Presentation of Performance for the First Half
Fiscal Year Ending March 31, 2014

November 13, 2013

Contents
I. Overview of Performance for the First Half of the Fiscal Year Ending March 31, 2014
1. Highlights of the First Half Financial Statements

1

2. Details of the First Half Orders Received by Business Segment2

3. Details of the First Half Sales by Business Segment

3

4. Details of First Half Operating Income

4

II. Full Year Forecasts for the Fiscal Year Ending March 31, 20145

III. Trends at Principal Carriers
1. Capital Expenditure Trends at NTT
2. Capital Expenditure Trends at Mobile Telecommunications Carriers
IV. Status of Progress in COMSYS WAY a Structural Reforms

6
7
8

1. Strategies for Top-line Growth9

2. IT Solutions Business Initiatives

10

3. Social Infrastructure Business Initiatives

11

4. Solar Power Generation-Related Business

12

V. Policy on Shareholder Returns and Status of Treasury Stock13

I-1. Highlights of the First Half Financial Statements
Increased in sales and dramatic growth in income due to completionof many projects carried over from the previous fiscal year
Performance inprevious term

Comparisons withthe previous term

Forecasts

Percent of Net Sales

Percent of Net Sales

Difference

Percent of Net Sales

1,607

1,644

Performance

Orders Received

Net Sales

Gross Proﬁts

-37

1,460

Comparisonswith forecasts

+147

1,405

1,322

+83

1,380

+25

193

161

+31

178

+15

12.2% +1.5 percentage points

12.9% +0.8 percentage points

Selling, General and

86

93

-6

93

-6

Administrative Expenses

6.2%

7.1%

-0.9 percentage points

6.7%-0.5 percentage points

106

67

+38

85

+21

7.6%

5.1% +2.5 percentage points

Remarks

Difference

13.7%

Operating Income(Unit: ¥100 million)

Orders Received
Orders received fell slightly from the previous
ﬁscal year due to bulk ordering in the mobile
telecommunications-related business during
the previous fiscal year. However, orders
received saw strong growth compared with
forecasts as orders for LTE-related projects
remained robust and strategies for top-line
expansion in the IT and social infrastructurebusinesses also performed positively.

Net Sales
Net sales outperformed both the previous ﬁscal
year and forecasts due to the completion ofmany projects carried over from the previous
fiscal year and new solar power construction
projects.

6.2% +1.4 percentage points

IncomeRecurring Proﬁt

Net Income

109

70

+38

87

+22

7.8%

5.4% +2.4 percentage points

6.3% +1.5 percentage points

61

38

51

4.4%

2.9% +1.5 percentage points

+23

+10

Substantial profit growth was achieved
compared with both the previous fiscal year
and forecasts due to the increase in sales andthe product mix as well as the effect of the
COMSYS WAY a structural reforms and cost
reductions implemented to date.

3.7% +0.7 percentage points

Note: Figures are rounded down to the nearest whole unit.

1I-2. Details of the First Half Orders Received by Business Segment
Dramatic growth compared with forecasts,
due to LTE-related projects and top-line expansion(Unit: ¥100 million)

Comparisons with
the Previous Term

Comparisonswith Forecasts-37(-2.3%)

+147

NTT-G
-4.4%

-43

Social System-Related
and Other+24.1%

NCC-26.3%-65

IT+12.1%

+41

+40

+36
Increase in solar
power construction
projects, etc.

Increase in system construction
for medical, education andother sectors
Decrease in Softbank platinum bandprojects and KDDI landline-related projects

Increase in systemconstruction for
medical, educationand other sectors

NCC+10.7%+17

Acceleration of
au LTE projects

NTT-G
+5.8%

+51

1,607

1,460
NTT Business (Access)Increase in projects to expand optical fiber areas

NTT Business (Access)Decrease in service integration projects

NTT Business (Network)
Acceleration of migration processes
DOCOMO business
Increase in LTE projects

DOCOMO business
Decrease in PDC dismantling andremoval and projects to counter poor
signal coverage in subways

Performance in Previous Term

IT
+14.6%+30
Increase in solar
power construction
projects, etc.

1,644(+10.1%)Social System-Related
and Other+25.3%

Performance

Target2

I-3. Details of the First Half Sales by Business Segment
Dramatic sales growth compared with both previous fiscal year
(Unit: ¥100 million)
and forecasts due to completion of many projects
carried over from previous fiscal year
Comparisons with
Comparisons
the Previous Termwith Forecasts-83(+6.3%)

Social System-Related
and Other+12.9%
NCC+32.7%

IT
+4.8%

-5

+14

Delays in solar power
construction projects
Increase in solar
power construction
projects, etc.

