Annual Results for the Fiscal Year
Ended March 31, 2018 (FY 2017)
May 11, 2018

Building a better,brighter future together
Total ICT Solutions:Contributing to the Realization of a Brighter
Future by Bringing People Together andForming Connections with Society

URL: http://www.exeo.co.jp/overseas/index.html

Annual Results for FY 2017

Contents
1. Overview of FY17 Results

・・・2(6) NCCs

・・・20(1) Performance Figures

・・・3(7) Urban Infrastructure・・・21(2) Orders Received

・・・4(8) System-Solutions

・・・25(3) Net Sales

・・・5(9) Measures for greater efficiency･･･ 31(4) Operating Income

・・・6(5) Cash Flow

・・・8

2. Management Integration

・・・9(1) Performance Figures

・・・10(2) Overview of FY17 Results of Each Company

・・・11(3) Business Scale after Management Integration

・・・11(ImprovedProductivity)

・・・34

4. Raising Shareholders’ Value(1)

Payment of Higher Dividends･･･ 35(2)

Dividend Payment Plan, etc. for FY18･･･ 36・・・37

5. Topics(1) Visit to Overseas Subsidiary by Minister ofInternal Affairs and Communications

3. Plans for FY18･･･ 38・・・12(1) Performance Figures

・・・13(2) Orders Received and Net Sales

・・・14(3) Operating Income

・・・16(4) NTT Group (Access/Network)・・・18(5) NTT Group (Mobile)

・・・19

－1－

Annual Results for FY 2017

1. Overview of FY17 Results(1) Performance Figures(2) Orders Received(3) Net Sales(4) Operating Income(5) Cash Flow

－2－

Annual Results for FY 2017

1. Overview of FY17 Results(1) Performance Figures◆ Net sales increased due to strong orders from telecom carriers and growth of orders received and salesof Urban Infrastructure◆ Operating income reached a new high due to the effects of more efficient construction and the like

■ Overview of FY17 results (consolidated)

(¥bn)

FY16
Actual

FY17

A

Plan

ActualYOY

Plan
accuracy

B

C

C/A

C/B

Orders received

324.1

330.0

325.0

100%

98%

Net sales

298.8

320.0

312.6

105%

98%

43.3

113%

105%

17.7

101%

97%

25.6

123%

111%

26.4

124%

112%

130%

115%

Gross profit

SG&A expenses

Operating income

Ordinary income(12.9%)(12.9%)

38.4(5.9%)(13.9%)

41.3(5.7%)

17.6(7.0%)(5.7%)

18.3(7.2%)

20.8(7.2%)(8.2%)

23.0(7.4%)

21.4(8.5%)

23.6

Net income(4.6%)(4.9%)(5.8%)
attributable to owners
13.7
15.7
17.9
of parent
Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

－3－

Annual Results for FY 2017

1. Overview of FY17 Results(2) Orders Received◆ Exceeded the previous year due to strong Urban Infrastructure orders◆ Decreased compared to the plan because orders received for SYSTEM-SOLUTIONS (new solutions)did not grow

■ YOY (consolidated)■ Compared to plan (consolidated) (¥bn)○ KDDI○ SB○ SI○ NI （new solutions ）

NCCs
+1.8

NTT Group
+6.3

NCCs
+3.0
Urban
Infrastructure○ Access○ Network‐ Mobile+11.4○Telecommunications
facilities○Electricity supply▲Civil engineering

330.0

325.0

＋0.9

FY16 Actual

Urban
Infrastructure-5.9

NTT Group-16.0▲ Access▲ Network▲ Mobile

SystemSolutions-7.2

SystemSolutions+2.5○ KDDI
○ SB

324.1

○ SI
▲ NI （new solutions ）○Telecommunications
facilities○Electricity supply▲Civil engineering

325.0

-5.0

FY17 Actual

FY17 Plan○ Reason for increase ▲ Reason for decrease － No increase/decrease－4－

FY17 Actual
Note: All amounts less than ¥100m are disregarded.
Annual Results for FY 2017

1. Overview of FY17 Results(3) Net Sales◆ Increased YOY by consuming a large number of carried-over projects in each segment◆ Decreased compared to the plan, due in part to the extension of work in NCCs and Urban Infrastructure■ YOY (consolidated)■ Compared to plan (consolidated) (¥bn)

ー SI
○ NI
○ KDDI○ SB

SystemSolutions
+2.7

NCCs
-2.9

NCCs
+4.8
NTT Group
-0.9

298.8

▲ Access‐ Network○ Mobile

NTT Group
-0.6
Urban
Infrastructure+7.2○Telecommunications
facilities▲Electricity supply○Civil engineering

320.0

312.6

＋13.8

FY16 Actual▲ SI▲ NI （new solutions ）▲ KDDI▲ SB○ Access‐ Network▲ Mobile

SystemSolutions
-2.5
Urban
Infrastructure-1.4○Telecommunications
facilities▲Electricity supply○Civil engineering

312.6

-7.4

FY17 Actual

FY17 Plan○ Reason for increase ▲ Reason for decrease － No increase/decrease－5－

FY17 Actual
Note: All amounts less than ¥100m are disregarded.
Annual Results for FY 2017

1. Overview of FY17 Results(4) Operating Income◆ Reached a new high due to the effects of the greater efficiency of construction and the like

■ YOY (consolidated)■ Compared to plan (consolidated) (¥bn)

Elimination of projects
with deficit , etc.

