One of these is a vibration-damping device for long-wave vibrations. The
object of this research is control of vibrations in structures due to the relatively long-wave
seismic vibrations generated by marine-type seismic waves, and this will result in a longwave vibration-damping device that is an application of the roller mechanism. Anotherexample of research and development into vibration-damping structures is the vibration
control damper designed to control vertical vibrations in bridge girders. This is a vibration
control technology that utilizes the horizontal displacement that occurs at the connection
points between the girders and props due to vertical distortions in the girders. Nippon
COMSYS and Tokai University have jointly secured a patent for the device.
Nippon COMSYS actively promotes joint research and development efforts
between industry and academia, and supports the development of a more efficient andsafer societal environment.

COMSYS Holdings Corporation — Annual Report 200423

Basic Philosophy Regarding Corporate GovernanceOne of the management visions listed by the COMSYS Group
is to be seen as the “best choice” company by all stakeholders. In addition, the group aims to continuously optimize theplacement of business resources, and to maximize corporate
value. The Company believes that strengthening corporate
governance, in order to realize a group that operates in an honest, highly transparent management mode, is one ofmanagement’s most important issues.
COMSYS Holdings employs an auditor system, andthe Board of Directors meets once a month. The Board of
Directors consists of nine executive directors, and no outside
directors have been selected. The Board takes decisions
regarding items stipulated by laws and regulations, andregarding important management issues, and its performanceis monitored by the four auditors in attendance.
The Senior Management Committee convenes twice
each month, to discuss implementation of group operations
and plans, based on the basic policies drawn up by the Boardof Directors. Because of the need to accelerate and rationalize discussions regarding group operations, and because the
Senior Management Committee is an important institution for
discussions, the meeting is attended by the nine executive
directors and one auditor, for effective and appropriate monitoring of legal issues.
The Statutory Auditors includes two outside auditors,
for a total of four auditors. Each auditor attends Board meet-ings and other important meetings, and performs appropriate
auditing of operations and execution. Auditors do not have aseparate organization or staff to perform their functions.
For independent auditor, the Company has signed acontract with the O. Yu Kyodo Office Certified Public Accountants, which performs account auditing in cooperation with
the Statutory Auditors.
Furthermore, the COMSYS Group has signed an agreement with the three companies regarding fulfillment of thegroup’s corporate responsibilities to society to establish thebasic rules for group management, and to strengthen management controls. A basic rule, for example, is that each company confirms basic items related to group management, andrefers important matters for discussion to the Company’s Management Meeting and Board of Directors.
Moreover, the Company has adopted a Compliance
Program for observance of legal and corporate ethics, andestablished a Corporate Compliance Committee consistingof executives drawn from group member companies. This
committee now meets regularly, once a month. The committee coordinates with the Compliance Committees of each of
the three companies to improve and disseminate awarenessof compliance issues throughout the group. To minimize therisks to group management, the committee also works withthe auditor departments of the three companies to strengthenand standardize internal controls.

Corporate Governance Organization Chart
General Shareholder’s Meeting

Statutory Auditors
Corporate Auditors
Outside Auditors

Board of Directors
Directors
Corporate Auditors/Outside Auditors

Independent Auditor

Senior Management Committee
Directors
Corporate Auditors
Audit
Compliance Committee
Group Agreement

Presidents Committee of the COMSYS Group
Presidents of the 33 Group Companies

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

SANWA ELEC Co., Ltd.

24

Nippon COMSYS Corporation

COMSYS Holdings Corporation — Annual Report 2004

TOSYS Corporation

Corporate Citizenship

COMSYS supports the J league
soccer team, Omiya Ardija.

In May 2001 COMSYS
won ISO 14001
certification for all its
domestic operations,demonstrating due
concern withenvironmental protection.

The COMSYS IT PlazaThe COMSYS Group is strongly conscious of its duty to thecommunities in which it operates. The Company engages in
activities that promote environmental awareness, sponsors
cultural events, and provides disaster-preparedness training.
In February 2000 Nippon COMSYS commenced inspection, analysis, and evaluation of every corner of Nippon COMSYS
from an environmental perspective. It was necessary to create a
new culture in which every employee became highly consciousof environmental problems, and committed to finding solutions.
In May 2001, all of Nippon COMSYS’s domestic operations
received ISO 14001 certification. An Environmental Management
System is in effect throughout Nippon COMSYS.
While offering our clients trusted, high-quality services,supported by strong technological capabilities, we are also protecting the environment, saving energy, and conserving materials. This not only strengthens our competitiveness, but
supports the development of the 21st century’s high-order,
information-intensive society. We firmly believe that this will also
help strengthen our business base.
The COMSYS Group is also an active participant in theregional community. The Omiya Ardija soccer team, foundedthrough joint participation by Nippon COMSYS, NTT, and 19 othercompanies closely associated with NTT, is active in the J2 soccer
league. The Japan Professional Football League is composed ofregional teams, and develops players at all levels, from youth toprofessional. Omiya Ardija is intended to support and participate

The training courses for
personal computer assistantsfor people with visual andhearing challenges.

in player development, as well as being a club that all can enjoy.
We are pleased and happy to have the opportunity to contributeto the wellbeing of the public in this way.
In another field, training courses for assistants who support people with visual and hearing challenges using personal
computers were held in April 2003 at the Nippon COMSYS IT
Plaza, located on the Kantonaka Branch premises. At the Nippon
COMSYS IT Plaza, people can experience ADSL, ISDN and
B-Flets, and personal computing classes are held regularly formembers of the local community. Computers are a powerfulcommunications tool, and a tool for obtaining information forpeople with visual and hearing challenges. However, the number of these people who make use of the Internet is extremely
low compared to that for people without such challenges. Thus,
Nippon COMSYS has planned and held training courses for
personal computer assistants for people with visual and hearing challenges, so that as many people as possible will be able
to enjoy the benefits of the IT society. It is our hope that those
who complete the course will take on roles as assistants who
support people with these challenges at various public or welfare facilities in the future.
The COMSYS Group is proud to be able to contribute inall of these ways to the culture and society of our host regions.
By doing so, we are able to give something in return to the communities that have made our existence and growth possible.

COMSYS Holdings Corporation — Annual Report 2004

25

Management
As of June 29, 2004

BOARD OF DIRECTORSCORPORATE AUDITORSStanding Auditor
Masahiro Yoshihara
Auditors
Takero Mizoguchi
Takashi Kakimi
Tadashi Kumakura
Hironobu Takeuchi
Chairman and Representative Director(Chairman and Representative Director of
Nippon COMSYS Corporation)

Chusei Sonta
Director(President and Representative
Director of SANWA ELEC Co., Ltd.)

