1st section of Tokyo stock exchange : 1959

KYUDENKO CORPORATIONFY ending March 2021 2nd Quarter
Results briefing

Nov. 12 th ,2020

All Rights Reserved. Copyright KYUDENKO CORPORATION

0Table of contents
Overview of business results

2

Plan for fiscal year

20

P/L

4

Orders/sales by department

22

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

3

5・6
7

8

9・10

11

12

B/S

13

Capital Investment

15

C/F

Power generation business

All Rights Reserved. Copyright KYUDENKO CORPORATION

14
16～19

Plan for fiscal year
Trend of dividends

21
23

Mid-term management plan・growth strategy

24

Axes of the growth strategy and key measures

26

Numerical targets

Road map of sales plan

25

27

Relevance to the SDGs

28

Digital transformation

30・31

Actual results of recruitment of humanresources and workforce planning
Energy Service Business
Appendix

29

32・33

34

1

Overview of business results

All Rights Reserved. Copyright KYUDENKO CORPORATION

2High lights
Sales¥180,101million

2nd-on-2nd 91.9%

Operating profit¥11,244million

Orders¥168,114million

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2nd-on-2nd 81.4%

2nd-on-2nd 86.6%

3

Outline of P/L March 2021, 2nd quarter
March 2020,
2Q ResultSales

195,870(100.0%)(Million yen)March 2021, 2Q
Increase
Result/decrease2nd-on-2nd

180,101▲15,768

91.9%

23,369▲2,95588.8％(100.0%)Gross profit

26,324

Operating profit

13,820

11,244▲2,576

81.4％

Ordinary profit

15,17912,533▲2,645

82.6％

Net profit

10,471

8,286▲2,18579.1％

147.47円

116.97円

Net profit per share

All Rights Reserved. Copyright KYUDENKO CORPORATION(13.4%)(7.1%)(7.7%)(5.3%)(13.0%)(6.2%)(7.0%)(4.6%)-

4

Factors of change in OP
20（Billion Yen）

:Increase:DecreaseA・Bonus decrease・Decrease ofother fixed cost(overhead cost)in SG&A Gross Cost

15

＋0.5

13.8
10

▲1.2
B

Decrease insales

Operatingprofit inMarch, 2020
2Q end▲1.0
C

Declining profit
margins on
construction

▲0.5
D

Power
distribution
line workE▲0.4
Other business

11.2
Operatingprofit inMarch, 2021
2Q end5

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5

Breakdown of construction sales and Factor of gross profit ratio Sep.2020(Kyudenko individual : excluding power distribution line work)

Average profit ratio
25.7
23.7

22.5

18.7

18.1

Sales fromNot delivered
items

total 123,930

25.5

24.7

total 120,951

Sales fromdelivered items

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200,000

18.8

78,041

Project delivered（Percentage-of-completion method）
22,45725,901
18%
19,10516%
Project delivered（Completed-contract method）
42,43838,70337,96231%
34%

2018’09

Construction sales (Million yen)

16.3
total 142,645

Project Not delivered（Percentage of completion method）
59,035 48%
63,884 53%

2017’0925.8

2019’0955%

15.8
total 135,645
14.8

150,000

76,113

56%

100,000

26,242

19%

33,289

25%

18%
27%

50,00002020’096

Order received / Sales by department Sep. 2020

(Million Yen)

Sales of each department(Million Yen)

Orders of each department■2018.9■2018.9■2019.9■2019.9

120,000

120,000■2020.9■2020.9

86,194
83,91275,656
73,19664,88562,09273,26070,50960,90355,86551,46758,41430,181
26,353
21,59923,64922,588

21,10235,247
24,607
22,824
22,16913,614
12,7740

0PowerElectrical work HVAC work
distribution
line work

All Rights Reserved. Copyright KYUDENKO CORPORATION

Solar plant
construction
work

Power
Electrical work HVAC work
distribution
line work

Solar plant
constructionwork

7Order received / Sales by customer Sep. 2020

(Million Yen)

Sales of each customer■2018.9■2018.9■2019.9■2019.9

180,000

175,408

180,000■2020.9

147,952
145,917(Million Yen)

