Presentation of Performance for the First Half
Fiscal Year Ending March 31, 2017

November 11, 2016

Contents
I . Overview of Performance for the First Half of the Fiscal Year Ending March 31, 2017
1. Highlights of the First Half Financial Statements
2. Details of Orders Received by Segment
3. Details of Net Sales by Segment
4. Details of Operating Income(Reference) First-Half Financial Results Summary (excluding TOKYO HOSOH KOGYO CO., LTD.)
II . Full Year Forecasts for the Fiscal Year Ending March 31, 2017
1. Full Year Forecasts for the Fiscal Year Ending March 31, 2017
2. Contract Backlogs
3. Second-Half Plan Achievement Forecasts
III . Trends at Principal Carriers
1. Trends in NTT Fixed-Line Related Business2. Trends in NTT Mobile Business(Reference) NTT DOCOMO Network
3. Trends in NCC BusinessIV . Strategies for Top-Line Expansion
1. Outlook for Solar Power Construction Business2. Progress in Post Solar Development Business
V . Promotion of Structural Reform
1. Progress on COMSYS WAYa Structural Reforms
2. Consolidation of AC Backyard Operations
3. Consolidation of Operation Centers
VI . Shareholder Returns Policy
1. Shareholder Returns Policy (Dividends and Acquisition of Treasury Stock)

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2

I-1. Highlights of the First Half Financial Statements
Although sales and profit fell short of forecasts, orders received recorded an all-time high(Unit: ¥100 million)

Performance inprevious term

Comparisons withthe previous term

Forecasts

Percent of Net Sales

Percent of Net Sales

Difference

Percent of Net Sales

1,786

1,626

Performance

Orders Received

+159

1,680

Comparisonswith forecasts
Difference

+106

1,322

1,287

+34

1,380

-57

165

161

+4

176

-10

12.5%

12.5%

0.0 percentage points

12.8%-0.3 percentage points

Selling, General and

102

95

+6

108

-5

Administrative Expenses

7.7%

7.5%

+0.2 percentage points

7.8%-0.1 percentage points

63

65

-2

68

-4

4.8%

5.1%

-0.3 percentage points

4.9%-0.1 percentage points

Net Sales

Gross Proﬁts

Operating Income

Recurring Proﬁt
Net Income
Attributable to
Owners of Parent

64

68

-4

72

-7

4.9%

5.3%

-0.4 percentage points

5.2%-0.3 percentage points

41

45

-4

46

-4

3.1%

3.5%

-0.4 percentage points

3.3%-0.2 percentage points

Notes: 1. Figures are rounded down to the nearest whole unit.
2. All-time high orders received: ¥173.5 billion in ﬁscal year ended March 31, 2015

Remarks

Orders Received
Although Social Systems-Related and Other
business fell short of forecasts, orders received recorded an all-time high due to orders moved forward in the NTT Engineeringbusiness (access-related and mobile) andthe impact of TOKYO HOSOH KOGYO, which
was consolidated in the current ﬁscal year.

Net Sales
Although the access-related businessexceeded forecasts as a result of robust
orders received, construction work wasdelayed in other segments, so the total
sales fell short of forecasts.

Operating Income
Despite efforts for structural reform andincreased productivity, operating income
fell short of previous ﬁscal year and forecasts due to a decline in net sales andchanges in product mix.

3I-2. Details of Orders Received by Segment
Increase compared with forecasts due to significant impact oforders moved forward in NTT Engineering businessComparisons with
the Previous Term

SocialSystem-Related
IT
and Other+5.3%-17.4%• Significant increase in civilengineering-related work due to
new consolidation• Decrease due to cancellation ofsolar construction (EPC) projects+159(+9.8%)• Increase in alliance solution
business• Increase in softwaredevelopment projects

NTT-G
+8.5%

+78

1,626

Performance in Previous Term

NCC
-4.4%

-5

IT
+8.1%

Comparisons
Increase due to au fixed-line-related with Forecasts
projects (network) moved forward

+106
NCC
+11.6%+13

SocialSystem-Related
and Other+20.2%-83+12(+6.3%)
NTT-G+19.5%• Increase in alliance solution
business• Decrease due to cancellation ofsolar construction (EPC) projects+66(Unit: ¥100 million)

+163

+19

Decrease due to disparities intiming of orders for au projects

NTT-Access
Increase in user processes andmaintenance processes
NTT-Network
Decrease in reaction to extraordinary
demand for network simplification
projects in previous term
NTT-Mobile
Increase in new construction
negotiation processes

1,786

Performance

NTT-Access
Increase due to growth in user
processes and maintenanceprocesses moved forward
NTT-Network
Increase due to growth in data center
processes and maintenanceprocesses moved forward
NTT-Mobile
Increase due to new negotiations
and construction processes moved
forward1,680

Target4

I-3. Details of Net Sales by Segment
Lower than forecasts because of delays in project completion and other reasons
Comparisons with
the Previous Term

(Unit: ¥100 million)

Comparisonswith Forecasts+34(+2.7%)
NTT-Access
Increase in user processes
NTT-Network
Decrease due to delays in construction
work for network simplification

NTT-G
+3.4%

NCC
-18.4%+24-22• Increase in civil engineering-related
work due to new consolidation• Decrease in solar construction
projects other than the mega-solar
power businessSocialSystem-Related
and Other+17.4%
IT
-3.4%

-57
Decrease in solution business(including manufacturer-related)

SocialSystem-Related
and Other
-7.1%

-9

NCC
-5.3%

NTT-G
-2.9%

-22

-5

-21

+40

Decrease in solar
construction projects
other than the megasolar power business-7
Decrease in
au LTE-related work

IT
-4.1%

(-4.2%)

Decrease in
WCP work

Decrease in solution business(including manufacturer-related)

NTT-Access
Increase in user processes
NTT-Network
Decrease due to delays in construction
work for network simplification
NTT-Mobile
Decrease due to completion timeerrors caused by delays in openingof transmission routes and deliveryof goods

1,287

1,322

1,380

Performance in Previous Term

Performance

Target5

I-4. Details of Operating Income
Lower than forecasts due to decline in sales and change in product mix
Comparisons with
the Previous Term

(Unit: ¥100 million)

Comparisonswith Forecasts
Main measures to increase productivity• Streamlining through consolidation of access-related backyard operations(workflow standardization and integrated operations)• Streamlining through consolidation of network operations and personnel movement• Reduction of field expenses and indirect expenses-2(-3.6%)+6-7

65
Operating Margin(5.1%)

Decline insales andchange inproduct mix-6Structuralreforms andImprovement
improved
productivity due to increasein expenses
Operating Margin
from new(4.8%)
consolidationand cost
reductions

63

Improvement
due tocost reduction-12+5Structuralreforms andimproved
productivity

68
Operating Margin(4.9%)+2

Increase in expenses
from new consolidation• Share acquisition expenses +1• Goodwill+0.8• SG&A+5

Performance in Previous Term(-7.3%)

Decline in sales
and change
in product mix+5
Effect of new
consolidation-4

Performance

Target6

(Reference) First-Half Financial Results Summary (excluding TOKYO HOSOH KOGYO CO., LTD.)

