Results for the Six Months Ended
September 30, 2018
November 2018

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Results for the Six Months Ended September 30, 2018

Contents
1. Overview of FY18 Interim Results

・・・

2

４．Raising Shareholders’ Value・・・ 31（１）Performance Figures

・・・

3（１）Shareholder Return Policy

・・・ 32（２）Orders Received

・・・

4(Revision of year-end dividend forecast, etc.)（３）Net Sales・・・

5（２）Plan for shareholder returns for FY18, etc.

・・・ 33（４）Operating Income・・・7（５）Cash Flow

・・・

9

５．ESG Initiatives

・・・ 34（１）Major Initiatives

・・・ 35

６．Topics

・・・ 36（１）Turning KOHKEN into a wholly・・・ 37

２．Expectations for the Rest of FY18・・・

（１）Revision of the full-year plan due

・・・ 1211

to management integration（２）NTT Group (Access/Network)・・・ 13（３）NTT Group (Mobile)・・・ 14（４）NCCs

・・・ 15（５）Urban Infrastructure・・・ 17（６）System-Solutions

・・・ 20（７）Measures for greater efficiency

・・・ 26

owned subsidiary（２）Plan to turn the LAE Group of・・・ 38Singapore into a wholly owned subsidiary(Improved Productivity)
３．Our M&A Strategy

・・・ 28（１）Objective and Growth Picture・・・ 29・・・ 30（２）Development Direction by Business
Segment－1－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(1) Performance Figures(2) Orders Received(3) Net Sales(4) Operating Income(5) Cash Flow

－2－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(1) Performance Figures◆ Orders for urban infrastructure were particularly strong, and both orders and sales increased from theprevious year and from the plan.
◆ Sales hit another record high, but operating income declined year on year due to an increase in
SG&A expenses, etc.

■ Overview of FY18 interim results (consolidated)(¥bn)

FY 2017

FY2018InterimInterimFull year

Plan

Actual

YOY
D/A

Plan
accuracy

A

B

C

D

Orders received

161.1

325.0

153.0

174.7

108%

114%

Net sales

124.9

312.6

128.0

132.8

106%

104%

17.7

103%

103%

9.1

110%

102%

8.5

96%

104%

8.9

92%

105%

5.8

93%

104%

Gross profit
SG&A expenses
Operating income
Ordinary income
Net income attributableto owners of parent(13.8%)

17.2(6.6%)(7.1%)(7.8%)(5.1%)

8.3
8.9
9.7
6.3

(13.9%)

43.3(5.7%)

17.7(8.2%)

25.6(8.5%)

26.4(5.8%)

17.9(13.4%)

17.2(7.0%)(6.4%)(6.6%)(4.5%)

－3－

9.0
8.2
8.5
5.7

D/C

(13.3%)(6.9%)(6.4%)(6.7%)(4.4%)

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(2) Orders Received◆ NTT Mobile saw a year-on-year decline, but orders received increased overall year on year due to the particularly
strong performance of Urban Infrastructure.
◆ Other than NTT Mobile, sales were favorable, and those of Urban Infrastructure were particularly strong,resulting in an increase from the plan.

■ YOY (consolidated)■ Compared to plan (consolidated)
○ SI
○ NI

○ KDDI
▲ SB

○ SI
○ NI

SystemSolutions
＋2.6

NCCs
＋1.4

Urban
NTT Group
Infrastructure
‐5.4
＋16.3

161.1

FY17 Interim
17年度2Q実績

Urban
Infrastructure
＋14.9

NTT
Group
＋3.4

174.7

○ Telecommunications
facilities－ Electricity supply○ Urban Civil
engineering○ Environmental
engineering＋13.6

SystemSolutions＋2.0○ KDDI
○ SB

NCCs
＋0.1

○ Access○ Network▲ Mobile

(¥bn)

153.0

174.7

○ Access○ Network▲ Mobile○ Telecommunications
facilities○ Electricity supply○ Urban Civil
engineering○ Environmental
engineering＋21.7

18年度2Q実績
FY18 Interim

FY18Interim Plan
18年度2Q計画○ Reason for increase ▲ Reason for decrease － No increase/decrease－4－

18年度2Q実績
FY18 Interim

Note: All amounts less than ¥100m are disregarded.
Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(3) Net Sales◆ Increased YOY by consuming a large number of carried-over work in each segment.
◆ NTT Network and Mobile saw delays due to the extension of the construction period, but orders forurban infrastructure were strong, resulting in an increase from the plan.