+48

+25
NCC
-0.8%

-1

(+1.9%)
NTT-G
+2.2%

+18
Increase in systemconstruction for
medical, educationand other sectors

Increase in systemconstruction for
medical, educationand other sectors

Increase in LTE projects
for au and Softbank

1,322

+17

+9

NTT-G
+1.0%

+8

Social System-Related
and Other
IT
-3.6%
+7.8%

1,405

NTT Business (Access)Increase in projects to expand
optical fiber areas
NTT Business (Network)
Acceleration of migration processes

1,380

NTT Business (Access)Decrease in service integration projects
DOCOMO business
Increase in LTE projects and PDC
dismantling and removal projects

Performance in Previous Term

Performance

Target3

I-4. Details of First Half Operating Income
Significant profit growth due toincrease in sales and effects of structural reforms(Unit: ¥100 million)

Comparisons with
the Previous Term

Comparisonswith Forecasts+38(+56.8%)
Improvement
due to rise inprofit margin

+6

+21

Improvement
due tocost reduction

Improvement
due tocost reduction

106
Operating Margin(7.6%)+6(+25.0%)
Improvement
due to rise inprofit margin+12

Improvement
due to increasein net sales

Structuralreforms andimproved
productivity+3+22
Improvement
due to increasein net sales

+10

67

Structuralreforms andimproved
productivity

Product mix

85
Operating Margin(6.2%)

Product mix

Operating Margin(5.1%)

Performance in Previous Term

Performance

Target4

II. Full Year Forecasts for the Fiscal Year Ending March 31, 2014
Full-year forecasts unchanged due to alterations in product mix(Unit: ¥100 million)

FY March 2013
Performance

FY March 2014
Targets

Comparisons withFY March 2013

Percent of Net Sales

Percent of Net Sales

Difference

3,356

3,200

Orders Received

-156

3,160

3,250

+89

412

425

+12

13.0%

13.1%

+0.1 percentage points

Selling, General and

186

185

-1

Administrative Expenses

5.9%

5.7%

-0.2 percentage points

225

240

+14

7.1%

7.4%

+0.3 percentage points

Net Sales

Gross Proﬁts

Operating Income

Recurring Proﬁt

Net Income

229

245

+15

7.2%

7.5%

+0.3 percentage points

132

150

+17

4.2%

4.6%

+0.4 percentage points

Remarks

Orders Received
Although the second-half forecasts will not be achieved because of
the impact from the positive first half (second-half orders brought
forward to the first half), full-year orders received will be largely
in line with forecasts. Factors such as earthquake reconstruction
projects, set to move into top gear from now on and construction of
infrastructure for the Tokyo Olympics have not been incorporated into
the forecasts.

Net Sales
Net sales will generally be in line with forecasts due to positive
orders received in the ﬁrst half and the many projects carried overfrom the previous ﬁscal year.

IncomeAlthough net sales will be in line with forecasts, the full-year
profit forecasts are unchanged due to alterations in the productmix (increase in IT, social infrastructure and NCC completion) andassumption of risks, such as a deterioration in access-related income
and expenses.

Note: Figures are rounded down to the nearest whole unit.

5III-1. Capital Expenditure Trends at NTT
NTT Consolidated Capex(Unit: ¥100 million)

NTT East and NTT West capex(Unit: ¥100 million)

7,549
6,900
19,70018,700
3,965

8,841

3,294

8,246
NTT EAST

1,657

Investment infiber optics
2,910

3,584

NTT WEST 1,637

3,197
1,613

Investment infiber optics
2,750

3,400

1,584

(First-half) (Full-year)(First-half) (Full-year)(First-half) (Full-year)(First-half) (Full-year)

Mar. 2013

Mar. 2014

Mar. 2013

Mar. 2014

Number of FLET’S HIKARI subscriptions(Unit: 10,000 contracts)

500,000)
t: 500,000, NTT West:get: 1 million (NTT Eas
tar
h
wt
gro
net
al
nu
An

1,730
975

+23

755
NTT WEST+13

NTT EAST

3,500

Mar. 2013(Results)

1,767

1,830

998

1,025

NTT Consolidated Capex• With no changes in annual capital expenditure since the start of the fiscal year, the progress rate
• for the first half was 44.1%, or ¥824.6 billion, down ¥59.5 billion from the previous fiscal year.
• Fixed/mobile access-related cost reductions recorded a progress rate of about 70%, or ¥275
• billion compared with the medium-term target of at least ¥400 billion in reductions by the year
• ending March 2015.
• The medium-term target was revised from at least ¥400 billion in reductions to ¥500 billion in• reductions compared with the year ended March 2012.

