K A N D E N K O
I N T E G R A T E D
R E P O R T

2023

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Table of Contents

Greetings

Introduction
2

Greetings/Table ofContents

3

Corporate Motto

4

At a Glance

6

History of Kandenko

7

Message from the
President

Social46 Initiatives to Support Recovery
from Natural Disasters

48 Employee Initiatives

22 Definition and Direction of
Capital
23 Value Chain
24 Important Stakeholders
25 Materialities (Important
Issues)26 Materiality Identification
Process

52 Maintaining and Improving
Partnerships with Partner
Companies and Material
Suppliers
52 Respect for Human Rights
53 Social Contribution Activities
Governance

55 Roundtable Discussion with
Outside Directors
59 Corporate Governance
65 Management

Data Section

Value Creation Initiative

67 Consolidated 11-Year Financial
Summary

28 Fiscal 2021-2023 MediumTerm Management Plan

68 Consolidated Financial
Statements

30 Financial Strategy & Capital
Policy70 Non-financial information

32 Business Overview by
Division

72 Stock Status

71 Company Profile

33 Business Review by
Division
Building Infrastructure Work:

Chairman and Director

President and Director

Seiichi Fubasami

Toshio Nakama• Electrical engineering,
environmental facilities
and systems, andrenovation work

Social Infrastructure Work:
Reporting Period
From April 1, 2022, to March 31, 2023
(Includes reports on some activities
outside this period)

44 Information Disclosure Basedon TCFD Recommendations

13 To Become a Green
Innovation Company

16 Featured Article “Hito-ichi
value” ~ Individual proactivity
× Organizational strengths ~Furthermore, aligning with our corporate motto, "Humanity First,"
and aiming for sustainable growth based on human capital, we areworking towards establishing a company where every employee canactively contribute. This involves reforming work practices and leave
policies, improving training programs, and fostering diversity.
The Kandenko Group will persist in upholding the fundamental
principles of our management by focusing on thorough compliance,
safety, and quality assurance. Our commitment also extends toestablishing a corporate structure capable of swift and appropriate
responses to rapid societal changes. We aim to deliver valuable
services, contributing to the wealth and happiness of all stakeholders,
including shareholders, customers, and local communities.

Environment

47 Occupational Safety andHigh-Quality Construction

15 Business Field ofKandenkoThank you for your interest in KANDENKO INTEGRATED REPORT 2023.
Kandenko provides comprehensive one-stop services ranging frominitial planning and design to construction, maintenance, and thesubsequent renewal of building facilities. This includes services related
to electricity, air conditioning, and telecommunication systems.
Additionally, we ensure a stable power supply by maintaining andconstructing social infrastructure facilities.
In recent years, we have utilized the collective expertise of our
Building Equipment and Social Infrastructure Divisions to provide
solutions and develop new technologies in decarbonization, disaster
preparedness, and business continuity planning (BCP). Our initiatives
span such areas as renewable energy generation, storage batteries,
and micro-grids. Moreover, we are enhancing productivity by digitallytransforming (DX) worksite operations using artificial intelligence (AI)and the Internet of Things (IoT).

ESG Management Initiatives

Value Creation Story

14 Value Creation Process

Editorial Policy
This integrated report introduces various aspectsof the Company for the purpose of facilitating all
stakeholders’ understanding of our businesses
and medium- to long-term value creation.

Data Section<Notes on proper use of business result forecast>
The business result forecast and other forward-looking statements
herein are based on information currently available and certain
assumptions deemed reasonable by the Company, and thus actual
results may differ significantly from these forecasts because of awide range of factors.

• Information &communication work
• Power distribution
line engineering work
• Electric power & civilengineering work

41 Research andDevelopment Activities

We partnered with Gakken Holdings to
co-publish Denki no Himitsu (Secrets ofElectricity), a part of the educational
manga series. For details, see page 54.

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate Motto“Humanity First”
To provide power that supports our society
In 1945, the year after Kandenko was founded, World War II came to an end, but the war destroyed the company's
headquarters and almost all of its branch offices in the fires.
Despite significant challenges, the employees of Kandenko during that period, adhering to the motto of illuminating thecity as soon as possible with minimal construction cost, focused on repairing distribution lines and provided power toilluminate the barracks and housing constructed in areas devastated by fire.
Having encountered such hardship in the early stages of the company, the Kandenko Group consistently have prioritizedrestoration and rebuilding efforts whenever Japan was affected by such natural disasters as earthquakes, typhoons,flooding, and heavy snow.
The aspiration of every employee in the Group was embodied in our corporate motto, "Humanity First," in 1988, and it
persists to the present day.
When we mention “Humanity” we include not only our employees but also our shareholders, customers, local communities,
and everyone else. Our goal is for these valuable stakeholders to thrive and experience increased happiness.
The corporate motto, along with our corporate philosophy, has become a crucial element of the Group's management
culture. It remains a resilient pillar, actively supporting our corporate activities and retaining its vitality.

Corporate Philosophy
https://www.kandenko.co.jp/
company/message

Charter of Corporate Behavior
https://www.kandenko.co.jp/
sustainability/guidelines

Kandenko Integrated Report 2023

3

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

At a Glance
Financial information
Net sales
Consolidated

Unit: Million yen¥541,579 million

563,5502018

616,143

2019

2020

495,567

541,579*
*

2021

2022

2018

513,919

Unit: Million yen

2019507,5222020

493,1282018¥493,317 million

496,088¥469,990 million

Consolidated

2019

486,327

2020

2021

2022

429,021*408,072

381,788402,983

2018

2019

2020

2022

2021

Unit: Million yen

7.3 %

2018

9.3

2019

Non-consolidated

7.8

7.3

7.3

2020

2021

2022

8.2

2018

8.9

2019

32,748

2018

2019

2020

2021

2022

Profit (loss) attributable to owners of the parent

Unit: Million yen

Consolidated

19,703

2022

2018

7.1 %

¥27,195 million

24,146440,799 464,126

2021

30,643469,990¥464,126 million*

30,041

Non-consolidated*

Unit: %

8.5

¥32,748 million

30,012

Construction contracts brought forward
Non-consolidated

466,837* 493,317

540,202

ROE
Consolidated

Unit: Million yen

34,693556,045

New orders received
Non-consolidated

Non-consolidated

Operating profit¥21,167 million
22,5152019

20,315

21,167

2020

2021

2022

Consolidated

¥32

2018

7.3

7.1

26

28

28

28

2020

2021

2022

2018

2019

2020

2021

2020

2021

19,4082022

2019

17,524

17,935

18,239

2020

2021

2022

Unit: %

30.9 %

32

2022

27,195

Unit: Million yen

Dividend payout ratio
Consolidated

7.6

25,416¥18,239 million

17,084

Unit: Yen

2019

24,730

Profit (loss)
Non-consolidated

20,147

1 Cash dividends per share2018

27,773

27.0

25.4

2018

2019

28.4

28.2

30.9

2020

2021

2022

* From fiscal 2021, the Accounting Standard for Revenue Recognition etc. is applied (Accounting Standards Board of Japan (ASBJ) Statement No. 29).

Kandenko Integrated Report 2023

4

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

At a Glance

Non-financial information
Number of employees
Overall

7,682 persons
7,202

Unit: Persons

Male

7,350

7,180 persons Female 502 persons

7,497

7,682

7,619

Number of regular hires
Overall

330 persons
331

333

502

Unit: Persons

Male 307persons

305

Female 23 persons

314

Number of mid-career hires
Overall330

persons

2019

2020

2022

2021

Average total working hours per person/month
Overall

173.0
183.6

Unit: Hours

hours

184.4

2018

175.4

72.4

173.0
49.3

2018

2019

2020

2021

Promotion to managerial positions
Number of women in
managerial positions

28 persons

2022

Unit: Persons and %Percentage of female employees
in managerial positions

5.5 %

2020

2021

2022

Paid leave usage rate
Overall

178.1

2019

2018

%

56.5

59.9

2019

2020

3.7

3.9

17

18

2018

2019

4.6

22

23

2020

2021

28

2022

2018

2019

34,359

72.4

2021

2022

Unit: Persons

108 persons
84

2020

2018

94

2020

2021

81

2021

2022

8
73

Unit: Hours

37,65835,813
26,600

2019

2020

2022

2021

Percentage of employees using the childcare leave program
Male

105

79

37,658 hours
22,862

Female technical and engineering staff

81

2019

106

Number of employee training hours* (Company-wide joint training etc.)
Total hours

5.5
4.5

2018

Unit: %

66.9

73 persons Female 8 persons

156
74

2018

Male

23

307

7,180

81

Unit: Persons

Unit: %

10.9 % Female 100.0 %
100.0

100.0

100.0

100.0

100.0

0.0

0.7

6.3

5.6

10.9

2018

2019

2020

2021

2022

108

2022

* Training provided by the Education & Training Center

Kandenko Integrated Report 2023

5

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

History of Kandenko

Data Section

Target net sales

Net sales
700,000¥577,000
million

Since its founding in September 1944, Kandenko has conducted business in a wide range

600,000

of fields with the aim of ensuring the mutual prosperity of its customers and thecommunities where it works and finds its purpose in this pursuit and has grown tobecome one of Japan’s leading general infrastructure companies.
This section presents the Company’s history of stably supplying electric power and

500,000

supporting people’s lives alongside postwar development in Japan.
400,000

Net sales/Operating profit
Net sales (millions of yen)

Operating profit (millions of yen)

Operating profit
30,000300,000
Targetoperating profit¥36,000

20,000

million

200,000

100,000

10,000

0

0

1944

1950

1960

Company Establishment and Japan’ s Postwar Recovery Period
September 1944
Kanto Denki Koji Co., Ltd., wasestablished.
Head office at 2 Tameikemachi,
Akasaka City (current Minato City),Tokyo

Around 1947
Transport of power poles byhand-drawn cart

November 1955
Introduced pillar-erecting
vehicle for power distribution
line engineering work

March 1960
Built the Technical Staff Training
Center (current Education & Training
Center) in Ibaraki Prefecture

March 1960
Moved the head office to
Yushima 4-chome,
Bunkyo-ku, Toky

October 1961
Listed on the Second Sectionof the Tokyo Stock Exchange

1970

1980

1990

From the Rapid Growth Period to the Stable Growth Period
February 1970
Listed on the First Sectionof the Tokyo Stock
Exchange

1971
Introduced aerial work platformtrucks for power distribution
line engineering work

August 1973
Set our “Humanity First”
sloganSeptember 1984
Company name changed to
Kandenko Co., Ltd.

July 1986
The Company participated in theJapanese Antarctic Research
Expedition for the first time.

December 1988
Moved the head office to the newly
constructed building at Shibaura
4-chome, Minato-ku, Tokyo(current location)

2000

2010

Transition from Showa to Heisei Era
January 1990
Started TV commercials

July 1993
Set up the Tsukuba Technology
Research & Development Institute(currently the Technology Research& Development Institute)

2023

Working to Realize a Sustainable Society

December 2006
Formulated the KandenkoGroup Charter of Corporate
Behavior

October 2012
Capital participation in Choshi
Wind Development Co., Ltd.

July 2015
Established the
Fukushima Division

March 2016
Formulated our
growth strategy

April 2020

October 1997
Launched Kandenko website

2020

October 2014
Introduced the regional
headquarters system

Achieved record highconsolidated business results

Formulated our Corporate
Philosophy
Formulated our Corporate Motto“Humanity First”

Kandenko Integrated Report 2023

6

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Message from the President

Message

With the courage to embrace change
and an unyielding sense of mission,
we aspire to pioneer the industry with
innovative ideas, shaping the future
and attaining consistent growth.
President and Director

Toshio Nakama

Summary• Review of fiscal 2022
• Evaluation of the Medium-Term Management Plan (fiscal 2021-2023)• Reinforce “Hito-Ichi value” ~ Individual proactivity × Organizational strengths ~• Promote Sound Management Activities• Message to all our stakeholders

Review of fiscal 2022

Seize opportunities and capitalize on momentum
to ensure a stable growth trajectory as weapproach the last year of the Medium-Term
Management Plan.
We have finished the second year of our three-year Medium-Term
Management Plan (fiscal 2021–2023), which commenced in fiscal

2021. Reflecting on the past two years, I believe we have effectively
laid the groundwork for our journey towards becoming the "Green
Innovation Company" by 2044. Embracing our slogan, “Change! And
Create the Future From a New Starting Point,” we initiated reforms
by thoroughly acknowledging our strengths and challenges. We thenproceeded to engage in ongoing discussions about creating thefuture, including outlining the direction for the upcoming mediumterm management plan.