Improved
construction
efficiency+1.2

Reduction of
SG&A, etc.

Others+0.7

Improved
construction
efficiency+1.5

Sales mix , etc.
+1.6

Improved
efficiency+1.1
Up due toincrease in sales+1.8

Down due todecrease in sales
-0.9

25.6

23.0

20.8

25.6

+2.6

+4.8

FY16 Actual

Others+0.4

FY17 Actual○ Reason for increase ▲ Reason for decrease

FY17 Plan

FY17 Actual
Note: All amounts less than ¥100m are disregarded.

－6－

Annual Results for FY 2017

1. Overview of FY17 Results
Reference: Trends in Group company profitability◆ Profits also reached a record high in Group companies■ Trends in operating profits over the past five years (consolidated/non-consolidated)(Ratio of consolidated to
non-consolidated profits)

(1.7)

(1.8)

(1.8)

(1.9)

20.8

20.7
18.3

9.6
8.3

FY13

10.5

18.4

8.3

12.4

(1.7)
25.6

Group companies
Exeo alone

(¥bn)

8.3

15.1
10.0

10.0

11.2

FY14

FY15

FY16

FY17

Notes: Ratio of consolidated to non-consolidated profits = operating profits from consolidated projects ÷operating profits from non-consolidated projects. All amounts less than ¥100m are disregarded.

－7－

Annual Results for FY 2017

1. Overview of FY17 Results(5) Cash Flow
◆ Stable cash flow
■ Cash flow (consolidated)

(¥bn)

FY15

FY16

FY17

Cash at beginning of FY

24.2

16.0

15.2

Operating activities

5.3

15.5

24.8

Investing activities

-13.9

-6.0

-4.5

Financing activities

0.3

-10.2

-5.1

Cash at end of FY

16.0

15.2

30.3

Note: All amounts less than ¥100m are disregarded.

－8－

Annual Results for FY 2017

2. Management Integration(1) Performance Figures(2) Overview of FY17 Results of Each Company(3) Business Scale after Management Integration－9－

Annual Results for FY 2017

2. Management Integration(1) Performance Figures◆ Management integration with C-Cube, Seibu Electric Industry, and Nippon Dentsu isplanned to take place as of October 1, 2018.
■ Purpose of Management Integration
Further reinforcing the system for providing one-stop construction services all over Japan andproducing synergetic effects by making efficient use of the management resources, customer bases,
etc. of each company so as to further improve our corporate value■ Profile of Each Company
Company name

C-CubeSeibu Electric Industry

Nippon Dentsu

Established

14 May,1954

3 Jul,1947

22 Oct,1947

Paid-in capital¥4,100 million¥1,600 million¥1,493.93 million

Representatives

President:
Wataru Hashimoto

Chairman：
Kazumi Miyakawa
President:
Toshihiko Kumamoto

Chairman and President:
Toshiro Ue

Head Office(Lot numbers omitted)

Monzen-cho, Naka-ku, Nagoya-shi,
Aichi

Hakataekihigashi, Hakata-ku,
Fukuoka-shi, Fukuoka

Isoji, Minato-ku, Osaka-shi, Osaka

Business details

・Telecommunications construction
business
・Information service business・Telecommunications engineering business・Solution business・Others

・Telecommunications facilities engineeringbusiness
・ICT solution businessNet sales(FY17)¥59.8 billion¥54.1 billion¥37.8 billion

Number of employees(as of March 31, 2018)

1,916－10－1,268
－10－

909

Annual Results for FY 2017

2. Management Integration(¥bn)(2) Overview of FY17 Results of Each Company Note: Fiscal year ended March 31, 2018

All amounts less than ¥100m are disregarded. Figures in ( ) indicate the ratio to net sales calculated by disregarding amounts less than ¥ 1 million.

Item

C-CubeNet sales

Seibu Electric Industry

Nippon Dentsu

59.8

54.1

37.8

Gross profit

7.3（12.3％）

4.2（7.8％）

4.8（12.8％）

SG&A expenses

4.1（7.0％）

2.7（5.1％）

3.8（10.1％）

Operating income

3.1（5.2％）

1.4（2.7％）

1.0（2.7％）

Ordinary income

3.4（5.8％）

1.7（3.2％）

1.1（3.0％）

Net income attributable toowners of parent

2.2（3.7％）

1.0（1.9％）

0.7（1.9％）(¥bn)(3) Business Scale after Management Integration

Note: Total values for results for the fiscal year ended March 31, 2018

All amounts less than ¥100m are disregarded. Figures in ( ) indicate the ratio to net sales calculated by disregarding amounts less than ¥ 1 million.