NTT East and NTT West capex• With no changes in capital expenditure at NTT East and NTT West, the first half progress rate for• NTT East was 46.1%, or ¥161.3 billion, down ¥4.4 billion compared with the previous fiscal year,• and 46.6%, or ¥158.4 billion, down ¥5.2 billion for NTT West.

768

805

Sept. 2013
(Results)

Mar. 2014(Target)Note: Figures are rounded down to the nearest whole unit.

Number of FLET’S HIKARI subscriptions• The number of contracts for FLET’S Hikari increased by 370,000, bringing the cumulative total to• 17,670,000, as a result of competitive price setting and initiatives to promote ongoing use, and• NTT East topped 10,000,000 contracts on October 20.
• Initiatives that include gaining SME demand and the utilization of Wi-Fi are being strengthened• with the aim of achieving annual contract targets.
Content on this page sourced from NTT IR materials.

6III-2. Capital Expenditure Trends at Mobile Telecommunications Carriers(Unit: ¥100 million)

NTT DOCOMO
Based on DOCOMO business result briefing materials

Based on KDDI business result briefing materials[ Full-year comparison ]7,537(Unit: ¥100 million)

KDDI

7,000

3,332

5,800
4,670

2,620

[ First-half comparison ]

3,610
Other
(Information
Systems, etc.)

1,600

FOMA
LTE

1,141

680

869
Mar. 2013

Mar. 2014

2,016
2,189 4,205
Mar. 2013

4,380

3,700

Based on Softbank business result briefing materials

7,800

7,531
1,033

5,800
3,694

Fixed
2,745 6,498
telecommunications,401
etc.
Mobile2,344
telecommunications
business

3,382

432
554

3,800

Fixed

641

Mobile

1,510

1,411

(First-half) (Full-year)(First-half) (Full-year)

Mar. 2013

Mar. 2014

Mar. 2014(Unit: ¥100 million)

2,397

2,155

(First-half)(First-half)(Full-year)(Full-year)
Note: Full-year projections for year ending March 2014 changed from initial forecasts

Softbank

900
1,100

1,280

3,018
1,120
392
1,506

J:COM, etc.

NTT DOCOMO• Capital expenditure declined ¥59.2 billion in the first half compared with the same period of the• previous fiscal year, but one-off investments in the previous year included dispersal of key• facilities related to measures for disaster preparedness.
• Investment in network equipment being strengthened in response to expansion of LTE service area
• and increase in traffic. ¥700 billion investment in these activities progressing in line with forecasts• Network area expansion through quad-band (2GHz, 800MHz, 1.7GHz, 1.5GHz) will achieve• world’s top speed of 150Mbps.
• Operation of another band (fifth band) at 700MHz will commence in January 2015.

KDDI

413

• Capital expenditure for the first half of year ending March 2014 is up ¥24.2 billion compared with• the same period of the previous year with a progress rate of 41.3%, and mobile-related• investment is up ¥41.8 billion year on year.
• Competitive edge is strengthening, primarily in mainstay 800MHz band.

3,281

Softbank(First-half) (Full-year)(First-half) (Full-year)(Full-year)

Mar. 2013

Mar. 2014

Mar. 2015

Note: Capital expenditure shown on acceptance inspection base up to first half of year ending March 2014.
Note: Does not include ¥163.5 billion for Sprint business in first half of year ending March 2014.

• Investment to have been implemented over five years accelerated to two-year period covering •• last year and this year
• Commencing move from double-speed LTE (2GHz＋ 1.7GHz) to triple-speed LTE next spring• (added 900 MHz)

7

IV. Status of Progress in COMSYS WAYa Structural Reforms
March 2012

March 2013

March 2014

March 2015

March 2016

COMSYS WAY a— Advance of structural reforms and top-line growth

COMSYS WAY— Sustained, More In-Depth Structural Reform

Improve profitability of IT business

Top-line growth
New developments in new businesses

Creation of new construction IT platform

Improve productivity and efficiency by harnessing IT

Reorganization of Group business management structure
Mobile and network operations• October 2012: COMSYS Mobile Corporation (merger of Tokyo Tsuken Co., Ltd. and Nittoh Tsuken Co., Ltd.)
1.5 years (scheduled recovery)

Extraordinary loss: ¥1.7 billion*Initially scheduled for recovery over 2.5 years, but now scheduled
for recovery over 1.5 years due to better than expected improvement
in construction efficiency• August 2012: Yashiro Tsushinkensetsu Co., Ltd. becomes 100% subsidiary)