Given the current business landscape, both companies and local
governments show a growing motivation to invest in construction.
This is driven by the demand for substantial redevelopment projects
particularly in metropolitan areas, large-scale semiconductor
factories, as well as lodging and commercial facilities in response to
the recovery of inbound demand. Against this backdrop,
consolidated results for fiscal 2022 exceeded those of the previous
fiscal year with net sales of completed construction contracts of

Kandenko Integrated Report 2023

7

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Message from the President¥541,579 million (up 9.3% from previous fiscal year), operating
income of ¥32,748 million (up 6.9%), ordinary income of ¥34,059
million (up 7.3%), and profit attributable to owners of the parent of¥21,167 million (up 4.2%).
Our performance in the ongoing fiscal year (fiscal 2023) is also
progressing as planned and is expected to meet the objectives
outlined in the midterm management plan. We will persist in tacklingsuch challenges as rising construction costs, a limited supply ofmaterials and equipment, and the impending "2024 issue" – referringto the maximum overtime work limit set to take effect in 2024.
Keeping these issues in mind, we will finalize the current MediumTerm Management Plan.
Evaluation of the Medium-Term Management Plan (fiscal 2021–2023)

Establishing a foundation for the transformation
towards becoming a 100-Year Company that
supports society
We have established the promotion of ESG management as afundamental policy in our Medium-Term Management Plan (fiscal
2021–2023) and are actively pursuing five key initiatives aimed atachieving sustainability for both our organization and society atlarge. We have reached a certain level of performance thus far, butthere is still room for improvement, and I would like to discuss three
key aspects: Productivity Innovation, Rebuilding Earnings Base by
Demonstrating Our Comprehensive Strengths, and Strengthening
the Foundations for Future Growth.
Medium-Term Management Plan

Productivity Innovation
To boost productivity in light of the urgent need for work-style reform
at construction sites, we have established a specialized organization
dedicated to construction site administration, technicalexaminations, the preparation of construction drawings, and related
tasks. This initiative strengthens the overall back-office function
across the entire company. At the same time, we have broadened
the scope of applicability for prefabricated and unitized construction
methods, significantly enhancing work efficiency on-site. Moving
forward, we plan to expand the functions of the Rokugo Center, ourproduction base for prefabricated and unitized construction
components, and establish additional production bases.

Fiscal 2022 Business Results
Non-consolidated results

Consolidated results
Net sales of completed
construction contracts¥541.5 billion

109.3% compared to theprevious fiscal year

Operating profit¥32.7 billion

106.9% compared to theprevious fiscal year

Ordinary profit (loss)

Profit (loss) attributableto owners of the parent¥34.0 billion

107.3% compared to theprevious fiscal year

¥21.1 billion

104.2%compared to theprevious fiscal year

P28

New orders received¥493.3 billion

105.7%compared to theprevious fiscal year

Net sales of completed
construction contracts¥469.9 billion

109.5%compared to theprevious fiscal year

Operating profit¥27.1 billion

107.0%compared to theprevious fiscal year

Ordinary profit (loss)¥28.6 billion

107.2%compared to theprevious fiscal year

Profit (loss)¥18.2 billion

101.7% compared to theprevious fiscal year

We have also been enhancing the efficiency of fundamental
construction management operations and on-site tasks byincorporating digital technologies. This involves the comprehensive
utilization of an on-site support system and encouraging all
employees to use mobile devices distributed to each of them. In
recognition of these efforts, Kandenko was selected as a DXCertified Operator by the Ministry of Economy, Trade, and Industry in2022.
I believe the labor-intensive construction industry, as it prepares forthe "2024 problem," faces the necessity of altering conventional
wisdom. As the number of construction workers continues todecline, there is an increasing need to change entrenched traditional
practices on construction sites. This shift is necessary to reduce
overtime work while still meeting the required workload.
For instance, there is no need for everyone to gather for morning
meetings. Sharing essential information from on-site managers
through digital tools would be sufficient. In addressing areas for
improvement like this, I believe it is essential to develop solutions
that are highly satisfactory to on-site workers, thus benefiting theentire construction industry. We will persist in concentrating on

Kandenko Integrated Report 2023

8

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Message from the President

Strengthen Foundations for Future Growth
The growth market for Kandenko, aspiring to evolve into a green
innovation company, encompasses the realm that contributes toboth environmental and social sustainability. Specifically, it involves
the development of comprehensive solution services that contributeto decarbonization, disaster preparedness, and the fulfillment ofbusiness continuity planning (BCP) requirements.
Value Creation Story

restructuring business processes and innovating construction
operations. Simultaneously, we will monitor changes in the businessenvironment to achieve a significant boost in productivity.

Rebuild Earnings Base by Demonstrating Our
Comprehensive Strengths
Kandenko has been visualizing information that could contribute tosecuring future orders, a concept we refer to as "sales information."
By actively collecting sales information and analyzing construction
market trends, we can initiate proposal-based sales activities in the
expanding sectors and secure orders for renewal projects.
Moreover, through meticulous management of the work in progress,
we enhance our ability to make more precise forecasts for both the
net sales of completed construction contracts and the recognition of
profits. This comprehensive approach provides a visual
representation of cost balances, including labor and raw material
costs, as well as cash flow.
With the successful visualization of sales information and work inprogress, our next step is to enhance the visualization of execution
capabilities. This initiative aims to strengthen the collaboration
between the sales and construction divisions. As the shortest way toboost profitability, we advocate for a strategic approach to enhanceorder acquisition efforts and foster adaptable execution capabilities.
This involves aligning information from the sales team, such as"Construction A is expected to commence in January," withprojections from the construction team, like "Construction B willconclude in December, freeing up additional capacity forconstruction personnel from January."
In order to create a positive feedback loop like this, it is essential tocreate a system where diverse types of visualized information arepresented on a single platform, enabling seamless sharing of
information among everyone involved. Enhancing the functionality ofthis system not only brings further clarity to the strengths andchallenges within each division and branch but also defines a unified
direction for the entire company. At the same time, it facilitates thedevelopment of a mid-to-long-term business portfolio.

P12

To date, Kandenko has contributed to reducing the environmental
impact of our customers' facilities through energy conservation andrenewable energy power generation businesses. We aim to further
enhance energy efficiency within our own business operations while
simultaneously assisting our customers in energy utilization anddecarbonization through a novel approach. This entails integrating
the insights and knowledge gained from our internal energy
conservation initiatives with cutting-edge ICT solutions. For instance,
our goal is to establish a system that not only delivers tangible
services like constructing energy-saving, energy-creating, andenergy-storing facilities but also provides intangible services, suchas facility maintenance and support for devising action plans that
contribute to effective energy management.
As a company entrusted with ensuring a stable supply of electric
power, it is our duty to tackle pressing societal issues, such as theescalating frequency and intensity of natural disasters. In response,
we plan to present comprehensive solutions that address bothtangible and intangible aspects. This involves establishing energy
networks within specific areas through the advancement of digitaltransformation (DX) and creating services that encompass resilience.
We aim to achieve this by strengthening our partnerships withcompanies specializing in weather analysis and disaster
preparedness systems as well as collaborating with educational
institutions.
In the current Medium-Term Management Plan, we have brought tofruition several initiatives that exemplify our commitment tointegrating construction facilities with the social infrastructure. We
are dedicated to elevating customer satisfaction by offering
comprehensive solutions for electrical works, communication,
heating, ventilation, air conditioning (HVAC), civil engineering, andvarious other operations. This commitment is reflected in our efforts
to stay abreast of societal shifts, including the growing adoption ofrenewable energies like wind and solar power, advancements insuch communication infrastructures as local 5G, and increased
investments in semiconductor, data center, and related fields. We
aim to foster Kandenko's growth by delivering comprehensive

Kandenko Integrated Report 2023

9

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Message from the President

solutions with added value to our customers.
In fiscal 2023, we are ready to wrap up the current Medium-Term
Management Plan, laying the foundation for the forthcoming growthstage. This also marks the year when we reaffirm our strengths andcommunicate new values, aligning with our management vision of"Becoming a 100-Year Company supporting society," as we strive toembody our progress. In the year 2044, as Kandenko celebrates its
100th anniversary, we are poised to reflect on the questions, "Whatare the social roles that Kandenko should play?" and "What kind ofcompany do we aspire to be?" — We stand ready to prepare for the
next Medium-Term Management Plan, taking into account these two
perspectives.

Reinforce “Hito-ichi value” ~ Individual proactivity × Organizational strengths ~Interweaving the DNA of a “Hito-ichi value”
Approach to Create Fresh Value
Three years ago, while developing the current Medium-Term
Management Plan, we gathered input from both young employees
and those in management positions. We then integrated theiropinions into our discussions to formulate policies. In this process,we anchored our discussions on our corporate motto, "Humanity
First," and our management philosophy. Even though more than 30
years have passed since the establishment of our corporate motto,
its influence remains strong, continuing to guide Kandenko in the
direction of progress.
As we enter the final year of the current Medium-Term Management
Plan, we have revisited our original spirit, reinterpreting our corporatemotto and management philosophy. Through this process, we aimed
to share a vision for the future. In light of this, we acknowledge thateven in this era of digitalization, "Humanity" stand out as the most
crucial of the management resources. By "Humanity" we mean not
only Kandenko employees but also encompass all stakeholders,
including shareholders, clients, and local communities.
People form the foundation of value creation within the KandenkoGroup. Committed to nurturing prosperity and happiness acrosssociety through a range of stakeholders, we coined the term “HitoIchi valu” to encapsulate the comprehensive capabilities of bothindividual and organizational strengths. Thus, the enhancement of
the “Hito-Ichi valu”has been integrated into the current Medium-

Term Management Plan.
Featured article “Hito-Ichi value” ~ Individual proactivity × Organizational strengths ~P16

The “Hito-Ichi value” encompasses human capital, intellectual capital,
and mental capital. This mirrors the distinctiveness of Kandenko, which
has cultivated a unique concept encapsulating our sense of mission
and professionalism since the company's inception.
The underlying essence of it all lies in the DNA of Kandenko, embedded
within each one of us. We promptly respond to any issues that may
arise at a facility we have worked on. We take on the responsibility ofmaintaining the infrastructures that were developed by ourpredecessors. The essence of the “Hito-Ichi value” lies in theinterconnection among individuals fostered by this kind of spirit.
On worksites, we often find ourselves in situations where we must
make decisions independently, irrespective of our age or experience. To
make optimal decisions in such situations, a thorough understanding of
the company's policies and values is essential. To strengthen the“Hito-Ichi value”, we begin by sharing the vision set forth by Kandenko.
Subsequently, ivt is crucial to continually inquire about each employee's
aspirations and capabilities, fostering active participation.
As a means to actualize this, we establish a flexible evaluation
system tailored to diverse abilities and job responsibilities. This
serves to uphold and enhance the motivation of our employees.
Furthermore, to consistently deliver high-quality services as acompany dedicated to social infrastructures, we acknowledge theresponsibility of ensuring a stable recruitment process and ongoing
cultivation of our workforce. Hence, we will actively pursue thedevelopment of comprehensive educational programs and advocate
for diversity.
Training and education system

P49

Promotion of diversity

P50

Promote Sound Management Activities

Elevate Governance and Embrace the“Hito-Ichi value”
To further enhance the “Hito-Ichi value”, it is crucial for those inmanagement positions to initially align on the recognition of thesocial roles Kandenko should fulfill. Engaging in candid discussions
is crucial for board members. It is also necessary to listen to theopinions of subordinates and young employees and steadily
progress with necessary measures. To clarify these responsibilities,
we implemented a team officer system in July 2023. As we prepare
for the next Medium-Term Management Plan, we will integrate
initiatives from each division across the entire company to enhance
our strategic functions through this system.

Definition of the “Hito-Ichi value”
MentalCapitalIndividual proactivity
Human
CapitalComponentsof the “HitoIchi value”

Intellectual
CapitalOrganizational strengths

Kandenko Integrated Report 2023

10

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Message from the PresidentInternal Control Division
Safety & Quality Supervision Unit

Corporate Planning &Administration Unit

Chief Financial Officer (CFO)

Proposal and implementation offinancial strategies

Accounting & Financial
Administratio Unit

Chief Digital Officer (CDO)

Proposal and implementation of DX
strategies, development, andoptimization of the IT environment

DX Promotion Unit

Chief Cost management
Officer (CCO)

Proposal and implementation ofstrategies to enhance profitgenerating capabilities.

Cost Management Division

Chief Green Innovation Officer(CGIO)

Proposal and implementation ofgreen innovation strategies

Green Innovation Promotion
Unit

Group companies

Chief Human Resources
Officer (CHRO)

Proposal and implementation ofgroup management strategies
Proposal and implementation ofhuman resources strategies

We are dedicated to accelerating transformation
to become a green innovation company.

Sales Division

Chief Strategy Officer (CSO)

Supervision of risk management

Messages to our stakeholders

President

Social Infrastructure Division

Chief Risk management
Officer (CRO)P59

Board of Directors

Tokyo Sales Divisioncooperation across the organization

Corporate GovernanceTo further elevate our corporate value, it is crucial to recognize thegrowing significance of management geared towards optimizing
capital costs and the return on investment. With this understanding,
we are committed to fortifying profitability in the upcoming MediumTerm Management Plan. Concurrently, we will meticulously manage
the Return on Equity (ROE) and Price-to-Book Ratio (PBR),
maintaining a good balance between shareholder returns andstrategic investments to enhance capital efficiency and facilitatesustained growth.

West Japan Sales Division

The Chief Officer System to facilitate seamlessconsistently strengthen our corporate governance practices.