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

○ SI
▲ NI
－ KDDI
○ SB

－ SI
○ NI
○ KDDI▲ SB

SystemSolutions
＋0.6

NCCs
＋0.8
NTT Group
+1.4

124.9

○ Access▲ Network▲ Mobile

17年度2Q実績
FY17 Interim

SystemSolutions
＋2.2

NCCs
＋0.3
Urban
Infrastructure＋5.1○ Telecommunications
facilities○ Electricity supply○ Urban Civil
engineering▲ Environmental
engineering＋7.9

NTT Group
-3.3

132.8

128.0

－ Access▲ Network▲ Mobile

Urban
Infrastructure＋5.6○ Telecommunications
facilities○ Electricity supply○ Urban Civil
engineering○ Environmental
engineering

132.8

＋4.8

18年度2Q実績
FY18 Interim

FY18Interim Plan
18年度2Q計画○ Reason for increase ▲ Reason for decrease － No increase/decrease－5－

18年度2Q実績
FY18 Interim

Note: All amounts less than ¥100m are disregarded.
Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results
Reference: Status of projects carried over
◆ Work carried over after 2Q at all-time high■ Work carried over at the end of the 2Q (consolidated)
(¥bn)

198.5
179.7
156.6
125.8

FY14 Interim

138.6

FY15 Interim

FY16 Interim

FY17 Interim

FY18 Interim

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

－6－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(4) Operating Income◆ Operating income decreased year on year partly due to an increase in SG&A
expenses, but increased from the plan due to an increase in sales.

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

Improved construction efficiency,

Personnel expenses,
amortization of goodwill, etc.

Improved efficiency+0.3

Improved
construction
efficiency+0.4

Others-0.9

Others±0.0

Sales mix , etc.
-0.9
Up due toSales mix , etc.
Up due to-0.7
increase in sales+0.6

increase in sales
+1.1

8.9

8.5

8.5

8.2

-0.4

17年度2Q実績
FY17 Interim＋0.3

18年度2Q実績
FY18 Interim

FY18Interim Plan
18年度2Q計画

18年度2Q実績
FY18 Interim

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

－7－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results
Reference: Trends in Group company profitability◆ The profit of the group companies decreased, but the ratio ofconsolidated to non-consolidated profits was high.
■ Trends in operating profits over the past five years (consolidated/non-consolidated)(Ratio of consolidated to（1.6）

non-consolidated profits)

（2.1）

（2.1）

8.9

Group companies
グループ会社
エクシオ単体Exeo alone

（1.9）

(¥bn)

（1.8）
8.5

7.5

2.9

5.9

4.2

3.6

4.7

4.9

17年度2Q実績
FY17 Interim

18年度2Q実績
FY18 Interim

4.8
3.1
2.5

4.6

FY14 Interim
14年度2Q実績

2.3

2.8

FY15 Interim
15年度2Q実績

FY16Interim
16年度2Q実績

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.

－8－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results(5) Cash Flow
◆ Stable cash flow
◆ Cash flows from investing activities increased due to M&A in the second quarter of FY18.

■ Cash flow (consolidated)

(¥bn)

FY15

FY17

FY16
Interim

FY18

Full year

InterimCash at beinning of FY

24.2

16.0

15.2

15.2

30.3

Operating activities

5.3

15.5

17.3

24.8

15.6

Investing activities

-13.9

-6.0

-1.4

-4.5

-9.5

Financial activities

0.3

-10.2

-2.3

-5.1

-5.3

Cash at end of period

16.0

15.2

28.7

30.3

31.1

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

－9－

Results for the Six Months Ended September 30, 2018

1. Overview of FY18 Interim Results
Reference: Performance of the three integrated companies of Western Japan◆ The three integrated companies also generally performed well in thesecond quarter of FY18.
■ Overview of results (consolidated)

C-Cube(¥bn)

FY 2017

FY2018InterimInterim

Seibu Electric
Nippon Dentsu
Industry

Simple totalof three

C-Cubecompanies

Seibu Electric
Nippon Dentsu
Industry

Simple totalof threecompanies

Orders received

29.5

25.8

18.6

74.0

30.8

29.3

16.3

76.4

Net sales

26.0

24.3

16.5

66.9

28.8

22.9

15.4

67.2

Gross profit
SG&A expenses
Operating income
Ordinary income
Net income
attributable to owners(11.3%)

2.9(7.7%)

2.0(3.6%)

0.9(4.0%)

1.0(2.2%)

0.5(8.1%)

1.9(5.5%)

1.3(2.6%)

0.6(3.2%)

0.7(1.7%)

0.4(13.1%)(10.6%)

2.1(11.2%)

7.0(7.8%)

1.8(1.8%)

5.2(2.8%)

0.3(2.4%)

1.8(3.3%)

0.3(1.4%)

2.2(1.8%)

0.2

－10－

1.2

(11.5%)

3.3(7.7%)

2.2(3.8%)

1.1(4.2%)

1.2(2.4%)

0.6(7.3%)

1.6(5.7%)

1.3(1.6%)

0.3(2.3%)

0.5(1.2%)

0.2(15.2%)

2.3(11.5%)

1.7(3.6%)

0.5(4.3%)

0.6(2.7%)

0.4(10.9%)

7.3(7.9%)

5.3(3.0%)

2.0(3.6%)

2.4(2.1%)

1.3

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(1) Revision of the full-year plan due
to management integration(2) NTT Group (Access/Network)(3) NTT Group (Mobile)(4) NCCs(5) Urban Infrastructure(6) System-Solutions(7) Measures for greater efficiency( Improved Productivity)－11－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(1) Revision of the full-year plan due to management integration◆ On October 1, 2018, management integration with C-Cube, Seibu Electric Industry, and Nippon Dentsu was
implemented.
◆ Net sales, etc. will increase significantly for the full year, but the operating income margin is expected to fall.

