1st section of Tokyo stock exchange : 1959

KYUDENKO CORPORATIONFY ending March 2020 2nd Quarter
Results briefing
Nov. 12 th ,2019

All Rights Reserved. Copyright KYUDENKO CORPORATION

0Table of contents
Overview of business results

2

Plan for fiscal year

22

Highlights

3

Plan for fiscal year

23

P/L

4

Orders/sales by department

24

5~9

Power distribution line work25

Trend of dividends

26

Factors of change in OP
Sales, Orders and Works on hand
1. Orders received/sales by department

10

Actual results of recruitment of humanresources and workforce planning27

2. Orders received/sales by customer

11

Mid-term management plan・growth strategy

28

14

Numerical targets

29

Actual results of works

15

Road map of sales plan

30

B/S

16

Review of present mid-term management
plan

31

C/F

17

Capital expenditure

18

Environmental prediction surrounding
Kyudenko

32

Recurrence prevention measures

33

Appendix34

3. Orders received/sales by region
4. Year-end amount of works on hand

Power generation business

All Rights Reserved. Copyright KYUDENKO CORPORATION

12・13

19～21

1

Overview of business results

All Rights Reserved. Copyright KYUDENKO CORPORATION

2High lights
Sales¥195,870million

2nd-on-2nd 118.6％

Operating profit¥13,820million

2nd-on-2nd 127.0％¥194,086million

2nd-on-2nd 89.4％

OrdersAll Rights Reserved. Copyright KYUDENKO CORPORATION

3

Outline of P/LMarch 2020, 2nd quarter(Million yen)March 2019,
2Q Result

March 2020, 2Q
Increase
Result/decrease

165,111

195,870(100.0%)(100.0%)Gross profit

23,033

26,324(14.0%)(13.4%)

Operating profit

10,886

13,820(6.6%)(7.1%)

Ordinary profit

12,42815,179(7.5%)(7.7%)

8,013

10,471(4.9%)(5.3%)¥112.64¥147.47

Sales

Net profit

Net profit per share

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2nd-on-2nd＋30,759118.6%＋3,291114.3%＋2,934127.0%＋2,750122.1%＋2,458130.7%

4

Factors of change in OP
20（Billion Yen）

15
Operating profit
in March, 2019
2Q end（revised)

11.5

※

＋0.6

▲0.6
Bonus
increase10

10.9
Operatingprofit inMarch, 2019
2Q end

5

A

C

B
＋0.1
Decrease ofother fixed
cost(overheadcost) in
SG&A, Gross
Cost

＋1.0

D

E

＋3.7

▲2.1

F

Sales
increased in Depression of＋0.2
gross profit
electrical &ratio in
HVAC & solar
electrical & Other business
plant
HVAC
& solarconstruction
plant
construction(=1.6-0.6）
Power
distribution
line work※Power distribution line work

13.8
(2Q-on-2Q＋2.3）
Operatingprofit inMarch, 2020
2Q endAmount to be paid retroactively
・The unit price for power distribution line work in fiscal 2018 was revisedin January 2019.
・That caused some amount to be paid retroactively from April , 2018
・It has amounted 0.6 billion yen from April to September.

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

Whole construction sales increased 21.6billion yen.
Sales from projects delivered increased 7.5billion yen.
Sales from projects Not delivered increased 14.1billion yen.
Difference of Project profit ratio between delivered items and Not
delivered items is about 6%.

Average profit ratio of delivered items

Construction sales（Million yen）

24.4
Average profit ratio of
Not delivered items

24.0
18.7

18.1

about

22.8
200,000

6％

Sales fromNot delivered items

16.3
total 142,645

total 123,930

total 120,951
78,04159,035

Sales fromdelivered items

22,45742,43847%

63,88453%

19,105Composition of

37,962construction sales

2017’09

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2018’0955%

100,000
Project Not delivered
53% （Percentage of completion method）

25,90145%
Project delivered
47% （Percentage-of-completion method）
38,703

Project delivered（Completed-contract method）0

2019’096

Factor of gross profit ratio depression
Breakdown of construction sales(2)（Kyudenko individual：excluding power distribution line work）（Million yen）
2018’092017’09
Method ofrecognizing revenue

sales

profitProfitratio

63,884

11,938

18.7%

52.8%

19,105

4,303

22.5%

15.8%

Total(percentage-of-completion)

82,98916,241

19.6%

68.6%

34.2%

Total(completedcontract)