Item

Net sales① KYOWA EXEO

②Total for the threecompanies[Simple sum of the figures
for the four companies]
①+②

312.6

151.9

464.5

Operating income

25.6（8.2％）

5.6（3.7％）

31.2（6.7％）

Ordinary income

26.4（8.5％）

6.3（4.2％）

32.8（7.1％）

Net income attributable toowners of parent

17.9（5.8％）

3.9（2.6％）

21.9（4.7％）

8,331

4,093

12,424

Number of employees（People）－11－

Annual Results for FY 2017

3. Plans for FY18(1) Performance Figures(2) Orders Received and Net Sales(3) Operating Income(4) NTT Group (Access/Network)(5) NTT Group (Mobile)(6) NCCs(7) Urban Infrastructure(8) System-Solutions(9) Measures for greater efficiency (Improved Productivity)－12－

Annual Results for FY 2017

3. Plans for FY18(1) Performance Figures (Consolidated Plan of the Current EXEO Group)◆ Both orders received and net sales are planned to exceed the previous year
◆ Operating income is planned to reach a new high by consuming a large number ofcarried-over projects and promoting measures for greater efficiency■ Plans for FY18 (consolidated)

(¥bn)

FY17

FY18

Actual

Plan

YOY

A

B

B/A

Orders received

325.0

340.0

105%

Net sales

312.6

335.0

107%

46.5

107%

19.0

107%

27.5

107%

28.1

106%

18.8

104%

Gross profit

SG&A expenses

Operating income

Ordinary income
Net income
attributable to ownersof parent(13.9%)(13.9%)

43.3(5.7%)(5.7%)

17.7(8.2%)(8.2%)

25.6(8.5%)(8.4%)

26.4(5.8%)(5.6%)

17.9

Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

－13－

Annual Results for FY 2017

3. Plans for FY18(2) Orders Received and Net Sales◆ Orders received from the NTT Group will decline, but Urban Infrastructures and System-Solutions
orders are expected to increase◆ Aim to increase net sales significantly by promoting the consumption of a large number of carried-overprojects and an increase in orders received■ Orders received (consolidated)
SystemSolutions+11.2○ KDDI▲ SB■ Net sales (consolidated)
○ SI
○ NI

○ SI
○ NI

325.0

▲ Access‐ Network▲ Mobile

NCCs
+1.4
Urban
Infrastructure+12.8

NTT Group
+0.6

Urban
Infrastructure
+14.4

340.0

○Telecommunications
facilities○Electricity supply○Civil engineering

312.6▲ Access○ Network－ Mobile○Telecommunications
facilities○Electricity supply○Civil engineering

335.0

+22.4

+15.0

FY17 Actual

SystemSolutions+6.0▲ KDDI
○ SB

NCCs
+0.7
NTT Group
-9.7

(¥bn)

FY18 Plan

FY17 Actual○ Reason for increase ▲ Reason for decrease － No increase/decrease－14－

FY18 Plan
Note: All amounts less than ¥100m are disregarded.
Annual Results for FY 2017

3. Plans for FY18
Reference: Status of projects carried over
◆ Projects carried over increase significantly and reach an all-time high■ Balance of projects carried over to next period by fiscal year (consolidated)

143.5
103.7

105.4

FY13

FY14

(¥bn)

155.9

118.3

FY15

FY16

FY17

Note: All amounts less than ¥100m are disregarded.

－15－

Annual Results for FY 2017

3. Plans for FY18(3) Operating Income◆ Plan to post record operating income by increasing net sales andpromoting measures for greater efficiency■ Operating income (consolidated)(¥bn)
Sales Mix, etc.

Improved
Productivity+1.0

Others-0.5

Cost forstrengthening
marketing, cost
Up due tofor strategic
increase in sales
human resource+3.1
development, etc.

-1.7

25.6

27.5

+1.9

FY17 Actual

FY18 Plan
Note: All amounts less than ¥100m are disregarded.

－16－

Annual Results for FY 2017

3. Plans for FY18
Reference: Investment Trends of Major Telecom Carriers
Optical fiber

626.6

224.0

FY14
14年度

583.4

661.8
547.9

510.0

156.0

153.0

161.0

FY15
15年度

FY16
16年度

FY17
17年度

FY18
18年度計画
Plan

365.4

FY14
14年度

FY15
15年度

Note: Trends in FY14 or later include UQ mobile.

519.4

560.8

Note: LTE-related from FY16 onward has not been published.