Productivity on par with previous fiscal year
despite decline in sales and changes in product mix
FY Mar. 2016
Performance
Percent of
Net Sales

Orders Received

Net Sales

1,626

1,287

FY Mar. 2017
Targets
Percent of
Net Sales

1,669

1,260

Comparisons
with
FY Mar. 2016
Difference

+43

-26

TOKYO
HOSOH KOGYOFY Mar. 2017
Performance

116

61

Comparisons with
the Previous Term

+43

Gross Proﬁts

Selling,
General and
Administrative
Expenses

158

-2

6

12.5%

12.6%

+0.1 p. p.

11.4%

95

94

-0

5

7.5%

7.5%

0.0 p. p.

9.1%

Operating

65

63

-1

1

Income5.1%

5.0%-0.1 p. p.

2.2%

Notes 1. Figures are rounded down to the nearest whole unit.
2. p.p. = percentage points

NTT-G

NCC

IT

-5

+19

SocialSystem-Related
and Other

-49

+78

+66

-49

1,669

1,626
Performance inPrevious Term

Performance— Net Sales —Comparisons with
the Previous Term

161

(Unit: ¥100 million)— Orders Received —

-26

NTT-G

+24

NCC

IT

-22

-7

SocialSystem-Related
and Other

-20

+40

1,287

-20

1,260

Performance inPrevious Term

Performance— Profit structure —Comparisons with
the Previous Term

-1

65
Performance inPrevious Term

Decline insales andchange inproduct mix-7

Structuralreforms andimproved
productivity+5

Improvement
due tocost reduction-063
Performance7II-1. Full Year Forecasts for the Fiscal Year Ending March 31, 2017
Achieve full-year forecasts by focusing on increasing orders received in second half
(Unit: ¥100 million)

FY March 2016
Performance

FY March 2017
Targets

Comparisons withFY March 2016

Percent of Net Sales

Percent of Net Sales

Difference

Orders Received

3,319

3,500

+180

Net Sales

3,206

3,400

+193

433

465

+31

13.5%

13.7%

+0.2 percentage points

Selling, General and

195

215

+19

Administrative Expenses

6.1%

6.3%

+0.2 percentage points

238

250

+11

7.4%

7.4%

+0.0 percentage points

242

255

+12

7.6%

7.5%

-0.1 percentage points

154

160

+5

4.8%

4.7%

-0.1 percentage points

Gross Proﬁts

Operating Income

Recurring Proﬁt

Net Income Attributable to
Owners of Parent

Remarks

Orders Received
Although orders received exceeded forecasts in the first half due
to the impact of orders moved forward in the NTT Engineeringbusiness, orders received in the second half are forecast to be
weak in reaction to that. In the Social Systems-Related and Other
business, we will aim to strengthen initiatives directed at achieving
full-year forecasts and further expand orders received throughactive proposal-based marketing.
Net Sales
We will aim to quickly complete delayed construction projects
from the first fiscal half, along with the large number of projects
carried forward, and to achieve forecasts by improving construction
efficiency and effecting appropriate operational management.
Furthermore, we will endeavor to expand sales by completing
construction projects ordered in advance in the ﬁrst ﬁscal half.
0perating Income
We will aim to achieve forecasts by improving productivity throughutilization of the IT platform and working to reduce lead times (fromreceiving an order to its completion) to record completion as soon
as possible and further reduce costs.

Notes: 1. The forecasts for the ﬁscal year ending March 31, 2017have not been changed from the forecasts announced in the ﬁnancial results summary dated May 10, 2016.
2. Figures are rounded down to the nearest whole unit.

8II-2. Contract Backlogs
High expectations of net sales from second half due to all-time high contract backlog(Target)

3,286

3,206

All-timehigh contract
backlog

3,400
Social System (Decrease)• Decrease due to a decline in orders
received for solar power construction projects• Increase in civil engineering work due to
new consolidation

1,477(Second Half)

1,190

1,844

1,321
(Second Half)

1,919(Unit: ¥100 million)

SocialIT (Increase)
Increase in alliance and solutions
System-Related
businessand Other (Second-half Forecasts)
2,078
NCC (Increase)
Increase due to orders received moved
forwardIT
NCC

Access (Increase)
Increase due to orders received for cabletunnel repair and maintenance work moved
forward

Network (Increase)NTT• Delay of completed work from first half
• Increase in electric power construction

Mobile (Increase)(First Half)

1,442

2Q Contract Backlog
Net Sales
FY March 2015

(First Half)(First Half)

1,287

1,322

2Q Contract Backlog
Net Sales
FY March 2016

• Delay of completed work from first half
• Increase due to orders received (fornegotiation on 3.5GHz and 700MHz bands
and consulting, base station constructionwork) being moved forward

2Q Contract Backlog Net Sales (Target)FY March 2017
*Previous all-time high contract backlog: ¥132.1 billion in second quarter of fiscal year ended March 31, 20169

II-3. Second-Half Plan Achievement Forecasts
To achieve the ¥200.0 billion mark for the first time in second-half net sales.
Second-half
net sales

IT
NCC

2,078
81

368

410

2,020
80
390

289
150

329

320

170

165

1,919
SocialSystem-Related
and Other(Unit: ¥100 million)
TOKYO HOSOH
KOGYO

Changes in Second-Half Net Sales

197.7¥200.0billionMar. 2008

NTT

1,112

1,087

207.8

Mar. 2017
Target1,065
Outlook for second half

Second-halfoperating income

Revised Target

187
TOKYO HOSOH
KOGYO

5

182

Network• Completion of delayed construction work
• Increase in orders received for electric power processes, etc.