Yoichi Chiba
Director(Specializing in Compliance)

26

Hirofumi Shimada
President and Representative Director(President and Representative Director of
Nippon COMSYS Corporation)

Joichi Magara
Director(President and Representative
Director of TOSYS Corporation)

Kaoru Noda
Director(General Manager of Corporate
Planning Department, Specializingin Corporate Strategy)

COMSYS Holdings Corporation — Annual Report 2004

Kenji Kondo
Director(Specializing in Business
Planning Promotion)

Yoshiaki Miyawaki
Director(General Manager of General
Affairs & Personnel Department,
Specializing in Shared Operations)

Yoshihiro Mimata
Director(General Manager of Finance &Accounting Department,
Specializing in Investor Relations)Financial Section

Financial Review .............................................................................................................. 28
Selected Financial and Operating Data ........................................................................... 31
Consolidated Balance Sheets ......................................................................................... 32
Consolidated Statements of Income ............................................................................... 34
Consolidated Statements of Shareholders’ Equity ......................................................... 34
Consolidated Statements of Cash Flows ........................................................................ 35
Notes to the Consolidated Financial Statements ........................................................... 36
Report of Independent Certified Public Accountants ..................................................... 41

COMSYS Holdings Corporation — Annual Report 200427

Financial Review

Overview
In NTT operations, which make up the main business of the
COMSYS Group, orders for Internet services (B Flets)-related
construction and mobile telecommunications construction forFOMA from NTT DoCoMo were strong. In non-NTT operations, while the IT-related and solutions businesses performed

COMSYS Holdings Corporation (the Company) was established
as a holding company through a transfer of shares on September
29, 2003, with Nippon COMSYS, Sanwa ELEC and TOSYS
becoming fully owned subsidiaries. The Company’s consolidated
results for the fiscal year ended March 2004 include the consolidated results of Nippon COMSYS for the fiscal year from April 1,
2003 to March 31, 2004 and the consolidated results of both Sanwa
ELEC and TOSYS for the half-year period from October 1, 2003 to
March 31, 2004 (October 1, 2003 being the deemed date of acquisition). In the consolidation of Nippon COMSYS, Sanwa ELEC
and TOSYS, the Company applied the pooling-of-interests method
to Nippon COMSYS and its consolidated subsidiaries, identified
as the acquiring group, and the purchase method to Sanwa ELEC
and TOSYS and their consolidated subsidiaries, identified as theacquired group, considering comprehensively the ratio of the transfer of shares of each company.

well, both telecommunications construction and electricalfacility construction faced a challenging environment for winning orders due to restrained public works investment andintensified competition in the private demand sector.
Results of Operations
In the fiscal year ended March 31, 2004, orders received
stood at ¥235,747 million (US$2,230 million) and net sales
at ¥248,961 million (US$2,355 million). Cost of sales was¥220,037 million (US$2,081 million), or 88.4% of the amountof net sales. Gross profit was ¥28,924 million (US$273
million). Selling, general and administrative expenses stoodat ¥18,138 million (US$171 million), or 62.7% of the amountof gross profit on sales. The ratio of selling, general andadministrative expenses to net sales was 7.3%. As a result

Supplemental Consolidated Financial Information
Nippon COMSYS Corporation and Consolidated Subsidiaries

Years ended 31st March, 2003 and 2004

83%
Millions of yen

Share of Net SalesYear ended March 31, 2004
(Actual)75%
Share of Net SalesYear ended March 31, 2004
(Simple sum)28

COMSYS Holdings Corporation — Annual Report 2004

For the Year
New Orders Received during the YearNet Sales
Operating Income
Net Income
At Year-End
Total Assets
Shareholders’ Equity

Percentagechange2003

2004

199,495
200,610
6,490
2,468

202,560
206,517
7,983
4,584

1.5%
2.9
23.0
85.7

166,528
111,724

177,140
116,624

6.4
4.4

of the foregoing, operating income was ¥10,786 million

tax rate) was 38.5%. Minority interests stood at ¥326 million(US$102 million). The operating margin was 4.3%. Interest(US$3 million). As a result of the foregoing, net income wasand dividend income was ¥193 million (US$1 million), and¥6,592 million (US$62 million), and the ratio of net income tointerest expenses were ¥149 million (US$1 million). The net

net sales was 2.6%. Net income per share was ¥45.96

amount of other expenses stood at ¥425 million (US$4(US$0.43). Diluted net income per share is not reported, as

million). This figure includes other income of ¥1,104 million

there were no residual securities outstanding at the end of(US$10 million) in gains on the transfer of the substitutional

the term. Dividends of ¥7 (US$0.07) were declared.

portion of the contributory pension plan, ¥888 million (US$8

Compared to results forecasts made at the time of

million) in amortization of consolidation adjustments arising

the establishment of the Company, net sales were off 0.4%,

from the business combination, and ¥594 million (US$5

operating income was up 21.2%, and net income was 9.8%

million) in amortization of other consolidation adjustments.

better than forecasted. Net sales very nearly achieved fore-

It also includes other expenses of ¥1,071 million (US$10

casts, and income exceeded what was projected. This posi-

million) on the write-down of investments in securities, ¥549

tive performance was the result of a reduction in the cost of

million (US$5 million) in allowance for doubtful receivables,

sales ratio of 0.7 points from the projected 89.1% to 88.4%,

and ¥283 million (US$2 million) in special payments on

as described above. This was achieved through a rational-

employees’ retirement. As a result of the foregoing, income

ization of outsourcing expenses, centralized purchasing of

before income taxes and other adjustments to net income

construction materials, reduced personnel expenses and awas ¥11,255 million (US$106 million).

reduction in interest payments due to the introduction ofIncome taxes for the fiscal year ended March 31, 2004

group finance.

totaled ¥4,337 million (US$41 million), and the ratio ofincome taxes to income before income taxes (the effective

11%

Supplemental Consolidated Financial Information
SANWA ELEC Co., Ltd. and Consolidated Subsidiaries

Years ended 31st March, 2003 and 2004
Millions of yen

Share of Net SalesYear ended March 31, 2004
(Actual)16%

For the Year
New Orders Received during the Year*Net Sales
Operating Income
Net Income (Loss)At Year-End
Total Assets
Shareholders’ Equity

Percentagechange

2003

2004

–
49,455880
54–44,318
942
(165)

–%
-10.4
7.0
–

32,9433,209

28,266
3,350

-14.2
4.4

*SANWA ELEC Co., Ltd. does not disclose New Orders Received on a consolidated basis.

Share of Net SalesYear ended March 31, 2004
(Simple sum)COMSYS Holdings Corporation — Annual Report 2004

29

Financial Position

holders’ equity was ¥121,326 million (US$1,147 million), while

At the end of the term, cash and cash equivalents stood at

the capital ratio stood at 57.3%. Shareholders’ equity per¥32,889 million (US$311 million), and short-term investments

share calculated on the basis of the number of shares out-

were ¥418 million (US$3 million). Notes and accounts receiv-

standing at March 31, 2004 was ¥859.24 (US$8.13).

able totaled ¥80,578 million (US$762 million). The accumulated

The COMSYS Group conducted ¥2,950 (US$27 million)

cost of construction in progress was ¥23,425 million (US$221

million in capital expenditure which included increasing andmillion). Deferred tax assets stood at ¥2,215 million (US$20

updating offices, construction sites, tools and equipment, andmillion). Other current assets totaled ¥2,999 million (US$28

fixtures accompanying an expansion in business size as well

million). As a result of the foregoing, current assets stood atas the promotion of work automation and training of engineers.

