Presentation of Results
Half Year, FYE June 30, 2017
February 23, 2017

Nippon Koei Co., Ltd.
Representative Director and President
Ryuichi Arimoto

I:

Accounting Report(July 2016 - Dec 2016, FYE17/6 1H)

2Q Results for FYE June 30, 2017
In addition to a favorable trend with respect to existing businesses, BDP consolidation
contributed to the growth of income and reduced the deficit.
Steadily progressed toward the objective of the full-year plan.
 Orders
The amount of orders showed a substantial increase over the same period of the previous year, since businesstrends of Domestic Consulting and International Consulting were favorable.
 Net Sales
Excluding consolidated BDP, the figure was at the same level as the previous year.
 Operating Income
Operating income showed an improvement in earnings, owing to the good performance of International Consulting
Business and Power Engineering Business. (Operating margin FYE 16/6 2Q： -17.2%→ FYE 17/6 2Q： -10.4%)
 Profit attributable to shareholders of parent firm
In addition to improved profitability, the growth of non-operating income reduced the deficit margin compared to thesame period of the previous year.

(Millions of yen)

FYE 16/6 2Q
Results

FYE17/6 2Q
Resultsyoyyoy (%)

Orders (*1)

38,24558,451

20,206152.8%Net Sales

20,33626,304

5,968

129.3%

Operating Income- 3,500- 2,747

752－

Ordinary Income- 3,328- 2,286

1,041－

Profit attributable toshareholders of parent firm

- 2,651- 1,800

850－

Reference
ValuesFYE17/6
2Q (*2)yoy (%)

52,895138.3%

20,31199.9%- 2,824－(*2) Excluded the Urban & Spatial
Development segment(*1) We have changed the calculation standard for orders starting this period. For details, please see page 26. Results for
2Q of FYE June 30, 2016 are also based upon figures calculated according to the same standard.
3

Consolidated Profit and Loss Summary (FYE 17/6 1H)
Profitability has dramatically improved even on a BDP-unconsolidated basis.
(Millions of yen)

FYE 16/6 2Q
Results

FYE17/6 2Q
Resultsyoyyoy (%)

Orders38,245

Ratio(vs. Sales)

58,451

Ratio(vs. Sales)

20,206152.8%Net sales

20,336100.0%

26,304100.0%

5,968

129.3%

15,59976.7%

17,936

68.2%

2,336

115.0%

Gross profit

4,736

23.3%

8,368

31.8%

3,632

176.7%

SG&A

8,237

40.5%

11,116

42.3%

2,879

135.0%

Operating income- 3,500-17.2%- 2,747- 10.4%752-

Non-operating
income / expenses

171

0.8%

460

1.8%

288

267.9%

Ordinary income- 3,328- 16.4%- 2,286- 8.7%

1,041-

Extraordinary
income/loss- 158- 0.8%- 105- 0.4%

53-

Profit attributable toshareholders of parent firm

- 2,651- 13.0%- 1,800- 6.8%

850-

Cost of sales

Reference
ValuesFYE17/6
2Q (*2)yoy (%)

52,895138.3%

20,311

99.9%

14,636

93.8%

5,674

119.8%

8,499

103.2%- 2,824－(*2) Excluded the Urban &SpatialDevelopment segment

4Profit / Loss Analysis(Millions of yen)

Cost of sales
ratio improved
by 4.6pts.

Profit increased dueto the consolidationof BDP.

Net sales forexisting
businesses
remained flat.

+95

+289

+963
- 42

+76

- 242

- 1,800

Taxes
Increased

FYE 17/6 2Q
Net Loss- 262- 2,651- 25

FYE 16/6 2Q
Net Loss

Gain on
Sales

Improving
Ratio of
Cost of Sales

Increasing
Administrative
Expenses

Urban &
SpatialDevelopment
ProfitNon-operating
incomeExtraordinary
incomeExtraordinary
loss*The amount of change in the values from sales to administrative expenses consists of yoy difference of existing
businesses, excluding Urban & Spatial Development.
5

Results by Business Segment(Millions of yen)OrdersFYE 16/6 2Q
Results

Real Estate Leasing

38,245
19,487
11,0527,697－
720,336
4,470
8,347
7,148
－
270
98
- 3,500- 3,535
- 118
1,166
－
201

Others/Recondilations- 1,214

Domestic Consulting
International Consulting
Power Engineering
Urban & Spatial Development
OthersNet Sales
Domestic Consulting
International Consulting
Power Engineering
Urban & Spatial Development
Real Estate Leasing
OthersOperating income
Domestic Consulting
International Consulting
Power Engineering
Urban & Spatial Development