37,962

9,368

24.7%

31.4%

100.0%

Total

120,951

25,60921.2%

100.0%

sales

profitProfitratio

profitProfitratio

59,035

10,704

18.1%

47.7%

22,457

5,782

25.8%

18.1%

Not
Percentage delivered-ofcompletion
Delivered

Total(percentage-of-completion)

81,492

16,486

20.2%

65.8%

Total(completedcontract)

42,43810,047

23.7%

Total

123,930

26,533

21.4%

Not
Percentage delivered-ofcompletion
Delivered

Compositionof salesMethod ofrecognizing revenue

sales

2019’09

Compositionof sales2019’09 －2018’09

Method ofrecognizing revenue
Not
Percentage delivered-ofcompletion
Delivered
Total(percentage-of-completion)
Total(completedcontract)
Total

sales

profitProfit ratio

Compositionof salesNot
Percentage delivered-ofcompletion
Delivered

Compositionof sales

14,157

782

-2.4%

1.9%

6,796

563

-3.7%

2.4%

Total(percentage-of-completion)

20,953

1,345

-2.7%

4.3%

27.1%

Total(completedcontract)

741

515

0.9%

-4.3%

100.0%

Total

21,694

1,860

-1.9%

-

78,041

12,720

16.3%

54.7%

25,901

4,866

18.8%

18.2%

103,942

17,586

16.9%

72.9%

38,703

9,883

25.6%

142,645

27,46919.3%

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Method ofrecognizing revenue

7

Reasons for decline in profit ratio for each projectand measures (excerpt)
FactorMeasures・Forecasting the peak of busyness in the whole construction
period, make an input plan for workers early and start thearrangement. 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.
A. Forecasting the busyness
peak of construction

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.

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8

Equipment construction company・General contractor
Gross profit margin transition

15.3
14.8
13.9

14.0

13.8
13.7

13.1

13.0

2016’092017’09

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13.4

Kyudenko

12.3
Major generalcontractor
simple average

12.4
Major equipment
construction company
simple average

2018’09

2019’099

Order received / Sales by department Sep. 2019

(Million Yen)

Sales of each department(Million Yen)

Orders of each department■2017.9■2017.9

120,000

120,000■2018.9■2018.9■2019.9■2019.9

88,67986,194
83,91275,656

73,196
67,20562,09270,50960,90351,46765,04044,964

22,401 23,649
21,59935,247
26,353
21,102
18,462024,607
22,69822,16933,91912,7740

PowerElectrical work HVAC work
distribution
line work

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Solar plant
construction
work

Power
Electrical work HVAC work
distribution
line work

Solar plant
construction
work

10

Order received / Sales by customer Sep. 2019

(Million Yen)

Sales of each customer■2017.9(Million Yen)

Orders of each customer

175,408
164,305
168,331■2017.9

180,000

180,000■2018.9■2018.9■2019.9■2019.9

147,952
123,094
116,535

23,352
22,63913,85921,601
12,797
11,56522,961

24,03822,43819,043

19,1395,742

00

Kyushu ElectricPower Co,

Govermment/Public

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Privatecompanies

Kyushu ElectricPower Co,

Govermment/Public

Privatecompanies

11Order received / Sales by region Sep. 2019
(Electrical & HVAC work excluding Solar plant construction work)(Million yen)

Sales of each region■2017.9 ■2018.9 ■2019.9(Million yen)Orders of each region■2017.9 ■2018.9 ■2019.9

130,000

130,000

115,548
105,627

103,41787,82578,43371,47539,78834,781
32,69233,44925,83321,70011,324
10,457
8,715
1,987 4,782
870

16,819 11,145
7,603 2,174
1,688
1,678
0

0

KyushuTokyo Nagoya
Area

Osaka Area

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Overseas

KyushuTokyo Nagoya… Osaka Area

Overseas12Order received / Sales by region Sep. 2019
(Solar plant construction work)(Million yen)

Sales of each region■2017.9 ■2018.9 ■2019.9(Million yen)Orders of each region■2017.9 ■2018.9 ■2019.9