¥142,289 million (US$1,346 million).
Reviewing liabilities, short-term bank loans were ¥6,034

Cash Flows

million (US$57 million), while the current portion of long-term

Cash flows for the fiscal year ended March 2004 saw income

debt stood at ¥1,300 million (US$12 million). Trade payablesof ¥12,101 million (US$114 million) in cash flows from operat-

totaled ¥43,364 million yen (US$410 million). Advances received

ing activities and expenditure of ¥83 million (US$785 thousand)on construction in progress came to ¥6,527 million (US$61

in cash flows from investing activities. Cash flows from financ-million), income tax payable was ¥4,373 million (US$41

ing activities came to ¥8,457 million (US$80 million) in expendi-

million), and other current liabilities totaled ¥5,588 million (US$52

ture. As a result of the foregoing, net cash and cash equivalents

million). As a result of the foregoing, current liabilities came toincreased by ¥3,561 million (US$33 million) from ¥25,411¥67,186 million (US$635 million), for a current assets to current

million (US$240 million) at the beginning of the fiscal year, andliabilities ratio of 2.1.

there was also an increase of ¥3,917 million (US$37 million)

Investments and other assets stood at ¥18,777 million

due to business combination. As a result, cash and cash equiva-(US$177 million). Total property and equipment came tolents at the end of the fiscal year stood at ¥32,889 million¥50,652 (US$479 million) after depreciation. As a result, total(US$311 million).

assets stood at ¥211,718 million (US$2,003 million). Share-6%

Supplemental Consolidated Financial Information
TOSYS Corporation and Consolidated Subsidiaries

Years ended 31st March, 2003 and 2004
Millions of yen

Share of Net SalesYear ended March 31, 2004
(Actual)9%

Share of Net SalesYear ended March 31, 2004
(Simple sum)

30

COMSYS Holdings Corporation — Annual Report 2004

For the Year
New Orders Received during the YearNet Sales
Operating Income
Net Income
At Year-End
Total Assets
Shareholders’ Equity

Percentagechange2003

2004

23,472
24,130699
311

25,83325,379
947
360

10.1%
5.2
35.5
15.6

14,373
7,856

15,092
7,307

5.0
-7.0

Selected Financial and Operating DataCOMSYS Holdings Corporation and Consolidated Subsidiaries
Year ended 31st March, 2004
Millions of yen

Thousands of
U.S. dollars

2004

2004

New orders received during the year

¥235,747$2,230,552

Net sales

248,961

2,355,578

Operating income

10,786

102,053

Income before income taxes and other adjustments to net income

11,255

106,491

Net income

6,592

62,371

Capital expenditure

2,950

27,912385

3,643¥211,718$2,003,198

50,652479,251

Results of Operations:

Research and development expenditure

Financial Position:
Total assets
Property and equipment
Long-term debt

4,150

39,266

Shareholders’ equity

121,326

1,147,942

Interest-bearing debt

11,484

108,657

Modified working capital

58,205

550,719¥ 45.96

$0.43

7.00

0.07

859.24

8.13

Per Share of Common Stock (in yen and U.S. dollars):
Net income
Cash dividends
Shareholders’ equity

Financial Ratios:
Operating income to net sales

4.3

Net income to net sales

2.6

R&D expenes to net sales

0.2

SG&A expenses to net sales

7.3

Equity ratio

57.3

Return on equity

5.7

Return on total assets

4.1

Interest coverage (times)

73.58

Debt/equity ratio

0.09

Other Statistics:
Number of employees at fiscal year-end (persons)

7,091

Common stock issued (thousand shares)

145,977

Common stock price range (for six months period ended 31st March, 2004, in yen):
High

898

Low

504

Note: 1. For convenience only, the accompanying Japanese yen figures for 2004 have been translated into U.S. dollars at the rate of ¥105.69 to $1, the rate prevailing on 31st March, 2004.

COMSYS Holdings Corporation — Annual Report 200431

Consolidated Balance Sheets
COMSYS Holdings Corporation and Consolidated Subsidiaries
As of 31st March, 2004ASSETS

Millions of yen

Thousands of
U.S. dollars (Note 1)

2004

2004

¥ 32,889$ 311,184

Current Assets:
Cash and cash equivalents
Short-term investments (Notes 3 and 4)

418

3,955

Notes and accounts receivable—trade

80,578762,399

23,425

221,639

Deferred income taxes (Note 7)

2,215

20,958Other current assets

2,999

28,375

Less: Allowance for doubtful receivables(235)(2,224)142,289

1,346,286

Inventories:
Accumulated cost of construction in progress

Total current assets

Investments and Other Assets:
Investment securities:
Unconsolidated subsidiaries and affiliates

590

5,582

Other (Notes 3 and 4)

5,035

47,639Long-term loans receivable

3,170

29,994

Deferred income taxes (Note 7)

2,952

27,931Other assets

9,296

87,955

Less: Allowance for doubtful receivables(2,266)(21,440)

18,777

177,661

Land (Note 4)

27,418259,419

Buildings and structures (Note 4)30,812

291,532

Machinery and equipment

19,124

180,944

Construction in progress2

19(26,704)(252,663)

50,652479,251¥211,718$2,003,198

Total investments and other assets

Property and Equipment:

Less: Accumulated depreciation
Total property and equipment

See Notes to the Consolidated Financial Statements.

32

COMSYS Holdings Corporation — Annual Report 2004

LIABILITIES AND SHAREHOLDERS’ EQUITY

Millions of yen

Thousands of
U.S. dollars (Note 1)

2004

2004

Current Liabilities:
Short-term bank loans (Note 4)¥ 6,034$

57,091

Current portion of long-term debt (Note 4)

1,300

12,300Accounts payable—Trade

43,364410,294

Advances received on construction in progress

6,527

61,756

Income taxes payable

4,373

41,376

Other current liabilities

5,588

52,872

67,186635,689

Long-term debt (Note 4)4,150

39,266

Accrued severance indemnities (Note 5)

7,021

66,430

Deferred income taxes (Note 7)

1,160

10,975

Deferred tax liabilities for unrealized gains on land revaluation (Note 10)

2,366

22,386

Consolidation adjustments account

7,056

66,76147445

21,800206,264

1,406

13,303

10,00094,616

Additional paid-in capital

56,613535,652

Retained earnings

66,845

632,463

Unrealized loss on land revaluation (Note 10)(8,514)(80,556)

211

1,996

125,155

1,184,171(3,829)(36,229)

121,326

1,147,942¥211,718$2,003,198

Total current liabilities

Long-Term Liabilities:

Other long-term liabilities
Total long-term liabilities

Minority Interests
Contingent Liabilities (Note 6)
Shareholders’ Equity (Note 9):
Common stock, par value ¥50 per share:
Authorized 580,000 thousand shares
Issued 145,977 thousand shares