■ Overview of revised operating results (Consolidated)(¥bn)

FY 2017

FY2018InterimInterimFull year

Full year
Plan

ActualInitialplan

after revision
plan

Increase(decrease)
F－E

A

B

C

D

E

F

Orders received

161.1

325.0

153.0

174.7

340.0

415.0

+75.0

Net sales

124.9

312.6

128.0

132.8

335.0

420.0

+85.0

Gross profit
SG&A expenses
Operating income
Ordinary income
Net income attributableto owners of parent(13.8%)

17.2(6.6%)

8.3(7.1%)

8.9(7.8%)

9.7(5.1%)

6.3(13.9%)

43.3(5.7%)

17.7(8.2%)

25.6(8.5%)

26.4(5.8%)

17.9(13.4%)

17.2(7.0%)

9.0(6.4%)

8.2(6.6%)

8.5(4.5%)

5.7－12－(13.3%)(13.9%)

17.7(6.9%)

46.5(5.7%)

9.1(6.4%)

19.0(8.2%)

8.5(6.7%)

27.5(8.4%)

8.9(4.4%)

28.1(5.6%)

5.8

18.8(13.3%)

56.0(5.8%)

24.5(7.5%)

31.5(7.7%)

32.5(10.0%)

42.0(-0.6P)+9.5(+0.1P)+5.5(-0.7P)+4.0(-0.7P)+4.4(+4.4P)+23.2

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(2) NTT Group (Access/Network)◆ Solid performance despite emergence of trend toward slight slowdown in growth of optical access engineeringwork◆ NTT East announced that it would terminate ADSL services at the end of January 2023.
Expected for investment in optical fiber.

■ Net sales of NTT Group(fixed-line network, consolidated)(¥bn)

ActualResults of the former

Results including those of

results

Company for thethree integrated

2Q実績
for 2Q

下期旧当社分second half period

下期3社等加算分
companies, etc. for thesecond half period(Revised plan)

146.5

113.1

111.8

117.7

115.8

30.5

■ Trend of number of subscribers to fixed-line broadband
4,000
3,000

1
623
447

1
673
320

1
643
375

0

FWA
CATV

2,000
1,000

10,000s of
subscribers

1
689
215

1
685
251

2,527

2,782

2,656

3,030

2,925

DSL
FTTH

FY13

FY14

FY15

FY16

FY17

Note: FWA：Fixed Wireless Access■ Trend of number of subscribers to NTT Group's
fixed-line broadband
2,113
2,053
2,000

1,871

1,925

1,500
1,000

50.7

44.9

45.6

49.3

51.7

500
0

FY14
14年度

FY15
15年度

FY16
16年度

FY17
17年度

1,844

1,456

FY18
18年度

27
FY14

469
FY15

2,005

1,130

10,000s of
subscribers

941

801
FLET'S HIKARI

874
FY16

1,111

FY17

1,311

COLLABO HIKARIFY18Plan(Source: Created by Kyowa Exeo, based on NTT presentation material)－13－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(3) NTT Group (Mobile)◆ Orders up to 2Q were somewhat weak, but the completion of the construction work of numerous 4G
radio base stations on hand was accelerated.
◆ Establishing and reinforcing construction systems for receiving orders for construction work for 5G■ NTT DOCOMO LTE Base Stations■ Net sales of NTT Group
Total no. of LTE(¥bn)(mobile network, consolidated)base stations:193,800
170,900

ＰＲＥＭＩＵＭ ４Ｇ

ActualResults of the former

results

下期旧当社分second half period

Company for the2Q実績
for 2Q

fastest in Japan

Results including those of
three integrated

下期3社等加算分
companies, etc. for thesecond half period

ＰＲＥＭＩＵＭ 4G-

Download

Upload1,288Mbps

131Mbpsenabled base86,300stations:123,000

FY17 Interim

FY17 Interim(Revised plan)

49.6

48.7

50.6

51.5

54.5
2.5

(Source: Created by us based on NTT DoCoMo presentation material.)■ Image of NTT DOCOMO Main Processes (our company's assumption)