Fukushima Division

Our commitment to safety and quality, along with ensuring
compliance, forms the core of our business. We also believe that theentire Kandenko Group, as well as partner companies, need toembrace these principles. Therefore, we are expanding our safety
and quality management education utilizing VR technologies andsmart devices, fostering a strong sense of compliance, andenhancing the effectiveness of risk management.
To address these challenges, we aim to build trust among our
stakeholders by fostering a shared understanding among all board
members, maintaining communication with external directors and auditors
who possess expertise in specific fields, such as corporate management,
finance, and law and regulations, and continuing our commitment toTo evolve into the next-generation Kandenko Group, we haveproactively addressed challenges as they arise and preparedourselves for shaping the future. In the midst of changes in theindustrial landscape, characterized by a shrinking labor force, a drive
towards decarbonization, and the swift adoption of digitaltransformation, the structure of the social infrastructure is evolving,leading to more efficient urban designs. We see significant growthpotential for Kandenko as we contribute to these transformativechanges. In other words, this marks the new mission of theKandenko Group, which has been actively involved in constructing
social infrastructures in collaboration with various stakeholders.
Committed to ensuring sustainable growth in the future, we arededicated to transparently communicating the transformative
journey of Kandenko. This includes showcasing our bold changes
and emphasizing our cherished“Hito-Ichi value”, which stands as
Kandenko's greatest strength. This detailed communication extends
to all stakeholders, including shareholders and investors. Maintainhigh hopes and expectations for the Kandenko Group as we
continue to embrace challenges in our journey to become a leading
green innovation company.

Strategy & Technology
Development Division

Kandenko Integrated Report 2023

11

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

SECTION 1
Value Creation Story
13

To become a green innovation company

14

Value Creation Process

15

Business field of Kandenko

16

Featuredarticles22

Definition and direction of capital

23

Value chain

24

Important stakeholders

25

Materialities (Important Issues)

26

Materiality identification process“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~Kandenko Integrated Report 2023

12

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

G R EEN I N N O VAT I O N C OMPA N Y

To become a Green Innovation Company
Our expectation for the year 2044, when Kandenko celebrates its 100th anniversary,envisions a future where the emphasis on environmental and energy conservation will beheightened, accompanied by a growing array of diverse needs. In a society of this nature,
the Kandenko Group aims to deliver increased value to our customers and society byenhancing our expertise in comprehensive facilities operation and exploring nextgeneration technologies.

Green
Innovation
Company
To realize decarbonizedsociety and solve
social issues

Direction of our initiatives

Building infrastructure
Solution achieved
through the integration ofenergy and ICT

Energy field

Social infrastructure

Visualization and smart
operation and monitoringof facilities and energy
consumption

Existing fields

Stock services thatencompass the operation
management of postfacility construction anddisposal

ICT technology Additional aspects

Electricity

Security, surveillance, optimal
operation

HVAC and water supply/discharge

Base and group management

Communication and network

Energy conservation and resource
circulation

Civil engineering

Demand forecasting and selfconsumption

Renewable energy generation

Data analysis and utilization

Kandenko Integrated Report 2023

13

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Value Creation Process
A company
we aspire to
becomeValue chain

Reinvestment

P22

Response to climatechangeReforms of work
practices and annual
leave systems

NaturalCapitalchnolo g yDigital transformation

Resilience (disaster

MentalCapitalProcurement
andexecution

preparedness andBCP)sBuilding facilities andsocial infrastructure

Strengths
Technology Experience
Research and development
Quality Customer confidence

Medium-Term
Management
Plan

Electrical engineering, environmental
facilities and systems, and renovation work
Information & Communication WorkPower Distribution Line Engineering WorkElectric Power & Civil Engineering Work

Value to be
Provided to
Clients andSociety

DesignAnticipation of customer needs engineering

Featured articles“Hito-Ichi value”
P16

Materialities
Maintenance and construction of safe andcomfortable social infrastructure
Reinforcing “Hito-Ichi value” (human resources)

Output

P28

e
or
ur
ko
pm
ct
o
u
l
n
r
i n fr a s t
deve
Provision of expertiseand new construction
methods
W

Intellectual
Capitalpo

Research and Development Activities
Technical examination
Design and estimate
Renewal proposal etc.

Te

Maintenance anddevelopment of social
infrastructurestValue that
Kandenko
gains

O M

SolutionsSocial and
Relationship
CapitalHuman
Capitalrau r e p ror uc tP24

aldecline and aging
society

Stakeholders

Planning andproposalnt

Domestic population

Financial
CapitalfRealization of adecarbonizedsocietyBusiness Cycle

Operation
maintenanceeCapitalIn

Social Issues

Becoming a Green Innovation Company

P13

P25

Promotion of innovation

Contribution to a
decarbonized society

Strengthening sound management foundation

Corporate Motto, Corporate Philosophy and Charter of Corporate Behavior

P03
Kandenko Integrated Report 2023

14

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Business field of Kandenko
As a professional facility construction company, Kandenko has been delivering comprehensive solutions for the entire
spectrum of social infrastructure, covering electrical and communication aspects. Our commitment extends throughout the
lifecycle of construction facilities, contributing to the creation of environmentally friendly, safe, and dependable urban
development.

Power plant
Electric Power & Civil
Engineering Work

Mobile bases andnetwork
Solar power generation

Information & Communication WorkElectric Power & Civil
Engineering Work

Overhead power distribution line
Power Distribution LineEngineering Work

Transmission line and steel towe

Data centers

Electric Power & Civil
Engineering WorkElectrical engineering,
environmental facilities andsystems, and renovation work

Large redevelopment
project

Substation

Electrical engineering,
environmental facilities andsystems, and renovation work

Electric Power & Civil
Engineering Work

Communication and CATV cable
Office building andinformation & communication
work

Office building
EV chargers

Electrical engineering,
environmental facilities andsystems, and renovation work

Wind power plant

Power Distribution LineEngineering WorkElectric Power & Civil
Engineering Work

Underground power distribution line
Power Distribution LineEngineering Work

Plant
Electrical engineering,
environmental facilities andsystems, and renovation work

Hospital
Electrical engineering,
environmental facilities andsystems, and renovation work

Underground power transmission line

Entertainment andcommercial facility

Electric Power & Civil
Engineering WorkElectrical engineering,
environmental facilities andsystems, and renovation work

Kandenko Integrated Report 2023

15

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Human capital that supports Kandenko

Featuredarticles“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~Kandenko has harnessed the collective power of individuals to address
societal challenges and enhance the stability of people's lives.
The “Hito-Ichi value”, signifying the ability to leverage the collective
strength of individuals, stands as a foundation supporting our corporatemotto, "Humanity First."
The “Hito-Ichi value” encompasses human capital, intellectual capital, andmental capital. It serves as a crucial driving force propelling us towards
the realization of our vision and the creation of value.

Corporate Motto

P03

Kandenko employees, as well as
partner companies including
suppliers and business partners

Human
Capital“Hito-Ichi value”
Expertise and technology
developed throughensuring a stable supplyof electricity in Japan.

Intellectual
CapitalMentalCapitalA sense of mission to
engage with society andcustomers andsuccessfully complete
any task we undertake.

Kandenko's distinctive character lies in our commitment to engage withsocial and customer needs, successfully completing every task weundertake, and our sense of mission that empowers us to take effective
action during emergencies, such as in the event of natural disasters.
Diligence

Compassion

Professionalism

Sense of mission

Kandenko Integrated Report 2023

16

Introduction

FeaturedarticlesSection 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~Basic concept
The “Hito-Ichi value” embodies the power to actualize prosperity and happinessfor all stakeholders, encompassing Kandenko employees, shareholders,customers, and local communities.
It comprises the technology accumulated since the foundation of Kandenko, ourfaith, and the organizational strengths to bring these aspects into tangible fruition.

Individual proactivity

Human
Capital“Hito-Ichi value”

Technology andForesight, originality,

expertiseand faith

Organizational strengths
Integration of technology
and expertise

Governance

Related items｜

The ability toactualize prosperity
and happiness of
stakeholders

MentalCapitalIntellectual
Capital

ESG Management Initiatives

P43

Materiality

OUTCOME

Communication anddialogue

Risk Management

P25

Important stakeholders

P24

Kandenko Integrated Report 2023

17

Introduction

FeaturedarticlesMessage from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~To enhance our “Hito-Ichi value”
To consistently strengthen our “Hito-Ichi value”, we formulate personnel plans, human resources
development plans, and procurement policies. We then provide feedback to those responsible for
improvement, planning, and direction-setting, utilizing progress management indices and action plans.
Through this process, we collaboratively manage the operation of personnel, human resources andprocurement systems, human resources development, maintaining and improving partnerships, andcultivating a positive work environment.

Direction and policy to enhance our “Hito-Ichi value”

Human rights policy
Human resources
development policy

Procurement policy

Personnel planning

Human resources
development plan

Operation Plan of Cost
Management Division

Fostering expertise anddiversity

Cultivate a mindset for selfdirected learning

Strengthen partnership

Personnel structure to respondto social needs

Broaden perspectives(Establish connections bothwithin and outside Kandenko)

Mitigate procurement risks

Creation of a workplace where
employees can thrive and in apositive company environment

Active participation andcollaboration of diverse
workforce

Promote green procurement
and purchasing

Outline of Initiatives for Human
Resources Development
Development of personnel

Continuous
human
resourcesdevelopment

Personnel
Human resources
Procurement system

Development of
workplace culture andenvironment
Kandenko Integrated Report 2023

18

Introduction

FeaturedarticlesSection 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~The person we aspire to be
In our ongoing commitment to strengthen the “Hito-Ichi value”,
we focus on developing human resources who embody thedistinctive character of Kandenko as reflected in our corporatemotto and management policy. This is done in accordancewith our personnel and human resources planning.

Foster and build social trust

Professionals

Facilitate and foster connections between
people and technologies

Management personnel

Individuals possessing a sense of mission tosafeguard infrastructure and engage with society
and customers with a sincere attitude

Individuals who actively
seek information both within and outside ofKandenko and set goals for themselves

Individuals who generate questions based onneeds and craft value through experimentationand learning

Individuals who solve
issues by engaging in communication withpartners.

Individuals committed to continually refining andsystematizing technologies and skills, passing themon to future generations through communication.

Individuals who contributeto the next generation with a high level ofexpertise and broad perspectives

Worker-friendly environment
1. Avoiding long working hours andstreamlining operations
2. Health management
3. Proper management of work hours
4. Human resources development
5. Encouraging and supporting
promotion of diverse workforce
6. Facilitating acquisition of days off
and vacations

Workplace culture that fosters human resources
Workplace with active communication

Reassurance-based workplace culture

Aligns organizational goals with motivation to achieve them

Mutual respect for opinions of others
Kandenko Integrated Report 2023

19

Introduction

FeaturedarticlesSection 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~Examples of Initiatives
1

Specific initiatives we are implementing to reinforce our “Hito-Ichi value” approach2

3

The initiative to link our management

Initiatives to ensure diversity andEfforts to promote reskilling andstrategy and the “Hito-Ichi value”

inclusion

continuous learning.

● Enhancing workforce through periodic recruitment andmid-career hiring in collaboration with the Construction
Headquarters.

Human Capital● Encourage male employees to take paternity leave.

Human Capital● Improvement of the management training programIntellectual Capital● Increase the number of women in managerial positions.

Mental Capital

Human Capital● Strengthen the recruitment of individuals with disabilities and● Continuous learning program for specialized fields

Reskilling seminar

Intellectual Capital

Mental Capital● Skill upgrading program for senior employees

Intellectual Capital

Mental Capitalprovide ongoing support.
Human Capital

Training for next generation leadersMain index andexample ofexecution

Fiscal 2022
Periodic recruitment: 330 people, mid-career hiring: 81
peopleKandenko SunSun School Family Visit Day

Main index
and example
of execution

Fiscal 2022
Number of women in managerial positions: 28, Ratio ofmale employees who take paternity leave: 10.9%

Main index
and example
of execution

Expansion of publicly solicited training programs

Kandenko Integrated Report 2023

20

Introduction

FeaturedarticlesMessage from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section“Hito-Ichi value”~ Individual proactivity × Organizational strengths ~Examples of Initiatives

Specific initiatives we are implementing to reinforce our “Hito-Ichi value” approach

4

5
Initiative to boost employee engagement● Deepening the understanding of the company● Continuation of teleworking

motto and corporate philosophy

Human Capital

Mental Capital● Strengthening the integration between● Training sessions and seminars aimed at enhancing

smartphones and work systems (applies to all
employees).

health awareness and promoting well-being
Human Capital

Human Capital● Training aimed at alleviating concerns andanxiety as well as fostering a spirit of teamwork
Mental Capital

Main index andexample of execution

Initiative to encourage a flexible workstyle unrestricted bytime and location

A walking event jointly hosted by Toshiaki Hirose, aformer captain of the Japan national rugby team.

Implementation of measures, such as a walking event, to promote
well-being

6

Main index and example
of execution

Expanding work systems compatible with smartphones

7
Initiative to boost cooperation among organizations● Staff rotations across divisions, cross-divisional● Enhancement of information distribution andcommunication channels.

meetings, and task management

Human CapitalIntellectual Capital● Meeting to explore strategies for addressing

inflation and delivery delays● Joint technical training with group and partner

Human Capitalcompanies.

Intellectual Capital
Technique and Skill Competition
Main index andexample of execution

A system to enhance trust-based relationships with suppliers

During fiscal 2022, approximately 4,900 individuals took part in joint
training sessions with affiliated and partner companies.

Partnership Building
Declaration portal site
https://www.biz-partnership.jp/

Main index and example
of execution

Enrollment in the Partnership Declaration
Kandenko Integrated Report 2023

21

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Definition and direction of capital

Financial Capital

Natural Capital

Financial foundation that supports business

Renewable energy resources contributing to the
reduction of environmental impact.

