1st section of Tokyo stock exchange : 1959

KYUDENKO CORPORATIONFY ending March 2020
Reference Materials

May 11th ,2020

All Rights Reserved. Copyright KYUDENKO CORPORATION

0Table of contents
Overview of business results

2

Plan for fiscal year

23

P/L

4

Power distribution line work

25

Recruit of human resources

27

Highlights

Factors of change in OP

Sales, Orders and Works on hand

1. Orders received/sales by department
2. Orders received/sales by customer
3. Orders received/sales by region

4. Year-end amount of works on hand

Actual results of works

Uku island mega solar generation business

3

5～9
10

11

12・13

Overview of the previous mid-term
management plan(2015～2019)16

Axes of the growth strategy and key measures

15

Capital Investment

19

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Mid-term management plan・growth strategy

14

17Power generation business

Trend of dividends

Forecast of the business environment
surrounding the group

B/S
C/F

Plan for fiscal year

18
20～22

Numerical targets

Road map of sales plan
Three reform

Issues continuing from the previous mid-term
management plan
Relevance to the SDGs
Appendix

24
26

28

29・30

31
32

33

34

35～37

38

39

40

1

Overview of business results

All Rights Reserved. Copyright KYUDENKO CORPORATION

2High lights
OrdersSales¥507,025million

Year-on-year 124.9％¥428,939million

Exceeded the previous fiscal year's level due
to orders for large-scale solar work.

New record highSteady progress on the back of abundantconstruction work on hand (349.0 billion yen)

Year-on-year 105.1％

New record high¥36,022million

Decrease due to lower gross profit margin ofOperating profit

Year-on-year 98.0％

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each project3

Outline of P/L March 2020
March 2019
ResultSales

408,143(100.0%)Result428,939

March 2020

Year-onyear(Million yen)

Plan (2019.4.26)

Progress

105.1%

418,000

60,093

99.2%

62,70095.8%(100.0%)(100.0%)102.6%

Gross profit

60,561

Operating profit

36,74736,02298.0%

38,00094.8%

Ordinary project

39,92438,64396.8%

40,70094.9%

Net profit

26,691

26,245

98.3%

27,20096.5%

Net profit per share(14.8%)(9.0%)(9.8%)(6.5%)¥375.17

All Rights Reserved. Copyright KYUDENKO CORPORATION(14.0%)(8.4%)(9.0%)(6.1%)¥370.00(15.0%)(9.1%)(9.7%)(6.5%)¥382.314

Factors of change in OP March 2020
（billion yen）

D
＋3.0

40

38

36

36.7
Operating

34

Profit in

A
▲0.6

Bonus
increase

B
＋0.3

C
▲0.2

Power
Decrease ofother fixed cost distribution
line work(overhead cost)in SG&A Gross
Cost

Sales
increased inelectrical &HVAC & solar
plant
construction

E:Increase:Decrease▲3.7
Depression ofgross profit
ratio inelectrical &HVAC
construction

F＋0.5

Other business

Operatingprofit inMarch,2019

32

36.0
March,2020

Main factors failed
achieve plandecrease in profit

30

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5Factor of gross profit ratio depression
Breakdown of construction sales(1)（Kyudenko individual：excluding power distribution line work）

Average profit ratio

24.2

23.4

21.8

21.8
17.7

Sales fromNot delivered
items

total 262,902

18.3

total 279,794

Project Not delivered（Percentage of completion method）
80,498102,046
36%
31%

Sales fromdelivered items

Project delivered（Percentage-of-completion method）
74,202
79,87030%
27%

Project delivered（Completed-contract method）
102,534
37%
39% 103,546

2017’032018’03

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24.9

25.5

Construction sales（Million yen）
400,000

19.1

total 315,566

18.0

17.8

total 305,015
122,858

40%

83,771

27%

98,38633%

14.9

116,004

300,000

37%
200,000

109,69035%
100,000

89,87228%
0

2019’032020’036

Factor of gross profit ratio depression
Breakdown of construction sales(2)（Kyudenko individual：excluding power distribution line work）（Million yen）

2018‘03
Method ofrecognizing
revenue
Not
Percentage
delivered
-of-

sales

profitProfit ratio

Compositionof sales

102,046

18,677

18.3%

36.5%

Total
(percentage-of-completion)

176,247

34,817

19.8%

63.0%

Total

279,794

59,827completion

Delivered

Total(completedcontract)
2020’03

Method ofrecognizing
revenue

Percentage-of-completion

Notdelivered
DeliveredTotal(percentage-of-completion)
Total(completedcontract)
Total