24.4

FY14
14年度

19.7

21.1

21.5

20.4

FY15
15年度

FY16
16年度

FY17
17年度

FY18
18年度

－14－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(4) NCCs◆ Both orders received and net sales have been on track to recovery since FY17.
◆ Orders are expected to be received for the construction of radio base stations for the new
frequency bands for 4G from the 3rd quarter onward.
■ Net sales of NCCs (consolidated)(¥bn)
ActualResults of the former

Results including those of

results

Company for the

下期3社等加算分
companies, etc. for the2Q実績
for 2Q

下期旧当社分second half period■ Number of base stations for new frequency bands for 4G(1.7 GHz and 3.4 GHz) planned to be opened
Service 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

three integrated

second half period(Revised plan)

36.6

35.0
28.1
23.2

KDDI
28,6605.5(Source: Prepared by the Company based on the materials of the Telecommunication
Bureau, Ministry of Internal Affairs and Communications)■ KDDI, Rakuten Announce Partnership
KDDI

23.3

Rakutenau*Roaming service

communication network

18.8

FY14
14年度

10.2

FY15
15年度

8.6

11.4

12.3

FY16
16年度

FY17
17年度

18年度
FY18

Settlement infrastructure
Distribution infrastructure

Provision of
settlement anddistribution
infrastructure

Rakutencommunication network

Settlement infrastructure
Distribution infrastructure*Gradual switchover from areas where in-house network construction was completed(Source: Prepared by the Company based on the materials published by KDDI)－15－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18
Reference: Investment Trends of Major Telecom Carriers
626.6

224.0

FY14
FY14

583.4

549.6

154.0

161.0

FY15
FY15

FY16
FY16

FY17
FY17

FY18
PLAN
FY18

Plan

365.4

14年度
FY14

15年度
FY15

16年度
FY16

17年度
FY17

18年度計画
FY18■ SoftBank
Notes:FY14 and FY15 figures are domestic communications business.

Mobile from FY17 onward has not been published.

560.8

590.0

Plan

(Source: FY15 Results Data Sheet)

570.0

583.7

479.1

FY14
14年度

406.7

Note: Trends in FY14 or later include UQ mobile.

519.3

577.9

Additional 20 billion yen(Oct. 31, 2018: Announced)
Initial 570

156.0

531.4

597.1

545.0

177.0

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

595.2
547.9

(¥bn)

LTE-related

661.8

Optical fiber■ 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

－16－

FY14
14年度

FY15
15年度

320.5

FY16
16年度

370.3

FY17
17年度

420.0

FY18

18年度計画Plan

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(5) Urban Infrastructure◆ Construction work for the measures for 700 MHz Band TV reception will be brisk, with orders
ahead of schedule.
◆ Net sales are expected to rise for the full year due to strong orders in all segments.
■ Urban Infrastructure net sales (consolidated)■ 700 MHz Band TV reception measures(¥bn)
Results including those of
ActualResults of the former

three integrated

results

Company for thefor 2Q
2Q実績

下期旧当社分second half period

companies, etc. for the

下期3社等加算分
second half period

Replacement
Installationof boosterOrof filter(Revised plan)

110.5

Construction areas of theCompany

21.5

67.9

21.0

65.7

17.1

67.3

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)

Kanto andKoshinetsu(Source: Created by us based on the HP of Association of 700MHz Frequency Promotion)

74.5■ Power pole elimination projects
Plan for promotion of elimination of power poles announced by the
Ministry of Land, Infrastructure, Transport and Tourism (in April 2018)

23.9

23.5

*Period of the promotion plan: Three years from fiscal 2018 to fiscal 2020
*Promotional Goal
Note: Figures in () other than (4) indicate the current rate of elimination of poles⇒ the target rate of elimination of poles
1. Disaster Prevention (Urban Emergency Road 34% ⇒ 42%)
2. Ensuring safe, efficient traffic (15% ⇒ 51%)
3. Landscape Formation and Tourism Promotion (37% ⇒ 79%)
4. Olympic and Paralympic (92% ⇒ Complete) Joint Electric Wire Channel
Improvement Rate

28.6

In order to achieve the above targets, it is necessary to reduce utility poles byapproximately 1,400 km.

FY14
14年度

FY15
15年度

FY16
16年度

FY17
17年度

FY18
18年度

（Source: Created by us based on data released by Ministry of Land, Infrastructure, Transport and Tourism ）－17－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18
Reference:Other Major Construction Projects in the Urban Infrastructure BusinessNote: Orders received do not include those of the three consolidated companies.

■ Orders Received(1) Construction of electrical facilities◆Order received in the current fiscal year

14.3

17.0

FY16
16年度

FY17
17年度

(¥bn)

6.5
FY18 Interim
18年度2Q実績

Note: The above photograph shows a different property.

June 2018: Work for electricity/power equipment for a large DC building in Osaka Prefecture. Around ¥1.3 bn(2) Solar power plant construction

4.3
16年度
FY16
◆Order received in the current fiscal year

7.3
4.0
17年度
FY17

18年度2Q実績
FY18 Interim

Note: The above photograph shows a different property.