Unrealized gain (loss) on securities

Treasury stock, at cost
Total shareholders’ equity

COMSYS Holdings Corporation — Annual Report 200433

Consolidated Statements of Income
COMSYS Holdings Corporation and Consolidated Subsidiaries
Year ended 31st March, 2004
Millions of yen

Thousands of
U.S. dollars (Note 1)

2004

2004

¥248,961
220,037$2,355,578
2,081,910

28,924

273,668

18,138

171,615

10,786

102,053

193
(149)
425

1,826
(1,409)
4,021

469

4,438

11,255

106,491

Income Taxes (Note 7):
Current
Deferred

4,876
(539)

46,135(5,100)Minority Interests

4,337
326

41,035
3,085

Net Sales
Cost of Sales
Gross profits
Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):
Interest and dividend income
Interest expenses
Other, net (Note 11)
Income before income taxes and other adjustments to net income

Net Income¥ 6,592
Yen

Amounts per share:
Net income—Basic—Diluted
Cash dividends
Weighted average number of shares (in thousands)¥45.96—
7.00
145,977$

62,371

U.S. dollars (Note 1)

$0.43
—
0.07

See Notes to the Consolidated Financial Statements.

Consolidated Statements of Shareholders’ Equity
COMSYS Holdings Corporation and Consolidated Subsidiaries
Year ended 31st March, 2004
Millions of yen

Thousands of
U.S. dollars (Note 1)

2004

2004

Common stock:
Balance at beginning of the year

¥10,000$ 94,616

Balance at end of the year

¥10,000$ 94,616¥30,736
25,877$290,813
244,839¥56,613$535,652¥61,158
6,592
85
(918)
(72)

$578,655
62,371804(8,686)(681)¥66,845$632,463

Additional paid-in capital:
Balance at beginning of the year
Increases arising from business combination
Balance at end of the year
Retained earnings:
Balance at beginning of the year
Net income
Increase arising from merger of consolidated subsidiaries
Cash dividends
Bonuses to directors
Balance at end of the year
See Notes to the Consolidated Financial Statements.

34

COMSYS Holdings Corporation — Annual Report 2004

Consolidated Statements of Cash FlowsCOMSYS Holdings Corporation and Consolidated Subsidiaries
Year ended 31st March, 2004
Millions of yen

Thousands of
U.S. dollars (Note 1)

2004

2004

¥ 11,255
3,945
1,071
558
(921)
(193)
149
138
(11,296)
4,227
5,075
231
(2,070)(80)(1,482)90$ 106,491
37,326
10,133
5,280(8,714)(1,826)1,410
1,306(106,879)
39,99448,0182,186(19,586)(757)(14,022)851

10,697
180
(138)
(835)
2,197

101,211
1,703(1,306)(7,900)20,787

12,101

114,495

Cash Flows from Investing Activities:
Decrease in short-term investments, net
Decrease in investment securities, net
Acquisitions of property and equipment
Acquisitions of other assets
Proceeds from sale of property
Increase in long-term loans
Collection of long-term loans
Other

1,153
638
(1,815)
(620)
104
(312)
588
181

10,9096,037(17,173)(5,866)984(2,952)
5,563
1,713

Cash Flows from Operating Activities:
Income before income taxes and other adjustments to net income
Depreciation and amortization
Write-down of investments in securities
Increase in allowance for doubtful receivables
Decrease in accrued severance indemnities
Interest and dividends received
Interest expenses
Loss on disposal of property and equipment
Increase in receivables—trade
Decrease in inventories
Increase in payables—trade
Decrease in other assets
Decrease in other liabilities
Directors’ bonuses paid
Amortization of consolidation adjustments
Other, net
Cash and cash equivalents received on interest and dividends income
Cash and cash equivalents paid for interest expenses
Cash and cash equivalents paid for income taxes
Cash and cash equivalents refunded for income taxes
Net cash provided by operating activities

Net cash used in investing activities

(83)

(785)

Cash Flows from Financing Activities:
Decrease in short-term borrowings, net
Repayment of long-term debt
Proceeds from long-term debt
Acquisitions of treasury stock
Cash dividends paid
Share transfer payments(4,746)(1,761)
388
(735)
(924)
(679)

(44,905)(16,662)
3,671(6,954)(8,743)(6,424)

Net cash used in financing activities(8,457)(80,017)Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase due to Business Combination

3,561
25,411
3,917

33,693
240,430
37,061¥ 32,889$ 311,184

Cash and Cash Equivalents at End of Year
See Notes to the Consolidated Financial Statements.

COMSYS Holdings Corporation — Annual Report 200435

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

1. Basis of Presenting Consolidated Financial Statements
COMSYS Holdings Corporation (the “Company”) was established on 29th September, 2003 as a business combination by the transfer of shares of Nippon Comsys
Corporation (“COMSYS”), Sanwa ELEC Co., Ltd. (“ELEC”) and TOSYS Corporation(“TOSYS”) as stipulated in Article 364 of the Commercial Code of Japan (the “Commercial Code”). As a result of this transfer of shares, COMSYS, ELEC and TOSYS
became wholly owned subsidiaries of the Company. All of the three subsidiaries aremainly engaged in construction of telecommunications infrastructure.
The accompanying consolidated financial statements have been prepared fromaccounts and records maintained in Japanese yen by the Company and its subsidiaries (together, the “Companies”) 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. Also, the accompanying consolidated financial statements have been
prepared from the consolidated financial statements filed with the Ministry of Financeof Japan as required by the Securities and Exchange Laws of Japan. Certain
reclassifications of account balances have been made so as to present the financial
statements in a form that is more familiar to readers outside Japan.
The accounts and records of the Companies are maintained in Japanese 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 rate of ¥105.69 to US$1. The presentation of such dollar
amounts is solely for the convenience of the reader and is not intended to imply thatyen amounts have been or could be converted, realized or settled in dollars at thator at any other rate.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of theCompany and 33 subsidiaries (see “Corporate Directory” at the last page of thisannual report) over which the Company exerts substantial control either throughmajority ownership of voting shares and/or by other means. For the purposes ofpreparing the consolidated 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 and affiliates are carried at cost due to theirimmateriality.
Certain subsidiaries are consolidated on the basis of fiscal periods ending 31st
December, a closing date which differs from that of the Company; however, thenecessary adjustments have been made if the effect of the difference is deemedmaterial.
In the consolidation of COMSYS, ELEC and TOSYS, the Company comprehensively applied the pooling-of-interest method to COMSYS and its subsidiaries as theacquiring group and the purchase method to ELEC and TOSYS and their subsidiaries as the acquired group, after considering the ratio of the transfer of shares ofeach company as well as other factors in accordance with “Accounting for theConsolidation of the Holding Company Established by Exchange or Transfer of Shares”(JICPA Accounting Committee Research Report No.6). Consequently, the results ofoperations and cash flows of COMSYS and its subsidiaries for the year started
from 1st April, 2003 and ended 31st March, 2004 have been included in the

36

COMSYS Holdings Corporation — Annual Report 2004

accompanying consolidated financial statements; while those of ELEC and TOSYS
and their subsidiaries for the period started from 29th September, 2003 and ended
31st March, 2004 have been included in the accompanying consolidated financial
statements.
Goodwill arising from the afore-mentioned business combination is amortized at
the incurrence; while others are mainly amortized over a period of 5 years using astraight-line method.