As of March 31, 2023

Examples¥487.8 billion¥0.8 billion¥298.3 billion¥15.7 billion

INPUT
ExamplesFuturedirection••••

Operating profit
ROIC
ROE
Dividend payout ratio

Human Capital

Number of renewable energy power plants 22 locations
Overall power generation facility capacity

66.8MW

Power generation business
https://www.kandenko.co.jp/business/tecservice/generate-electricity

INPUT
Examples

OUTCOME¥36.0 billion
8% or above
8% or above
30% or above“Hito-Ichi value”

Futuredirection• Greenhouse gas emissions: net zero

OUTCOME

2030• Greenhouse gas emissions: -50% (from fiscal
2020)

Futuredirection

Intellectual Capital

P16“Hito-Ichi value”

P16

Professional Engineer

Leveraging foresight and distinctiveness toprovide technologies, insights, and theexceptional service developed through years of
supporting a stable electricity supply

204

First and second grade electric work managing engineer

2,235

INPUT

First-class electrician

2,395

ExamplesFirst and second grade construction managing engineer

175First and second grade civil engineering managing engineer 408• Cultivation of next-generation professionals
who generate novel value through the
integration of technologies and skills

OUTCOME
Futuredirection• Enhancing partnerships and addressing
social issues

Mental Capital• Establishment of a system to connect
professionals and harness synergy• Recruitment of individuals with expertise in
cutting-edge fields like AI, robotics, and data
analysis

Expertise in technology, management capabilities,
and skilled manpower for the maintenance andconstruction of facilities and social infrastructures.
R&D investment¥1.7 billion
Patents (excluding trademarks)
147

INPUT
Examples• Pursuit of services with added value (integrationof technologies and expertise in electrical andconstruction facilities)

OUTCOME
Futuredirection• Enhancement of decarbonization technologies,
including the adoption of EVs as construction
vehicles and the development of environmentallyfriendly construction methods• Advancing current business operations to build adata platform that creates new businesses“Hito-Ichi value”

P16

A sense of mission to engage with society andcustomers and successfully complete any task
we undertake

As of March 31, 2023

INPUT

• Establishing a more robust and resilient
supply chain*Both pertaining to Scopes 1 and 2 emissions

Professionals with expertise in diverse fields,such as electricity, HVAC, communication, andcivil engineering.

ExamplesSupply chain(Partner companies, manufacturers, agencies)
Research and project implementation partners(Local governments, companies, universities,
etc.)

2050

Fiscal 2023

OUTCOME

Business implementation framework closely
connected to local communities

As of March 31, 2023

Total assets
Free cash flow
Equity ratio
Interest-bearing liabilities

INPUT

Social and Relationship Capital

OUTCOME
Futuredirection

A sincere attitude to address the demands andrequests of society and customers
A commitment to empathize with customers' feelingsand ensure dedicated care for projects until
completion
A focused attitude toward the task at hand
Individual and organizational capabilities that
demonstrate strength during emergencies and crises(the ability to accomplish tasks using all available
networks)• Cultivating a cultural and organizational
atmosphere that fosters the connection andexpansion of mindsz

Kandenko Integrated Report 2023

22

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Value chain

The Kandenko Group provides comprehensive solution services encompassing planning, design, construction, maintenance, and renewal,
addressing such diverse customer needs as energy conservation, decarbonization, disaster preparedness, and business continuity planning (BCP).
In the future, our aim is to provide services that advance energy utilization, contributing to the development of next-generation facilities that
achieve both convenience and flexibility, alongside promoting carbon neutrality. This will be accomplished by harnessing the strengths as acomprehensive facility company and integrating electricity, HVAC, communication, network facilities, and other necessary aspects.

Planning and proposal

Building Infrastructure WorkSocial Infrastructure WorkBusiness planning andproposal

Functionsandservices

Strengths

Design and engineering

Basic design, detailed
design, and estimate

Planning and proposing theconstruction of optimal facilities
and renewals tailored to thespecific needs of customers
Provision of facility energy
management service

Pursuit of enhanced facility
functionality and convenience
Maximizing cost effectivenessthroughout the construction
lifecycle
Exploration of an eco-friendly
construction method that
optimally suits the project

Having successfully undertaken
numerous construction projects,
including large-scale
redevelopment and major power
grid construction projects incentral Tokyo, Kandenko has
amassed significant
technological competence andexpertise.

We integrate our internal
engineering expertise with
cutting-edge technologies andinnovations to strive forfacilities and quality that alignwith the requirements of ourcustomers.

Construction work with planning and execution

Execution plan, procurement,
construction, and operationand management
Proposal of detailed execution
plans
Procurement of the most suitablematerials and equipment
Joint execution with partnercompanies
Thorough safety and quality
management

We construct optimal facilities
for our customers by uniting ouradvanced technology, expertise,and construction methods.

Operation, maintenance, and repair

Maintenance and renewal
Facility maintenance
Executing renewal projects toenhance the functionalities ofcustomer-owned facilities,
covering aspects like
decarbonization, disaster
preparedness, and BCP

We deliver comprehensive
post-sales service through ourskilled personnel with extensive
knowledge, and backed by asupport system that includes
group companies.

Kandenko Integrated Report 2023

23

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Important stakeholders

In our corporate motto, "Humanity First*," the term "Humanity"
encompasses everyone, including Kandenko employees,
shareholders, customers, and residents of local communities.
We believe that the mission of the Kandenko Group is to provide
valuable services with the aim of ensuring the prosperity andhappiness of these crucial stakeholders.
*Corporate Motto

Society
People in society
Local government and communities

P03

Partners

Customers

Supply chain

Owners and clients

Partner companies,
manufacturers, and agencies

Users of facilities

Customers of customers

Joint operators

Users of services offered byclient companies

Joint business operators, joint
researchers

Employees

Shareholders et al.

Employees et al.

Shareholders

Employees, contractors,
temporary staff, et al. and theirfamily members

Shareholders of Kandenko

Provision of valuable services

Investors
Investors and institutional
investors

Group companies
https://www.kandenko.co.jp/company/affiliated-company

Kandenko Integrated Report 2023

24

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Materialities (Important Issues)

Maintenance and construction of safe and comfortablesocial infrastructure

Related
SDGs

Reinforcing “Hito-Ichi value” (human resources)

The Kandenko Group will fulfill its mission of constructing safe and comfortable facilities, maintaining
and developing the social infrastructure, and providing disaster restoration and recovery work and willcontribute to the realization of a sustainable society by solving urban and regional problems andcreating new communities.

For society and customers
Construction and maintenance of electric power facilities that
support daily life and business activities
Renovation and maintenance of facilities, BCP measures
Railways, roads, water supply, and local 5G-related construction
Participation in creating new communities (regional microgrids,
smart cities, etc.)
Initiatives for urban data center development businessContribution to a decarbonized society

Kandenko initiatives
Ensuring occupational safety (compliance with rules andprocedures)
Thorough implementation of rules for building safe, high-quality
facilities
Thorough health management
Research and development of technologies and construction
methods to improve occupational safety and quality

RelatedSDGs

The Kandenko Group will promote our internal initiatives to reduce the environmental burden, while also contributing
to the creation of a rich social environment through the construction of renewable energy-related facilities and theRelated
SDGs

In order to exemplify our “Humanity First” philosophy that aims for mutual prosperity of all People insociety, we believe that the Kandenko Group must work together with our partners, including partnercompanies and material suppliers, to pursue high value-added services by improving our technologies
and skills.
We call this “Hito-Ichi value” and we promote it as the driving force behind our business activities, inorder to contribute to society.

Kandenko initiatives
Training professional human resources who are trusted by our customers (job level training and on-the-job training)
Communication (mutual understanding through dialogue and communication)
Maintaining and improving partnerships with partner companies and material suppliers etc.
Promotion of workstyle reforms (review business processes, use remote working and IT equipment)
Promotion of diversity (promote advancement of women, hire People with disabilities, encourage male employees to take parental leave)
Enhancement of educational programs (enhance training content, use VR/AR)
Development and sharing of human rights and procurement policies

Strengthening sound management foundation

Related
SDGs

introduction of decarbonization and energy-saving solutions in office buildings, factories, and other public facilities.

For society and customers

Kandenko initiatives

Propose decarbonization and energy conservation solutions for

Reduce CO2 emissions from construction

facility construction and operation

Research and development of environmentally conscious

Promotion of renewable energy power generation businesstechnologies and construction methods

Construction of renewable energy related facilities

Reduce energy consumption through equipment upgrades etc.
Promote the use of EV vehicles
Control and properly dispose of waste

Related
SDGs

Promotion of innovation

In anticipation of the future of the construction industry, the Kandenko Group will pursue efficient
operations and promote technological innovation through the use of digital technology and other means,as well as pursuing a business model that contributes to high-quality facility construction,
decarbonization, and resilience through collaboration with diverse partners within and outside theGroup.

For society and customers
Provide high-quality equipment by deepening prefabrication andmodular unit construction methods
Rapid and efficient restoration in the event of a natural disaster
Enhancing facilities to withstand natural disasters

The Kandenko Group ensures management transparency through risk management andcompliance, which are the basic premise of management, and promotes management toremain trusted by society.

Kandenko initiatives
Maintaining and strengthening governancestructure
Appropriate risk and process management
Thorough compliance
Maintaining and strengthening information security
measures*For more information, please visit the webpage below.

Sustainability
https://www.kandenko.co.jp/sustainability

Kandenko initiatives
Business process redesign
Advancement of construction methods and management
processes (use of IoT, AI, robotics, and drone technology)
Improvement of operational efficiency by setting up a backoffice and improving IT systems
Joint research with universities, local governments, otherindustries, etc.

Kandenko Integrated Report 2023

25

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Materiality identification process

In light of our objective recognition of social issues, we conducted a sustainability-focused analysis to assess risks and opportunities, resulting in the identification of five materialities and eighteen sub-materialities.
In tandem with this materiality, we will oversee our policies and measures from a sustainability perspective, discussing progress and introducing new initiatives in management councils and board of directors' meetings.

Five materialities and eighteen sub-materialities

Environment

SocialGovernance

Process of identifying materialities (important issues)

Materialities for corporate value creation
Maintenance and construction of safe andcomfortable social infrastructure
Occupational safety and high-quality construction
Disaster preparedness and recovery initiatives
Maintenance and development of social infrastructure
Local community

Identifying social issues

Promotion of innovation

Contribution to a decarbonized society

Enhancement of operational efficiency
and technological innovation

Response to climate change
Energy conservation and expansion of renewableenergyContribution to a recycling-based society

Pursuit of new business models

STEP

1

The ESG Promotion Committee, consisting of theManagement Planning Department and other leading
departments, has been established to identify social
issues by referring to and analyzing internationalguidelines, such as ISO 26000 and GRI Standards,
and the SDGs.

Reinforcing “Hito-Ichi value” (human resources)

Evaluating the importance of social
issuesRespect for human rights
Diversity & inclusion
Reforms of work practices and annual leave systems
Strengthening human resource development
Maintaining and improving partnerships with partner companies and material suppliers etc.

STEP

2

Strengthening sound management foundation
Thorough compliance and risk management

Ensuring information security

Corruption prevention

Anti-competitive practices

With regard to the social issues identified in STEP 1,
we identified issues of high importance from two
perspectives, namely, importance to stakeholders(society) and importance to the Kandenko Group.

Materialities for business foundation continuation
Evaluating measures and reviewing
validity

Eighteen sub-materialities

Environment

High

Importance to stakeholders

Compliance and risk management

Environmental management
Labor-management relations

Human resources development

Disaster preparedness and recovery

Innovation

Information security

Supply chain

Corruption prevention

Local community

Anti-competitive practices

Safety and quality
Maintenance and development of social infrastructure

Work style reform

Identification of Materialities(Important Issues)

Digital transformation (DX)

Fair evaluation and treatment

STEP

Employment

4

Transparency and information
disclosure
High

Importance to the Kandenko GroupWe evaluated the measures to be taken for theissues identified in STEP 2, taking into account theirrelevance to the Medium-Term Management Plan,
and we reviewed the issues by seeking opinionsfrom outside experts, in order to confirm the validityof our evaluations.

Human rights

Tax
Public policy

STEP

3

Energy conservation and renewable energy

Diversity & inclusion

Biodiversity

Governance

Climate change

Resource recycling and waste

Water

Social

We identified materialities (important issues) the
Kandenko Group should address through ourbusiness activities based on deliberations anddiscussions at the Management Council and Boardof Directors’ meetings. Going forward, we willcontinue to review our efforts based on the status of
our initiatives and the business environment.

Kandenko Integrated Report 2023

26

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

SECTION 2
Value creation initiative
28

Fiscal 2021–2023 Medium-Term
Management Plan

30

Financial Strategy & Capital Policy

32

Business Overview by Division

33

Business Review by Division
Building Infrastructure Work:• Electrical engineering, environmental
facilities and systems, andrenovation work

Social Infrastructure Work:• Information & communication work
• Power distribution line engineeringwork• Electric power & civil engineering
work

41

Research and Development
Activities
Kandenko Integrated Report 2023

27

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Fiscal 2021–2023 Medium-Term Management Plan

Change!