Sep. 2018: Work for construction of mega solar power plants in Kagoshima Prefecture. Around ¥ 3.3 bn－18－

Results for the Six Months Ended September 30, 2018

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

2.6
16年度
FY16

(¥bn)

4.9
1.2
17年度
FY17

FY18 Interim
18年度2Q実績(4) Disaster prevention radio
communications
3.3

FY16
16年度

(5) Construction and operation ofenvironmental plant

2.1
FY17
17年度

2.7

FY18 Interim
18年度2Q実績

Note)Construction of environmental facilities received an order in the second quarter of
FY18, including the operation business for 20 years after completion.

2.3
FY16
16年度

－19－

4.9
FY17
17年度

7.3

FY18 Interim
18年度2Q実績

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(6) System-Solutions◆ Expanding added value by integrating solutions with leading-edge technologies such as RPA and Cloud◆ Continue to focus on expansion of new solutions such as new energy and Geo Solutions■ Solution Map (added value expansion plan)■ System-Solutions net sales(consolidated)(¥bn)
Results including those of
ActualResults of the former

results
2Q実績

Company for the
下期旧当社分

for 2Q

second half period

three integrated

下期3社等加算分
companies, etc. for thesecond half period(Revised plan)

73.5
25.0
42.5

37.8

39.7

12.1

15.7

16.9

19.0

19.6

FY14
14年度

FY15
15年度

FY16
16年度

FY17
17年度

FY18
18年度

33.6

－20－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18
Reference: Results of orders received for new solutions and activities going forward
6
5
4
3
2
1
0

¥5.5bnNew energy field¥1.0bnFY18
Plan

・ Energy management service

FY18Interim・ Transportable lithium battery
・ Smart meter・Business in the

6
5
4
3
2
1
0

¥2.0bn¥0.8bn
FY18
Plan

FY18
Interim

Energy Viewer , Survival Power Supply,
Utility cloud for new electric power companies ,Orders Received

HEMS, etc.

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

16

Global, other

14

・ Global projects

10・ Global project
investment, etc.

¥12.0bn

Geo Solutions field

12

・ Beacon8¥3.6bn

6
4
2
0
FY18
Plan

6
5
4
3
2
1
0

¥3.5bnFY18Interim（indoor positioning(Next-generation beacon
equipped with mesh network

infrastructure/sensor

function)

network）⇒ Provision of indoor positioning

・ Guide application

infrastructure and formation of(tourism/disaster)

sensor network

Cloud/security¥1.7bn

6
5
4
3
2
1
0

field
・ Thin client/virtual field

FY18
Plan

EXBeacon:

FY18
Interim・Cloud integration engineering in partnership with Microsoft

・ 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.

－21－

¥1.0bnFY18
Plan¥0.1bnFY18InterimResults for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18
Reference: Energy Viewer■ Energy Viewer reduces power usage through the remote and automatic control of air conditioning, employing a B2B2X
business model in collaboration with local electric power companies.
■ Conduct PoC at around 60 locations. Achieved an average of 18% reduction in air conditioning energy at hardware
stores, drug stores, clothing stores, automobile dealers, and so on. Established a business model that can recover theservice expenses within three years.In recognition of this achievement, we received the Energy Conservation Grand
Prize 2017 through collaboration with Tepco Customer Service Corporation.
■ With highly evaluated PoC results, Middle B created a detailed plan of large scale sales promotions, which arescheduled to start this Autumn (approx. 2,000 bases).
■ Currently analyzing accumulated big data for automatic control optimization.

Trend of number of bases toprovide and propose services
3000(number of bases)

2000

Number of bases to propose services
サービス提案拠点数
Number of bases to provide services
サービス提供拠点数

2700

1000
0

(Plan)

892017.32017.3204 372018.32018.3700 602018.660

2018.10 ～2018.6－22－

President Kozono and President Nagasaki of Tepco Customer
Service Corporation after the presentation ceremony

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of 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 [April to end of Sep. FY18]
 Efforts for comprehensive cloud engineering in collaboration with Microsoft Japanand other companies-Approx. 58 orders received (560 million),48 business deals in progress (3.14 billion)-Actual results: Communication reform using Microsoft Office 365/Azure
Network security renewal and management reform support
associated with cloud introduction
Cloud PBX introduction support (PBX renewal, voice recognition)
 IoT
Began collaboration with multiple Japanese domestic communication carriers on
agricultural IoT and factory IoT solutions.