(b) Use of estimates
Management of the Company has made a number of estimates and assumptions
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
Construction contracts of the Companies are accounted for by the completedcontract method. 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, generally with original maturities of three months or less, those are readily convertible to known amountsof cash and are so near maturity that they present insignificant risk of changes invalue because of changes in interest rates.
(e) Short-term investments and investment securities
The GAAP of Japan requires the classification of short-term investments andinvestment securities (except for “unconsolidated subsidiaries and affiliates”) of theCompanies into three categories as follows:i) Debt securities that are expected to be held-to-maturity: carried at accumulated
cost using straight-line method.
ii) Other securities whose fair values are readily determinable: carried at fair value
with unrealized gains or losses included in Stockholders’ Equity as “Unrealized
gain (loss) on securities,” net of applicable income taxes.
iii) Other securities whose fair values are not readily determinable: carried at costusing moving-average method.
With respect to investments in unconsolidated subsidiaries and affiliates, the Companies are carrying their amounts at cost, determined by the moving average cost.
(f) Derivative Financial Instruments
A certain subsidiary uses financial instruments to manage exposures of interest
rates and foreign currency exchange rates incurred in the ordinary course of business. Hedging instruments include interest rate options contracts, interest rate swap
contracts and forward foreign exchange contracts.
Derivatives are recorded at fair value.
(g) Accumulated cost of construction in progress
In connection with (c) above, “Accumulated cost of construction in progress” isstated at cost based on an individual project basis.
(h) 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

(i) Intangible assets and deferred charges
Intangible assets including software are carried at cost and amortized by the straightline method over the estimated useful lives of assets. The useful life of software
utilized in the Companies is estimated to be 5 years. Research and development
costs are charged to income as incurred.

(b) Other securities whose fair value was readily determinable as at 31st March,
2004, were as follows:(j) Leases
Financial leases that do not transfer ownership of the property to lessee are accounted
for as transactions of rent. Under the GAAP of Japan, financial leases in which
ownership of the property is deemed to be transferred to the lessee are treated ascapital leases; while it is permitted to treat others as operating leases if certain “as if
capitalized” information is disclosed in the notes to the lessee’s financial statements.

Classification(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 theconsolidated financial statements, deferred tax assets and liabilities also arose fromthe elimination of unrealized profits among the Companies and the adjustment of
the allowance for doubtful receivables caused by the offsetting of inter-company
receivables and payables.

(c) 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, 2004, were as follows:(l) Appropriations of retained earnings
Appropriations of retained earnings of the Company at each year-end are reflectedin the consolidated financial statements for the following year upon shareholders’approval (See Note 12).

Proceeds from sales
Realized gains
Realized losses(m) Net income and cash dividends per share
The computations of basic net income per share are based on the weighted 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 and corporate auditors) from net income when computing
net income per share.
Cash dividends per share are based on the cash dividends applicable to therespective years, including dividends to be paid after the end of the year.
3. Short-Term Investments and Investment Securities-Other
Information that is required to be disclosed in the Notes to the consolidated financial
statements by the regulations and rules on disclosures under the Securities andExchange Laws of Japan, as amended to conform to certain reclassifications ofaccount balances made to present the consolidated financial statements, consistsof the following:(a) Debt securities that are expected to be held-to-maturity whose fair value wasreadily determinable as at 31st March, 2004, were as follows:
31st March, 2004

Japanese government bonds

Millions of yen

Thousands of
U.S. dollars

Book
value

Fair
value

Book
value

Fair
value

¥10

¥10

$95

$95

31st March, 2004
Millions of yen

Thousands of U.S. dollars

Gross
Gross
Unrealized Unrealized Fair
Cost
Gains
Losses Value

Stocks¥1,294
Bonds anddebentures
158
Others
1,156
Total¥2,608

¥574

¥133

2
9

—
90

¥585

¥223

Cost

Gross
Gross
Unrealized Unrealized Fair
Gains
Losses Value¥1,735 $12,243 $5,431
160
1,075

1,495
10,938$1,258 $16,416

1985— 1,514852 10,171¥2,970 $24,676 $5,535$2,110 $28,101

Millions of yen

Thousands of
U.S. dollars

For the year ended
31st March

For the year ended
31st March

2004

2004

¥767
121
11

$7,2571,145104(d) Other securities whose fair value was not readily determinable as at 31st March,
2004 mainly consisted of unlisted stocks amounted to ¥2,210 million(US$20,910 thousand).
(e) Debt securities that are expected to be held-to-maturity and other securities
with maturity dates as at 31st March, 2004 consisted of the following:Book value
Millions of yen
31st March, 2004

Due: Within 1 yr. Within 5 yr. Within 10 yr. After 10 yr.

Bonds and debentures:Japanese government
bonds
Corporate bonds
Others
Total

¥ —
100
—

¥ 10
58
80

¥—
—
—

¥—
—
—

¥100

¥148

¥—

¥—

Thousands of U.S. dollars
31st March, 2004

Due: Within 1 yr. Within 5 yr. Within 10 yr. After 10 yr.

Bonds and debentures:Japanese government
bonds
Corporate bonds
Others
Total

$ —
946
—

$

95
548
757

$—
—
—

$—
—
—

$946

$1,400$—$—COMSYS Holdings Corporation — Annual Report 200437

For the years ended 31st March, 2004, the Companies made write-down ofinvestment securities, whose fair value was readily determinable, amounting to ¥19
million (US$ 180 thousand), 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. Short-Term Bank Loans and Long-Term Debt
The weighted average interest rates of short-term and long-term bank loans as at
the year ended 31st March, 2004, were approximately 1.48 per cent. and 2.28
per cent., respectively.
At 31st March, 2004, consolidated subsidiaries’ short-term bank loans amounting to ¥2,883 million (US$27,278 thousand), long-term bank loans amounting to¥4,065 million (US$38,462 thousand) and bonds due 2004 amounting to ¥1,300
million (US$12,300 thousand) were secured. A summary of assets pledged ascollateral consisted of the following:

Buildings and structures, net ofaccumulated depreciation
Land
Investment securities
Short-term investments (time deposits)

Millions of yen

Thousands of
U.S. dollars¥2,592
5,054
484
10

$24,525
47,8194,579
95¥8,140$77,018

At 31st March, 2004, long-term debt consisted of the following:

2.05 per cent yen secured bonds due 2004
2.09 per cent yen secured bonds due 2004
2.30 per cent yen secured bonds due 2004
Loans from banks
Less: Current portion
Total

Millions of yen

Thousands of
U.S. dollars

¥ 500
300
500
7,090
4,240

$ 4,731
2,838
4,731
67,083
40,117¥4,150$39,266

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 andconditions under which the termination occurs. With respect to directors and corporate auditors of the Companies, lump-sum severance indemnities are calculatedusing a similar formula and are normally paid subject to the approval at theshareholders’ meeting of each of the Companies.
COMSYS has a contributory and funded defined benefit pension plan, which ispursuant to the Welfare Pension Insurance Law of Japan. The contributory pension
plan covers a portion of the governmental welfare pension program (the so-called“substitutional portion”), under which they and their employees make thecontributions.
On 13th August, 2003, the above mentioned pension plan obtained approval
from Ministry of Health, Labor and Welfare of Japan for exemption from the future
benefit obligation arising from the substitutional portion. In conformity with atransitional accounting method as prescribed in prescribed in paragraph 47-2 of“Practical Guidelines of Accounting for Retirement Benefits (Interim Report)” (JICPA
Accounting Committee Report No.13), COMSYS recognized the settlement of thesubstitutional portion at that date of approval.