597.1

576.4

570.0

FY16
16年度

FY17
17年度

FY18
18年度計画Plan■ SoftBank

Notes:FY14 and FY15 figures are domestic communications business.
(Source: FY15 Results Data Sheet)

570.0

583.7

479.1

FY14
14年度

406.7

Mobile from FY17 onward has not been published.

531.4

(¥bn)

500.0

177.0

Mobile

LET-related

595.2■ KDDI

667.7(Source: Figures released by the telecommunications carriers)■ NTT DoCoMo■ NTT East/West

338.0

325.0

FY15
15年度

FY16
16年度

412.8

FY17
17年度

FY18
Plan

18年度計画

－17－

14年度
FY14

FY15
15年度

320.5

FY16
16年度

370.3

17年度
FY17

TBA

FY18
18年度計画Plan

Annual Results for FY 2017

3. Plans for FY18(4) NTT Group (Access/Network)◆ Solid performance despite emergence of trend toward slight slowdown in growth of opticalaccess engineering work
◆ Steady demand is also expected for the renewal work of indoor network equipment and power
supply works■ Trend of number of subscribers to fixed-line broadband■ Net sales of NTT Group(fixed-line network, consolidated)

4,000
3,000

（bn）

1
623
447

1
601
542

1
673
320

1
643
375

1
685
251

0

FWA
CATV

2,000
1,000

10,000s of
subscribers

2,385

2,531

FY12

FY13

2,661

2,788

2,932

DSL
FTTH

FY14

FY15

FY16

Note: FWA：Fixed Wireless Access( Source: Created by us based on WHITE PAPER Information and Communications in Japan 2017of the Telecommunications Bureau of the Ministry of Internal Affairs and Communications)

113.1

FY14

111.8

FY15

117.7

FY16

115.8

FY17

■ NTT Group’s Share of Fixed-Line Broadband

116.0

FTTH
Approx.
29.9 million（As of end of Sep. 2017)
NTT East/West
Approx.
0.85 million

NTT East/West
Approx.
20.3 million

DSL
Approx.
2.3 million～2Gbps～50MbpsCATV
Approx.
6.9 million

FY18 Plan
Speed～320Mbps(Source: Created by Kyowa Exeo, based on NTT presentation material)－18－

Annual Results for FY 2017

3. Plans for FY18(5) NTT Group (Mobile)◆ Construction of the LTE-Advanced radio base station for 4G will remain strong◆ Establishing and reinforcing construction systems for receiving orders for construction
work for 5G■ Net sales of NTT Group(mobile network, consolidated)■ NTT DOCOMO LTE Base Stations（bn）

161,900

Total no. of LTE
base stations:185,000

PREMIUM 4G

ＰＲＥＭＩＵＭ 4G-enabled

Arrival of the“giga era” forspeedbase stations:108,300

988 Mbps

69,700

Provision planned to becommenced in the summer of
2018

FY16

FY17

■ NTT DOCOMO’s 5G Open Partner Program

49.6

48.7

50.6

51.5

Expansion of collaborative creation withpartners for the generation of new
scenarios for using 5G

52.0

As of Jan. 25

Participation of morethan 500 companies

Provision of latest information about 5G
From Feb. 2018

Participation in partner workshops
From Feb. 2018

Provision of 5G environment
From Apr. 2018

FY14

FY15

FY16

FY17

FY18 Plan

Including us(Source: Created by us based on NTT DoCoMo presentation material.)－19－

Annual Results for FY 2017

3. Plans for FY18(6) NCCs◆ Both orders received and net sales have been on track to recovery since FY17
◆ Orders are expected to be received for radio base station construction in the new
frequency bands for 4G from the 2nd quarter onward■ Net sales of NCCs (consolidated)■ Allocation of new frequency bands (1.7 GHz and 3.4 GHz) for 4G【1.7GHz】

KDDI
20MHz↑

1710

(¥bn)

(Allocation announced in April 2018)

Tokyo, Nagoya and Osaka

Rakuten
20MHz↑

1730

SB
↑

1750

DOCOMO↑KDDI
20MHz↓※20MHz↑1765

Rakuten
20MHz↓SB↓

DOCOMO↓※20MHz↓

1785

1805

1825

1845

1860

1880

Other than Tokyo, Nagoya and Osaka【3.4GHz】
SB
40MHz↑↓
3400

DOCOMO
40MHz↑↓
3440

DOCOMO
↑↓
3480

KDDI
↑↓
3520

SB
↑↓
3560

3600

■ Number of 1.7GHz/3.4GHz radio base stations that are planned
to be opened

36.6
23.2

FY14

FY15

23.3

FY16

28.1

FY17

29.5

FY18 Plan

－20－

KDDI
28,660Service to be launched at the end of
March 2019
Number of stations planned to be openedby the end of FY25

SoftBank
23,167

Service to be launched at the end of
March 2020
Number of stations planned to be openedby the end of FY22

Rakuten27,397

Service to be launched in October 2019
Number of stations planned to be openedby the end of FY25