(3) Gained approval from Microsoft Japan 18.6 Started telephone system connection service construction support for
Microsoft Teams for the first time in Japan 18.7 Certified as a Microsoft Mixed Reality partner
 18.8 Showcased at Microsoft Japan Partner Conference(4) Provision of new solution in cooperation with Nextgen
 18.5 Began provision of voice recognition service (Next Gen VOTEX Series)*Offer nationwide, unified, one-stop engineering, including cloud
implementation alongside existing network engineering

Trend of numbers on comprehensive cloudengineering, including received orders－23－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18

Cloud

Reference: Mesh-Type Beacon (new IoT infrastructure)
SensorCommercialization of Bluetooth Mesh
(most advanced in Japan)

Sensor

Beacon(cases)Rapid increase inoverseas projects

BeaconBeaconGPS cannot
reach indoors!

Trend of numbers on mesh-type beacon,[Use Scenarios]

including introduction results

Offices,
Meeting rooms[Customer's commercialization]
An embedded device supplier for a

Factories,

EXBeacon simultaneously
provides three services.

manufacturer’s products built an

logistics,
Hospitals,

warehouses

EXBeacon platform.

Nursing homes

EXBeacon[Implementation case]

IndoorSensorpositioning

information

Availability ratio of nurses

gathering

improves in Taiwan hospital

Exhibition halls,

Factory floors

Showrooms

EXTxAir（Beacon tag card-type）

Remote monitoring
Remote control

EXTx（Beacon tag）
EXBeacon

Photo of equipment introduced inCompany A① High redundancy: In case a beacon breaks,
another beacon will work.
② Easy installation: No wiring needed.

－24－

Hotels,

Airports,

Casinos

Port facilities

EXGateway

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18
Reference: Global business initiatives Building business basesin Southeast Asia
Philippines
Thailand・Philippines

・ Airport ICT・ Industrial complex ICT
・ Data center ICT
・ Expressway
communication

・Thailand・ Railway communication

・・・
SingaporeOn October 31, 2018, the company signed an agreement to acquire all shares of the
LAE Group, which engages in work for electrical and integrated facilities in Singapore.

External view of training center near Manila

Location
Business
Activities
C a p i t a l
Number of
employees
D a t eo f
Establishment

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

a

m

e

Singapore
Work for electrical and integrated facilities
1.5 million SGD
Approx. 260 people
September 6, 1999

MG Exeo (Philippines) as a base for development in Asia
including ASEAN

EXEO ASIA COMPANY LIMITED・Development of ICT technology educators in the Philippines

L o c a t i o n

Bangkok, Thailand

B u s i n e s s
Activities

Planning, marketing, design, construction, development, sales andmaintenance services in relation to ICT solutions, communicationequipment and IP/Internet

C a p i t a l

6,000,000 THB

Send trainees from Japan

Ownership
R a t i o s

KYOWA EXEO 40%, Net Chart 9%, S.E.C.T. 16%,
KDTS 10%, Millennium Plus One 25%(First group sent in Oct. 2015 (completed); second group in Oct.

D a t eo f
Establishment

January 3, 2018

→ Spread to other SE Asian countries
・Train global staff in the Philippines(One-year local stay)

2016 (completed) ; Third group in Oct. 2017 (completed))<Note> In April 2017, we concluded an agreement with ACOM, Vietnam to acquire stocks of a new IBS business company that ACOM was to establish in its country.
However, because circumstances changed regarding the IBS business in Vietnam, we concluded an agreement to dissolve the stock purchase with the consent
of both companies in September 2018.

－25－

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of FY18(7) 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 reductions
ＦＹ

FY15

FY16

FY17

Aims

¥1.0bn¥1.0bn¥1.0bn¥1.0bn¥1.5bn¥1.1bnResults for the second quarter(cumulative ¥8.0bn)(cumulative ¥9.5bn)(cumulative ¥10.6bn)¥0.2bnResults■ Recent principal measures

FY18¥1.0bn(cumulative ¥11.6bn)

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

Measures

Area◇Review of access, network, and engineering construction systems
Functional◇Expansion of shared company work consignments

integration◇Group-wide unification of audits, MS tasks ◇Reorganization of Group access companies in Kanto area
◇Integrated cross-departmental systems

Reorganization◇Improved business flow and systems through BPR◇Merger of subsidiary security companies ◇Merger of subsidiary access companies in Kansai/Chugoku regionsof Group◇Merger of subsidiary mobile companies

companies◇Merger of major subsidiaries (WAKO and Ikeno) ◇Merger of subsidiary network companies◇Merger of subsidiary access companies in Tohoku region◇Sendai General Engineering Center (9 bases → 1)

◇Kagawa Technical Center (5 bases → 1)

Consolidation of ◇Ishioka General Technical Center (4 bases → 1)

◇Koshin branches (5 bases → 1)

◇Hyogo General Technical Center (5 bases → 1)

◇Kansai branches （7 bases → 1)

bases

◇ Introduction of a new telework style◇ Introduction of RPA to each organization andsubsidiary◇ Development of a common platform for internal
systems and automatization of the systems (continued)◇ Management integration with C-Cube, Seibu ElectricIndustry, and NIPPON DENTSU.