Orders of each customer■2020.9

164,305130,202
123,094

23,352
22,247
21,601

22,438

12,797
11,56524,03822,761 19,139
15,150
5,742

5,356
0

0

Kyushu ElectricPower Co,

Govermment/Public

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Privatecompanies

Kyushu ElectricPower Co,

Govermment/Public

Privatecompanies

8Order received / Sales by region Sep. 2020
(Electrical & HVAC work excluding Solar plant construction work)(Million yen)

Sales of each region■2018.9 ■2019.9 ■2020.9(Million yen)Orders of each region■2018.9 ■2019.9 ■2020.9

130,000

130,000

115,548
103,41787,82586,55878,43378,04339,78835,81832,69233,44931,39925,833

10,457
11,145
9,200
2,109
7,603
1,688
1,678

8,715
8,554
4,782
870
744

0
0

KyushuTokyo Tohoku
and Chubu Areas

Osaka Area

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Overseas

KyushuTokyo Tohoku
and Chubu Areas

Osaka Area

Overseas9Order received / Sales by region Sep. 2020
(Solar plant construction work)(Million yen)

Sales of each region■2018.9 ■2019.9 ■2020.9

50,000(Million yen)Orders of each region■2018.9 ■2019.9 ■2020.9

50,00026,71524,211

17,01814,028
11,434

10,401

7,204

8,028
5,752

1,592

4,818
2,642
2,000

889

1,440
451
503

141
0
0

KyushuTokyo Tohoku andChubu Areas

Osaka Area

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KyushuTokyo Tohoku andChubu Areas

Osaka Area

10

Situation of works on hand Sep. 2020

Order stock of each department■2018.9 ■2019.9 ■2020.9(Million yen)

New orders in FY ended Sep. 2020

197,976
Image

170,000

154,339
142,377
127,513 131,025
121,714
115,814
114,495

83,725

1,798
1,751
1,663
0

Power
Electrical work HVAC work
distribution
line work

All Rights Reserved. Copyright KYUDENKO CORPORATION

Solar plant
construction
work

11

Actual results of works Sep. 2020
Image

Image

(C)SoftBank Hawks
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12

Outline of balance sheet

Current assets
Fixed assets
Total assets
Current liabilities
Fixed liabilities
Total liabilities

Total net assets
Total liabilities

and net assets

End of Mar.
2020

216,269(58.7%)End of Sep.
2020

186,171(55.0%)

Increase/decrease▲30,097

152,212152,132

368,482

338,304

142,723

109,712▲33,01028,31625,528▲2,788(41.3%)(100.0%)(38.7%)(7.7%)(45.0%)(100.0%)(32.4%)(7.5%)

171,039

135,240(53.6%)(60.0%)(46.4%)

197,442
368,482(100.0%)All Rights Reserved. Copyright KYUDENKO CORPORATION(40.0%)

203,063
338,304(100.0%)▲79▲30,177(Million Yen, composition ratio)

Main factors behindincrease/decrease

Trade notes and accounts receivable▲45,331
Machinery, vehicles, tools, furnitureand fixtures▲927
investment securities +1,496

Trade notes and accounts payable▲24,612
Electronically recorded obligations▲5,833Net defined benefit liability ▲1,812
Long-term debt ▲820

▲35,798
5,621

Retained earnings +4,730▲30,17713

Outline of C/F
Sep. 2019

Sep. 2020

Cash flow from operating activities

5,318

12,096

Cash flow from investment activities▲5,729▲3,163

▲410

8,932

▲6,090▲4,494▲6,592

4,369

40,19254,96433,60059,333

Free cash flow

Cash flow by financial activities
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 to
Sep. 2020

Income before income taxes and minority
interests ▲2,790
Decrease in trade notes and accounts
receivable ＋21,925
Decrease in advances received on
uncompleted construction
contracts▲10,373

Sale of investment securities +2,398(Sep.2019)

Acquisition of treasury stock 994

14Capital Investment
End of Mar. 2020
Capital investment

End of Sep. 2020

4.1 billion yen

1.7 billion yen

3.9 billion yen

1.6 billion yen

Replacement of branches ,business offices and sanatoriumof Kyudenko

Replacement of branches andbusiness offices of Kyudenko

Machinery and equipment, etc. forconstructions

Machinery and equipment, etc. forconstructions

Lease contracts on specialized
vehicles for construction

Lease contracts on specialized
vehicles for construction

Facility work

0.2 billion yen

0.1 billion yen

OthersSoftwareDepreciation

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etc.