Access operations• October 2012: Phos Techno Shikoku Co., Ltd. merger of Tokushima Tsuken and Nichidenko)• April 2013: TOSYS Niigata Co., Ltd. merger of TOSYS Niigata and ACTIS)• October 2013: Restructuring of TSUKEN Group(merger of TSUKEN Corporation and five access-related consolidated subsidiaries)
2 years (scheduled recovery)

Extraordinary loss: ¥0.9 billion(for structural reform expenses)
8IV-1. Strategies for Top-line Growth*Amended and revised from the materials for COMSYS Holdings
performance presentation for the fiscal year ended March 2013
External Environment

Top-line Growth

Generate profits andexpand revenues throughstructural reforms

3,160

Pursue high profit margin throughgreater efficiency and cost reductions

Newbusinesses

3,250

40%

Non-NTTRelated
business

Net Sales

NCC
EngineeringNTT
Engineering

Mar. 2013

New Businesses
Green innovation business
Enhancement of research and development through establishment of new
Technology Development Office
Expansion of lines of business through alliances and M&As

SocialSystem-Related
and OtherIT
SolutionsSigns of economic boom due to “Abenomics” (monetary easing, growthstrategies, proactive fiscal policy)
Aggressive public investment by Ministry of Land, Infrastructure, Transport
and Tourism, Ministry of Internal Affairs and Communications and Ministry of
Economy, Trade and Industry
Expansion of private capital expenditure and investment in IT accompanying
measures to bring about inflation and depreciation of the yen
Decision to hold Tokyo Olympics

Non-NTT-Related Buisness (social infrastructure business, IT business)
Urban infrastructure business
Earthquake reconstruction, etc., businessBusiness in remote monitoring of infrastructure facilities, such as dams, using
network and system integration technology
Expansion into medical treatment and education sectors through alliances, etc.
Expansion into cloud market
Boost to installation of infrastructure due to decision to hold Tokyo Olympics• Order received for common-use cable tunnel project• Order received for projects to counter aging structures, and projects for thethree ring roads connecting the Tokyo metropolitan area

NTT-Related business

60%

Mar. 2014 Target

NTT-related
business

Establishment of rapid-response system for small projects and repeat similar
projects
Expansion of blanket contracting for facility mangement operations(maintenance and management operations) by region
Expansion of orders received through active proposals for maintenance offacilities
Order received for underground telephone cable project
Order received for network cable reconfiguration project due to construction
project for the three ring roads connecting the Tokyo metropolitan area

Medium- and Long-Term

9

IV-2. IT Solutions Business Initiatives
Orders received rose ¥3 billion, or 12%, compared with previous fiscal year
Orders received in IT solutions business¥28.6 billion

Up ¥3 billion(12%)

Sectors with Growth in Orders

COMSYS Strengths

System construction in medical and education sectors due toalliances, etc.,
Private cloud construction at universities and hospitals, etc.
(Construction of network, server and storage systems)
XP terminal updating• Training of engineers• (network and server virtualization)• Leading alliance partner

System construction at sites nationwide
System construction at sites nationwide(Networks, servers, wireless AP, PBX, etc.)• Wealth of experience in• construction nationwide• Equipped with control function• Nationwide construction system

Public projects
Construction of digital radio system for fire service• COMSYS infrastructure technology• Relationships with existing customers¥25.5 billion
Examination of
IT specifications
Creation oftender document

Maintenanceand operation

Equipment
construction

Server rack
installation anchor bolt

Operation design

Server equipment disposal

Network diagnosis

Server mounting

Migration work

Network monitoring
design and construction

LAN powersource work

Fault isolation,
replication and verification

Application
development

Platform

Network
construction.net

Windows

Network design

HardwareServer equipment migration

Linux

Design of system
operation policy

java

Consultation

Mobileapplications

Hyper-V
VM wareAir conditioning equipment
Line contracting agency

Source: Nippon COMSYS Corporation website

1H FY2012 results

1H FY2013 results10IV-3. Social Infrastructure Business Initiatives
Orders received rose ¥4 billion, or 24%, compared with the previous fiscal year and also expected to rise next fiscal years and beyond
Orders received for social systems¥20.6 billion

Sectors with growth expected next fiscal year and beyond
Projects for removal of utility poles expected from next fiscal year and beyond(FY2013: about ¥1 billion → FY2013 onward: about ¥1.5 billion)
Market environment
Projects for removal of utility poles moving into top gear due to decision
to hold 2020 Olympics in Tokyo• Removal of utility poles by 2020 in primary areas of Tokyo
Construction projects for C.C. Box(common use cable tunnels)(total cost of works about ¥78 billion)• Will gradually expand from city center to regional areas (estimated ¥30 billion/year)