100-year anniversary

2044

And Create the Future from a New Starting Point

Becoming a Green
Innovation Company

Building infrastructure

2023
2022
2021

Green Innovation Company

Social infrastructure

P13

Numerical goals andprogress
Net sales

Actual results¥541.5 billion

Target¥577.0 billion

Operating profit

Actual results¥32.7 billion

Target¥36.0 billion

ROE

Actual results

7.3 %Target8 % or above

ROIC

Actual results

7.0 %Target8 % or above

Dividend payout
ratio

Actual results

30.9 %

Target

30 % or above

EnergyConsumption

Actual results

Ratio of renewableenergy in electricity Actual results
consumption(compared to fiscal 2009)(compared to fiscal 2009)

-21.7

%

Target4.1 %Target-30%

Key policies

01 Productivity
Innovation

Strengthen

Earnings Base by
02 Rebuild
Demonstrating Our

03 Foundations forComprehensive Strengths

Future Growth

Promote Sound
04 Management Activities 05

Reinforce“Hito-Ichi value”

Quantitative Plan

Qualitative Plan

Attained increased sales and profits attributed to thesuccessful completion of a large semiconductorrelated plant and advancements in renewableenergy-related construction projects. Specifically,
every profit figure surpassed the initially disclosed
values.

Further progress in rebuilding earnings base bydemonstrating our comprehensive strengths. Thereis an immediate necessity to drive innovation in
productivity, encompassing reforms in businessprocesses, as well as reforms in work styles andannual leave systems.

15 % or above
Kandenko Integrated Report 2023

28

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Fiscal 2021–2023 Medium-Term Management Plan

Progress of Medium-Term Management Plan
As specific initiatives for the Medium-Term Management Plan, we analyzed market trends using a wealth of visualized sales information. We then focused on robust proposal-based sales activities ingrowth areas like semiconductors, data centers, and logistics, as well as securing orders for renewal work.
We accelerate our efforts to transform into a green innovation company as we approach our 100th anniversary in 2044.

Key policies

Important items

Main initiatives in fiscal 2022

Related Materialities

P25

Preparation of construction drawings and technical analysis by Technical Assistant Team
Expansion of a back office through the new installation of Site Work Assistant Team01

Productivity
Innovation• Business process reform• Execution technology reform• Thorough utilization of digital technologies

Utilization of BLuE, a measurement recording support system
Scaling up facilities and implementing mechanization to expand the utilization of the Rokugo

Promotion of

ReinforceCenterinnovation“Hito-Ichi value”

Enhancing the worksite support system and expediting the transition to a paperless
operation
Establishment of an information analysis infrastructure for data management.

02

Rebuild Earnings
Base byDemonstrating
Our
Comprehensive
Strengths

Optimizing the management of sales information volume while ensuring its secure acquisition• Enhancement of our capability to provide

compelling proposals• Enhancement of profit-generating capabilities• Enhancement of execution abilities

and utilization

Maintenance andEnhancing proposal-driven sales initiatives that capture the demand for carbon neutrality andconstruction of safe

other related aspects

and comfortable

Continuous acquisition of orders from robust industries and companies.

social infrastructure

03
04
05

Reinforce“Hito-Ichi value”

society

Implementing the examination of VE and CD as a standard practice from the initial stage
Use of productivity index• Establishment of a strong presence in the field of

decarbonization, disaster preparedness, and BCP• Expansion of overseas businessenvironmental footprint
Increasing the number of proposals made for EV-related projects
Research and development in the field of carbon neutrality
Expansion of the use of Local 5G Lab
Expansion of international recruitment and fostering the growth of recruited talent
Venturing into the fields of traffic and electricity infrastructure

Promote Sound
Management
Activities

decarbonized

Cooperation and collaboration with group companies

Establishment of an organizational and sales system with an emphasis on minimizing

StrengthenFoundations for
Future Growth

Contribution to a

• Environmental conservation• Information security• Safety• Compliance• Quality• Financial capital

Promotion of efforts to reduce energy consumption• Establishment of systems that enable diverse

Promotion of initiatives to enhance diversity.

human resources to fully demonstrate theirabilities• Appealing workplaces and diverse work styles• Human resources development that create thefutureChecking and following up on safety activities
Implementation of initiatives to prevent facility accidents and the occurrence of quality failures.
Promotion of group-wide information security activities

Maintenance andconstruction of safe
and comfortablesocial infrastructure

Contribution to a
decarbonizedsociety

Promotion of
innovation

Strengthening
sound managementfoundation

Reinforce“Hito-Ichi value”

Strengthening of compliance awareness through seminars and training sessions

Promoting the advancement of women
Hosting assertive communication training sessions jointly with group companies
Promoting human resources development through various seminars and on-the-job training(OJT) to enhance training programs for young employees, enabling them to rapidly develop

Strengthening
sound managementfoundation

Reinforce“Humanity First”

their practical skills.

Kandenko Integrated Report 2023

29

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Financial Strategy & Capital Policy

We continue to progress toward becoming the ideal company weaspire to be, building on the solid achievements we have accomplishedinvolves securing loans from financial institutions. We uphold afinancially secure position, maintaining an equity ratio of 61.2%.
Fiscal 2023 marks the culmination of our Medium-Term Management
Plan. We have set ambitious targets for both net sales fromcompleted construction contracts and profits, and we aim to achieve
them through steady progress in ongoing projects and additional
profit generation.
Likewise, concerning profitability and efficiency, the Medium-Term
Management Plan provides goals for achieving an ROE of 8% or more
and an ROIC of 8% or more. We consider it crucial to transition fromprofit and loss (PL) oriented management to balance sheet (BS)oriented management to meet these targets. We will assess eachproject, taking into account both the capital invested and the correlation
between net sales from completed construction contracts and profit.
Concerning the improvement of the P/B ratio, given the common
belief that a P/B ratio exceeds 1x when ROE surpasses the cost ofshareholders' equity, we will strive to further enhance ROE to meetthe return level demanded by shareholders.

Review of fiscal 2022

Thanks to consistent progress in execution, we
attained higher sales and increased profits.
We aim to improve ROE and ROIC.
In terms of net sales from completed construction contracts, theincrease is attributed to the successful completion of a large-scale
semiconductor plant and progress in renewable energy-related
construction projects. In terms of profitability, consistent progress inongoing projects and proactive VE/CD proposals led to an upturn inprofits. As a result, we attained the first increase in sales and profit inthree years.
Cash on hand decreased as a result of an increase in working
capital, driven by the growth in construction volume and increasedorders for large projects. In addition, we allocated funds to capital
investments, aiming to enhance execution capabilities, improve
productivity, and mitigate environmental impact.
Our primary method of acquiring funds, aside from cash on hand,

Progress of Medium-Term Management Plan

Promoting digitalization and enhancing
efficiency to reach goals
To enhance profitability, we will allocate income/expense targets toeach segment, business site, project, etc., along with specific andmeasurable initiatives to achieve our goals. Simultaneously, we will
enforce cost management measures through thorough oversight of
construction progress.
We also aim to enhance productivity by reinforcing our worksite
support system. This involves the effective allocation of personnel
based on construction volume and the systematization of worksite
operations. We intend to maintain a robust capital adequacy ratio andstrengthen our financial foundation by generating cash through thesemeasures to reinforce profitability and solidify the management ofworking capital, including trade receivables.
In terms of challenges, despite the flourishing new orders driven bya robust demand for domestic construction, difficulties arise fromescalating material, equipment, and labor costs. Ensuring stableprofits is deemed crucial under such circumstances.
To realize productivity innovation, one of our key policies, we must
undergo comprehensive operational process reforms achieved
through digitalization. Additionally, we need to improve the efficiency

Net sales from completed construction contract/operating profit (non-consolidated)

Ordinary profit/ROE (consolidated)

Unit: Millions of yen

Unit: Millions of yen

Unit: Millions of yen

600,000

40,00060,00050,33145,824

48,623450,000

52,999148,493
145,775

150,000

0

27,773

266,520

24,146

296,525

Fiscal 2018

Electrical engineering, environmental
facilities and systems, and renovation work

Fiscal 2019
Information &communication work

37,776

39,691

40,532

Fiscal 2020
Power distribution line
engineering work

34,05931,75430,0005.0

15,0002.5

25,416

24,730252,237

7.5
31,04330,79530,00027,1957.3

7.3

35,565102,264 *

41,79010.0
7.8

45,000107,362*

44,852300,000

9.3
8.5

35,00047,928138,992

Unit: %

238,296

Fiscal 2021
Electric power & civilengineering work

271,851

Fiscal 2022

25,0000Operating profit

0

Fiscal 2018

Fiscal 2019

Fiscal 2020
Ordinary profit

Fiscal 2021

Fiscal 2022

0

ROE

* From fiscal 2021, the Accounting Standard for Revenue Recognition etc. is applied (Accounting Standards Board of Japan (ASBJ)
Statement No. 29).

Kandenko Integrated Report 2023

30

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Financial Strategy & Capital Policy

Guided by our corporate motto, "Hito-Ichi value," we endeavor toenhance our Humanity First to achieve the prosperity and happinessof all stakeholders, including Kandenko employees, shareholders,customers, and local communities.
To reinforce our “Hito-Ichi value”, we are implementing
comprehensive initiatives to establish a favorable work environment.
This includes maintaining and enhancing the functionality of
personnel, human resources, and procurement systems, as well as
efforts in human resources development and partnership building.
We have established a personnel plan, human resources
development plan, and procurement policy. Through progress
management utilizing indicators and action plans, we identify andaddress issues, providing feedback to refine the plans and policies.

of both execution management and worksite operations by
incorporating prefabricated components, unit-based operations, andleveraging back-office capabilities. Furthermore, we will enhance ourability to offer the best possible solutions, spanning decarbonization,
disaster prevention, and BCP, to strengthen the foundations for
future growth. The entire Kandenko Group will make a united effort
to achieve our performance targets for fiscal 2023.
Shareholder Returns

To maintain stable dividends
We distribute profits to our shareholders following the fundamental
policy of maintaining stable dividends, considering both our businessperformance and the business environment.
For fiscal 2023, we aim to achieve a consolidated dividend payout
ratio of 30% or more as stated in our Medium-Term Management
Plan in order to actively return profits to our shareholders.

Toward the realization of a green innovation company

Social contribution as a comprehensive facility
company with the goal of realizing a carbonneutral society
To transform into a green innovation company, our goal is to develop
a new business portfolio that aligns with the principles of a carbonneutral society.
We conduct a comprehensive assessment of the growth potential

Investment in Human Capital

Accelerate our initiative to reinforce our “HitoIchi value”

Cash flows (Consolidated)

Status of dividends

Unit: Millions of yen

Unit: Yen

45,00050.0

30,00029,15528,251
18,12017, 212,87311,

0-30,000

Reduction in free cash
flow attributed to the risein work in progress.

27,1

1 , 7

15,000-15,000

7,455
820

1

9,153

Fiscal 2018

7,151

9,224

13,481
Fiscal 2019

7,789

Unit: %

30.9
27.0

37.5

6,635

7,319

Fiscal 2020

Fiscal 2021

Net cash provided by (used in) operating activities

Net cash used in financing activities

Net cash provided by (used in) investing activities

Free cash flow

30.7

25.4

35.0

28.0

28.0

13.0

14.0

14.0

13.0

15.0

14.0

14.0

15.0

17.0

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Fiscal 2023

13.0

36.0

28.2

28.0

12.5
26,317

28.4

32.0
26.0

25.0

972
10,131and profitability of our current business through thorough andmultifaceted market analysis while simultaneously exploring
opportunities for expansion into new businesses.
We have been leveraging the technologies and skills developed as acomprehensive facilities company to decarbonize our customers'
facilities and enhance the resilience of social infrastructure. In
contributing to the realization of a sustainable society through ourexpertise, we will drive proactive investments in R&D and new
ventures with a specific emphasis on areas related to carbon
neutrality.
To secure the mid-to-long-term enhancement of our corporate value,
we consider it crucial to engage in constructive dialogues withstakeholders, including shareholders and investors. We willproactively engage in discussions concerning our business, vision,
progress in our Medium-Term Management Plan, and ESG initiatives.
Furthermore, we will give careful consideration to the opinions we
receive and integrate them into our future management strategies.

18.0

17.0

27.0

18.0

9.0

Fiscal 2022

0

Dividend for the second quarter

Year-end dividend(forecast)0

Dividend payout ratio

Kandenko Integrated Report 2023

31

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Business Overview by Division

Building Infrastructure WorkElectrical engineering,
environmental facilities and systems,
and renovation work

Social Infrastructure WorkSocial Infrastructure WorkSocial Infrastructure Work

Information & Communication WorkPower Distribution LineEngineering WorkElectric Power & Civil Engineering Work

P33

P35

P37

P39

Sales composition

Sales composition

Sales composition

Sales composition¥271.8 billion¥37.7 billion¥107.3 billion¥52.9 billion

57.9%

8.0%

22.8%

11.3%

Business Overview

Business Overview

Business Overview

Business Overview

The segment meets the various needs of customers
from equipment diagnosis to design, proposal,
construction, and maintenance, not only in the
installation and expansion of electrical facilities, airconditioning and sanitation, and instrumentation
infrastructure but also in the renewal of existing
infrastructure for various structures, including officebuildings, factories, hotels, department stores,
theaters, and hospitals.

The segment has a wide range of achievements fromthe planning of new installation and renewal todesign, construction, and maintenance in all types of
network infrastructure, including upgrades to opticalfiber cable networks, installation of transmission
base stations for mobile communications, andconstruction of networks for cable TV andmunicipalities.