FYE17/6 2Q
Results

58,451
23,95122,229
6,690
5,555
24
26,304
4,237
7,959
7,738
5,993
241
134
- 2,747- 3,482
201
1,442
76
203
- 1,189yoy

yoy (%)

20,206152.8%

4,464

122.9%

11,177201.1%- 1,007

86.9%

5,555

－

16

324.1%

5,968

129.3%

- 233

94.8%

- 388

95.3%

589

108.2%

5,993

－

- 29

89.3%

36

136.9%

752

－

52

－

319

－

276

123.7%

76－2

101.3%

25－
6

Domestic Consulting
Market environment•The public works-related budget remains flat at the level of JPY 6 trillion, while budget for disaster prevention &mitigation and countermeasures against aging infrastructure showed a slight increase owing to “building
national resilience” policy.
– The amount of orders increased compared to the same period of the previous fiscal year owing to the orders rescheduledby the client and robust receiving orders in core business areas. (*The order for Cairo Metro project, approximately JPY 2
billion, acquired by Nippon Civic Consulting Engineers Co., Ltd., is recorded.)– Net sales fell short of the same period of the previous year as a result of decrease in number of large-scale special projects,
such as small hydroelectric generation, and construction of projects completed in the first half of the period.
– Operating income increased due to the increase in gross profit resulting from improved productivity generated by thepromotion of in-house manufacturing.

(Millions of yen)

FYE 16/6 2Q
Results

FYE17/6 2Q
Resultsyoyyoy (%)

Orders

19,487

Ratio(vs. Sales)

23,951

Ratio(vs. Sales)

4,464

122.9%Net sales (*)

4,470

100.0%

4,237

100.0%

- 233

94.8%

Cost of sales

4,135

92.5%

3,733

88.1%

- 402

90.3%

Gross profit

334

7.5%

504

11.9%

169

150.6%

SG & A

3,869

86.6%

3,986

94.1%

116

103.0%- 3,535- 79.1%- 3,482- 82.2%52

98.5%

Operating income*Net sales represent sales to external customers.
7

Domestic Consulting
Progress of business strategy• The amount of orders for FYE17/6 1H steadily increased as a result of focusing on front-loaded orders
observing the market trend.
• The amount of orders showed a 40% increase in core business over the same period of the previous
year, with approx. 10% increase in Disaster Prevention and Mitigation, approx. 30% increase in
Maintenance and Control.
• According to the statistics of MLIT’s national survey (50 major organizations incl. local governments
and other governmental agencies), our market share increased steadily. (The unconsolidated share of
Nippon Koei rose from 6.5% to 6.9%. *The data collection period is from April to November.)• Productivity improved as a result of strategic project selection and promotion of quality improvement.

■Orders■Net sales■Operating income(Millions of yen)

-

-

-

-

-

8

International Consulting
Market environment• The ODA budget increased for the first time in 17 years. The “Expanded Partnership for Quality
Infrastructure” initiative provides a favorable business environment for the Nippon Koei Group, whichholds the top share in the ODA business.
– The amount of orders largely surpassed the one of the previous year owing to the increase in number of large-scale
projects.
(*The Cairo Metro project, acquired by Nippon Koei Co., Ltd., reached the amount of approximately JPY 8 billion.)– Net sales fell short compared to the same period of the previous year due to an accidentally enforced interruption of a
project in Bangladesh, while the trend of the traffic/transport sector was favorable.
– Operating income turned into the black during the first half of the period, while showing a decline in sales, owing to thecontinuous implementation of profit management efforts. (Operating margin: -1.4% → +2.5%)(Millions of yen)

FYE 16/6 2Q
Results

FYE17/6 2Q
Resultsyoyyoy (%)

Orders

11,052

Ratio(vs. Sales)

22,229

Ratio(vs. Sales)

11,177201.1%Net sales (*)

8,347

100.0%

7,959

100.0%

- 388

95.3%

Cost of sales

6,498

77.8%

5,749

72.2%

- 748

88.5%

Gross profit

1,849

22.2%

2,210

27.8%

360

119.5%

SG & A

1,968

23.6%

2,009

25.2%

41

102.1%

Operating income- 118- 1.4%

201

2.5%

319

－

*Net sales represent sales to external customers.
9International Consulting
Progress of business strategy
•
•
•
•
•

The number of orders is at the highest level in history owing to contracts for several largescale railway projects.
Japanese ODA business keeps on growing, as a result of steadily-obtained orders for JICA’s
study projects and yen-loan-financed projects.
An increase in number of projects at the construction surveillance stage led to a dramatic
improvement in profitability.
Group-wide acceptance of orders is promoted with strengthened ties among Group
companies and overseas affiliate companies.
Attention remains focused on its role as a tugboat to lead the infrastructure export industry.