50,00050,00028,816
26,71524,211

17,018
11,434
8,021

5,363
2,642

8,028

5,078
2,000

4,875

1,440

451

141
0

KyushuTokyo Nagoya
Area

Osaka Area

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226

503

889

0

KyushuTokyo Nagoya
Area

Osaka Area

13

Situation of works on hand Sep. 2019

(Million yen)Order stock of each department

New orders in FY ended Sep. 2019■2017.9 ■2018.9 ■2019.9
170,000

154,339
140,171

142,377
131,025
121,714

114,495
110,200
83,725

Image

84,366

1,798
1,663
1,474
0

Power
Electrical work HVAC work
distribution
line work

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Solar plant
construction
work

14

Actual results of works Sep. 2019

Image

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15

Outline of balance sheet(Million Yen, composition ratio)

End of Mar.
2019

End of Sep.
2019

206,268

184,761(57.7%)(55.1%)

151,002150,700(42.3%)(44.9%)

357,271

335,461(100.0%)(100.0%)142,144

118,823(39.8%)(35.4%)

32,94929,457(9.2%)(8.8%)

175,094

148,281(49.0%)(44.2%)

182,176

187,179(51.0%)(55.8%)

Total liabilities

357,271

335,461

and net assets(100.0%)(100.0%)Current assets
Fixed assets
Total assets
Current liabilities
Fixed liabilities
Total liabilities
Total net assets

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Increase/decrease

Main factors behindincrease/decrease▲21,507

Trade notes and accounts receivable ▲23,313▲302▲21,810▲23,321▲3,492

Trade notes and accounts payable ▲23,540

Net defined benefit liability ▲2,709▲26,813
5,003

Retained earnings +6,011▲21,81016

Outline of C/F(Million Yen)

Sep. 2018

Sep. 2019

Details of statement to
Sep. 2019
Income before income taxes and minority
interests +15,102

Cash flow from operating activities

8,771

5,318

Decrease in trade notes and accounts
receivable ＋23,286
Decrease in trade notes and accounts
payable ▲26,507

Cash flow from investment activities

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▲7,812▲5,729958▲410▲3,942▲6,090▲3,035▲6,59234,50540,192

31,46933,600Purchase of investment securities ▲2,669
Purchase of property, plant and equipment▲2,232

Cash dividends paid ▲3,557
Repayments of long-term loans payable▲1,06417

Capital Investment
End of Mar. 2019

Capital investment

End of Sep. 2019

4.3 billion yen

1.8 billion yen

3.7 billion yen

1.7 billion yen

Replacement of branches ,business offices and sanatoriumof Kyudenko

Replacement of branches , businessoffices and sanatorium 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

0.6 billion yen
OthersSolar power plant facilities

Depreciation

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etc.

6.0 billion yen

0.1 billion yen
Softwareetc.

2.8 billion yen
18

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

Ishikawa

Miyagi
Fukushima

Okayama Hyogo

Gotou

Hiroshima

Deals operated by group- In Operation

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

Amami

Nara Mie

Aichi- Preparing for construction

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19

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

Deals through investment in equity(make capital investment and record the entire operation to otheroperations sales)(acquire investment securities and record an amount equal to the equity to nonoperating revenues)
Depreciated at the straight line method

Depreciated at the declining balance method

Number ofpower
plantsGeneration
capacity(the entire
operation)

Generation
capacity(that equal tothe equity)

Number ofpower
plantsGeneration
capacity(the entire
operation)

Generation
capacity(that equal to theequity)In operation

49

92MW

87MW

In operation

43

371MW

117MW

Under
construction

-

-

-

Under
construction

6

277MW

76MW

Plan

-

-

-

Plan

1

50MW

15MW

Total

49

92MW

87MW

Total

52

698MW

208MW

2.0 to 2.4 billion yen at its maximum

1.8 to 2.0 billion yen at its maximum

In the current fiscal year , the suppression of solar power’s output was implemented by KEP
from April to May .（Total 30 days）
Impacts

Instruction to stop a total of 745 power station out of 86 power station in a whole
Loss of profit might be 198 million yen.(assumption)※Projects in above table are old regulation (suppression is up to 30 days rule).
Business plans with 8% suppression instructions incorporated

All Rights Reserved. Copyright KYUDENKO CORPORATION

20

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
Number of
power plants

Generation capacity(the entire
operation)

Generation capacity(that equal to theequity)In Operation

5

38MW

38MW

Under
construction

-

-

-

Plan

-

-

-

Total

5

38MW

38MW

Deals through investment in equity
Gotou

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

All Rights Reserved. Copyright KYUDENKO CORPORATION(acquire investment securities and record an amount equal to the equity to
non-operating revenues)
Depreciated at the Mainly declining balance method