74,202

103,546

sales
116,004

16,13925,009profit

21.8%

24.2%

21.4%
Profit ratio

26.5%

37.0%

100.0%
Compositionof sales109,690

20,67016,346

17.8%

36.8%

225,694

37,017

16.4%

71.5%

315,566

59,90819.0%

100.0%

89,872

22,891

14.9%

25.5%

All Rights Reserved. Copyright KYUDENKO CORPORATION

34.7%

28.5%

2019’03
Method ofrecognizing
revenue
Not
Percentage
delivered-ofcompletion

sales
122,858

profitProfit ratio
18.0%

40.3%

18.5%

67.7%

83,771

16,011

206,629

38,143

Total

305,015

62,6612020’03 －2019’03

Method ofrecognizing
revenue
Not
Percentage
delivered-ofcompletion

DeliveredTotal(percentage-of-completion)

Total(completedcontract)
Total

98,386of sales22,131

DeliveredTotal(percentage-of-completion)

Total(completedcontract)

Composition

24,518sales

profit▲6,853▲1,460

19.1%

24.9%

20.5%

Profit ratio

27.4%

32.3%

100.0%
Compositionof sales

334

-0.2%

-4.2%

-3.5%

19,065▲1,126

-2.1%

3.8%

10,551▲2,753-1.6%

25,918▲8,514▲1,627

0.6%

7.3%

-0.9%

-

7

Factor of gross profit ratio depression
Breakdown of Project delivered （Percentage-of-completion method）(3)（Kyudenko individual：excluding power distribution line work）

・Profits from large scale projects with long construction periods declined.
・Profit margins for construction projects with a construction period of lessthan one year increase, which are less susceptible to rising labor and material costs.
(Billion yen)

Project scale Region
Construction(number of (number
perioditems)of items) (number of items)

Less than
500milliom
yen
(422)

More than
500million
yen
(95)

Kyushu(335)
Out ofKyushu(87)

Kyushu(57)
Out ofKyushu(38)

Within a year
(108)
More than one
year(227)

March 2020 Result

Sales

Subtotal

Within a year
(18)
More than one
year(69)

Subtotal
Total

Within a year
(1)
More than one
year(56)

Subtotal

Within a year
(2)
More than one
year(36)

Subtotal
Total

Total(517)

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10.2
26.5

Profit2.1
5.2

Profitmargin

20.7%
19.6%

Expected profit at Difference between
Significantly
the beginning ofassumed andreduced cases
the year
actual results
ProfitProfitNumber Reduced
ProfitProfitmarginmargin of items amount
2.1

20.3%

5.6

21.3%

0.1

▲ 0.5

0.5%

－

－
－

-1.7%

－

－

36.7

7.3

19.9%

7.7

21.0%

▲ 0.4

-1.1%

－

3.9

0.3

7.0%

0.9

22.1%

▲ 0.6

-15.1%

2

▲ 1.0

-2.2%

2

▲ 0.3

-0.7%

3

▲ 1.4

2.0%

－

－

2.8

0.4

15.8%

0.4

15.2%

0.0

0.6%

6.7

0.7

10.7%

1.3

19.2%

▲ 0.6

0.5

0.1

25.7%

0.1

25.1%

0.0

34.3

6.5

19.0%

6.8

19.7%

▲ 0.2

-0.7%

30.1

1.4

4.7%

5.3

17.7%

▲ 3.9

-12.9%

43.4
33.8

1.9

8.0
6.4

0.4

32.0

1.8

109.7

16.3

66.3

8.3

18.5%
18.9%

19.6%
5.6%

12.6%

14.9%

9.0
6.6

0.3

5.6

12.4

21.4

20.7%
19.6%

17.7%

17.7%

18.7%

19.5%

▲ 0.2
0.0

-8.5%

0.6%

▲ 3.9

-12.1%

▲ 5.1

-4.6%

▲ 4.1

-6.2%

－

2

－

3

-

▲ 0.3

▲ 0.3

－

▲ 1.4

15

▲ 4.5

18

▲ 5.9

15

20

▲ 4.5

▲ 6.2

8

Reasons for decline in profit ratio for each projectand measures (excerpt)
Factor

１.Cost increase causedby exceeding the plannedlabor and material cost
after receiving an order.

２.Cost increase due tothe compression of facility
construction
process causedby building construction
delay.