◇Shonan Technical Center （2 bases → 1)
◇Resource shift to mobile/solutions area
Resource◇Group-wide cross-sectional projects (mobile, 700 MHz TV reception measures, Data Centers, etc.)

sharing－26－◇ Establishing and reinforcing construction systems forconstruction work for 5G◇Reemployment of the Company’s veteranemployees, etc. across organizations. (continued)

Results for the Six Months Ended September 30, 2018

2. Expectations for the Rest of 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<RPA implementation status> as of September 2018
KYOWA EXEO: Implemented in 2 divisions/4 branches
Subsidiaries: Implemented in 10 companies
In the future, we plan to implement 5 divisions/3 branches in
KYOWA EXEO and 8 subsidiaries until the end of FY18

RPA will be introduced sequentially.
Subsidiaries

Divisions in
KYOWA EXEO

・Replacement of work doneby humans with robots
・Reduction of duplicate input
・Eradication of data input errors－27－

Results for the Six Months Ended September 30, 2018

3. Our M&A Strategy(1) Objective and Growth Picture(2) Development Direction by Business Segment－28－

Results for the Six Months Ended September 30, 2018

3. Our M&A Strategy(1) Objective and Growth Picture
600

Aiming for 500 billion yen in sales and further growth

(¥bn)
550

- Objective of M&A: Growing together Targeting companies that own businesses and technology that cangenerate synergy effects with our group

500
450

(Currently)

400
350

Growth segment

Actively conduct M&A in addition
to organic growth
Solution fields including SI and NI

300

Facility fields including power and air conditioning

250
200
150
100
50
0

FY15

FY16

FY17

FY18 Plan－29－

FY19 Tentative

FY20 Tentative

Results for the Six Months Ended September 30, 2018

3. Our M&A Strategy(2) Development Direction by Business Segment
Engineering Solutions（Urban infrastructure）

Engineering Solutions（NTT Group, NCCs）
Implementation of system enforcement,
maintenance area expansion

Expanding areas of power/air conditioning and maintenance・M&A in the power/air conditioning field, where synergy can be generated
・M&A in the facility maintenance field・ Generation of synergy with each of the companies
merged and previously acquired
・ M&A aiming at enhancing implementation systemand expanding maintenance2018
C-Cube2018
ＫＯＨＫＥＮ2018
Seibu
Electric
Industry

2010
Ikeno
TsukenAnticorrosion
coating

Currently: Exeo Tech
2011
Wako
Engineering
2011
Daiwa
Densetsu

2018
NipponDentsuCompetitors(mainly undertaking
NTT's communication
facility construction)

2011

2018

LAE
Electricity supply

Icom

2014

ＳＩ

AID

2015

ＳＩ

WHERE
ＮＩ(Beacon etc.)

Expansion of SI, NI, and global fields
・M&A in the IoT, AI, and Robotics fields
・M&A in the fields of facility construction,
SI, and NI in the ASEAN region

System Solutions－30－

Results for the Six Months Ended September 30, 2018

4. Raising Shareholders’ Value(1) Shareholder Return Policy(Revision of year-end dividend forecast, etc.)(2) Plan for shareholder returns for FY18, etc.

－31－

Results for the Six Months Ended September 30, 2018

4. Raising Shareholders’ Value(1) Shareholder Return Policy (Revision of year-end dividend forecast, etc.)◆ Increase DOE from about 3% to about 3.5% from FY18 dividend and strengthenshareholder return◆ Revision of year-end dividend forecast from ¥32 to ¥38 (considering the equity capital of
the three integrated companies)■ Revision of year-end dividend forecast to ¥38
Revision
Summary

As of October 1, 2018, the management was integrated with C-Cube, Seibu Electric Industry and Nippon Dentsu and the shareholders'equity of the three companies was added, and the year-end dividend forecast was revised based on DOE 3.5%.
Item

Forecast amountof annualdividends for
FY18 andamounts paid inpast years

Annual dividends per share
Total annual dividends
Payout ratio

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

FY17with DOE at 3％

¥32

¥38

¥46

¥3.16 billion¥3.7 billion

25.8％

30.2％

FY14

FY18 forecast
DOE 3.5%
InitialDOE 3.5%
after revision

¥50

¥64

¥70

¥4.38 billion¥4.78 billion¥6.06 billion¥7.33 billion

31.7％

26.4％

32.3％

33.7％**Calculated by subtracting the extraordinary profit (negative goodwill) arising from the management integration.