Annual Results for FY 2017

3. Plans for FY18(7) Urban Infrastructure◆ Construction jobs for 700MHZ TV reception will be proceeding at full pace towards FY19
◆ We will focus our efforts on increasing orders for large-scale electrical construction in the Tokyo
metropolitan area, and the expansion of investment in power pole elimination projects is also expectedin the future■ Urban Infrastructure net sales (consolidated)■ 700 MHz Band TV reception measures(¥bn)

Replacement
Installationof boosterOrof filter

Construction areas of theCompany

Kanto and Koshinetsu
Install a filter to cancel the radio

Replace a booster with one that amplifies only thewaves from the 700MHz bandbands up to 710MHz (where the situation cannot

mobile phone base stations

be addressed with the installation of a filter)(Source: Created by us based on the HP of Association of 700MHz Frequency Promotion)■ Power pole elimination projects
89.0
67.9

65.7

67.3

Future expansion of investment expected given the announcement of
new initiatives by governments to promote projects

74.5

Current status of power pole elimination in major cities in Europe and Asia
100%

100%

100%

95%

93%

46%

35%
8%

FY14

FY15

FY16

FY17

LondonFY18 Plan

Paris

Hong
Kong

TaipeiSingapore

Seoul

6%

Jakarta Tokyo’s 23 Osaka
Wards（Source: Created by us based on data released by Ministry of Land, Infrastructure, Transport and Tourism ）－21－

Annual Results for FY 2017

3. Plans for FY18
Reference:Other Major Construction Projects in the Urban Infrastructure Business■ Orders Received(1) Construction of electrical facilities◆Order received in the current fiscal year

(¥bn)

14.1

14.3

17.0

FY15

FY16

FY17

Note）The above photograph shows a different property.

Dec.2017 Electrical construction for a major company R&D Center Around ¥3.8 bn(2) Solar power plant construction

5.6
FY15

◆Order received in the current fiscal year(¥bn)

■ Orders Received

4.3
FY16

7.3

FY17

Note）The above photograph shows a different property.

Jun. 2017 Construction of mega solar system in Kagoshima Prefecture Around ¥5.5 bn－22－Annual Results for FY 2017

3. Plans for FY18
Reference:Other Major Construction Projects in the Urban Infrastructure Business■ Orders Received(3) Expressway communications

3.6
FY15

(4) Disaster prevention radio
communications

2.6
FY16

(¥bn)

4.9
FY17

■ Orders Received

2.2
FY15

3.3
FY16

(¥bn)

2.1
FY17

■ Orders Received(5) Construction and operation ofenvironmental plant
7.7
FY15

－23－

2.3
FY16

(¥bn)

4.9
FY17
Annual Results for FY 2017

3. Plans for FY18
Reference: Involvement in Solar Power Generation Business
20,000

1,000

(kW)

（Millions of yen/year）

16,000800

12,000

600

8,000

400

4,000

200

0

0
FY15

17 plants in operation
across Japan
with a capacity of
approximately 19 MW（as of March 31,2018）

OutputFY16

FY17

Amount of electricity sales

Fujisawa-shi,
Kanagawa－24－

Annual Results for FY 2017

3. Plans for FY18(8) System-Solutions◆ Fuse BPM solutions with leading-edge technologies, such as mobile and robot technologies,
to improve their added value◆ Focus efforts on expanding new solutions such as cloud and geo solutions■ System-Solutions net sales(consolidated)■ Expand the added value of the BPM solution business

(¥bn)

33.6

FY14

37.8

39.7

FY15

FY16

42.5

FY17

48.5

FY18 Plan－25－

Annual Results for FY 2017

3. Plans for FY18
Reference: Results of orders received for new solutions and activities going forward¥5.5bn

6
5
4
3
2
1
0

¥2.3bnNew energy field
・ Energy management service

FY17

・ Transportable lithium battery
・ Smart meter

FY18 Plan

・Expand business in the・Participate in business in

14
12

・ Participate in businessin Thailand（Establishment of EXEO Asia,a joint venture)

Global, other 10
・ Global projects
・ Global project
investment, etc.

86Orders

FY17

FY18 Plan

Energy Viewer , Survival Power Supply,¥3.1bnHEMS, etc.

¥12.0bn

Geo Solutions fieldReceived

・ Beacon¥6.2bn（indoor positioning

equipped with mesh network
function)2

network）⇒ Provision of indoor positioning

0・ Guide application

infrastructure and formation of(tourism/disaster)

sensor network¥3.5bnFY18 Plan

Cloud/security
・ Thin client/virtual field

FY18 Plan・Cloud integration engineering in partnership with Microsoft(Next-generation beacon

infrastructure/sensor

field
FY17

EXBeacon:

4

FY17

6
5
4
3
2
1
0

¥2.0bn¥0.5bnUtility cloud for new electric power companies ,Philippines
Vietnam

6
5
4
3
2
1
0

・ Security infrastructure
・ Educational apps
Computerized parking spacecertification system－Enrichment of lineup of solutions in corporate communication and
IoT fields, Capital and business tie-up with Phone Appli Inc.