Software

6.0 billion yen

etc.

2.8 billion yen

15

Investment in Power Operations (Solar Power Plants)
Mega solor 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

All Rights Reserved. Copyright KYUDENKO CORPORATION

Amami

Nara Mie

Aichi

16

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

-

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
Plan

Total

48

Generation
capacity(the entire
operation)

530MW

Generation
capacity(that equal to theequity)

147MW

6

697MW

144MW

54

1,227MW

291MW

-

-

-

From April to September, a total of 41 controls on output were issued by Kyushu Electric Power Company.
The average number of controls at our power plants was 12.

The total amount of lost profits for the group was about 350.0million yen.

All Rights Reserved. Copyright KYUDENKO CORPORATION

17

Investment in Power Operations (Wind Power Plants)
Wind power plant

Miyagi
Fukushima

Deals operated by group(make capital investment and record the entire operation to otheroperations sales)
Depreciated at the Mainly declining balance method

In Operation

Under
construction
Plan
Total

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

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Generation capacity(the entire
operation)

Deals through investment in equity

Gotou

Deals operated by group- In Operation
Projects for equity investment- In Operation- Under construction- Preparing for construction

Number of
power plants

Aichi

Under
construction
Plan
Total

Number of
power plants

Generation capacity(the entire
operation)

Generation capacity(that equal to theequity)

-

-

-

5
2
7

145MW
22MW

167MW

50MW
5MW

55MW
18

Investment in Power Operations

Deals through investment in equity(Million yen)

Deals operated by group(sales)(Million yen)(Non-operating income)■Wind Power Plants■Wind Power Plants■Solar Power Plants■Solar Power Plants

4,205
4,031
1,447
3,508
1,412
3,233

2,263
876

593
1,048
369
938
883
790
361

135
13

38
2017'032018'032019'032020'032020'09

All Rights Reserved. Copyright KYUDENKO CORPORATION

2017'032018'032019'032020'032020'0919

Plan for fiscal year

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20

Plan for March 2021
March 2020
ResultSales

428,939(100.0%)March 2021

413,000(100.0%)Gross profit

60,093Operating profit

36,02232,000Ordinary profit

38,64334,000Current (quarter)
net profit

26,24522,500Current net profit
per stock¥370.00

Dividends(14.0%)(8.4%)(9.0%)(6.1%)¥100

Interim ¥50

All Rights Reserved. Copyright KYUDENKO CORPORATION

56,400(13.7%)(7.7%)(8.2%)(5.4%)

Plan for March 2021

Year-on-Year

96.3%
93.9%
88.8%
88.0%
85.7%

¥317.59(Million yen)

2Q Result

180,101(100.0%)23,369(13.0%)

11,244(6.2%)

12,533(7.0%)

8,286(4.6%)

Progress

43.6%
41.4%
35.1%
36.9%
36.8%

¥116.97¥100

Interim ¥50

21

Orders & Sales plan by department(Million yen)

Sales of each department■2019.3 ■2020.3

240,000■2021.3（plan）(Million yen)Orders of each department■2019.3 ■2020.3
240,000■2021.3（plan）

176,545
162,646 175,200
156,104
150,469

166,344
165,667
152,400
134,955
126,573 121,700

126,801
125,500

78,00059,30647,706
46,90045,90045,332
48,37947,57447,45344,60029,5000

0PowerElectrical work HVAC work
distribution
line work

All Rights Reserved. Copyright KYUDENKO CORPORATION

Solar plant
construction
work

Power
distribution
line work

Electricalwork

HVAC work

Solar plant
construction
work

22

Trend of dividends
With regard to dividends for the fiscal year ending March 2021, we plan to
pay an annual dividend of ¥ 100 per share.