Mobile• Completion of delayed construction work
• Impact in orders received for negotiation and wireless construction processes moved forward• Concerns about delays to completion of work due to delays in goods and opening oftransmission routes, etc.

NCC Engineering• Increase in au first-half orders received• Concerns about delays to completion of work due to delays in orders received

IT Solutions• Increase in first-half orders received• Increase due to promotion of alliance business

5

173
182
173
Performance inPrevious Term

Target• Continuation expected for user processes (due to increase in optical fiber collaboration)• Impact of first-half orders received for cable tunnel repair
and maintenance work moved forward

NTT Engineering

Performance inPrevious Term

Access

Revised Target

177
TargetDegree of
expectation

Social System- • Impact of failure to achieve first-half forecast for orders received
Related and Other

10

III-1. Trends in NTT Fixed-Line Related Business(Unit: ¥100 million)

NTT East and NTT West capex(Unit: 10,000 lines)

No. of FLET’S subscriptions(including optical fiber collaboration)

No. of DOCOMO Hikari subscriptions

6,266

5,834

3,121

2,687
NTT EAST 1,287
NTT WEST 1,400(First-Half) (Full-Year)
Mar. 2015

2,241
1,027

1,925

253

5,450
2,700
Investment infiber optics
1,650

2,750

2,894

1,214
(First-Half) (Full-Year)
Mar. 2016

Optical fiber
collaboration(First-Half) (Full-Year Target)
Mar. 2017

Optical fiber
collaboration

Optical fiber
collaboration

512

307

19

Investment infiber optics
1,770

1,096

1,066

NTT EAST 1,040

2,940

Investment infiber optics
2,240

3,145

1,871

1,985
157

+96
157

23

+134

+23

23

Mar. 2015

Mar. 2016

Mar. 2017(Second Quarter)

No. of SoftBank Hikari subscriptions
Optical fiber
collaboration

270

889

859

NTT WEST 831

Optical fiber
collaboration

Optical fiber
collaboration

8

161

311

Mar. 2015

Mar. 2016

Mar. 2017(Full-Year Forecast)

Note: No. of subscriptions is cumulative,
optical fiber collaboration is reposted.

12

172

+98

+160

172

+12

12

Mar. 2015

Mar. 2016

Mar. 2017(Second Quarter)

Source: NTT Results Briefing Materials

Orders received at COMSYS Group (NTT −Access)(Unit: ¥100 million)

932

973

945

Second-half

475

484

455

First-half

457

489

Results
Mar. 2015

Results
Mar. 2016

538

490

Results Target
Mar. 2017

COMSYS Group materials: Simple total for five companies; NTT Engineering business–Access

NTT East and West
• Overall capex for NTT Group increased ¥32.8 billion from previous year to ¥1,720.0 billion,
but regional and mobile communications down ¥43.3 billion.
• Full-year capex at NTT East and West gradually declining down 6.6% from previous year to¥545.0 billion.
No. of FLET’S subscriptions (including optical ﬁber collaboration)• Forecast FLET’S Hikari subscriptions totaled 600,000 lines for the year, and the numberof subscribers as of the ﬁrst quarter is on track at 261,000 lines (progress rate 43.5%)• Forecast optical ﬁber collaboration subscriptions are 3,550,000 lines for the year, andthe number of subscribers as of the ﬁrst quarter is on track at 1,221,000 (progress rate
34.4%), of which 530,000 are new lines.
COMSYS Group• Due to the rise in optical ﬁber collaboration orders, there has been an increase in opening of
FLET’S Hikari, and orders received and sales are increasing.
• Increase in orders received consists of increase in user processes and cable tunnel repair andmaintenance processes.

11III-2. Trends in NTT Mobile Business(Unit: ¥100 million)

NTT DOCOMO
Capital Expenditure Trends

5,850

5,850

250

220

LTE Network
LTE base stations
138,100 stations

Premium
4G-enabledbase stations
38,100stations[ First-half comparison ]

Other

2,195

(Smart Lifebusiness, etc.)

93

Communications
business

2,461
85

-30
5,630

5,600 ᴾ

2,376

Mar. 2016

Mar. 2017

Mar. 2017

Mar. 2017(First-Half)(First-Half)(Current Forecast)(Initial Forecast)

Orders received at COMSYS Group (NTT −Mobile)(Unit: ¥100 million)

650

Second-Half

299

334

First Half

323

316

Results
Mar. 2015

Results
Mar. 2016

600

350

356

250

Results Target
Mar. 2017

COMSYS Group materials: Simple total for five companies; NTT Engineering business–Mobile

FY March 2015

PREMIUM 4G
Expanded to 1,240 cities nationwide
370Mbps service
through 3.5GHz band
Expanded to 82 cities nationwide
March 2017
Fastest in Japan
Commence provision of 512Mbps
682Mbps starting in March

22,800 stations

2,102

622

149,600 stations

FY March 2016
(First-Half)

Source: NTT DOCOMO Results Briefing Materials

NTT DOCOMO• Overall capex for the year unchanged from initial ¥585.0 billion, but telecommunications business changed to ¥560.0 billion, down ¥3.0 billion from initialexpectation.
• First-half capex amount increased by ¥26.6 billion from previous year to¥246.1 billion, which included an ¥27.4 billion increase for telecommunications business.
• No change to future capex plans until ﬁscal 2017 from maximum of ¥650.0
billion, the medium-term target announced last year.
COMSYS Group• Orders received during the ﬁrst half exceeded forecasts due to an early start ofnegotiations and consulting for 3.5GHz and 700MHz bands, and an increase insales from base station construction work is expected from the second half.
• Cost pressures are expected to be severe considering greater cost efﬁciency at
NTT DOCOMO. However, there will be ongoing demand for mobile-related projects with continued network acceleration.

12

(Reference) NTT DOCOMO Network
Further Network Evolution
2014

2015

2016

2020

From March 2017
256QAM
4X4 MIMO
241Mbps
3.5GHz5G

4G

3 5 ( 0 , 8 0 *
PREMIUM

Receiving max.