The segment covers the installation andmaintenance work of overhead and undergroundpower distribution lines that deliver electricity directly
to households, stores, and other customers. The
segment demonstrates advanced technicalcapabilities using safe and efficient construction
methods, tools, and work vehicles and has acomplete construction system in place in order to
respond quickly and appropriately to unforeseen
situations caused by natural disasters, such as
earthquakes, lightning, and heavy rain.

The segment is engaged in electrical work in nuclear
power plants, in addition to work on power stations
and substations, and on transmission lines. Recently,
the division has also been building wind power
plants and solar power plants and interconnecting
lines to the transmission line networks. Kandenko’s
comprehensive expertise and extensive experience
have been highly evaluated, helping us receive manyorders.

Construction companies
Customers

Real estate developers
Manufacturing companies

Mobile phone carriers
Customers

Government offices

CATV operators
Electric power company

Telecommunications service providers

Electric power company
Customers

Electric power company, and others

Customers

Renewable energy power generation businesses
Government offices, and others

Government offices, and others

Kandenko Integrated Report 2023

32

Introduction

Building Infrastructure Work

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Electrical engineering, environmental facilities and systems, and renovation work

Description of BusinessElectrical engineering work

Work on environmental facilities

Net sales fromcompleted construction
contract in fiscal 2022

Work on electrical facilities and equipment inside all types ofbuildings and structures, building interiors, control equipment,
and interior network
Work on air-conditioning and sanitation systems as well aswater, heat, and disaster prevention systems¥271,851 million¥288,620 million

New orders received

Compared to the previous fiscal
year: + ¥20,971 million

Compared to theprevious fiscal year

114.1%Net sales ofcompleted
construction
contracts¥271,851 million
Compared to the previous fiscal
year: + ¥33,555 million©H.N.F.
ES CON FIELD HOKKAIDO (Hokkaido prefecture)
Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Review of fiscal 2022

We actively advocate for on-sitebusiness process reforms and offer
total energy solutions across adiverse array of projects.

Sales from new orders and completed construction contracts increased,
attributed to the acquisition of contracts in growing fields and othercontributing factors.
In the Building Infrastructure Work Division, there was a consistent increase in sales from both neworders and completed construction contracts. Sales from new orders exceeded that of the previous
fiscal year, primarily propelled by the acquisition of orders for electrical engineering works in largescale construction projects related to semiconductors, electronic components, data centers, and otherthriving industries. Additionally, as planned, we acquired orders for environmental facility construction
in redevelopment projects and the construction of hospitals and other facilities. Furthermore, the sales
from completed construction contracts experienced a substantial increase from the previous fiscal
year, driven by the progress of ongoing construction at various manufacturing plants, particularly in thesemiconductor field. Additionally, the full-scale implementation of redevelopment projects in such
metropolitan areas as Tokyo, Yokohama, and Osaka contributed to this growth.
Kandenko Integrated Report 2023

33

Introduction

Message from the President

Building Infrastructure Work

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Electrical engineering, environmental facilities and systems, and renovation work
CHUGAI PHARMACEUTICAL CO., LTD.
Chugai Life Science Park Yokohama(Kanagawa prefecture)

Progress of Medium-Term Management Plan

We are restructuring on-site operational processes to ensure sustainablegrowth through enhanced productivity.
In line with the priority policies articulated in the Medium-Term Management Plan, which encompass"Rebuilding the earnings base by demonstrating our comprehensive strengths" and "Strengthening
foundations for future growth," we are enhancing our sales and technical proposal capabilities. Thisinitiative aims to consistently increase order volumes in such growing sectors as semiconductor andbattery factories, as well as data centers, by fully leveraging our expertise rooted in our extensive
experience of handling and executing orders. Moreover, to precisely address customer demands forCO2 emissions reduction and electricity rate optimization, we focus on proposing a set of technologies
related to creation, storage, and energy conservation, along with the renewal of existing facilities.
Next, concerning productivity innovation, we are reassessing on-site operation processes to ensurecompliance with a legal cap on overtime work while actively implementing various initiatives to alleviate
the workload of construction personnel. In addition to progressing with the DX and back-officesystems we have implemented thus far, we are also actively developing and expanding our on-site
supply system, particularly focusing on the adoption of prefabricated and unitized construction
methods. These methods involve conducting such essential processes as cutting and drilling forelectrical components offsite in advance before reaching the construction site. We are broadening theutilization of products manufactured at our prefabrication site (Rokugo Center) by establishing a
dedicated team at our head office responsible for minimizing manpower and labor during construction.
This team maintains close communication with worksites to ensure effective implementation.

Growth strategy for electrical engineering, environmental facilities and systems,
and renovation work
Tailwind• Investment in private-sector construction,
which experienced a decline during the
COVID-19 pandemic period, is indicatinga gradual recovery trend.

• There is an increase in capital investment
targeted at decarbonization, along withinvestments in sectors related to
semiconductors and data centers.

Headwind• Prolonged increases in the prices ofcopper and construction materials andequipment.

• Concerns about a global economic

slowdown amid inflation and theimplementation of monetary tightening
policies in various countries

We will provide our employees with the opportunity to experience in advance the workstyle that begins
in fiscal 2024 and beyond. Through this initiative, we aim to identify the causes of overtime work ingreater detail than ever before, allowing us to develop more effective on-site support measures. In the
short term, we will continue to ensure flexible allocation of personnel across regions to secure thenecessary human resources. Simultaneously, for the medium to long term, we are introducing new
initiatives in human resources development. This involves concurrently hiring new graduates as
temporary staff and implementing plans for individual leadership training through a tutor system toenhance our human capital.

Becoming a Green Innovation Company

We promote the adoption of ICT, digital technology, and DX, actively
taking the lead in addressing challenges in industries

We expect substantial advancements in the adoption of digital transformation (DX) within theconstruction industry in the coming years. Kandenko is also ready to fully leverage ICT and digitaltechnology for a drastic reassessment of our operational processes. In the medium term, we aredeveloping a plan to establish a centralized control center with both back-office and logistics
functions, intending to relocate a portion of on-site management operations to this center. We strive toimprove both productivity and work styles by implementing the division of on-site operation processes
and transitioning to standardized on-site construction work.
Furthermore, in line with government policies, we expect
ongoing capital investments in sectors related to automobiles,
Specific Initiatives to Become a Green
semiconductors, and data centers. Additionally, the demand
Innovation Company
for industries contributing to carbon neutrality is expected to
Support for the implementation of storage batteries
become more diverse. In order to align our businessfor business and industrial applications in office
operations with the evolving society and the increasingly
buildings, commercial facilities, and manufacturing
plantsvaried needs of customers, we will shift our sales strategy to
Support for the adoption of energy-efficient electricaland HVAC equipment in the green data center
emphasize proposing engineering solutions based on
Proposal for the repowering of renewable energy
monitoring. This transformation aims to offer a comprehensive
facilities
solution service encompassing planning, proposals,
Establishment of smart security technologies inexisting facilities and the development of its operation
construction, maintenance, monitoring, and control across all
systems
Development of new energy monitoring andaspects of energy.
measurement systems

Kandenko Integrated Report 2023

34

Introduction

Social Infrastructure Work

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Information & Communication Work

Description of Business• Installation of optical fiber cables and related equipment for electric power providers andtelecommunications providers• Construction and maintenance of networks for cable TV and municipalities• Construction and maintenance of mobile communication base stations

Net sales fromcompleted construction
contract in fiscal 2022

New orders received¥37,776 million¥34,400 million
Compared to the previous
fiscal year: - ¥3,807 million

Compared to theprevious fiscal year

93.2%
Net sales ofcompleted
construction
contracts¥37,776 million
Compared to the previous
fiscal year: - ¥2,756 million

Mobile communications base station installation work (Chiba prefecture)
Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Review of fiscal 2022

We create the ideal network
infrastructure to support a digitalsociety through the implementationof next-generation communication
technologies.

We explore new domains to secure a consistent growth in order volume.
In the environment of orders received for information and telecommunications projects, the demandfor projects to repair aging expressways remained robust. Simultaneously, there was an uptick in
optical cable projects driven by TEPCO 's initiatives to enhance the resilience of smart grids.
Conversely, a decrease was observed in projects involving the installation of base stations for mobile
phone carriers, attributed to semiconductor shortages, and the completion of a series of large-scaletransmission line installation projects for CATV carriers. These factors led to a decline in both sales
from new orders and from completed construction contracts compared to the previous fiscal year.
In the upcoming period, our strategy for ensuring a consistent growth in order volume involves vigilant
monitoring of the preferences and needs of major clients like TEPCO and mobile phone carriers. We
also plan to secure orders by offering solutions that leverage the capabilities of local 5G, a highperformance wireless system. Additionally, we will actively engage in sales efforts for construction
projects related to carbon neutrality, capitalizing on the anticipated surge in demand resulting from thewidespread installation of EV chargers.

Kandenko Integrated Report 2023

35

Introduction

Section 1
Value Creation Story

Message from the President

Social Infrastructure Work

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Information & Communication Work
Optical cable installation work in the National Skills
Competition

Progress of Medium-Term Management Plan

We aim to cultivate individuals with diverse skills and to advance ourtechnologies in order to contribute to the development of a decarbonizedsociety.
Enhancing productivity innovation is a key point outlined in the Medium-Term Management Plan, and it
is a specific area where we are directing special efforts. In particular, we are enhancing the functionalityof the worksite support system implemented in fiscal 2021, facilitating the efficient identification of
on-site conditions and transitioning to paperless operations. Additionally, we are actively deploying
Robotic Process Automation (RPA) for routine tasks and initiating reforms in business processes
involving customer interactions. Our emphasis is also on enhancing productivity by training employees
to acquire a variety of skills, enabling them to manage diverse tasks, and adopting flexible staffing
practices. We believe these initiatives will maximize their effectiveness in alignment with theimplementation of the legal cap on overtime work scheduled to take effect in fiscal 2024.
Building a robust foundation for future growth involves fortifying the capacity to deliver solutions
centered around local 5G. The high performance of local 5G is anticipated to find applications invarious fields like manufacturing, medicine, and tourism. However, numerous challenges, including thedesign of the wireless coverage area, must be addressed for its successful implementation. Therefore,
Kandenko is undertaking various initiatives to provide extensive support to our clients, encompassing
local 5G consulting and licensing, system design, installation, maintenance, and operation. As part ofthis endeavor, we are conducting demonstrations at the Local 5G Lab, the facility established in April

2022, allowing users to experience the performance and convenience of local 5G. Furthermore, we areshowcasing our accumulated technologies and expertise in wireless telecommunications. Throughthese activities and engaging in dialogue with customers, we are exploring the potential to offer
solutions and form new alliances. Constructions related to carbon neutrality are anticipated toexperience a significant surge as part of the international commitment to reduce CO2 emissions.
Consequently, we are dedicated to securing contracts for EV charger installation projects and storage
battery installation projects, utilizing the expertise honed through power source construction projects
for mobile phone bases. Simultaneously, we aim to secure orders for Virtual Power Plant (VPP) andPower Purchase Agreement (PPA)-related construction projects through collaboration with local
governments and Tokyo Electric Power Company.
In fiscal 2023, the concluding year of the Medium-Term Management Plan, we anticipate sales fromcompleted construction projects to be ¥41.0 billion. In pursuit of our objectives, we aim to obtain aconsistent volume of construction projects in the fields of telecommunication cable, mobile, and CATV,
with the ultimate goal of enhancing our financial performance.

Becoming a Green Innovation Company

Information & Communication Work Growth Strategy
Tailwind• The rise in optical cable construction

Headwind• Escalating costs of materials andvolume attributed to TEPCO's smart gridequipment attributed to a weakened yen,initiative and other contributing factors

semiconductor shortages, and the• Diversification of construction projects tobolster resilience, driven by the promotion

situation i in Ukraine• Variations in capital investment by mobileof the National Resilience Plan by thephone carriers based on economic trends

national governmentand other influencing factors

Our comprehensive solution for information and communication systems
supports efficient energy utilization.
As the momentum toward achieving carbon neutrality continues
to grow, there is an expectation of the extensive use of
information and communication technologies for efficient andcoordinated energy control. Kandenko is committed to delivering
energy-related information and communication systems thatmeet the needs of our customers. To achieve this, we will
strengthen our engineering capabilities and software technology,
leveraging the expertise we have accumulated. Additionally, weare dedicated to undertaking diverse initiatives, including
enhancing the skills of our development support teams, fosteringsynergy within the Kandenko Group, and collaborating withcompanies possessing a range of technologies and expertise,such as manufacturers and system integrators. Through these
efforts, we aim to generate new value.

Specific Initiatives to Become a Green
Innovation Company
Engagement in the advancement and demonstrationof locally tailored 5G solutions aimed at addressing
regional challenges
Delivery of comprehensive solution services in thefield of information and communication throughcollaboration with NextCadix Ltd. , our subsidiary
Development of systems that promote energy andresource conservation, such as the remote monitoring
system for storage batteries

Kandenko Integrated Report 2023

36

Introduction

Message from the President

Social Infrastructure WorkPower Distribution Line Engineering Work

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Description of Business
Overhead power distribution line work
Underground power distribution line work

Net sales fromcompleted construction
contract in fiscal 2022

Construction and maintenance of overhead power distributionlines facilities involving power poles with power cables
Construction and maintenance of underground distributionlines facilities involving power cables underground¥107,362 million¥112,396 million

New orders received

Compared to the previous
fiscal year: + ¥8,155 million

Compared to theprevious fiscal year

105.0%Net sales ofcompleted
construction
contracts¥107,362 million
Compared to the previous
fiscal year: + ¥5,097 million

Overhead power distribution line work using theindirect hot-line method (Ibaraki Prefecture)
Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Review of fiscal 2022

The performance exceeded that of the previous fiscal year, driven by a
substantial work on hand and expansion in growing sectors.