38

COMSYS Holdings Corporation — Annual Report 2004

As qualified and allowed under the GAAP of Japan, the plan assets include an
employee retirement benefit trust to which COMSYS, ELEC and TOSYS contributed
certain marketable equity securities.
Other consolidated subsidiaries provide for severance indemnities based on theliability if all eligible employees were to voluntarily terminate employment on thebalance sheet date. In addition, certain subsidiaries have funds for tax qualified
defined benefit pension plans and a few subsidiaries have non-contributory andfunded defined benefit pension plans.
“Accrued severance indemnities” recognized in the consolidated balance sheet
as at 31st March, 2004 were as follows:
Millions of yen

Thousands of
U.S. dollars

2004

2004

Projected benefit obligation
Fair value of plan assets¥(50,420)
35,006$(477,056)
331,214

Unfunded benefit obligation
Unrecognized actuarial difference
Unrecognized prior service cost

(15,414)
9,413
(226)

(145,842)
89,062(2,138)¥ (6,227)$ (58,918)

Net amount recognized“Accrued severance indemnities” in the consolidated balance sheet as at 31st
March, 2004 includes the provision for accrued severance indemnities for directors
and corporate auditors of the Companies amounted to ¥794 million (US$7,512
thousand).
Net pension cost of the plans included in the consolidated statements of income
for the years ended 31st March, 2004 was as follows:
Millions of yen

Thousands of
U.S. dollars

Service cost
Interest cost
Expected return of plan assets
Amortization of unrecognized actuarial difference
Amortization of unrecognized prior service cost(negative)
Other¥2,217
1,245
(34)
1,040

$20,977
11,780
(322)
9,840

(229)
34

(2,167)322

Net pension cost
Gain on transfer of the substitutional portionof contributory pension plan

¥4,273$40,430(1,104)(10,446)¥3,169$29,984

Total, net

Unrecognized actuarial differences are amortized and charged to income using astraight-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 were as
follows:• Allocation method of benefit obligation
Straight-line method• Discount rate
2.5%
• Expected rate of return on plan assets
0.1% (mainly)• Unrecognized prior service cost is mainly amortized at the incurrence.
• Unrecognized actuarial difference is amortized over mainly 15 years from thesucceeding fiscal year of the incurrence.

6. Contingent Liabilities
At 31st March, 2004, contingent liabilities consisted of the following:

Guarantees of loans borrowed by:
COMSYS Thailand Co., Ltd.
Other

8. Leases

Millions of yen

Thousands of
U.S. dollars¥1,485110$14,050
1,041¥1,595$15,091

7. Income Taxes
The Companies are subject to corporate (national), inhabitant and enterprise (local)
taxes based upon taxable income, which resulted in statutory tax rates of approximately 42%, in aggregate, for the year ended 31st March, 2004. The effective tax
rate reflected in the accompanying consolidated statements of income and retained
earnings differs from the statutory tax rate primarily due to such items aspermanently non-deductible expenses and timing differences in recognizing certain
income and expense items for financial and tax reporting purposes.
The differences between the statutory tax rate and effective tax rate reflected in
the consolidated statements of income for the year ended 31st March, 2004,
primarily consisted of the following:
Statutory tax rate of the Company
Effects of:
Expenses permanently not deductible for income tax purpose
Dividend income deductible for income tax purpose
Amortization of newly consolidation adjustments
Other, net

42.0%

Effective tax rate

38.5%

2.5
(0.2)
(5.5)
(0.3)

Deferred tax assets and liabilities of the Companies, except for that relating toland revaluation of COMSYS mentioned in Note 10, as of 31st March, 2004,
primarily consisted of the following:

Deferred tax assets:
Accrued expenses and enterprise taxes
Accrued severance indemnities
Allowance for doubtful receivables
Revaluation of land owned byconsolidated subsidiaries
Write-down of investments inunconsolidated subsidiaries
Net operation loss carried forward
OthersLess: Valuation allowance
Deferred tax liabilities:
Deferred gain on exchange of lands
Revaluation of land owned byconsolidated subsidiaries
OthersNet deferred tax assets

Millions of yen

Thousands of
U.S. dollars¥ 1,777
3,818
818$ 16,813
36,124
7,740

1,077

10,190

358
558
833

3,387
5,280
7,883

9,239
(2,948)87,416(27,893)

6,291

59,523(157)(1,485)(1,903)(224)(18,006)(2,119)(2,284)(21,610)¥ 4,007$ 37,913(As a Lessee)
The Companies lease mainly machinery and equipment by financial leases. Pro
forma amounts of the acquisition costs (including the interest portion thereon),accumulated depreciation (depreciation expenses of the leased property were computed by the straight-line method over the respective lease terms) and net bookvalue of leased property as of 31st March, 2004, which would have been reflectedin the consolidated balance sheets if capitalized, were as follows:

Acquisition costs
Accumulated depreciation
Net book value

Millions of yen

Thousands of
U.S. dollars

¥843
447

$7,976
4,229¥396$3,747

Lease payments relating to financial leases accounted for as transactions of rent
amounted to ¥176 million (US$1,665 thousand) for the years ended 31st March,
2004.
Obligation (including the interest portion thereon) under financial leases at 31st
March, 2004, were as follows:

Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

¥132
264

$1,2492,498¥396$3,747(As a Lessor)
One of the Companies leases mainly machinery and equipment by financial leases.
Future lease receipts, inclusive of interest, at 31st March, 2004 were as follows:

Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

¥ 434
806

$ 4,106
7,626¥1,240$11,732

Lease fees received and depreciation charges for the years ended 31st March,
2004 were as follows:

Lease fees received
Depreciation

Millions of yen

Thousands of
U.S. dollars

¥438
337

$4,1443,189

9. Shareholders’ Equity
Under the Commercial Code, the additional paid-in capital may be transferred tostated capital by a resolution of the board of directors or used to reduce a deficit byshareholders’ resolution, but they are not available for dividend payment. On condition that the aggregate amount of additional paid-in capital remains equal to or
exceeding 25 per cent of the amount of stated capital, it is available for distributions
by the resolution of the shareholders’ meeting within a certain limit. The amount of
the additional paid-in capital of the Company included in “Additional paid-in capital”
and “Retained earnings” of the accompanying consolidated balance sheets as at
31st March, 2004 was ¥98,816 million (US$934,961 thousand).