・Forecasting the peak of busyness in the whole construction
A. Forecasting the busyness
period, make an input plan for workers early and start thepeak of construction
arrangement. Review the plan in a timely manner andmake adjustments throughout the company.
・Close relationships with construction cooperation companies,
planned order and allocate appropriate personnel, suppress
B. Measures for increase oflabor costs increase.
construction cooperation（Branch executives present annual order amount, andcompanies’ labor costs.
exchange information with cooperation companies
directly.)
C. Establishment of team・Establishment of a team specialized for supporting
supporting construction.
construction by employee technicians.
D. Material ordering linked
・Technical department check whether each branch andto design change andaffiliated company uses Q-mast for purchasing materials, infurther utilization ofcooperation with “Q-mast”. When utilization does not”Q-mast” which affiliatedadvance, technical department and Q-mast investigate thecompany specialized forcause and solve.
purchasing material.
E. Approach to・Make design changes possible based on budget by building a“Front Loading”
good relationship with design office.
・For additional work, the sales representative and theF. Sales representative’s
construction manager cooperate, and before starting
help to construction site
construction, be sure to submit each estimate and negotiate
after construction starts.
the price・Confirming the delay in building construction work process
G. Dealing to delays inwould be happen at the first construction study meetingthe progress of building
after receiving an order, and teaching the method whichconstruction work
make the facility construction possible in advance ofbuilding construction.

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Measures9Order received / Sales by department

March 2020

Net sales increased due to steady progress in hand-held construction.
Orders received decreased in Electrical,HVAC work, but increased in Solar power due toorders for large power plants.
(Million yen)

Sales of each department■2018.3■2018.3■2019.3■2019.3■2020.3(Million yen)Orders of each department■2020.3

166,344
165,667

176,545
167,040
162,646
156,104

153,447

150,469
134,955
126,801

126,573
120,414101,164

59,306
48,37945,15747,706
46,90046,633

Power
Electrical work
distribution line
work

HVAC work

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Solar plant
construction
work

47,57447,453
46,537Power
Electrical work
distribution line
work

50,76445,332

HVAC work

Solar plant
construction
work

10

Order received / Sales by customer March 2020
Both sales and orders increased, partly due to solar plant construction work.
(Million yen)

Sales of each customer■2018.3■2019.3(Million yen)Orders of each customer■2018.3

442,510■2019.3■2020.3■2020.3

326,676

331,538
305,300

306,607

263,796

48,79447,881

48,65547,98147,30634,72547,53934,233 28,428

30,57030,167
17,208

Kyushu ElectricPower Co,

Govermment/Public

Privatecompanies

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Kyushu ElectricPower Co,

Govermment/Public

Privatecompanies

11Order received / Sales by region March 2020
(Electrical & HVAC work excluding Solar plant construction work)

Steady growth in sales in the Tokyo metropolitan area.
(Million yen)

Sales of each region■2018.3■2019.3 ■2020.3(Million yen)Orders of each region■2018.3■2019.3 ■2020.3

218,328
202,906
199,179

197,665
194,445

178,698

77,59368,09568,47164,96962,974

43,862
26,852
19,26817,275
5,198 5,259
3,963
KyushuTokyo Tohoku
and Chubu Areas

Osaka Area

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Overseas

21,567
20,574
17,485
KyushuTokyo Tohoku andChubu Areas

Osaka Area

6,004
5,742
5,247
Overseas12Order received / Sales by region March 2020
(Solar plant construction work)
Received an order for a large power plant in the Kyushu region.
(Million yen)

Sales of each region■2018.3■2019.3 ■2020.3(Million yen)Orders of each region■2018.3■2019.3 ■2020.3

155,891

48,67240,18941,12927,05927,365
19,60813,3169,467
6,306 6,301 8,630

4,332
4,891
1,883

4,743 4,650
1,045

KyushuTokyo Tohoku and Chubu
Areas

Osaka Area

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KyushuTokyo Tohoku and Chubu
Areas

Osaka Area

13

Year-end amount of works on hand
Sales of Electrical and HVAC work on hand decreased due to a decrease in orders and an increase in sales.
The amount of Solar plant construction work on hand increased significantly due to an increase in orders.
Order stock of each department■2018.3 ■2019.3 ■2020.3(Million yen)

214,542

New orders in FY ended March 2020
Image

132,519 129,498
121,420
113,266
100,350
97,59897,304

119,138

1,514
1,121 840
PowerElectrical work
distribution line
work

HVAC work

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Solar plant
construction
work

14

Actual results of works FY March 2020
Electrical work of JAPAN NATIONAL STADIUM

Photo of JAPAN NATIONAL STADIUM was provided by TAISEI CORPORATION.

All Rights Reserved. Copyright KYUDENKO CORPORATION

15

Uku island Mega solar generation business
Overview of business

Content ofbusiness

Mega solar generation businesswhile operating agriculture

FIT unit price40yen/ｗ

Powergeneration
outputEPC

KYUDENKO About 140 billion yen

The largest scale in JapanO&M

KYUDENKO

Scheduled
operation start July 2023
month

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16

Outline of balance sheet
End of Mar.
Current assets
Fixed assets
Total assets

Current liabilities
Fixed liabilities
Total liabilities

Total net assets
Total liabilities

and net assets

2019

206,268(57.7%)End of Mar.
2020

216,269(58.7%)

151,002152,212357,271368,482(42.3%)(100.0%)142,144(39.8%)