Aichi

Number of
power plants

Generation capacity(the entire
operation)

Generation capacity(that equal to theequity)In Operation

4

80MW

18MW

Under
construction

1

65MW

32MW

Plan

-

-

-

Total

5

145MW

50MW
21

Plan for fiscal year

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22

Plan for March 2020
(Million yen)

Plan for March 2020

March 2019
ResultMarch 2020

408,143

418,000(100.0%)(100.0%)60,56162,700(14.8%)(15.0%)

36,74738,000(9.0%)(9.1%)

39,92440,700(9.8%)(9.7%)

Current (quarter)
net profit

26,691

27,200(6.5%)(6.5%)

Current net profit
per stock¥375.17

Sales

Gross profit

Operating profit

Ordinary profit

Dividends

Year-on-Year

2Q Result

102.4%

195,870

103.5%

26,324103.4%

13,820101.9%

15,179101.9%¥382.31(100.0%)(13.4%)(7.1%)(7.7%)

10,471(5.3%)

Progress

46.9%
42.0%
36.4%
37.3%
38.5%

¥147.47

100円

¥100

Interim ¥50

Interim ¥50

All Rights Reserved. Copyright KYUDENKO CORPORATION

23

Orders & Sales plan by department
Order plans are biased toward the second half of electrical.
(Million yen)

Sales of each department■2018.3 ■2019.3

240,000■2020.3（plan）(Million yen)Orders of each department■2018.3 ■2019.3
240,000■2020.3（plan）

202,500
170,000
165,667
153,447

167,040
162,646
150,469
135,000

135,500
126,573

120,414101,164
47,70647,50046,63350,00048,37945,1570

PowerElectrical work HVAC work
distribution
line work

All Rights Reserved. Copyright KYUDENKO CORPORATION

Solar plant
construction
work

47,50047,453
46,5370Powerdistribution
line work

50,76445,33240,000Electricalwork

HVAC work

Solar plant
construction
work

24

Power distribution work
Present condition

Four of Kyushu Electric's nuclear power
plants are scheduled for periodic
inspections, but have been in operation
since the beginning of the period.

Compared to the previous first half, work
efficiency improved in the first halfbecause orders were made with the work
volume leveled.

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
With regard to dividends for the fiscal year ending March 2020, we plan to
pay an annual dividend of ¥ 100 per share, based on a consolidated payout
ratio target of 25%.
110

Decision on acquisition and cancellation of100
treasurystocks (June 10, 2019)

special

We execute flexible capital policies according to changes in the90business environment, and strive to improve capital efficiency andshareholder value.
Total:
80 number of shares that can be acquired
300,000 shares(upper limit)
Total acquisition price : 1 billion yen (upper limit)
70
Acquisition
period : June 11, 2019 to September 10, 2019
Total number of cancellations of treasury stock :60Total of all treasury shares to be acquired and 822 shares oftreasury stock held as of May 31, 2019
Expected cancellation date : September 30, 2019

specialMemorial
special30

20special1013Mar,2013

Mar,2014

100

Mar,2019

Mar,2020

90
10

70
10

45

50

40

100

special
25
2
7

15

3

10

0

Mar,2011

Mar,2012

All Rights Reserved. Copyright KYUDENKO CORPORATION

Mar,2015

Mar,2016

Mar,2017

Mar,2018

26

Actual results of recruitment of human resources(Kyudenko individual) and workforce planning≪ Comparison in actual results of recruitment
for April 2019 with other companies≫≪ Actual results of periodic recruitment of engineers andskilled persons≫
2007～2014

2015

2016

2017

2018

2019
Kyudenko

Large electricalconstruction
companies

Large HVAC
companies

Super general
constructors

Total in all
professions

362

320～33060～90

250～330

Total
engineers andskilledpersons

Around 200

241

262

344

384

342

High
schoolgraduates

Around 150

163

177

248

271

253

High
schoolgraduates

253

Around 190

Around 10

Around 10

University
graduates

Around 50

78

85

96

113

89

University
graduates

109

130～14060～80

250～320≪ Planned year-end workforce until FY2020 March≫
Increase or
Mach 2016

Mach 2017

Mach 2018

Mach 2019

Mach 2020

decrease in plan

Electrical work department

1,728

1,826

2,090

2,203

2,228

About +500

HVAC work department

921

990

1,052

1,107

1,160

About +240

Year-end workforce of electricaland HVAC

2,649

2,816

3,142

3,310

3,388

About +740

Power distribution line department

1,869

1,816

1,741

1,669

1,647

About ▲220

Other

1,394

1,408

1,418

1,420

1,433

About +40

Employees of single Kyudenko

5,912

6,040

6,301

6,399

6,468

About +560

Employees of group

8,976

9,287

9,843

9,954

10,000

About +1,000

Total 8,100 employees in technical field of total 9,900.
(Kyudenko )(Subsidiaries)