special

110100

special

90

80

70

90

100

100

100

10
70

10
60

special

50

40

30

20

10

Memorial

specialspecial
13
10
3

25
2
7

45

15

0

Mar,2011 Mar,2012 Mar,2013 Mar,2014 Mar,2015 Mar,2016 Mar,2017 Mar,2018 Mar,2019 Mar,2020 Mar,2021

All Rights Reserved. Copyright KYUDENKO CORPORATION

23

Mid-term management plan
(Published on April 28,2020.)• With the spread of the new coronavirus infection on a global scale, the risk of an economic downturn is increasing.
At this time, it is difficult to estimate the impact on the Group's business performance in terms of scale andduration, so this medium-term management plan does not reflect this impact.
• We will closely monitor future trends and review this medium-term management plan as necessary.

All Rights Reserved. Copyright KYUDENKO CORPORATION

24

New mid-term management plan(2020～2024）

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

Main theme

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.

All Rights Reserved. Copyright KYUDENKO CORPORATION

25

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

All Rights Reserved. Copyright KYUDENKO CORPORATION

Development of new business areas
Creating an Attractive Workplace
Environment

Improving corporate value

26

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）

All Rights Reserved. Copyright KYUDENKO CORPORATION

27

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

28

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)++

All Rights Reserved. Copyright KYUDENKO CORPORATION

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
29

Digital Transformation
・The DX Promotion Department was established to strengthen the Group's DX promotion
structure. (October 1, 2020)

・Initiate the development of new technologies such as IT and IoT to improve productivity.
・Create new innovations across the business.

Promotion of DX

Transforming the way we work.
『Promoting digitalization at
the workplace level』● Streamline and automate current
systems and operations with thelatest IT technology.

● Utilize IT to connect the head officewith the work site in real time toshare information on various aspects
such as safety, construction quality,
and construction management.

≪Main Initiative Themes≫■We will create a database of the projects we have worked
on so far. We will also develop AI and use it to support
design changes.

■Improving productivity through the development of newtechnologies such as AI, IoT and BIM.

■Promotes telework by using mobile devices and implements
innovations in the way we work.

Create new
business models.
『Established a competitive
advantage』●Creation of new businesses.

●Business Model Transformation.
●Establishing new businesses by
providing high quality, highvalue-added services.

● change in the way we work.

All Rights Reserved. Copyright KYUDENKO CORPORATION

30

Digital Transformation ～directionality～
Introduce advanced technologies such as AI and IoT to increase the sophistication, labor savings, andefficiency of work, education, and training related to design and construction management, etc., and tocreate new businesses and business models that utilize digital technologies.
AI Surveying and Construction
Management Drones
Preparation of construction
drawings（AI.BIM/CIM）

AI Construction
Management System

Drones for material transport
Remote operation
Robots and powered suits(construction equipment
for construction work
and work vehicles)

Advancement of business operations
Collection, storage and analysis of and creation of new business
Virtual hands-on training facilities.
building and equipment data
through
digitaltechnology
Training on the installation
Detection and diagnosis
of signs of failureof power distribution lines
using VR goggles

Health Support Services

Construction Management
Training Using AR Smart Glasses

All Rights Reserved. Copyright KYUDENKO CORPORATION

31

Energy Service Business・Established an independent and exclusive subsidiary to develop the ES
business, which is set out in the Medium-Term Management Plan.
Overview of the new company and ES business scheme
Capital

5 million yen

Business Area

throughout Japan

Establishment
社名
Business
Description

Investor

July 2020.

Start of business

Kyudenko

August 1, 2020.

Japan Energy Consulting Co.
Provision of technical and operational know-how on energy use in buildings, etc. andconsulting

customer

information
consulting fee

consulting
Japan Energy Consulting Co.

(100% owned by theCompany)

matching
EPC order

All Rights Reserved. Copyright KYUDENKO CORPORATION

information
know-howenergy supplier

Design estimate support fee

design fee

ES BusinessCompany32

Energy Service Business ～directionality～
We will expand our business beyond the construction of electricity, water, communications
and other infrastructure for daily life to include the development of smart cities and othercomfortable urban areas and the provision of local public services, and we will evolve into a
company that provides total support for the energy infrastructure and services of local
communities.
Participation in urban development
such as smart cities
Pursuit of electrical, HVAC
and distribution line installation

Step 1
Community Energy
Equipment
Company
Leave the energy
equipment
to Kyudenko.