32,949(9.2%)(41.3%)(100.0%)142,723(38.7%)

28,316(7.7%)

175,094

171,039(51.0%)(53.6%)(49.0%)

182,176
357,271(100.0%)All Rights Reserved. Copyright KYUDENKO CORPORATION(46.4%)

197,442
368,482(100.0%)

Increase/decrease（Million yen, composition ratio）

Main factors behindincrease/decrease

10,001

Cash on hand and in banks

1,209

Investment securities +2,257＋14,834

11,210578▲4,633

Advances received on uncompleted construction
contracts ＋10,531
Trade notes and accounts payable ▲14,776

Long-term debt ▲1,769▲4,055
15,266

Retained earnings +18,241

11,21017

Outline of C/F
Mar.2019

Mar.2020

Cash flow from operating activities

26,054

38,222

Cash flow from investment activities▲11,298▲12,136

Free cash flow

14,75526,086

Cash flow by financial activities▲9,021▲11,250

5,686

14,83334,50540,19240,19254,964

Increase/decrease of cash andcash equivalents

Cash and cash equivalents at the
beginning of the period

Cash and cash equivalents at theend of the period

All Rights Reserved. Copyright KYUDENKO CORPORATION(Million yen)

Details of statement toMar. 2020
Income before income taxes andminority interests +38,423

Purchase of investment securities ▲8,649

Cash dividends paid

▲7,09918

Capital Investment
FY2019 Mar.
Capital investment

FY2020 Mar.

4.3 billion yen

4.1 billion yen

3.7 billion yen

3.9 billion yen

Replacement of branches ,business offices and sanatoriumof Kyudenko

Replacement of branches , businessoffices and sanatorium of
Kyudenko

Facility work
Machinery and equipment, etc. forconstructions
Machinery and equipment, etc. forconstructions

Lease contracts on specialized
vehicles for construction

Lease contracts on specialized
vehicles for construction

0.6 billion yen

0.2 billion yen

OthersSolar power plant facilities

Depreciation

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6.0 billion yen

Software

6.0 billion yen

19

Investment in Power Operations (Solar Power Plants)
Mega solar power plant

Okayama Hyogo

Ishikawa

Miyagi
Fukushima

Gotou
Hiroshima

Deals operated by group

Chiba- In Operation- Under construction- Preparing for construction
Projects for equity investment- In Operation- Under construction- Preparing for construction

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Amami

Nara Mie

Aichi

20

Investment in Power Operations (Solar Power Plants)
Deals through investment in equity

Deals operated by group(make capital investment and record the entire operation to otheroperations sales)

Depreciated at the declining balance method

In operation

Under
construction
Plan

Total

Number ofpower
plants49-

49

Generation
capacity(the entire
operation)

92MW

-

92MW

Generation
capacity(that equal tothe equity)

87MW

-

(acquire investment securities and record an amount equal to the equity to nonoperating revenues)
Depreciated at the straight line method

In operation

Number ofpower
plantsUnder
construction

87MW

Plan

Total

2.0 to 2.4 billion yen at its maximum

46

Generation
capacity(the entire
operation)

402MW

6

296MW

52

698MW

-

-

Generation
capacity(that equal to theequity)

130MW
78MW

-

208MW

1.8 to 2.0 billion yen at its maximum

The suppression of solar power’s output was implemented by KEP from April to May, October to March（Total 74 days）
Impacts Instruction to stop a total of 1,919 power station out of 88 power station in a whole Loss of profit might be
470 million yen.(assumption)※Projects in above table are old regulation (suppression is up to 30 days rule).
Business plans with 8% suppression instructions incorporated

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21

Investment in Power Operations (Wind Power Plants)
Deals operated by group

Wind power plant(make capital investment and record the entire operation to otheroperations sales)
Depreciated at the Mainly declining balance method

In Operation

Under
construction
Plan
Total

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Generation capacity(that equal to theequity)

-

-

-

5

38MW

-

5

-

38MW

38MW
-

38MW

(acquire investment securities and record an amount equal to the equity to
non-operating revenues)
Depreciated at the Mainly declining balance method

In Operation

Projects for equity investment- In Operation- Under construction

Generation capacity(the entire
operation)

Deals through investment in equity

Gotou

Deals operated by group- In Operation

Number of
power plants

Aichi

Under
construction
Plan
Total

Number of
power plants

Generation capacity(the entire
operation)

Generation capacity(that equal to theequity)

1

65MW

32MW

4
-

5

80MW
-

145MW

18MW
-

50MW
22

Plan for fiscal year

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23

Plan for March 2021
With respect to the consolidated results for the next fiscal year (the fiscal year ending
March 2021), the Company will proceed with the initiatives set forth in its mediumterm management plan and basic management policies while aiming for the samelevel as the current fiscal year (the fiscal year ending March 2020); however, due tothe uncertain timing of the end of the new coronavirus and its impact on businessresults, the Company has not yet decided.
We will disclose the information as soon as a certain prospect becomes clear and it
becomes possible to make a reasonable calculation.
Some of the major anticipated impacts include the following●Construction delays due to quarantine measures resulting from illnesses or severe
contact with sick employees of the Group.