COMSYS Holdings Corporation — Annual Report 2004

39

10. 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 negativerevaluation surplus after adding the related deferred tax liabilities as mentioned
bellow. The negative revaluation surplus will be credited as a gain or loss when apart of the land is sold.
The book value before and after revaluation and unrealized gains and losses
resulting from the revaluation at 31st March, 2002, in the aggregate, were as
follows:
Millions of yen

Book value:
Before revaluation
After revaluation
Unrealized—
Gains
Losses¥22,995
16,847
5,915
12,063

Net (loss)¥ (6,148)

The fair value for the revalued land mentioned above as of 31st March, 2004
has been reduced by ¥1,494 million (US$14,136 thousand) in the aggregate, but
the book value has not been restated, as allowed by the GAAP of Japan.
Deferred tax assets and liabilities relating to revaluation of land of the Company
as of 31st March, 2004 consisted of the following:

Deferred tax assets:
Relating to unrealized losses
Less: Valuation allowance

Millions of yen

Thousands of
U.S. dollars¥ 4,825(4,825)$ 45,652(45,652)——

Deferred tax assets:
Relating to unrealized gains

2,366

22,386

Net: Deferred tax liabilities¥ 2,366$ 22,386

11. Other Income and Expenses“Other, net” in “Other Income (Expenses)” consisted of the following:

Gain on transfer of substitutional portion ofcontributory pension plan
Amortization of consolidation adjustments
arising from business combination
Amortization of other consolidation adjustments
Write-down of investments in securities
Allowance for doubtful receivablesSpecial payments on employees’ retirement
Foreign exchange losses
Amortization of business start-up expenditures
Other

40

Millions of yen

Thousands of
U.S. dollars¥ 1,104$ 10,446

888
594(1,071)
(549)
(283)
(171)
(149)
62

8,402
5,620
(10,133)(5,195)(2,678)(1,618)(1,410)587¥ 425$ 4,021

COMSYS Holdings Corporation — Annual Report 2004

12. Subsequent Events
On 29th June, 2004, the shareholders of the Company approved the following
appropriations of retained earnings:

Cash dividends

Millions of yen

Thousands of
U.S. dollars¥1,021$9,660Also, the shareholders of the Company approved a transfer of the additional
paid-in capital to general capital surplus amounting to ¥40,000 million (US$378,465
thousand), pursuant to the Commercial Code as mentioned in Note 9 above.

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, 2004 and the related consolidated statements of income, shareholders’ equity
and cash flows for the year ended 31st March, 2004, all expressed in Japanese yen.
Preparing these financial statements is the responsibility of the Company’s
management. Our responsibility is limited to express an independent opinion on thesefinancial statements based on our audits.
We conducted our audits in accordance with auditing standards, proceduresand practices generally accepted and applied in Japan, which require that we plan andperform the audits to obtain reasonable assurance that the financial statements are freeof material misstatement. Our audits include examining evidence supporting theamounts and disclosures of the financial statements on a test basis, and also include
assessing the accounting policies and significant estimates adopted and applied by theCompany’s management, as well as evaluating the overall presentation of 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, 2004 and theconsolidated results of their operations and cash flows for the year ended 31st March,
2004, in conformity with accounting principles and practices generally accepted inJapan as described in Note 1 to the consolidated financial statements.
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.

Eiji Miyashita

Hideo Niwa

Takashi Saitou

Certified Public Accountants of JapanTokyo, Japan
29th June, 2004

COMSYS Holdings Corporation — Annual Report 200441

Corporate Directory
As of March 31, 2004

Nippon COMSYS Group
Company Name

Location

Principal Business

Paid-in Capital

Percentage
Owned (%)

Nippon COMSYS Corporation

Tokyo, Japan

Telecommunications engineeringand electrical engineering¥31,140 million

100.0

OT Engineering Co., Ltd.

Tokyo, Japan

Telecommunications engineeringand electrical engineering¥120 million

99.7

COMSYS Techno Co., Ltd.

Tokyo, Japan

Planning and consultation with regard
to information-processing technology¥50 million

100.0Tokyo Tsuken Co., Ltd.

Tokyo, Japan

Construction of telecommunications facilities¥54 million

100.0

Nitto Tsuken Co., Ltd.

Tokyo, Japan

Construction of telecommunications facilities¥60 million

91.5

Taiei Seisakusho Co., Ltd.

Tokyo, Japan

Design, manufacturing, and salesof telecommunications equipment¥60 million

49.7

COMSYS Tsusan Co., Ltd.

Tokyo, Japan

Sales of construction materials¥60 million

100.0

COMSYS Business Service Co., Ltd.

Tokyo, Japan

Construction of telecommunications facilities¥304 million

100.0

COMSYS Net Corporation

Tokyo, Japan

Construction of telecommunications facilities¥50 million

100.0

COMSYS Tohoku Techno Co., Ltd.

Miyagi, Japan

Planning and consultation with regard
to information-processing technology¥50 million

100.0

COMSYS Shinetsu Engineering Co., Ltd.**

Nagano, Japan

Construction of telecommunications facilities¥30 million

100.0

COMSYS Kansai Engineering Co., Ltd.

Osaka, Japan

Construction of telecommunications facilities¥50 million

100.0

COMSYS Kyusyu Engineering Co., Ltd.

Fukuoka, Japan

Construction of telecommunications facilities¥50 million

100.0

Chuo Denki Tsushin Kensetsu Co. Ltd.*Tokyo, Japan

Construction of telecommunications facilities¥80 million

100.0

COMSYS Thailand Co., Ltd.

Bangkok, Thailand

Technological consulting and engineering services

B15,000 thousand

48.0

Thai COMSYS & Jackson Co., Ltd.

Bangkok, Thailand

Technological consulting and engineering services

B2,000 thousand

49.0

COMSYS Philippines, Inc.

Manila, Philippines

Technological consulting and engineering services

P12,500 thousand

40.0

Consolidated Subsidiaries and Affiliates

Overseas Affiliates* Chuo Denki Tsushin Kensetsu Co. Ltd. changed its name to Chuo. C Co. Ltd. on April 1, 2004.
** COMSYS Shinetsu Engineering Co., Ltd. and TOSYS UNITEC Co., Ltd. merged to become a single company on July 1, 2004, and the new company was named Alstar Co., Ltd.

42COMSYS Holdings Corporation — Annual Report 2004

SANWA ELEC Group
Company Name

Location

Principal Business

Paid-in Capital

Percentage
Owned (%)

Telecommunications engineeringand electrical engineering
Design and construction of electric and otherfacilities for the Metropolitan Expressway¥1,374 million*

100.0¥50 million

100.0

Consolidated Subsidiaries and Affiliates
SANWA ELEC Co., Ltd.

Tokyo, Japan

Road-Techno Co., Ltd.