1Gbps

3.5GHz241MbpsFurther
acceleration

1.7GHz200Mbps

2GHz

March 2017
256QAM *2
150Mbps

1.7GHz200Mbps

800MHz150Mbps

3.5GHz

4X4 MIMO *1
181Mbps

3.5GHz181Mbps

1.7GHz150Mbps

682 Mbps
256 QAM4 X 4 MIMO

500 Mbps
370 Mbps
300 Mbps
225 Mbps
Commencement of
PREMIUM 4G

375 Mbps

May 2016

256 QAM

2GHz

112.5Mbps

1.7GHz150MbpsReceiving max.

3.5GHz band
TDD+FDD

800MHzFDD

112.5Mbps

375
Mbps

1.5GHz112.5Mbps

2GHz

112.5Mbps

Mbps

225

1.7GHz150MbpsReceiving max.

2GHz

112.5Mbps

Mbps

262.5

682
Mbps

Receiving max.

500
Mbps

Receiving max.

512
Mbps

Full LTE 800MHz band in certain areas only
All other areas are 337.5Mbps.

June 2016
Receiving max.

Simultaneous acceleration due toupdating of base station software

2GHz

112.5Mbps

1.5GHz112.5Mbps

800MHz* 112.5Mbps

Receiving max.

300
Mbps

3.5GHz110Mbps

3.5GHz110Mbps

1.7GHz150MbpsReceiving max.

*1. MIMO: technology for receiving and transmitting
different signals simultaneously from multiple antennas*2. Quadrature amplitude modulation

370
Mbps

March 2017: roll out of over-500Mbps areas in approx. 70 cities in the Tokyo, Nagoya and Osaka regions
City centers

Urban areas

Over-500Mbps areas

Over-300Mbps areas

Suburbs

PREMIUM 4G areas

Rural areas

LTE areas

Source: Prepared by COMSYS based on NTT DOCOMO financial results presentation materials

13III-3. Trends in NCC BusinessKDDI Capex (payment)

Softbank Capex (Telecommunications business in Japan)(Unit: ¥100 million)(Unit: ¥100 million)

5,600

5,314

2,100

1,934

Includesapproximately ¥30.0
billion resulting fromchange ofconstruction
implementation
timeframe.

7,394
6,345

5,987
3,281
4,125

2,551
Fixed,etc. 927

1,840
3,380

Mobile 1,624

736

3,500
Mar. 2013

1,104(Includes UQ)First-Half Full-YearFirst-Half Full-Year(Forecast)Mar. 2016(Japan standards)

Mar. 2017
Source: KDDI Results Briefing Materials

Orders received at COMSYS Group (NCC)

340
Second-half

212

142

267

255

183

Results
Mar. 2014

145

198
127
Results
Mar. 2015

Mar. 2016

Mar. 2017(Forecast)Targets (International accounting standards)*Figures for the fiscal year ended March 31, 2013 to the fiscal year ended March
31, 2015 are totals of mobile and fixed-line communications businesses.
*Figures for the fiscal year ended March 31, 2016 and that ending March 31,2017 are for communications business in Japan.

Source: Softbank Group Annual Securities Report• Capital expenditures in ﬁrst half down ¥71.1 billion from the same period in theprevious ﬁscal year; progress rate of 32.9%. Lagging behind plans, and second-halfinvestment will be double that of the ﬁrst half.
• Large volume of investment planned in second half for VoLTE improvement,
including 3.5GHz and 700MHz bands, area reassignment, CA conversion, and
C-RAN construction.

Softbank

140
First-halfMar. 2015

KDDI(Unit: ¥100 million)

395

Mar. 2014

Results
Mar. 2016

123

110

Results Target
Mar. 2017• Capital investment of ¥106.1 billion in ﬁrst half compared with ¥328.1 billion forecast; progress rate of 32.3%.
• Start of 5G Project. Plans for steady expansion through 100 stations in 43 cities
nationwide with introduction of Massive MIMO.

COMSYS Group• Forecasts assumed that work for VoLTE improvement, including 3,5GHz and 700MHz
bands, area reassignment, CA conversion, and C-RAN construction would move ahead
at full speed in second half, and ﬁrst-half orders received recorded a weak increase.
• Although work volume will increase signiﬁcantly, unit cost situation is forecast to be
severe due to downsizing.

COMSYS Group materials: Simple total for five companies; NCC Engineering business14

IV-1. Outlook for Solar Power Construction Business
Strategic review of solar power construction business with revision of feed-in tariff system
FY March 2013

FY March 2014

FY March 2015

FY March 2016

FY March 2017

From fiscal year ending March 31, 2018
*Solar power for businesses (at least 10kW)

Purchase Price*(¥/kWh)

40

36

32

29

27

24

Annual decision: implementation of bidding for large-scale solar power

Subsidies for introduction of solar power generation

Subsidy(¥10,000/KW)

4.8

Investment
Tax Credit

3

Peak of solar
construction business?

Abolished

Green tax credit for solar power generation

Abolition of
immediate depreciation

Output Restriction Rules(10kW and higher)

Introduction of restrictions on unlimited output
Purchase price at time of applying for the connection agreement is applicable.

Approval System

Purchase price effective in fiscal year of signing the connection agreement is applicable.

Many large-scale projects remaining

July 2016 reform of feed-in tariff system

Reference: Approval and Introduction of Solar Power Generation (Non-residential) (as of June 30, 2016)

Approval expires unless connection agreement is entered into with power company by March 31, 2017

• Capacity approved: 75,030MW• Capacity introduced: 24,990MW (33% of capacity approved)

Penalties imposed in cases where operation cannot commence within three years of April 1, 2017

Source: Agency for Natural Resources and Energy website for disclosure of information on feed-in tariff system

Possibility of front-loaded demand

We will aim to capture front-loaded demand leveraging our experience as an IPP operator
Order backlog in EPC business

Orders received next
fiscal year expected
to be on level withthis fiscal year

(Unit: ¥100 million)