●Delays in construction due to the closure of the construction site or the closure of
the Company's business office at the discretion of the client or prime contractor.

●Delays in construction due to business stoppages at material suppliers and partnercompanies.

●Decrease in construction orders due to stagnant economic activity.

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24

Power distribution line work
Present condition

 Of the four units at Kyushu Electric Power
Company's nuclear power plant, Sendai Unit 1 has
been shut down for regular inspections since March
16, 2020.

Tasks and actions

 A cost cut by our technology development and efficiency is important,for Electricity Systems Reform , we improve the profitability by costcompetitiveness having high transparency.
 We pursuit an appropriate profit rate appropriate to the capital cost for the
maintenance of the distribution network, the security of the personnel required who
can cope at a peak, the investment that is necessary for correspondence inemergency.
All Rights Reserved. Copyright KYUDENKO CORPORATION

25

Trend of dividends
For FY03/2021, the company plans to pay an annual dividend of 100 yen per share, basedon the assumption that profits will remain at the same level as in FY03/2020, although
the company has not announced its earnings forecast at this time.
130

100

100

100

Mar,2019

Mar,2020

Mar,2021

120

Special110

100

Special90

80Special

70

60

Memorial

50

SpecialSpecial
13
10
3

40

30

20

10

25
2
7

90

70
10

10

Mar,2017

Mar,2018

45

15

0

Mar,2011

Mar,2012

Mar,2013

Mar,2014

All Rights Reserved. Copyright KYUDENKO CORPORATION

Mar,2015

Mar,2016

26

Actual results of recruitment of human resources(Kyudenko individual) and workforce planning≪ Actual results of periodic recruitment of engineers andskilled persons≫
2007～
2014

Total engineers
and skilled
persons

Around200

University
graduates

Around50High school
graduates2015 2016241

Around
150

163
78

262
177
85

2017 2018 2019
344
248
96

384
271

113

342
253
89

2020

≪ Comparison in actual results of recruitment
for April 2020 with other companies≫

336
253
83

≪ Planned year-end workforce until FY2025 March≫

Number of
construction
managers

70～100250～350103

100～160

70～100250～320253

Highschoolgraduates
University
graduates

Around200

Around10Mar. 2025

Increase or
decrease in
plan

1,138

1,192

1,269

1,355

1,435

1,517

About+320

2,340
3,532

1,642

1,612

1,446

1,417
6,561

10,018

2,475
3,744
1,618
1,407
6,769

2,599
3,954
1,632
1,402
6,988

Total 8,100 employees in technical field of total 10,000
Number ofsite
technicians

330～360

Mar. 2024

6,500

Employees of group

356

Mar. 2023

3,411

Employees of single
Kyudenko

Super general
constructors

Mar. 2022

Year-end workforce of electricaland HVAC

Other

Large HVAC
companies

Mar. 2021

2,274Power distribution line
department

Large electricalconstruction
companies

Mar. 2020

Electrical work department
HVAC work department

Total in all
professions

Kyudenko(Kyudenko)

About 2,100

About 3,000(Subsidiaries)++

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About 2,000

About 1,000

=

=

2,750
4,185
1,641
1,397
7,223

2,893
4,410
1,666
1,408
7,484

12,000Around10

About+550
About+870
About+50

About+900

About+2,000

About 4,100
About 4,000
27

Mid-term management plan
growth strategy

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28

Overview of the previous mid-term management plan
(2015～2019)＜Outline of the Previous Mid-term management plan＞
Main Theme

Challenge to a Further Growth～To the next growth stage～

Growth strategy

Strategic Policies“ Sales force ” to meet trusts and expectations of clients

Establish stable foundation in Kyushu“ Technological force ” to win the cost & quality competition

Strengthening business in the metropolitan area
“ On-site Capabilities ” to obtain more projects and profit efficiency

The development of human resources“ Growing Force ” for future success＜ Results in the final year of the previous medium-term management plan＞
Numerical
target at
Mar.2020

Sales

Gross Profit
Ratio

Results in
Mar.2020

Status ofachievement

Results

Issue

Achieved

１）Riding the tailwind of booming construction demand・Expansion of orders outside the Kyushu region
・Expanding the air-conditioning pipe business byleveraging the strengths of the comprehensive
equipment business・M&As of construction companies

１）Challenges in developing human resources andimproving productivity in response to the rapid
increase in the volume of construction

400 billion yen 429 billion yen

Over 15%

14.0% FY2016&2017 achieved

Operating Profit
Ratio

Over 9%

8.4%

ＲＯＥOver 14%14.0%

FY2016＆2017＆2018achieved２）Thorough cost control by the Technology
Management Department.
Improving profit margins through theestablishment of the Q-mast Company.