■Orders■Net Sales■Operating income(Millions of yen)

*

-

-

-

-

*The actual amount of orders for 2Q of FYE15/6 is calculated based on the previous standard.
10Power Engineering
Market environment• Price competition and cost reduction demand, including the growing number of competitive bids, willcontinue to intensify, while the number of renewal and repair projects increases.
• Future prospect for the market trend of electric power system reform is uncertain.
– The amount of orders did not reach the one of the same period of the previous year due to delays in contracting
procedures for some projects.
– Net sales surpassed the one of the same period of the previous year, with completions and fairly progressing status oflarge-scale projects started in the past.
– Operating income also surpassed the one of the same period of the previous year, with completion of a number of largescale projects and steady progress in productivity improvement. (Operating margin: 16.3% →18.6%)(Millions of yen)

FYE 16/6 2Q
Results

FYE17/6 2Q
ResultsYoyyoy (%)

Orders

7,697

Ratio
(vs. Sales)

6,690

Ratio
(vs. Sales)- 1,007

86.9%

Net sales (*)

7,148

100.0%

7,738

100.0%

589

108.2%

Cost of sales

4,735

66.2%

4,921

63.6%

186

103.9%

Gross profit

2,413

33.8%

2,816

36.4%

402

116.7%

SG & A

1,246

17.4%

1,373

17.8%

126

110.2%

Operatingincome

1,166

16.3%

1,442

18.6%

276

123.7%*Net sales represents sales to external customers.
11

Power Engineering
Progress of business strategy in practice• Achieved cost reduction by reviewing designs/specifications and improving operational
efficiency, coping with the market environment of price competition and cost reduction
demand.
• Currently promoting sales for governmental offices, private companies, and electricity
producers other than Tokyo Electric Power Co.
• Constantly formulate projects in collaboration with the Domestic Consulting segment ofNK group.
• Formulate new projects with focused business themes.
• Continue research & development for new products.
■Orders■Net sales■Operating income(Millions of yen)

12

Urban & Spatial Development
Market environment• In UK, the impact of Brexit is considered not to be very serious but consequences of somecommercial projects conducted by the private sector are somehow influenced and uncertain.
• Urban development demand in emerging economies has been acutely rising especially in Asia.
– While the number of new orders slightly declined in July and August immediately after the announcement of Brexit, orders showed asteady progress vis-à-vis the plan.
– The number of net sales have become better than the plan. The sales trend steadily progressed almost as forecasted either in UK oroverseas on a local currency basis.
– Even with the impact of foreign currency translation (weak GBP), the status of operating income was almost as forecasted. (Operating
Margin to Sales after amortization of goodwill: 1.3%)* The total amount of amortization expense for FYE June 30, 2017 is approximately JPY 1 billion.
- Amortization of goodwill: approximately JPY 500 million- Of other intangible fixed assets: Just over JPY 500 million(Millions of yen)

FYE17/6 2Q
Results

Progress of business strategy in practice•

Orders5,555(ratio vs.
sales)Net Sales (*)

5,993

100.0%

Cost of sales

3,299

55.0%

Gross profit

2,694

45.0%

SG & A

2,617

43.7%

Operatingincome

76

1.3%

•
•

BDP’s existing businesses, mainly in UK, continue tobe stable.
Started sales promotion targeting private companies
in ASEAN countries according to the cooperation with
Nippon Koei Group.
Completed (1) a program to send two Nippon Koei
employees to BDP for three and a half months and(2) a training program to learn BIM technology.

* Consolidated results including BDP are recorded with a three-month timelag. Thus, the consolidated settlement of 2Q (July-December 2016) isbased upon the performance within a six-month period of AprilSeptember 2016.
* Fixed exchange rate of for 2Q results: 1 GBP = 144.5 JPY(Rate used in the plan for the FYE June 30, 2017 was 1 GBP = 160 JPY)

*Net sales represent sales to external customers.
13

Balance sheet• Intangible fixed assets increased by recognition of goodwill during the acquisition of BDP in
April 2016.
• Fixed liabilities increased due to an increase of long-term borrowings for the BDP acquisition.
(Millions of yen)

FYE 16/6 2Q
Results

FYE 17/6 2Q
Resultsyoy

Assets89,532

113,878

24,346

Current assets

49,45658,4008,943

24,54424,60965

553

13,205

12,652

14,97817,663

2,685

Liabilities

40,42767,091

26,664Current liabilities

34,51438,986

4,471

5,912

28,10522,192

49,10446,786- 2,317

Physical fixed
assetsIntangible assets
Investments andother assets

Non-current
liabilities
Net assets

14

Cash Flows• Cash flow from operating activities increased owing to the increase in advances received
led by a favorable increase in orders.
• Cash flow from investment activities showed a decrease in expenses as a result of
reduced expenditure for the purchase of investment securities.