190
60
FY March 2013

220

103
FY March 2014

• Reduction in players• Increase in new customers• Captive consumption projects

240(Initial forecast)FY March 2015

FY March 2016

FY March 2017

FY March 201815

IV-2. Progress in Post Solar Development Business
Areas of Ecological Innovation

Areas of Urban Revitalization Innovation

Areas of Community Revitalization Innovation<Environment and Energy><Nationwide Resilience><Community Development>(1) Solar power generation (IPP)(2) Solar power construction (EPC)• Develop new customers and new markets (EPC
for large-scale generation projects, such as golfcourses, etc.)(3) Power Producer and Supplier (PPS) businessAlready
introduced• Commence provision of electricity retail business(Jibun Denryoku)(4) Grey water business(5) Industrial Waste Recycling Business(6) Smart grid
• Enter the market leveraging accreditation and trackrecord as electrical construction company• Aim to expand business area

(7) Small-scale wind power generation• Plan to conclude distributor agreements with overseas manufacturer and commence sales

Short- tomedium-term(1) Wood biomass• Consider package commercialization of smallscale power generation and heat supply business(2) Energy Service Company (ESCO) business(1) Repair of NTT facilities• Increase in cable tunnel repair and maintenance processes(2) Full-scale earthquake reconstruction• Receive orders for model projects (specified by NTT East
Japan Reconstruction Ofﬁce) to remove objects obstructing
construction.

(3) Removal of utility poles (Tohoku area)(4) Water and sewerage facilities (Tokai area)(5) Renovation of Metropolitan Expressway (Kanto area)• Expand business areas leveraging track record on
Metropolitan Expressway(6) Agricultural engineering(1) Make effective use of idle real estate• Commercialization decided for 4 projects (total
investment ¥1.2 billion)(2) Establish Okinawa project• 1 order received (common-use cable tunnel)(3) Participate in overseas projects• Develop overseas markets in collaboration withJapanese telecommunications carriers• Build up know-how and evaluations through ongoing orders
received(7) Water treatment electricity• First order received for project in Kansai area

(1) Removal of utility poles (Kansai area)(2) Water and sewerage facilities (Kansai area)(3) Revitalization and upgrading of urban infrastructure(4) Renovation of Shuto Expressway (Kansai/Kyushu area)(1) Tokyo Olympics-related work
(2) Development of area around Shinagawa Station(1) Geothermal heat pump
• Planning onsite verification of geothermal heatpump utilization

Medium- tolong-term(2) Small-scale geothermal power generation• Implementing joint research with Hokkaido University aimed at construction of heat collection model(1) PFI (concessions) and PPP• We will aim to take part in projects related to development of roadand water service-related infrastructure(1) Region creation projects(3) Smart cities• Take charge of storage battery sales and construction in Kansai VPP Project pilot scheme
Note: Red text indicates businesses with progress in ﬁrst half16V-1. Progress on COMSYS WAYa Structural Reforms
Structural reforms set the stage anew for efforts to increase efficiency across the entire COMSYS Group.
COMSYS WAYa
— Advance of structural reforms and top-line growth

COMSYS WAY— Sustained, More In-Depth
Structural Reform
Fiscal year ended March 31, 2009 – fiscal year ended March 31, 2015
(fiscal 2008 – fiscal 2014)

Group Innovation 2010

Fiscal year ended March 31, 2016
(fiscal 2015)

Group
strategy• Nationwide movementof personnel

Fiscal year ended March 31, 2017
(fiscal 2016)• Enhancement of quantity survey
system within the Group• Consolidate backyard operations
Consolidate access-related operations
Merge operations centers

Promote IT
Penetration

Strengthen
Construction
System• Standardization of business process
reengineering (BPR) and workflow• Construction of common platform,
Comstar• Roll out construction IT platform• Clarification of roles with prime
contractor affiliates (dualstratification)• Restructure mobile and network
business• Restructure COMSYS’s mobilerelated subsidiaries• Restructure COMSYS accessrelated subsidiaries

Gradual introduction to all segments

Expand within Group

Promote IT development and standardizationof workflow for companies that COMSYS
Holdings has merged or acquired• Amalgamation of TSUKEN accessrelated subsidiaries• Restructure TOSYS accessrelated subsidiaries

Consolidate project administration office (Technostation)
Cost
Reductions• Expansion of centralizedpurchasing within the Group• Personnel reductions of 500 fromGroup overall• Fair evaluation of software assets• Disposal of idle assets• Introduce Group consolidated tax
payment system

Reduce selling costs
Integration
Synergies• Introduce Group finances• Consolidate shared operations• Merge business locations• Management integration with
TSUKEN• Integration of Hokkaido network
business (into COMSYS)• Integration of Hokkaido accessrelated business (into TSUKEN)• Integration of Shinetsu network
business (into COMSYS)

17

V-2. Consolidation of AC Backyard Operations
Aim for integrated operation of COMSYS Group in access business
Objectives
Cost reduction through consolidated worksites
Strengthen prime contractor operations by shifting management resources for integrated management of consolidated subsidiaries
Establishment of consolidated operation centers in optimum locations in the COMSYS Group and systemization of operations

Toward COMSYS Group optimization
Standardize work flow
Integrate system

Stimulatepersonnel
exchange

Effect targets

Centralize area-free operations
Consolidated operation centerfor starting communication service

Approx. ¥400 million
in cuts

Consolidated operation center for metallic materials
and construction completion management

for current fiscal year on full-year base(consolidated Nippon COMSYS Group-basis)

Quality inspection center (photo inspection)

Further increase inamount of reductions
through expansion of consolidated areas*Under consideration in migration projectImage of operations centralization
Step 1

Step 2(Nippon COMSYS)

Operational consolidation for Greater Tokyo area

Category

Service integration construction
User
construction AC construction

Generalconstruction

Consolidation of East Japan operations

Completion
processing

Consolidated operation
center for metallic
materials andconstruction completion
management

Photoinspection East Japan and West Japan Quality Inspection Center(COMSYS Group)

Consolidation of operations within Grouptsu

Hirabayashi

TSUKEN(Sapporo)

Hiroshima

Utsunomiya

Construction

Consolidated
operation centerfor starting
communication
service

Consolidation of West Japan operations

ine

Sh

Construction officemanagementᵖᵖӸίᵏᵕᵌᵓήὸỉʴՃЪถửܱྵ
DesignStep 3(Nippon COMSYS)

Fukuoka
Toda
Hachioji
Sagamihara

TOSYS(Matoba)

Koshigaya
Ueno
Southern Tokyo
Tokyo start of service
operations consolidated center