２）Increased overtime work and turnover⇩Concerns about future deterioration in quality andthe risk of disasters３）Profit margins declined in the final stages ofthe fiscal year, although the target was achieved
once.

３）Strengthen construction capabilities, including
increased hiring of engineers⇩

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expansion of one's business

Achieved

29

Changes in previous years
Sales

408

500
Target value

400
400 billion yen

300
200
100

249

247

279

239

316

311

342

429

9.0

10.0

9.6

9.0

Target value

361

8.0

Over 9%

6.0

previous medium-term
management plan

4.0

2.5

2.0

（2015-2019）

0.7

1.8

5.3

2.6

8.4

8.1
previous medium-term
management plan
（2015-2019）

0

0.0

Gross Profit Ratio
15.2

16.0
Target value

12.0
10.0
9.4

7.8

11.7
9.1

9.1

ROE

15.7
14.8

14.5

Over 15%

14.0

8.0

Operating Profit Ratio

previous medium-term
management plan
（2015-2019）

6.0

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14.0

18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0

16.7

17.8

16.8

15.6

14.0

Target value
11.9

Over 14%
4.2

1.5

3.1

3.9

previous medium-term
management plan
（2015-2019）30

New mid-term management plan(2020～2024）＜Premise＞
The impact of the new coronavirus infection on the Group's performance is not reflected because it is difficult to estimate thescale and duration of the infection.

＜Forecast of the business environment surrounding the group＞（１）Domestic
construction market

Large-scale projects in central Tokyo and the Kansai region
Tenjin Big Bang and Hakata Connected in Fukuoka

A sharp decline is unlikely（２)Solar plant
construction work

It is expected to come to an end in the future, but theexistence of concrete projects, including the Uku island
mega solar

The amount of constructionin the next two to three
years is expected to beadequate.

（３）working
environment

The worsening shortage of skilled construction workers andthe use of the latest technology

The movement to reform theway we work is in full swing

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31

New mid-term management plan(2020～2024）

Main theme

Establish a management foundation for sustainable growth～Realization of the three reforms～
Numerical target

Final year（Mar.2024）
Sales

500 billion yen

Ordinary profit

50 billion yen

margin

ＲＯＩＣ

Over 10.0 ％（Breakdown of construction sales）
Power distribution line work
Electrical･HVAC work
Renewable Energy Business,etc.
Other business

50 billion yen

334 billion yen
81 billion yen
35 billion yen

Over 10.0 ％※ROIC is used as an accurate measure of a company's capital eﬃciency.

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32

New mid-term management plan(2020～2024）
Establish a management foundation forsustainable growth～Realization of the three reforms～
Strong and muscular
corporate structure

construction capability

Three reform
productivity

governance

Issues continuing from the previous mid-term management plan
Deepen measures to improve profit
margins

Strengthen and expand the orderbase of the domestic equipment

Strengthen the profitability of power
distribution line work

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Development of new business areas
Creating an Attractive Workplace
Environment

Improving corporate value

33

Road map of sales plan
Goals for the(Billion yen)

final year

500

429

81.0

Solar plant
construction(17.0）

Renewable energy business

67.8

Solar plant
construction (59.3）

191.0

Electricalconstruction

157.7

HVAC

143.0

129.9

Power distribution line

50.0

46.9

Others 26.7

Mar.2020

Mar.2021

Mar.2022

Mar.2023

Mar.2024

35.0

Mar.2025

The period of the new mid-term management plan(2020－2024）

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34

Three reform

１）Reform of construction capability≪ Specific issues to be addressed ≫Strengthen hiring of engineers based on a long-term workforce
planReduce the turnover rate of young engineers by reviewing
technical education

Establishment of a system to ensure the timely and optimal
deployment of all technicians

Review of the construction management system by strengthening
and utilizing the technical management department
Promotion of multifunctional worker
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35

Three reform

２） Reform of productivity≪ Specific issues to be addressed ≫Review of company-wide and departmental training systems
Achieve optimal personnel rotation for the entire company

Promote rationalization and labor saving through the use of
cutting-edge technology and IT
Realization of business reforms

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36

Three reform

３） Reform of Governance≪ Specific issues to be addressed ≫Implement measures to prevent recurrence of fraud

Strengthening and Thoroughly Implementing a Governance
System Based on the Kyudenko Corporate Governance
Guidelines

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37

New mid-term management plan(2020～2024）(on going efforts)

Issues continuing from the previous

mid-term management plan

１）Deepen measures to improve profit margins

２）Strengthen and expand the order base of the domestic
３）Strengthen the profitability of power distribution line work

equipment construction industry

４）Development of new business areas

５）Creating an Attractive Workplace Environment６）Improving corporate value

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38

New mid-term management plan(2020～2024）(Relevance to the SDGs)
We will steadily advance the initiatives set forth in the Medium-Term Management Plan and contribute to
the realization of the SDGs, which have a high degree of affinity with the businesses of the Group,
through our business activities.