(Millions of yen)

Net cash provided by(used in) operating
activities
Net cash provided by(used in) investing
activities
Net cash provided by(used in) financing
activities
Net increase(decrease) in cash andcash equivalents
Cash and cash
equivalents at the endof period

FYE 16/6 2Q
Results

FYE 17/6 2Q
Resultsyoy- 14,639- 7,337

7,301- 3,057- 2,078

97811,21810,758- 459- 6,530

933

7,463

5,142

10,334

5,191
15

II: FYE 17/6 Forecast

FYE 17/6 Forecast (Orders Amount Revised)
The forecast for orders was revised upward as a result of adding the order for the Cairo Metro project.
No changes have been made to the forecasts for net sales and operating income for the entire period.

(Millions of yen)

FYE 17/6
Forecast

Ordinary income

4,365

114,000
105,000
45,00026,00018,50014,000
6,000
3,200
1,600
3,100
600
6,300

Profit attributable toshareholders of parent firm

1,823

3,600

Orders
Net sales

81,865- Domestic Consulting

40,778- International Consulting

22,070- Power Engineering

17,522- Urban & Spatial Development-

Operating income

4,723- Domestic Consulting

2,956- International Consulting

1,156- Power Engineering

3,048- Urban & Spatial Development*

FYE 16/6
Results
104,019-yoy

yoy (%)

9,980

109.6%

23,134128.3%

4,221

110.4%

3,929

117.8%

977

105.6%

14,000-1,276

127.0%

243

108.2%

443

138.3%

51

101.7%

600

-

1,934

144.3%

1,776

197.5%

Note: Net sales and operating income are exclusively consisted of the main segments of Domestic Consulting, International Consulting , PowerEngineering and Urban & Spatial Development. Net sales and operating income also include the Real Estate Leasing segment, etc.
17

FYE 17/6 Forecast (Orders Amount Revised)(Millions of yen)

FYE 17/6

FYE 17/6

Forecast (initial)

Forecast (revised)

Increase/
Decrease

104,000

114,000

10,000- Domestic Consulting

46,00048,0002,000- International Consulting

28,00036,0008,000- Power Engineering

16,00016,0000- Urban & Spatial Development

14,00014,0000Orders(Details of changes)
Domestic Consulting
Order received: Cairo Metro project acquired by Nippon Civic Consulting Engineers Co., Ltd.: JPY 2 billion
International Consulting
Order received: Cairo Metro project acquired by Nippon Koei Co., Ltd. : JPY 8 billion

18III: Initiatives to be taken in the Second
Half of the Fiscal Year Ending June30, 2017 and Beyond

Initiatives from FYE 17/6 3Q (1) - to achieve NK-AIM Domestic Consulting<< Outstanding orders (Millions of yen) >>– In light of the “Restructuring Vision for Society with Awareness of
Water-related Disaster Prevention (MLIT)”, we will enhancemeasures for large-scale water-related disasters that will be aleading factor for winning the competition at the market with highgrowth potential. Taking advantage of our strength as a general
consultant, we will deal with the business demand in a crossdivisional approach.
– As a member of the “National Council for Infrastructure
Maintenance,” we will actively collect relevant information andmake proposals for solution.
– We will obtain a high rating for this year’s businesses and secure
early orders by conducting strict quality control.

International Consulting<< Outstanding orders (Millions of yen) >>– We will continue enhancing capacities for making proposals withcomparative advantages to secure large-scale orders.
– We will strengthen management systems and accumulate knowhow of the railway-related business.
– In order to promote urban and PPP businesses, we will
strengthen operations and sales forces mainly in areas of
airports/ports, roads, and water supply & sewage.
– We will strengthen our ties for collaboration with Group
companies and enhance the production system by accelerating
our alliance with other companies.
20

Activities from FYE 17/6 3Q (2) - to achieve NK-AIM Power Engineering<< Outstanding orders (Millions of yen) >>– By responding to rush demand before the revision of the FIT
price and other kind of demand emerging after the revision, we
will seek opportunities to prepare estimates for governmental andprivate projects in order to obtain more orders.
– We will follow up on the former technology-related proposals, andsubmit new technical proposals.
– Sales operations will be conducted in collaboration with thebranches of the domestic consulting business.
– We will seek new business opportunities and develop
relationships with electricity producers other than the major
power companies we currently transact with.