－26－

6
5
4
3
2
1
0

¥0.3bnFY17¥1.0bnFY18 Plan

Annual Results for FY 2017

3. Plans for FY18
Reference: Energy Viewer◆ Deregulation of electric power and energy saving trend provide an opportunity to enter into the market in the new energy field◆ “Energy Viewer” is a B2B2X business model through collaboration with the local electric power companies Won 2017 Energy
Conservation Grand Prize* for provision of services in collaboration with Tepco Customer Service Corporation◆ Developed as a tool to reduce power usage through the control of air conditioning and to acquire customers
and prevent withdrawal for the local electric power companies

Service provided at
approx. 60 sites atpresent (including plans)President Kozono and President Nagasaki of
Tepco Customer Service Corporation after
the presentation ceremony－27－

Annual Results for FY 2017

3. Plans for FY18
Reference: Cloud Integration Engineering*
Development of the market for sound solutions for enterprises and the expansion of the IoT solutions lineup◆ Concept of business development of cloud integration engineering
Recurring business model leading to various solutions[Being a long-term, comprehensive partner of customers](1) State of activities[FY 2017]
Efforts for cloud integration engineering in collaboration with Microsoft
Japan-Approx. 50 orders received, approx. 130 business deals inprogress.
-Actual results: Cloud migration of office communication, introduction
and assessment of cloud PBX and cloud video conferencing,IoT
Began cooperation with NTT East/West over agriculture IoT using
non-electric source sensor network solutions(2) Train cloud engineers.
IoT
Achieved training of 2,000 Microsoft cloud engineers 1 year ahead ofschedule (Initial plan: end of 2018 ; as of end of March: 2,032 engineers)(3) Gained approval from Microsoft Japan
17.12 Microsoft365 Business Partner
17.12 Cloud Productivity Silver Partner
17.12 Surface Hub authorized reseller
Participation in MRPP(Mixed Reality Partner Program)*Offer nationwide, unified, one-stop engineering, including cloud
implementation alongside existing network engineering(4) Provision of new solution in cooperation with Nextgen17.11 Began provision of solution using voice recognition service（U3COGNI）－28－

Annual Results for FY 2017

3. Plans for FY18

Cloud

Reference: Mesh-Type Beacon
SensorSensor

BeaconAdvantages of Mesh-Type Beacon（Enables easy creation of “GPSspace” indoors)(i) Enables indoor positioning (space navigation）

BeaconBeaconGPS cannot
reach indoors!

(ii)Supports sensors, etc.
・Temperature sensor, motion detector, etc.
(iii) High redundancy
・Even if one beacon breaks, another takes its place(iv) Simple installation
・No cabling required
EX Beacon(Battery/sensor stack-type)

Use
Scenarios

EX Gateway

EX Beacon【Introduced or going to be introduced】 ８ projects (plant, railway, office, construction site, etc.）【POC*】 25 projects in progress, 31 projects planned（plant, office, construction site, etc.）【Competing for contract】 ４ projects（manufacturer, real estate consultancy, large-scale office, etc.）
EX Tx【Solutions】 EXOffice，Ibasho-Wakuru-kun （PhoneAppli）［as of Jan. 2018］（Beacon tag card-type)※POC stands for Proof of Concept

EX Tｘ（Beacon tag）

Plant/warehouse , etc.

Construction site, etc.

Office , etc.

Management of storage place for packages

Management of workers’ whereabouts



Visualization of employees’ behavior

Management of gate entrance and exit/Control of room environmentCollection of sensor information of machines,

Authentication management


etc.


<Visualization of situation>

Management of employees’ positions/traffic
Management of building entrance andexit/Authentication of employees

goods



Control of office space environment

Management system of operation reports, etc.

Work style reforms

－29－

coin

lines


Management of the location/taking out of<Visualization of worksite>

500 yen<Visualization of work style>
Annual Results for FY 2017

3. Plans for FY18
Reference: Global business initiatives ■ MG Exeo sales trends
15

Vietnam（¥100m）
10

Philippines
Thailand

5

0

FY13

FY14

FY15

FY16

FY17

FY18 Plan

MG Exeo (Philippines) as a base forIndonesiandevelopment in Asia including ASEAN＜around 850 employees as of Dec. 2017＞Concluded an agreement to acquire sharesof a new company of the IBS (In-Building

・Development of ICT technology educators in the Philippines

System) Business in Vietnam in April 2017.