All Rights Reserved. Copyright KYUDENKO CORPORATION

39

Appendix

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40

Appendix(1)Corporate profile
Company name

Kyudenko Corporation

Established

December 1, 1944

Capital￥12,561 million

Listed market
Code

1st Section of Tokyo Stock Exchange, Fukuoka Stock Exchange
1959

Head office

1-23-35 Nanokawa, Minamiku, Fukuoka city

Tokyo head officeSunshine 60 3-1-1 Higashi-Ikebukuro, Toshima-ku, Tokyo

Bases

Head office, Tokyo head office, 10 branches in Japan, 120 sales
offices, / 5 overseas subsidiaries

Number of
employees

Consolidated: 10,018 persons (March 31, 2020)

Approval for
construction

Approved by Minister of Land, Infrastructure, Transport and Tourism(Sp. 24) No. 1659

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41

Appendix(2)Post-2020 Prediction about industry
Construction demand will be supported by large-scale projects and renovation of aging infrastructure
built more than 50 years ago. The labor shortage will accelerate with the decline in the working age
population, with a rapid falloff in supply capability.

Real construction
investment(Trillions of yen) 非住宅建設
90
80

住宅建設

Past construction
investment amountNo. of constructionindustry employees

No. of constructionindustry employees(Thousands)

Tokyo Olympic (2021)

Correspondence to earthquake resistant structure ·Rebuilding / renewal demand of buildings
over 50 years after construction
Tenjin Big Bang Project (through 2024)
Waterfront Next (over 20-30 years)

民間土木
政府土木

70

50
500

50

40
400

40

Supported by redevelopment demand
Buildings constructed during the period of higheconomic growth have passed their useful lives

30
20

Working age population
Working age population
Peak: 87.26 million

10

年1960
度

70
700

Linear Shinkansen Line 60
600
opened to Osaka(2045)

60

0

80
800

(1995)
1970

1980

1990

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2000

Base: 77.28 million(2015)

2010

2020

2030

30
300
20
200

Working age population
Forecast: 45.29 million 10
100(2065)

2040

2050

00

42
42

Appendix(3)Analysis of works on hand
（Kyudenko individual : excluding power distribution work）
Opening amount of construction works on hand by delivery schedule timing and

15.7％

Total
266.6

Deliver on after next FY

85.3

Deliver on next FY

71.1

Deliver on FY

110.2

FY2017Gross profit ratio for each year

14.8％
Total
302.1
81.3

115.7

Total
315.0

14.0％

Works on hand（Billion yen）

Total
415.0

228.0
（+150.0）

77.8

99.0

70.0

（▲29.0）

117.2

105.1

138.2

（▲21.0）FY2018FY2019FY2020All Rights Reserved. Copyright KYUDENKO CORPORATION

43

Appendix(4)Scheduled delivery amount by quarterly accounting period [Opening time](Kyudenko individual : excluding power distribution work)

Opening amount of construction works on hand of quarterly accounting period

FY2017

Total
110.2

Scheduled delivery amount

FY2018FY2019

Total
105.1

FY2020

Total
117.3

Total
138.2

（Billion yen）

55.5
47.7
45.3
39.0

31.2
23.6
20.2 20.0
16.4

First quarteraccounting period

25.3
23.0

31.5 30.6

24.1
20.4
17.0

Second quarteraccounting period

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Third quarteraccounting period

Fourth quarteraccounting period
44Appendix(5)Analysis by scale of order (Kyudenko individual : excluding power distribution work）

The number of orders for small-scale projects with a contract value of lessthan 300 million yen decreased from the previous year.

(Million yen)■2018.3 ■2019.3 ■2020.3

93,729 93,208
82,57043,928 49,223 39,223

100～300 million yen
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Under 100 million yen
45Appendix(6)Correlation between the progress of construction and the progress of theconstruction period (Kyudenko individual)

Under the percentage-of-completion method, the progress of construction (sales) tends toprogress rapidly after about 50% of the construction period has passed. There is a strong
possibility that sales for the current fiscal year will be biased toward the second half ofthe year compared to the previous year.
100%

Progress of construction(recording of sales)

50%

Standard progress curve of theconstruction progress standard

Weighted averagefor April 2019

Weighted averagefor April 2020

50%

Period of construction

100%

R² = 0.6002(Kyudenko individual)Analysis ofprojects to which the percentage-of-com pletion standard has been applied for the past two years.
Correlation coefficient 0.75
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46

