Page 27 of the Company Presentation (Additional for Global [Factors of increase and decrease Operating income]) shows 1.8 billion yen as the increased factor of an operating income due to the impact of unification accounting period. I understood that this was the figure for not only the Global segment but whole NTT DATA. Is this correct?
1. According to the full-year forecast for the fiscal year ending March 2018, we have estimated a post-merger integration (PMI) cost for the former Dell Services at 15 billion yen. Was 4.8 billion yen posted for the first quarter as scheduled?
You mentioned that the PMI progressed steadily according to the plan. Could you tell us about when the PMI will be completed?
The PMI cost posted for the former Dell Services for the first quarter was in line with expectations.
Additionally, the acquisition of the former Dell Services from Dell Inc. took the form of what is referred to as a “carve-out,” a scheme for acquiring a business unit of a company. This takes time as we must undergo a complicated integration process involving, among other things, a transfer of IT systems to our systems.
The PMI is scheduled to be completed in the first quarter of the fiscal year ending March 2019.
As scheduled, the system utilization agreement with Dell Inc., we intend to integrate as early as possible, so the PMI is desired to be completed by that time at the latest.
2. Is the scheduled completion in the first quarter of the fiscal year ending March 2019? Is this under control?
Yes, it is.
3. I understood that the PMI cost for the former Dell Services for the fiscal year ending March 2018 will not exceed the 15 billion yen mark announced in May. Is this collect?
Apart from this, regarding the remaining 10 billion yen or so for this fiscal year, could you present estimated expenditures on a quarter-by-quarter basis?
The expenditures are currently projected to be within the range planned now.
I understood that we cannot answer the question on estimated quarter-by-quarter expenditures now because we are supposed to manage progress on an annual basis, however, we will expend carefully and promptly expenditures for the first quarter in your question were somewhat large in value, since after a business merger between the former Dell Services and the former NTT DATA, Inc. in April 2017 and a unification of operations as NTT DATA Services, we recorded expenses for: i) developing the organizational structure in the form of an integration of headquarters business units, etc.; ii) conducting relocations, etc.; and iii) optimizing human resources, etc. The IT-related cost in the first quarter, accounting for most of the PMI cost, was spent in an amount equivalent to approximately one-fourth of the full-year plan, so IT-related cost will also be likely to spent at the same pace in the second quarter and thereafter.
As for new orders received in the first quarter, I have understood that those from the manufacturing industries for Enterprise & Solutions expansion. On which can the expansion be seen on a non-consolidated or subsidiaries basis? If on a subsidiaries basis, please specify the business area in which they operated.
With respect to new orders received in the first quarter, you mentioned that the large-scale projects could be acquired in the Public & Social Infrastructure segment. Could you tell us about what were the sizes of the projects approximately? I would also like to tell us about other factors for the expansion.
Subsidiaries engaging in outsourcing business for the manufacturing industries were a factor for the expansion of manufacturing industry in Enterprise & Solutions. The expansion was also due to the relatively strong performance of, among others, NTT DATA SBC Corporation (the former Sharp Business Computer Software Inc.), etc., which had conducted some M&A transactions in the previous fiscal year.
Among large-scale projects in the Public & Social Infrastructure segment, the largest one was a renewal project worth approximately 15 billion yen. Another factor for the expansion was new orders received of several billion yen each.
As for the revision to the depreciation method, I understand that there is a negative impact on the income of the NTT group for the fiscal year ended March 2017 and that the revision will positively affect the income from the fiscal year ending March 2018. Did the revision positively affect the income in the first quarter? Could you also tell us about the impact for the fiscal year ending March 2018 as well as from the next fiscal year onward?
We recorded some amount of depreciation more in the first quarter of the fiscal year ended March 2017, an effect of about 1 billion yen in that quarter. This has resulted in operating income in the Financial segment improving this fiscal year. The change of depreciation method, having largely ended in the first quarter of the fiscal year ending March 2018, is unlikely to occur from the second quarter onward.
It appears that the first quarter income would have grown approximately 17% year on year if the effect of unification accounting period is excluded. However, the full-year forecast for the fiscal year ending March 2018 says income is likely to grow only marginally compared to the previous fiscal year. In light of the full-year forecast, how do you see the results of the first quarter of the fiscal year ending March 2018?
The overall performance was in line with, or slightly above, the plan. While we progressed steadily in Japan, it is hoped that our overseas performance will improve from the second quarter onward.