→ Spread to other SE Asian countries
・Train global staff in the Philippines

Establishment of EXEO ASIA, a new
joint venture in Thailand in Jan. 2018

(One-year local stay)

Send trainees from Japan(First group sent in Oct. 2015 (completed); second group in Oct.
2016 (completed) ; Third group in Oct. 2017 (In process))

N a m eLocation
Business
Activities
C ap i ta l
Ownership
R a t i o s
Date of
Establishment

EXEO ASIA COMPANY LIMITED
Bangkok, Thailand
Planning, marketing, design, construction, development, sales andmaintenance services in relation to ICT solutions, communicationequipment and IP/Internet
6,000,000 THB
KYOWA EXEO 40%, Net Chart 9%, S.E.C.T. 16%,
KDTS 10%, Millennium Plus One 25%

・Airport ICT

January 3, 2018

・Industrial complex ICT ・ Railway communication

Trial implementation of Indonesian FTTH project
Targeting various projects using government ODA

・Data center ICT－30－

・ Expressway communication

・ICT business investment
Annual Results for FY 2017

3. Plans for FY18(9) Measures for greater efficiency (Improved Productivity)◆ Measures for greater efficiency have produced a greater impact than planned in past years◆ Continued groupwide promotion of improved productivity, cost improvements andworkstyle reform

Improvement■ Enhanced profitability through cost reductionsＦＹ

FY2015FY2016FY2017Aims¥1.0bn¥1.0bn¥1.0bnResults¥1.0bn¥1.5bn¥1.1bn(cumulative ¥8.0bn)(cumulative ¥9.5bn)(cumulative ¥10.6bn)■ Recent principal measures
Area

Functional
integration

Reorganizationof Group
companies(cumulative ¥11.6bn)

Note: Amount of improvement represents cost reductions relative to FY10.

Measures◇Review of access, network, and engineering construction systems◇Expansion of shared company work consignments◇Group-wide unification of audits, MS tasks ◇Reorganization of Group access companies in Kanto area
◇Integrated cross-departmental systems◇Improved business flow and systems through BPR◇ Introduction of a new telework style◇ Modularization and digitization of business processes◇ Development of a common platform for internal
systems and automatization of the systems (continued)◇Merger of subsidiary security companies ◇Merger of subsidiary access companies in Kansai/Chugoku regions◇Merger of subsidiary mobile companies ◇Merger of subsidiary access companies in Tohoku region◇Merger of major subsidiaries (WAKO and Ikeno) ◇Merger of subsidiary network companies◇Sendai General Engineering Center (9 bases → 1) ◇Kagawa Technical Center (5 bases → 1)
◇Ishioka
General Technical Center (4 bases → 1)
◇Koshin branches (5 bases → 1)
Consolidation of◇HyogoGeneralTechnical
Center
(5
bases
→
1)
◇Kansaibranches （7 bases → 1)
bases
◇Shonan Technical Center （2 bases → 1)

Resource

FY2018¥1.0bn◇Resource shift to mobile/solutions area
◇Group-wide cross-sectional projects (mobile, 700 MHz TV reception measures, Data Centers, etc.)

sharing－31－◇ Management integration with C-Cube, Seibu ElectricIndustry, and Nippon Dentsu. (planned in October 2018)◇ Establishing and reinforcing construction systems forconstruction work for 5G◇Reemployment of the Company’s veteranemployees, etc. across organizations. (continued)

Annual Results for FY 2017

3. Plans for FY18
Reference: Image of Promotion of Business Structure Reform◆ Achieving and implementing business improvements and work style reform as the Team EXEO (overall
EXEO Group), thereby promoting transformation into a more resilient management base

Problem-Solving Scheme

Group of highly
skilled ICT engineers

Business Structure Reform Team
Diverse
employment

Promotion ofpatterns

diversity

Work-life

Management

Improvedbalanceissues

Productivity

Ｐ

MissionTeam EXEO

Ｄ

Promotion ofcrossorganizational
working teams

Improved
productivity（Business
improvements）

Profit rate increasing steadily, due in partto the impact of these measures for greater
efficiency (cost reduction)

Problem-solving throughhigh level of ICT skills
and softwaredevelopment
capacity

Promotion of
BPR

Development ofsystem common
platform

Efficient system

Annual cost
reduction

operation（Cost of sales, SG&A
expenses） of

1 billion

Promotion of
improvement inbusiness flow
systemWork style reform

Creation of
innovation

Ａ

Effect of
FY2018TargetEffect of further reform inＣFurther challenges

building more resilient
management baseBusiness frontline, Group companies
Subsidiaries

Sales

Problem-posing& feedback
Construction

Desk◆Enhancement of system common platform◆Introduction of AI and *RPA （software robots)◆Modularization and digitization of businessprocesses◆Introduction of telework and creation of futuristic
offices*Robotic Process Automation－32－

Annual Results for FY 2017

3. Plans for FY18
Reference:Examples of improvement measures ◎Enhancement of system common platform - Automation of data input using RPA◎Modularization of individual business processes of business divisions/branches/Group companies