Itano
Nishihara

COMSYS*Gradual migration planned*Consolidated sites to be considered in migration project18

V-3. Consolidation of Operation Centers
We plan to integrate the Nippon COMSYS and TSUKEN OPC to reduce costs by 25%
Objectives

Image of Business Integration of operational services• Cost reduction by eliminating duplicatedoperations with creation of 1 base
• Streamlining through expansion ofbusiness scale• Contribute to topline expansion as theintegrated platform business of
COMSYS Group operation services[ Step 1 ]Consolidate in Sapporo OPC

Sapporo operation center(to open October 2017)

COMSYS Duplicatedoperations TSUKEN

Details of operations(1) 24-hour, 365-day call center(2) Delivery center (116 functions)(3) Line resale (optical fiber collaboration)(4) Primary fault response(5) Remote monitoring(6) Remote operation(7) Secondary fault countermeasures

Trend of IT Business MaintenanceOperations Sales

51

OPC expenses reduction target[ Step 2 ]Group-wide consolidation in Sapporo OPC(Unit: ¥100 million)
Existing
market58

53

NI/SI users(second)Labor cost60
Marketingfront office

180

47

Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 201725% reduction70

MY users

Subcontracting

46(Unit: ¥100 million)

Backyard

Expandedmarket

CHD-OPS* integrated platform business

NTT-G

Newly developed users(System integrator second)

Simple total of 5 companies

Office rent
Communications
expensesUtilities, etc.

250Mar. 2015*OPS = operation services

125
185
Mar. 202019

VI-1. Shareholder Returns Policy (Dividends and Acquisition of Treasury Stock)Total shareholder return ratio to 70% due to acquisition of additional ¥3.0 billion in treasury shares(Unit: ¥100 million) 200
Net Income(Target)15030
Additional

100
167

163
80

132
50
71

30

80

75

50
(40)
Acquired

154

40

160

39

44

Acquisition oftreasury shares

Total cash
dividend

25

24

29

35

March 2012

March 2013

March 2014

March 2015

March 2016

March 2017
(Planned)

Interim

¥10

¥10

¥10

¥15

¥15

¥20

Year-end¥10¥10

Ordinary dividends: ¥10+
Commemorative dividends: ¥5

¥15

¥20

¥20

Consolidated Payout Ratio

36.0%

18.7%

18.4%

21.0%

25.6%

27.8%

Total Return Ratio
Dividends + treasury stock
Net income

77.7%

48.7%

66.9%

66.2%

77.2%

Number of sharesof treasury stockat the end of the period*

19.18
million shares

23.01
million shares

28.31
million shares

31.41
million shares

30.24
million shares

29.96
million shares(Ownership Ratio)(13.1%)(15.8%)(19.4%)(21.5%)(21.5%)(As of September 30,2016)

ROE

4.4%

7.9%

9.4%

9.0%

7.9%

—

Dividends per
Share(annual)

¥15

59.0%
77.8%

(21.3%)*The total number of issued shares changed from 145.97 million shares to 141.00 million shares with the cancellation of 4.97 million shares of treasury stock on November 30, 2015.
2.12 million shares of treasury stock (1.5%) were contributed as a result of the exchange of shares with TOKYO HOSOH KOGYO CO., LTD. on April 1, 2016.

20

Interim Results for the Fiscal Year Ending March 31, 2017
— Data Book —November 11, 2016

Contents
Detailed Data
1

Consolidated Statements of Income (COMSYS.HD Consolidated)

2Statements of Income for Each Company

3

Orders Received, Net Sales, and Contract Backlogs by Business Area (COMSYS.HD Consolidated)

4

Orders Received and Net Sales by Detailed Business Area
for Five Companies on a Non-Consolidated Simple Sum Basis

5

Capital Expenditure, Depreciation and Amortization

Reference
6

Consolidated Balance Sheets (Condensed)

7

Consolidated Cash Flow (Condensed)

Consolidated Statements of Income (COMSYS.HD Consolidated)(Unit: ¥100 million)
FY March 2016

FY March 2017

FY March 2017

Comparisons with the Previous Term Comparisons with Forecasts
Difference (d) Percentage Difference (e) Percentage
Difference
Difference(c) – (a)(d) ⁄ (a)(c) – (b)(e) ⁄ (b)Full Year
Targets(f)

ProgressRate(c) ⁄ (f)2Q Results

2Q Targets

2Q Results

(a)

(b)

(c)

Orders Received

1,626

1,680

1,786

159

9.8%

106

6.3%

3,500

51.0%

Net Sales

1,287

1,380

1,322

34

2.7%

-57

-4.2%

3,400

38.9%

Gross Profits

161

176

165

4

2.5%

-10

-6.1%

465

35.6%

(12.5%)(12.8%)(12.5%)

0.0 p.p.

Selling, General and Administrative Expenses

95

108

102

6

6.7%

-5

-5.2%

215

47.6%

Operating Income

65

68

63

-2

-3.6%

-4

-7.3%

250

25.2%

(5.1%)(4.9%)(4.8%)-0.3 p.p.

68

72

64

-4

(5.3%)(5.2%)(4.9%)-0.4 p.p.

45

46

41

-4

(3.5%)(3.3%)(3.1%)-0.4 p.p.

(Gross Profit Margin)(Operating Margin)
Recurring Profit(Recurring Profit Margin)
Net Income Attributable to Owners of Parent(Net Profit Margin)-0.3 p.p.

(13.7%)-0.1 p.p.

-5.9%

-7

(7.4%)-10.3%-0.3 p.p.

-9.2%

-4
-0.2 p.p.

255

25.3%

(7.5%)-10.3%

160

25.8%(4.7%)

Notes: 1. Figures are rounded down to the nearest whole unit. Profit margin, percentages of increase and decrease and progress percentage data are calculated using a base unit of yen. Figures are rounded to the nearest first decimal pla
2. p.p. = percentage points

1Statements of Income for Each Company(Unit: ¥100 million)

COMSYS-G

Comparisons with the Previous Term

SANCOM-G

TOSYS-G

TSUKEN-G

Mar. 2016
2Q Results

Mar. 2017
2Q Results

Difference

Mar. 2016
2Q Results

Mar. 2017
2Q Results

Difference

Mar. 2016
2Q Results

Mar. 2017
2Q Results

Difference

Mar. 2016
2Q Results

Mar. 2017
2Q Results

Difference

1,075

1,200

124

207

214

7

146

126

-19

219

263

43

Net Sales

838

870

32

179

178

-1

113

103

-10

175

190

15

Gross Profits

111.1

116.8

5.6

12.5

12.6

0.1

8.9

7.5

-1.4

21.1

21.1

0.0

(13.3%)(13.4%)

0.1 p.p.