We build robust construction
foundations to achieve a
decarbonized and resilient society.

Within the Power Distribution Line Engineering division, sales from both new orders and completed
construction contracts surpassed the levels of the previous fiscal year. A key contributing factor to therobust performance was our ability to secure abundant work on hand because clients proactively placedorders for construction projects to address the aging of power distribution lines in anticipation of theinitiation of the revenue cap system. This proactive approach led to an increase in orders for both
overhead and underground power distribution line work. Furthermore, detailed construction planning toenhance the efficiency of underground power distribution line work and measures to improve
productivity, contributing to increased work density in overhead power distribution line work, haveresulted in a rise in sales from completed construction contracts. On another note, concerning theacquisition of construction contracts from clients overall (excluding TEPCO), we achieved excellent
performance by actively participating in Private Finance Initiative (PFI) projects for power line joint
trenches aimed at eliminating utility poles. Additionally, our proactive sales efforts in the installation of
EV chargers also contributed to this success.
Kandenko Integrated Report 2023

37

Section 1
Value Creation Story

Introduction

Message from the President

Social Infrastructure WorkPower Distribution Line Engineering Work

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Cable connection work for underground
distribution lines facilities(Tokyo)Progress of Medium-Term Management Plan

We reinforce our execution capabilities through productivity innovationand human resources development to continue responding to the demand
from the expanding market.
To achieve productivity innovation, we promote business process reforms by strengthening theworksite support system. At the same time, we are working to improve efficiency by thoroughly
applying digital technology, such as remote worksite management using mobile devices and wearable
devices. We also work on research and development of items that contribute to workload reduction,such as assist suits, assist tools, and the small diameter curved piping method.
Additionally, to reconstruct our earnings foundation, we are fostering multi-skilled construction
personnel and transferring expertise to younger employees, ensuring sustained construction
capabilities for the future. Moreover, we are steadily supporting human resource development atpartner companies.
To strengthen the foundations for future growth, we intend to broaden our sales efforts beyond the
Kanto region. This initiative aligns with the GX Promotion Strategy (Strategy to Promote the Transition
to a Decarbonized Growth-Oriented Economic Structure) established by the Japanese government inJuly 2023. We will leverage our expertise in EV chargers, elimination of utility poles, LED street lighting,and other areas to capitalize on this strategy.

Looking forward, we anticipate a market expansion in the renewable energy sector driven by the
expansion and maintenance projects associated with distribution lines constructed during the rapid
economic growth period (from the 1950s to the 1970s) and the GX Promotion Strategy. Consequently,
we expect the Social Infrastructure Work division's performance in fiscal 2023 to exhibit a robust trendwith new orders totaling ¥111.5 billion and completed construction contracts reaching ¥110.5 billion.
We keep enhancing our execution capabilities, of course, and concentrate on securing new clients byactively gathering information to accurately identify social needs and defining clear targets.

Becoming a Green Innovation Company

Growth Strategy for Power Distribution Line Engineering Work
Tailwind• Start of the revenue cap system, which

requires power companies to upgrade
facilities according to predefined plans• Implementation of the plan to promote
the undergrounding of power lines by thenational and local governments• Expanding demand for EV chargers andsolar power facilities with the backgroundof the GX Promotion Strategy

Headwind• Decline in the labor force due topopulation decline attributed to adecreasing birthrate and aging
demographics• Discontinuation of the transfer oftechnologies, skills, and expertise held byveteran employees

We expand our business in growing fields that shape the future byaddressing the demand for decarbonization and enhancing resilience.
In our efforts to achieve a decarbonized and resilient society, we are working towards reducing CO2
emissions at the worksite level through various means. This includes shifting to battery power for the
structural components of aerial work platforms, employing electric power for hydraulic tools, andincorporating electric vehicles into our business operations. With a long-term perspective in mind, weare advancing the development of technologies and nurturing human resources for the future,including efforts in next-generation renewable energy power
generation.
Specific Initiatives to Become a GreenWe are dedicated to expanding our business in growing fields
Innovation Company
while intensifying our efforts to develop the next-generation
Utilization of eco-mix, a room-temperature asphalt for
power network as a key player to ensure a stable electricity
repairing pavements that is composed of recycled
supply. We will also persist in diligently undertaking
materials
construction projects to enhance resilience in preparation forConstruction employing technologies likesmall-diameter curved piping methods to ensure
the escalating severity and frequency of natural disasters.
economic efficiency and environmental consideration
for nearby areas
Through these efforts, we aim to further fortify our Social
Infrastructure Work division.
Kandenko Integrated Report 2023

38

Introduction

Message from the President

Social Infrastructure WorkElectric Power & Civil Engineering Work

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Description of BusinessWork on substations
Work on power stations and substations andrenewable energy power generation
Work on transmission lines
Work on overhead transmission lines

Net sales fromcompleted construction
contract in fiscal 2022
New orders received¥52,999 million¥57,900 million
Compared to the previous
fiscal year: + ¥1,159 million

Work on underground lines and civilengineering work
Work on underground power transmission lines
and civil engineering work
Work on nuclear power plant
Repair, maintenance, and inspection of nuclear
power plantCompared to theprevious fiscal year

110.6%Net sales ofcompleted
construction
contracts¥52,999 million
Compared to the previous
fiscal year: + ¥5,071 million

Hamasato Wind Farm (Hokkaido Prefecture)
Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Fiscal2018

Fiscal
2019

Fiscal
2020

Fiscal2021

Fiscal2022

Review of fiscal 2022

We contribute to the advancement ofa society powered by nextgeneration energies through oursteady involvement in construction
projects related to renewable energy.

Revenue from both new orders and completed construction contracts washigh and driven by an increase in projects related to storage batteries andother associated ventures, in addition to those related to renewable energies.
The Social Infrastructure Work division saw a rise in new orders compared to the previous fiscal year
driven by steady growth in TEPCO’s construction projects and an uptick in storage battery installation
work for special high-voltage power receiving and transforming facilities. This growth occurred despitesome setbacks, including plan revisions by power generation companies due to increasing prices ofmaterials and equipment, as well as delays in obtaining permits and approvals.
Despite a reduction in overhead transmission line construction and process delays caused by external
factors, sales from completed construction contracts significantly surpassed that of the previous fiscal
year. This accomplishment is attributed to an increase in both orders received and completed work
during the current fiscal year as well as diligent progress in construction.

Kandenko Integrated Report 2023

39

Section 1
Value Creation Story

Introduction

Message from the President

Social Infrastructure WorkElectric Power & Civil Engineering Work

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Replacement of switches in substations(Shizuoka prefecture)

Progress of Medium-Term Management Plan

We strive to enhance our execution system by accumulating technologies
and expertise to meet the growing demand in the field of renewableenergies.
In terms of productivity innovations, we conducted a review of our business processes to enhance
work efficiency, including centralizing the management of technical reviews and digitizing on-sitemanagement. In anticipation of the overtime cap set to be implemented from fiscal 2024, we will
actively pursue a comprehensive review and streamlining of business processes aimed at alleviating
the workload at worksites.
Regarding the rebuilding of our earnings through the demonstration of our comprehensive strength, wehave focused on fortifying our profit-generating capabilities. This involves implementing sales activities
aimed at securing renewal and replacement projects for existing facilities, including those related torenewable energy. Anticipating a growing demand for the construction of storage battery facilities in
the future, we are committed to meeting customer expectations by mobilizing our division to secure
construction personnel and enhance our construction track record.
To strengthen the foundation for future growth, we are proactively acquiring information on storage
batteries and micro-grids in tandem with fulfilling orders and executing renewable energy-oriented
construction projects. Simultaneously, we are dedicated to amassing technological expertise,enhancing our knowledge base, and reinforcing our construction processes.

Concerning health management, a cornerstone in fortifying our “Humanity First”, we cultivate anenvironment where individuals can fully utilize their capabilities. This involves implementing personnel
measures to facilitate active participation for employees in older age groups. Simultaneously, weconcentrate on the training of younger employees, enabling them to enhance their abilities and swiftly
acquire practical skills. We consistently nurture trust through K. Assertion, promoting a workplaceenvironment that prioritizes employee satisfaction. Furthermore, we assist younger employees inswiftly gaining expertise through online courses and practical training sessions supplemented byon-site support from seasoned veteran employees.

Becoming a Green Innovation Company

Growth Strategy of Electric Power & Civil Engineering Work
Tailwind• Advocacy for renewable energies as theprimary power source to achieve carbon
neutrality by 2050
• Expansion of distributed power sources
and corresponding demand to constructpower plants and substations• Start of the revenue cap system, which
requires power companies to upgrade
facilities according to predefined plans

Headwind• Decline in the labor force due to population

decline, attributed to a decreasing birthrate
and aging demographics• The ongoing increase in prices for materials
and equipment, coupled with delays in theirdeliveries, attributable to the COVID-19
pandemic and the crisis in Ukraine• Intensifying competition for securing orders
as the scale of projects increases

We contribute to the utilization of next-generation energy systems
through technological development.
To realize a sustainable society, we aim to improve theprovision of comprehensive solution services for constructing
wind and solar power plants by aligning with the growing
utilization of renewable energy. Additionally, we focus onservices for building new extra high-voltage power receiving
and transforming facilities, which are becoming essential
because of the rapid increase in the number of EV charging
facilities.
Furthermore, to play a role in advancing the adoption of
next-generation energy, we will proactively gather information
on hydrogen production technologies, versatile multi-terminal
DC power transmission systems that enable efficient powertransfer, and emerging power generation systems likeperovskite solar cells. Through these efforts, we aim toenhance our understanding and expertise in these areas.

Specific Initiatives to Become a Green
Innovation Company
Total solution covering large-scale wind farm, solar
power generation system installation plan, design,
construction, and maintenance

Kandenko Integrated Report 2023

40

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Research and Development Activities

Research and Development System

Intellectual Property Initiatives

Striving to enhance the safety, quality, and efficiency of
current operations while fostering sustainable societal growth,
the Kandenko Group is directing its efforts towards
technological advancements supporting digitalization androbotization, technology development related to disaster
preparedness and BCP, and technological progress for theestablishment of a decarbonized society.
In fiscal 2022, we conducted our research and development
activities with focus on technology development that createsworksite earning power. Specifically, in the field of technologicaldevelopment contributing to robotization, we created a moving
device control system designed to autonomously assist in

various measurement tasks, such as illuminance. We also
developed a self-propelled ceiling wiring robot. In the pursuit oftechnology to realize a decarbonized society, we actively
conducted research on carbon dioxide emissions calculation
methods. Additionally, we worked on strengthening
technological development through collaboration amongindustry, government, and academia, as well as in cooperation
with group companies. The R&D expenses for fiscal 2022 was¥1,733 million. The next page provides details on the primary
accomplishments of our R&D efforts.

Technology Research & Development InstituteHigh-Voltage Laboratory

The Technology Research & Development Institute consists ofa research building, experiment building, and outdoor testing.
In the laboratories of the experiment building, we conduct
basic experiments to respond to new construction
technologies and conduct verification experiments fordevelopment results. The institute also houses special
equipment, such as electron microscopes and X-ray
inspection equipment, to enable us to respond to any kind of
onsite technical issues. Recently, we have introduced analysis
systems, including various simulations, and we are working todisseminate more reliable results by using those systems in
combination with experimental validation.

The High-Voltage Laboratory is made up of a test room,physical test room, working room, and outdoor water tankused for voltage resistance tests. In the test room, we havelarge-scale experiment devices, including a 350 kV AC voltage
generator, 1,800 kV-impulse voltage generator, and highcurrent generator.
We use this testing
equipment to test lightning
damage and verify
countermeasures andconduct voltage resistancetests on products. We havereceived requests from manycustomers to use the facility
because other companies in
the industry do not have any
similar facilities.

Our intellectual property (IP) activities have centered on generating,safeguarding, and utilizing intellectual property with a specificemphasis on technologies that enhance construction efficiency andensure safety and quality. In addition to these ongoing initiatives, a
dedicated department overseeing intellectual property management
actively engaged in construction and planning projects from theirinitial phases, initiating efforts to obtain patents for worksite
technologies, expertise, and ideas.
As a result, we have been increasing the number of patent applications in
the field of DX and robotics engineering. Furthermore, we are publicizing
our technologies by acquiring trademarks and commercializing products
like Ealitun mini, BLuE, and Rakuraku Toru-kun.
Moving forward, we will enhance our commitment to research anddevelopment, particularly in such areas as carbon neutrality, disaster
preparedness, and BCP. This will involve leveraging external resources,
including collaboration among industry, government, and academia,
while securing the accomplishments as our intellectual properties.
According to the Green Transformation Inventory Classification
released by the Japan Patent Office in June 2022, Kandenko holds asignificantly greater number of patents related to green
transformation compared to the standard in the electricalinfrastructure work industry.