Urban & Spatial Development– In the UK market, we will use the cutting-edge BIM technology owned by BDP, as one of sales
promotion tools, to enhance business performance.
– The establishment of a new business site in Asia is under discussion in order to facilitate cooperation
with the Nippon Koei Group and improve productivity.
– Employees of Nippon Koei and BDP form a liaison group to share bidding information as needed. We
will obtain orders of cooperative project like the one for Myanmar.
– We will utilize employees who have completed training at BDP to share the knowledge and theory
they have learned with Nippon Koei.
– The human-resource exchange with BDP and sharing of BIM technology will continue.
21

Initiatives from FYE 17/6 3Q (3) ― to achieve NK-AIM ―Corporate-wide common measures■ Technical measure  The International R&D Center was established within the R&D Center inJanuary 2017. The aim is to make proposals for overseas projects by utilizing globallyinvestigated technological information and trends.
We will make an action plan in practice, consisting of 12 themes including technology
coping with climate change, disaster prevention and mitigation technology, project
management systems and BIM system.
■ Personnel measure  To provide more comfortable work environment, a full-scale launch of theworking-at-home system, the establishment of a satellite office and a child-care related
corporate welfare scheme will be conducted.
■ Organizational measure  Demolishment of the former head office building commenced in
February 2017 as a part of the new head office project.

[TOPIC] The first among construction consultant
companies, we opened an on-site day-care
center “N-Kids” in October 2016.
As a part of the initiatives to realize flexible working styles,
an on-site day-care center started to provide employeeswith more comfortable work environment. The center canbe used on a regular and day-to-day basis, andencourages early return from childbirth leave andfacilitates sustainable operation when an employee istransferred from an overseas office or local office to theheadquarter site in Tokyo.
22

NK-AIM Demonstration of our true Merit (1)Create synergy through cooperation between
BDP and Nippon Koei
 Acquisition of orders for cooperative
projects
Accepted an order of cooperative projectat Vietnam. Will continue with efforts toacquire more orders for cooperative
urban & spatial development projects inAsia.

 Joint client visit
Conduct market survey and client visits
in Asia continuously, in order to collectsales information and to reinforce
cooperative ties between BDP and NK.

 Integration of business Sites in India
Nippon Koei’s New Delhi office and
BDP’s site in India were merged.
Sales liaison meetings will be regularly
held to facilitate active communication.

23

NK-AIM Demonstration of our true Merit (2)For expanding new business (energy business) Promote regional revitalization and “local production for local consumption” of electricity byhydropower.
 As for the small hydropower projects currently in operation, there are six hydropower plants
operating including the Shirataki Electric Plant in Engaru-cho (Hokkaido), which wascommenced in July 2016. Sales promotion for corporate divisions of local governments istargeted to launch more projects of small hydropower plants.

 Enter into overseas electric-power development business Financially, we have been contributing to PowerSource, a private electric power
development company in the Philippines, since March 2016. More than 50% of theconstruction work for a power plant fueled by coal and biomass was completed as of theend of January, 2017, expected to start operating in January next year. Our engineersvisit the site on a regular basis to check the progress of construction and the quality, andobserve major machine tests at the manufacturing plant.

Conceptual Drawing

Construction of boiler steel
framesFoundation of the building of aturbine and electric generator
24

Reverse split of stocks/Changes in Share Unit/Dividend Policy
Reverse split of stocks/Changes in Share Unit
– Changed its number of shares per unit (trading unit) from 1,000 shares to 100 shares,
effective as of January 1, 2017.
– Consolidated 5 shares into 1 share in order to adjust the investment unit to a levelconsidered desirable by the Stock Exchange (JPY 50,000 or more, but less than
500,000).
(%)

(yen)

Dividend policy

Dividends

Stable dividends and enhancementof shareholder return in line withincreases in profit

payout ratio (%)

 The targeted medium-term
dividend payout ratio is around30%.
Planning to pay a dividend of¥75.0, an increase of 50%, for
FYE 17/6.
FYE 2014/6

FYE 2015/6

FYE 2016/6

FYE2017/6 (Plan)*Past dividends are recalculated based on the ratio after share consolidation.
25

(Reference) On changes in the calculation standards for orders
Previously, amount of orders included the balances of foreign currency translation (*) of outstanding orders
as of the end of the previous period and orders for the current period. Starting this period, however, orders
are settled without foreign currency translation.
 Previous method of calculation

 Current method of calculation (starting this period)