(7.0%)(7.1%)

0.1 p.p.

(7.9%)(7.3%)-0.6 p.p.

(12.1%)(11.1%)-1.0 p.p.

Selling, General and Administrative Expenses

60.3

66.0

5.6

11.2

11.8

0.5

7.0

7.2

0.1

13.3

12.9

-0.3

Operating Income

50.8

50.8

-0.0

1.3

0.8

-0.4

1.8

0.2

-1.5

7.8

8.2

0.3

(Operating Margin)(6.1%)(5.8%)-0.3 p.p.

(0.7%)(0.5%)-0.2 p.p.

(1.7%)(0.3%)-1.4 p.p.

(4.5%)(4.3%)-0.2 p.p.

53.7

52.1

0.9

0.3

8.5

(0.8%)(0.5%)(1.9%)(0.3%)-1.8-1.6 p.p.

8.1(6.0%)-0.5-0.3 p.p.

2.1(6.4%)-1.6-0.4 p.p.

1.4(Recurring Profit Margin)(4.7%)(4.5%)

0.4-0.2 p.p.

33.6

31.8

-1.8

0.5

0.4

-0.0

1.0

0.0

-1.0

8.4

10.9

2.4

(4.0%)(3.7%)-0.3 p.p.

(0.3%)(0.2%)-0.1 p.p.

(0.9%)(0.0%)-0.9 p.p.

(4.8%)(5.7%)

0.9 p.p.

Orders Received(Gross Profit Margin)

Recurring Profit
Net Income Attributable to Owners of Parent(Net Profit Margin)(Unit: ¥100 million)

COMSYS-G

Comparisons with Forecasts for the Full YearSANCOM-G

TOSYS-G

TSUKEN-G

Mar. 2017 Mar. 2017
Mar. 2017 Mar. 2017
Mar. 2017 Mar. 2017
Mar. 2017 Mar. 2017
Full Year Targets 2Q Results Progress Rate Full Year Targets 2Q Results Progress Rate Full Year Targets 2Q Results Progress Rate Full Year Targets 2Q Results Progress Rate

Orders Received

2,346

1,200

51.2%

478

214

45.0%

294

126

43.2%

435

263

60.5%

Net Sales

2,291

870

38.0%

457

178

39.0%

294

103

35.0%

442

190

43.2%

Gross Profits

332

116.8

35.2%

39

12.6

32.5%

26

7.5

29.0%

53

21.1

39.9%

(14.5%)(13.4%)(8.5%)(7.1%)(8.8%)(7.3%)(12.0%)(11.1%)

Selling, General and Administrative Expenses

139

66.0

47.5%

23

11.8

51.4%

14

7.2

51.9%

28

12.9

46.3%

Operating Income

192

50.8

26.5%

15

0.8

5.8%

12

0.2

2.3%

25

8.2

32.8%

(8.4%)(5.8%)(3.3%)(0.5%)(4.1%)(0.3%)(5.7%)(4.3%)(Gross Profit Margin)(Operating Margin)

Notes: 1. Figures are rounded down to the nearest whole unit. Profit margin and progress percentage data are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.
2. Business transactions between operating groups have not been eliminated.
3. p.p. = percentage points

2Orders Received, Net Sales, and Contract Backlogs by Business Area (COMSYS.HD Consolidated)
Orders Received

FY March 2016

(Six months ended September 30)

Business Area

NTT Engineering
NCC Engineering
IT Solutions
Social System-Related and Other
Total

2Q Results

2Q Targets

2Q Results

(a)

(b)

(c)

924
128
243
329
1,626

840
110
250
480
1,680

1,003
122
263
396
1,786

FY March 2016

Net Sales(Six months ended September 30)

Business Area

NTT Engineering
NCC Engineering
IT Solutions
Social System-Related and Other
Total

Contract Backlogs

2Q Results

2Q Targets

2Q Results

(a)

(b)

(c)

713
121
218
233
1,287

760
105
220
295
1,380

737
99
210
273
1,322

FY March 2016
2Q Results

Business Area

NTT Engineering
NCC Engineering
IT Solutions
Social System-Related and Other
Total

(a)

711
48
144
415
1,321

FY March 2017
Comparisons with the Previous Term Comparisons with Forecasts
Difference (d) Percentage
Difference (e) Percentage
Difference
Difference(c) – (a)(d) ⁄ (a)(c) – (b)(e) ⁄ (b)

78
-5
19
66
159

8.5%
-4.4%
8.1%
20.2%
9.8%

163
12
13
-83
106

19.5%
11.6%
5.3%
-17.4%
6.3%

FY March 2017
Comparisons with the Previous Term Comparisons with Forecasts
Difference (d) Percentage
Difference (e) Percentage
Difference
Difference(c) – (a)(d) ⁄ (a)(c) – (b)(e) ⁄ (b)

24
-22
-7
40
34

3.4%
-18.4%
-3.4%
17.4%
2.7%

-22
-5
-9
-21
-57

-2.9%
-5.3%
-4.1%
-7.1%
-4.2%

(Unit: ¥100 million)
FY March 2017
Full Year
Targets
(f)

1,765
255
575
905
3,500

ProgressRate(c) ⁄ (f)
56.9%
48.1%
45.8%
43.8%
51.0%

(Unit: ¥100 million)
FY March 2017
Full Year
Targets
(f)

1,825
270
540
765
3,400

ProgressRate(c) ⁄ (f)
40.4%
36.8%
39.1%
35.8%
38.9%

(Unit: ¥100 million)
FY March 2017
Comparisons with the Previous Term
2Q Results
Difference (d) Percentage
Difference(c)(c) – (a)(d) ⁄ (a)

824
62
186
403
1,477

112
13
41
-12
156

15.9%
28.6%
28.7%
-2.9%
11.8%

Note: Figures are rounded down to the nearest whole unit. Increase and decrease as well as progress percentage data are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