Appendix(7)Details of diverse business models (facility work)business
model

item

① Feature② Businessarea③ Sales④ Profit rate
⑤ Differentiation
strategy⑥ Rival⑦ Composition
ratioⒶ Proposal and originalcontract type(Local based）

・Mainly small- and medsized deals

・Order directly from the owner（prime contractor)

Mainly Kyushu
To Kanto and Kansai by M & AⒷ Sub-contract type・Large sized deals

・Subcontractor of a generalcontractor

Urban areas such as
Kanto and Kansai

Fukuoka urban area

Business area expansion
to the whole country

Sales by project are small

Sales by project are large（Order directly from the owner）（Mainly subcontracted）

Relatively higher

Relatively lowerⒸ Capital participation type・Capital participation in a projectof collaboration with different

industries, and receiving an orderfor construction

・Construction proﬁt + Businessprofit according to the amount ofinvestment

Nationwide development

Sales by project are large
Different for each project

By having 110 sales offices throughout Overwhelming ability to collect

By participating from the project

local-based sales by engineers

receive an order for construction

Kyushu and Okinawa, we develop
Local small and mediumsized enterprises
about４０％

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workforce and ability of direct
construction

planning stage, we definitely
General contractor

Major competitors
about５０％and developer

47

about１０％47

Appendix(8)【Positional relationship】
Fukuoka Waterfront Next, Tenjin Big Bang, Hakata Connected

Relaxation of height restriction
38 hectares in the waterfront area (70m→100m)
1.7 hectare in Tenjin area (67m→115m at
maximum)
Request for relaxation of height restriction
Hakata Station area (50m→60m)

Sanyo Shinkansen line

Waterfront area

空港まで10
10 minutes by
分 tohighway
the airport

Fukuoka urban expressway

10 minutes

15 minutes by
空港まで10highway to分the airport

5 minutes

Hakata Station area

Showa Street
Meiji Street
10 minutes
to theairportTenjin area
5 minutes
Fukuoka City Subway Airport Line
Nishi-Nippon Railroad
Fukuoka(Tenjin)station

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Fukuoka City Subway Nanakuma Line48

Appendix(9)【Project contents】
Fukuoka Waterfront Next, Tenjin Big Bang, Hakata Connected

Project①Tenjin Big Bang

②Fukuoka
Waterfront Next

③Hakata Connected

Purpose

Period and scale

・By promoting theredevelopment of the Tenjin
area, which is the center of
Fukuoka, enhance the roleand function as a hub city in
Asia and create jobs

・Through 2024
・Total floor area
757,000㎡
・Reconstruction ofbuildings in Tenjin
area (30 buildings)

・Connect the vitality andbustle of Hakata Station, thegateway to Kyushu, to thesurrounding area.

・Through 2028
・About 80ha of about
500m in radius from
Hakata Station
・Reconstruction ofbuildings around
Hakata Station (20buildings)

・Create bustle around Hakata
Port, the gateway to Kyushu
・Improved urban functions tomeet MICE and cruisedemandAll Rights Reserved. Copyright KYUDENKO CORPORATION

・Over 20-30 years
・Cruise terminal, MICE,
commercial facilities,
hotels49

This document contains information about Kyudenko and the Kyudenko Group ("Kyudenko Group").
Forward-looking statements, such as forecasts, plans, policies, management strategies, goals, plans,
expectations, perceptions, and evaluations of the Company and its subsidiaries and affiliates. These
forward-looking statements are based on the Group's projections, expectations, assumptions, plans,
perceptions and assessments based on information currently available to it, and involve known andunknown risks, uncertainties and other factors. As a result of these risks, uncertainties and otherfactors, the Group's future results of operations, results of operations and financial condition may differ
materially from those expressed or implied in any forward-looking statements. Please note that theGroup has no obligation or policy to update or revise any forward-looking statements after the
publication of this document, except as required by law.
Examples of risks, uncertainties and other factors that could have a material impact on the Group's
operating results and financial position include economic conditions, fluctuations in the price ofconstruction materials, the risk of bad debts, risks associated with assets held, risks associated withbusinesses other than the equipment construction business, risks associated with overseas businesses,
retirement benefit obligations and changes in laws and regulations. Such risks and factors include, but
are not limited to, these matters. However, please note that the Group shall not be held responsible forany errors or falsification of data by third parties, or any damage caused by the transmission of data.
In addition, the information contained in the materials with a date is current as of the relevant date andis not current as of today. Please note that the Company does not promise to change or update theinformation at any time, even if the content of the information changes afterwards. This material ispresented as part of the Group's IR activities and is not intended as a solicitation for investment in any
securities.

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50