Loss

Loss

Orders for the current period
include the balances offoreign currency translation ofoutstanding orders as of theend of the previous period
and orders for the current
periodOutstandingorders as of theend of theprevious period

Current period
ordersCurrent period
net sales

Orders for the current period do
not include the balances offoreign currency translation ofoutstanding orders as of theend of the previous period andorders for the current period

Outstandingorders as of theend of the current
periodOutstandingorders as of theend of theprevious period

Current period
ordersBalance of foreign
currencytranslation

Current period
net sales

Outstandingorders as of theend of the current
period(*) Details on the balances of foreign currency translation of outstanding orders as of the end of the previous period and orders for thecurrent period are explained in the section titled “4. Supplementary Information” on page12, the Summary of Financial Results.
26

IV: ReferenceCorporate Profile
Corporate NameNIPPON KOEI CO., LTD.

Date of Foundation

June 7, 1946

Capital¥7,393 million

 Founder

Yutaka Kubota (1890-1986)
Before WWII, Yutaka Kubota was engaged in thedevelopment of hydropower resources (e.g. Suiho
Dam/700MW, in the Korean Peninsula, one of theworld’s largest at that time).

Number of Employees 4,336 (consolidated)
Consolidated Subsidiaries
Businesses

After the War, in a bid to work toward therestoration of Japan and reconstruction ofcountries damaged by the War, he founded theCompany at the age of 56.

16

Domestic Consulting
International Consulting (ODA, etc.)
Power Engineering
Urban & Spatial Development

Known as the “Father of Overseas Engineering
Cooperation”, he was awarded the Grand Cordonof the First Order of the Rising Sun in 1985.
He directed projects in many countries throughout
the world until he was 90 years old, contributing todevelopment in developing countries.

Management Philosophy
Act with integrity and contribute to society throughtechnology and engineering.

Transition of Operating Income (consolidated, ¥ million)

Transition of Sales (consolidated, ¥ million)
120,000

105,000

90,00065,94572,411

79,193

81,839

7,000

6,000

6,000

81,865

4,642

5,000
4,000

60,000

4,256

4,502

4,723

2014

2015

2016

3,030

3,000
2,000

30,000

1,000
0

0
2012

2013

2014

2015

2016

(Forecast)2017（予）

2012

2013

(Forecast)2017（予）28

Business Development
Domestic Consulting

International Consulting

Nippon Koei has implemented approx. 3,000 projects/year tounderpin the foundations of people’s daily lives, such as development
and maintenance of social capital including rivers, roads, etc., andregional reforms to realize prosperous and safe living.

Nippon Koei has supported the growth of developing countries in Africa,
the Middle East, Latin America and, especially, in Asia by providing support
in a broad range of fields including water resources, energy, urban
development, transportation, agricultural development, and environment
control.

Power Engineering

Nippon Koei has worked on the development of power sources and thepromotion of business accommodating electricity demand in Japan andoverseas. The Company has engaged in new construction and repairs of
substations, switching stations, power stations, the formation of dam
management systems at hydroelectric power plants, etc.

Urban & Spatial Development

Nippon Koei strives to create multifunctional, well-organized, barrier-free, ecofriendly and beautiful life space in emerging economies in Asia and otherdeveloping countries/regions through development projects of social
infrastructure design, such as of railway stations, airport buildings,
rearrangement of the streetscape, etc.
29

Job Description for Civil Engineering Consultants
Domestic: Mainly involved through the design stage. Core customers are primary government organizations including the
Ministry of Land, Infrastructure, Transport and Tourism, and secondary government organizations including prefectural andother local governments.
Overseas: Involvement varies by project, and can range from planning and construction to construction supervision andmanagement. Core customers include the Japan International Cooperation Agency (JICA), other governmental agencies,
the United Nations and the World Bank.

Planning

DesignPlan and draft,
Basic engineering,feasibility studies Detailed engineering

Construction
Competitive bids,
Providing
Proposals

Bid evaluation and support
for supplier selection

Operation/
Management

Contract supervision and management Operational consulting
Construction supervision andManagement consulting
management

Domestic

Consultant (NK)Construction (General Contractors, etc.)

Overseas

Consultant (NK)Surveillance (NK)Construction (General Contractors, etc.)

Example: Chronic traffic congestion problems in Region A
Planning

DesignConstruction

Provide engineering services forstudies, planning, design and otheractivities.