Annual dividends for FY18 : ¥70 ( Interim : ¥32 / Year-end : ¥38 )■ Outline of repurchase of treasury stock in the first half of FY18(1) Purposes of the acquisition: Flexible implementation of capital policy and improvement of capital efficiency(2) Total acquisition: ¥2,999,734,683 yen(3) Total number of shares of treasury stock to be acquired: 1,007,900 shares(4) Acquisition period: May 10, 2018 to September 20, 2018－32－

Results for the Six Months Ended September 30, 2018

4. Raising Shareholders’ Value(2) Plan for shareholder returns for FY18, etc.
■ Dividend history (per share)■ Total shareholder return¥70(Total dividends + total acquisition of treasury stock)
Note: The acquisition of treasury stock will be implemented flexibly.

46
32

配当総額
Total dividends

50¥10.3bn

Year-end
38

38

8.7
6.1

FY15
15年度

FY16
16年度

17年度
FY17

FY18
18年度計画

3.0

7.3

5.0

3.0

4.7

3.1

3.7

4.3

4.7

14年度
FY14

15年度
FY15

FY16
16年度

17年度
FY17

3.0

Interim
32

FY14
14年度

Total acquisition of treasury stock
自己株式取得額■ EPS/ROE

5.0

EPS

ROE

189
3.0

3.0

¥3.0bn
123
8.7%

FY14
FY14

FY15
FY15

FY16
FY16

FY17
FY17

FY18
18年度計画Plan

Plan■ Acquisition of treasury stock

7.3

FY18
FY18
Plan
Plan

FY14
14年度

125

145

¥207

10.8%

8.9%

9.8%

8.2%

FY15
15年度

FY16
16年度

FY17
17年度

FY18
18年度計画PlanNote)EPS and ROE are calculated by subtracting the special profit (negative goodwill)from the management integration.

－33－

Results for the Six Months Ended September 30, 2018

5. ESG Initiatives(1) Major Initiatives－34－

Results for the Six Months Ended September 30, 2018

5. ESG Initiatives(1) Major Initiatives
Ｅ
Environment

・Reduction of CO2 emissions ⇒ 1% reduction of power/gasoline use compared to the previous year
・Use of green energy, forest conservation ⇒ Solar power business, Forest of Exeo, and so on
・Promotion of green procurement ⇒ 70% or more of ecological product purchases- Activities on Forest of Exeo Fifty years after Exeo’s foundation, we once again acknowledge the need for global warming
protection and community contribution, by currently concluding profit-sharing silviculture
agreements* with five regional forest management offices nationwide. Naming each one a"Forest of Exeo," we are promoting activities to protect national forests and develop afriendship between employees and their families.
Conservation activities of national forests on the premise of not cutting them down.

Our stocks have been selected for the MSCI Japan ESG SelectLeaders Index. (as of June 2018)*DS: diversity, WLB: work life balanceＳ
Society

・ Promotion of DS/WLB※ ⇒ More than 25% new female graduate employment, total reduction of working
hours, and so on
・ Securing safety and quality ⇒ Zero serious accidents per year, ensuring and disseminating the quality
philosophy
・ Contribution to society and community ⇒ Recovery measures in the case of natural disasters, andcommunity contribution

Our stocks have been selected for the MSCI Japan Empowering Women Index (WIN). (as of June 2018)

Ｇ
Governance・ Strengthening corporate governance ⇒ Internal control committee meetings, guidelines review
・ Ensuring compliance ⇒ Committee/training, promotion of effectiveness of internal report system
・ Proper risk management ⇒ Specifying risks of processes, enhancement of BCP－35－

Results for the Six Months Ended September 30, 2018

6. Topics(1) Turning KOHKEN into a wholly owned
subsidiary(2) Plan to turn the LAE Group of Singapore into awholly owned subsidiary－36－

Results for the Six Months Ended September 30, 2018

6. Topics(1) Turning KOHKEN into a wholly owned subsidiary◆ On September 13, 2018, KOHKEN a company that handles anticorrosive painting
mainly in the Tokyo metropolitan area, was made a wholly-owned subsidiary. The aim is tofurther expand the urban infrastructure business.

Name

KOHKEN Co., Ltd.

Location

12-7, Torihama-cho, Kanazawa-ku,
Yokohama-shi, Kanagawa

Title and name ofrepresentative

President: Seiji Masuda

Business activities

Painting work

Capital20 million yen

Date ofestablishment

October 28, 1983

－37－

Results for the Six Months Ended September 30, 2018

6. Topics(2) Plan to turn the LAE Group of Singapore into a wholly owned subsidiary◆ On October 31, 2018, the company signed an agreement to acquire all
shares of the LAE Group, which engages in work for electrical andintegrated facilities in Singapore. The aim is to expand the global business.
Name

Leng Aik Engineering Pte Ltd

Location

Singapore 17 Soon Lee Road 628080

Title and name ofrepresentative

President: Tan Seow Leng

Business activities

Work for electrical and integrated facilities

Capital

1.5 million SGD (about 124 million yen)

Date ofestablishment

September 6, 1999

－38－

Results for the Six Months Ended September 30, 2018

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－

Results for the Six Months Ended September 30, 2018