3Orders Received and Net Sales by Detailed Business Area
for Five Companies on a Non-Consolidated Simple Sum Basis
FY March 2016

Orders Received(Six months ended September 30)

Business Area
AccessNetwork
MobileSubtotal

NTT Engineering
NCC Engineering
IT Solutions
Social System-Related and Other
Total

2Q Results

2Q Targets

2Q Results

(a)

(b)

(c)

489
114
316
920
127
189
195
1,432

490
85
250
825
110
195
240
1,370

538
95
356
990
123
203
177
1,494

FY March 2016

Net Sales(Six months ended September 30)

Business Area

NTT Engineering
NCC Engineering
IT Solutions
Social System-Related and Other
Total

AccessNetwork
MobileSubtotal

2Q Results

2Q Targets

2Q Results

(a)

(b)

(c)

377
83
247
707
121
164
94
1,089

390
95
260
745
105
165
120
1,135

405
79
243
728
99
160
126
1,115

FY March 2017
Comparisons with the Previous Term Comparisons with Forecasts
Difference (d) Percentage
Difference (e) Percentage
Difference
Difference(c) – (a)(d) ⁄ (a)(c) – (b)(e) ⁄ (b)

48
-19
40
69
-4
14
-18
61

10.0%
-16.9%
12.8%
7.6%
-3.5%
7.7%
-9.4%
4.3%

48
10
106
165
13
8
-62
124

9.9%
12.2%
42.6%
20.0%
11.9%
4.4%
-26.2%
9.1%

FY March 2017
Comparisons with the Previous Term Comparisons with Forecasts
Difference (d) Percentage
Difference (e) Percentage
Difference
Difference(c) – (a)(d) ⁄ (a)(c) – (b)(e) ⁄ (b)

28
-3
-4
20
-21
-4
31
25

7.5%
-4.0%
-1.7%
3.0%
-18.0%
-2.8%
33.3%
2.4%

15
-15
-16
-16
-5
-4
6
-19

4.0%
-15.9%
-6.4%
-2.2%
-5.1%
-2.9%
5.3%
-1.8%

(Unit: ¥100 million)
FY March 2017
Full Year
Targets
(f)

945
200
600
1,745
255
450
490
2,940

ProgressRate(c) ⁄ (f)
57.0%
47.7%
59.4%
56.8%
48.3%
45.2%
36.1%
50.8%

(Unit: ¥100 million)
FY March 2017
Full Year
Targets
(f)

980
220
590
1,790
270
415
385
2,860

ProgressRate(c) ⁄ (f)
41.4%
36.3%
41.2%
40.7%
36.9%
38.6%
32.8%
39.0%

Notes: 1. The non-consolidated simple sum data are for the following five companies: Nippon COMSYS Corporation; SANWA COMSYS Engineering Corporation; TOSYS Corporation; TSUKEN Corporation;
and COMSYS JOHO SYSTEM Corporation.
2. Figures are rounded down to the nearest whole unit. Increase and decrease as well as progress percentage data are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

4

Capital Expenditure, Depreciation and Amortization(Unit: ¥100 million)
March 2016

March 2017

2Q Results

March 2017

Comparisons with the previous term
Percentage
Difference
difference

2Q Results

Full Year Targets

Progress rate

Tangible Assets

27

30

3

13.2%

88

35.0%

Intangible Assets

5

4

-1

-25.4%

8

49.8%

Total

33

35

2

6.5%

96

36.3%

Depreciation and Amortization

24

28

3

15.6%

51

54.5%

Capital Expenditure

Note: Figures are rounded down to the nearest whole unit. Percentages of increase and decrease are calculated using a base unit of yen. Figures are rounded to the nearest first decimal place.

5Consolidated Balance Sheets (Condensed)
ASSETS-147

LIABILITIES AND NET ASSETS(Unit: ¥100 million)

2,660

-147

2,660
2,513
Current
Liabilities

Current Assets

1,555(Unit: ¥100 million)

612(-183)• Accumulated cost of construction inprogress and other inventories +129
+82
• Cash and cash equivalents• Notes and accounts
receivable—trade-400+6• Other current assets

1,371

Long-Term
Liabilities

2,513(-170)• Advances received on
construction in progress• Accounts payable—trade• Income taxes payable• Other current liabilitiese

+19
-141
-23
-25

441
95

(+12)

82

(+10)

Net Assets

1,965
(+36)
• Property, plant and equipment,
including buildings

Fixed Assets+104• Intangible assets

+3

ᴾ

-70

• Investments and other assets

1,105

1,141

As of March 31, 2016

As of September 30, 2016

• Net income attributable

1,976

to owners of parent+41• Share exchange, etc.

+39

• Acquisition of treasury shares-40• Cash Dividends-22• Other-8*Equity ratio
From 73.4% to 78.2%

As of March 31, 2016

As of September 30, 20166

Consolidated Cash Flow (Condensed)(Unit: ¥100 million)
Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

+164

-37

• Decrease in receivables—trade +440
• Income before income taxes
and other adjustments
to net income+61• Depreciation and amortization +28• Decrease in payables—trade -212
• Increase in inventories-128• Cash and cash equivalents
paid for income taxes-48• Other+23• Acquisitions ofproperty and equipment• Acquisitions ofintangible fixed assets• Proceeds from sale ofinvestment securities• Other

Cash Flows from
Financing Activities
-34
-3
+2
-2

-60
• Acquisitions of treasury stock• Cash dividends paid
• Other

-40
-22
+2

New consolidation
+16

+83
288

371

Cash and
Cash Equivalents
at End of Year

Cash and
Cash Equivalents
at End of Half YearAs of March 31, 2016

As of September 30, 20167

Cautionary Statement with Respect to Forward-Looking Statements
Forecast figures contained in these presentation materials are forward-looking statements that assume underlying
risks and uncertain factors.
Accordingly, it should be recognized that actual results may differ from such forward-looking statements due to avariety 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’s business areas, and downward pressure on prices for the services provided by theGroup owing to fluctuations in demand and intensified competition.

For further information, please contact:

IR Department
Telephone: +81-3-3448-7000 (direct)
Facsimile: +81-3-3448-7001
E-Mail: chd-ir@comsys.co.jp
URL: http://www.comsys-hd.co.jp/