Supervise the work of contractors on behalfof the client (supervision and management)

Completion ofroad・ Should roads or subways be constructed?
・ Is the project economically viable?
・ Propose the optimum construction
methods given the terrain(General contractors, manufacturers, etc.)
Execution of construction work according to thespecifications agreed upon by the contractee andcivil engineering consulting firm

Provided as aservice toresidents
30

Nippon Koei’s Development Along with Social Progress
NipponKoei
XSocietyBusiness
Development

Formulation of business base,
Fostering positive relationshipwith foreign governments

Comprehensive strength anddevelopment capability toencompass various fields

Flexible responses tochanges in environmentand social needs

Stable supply of electricity
Development of infrastructure
for daily life

Establishment of foundation
for industrial growth

Realization of sustainable
society

Dam

Electricity
Production

Rivers anddrainageTransportation

Environmental
systemLong-termManagement
Strategy

NK-AIM
Urban & spatial
development

Maintenanceandmanagement

Building
National
Resilience
Longer operating
lives of infrastructure
Environmental
responses

Advances

Deregulation ofelectricity
business

Infrastructure
exportEstablishment ofsocial capital
Restoration of
infrastructure fordaily livings

Human
Resources

Provision of employment
opportunities for engineers whocame back alive from overseas
territories

Improvement in quality ofengineers,
Training of engineers in extensive
industrial fields

Improving social reputation ofengineering consultants
Transfer of technologies todeveloping countries

Stage

Foundation stage

Growth stage

Maturation stage

Innovation stage

Era

Restoration in the postwar
period1946-1960s

High economic growth
Population increase
1970s-1990s

Collapse of bubble economy
Global warming
1990s-2000s

Great East Japan Earthquake
Urban problems
2011-Present

Recruitment of regional engineers
Paying attention to work-life balance

6

Strengths of Nippon Koei
(1) Sustainable business model developed
along with progress in society(Win-win relationship between society and theCompany)

Implementation of transformation to meetmarket needs(2) Japan’s leading engineering consultant(Business domains, technologies, and humanresources)

Comprehensive strength: Capable of solving
sophisticated or complex issues
Human resources: Has the largest number ofengineers in the industry

Commercialization of solutions on social
issuesConsolidated
net sales:¥81.8 billion

No. ofcountries inwhich businessis undertaken:
156

Technologies: Equipped with in-house R&D
facilities and a number of patents

No. of orders
per year: over
4,500

No. of patents
acquired:74

No. of
Professional
Engineers*:
1,465*Certified by the Japanese government

Provide solutions on needs of the era and realize sustainable business expansion
and profitability growth32

Position in Industry
Nippon Koei is Japan’s leading civil engineering consultant.
Rank

Sales (Millions of yen)Company

Segment ofConst. Consultation

Corporate
Total

1

Nippon Koei

43,59560,471

2

Pacific Consultants Co.,LTD.

38,16340,5403

CTI Engineering Co., Ltd.

32,11933,734

4

Yachiyo Engineering Co., Ltd.

18,761

19,101

5

KOKUSAI KOGYO CO., LTD.

16,32535,022

6

IDEA Consultants, Inc.

16,057

16,596

7

JR East Consultants Company

16,047

17,810

8

Eight-Japan Engineering Consultants Inc.

15,362

17,531

9

Nihon Suido Consultants Co., Ltd

15,207

16,515

10

Oriental Consultants Co., LTD.

15,19915,24420

Tamano Consultants Co., Ltd. (strong point: urban planning)

10,301

12,02279

NIPPON CIVIC CONSULTING ENGINEERS CO.,LTD(strong points: underground spatial planning, tunnels)

2,216

2,269

※ Source: Nikkei Construction, May 9, 2016 edition. Ranking by engineering consultant division sales (according to published financial results)
33

Group Vision
To provide services that are of value in building safe and reliablesocial infrastructure and comfortable living spaces

34

Long-Term Management Strategy (July 2015 – June 2021)
Continue evolution toward a global consulting and engineering firm
FYE21/6 Numerical Targets
Consolidated Net
Sales¥140.0 billion

Operating income¥14.0 billion

Operating margin
10%

ROE
10%

¥140.0 billion
Growth by new business+¥40.0 billion¥100.0 billion¥80.0 billion
1st
Step

2nd
Step

Sustainable growth ofexisting business+¥20.0 billion¥80.0 billion  ¥100.0 billion

3rd
Step

NK-AIM
FY2008FY2012FY2015FY2018FY2020In order to meet the requirement of sophisticated and complicated urban functions as well as
to resolve urban issues in developing countries, exploit urban space business and other new businesses
toward a global and highly profitable corporation
35