Number ofsite
technicians

About 2,100+

About 2,000=

About 4,100

Number of
construction
managers

About 3,000+

About 1,000=

About 4,000

All Rights Reserved. Copyright KYUDENKO CORPORATION

27

Mid-term management plan
growth strategy

All Rights Reserved. Copyright KYUDENKO CORPORATION

28

Numerical target≪ Main theme ≫Challenge to a Further Growth～To the next growth stage～≪ Numerical target at March 31, 2020≫(Results in March 2019)

S a l e s

400 BillionYen

408 BillionYen

Gross Profit Ratio

Over
％
15

14.8 ％

Operating Profit Ratio

Over
％
9

9.0 ％

R O E

Over
％
14

15.6 ％All Rights Reserved. Copyright KYUDENKO CORPORATION

29

Road map of sales plan
(Billion yen)
400

48

50

166

170

127

136

45
50

Solar plant
construction

48

66
138
Electrical construction

153

127

111

HVAC
80

94

101

47

47

47

48

48

15

13

15

20

15

2016.32017.32018.32019.32020.375

Power distribution line
45
Others0

14
2015.3(plan)
Medium-term management plan（2016.3～2020.3）

All Rights Reserved. Copyright KYUDENKO CORPORATION

30

Review of present mid-term management plan
※Figures are from internal management materials
Tokyo headquarters
result

FY2018resultIncrease or decrease
from FY2014

74.8B Yen

＋41.4B Yen

Group companies

16.2B Yen

＋15.2B Yen

Number of engineers
and technicians

756 ppl＋391 ppl

Group companies

223 ppl＋154 ppl

Sales

Designproject

Electrical

FY2018result
93.5%

HVAC

94.1%

＋18.5%

Estimates
project

Electrical

50.9%＋18.8%

HVAC

63.1%

＋29.3%

Electrical

20.3%

＋2.5%

HVAC

17.2%

＋3.7%

Kyudenko(Individual)

Orderprobability

project
profitIncrease or decrease
from FY2014＋13.5%

Number of engineers
and technicians

FY2018resultIncrease or decrease
from FY2014

Kyudenko(individual)

3,310 ppl

＋785 ppl

Group companies

1,572 ppl

＋402 ppl

Ｍ＆Ａ
Total

220 ppl＋220 ppl

4,882 ppl

＋1,187 ppl

・Established a sales office in Tokyo.
・Reinforcement of Yokohama and Nagoya sales offices
・ Shift construction personnel to Tokyo headquarters
・Strengthening construction capabilities using M & A※Ergotech co. 、Shoeidensetsu co. etc
・Company-wide horizontal deployment ofexperience and know-how through thorough cost
control and personnel rotation in the technicalmanagement department
・Reduction of material costs(new establishment of Q-mast)
・Transfer of Quatec co employees to improve ourdesign and design change capabilities
・Introduction of QC method
・Increase in new graduate recruitment
・Extended employment period for engineers(up to 67 years)
・Utilization of mid-career recruitment and M & A※Engineers and technicians dedicated to domestic electrical and HVAC
(excluding power distribution line and other business)

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31

Environmental prediction surrounding Kyudenko
Large-scale projects in metropolitan areas and local Fukuoka will support construction demand.
The labor shortage will accelerate with the decline in the working age population, with a rapid falloff insupply capability.
No. of construction
Real construction
investment(Trillions of yen) 非住宅建設
90
80

Past construction
investment amountNo. of constructionindustry employees

住宅建設

industry employees(Thousands)

Tokyo Olympic (2020)

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)
Osaka・Kansai Expo(2025)

民間土木

政府土木

70

80
800
70
700

Linear Shinkansen Line 60
600
opened to Osaka(2045)

60

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(1995)

Base: 77.28 million

20
200Working age population
Forecast: 45.29 million 10
100(2065)(2015)

0

年1960

30
300

00

1970

1980

1990

2000

2010

2020

2030

2040

2050

度
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32

＜As regards to scandal of employee concerning Chikujyo town water and waste sewage treatment facility＞

・ Recurrence prevention measures

KYUDENKO Group has formed an investigation committee, which includes outside directors and lawyers,
and thoroughly investigated the causes, such as the opportunities and the motivation for the fraud. The
recurrence prevention measure based on this survey is as follows.