Green innovation business• Growth in mega-solar power business and EPC business (details on next page)Up ¥4 billion(24%)¥16.6 billion

Urban infrastructure business• Growth in orders received for lighting equipment (conversion
to LED) and tunnel disaster prevention equipment projects
Market environment
Projects to counter aging structures, and projects for the three ring roads connecting the Tokyo metropolitan area
Main orders received in fiscal 2013
Progress in construction of three ring roads• Growth in projects related to Shuto Expressway
Completed, existing
Project name

Value oforders received

Lighting upgrade project No. 1-101 (western Tokyo) ¥430 million
Lighting upgrade project No. 2-101 (eastern Tokyo)

Under construction
Under study/planning(Forecast at end of fiscal 2012)
Metropolitan
Inter-City Expressway

Tokyo Gaikan
Expressway

Yokota Airport

Inner Circular
Route Expressway
Narita Airport¥730 million
Haneda Airport

Telecommunications equipment upgrade projectNo. 25-3-1 (Kanagawa)
1H FY2012 results

1H FY2013 results¥210 million

Shin-Tomei Expressway

Keihin Port

(Source: Tokyo Metropolitan Government)11

IV-4. Solar Power Generation-Related Business

Mega-Solar Power BusinessBusiness investment raised to ¥8 billion

Planned locations for construction of power stations
In operation
Commercialization ﬁnalized
Commercialization under study

Other projects under investigation: 9MW• Investment: ¥2.7 billion

Up ¥1.1 billion
Kita Ibaraki City, Ibaraki Prefecture: 5.9MW• Investment: ¥1.7 billion

Cumulative:
Showa-mura, Gunma Prefecture: 2.4MW¥8.0 billion¥6.9 billion
March 2014
Initial forecast

Tsu City, Mie Prefecture: 2.5MW

Hitachiota City, Ibaraki Prefecture: 2.8MW

Soo City, Kagoshima Prefecture: 1.9MW• Investment: ¥0.6 billion

Tsukuba City, Ibaraki Prefecture: 1.9MW• Investment: ¥0.6 billion

March 2014
Revised forecast

Solar Power Construction Business
Targeting ¥10 billion for full year due to steady orders received+ ¥2 billion[ Main orders received ]Location¥8 billion¥3.9 billion
March 2014
First-half results(Initial forecast)March 2014
Full-year forecast

Generating capacity

Orders Received

Tohoku and Kanto

7.7MW¥2.3 billion

Tokai and Kinki

6.8MW¥1.8 billion

Chugoku and Shikoku

2.9MW¥0.7 billion

Kyushu10.3MW¥2.7 billion
12

V. Policy on Shareholder Returns and Status of Treasury StockNet Income (Target)(Unit: ¥100 million)

150

100
Net Income

50

50

70
0

150

132

TreasuryStock

95

25 Dividends

30
25

71

30

40

25

24

50
29

TreasuryStock
Ordinary
dividends: 23
Commemorative
dividends: 6

March 2010

March 2011

March 2012

March 2013

March 2014 (Planned)

Interim

¥10

¥10

¥10

¥10

Dividends per Share(annual)Year-end

¥10

¥10

¥10

¥10

¥10
¥15
Ordinary dividends: ¥10
Commemorative dividends: ¥5

Consolidated Payout Ratio

36.2%

27.1%

36.0%

18.7%

19.9%

Total Return Ratio
Dividends + treasury stock
Net income

106.2%

58.3%

77.7%

48.7%

53.3%

Use in implementing
management integration
with TSUKEN Corporation
8.35 million shares

23.01 million shares

20.27 million shares
19.18 million shares

Acquisitions of Treasury Stock

Newly acquired portion
5.25 million shares(Approximately ¥5 billion)

16.12 million shares
Newly acquired portion
3.61 million shares(Approximately ¥3 billion)

Newly acquired portion
3.52 million shares(Approximately ¥3 billion)

Newly acquired portion
4.16 million shares(Approximately ¥4 billion)

Newly acquired portion
4.00 million shares(Approximately ¥5 billion)

Already acquired in ﬁrst half

26.63 million shares

13

Cautionary Statement with Respect to Forward-Looking Statements
Forecast figures and explanations contained in the presentation are forwardlooking statements that involve risks and uncertain factors.
Accordingly, it should be recognized that actual results may differ from suchforward-looking statements due to a variety of factors.
Important factors that could affect results include, but are not limited to,changes in economic conditions and social trends relevant to the Group’sbusiness areas, and downward pressure on prices for the services provided by
the Group owing to fluctuations in demand and intensified competition.

14