Revised Medium-Term Management Plan (NK-AIM)“Autonomy and collaboration” (each group company’s autonomous management
system and collaboration within/outside the company) have been added to thebasic policies, aiming at creating a foundation for the achievement of the Group
Vision and Long-Term Management Strategy.
FYE18/6 Numerical Targets (after the revision, August 2016)
Consolidated Net Sales

Operating income

Operating marginROE¥115.0 billion¥7.4 billion

6.4%

7.5%

Basic policies
Sustainable growth of three core businesses,
Generation and expansion of new businesses,
Autonomy and collaboration ≪NEW≫
Key Challenges

Corporate-wide measures to address key challenges• Develop next-generation coretechnologies• Further improvement of technicalstrengths and productivity(1) Further evolution of global expansion→ Advance globally(1)
Technology(2) Further expansion of business fields andimprovement of profitability by intensifying
existing core businesses→ Intensify in Japan(2) Human
Resources

Strengthen human resources,
recruitment and training(3) Demonstrating true merits of aggregatedtechnologies for establishing new businessareas→ Demonstrate Merits(3)
Organization

Promote collaboration and enhance
corporate governance36

Domestic Consulting
Public Works Expenditures (¥ trillion)

Nippon Koei’s Operating Results in Domestic Consulting(¥ million)

 Initial budget  Supplementary

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Orders

FYE
12/3

FYE
13/3

Net Sales

FYE
14/6

FYE
15/6

Operating
Income

FYE
16/6

FYE
17/6

FYE
18/6

37

International Consulting
Initial ODA Budget in General Account of Japan(¥ billion)

Nippon Koei’s Operating Results in International Consulting(¥ million)
Orders

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FYE
12/3

FYE
13/3

Net Sales

FYE
14/6

FYE
15/6

Operating Income

FYE
16/6

FYE
17/6

FYE
18/6

(*1) The amount of actual orders for the period ended June 2016 and orders (plan) for the period ended June 2017 are calculated using the revised calculation standard.
(*2) The amount of orders (plan) for FYE June 30, 2018 are calculated using the conventional calculation standard. Financial results for FYE June 30, 2017 will beannounced reflecting an amount of orders (plan) based on the revised calculation standard.
38

Power Engineering
Tokyo Electric Power Co., Ltd.’s Repair Expenditures andFacility Investment and Its Distribution (¥ 100 million)■ Repair Exp.

Nippon Koei’s Operating Results in Power Engineering
Business (¥ million)
20,000

受注
Orders■ Facility Inv.

Operating
営業利益
Income

Net
Sales
売上

19,500 5,000

18,50017,857

17,522

16,000 16,000

15,92915,831

4,000

14,71615,00014,16913,595
12,932
12,541
11,990

3,048

3,100

2,834

2,800

3,000

10,000
1,979

2,000

1,267
5,000
878

0
FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FYE
2012年
12/3
3月期

1,000

FYE
2013年
13/3
3月期

FYE
2014年
14/6
6月期

FYE
2015年
15/6
6月期

FYE
2016年
16/6
6月期

FYE
2017年
17/6
6月期
(Plan)
（計画）

FYE
2018年
18/6
6月期
(Plan)（計画）

039

Urban & Spatial Development
Sales of the top 164 architecture and design
companies (USD 100 million)

FY2015 sales of the top 164 companies bysegment (USD 100 million)

Construction
Transportation
Other

Source: Engineering News-Record (August 2016 edition)40

About BDP Holdings Limited
 Name Location (HQ) Capital
 Established Employees
 Sales

BDP Holdings Limited
Manchester , UK
£5.0 million
05 April,1961
850 (approx.)£84.4 million (FYE15/12)

BDP Manchester Studio• Amount of transaction: Approximately ¥16.5 billion (£102.2million)• The amount of amortization expenses for FYE June 30, 2017 is approximately JPY 1 billion.
- Amortization of goodwill: Approximately JPY 500 million for depreciation for 20 years- Other intangible fixed assets: Just over JPY 500 million
Transition of Net Sales/EBITDA

By business category

By region
OthersOthers15%

Middle East
Ireland

Designing oflandscapes and urban areas
10%

U.K.
80%

Building facilities
15%

Architecture60%

41

Act with integrity and contribute to society through technology and engineering.

This presentation is provided for informational purposes only and is not intended to solicit any action. Nippon Koei prepared thispresentation (including forecasts of financial results) based on credible information available at the time of publication and certain
assumptions the Company believes to be reasonable. Various factors may cause actual results to differ materially from the projected
results or other expectations implied or expressed in this presentation.

IR-related inquiries
Nippon Koei Co., Ltd.
Corporate Communication Office
Corporate Planning Divisionkoei-ir＠n-koei.co.jp
www.n-koei.co.jp/english/