Scandal farewell declaration『 KYUDENKO Group will comply with law thoroughly in all business activities 』
1. Enhance compliance awareness3. Review of outsourcing order scheme(1) Reform Employee’s awareness aiming at
creating a corporate culture to point out scandal(1) We thoroughly pursue a scheme to avoid
scandal in outsourcing orders.

(2) Reeducate compliance thoroughly(2) Verification enhancement of the validity of theoutsourcing order amount(3) Formulate and disseminate "salespersons action
guidelines“ thoroughly(3) Enhancement of scandal monitoring function for
construction orders(4) Raise awareness for the prevention of scandal

4. Thorough prevention of scandal tooutsourcing companies

2. Enhance in-house check function(1) Cooperation request for prevention of scandal
to outsourcing companies(1) Thorough scrutiny of costs(2) Review the items of the contract with theoutsourcing company(2) Thorough new personnel and evaluation system

5. Enhancement of reporting system andstricter internal disposal(3) Enhancement of check function in businessprocessing(1) Common knowledge and completion of thereporting system(4) Verification enhancement by system(2) Stricter internal disposal

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33

Appendix

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34

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

Approval for construction

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

Number of employees

Consolidated: 9,954 persons (March 31, 2019)

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35

Appendix(2)Analysis of works on hand
（Kyudenko individual : excluding power distribution work）
Third quarter opening construction works on hand by delivery schedule timing
Works on hand

Total 359.9（Billion yen）

Total 316.8

Total 318.0
132.4
Deliver on after next FY

110.2(▲22.2）157.0

Deliver on next FY

148.4

123.9
（▲24.5）

79.1

82.7（＋3.6）FY 2018 3Q

FY 2019 3Q

93.3
Deliver on FY

67.7
FY 2017 3Q
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36

Appendix(3)Analysis by scale of order(Kyudenko individual : excluding power distribution work）(Million yen)■2017.9 ■2018.9 ■2019.9

25,426 26,626

50,090 51,626

45,85022,265100～300 million yen

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Under 100 million yen

37Appendix(4)Details of diverse business models (facility work)business
model
item

Ⓐ Proposal and originalcontract type(Local based）Ⓑ Sub-contract type

Ⓒ Capital participation type・Capital participation in a project・Mainly small- and med-

① Feature

sized deals
・Order directly from the owner（prime contractor)

・Large sized deals
・Subcontractor of a generalof collaboration with different
industries, and receiving an orderfor construction
・Construction profit + Business

contractor

profit according to the amount ofinvestment

Mainly Kyushu② Business
area

Urban areas such as
Kanto and Kansai
Fukuoka urban area

To Kanto and Kansai by M & A

Nationwide development

Business area expansion
to the whole country③ Sales④ Profit rate

⑤ Differentiation
strategy⑥ Rival⑦ Composition
ratio

Sales by project are small

Sales by project are large

Relatively higher

Relatively lower（Order directly from the owner）（Mainly subcontracted）

Sales by project are large
Different for each project

By having 110 sales offices throughout Overwhelming ability to collect

By participating from the project

Kyushu and Okinawa, we develop

workforce and ability of directplanning stage, we definitely

local-based sales by engineersconstruction

receive an order for construction

Local small and mediumsized enterprises
about４０％

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Major competitors
about５０％

General contractor
and developer
about１０％38

Appendix(5)【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

Tenjin area
Fukuoka City Subway Airport Line
Nishi-Nippon Railroad
Fukuoka(Tenjin)station

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10 minutes
to theairport5 minutes
Fukuoka City Subway Nanakuma Line39

Appendix(6)【Project contents】
Fukuoka Waterfront Next, Tenjin Big Bang, Hakata Connected

Project

Purpose

Period and scale①Tenjin Big Bang・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)②Fukuoka
Waterfront Next

・Create bustle around Hakata
Port, the gateway to Kyushu
・Improved urban functions tomeet MICE and cruisedemand・Over 20-30 years
・Cruise terminal, MICE,
commercial facilities,
hotels・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)③Hakata Connected

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