Goal

Automation of data input using RPA

Enhancement of system common platform

・Replacement of work doneby humans with robots
・Reduction of duplicate input
・Eradication of data input errors－33－

Annual Results for FY 2017

4. Raising Shareholders’ Value(1) Payment of More Dividends(2) Dividend Payment Plan for FY18, etc.

－34－

Annual Results for FY 2017

4. Raising Shareholders’ Value(1) Payment of More Dividends◆ Increasing the targeted DOE from 3% to 3.5% to pay more dividends◆ Acquiring treasury stock in the first half of FY18 with an upper limit of 3.0 billion yen■ Outline of changes to dividend policy <Targeted DOE at 3%  3.5%>
Purposeof thechangeStriving to distribute even more returns to shareholders by considering the future performance outlook, financial status, andother elements comprehensively while maintaining our existing basic policy of “continuing to pay dividends proactively andstably based on a firm financial base and medium- and long-term growth scenario”
Item

Forecast amountof annualdividends for
FY18 andamounts paid inpast years

FY14

FY18 forecast

DOE at 3％ since
the end of FY15FY16with DOE at 3％

FY17with DOE at 3％

DOE at 3.5%

（Reference: DOE at
3％）

Annual dividends per
share

¥32

¥38

¥46

¥50

¥64*

（¥55*）

Total annual dividends¥3.16 billion¥3.7 billion¥4.38 billion¥4.78 billion¥6.06 billion*（¥5.21 billion*）

25.8％

30.2％

31.7％

26.4％

32.3％*（29.3％*）

Payout ratio*The impact ofmanagement
integration is notreflected in theforecast amount ofannual dividends for
FY18.

Annual dividends for FY18: ¥64 (Interim: ¥32/Year-end: ¥32*)*The amount of the year-end dividend, which will be paid after the management integration, will be announced at the time of
the announcement of the results for the six months ending September 30, 2018.
(The amount of the year-end dividend will reflect the total amount of equity capital of the four companies.)■ Outline of the acquisition of treasury stock(1) Purposes of the acquisition: Flexible implementation of capital policy and improvement of capital efficiency(2) Total acquisition: ¥3.0 billion (upper limit)(3) Total number of shares of treasury stock to be acquired: 1.2 million shares (upper limit)(4) Acquisition period: May 10, 2018 to September 30, 2018－35－

Annual Results for FY 2017

4. Raising Shareholders’ Value(2) Dividend Payment Plan, etc. for FY18
■ Total shareholder return■ Dividend history (per share)(Total dividends + total acquisition of treasury stock)
Note: The acquisition of treasury stock will be implemented flexibly.

¥64 ※
50

46
38

32

Total dividends

3.0

Year-end
32*

8.7
6.1

FY15

FY16

FY17

FY18 Plan

7.3

5.0

3.0

¥4.7bn

3.1

3.7

4.3

4.7

FY14

FY15

FY16

FY17

EPS

ROE

3.0

Interim32

FY14

Total acquisition of treasury stock

FY18 PLAN*The amount of the year-end dividend, which will be paid after the management integration, will be announced
at the time of the announcement of the results for the six months ending September 30, 2018.
(The amount of the year-end dividend will reflect the total amount of equity capital of the four companies.)■ Acquisition of treasury stock■ EPS/ROE

5.0

189
3.0

3.0

¥3.0bn

123
8.7%

FY14

FY15

FY16

FY17

FY14

FY18 Plan

－36－

125

145

10.8%

¥198
10.4%

8.9%
8.2%

FY15

FY16

FY17

FY18 Plan

Annual Results for FY 2017

5. Topics(1) Visit to Overseas Subsidiary by Minister ofInternal Affairs and Communications－37－

Annual Results for FY 2017

5. Topics(1) Visit to Overseas Subsidiary by Minister of Internal Affairs and Communications◆ Seiko Noda, Minister of Internal Affairs and Communications, visited the training center ofour consolidated subsidiary in the suburbs of Manilla in the Philippines■ In January 2018, Minister Noda visited the training center of our consolidated subsidiary
MG EXEO NETWORK, Inc. opened in May last year in the suburbs of Manila to inspect
the training of local engineers.

From left to right: MG EXEO Chairman Michael
Tantoco, Minister Noda, our president Fuminori Kozono,

Inspection of training of local employees

MG EXEO President Eiichi Matsuda－38－

Annual Results for FY 2017

Disclaimer Regarding Forward-Looking Statements
Management of the Company has made estimates and assumptions
relating to financial forecasts based on information available as of thereporting date. Actual results could differ from those estimates.

3-29-20 Shibuya, Shibuya-ku,
Tokyo 150-0002 JAPANhttp://www.exeo.co.jp/overseas/index.html
TEL: (81)3-5778-1073
FAX: (81)3-5778-1228

A variety of IR materials is available for
consultation on our company website.

－39－

Annual Results for FY 2017