Tokyo, JapanSan Access Co., Ltd.***Tokyo, Japan

Engineering work, design and construction
work related to telecommunications¥50 million

100.0

SEC Hi Tec Co., Ltd.

Tokyo, Japan

Development and design of hardware and software¥30 million

100.0

SANWA Co., Ltd.**

Tokyo, Japan

Non-life insurance agency, and leasingof automobiles, etc.

¥30 million

100.0

Ibaraki Denden Kensetsu Co., Ltd.***Ibaraki, Japan

Engineering work, design and construction
work related to telecommunications¥30 million

100.0

SANWA Denshi Inc.

Tokyo, Japan

Design and construction of electric and electronic
telecommunication appliances and equipment¥112 million

99.3

SEM Co., Ltd.

Tokyo, Japan

Manufacture of automobile parts and accessories¥35 million

69.2

Sannect Co., Ltd.

Tokyo, Japan

Sales and maintenance of machines andequipment related to the aviation industry¥10 million

60.0

SANWA Support Engineering Co., Ltd.

Tokyo, Japan

Design and construction of telecommunications facilities¥20 million

90.0

P.T. Sarana Ekacitra Indonesia

Jakarta, Indonesia

Construction of telecommunications facilities

Rp1,884 million

40.0

SECM. S.A. DE C.V.

Mexico D.F., Mexico

Construction of telecommunications facilities

N$1,054 million

100.0

Overseas Affiliates* As a result of a capital increase, paid-in capital was ¥3,624 million as of September 30, 2004.
** This company’s main business was transferred to COMSYS Tsusan Co., Ltd. on August 1, 2004. As a result, starting from the first half of the fiscal year ending March 31, 2005,
this company has not been included in the consolidated financial statements.
*** Ibaraki Denden Kensetsu Co., Ltd. and San Access Co., Ltd. merged to become a single company on October 1, 2004, and the new company was named San Net Com Co., Ltd.

TOSYS Group
Company Name

Location

Principal Business

Paid-in Capital

Percentage
Owned (%)

TOSYS Corporation

Nagano, Japan

Telecommunications engineeringand electrical engineering¥360 million

100.0

TOSYS Nagano Co., Ltd.

Nagano, Japan

Construction of telecommunications and electric facilities¥21 million

71.7

TOSYS UNITEC Co., Ltd.**

Nagano, Japan

Construction of telecommunications and electric facilities¥31 million

100.0

TOSYS Nigata Co., Ltd.

Niigata, Japan

Construction of telecommunications and electric facilities¥40 million

61.6

TOSYS Actis Co., Ltd.

Niigata, Japan

Construction of telecommunications and electric facilities¥49 million

52.5

Tulip Keibi Co., Ltd.

Niigata, Japan

Security maintenance business for construction sites¥30 million

100.0

Tulip Life Co., Ltd.

Niigata, Japan

Repair, processing, sales, etc., of automobile¥40 million

100.0

TOSYS Ryokuka Co., Ltd.

Niigata, Japan

Landscape architecture and construction business¥10 million

100.0

Yoshimoto Kensetsu Co., Ltd.

Nagano, Japan

General engineering and construction business¥44 million

100.0

Consolidated Subsidiaries and Affiliates** COMSYS Shinetsu Engineering Co., Ltd. and TOSYS UNITEC Co., Ltd. merged to become a single company on July 1, 2004, and the new company was named Alstar Co., Ltd.

COMSYS Holdings Corporation — Annual Report 2004

43

COMSYS Holdings Information

Corporate Data
As of March 31, 2004

Name:
COMSYS Holdings Corporation
Hokkaido

Head Office:17-1, Higashigotanda 2-chome, Shinagawa-ku,
Tokyo 141-8647, Japan
Akita
Shibata/Nagaoka/Muikamachi/Joetsu
Kantonaka
Minami Tokyo

URL:
http://www.comsys-hd.co.jp/

TohokuFukushima
NIIGATA

Niigata
NAGANO

Hokuriku
Shinetsu
Ueda/Saku/Matsumoto/Shiojiri/Suwa/Iida
Gifu
Chugoku

Date of Establishment:
September 29, 2003

TOKYO

KansaiTokai
Takamatsu
Shikoku¥10 billion

Chiba
Kanagawa
Nishi Tokyo
Kantominami
Shizuoka
Hachioji

KyushuPaid in Capital:

Tochigi
Ibaraki
SaitamaHead Office/Nippon COMSYS Corporation
Head Office/SANWA ELEC Co., Ltd.
Head Office/TOSYS Corporation

Number of Employees (Consolidated):

Bangkok Liaison Office

Branch/Nippon COMSYS Corporation

Jakarta Branch Office

Branch/SANWA ELEC Co., Ltd.
Branch/TOSYS Corporation

7,091

Okinawa

Organization Chart
As of July 1, 2004

Corporate Planning Group

Corporate Strategy Group
Board of Directors

Corporate Information Systems Group

President

Senior Management Committee

Compliance Committee

Statutory Auditors

Corporate Planning Department

IR Department

Finance & Accounting Department

General Affairs & Personnel Department

44

COMSYS Holdings Corporation — Annual Report 2004

Investor Information
As of March 31, 2004

Fiscal Year-End:
March 31, 2004

Major Shareholders:
As of March 31, 2004
Share Held(Thousands)

Percentage
of Total(%)

Japan Trustee Services Bank, Ltd. (Trust Account)

26,505

18.15

The Master Trust Bank of Japan, Ltd. (Trust Account)

12,999

8.90

Common Stock:

Fujikura Ltd.

6,835

4.68

Authorized: 580,000,000 shares

Sumitomo Electric Industries, Ltd.

5,166

3.53

Issued: 145,977,886 shares

The Furukawa Electric Co., Ltd.

5,166

3.53

Nippon COMSYS Corporation*

4,638

3.17

Deutsche Securities Limited (Tokyo Branch)

2,966

2.03

Nippon Life Insurance Company

2,683

1.83

Date of Listing:Fujitsu Limited

2,413

1.65

September 2003

COMSYS Holdings Employee Shareholders Association

2,053

1.40

Stock Exchange Listing:*The shares held by Nippon Comsys Corporation in the new company do not carry voting

Shareholders

Annual Shareholders’ Meeting:June 29, 2004

Number of Shareholders:
11,429First Section of Tokyo Stock Exchangerights, as provided for in Article 241, Paragraph 3, of the Commercial Code of Japan.

and Osaka Securities Exchange(Securities code: 1721)

Composition of Shareholders:
As of March 31, 2004

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

Individuals and Others

16.23%

Auditor:

Foreign Companies
and Individuals

Certified Public Accountants of Japan

16.92%

Government and Municipalities

0.00%
Financial Institutions

45.28%

O-Yu Kyodo Office
Domestic Companies

For Further Information
and additional copies of this annual report, Please Contact
IR Department
Telephone: +81-3-3448-7000 (direct)
Facsimile: +81-3-3448-7001
E-Mail: IR@comsys-hd.co.jp

20.12%

Securities Companies

1.41%

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

Printed in Japan on recycled paper made from 100% post-consumer materials.