Provision of local energy supply
and public services

Construction of wastewaterand garbage treatment facilities

Step 2

Regional Utility
Facility Company
Leave public
infrastructure
facilities to Kyudenko.

All Rights Reserved. Copyright KYUDENKO CORPORATION

Step 3

Local Community
Development
Company
We can also help
you build
your community.

Step 4

Regional total
service company
Please contact Kyudenko
for anything in the area.

33

Appendix

All Rights Reserved. Copyright KYUDENKO CORPORATION

34

Appendix(1)Analysis of works on hand
（Kyudenko individual : excluding power distribution work）

Works on hand

Third quarter opening construction works on hand by delivery schedule timing

Total
4,025

Total
3,599
Total
318.0
Deliver on after next FY（Billion yen）

Total
3,168
132.4
110.2

235.4
(+125.2)

4,000

3,000

157.0
Deliver on next FY

2,000

148.4

123.9
93.7
(▲30.3)

93.3
Deliver on FY

82.7
79.1

67.7
FY 2017 3Q

FY 2018 3Q

All Rights Reserved. Copyright KYUDENKO CORPORATION

FY 2019 3Q

73.4(▲9.2)FY 2020 3Q

1,000

0

35

Appendix(2)Analysis by scale of order(Kyudenko individual : excluding power distribution work）

50,090 51,626■2017.9 ■2018.9 ■2019.9 ■2020.9

25,426 26,626

22,26545,85043,67820,445100～300 million yen
All Rights Reserved. Copyright KYUDENKO CORPORATION(Million yen)

Under 100 million yen
36Appendix(3)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

All Rights Reserved. Copyright KYUDENKO CORPORATION

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

37

Appendix(4)Power distribution work
Present conditionThree of Kyushu Electric Power Co.'s four
nuclear power plants, excluding Genkai
Unit 4, have stopped generating power forroutine inspections.
In the first half of the year, the volume of
construction work decreased compared tothe previous first half.

Tasks and actions

 The company aims to strengthen its competitiveness and improve profitability by
developing technologies, improving work efficiency, recruiting more workers by
improving the work environment, and further reducing costs.

 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

38

Appendix(5)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

All Rights Reserved. Copyright KYUDENKO CORPORATION

39

Appendix(6)Benefits of being involved from the design stage

Front-loading initiatives

・[Design Phase] Design changes can be made from the initial design stage(Effective suggestions and cost savings can be anticipated.)・[Contract Stage] Orders can be received with cost savings factored in・[Construction Phase] It allows for a smooth handover to the field<Image in our company><The Concept of Front Loading>（conventional）

Ease of change／
Cost

Ease ofchangeEarly in the projectstage, design changes
are easy

Aim to participate inprojects at the basic andimplementation design
stage

A design processthat incorporates
front-loading

Ahead ofschedule

Cost ofchangeImplementing designchanges at the end of a
project is time-consuming
and costly.
Traditional Design
Processinvestigati
onPlanning and
Designbasic
designdetailed design

Project Progress

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procurement

construction（Use of front-loading）

investigation

design office

investigation

design officePlanning and
Designdesign officePlanning and
Designdesign officebasic design

design officeorder strategy

Kyudenkodetailed design

design officebasic design

design office・Kyudenko

order strategy

Kyudenkodetailed design

construction

Kyudenko

construction※Technical Proposal

design office・Kyudenko※Technical Proposal

Kyudenkoadministration

40

Appendix(7)Specific measures to improve the profit margin (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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Measures41

Appendix(8)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

Major competitors
about５０％planning stage, we definitely
General contractor
and developer
about１０％42Appendix(9)【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 Line43

Appendix(10)【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,
hotels44

Appendix(11)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
Approval for construction
Number of employees

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

Approved by Minister of Land, Infrastructure, Transport andTourism (Sp. 29) No. 1659
Consolidated: 10,018 persons (March 31, 2020)

All Rights Reserved. Copyright KYUDENKO CORPORATION

45