Number of SDGs patents Kandenko holds

3

33

26

8

15

Not
applicable/
Other

Total

62

147

*Created using the tool of Japan Patent Information Organization

The number of patents held by Kandenko, as indicated above,
serves as our competitive advantage. Therefore, we endeavor tointensify our efforts in patent applications. At the same time, we aim
to developing our intellectual property portfolio in fields that
contribute to the expansion of business domains and services.
1,800 kV impact voltage generator

Kandenko Integrated Report 2023

41

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Research and Development Activities

Examples of Initiatives
Development of BLuE Kakeru

Enhancement of the Self-propelling Ceiling Wiring Robot

During indoor electrical work, the measurement of illuminance andother conditions involves a manual process encompassing
measurement, recording, and reporting of values. The workload
associated with these procedures is substantial, prompting the needfor efficiency improvements in these operations. To tackle thischallenge, Kandenko has introduced the BLuE measurement
recording support system. Additionally, we have now developed
BLuE Kakeru, a system that identifies a measurement point on a
CAD diagram and autonomously directs a measurement device tothe specified location. The integration of the BLuE Kakeru system
and BLuE will enable fully automated measurement and recording.
We plan to incorporate additional measurement devices compatible
with this system to further enhance work efficiency.

Installation of piping and cables in the ceiling, where numerous
facilities are crowded, occurs at elevated heights and within confined
spaces. Consequently, ensuring safety and a significant reduction inwork efficiency pose challenges. Kandenko has developed anddeployed self-propelled ceiling wiring robots that can be operated
remotely, utilizing them in practical wiring projects. However, during
renewal works, the wiring and piping of existing facilities, scatteredthroughout, present obstacles for the robots, impeding them fromreaching their full potential. Consequently, there arose a necessity
for improvements.
Therefore, we created
Rakuraku Toru-kun NEO,
incorporating several
enhancements, including
increased maneuverability,
reduced weight, andimproved visibility through a
360-degree camera. We plan
to deploy this device invarious worksites, particularly
in renewal construction
projects, aiming to enhancesafety and further improve
Rakuraku Toru-kun NEO
work efficiency.

Monitor screen of BLuE Kakeru
BLuE Kakeru

BLuE Measurement Recording Support System
This software enables the direct input of on-site measurement
values into drawings and records by wirelessly connecting
measuring instruments, such as illuminance meters andinsulation resistance testers, to PCs and tablet terminals. It
has already received positive feedback from manycustomers due to its high versatility and ability tosupport various formats.
BLuE special webpage

Demonstration Research in Developing Local 5G
Development
Local 5G involves local governments and businesses leading theestablishment of a 5G network within specific areas or buildings,
independently of external networks. Its characteristics make it
effective in ensuring a high level of security and maintaining
communication functions during natural disasters. Consequently, it
is considered a next-generation communication technology
anticipated to be utilized in various scenarios, including smart cities
and virtual power plants (VPPs).
For this purpose, Kandenko has set up the Local 5G Lab, ademonstration facility, and is actively working to gather knowledge
and expertise through a range of demonstration tests, encompassing
design, construction, maintenance, and operation. We strive todeliver a comprehensive solution related to local 5G, aiming tomaterialize various ideas that effectively address the needs of ourcustomers.

Research on Methods for Calculating CO2 Emissions
To contribute to realizing a decarbonized society through the
reduction of carbon dioxide emissions, it is becoming increasingly
crucial to swiftly and accurately calculate a company's supply chainwide emissions (Scope 3). Hence, Kandenko is engaged in research
to promptly and accurately identify emissions. For instance, we
accumulate knowledge on the emission intensity, activities, andconversion to emission intensity of procured electric facilities by
employing calculations through the stacking method based on theemission unit database (IDEA). We will continue this research tocontribute to the realization of a decarbonized society.

Local 5G Lab

https://smart-blue.net/

Kandenko Integrated Report 2023

42

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

SECTION 3
ESG Management Initiatives
Environment

52 Respect for Human Rights

44 Information Disclosure Based on
TCFD Recommendations

53 Social Contribution Activities
GovernanceSocial46 Initiatives to Support Recovery fromNatural Disasters
47 Occupational Safety and High-Quality
Construction

55 Roundtable Discussion with Outside
Directors
59 Corporate Governance
65 Management

48 Employee Initiatives
52 Maintaining and Improving
Partnerships with Partner Companies
and Material Suppliers

Kandenko Integrated Report 2023

43

Introduction

Environment

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Information Disclosure Based on TCFD Recommendations

The Kandenko Group views climate change as one of the most important management issues and is working to reducegreenhouse gas emissions both internally and externally.
In June 2022, we expressed our support for the Task Force on Climate-related Financial Disclosures (TCFD).

Scope

Target2050

Amount ofgreenhouse gas emissions

Net zeroInterim target
2030

Amount ofgreenhouse gas emissions-50% (compared to fiscal 2020)

Scope3

Scope2

Scope3Mining of raw
materialsor otherresources

Use of electricity
and heat suppliedby other companies

Disposal of products
and goods

Suppliers etc.

Kandenko

Use of products
and good

Scope3

Manufacture of raw
materials etc.

Scope3

Transportation of raw
materials etc.

Scope1

Scope3

Scope3

Fuel combustion

Transportation of
products and goods

Users of products andgoods

Scope3

Commuting, businesstravel, sales

Kandenko Integrated Report 2023

44

Introduction

Environment

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Information Disclosure Based on TCFD Recommendations

Information Disclosure Based on TCFD
Recommendations
In accordance with the Corporate Governance Code, which wasrevised in June 2021, the Kandenko Group discloses crucial information
regarding climate change based on the TCFD recommendations.
Information Disclosure Basedon TCFD Recommendation
https://www.kandenko.co.jp/
sustainability/tcfd

Risk Management
Management of risks, including risks related to climate change, isundertaken in conjunction with major departments and theManagement Planning Department. Policies and measures areenvironment, and important policies are reported to the Management
Council and the Board of Directors.

an ESG Promotion Committee, consisting of the Management
Planning Department and other leading departments, to formulate
important policies and measures concerning environmental issues ingeneral, including our response to climate change, and important
policies are reviewed and examined at meetings of the Management
Council and the Board of Directors
We incorporate the determined policies and measures in ourmanagement and business plans, implement them, and follow up on
their progress and impact to make further improvements andinvolves comparing them with materialities (important issues) andManagement Plan and action plans, and reviewed annually, in light

Scope 3of the risks with high probability and high impact is estimated andreflected in management strategies and financial plans. With regard
to risks with low probability and high impact, we will engage inthorough future efforts to gather information, and with regard to risks
with high probability and low impact, we will continue to monitor
their financial impact.

Strategy
Our greenhouse gas emission calculations cover Scope 1, Scope 2,

and their importance is assessed from a materiality perspective(important issues). Of these risks and opportunities, scenario analyses
were conducted for the introduction of a carbon tax and flood andstorm surge damage, based on the results of future projections by
public agencies assuming 1.5°C, 2°C, and 4°C temperate increases,
and the financial impact as of 2040* was calculated.
* Calculated as of 2040, looking ahead to 2044, when the Company will celebrate its 100-year
anniversary

Scope 2 (electricity use)

the TCFD recommendations are incorporated into the Medium-Termof materialities (important issues). S`pecifically, the financial impact

and Scope 3 of our business (non-consolidated)*, and we calculated

Emissions (t-CO2)
10,351

Location criteria

12,681Market criteria*3

13,050*2

Scope 2 (heat use)

Indicators and Targets

climate change were identified in line with TCFD recommendations

Classification
Scope 1 (fuel combustion)*1

In addition, the risks and opportunities identified in accordance withintroduce new initiatives.

Risks and opportunities that may arise in the future as a result ofgreenhouse gas emissions from the supply chain)*Scope 1: Confirming the actual use of greenhouse gases other than CO2 (such as SF6).
*Scope 2: Excludes electricity usage paid as common service expenses, etc., such as usageat temporary offices on worksites.

Also, we will annually review and update risks and opportunities

integrating them into the Midterm Management Plan and action plans.
In order to address environment-related issues, we have established

Target: Kandenko non-consolidated (fiscal 2021)
Calculation criteria: calculation method based on GHG Protocol
Scope of calculation: Scope 1 (fuel combustion), Scope 2 (use ofelectricity and heat), Scope 3 (the amount of

formulated based on the state of initiatives and the business

identified in accordance with TCFD recommendations. This process

GovernanceFiscal 2021 greenhouse gas emissions

Total (Scope 1+2+3)

746
649,471(Location criteria)

673,249(Market criteria)

673,618

We receive support from external experts in conducting calculations.
*1: The calculation involves multiplying the annual consumption by the unit calorific value
and the CO2 emission factor for each fuel, and then summing the results.
The unit calorific value of each fuel and CO2 emission factor of each fuel are based on
the System for Greenhouse Gas Emissions Calculation, Reporting, and Publication
under the Act on Promotion of Global Warming Countermeasures*2: Calculated based on an average emission factor (using a factor that takes into accountthe distance from the power plant to consumer office)*3: Calculated based on the adjusted emission factor (for fiscal 2021 reporting) for eachelectric utility provider as stipulated in the Act on Promotion of Global WarmingCountermeasures (using emission factors determined in contracts between theelectricity retailer and the office)Environmental Initiatives

that greenhouse gas emissions in fiscal 2021 were 673,249 t-CO2

The Kandenko Group takes the long-term view that it is corporate(location-based) and 673,618 t-CO2 (market-based).
In July 2022, we set the goal of reaching net-zero greenhouse gas

management’s vital social responsibility to have an environmental

emissions by 2050. As of fiscal 2023, we have begun working

part to leave a safe, sound environment for future generations by

towards a 50% reduction in greenhouse gas emissions by 2030

implementing initiatives that reduce the burden on the environment.

vision leading to the creation of a sustainable society. We will do our(compared to fiscal 2020) by transitioning to 100% renewableenergies by 2030. This shift aims to increase the probability ofachieving the target for both Scope 1 and Scope 2 emissions.
* Excludes electricity usage paid as common service expenses etc., such as usage at
temporary offices on worksites.

Environmental Initiatives
https://www.kandenko.co.jp/
sustainability/environmental

Kandenko Integrated Report 2023

45

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

February 2014
Damage by heavy snow in Gunma

March 2011 The Great East Japan Earthquake

SocialInitiatives to Support Recovery
from Natural Disasters

Responding after natural disasters occur

April 2016
Damage by the Kumamoto Earthquake (Indoor electrical engineering)Kandenko believes that, as part of its social responsibility as a company
that is involved in supplying public utilities, it is our duty to devote all of
our strength to the expedited restoration of electrical infrastructure forthe stable provision of electric power in the event of a disaster. We
would like to take this opportunity to introduce the initiatives that we
implemented following the Great East Japan Earthquake.

May 2012
Damage by tornadoes in Northern Kanto

September 2013
Damage by tornadoes in Saitama & Chiba

September - October 2019
Damage by typhoons Faxai and Hagibis
Photo: Provided by the Japan Ground Self-Defense Force
Kandenko Integrated Report 2023

46

Introduction

SocialSection 1
Value Creation Story

Message from the President

SafetyQuality

Health and Safety Policy

Basic Policy on Quality

Safetywhole equipment lifecycle from planning and proposal through to post-installation maintenance.

Activity guidelines
1

We will anticipate customer needs and use advanced
technologies and sophisticated skills to provide a level of qualitythat will satisfy our customers.

3 We, together with all our employees and organizations, will strive
to consistently improve our quality management systems inorder to maintain and improve quality.

2

We will continue to research and develop technologies andimprove operations, and always create valuable products.

4

We are working on the following priority items to eradicate
occupational accidents.

We will conduct education and training, improve technology andpass on skills, and promote reliable human resource development.

Quality Management System

Strengthening onsite risk management capability

2 Enhancing safety education
3 Applying digital technologies to onsite risk countermeasures
Improving communication with affiliated companies and partnercompanies and support safety activities

We establish quality management systems (QMS) in accordance with the ISO 9001 requirements based on our Basic Policy on Quality and seek
to achieve sustainable growth.

List of ISO 9001 External Certification Acquisition Status
Category of

Promoting reforms of work practices and annual leave systems

2 Promoting mental health measures
3 Ensuring the health of employees and create a comfortableworking environment

Social Infrastructure Workand physical health.

Work

We are working on the following priority items to maintain mental

Building

HealthInfrastructure

construction

1

Data Section

We pursue technological innovation that contributes to safety and security and provide top-quality services and infrastructure across theActivity guidelines

4

Section 3
ESG Management Initiatives

Occupational Safety and High-Quality Construction

Based on our “Humanity First” motto, we view health and safety
initiatives as one of the top priorities of our corporate activities andare committed to eradicating occupational accidents andmaintaining the physical and mental health of all those involved inour corporate activities.

1

Section 2
Value Creation Initiative

Division/Office
Cost Management Division, Sales Division, Tokyo Sales Division,
Kitakanto & Hokushinetsu Sales Division, Higashikanto Sales
Division, Minamikanto & Tokai Sales Division, Nishikanto Sales
Division, West Japan Sales Division, Fukushima Division

Social Infrastructure Division(excluding Nuclear Energy Department)

Registration scope
Design and construction of electrical infrastructure
Design and construction of air-conditioning, water supply anddrainage, and sanitation systems

Registration organization and registration number
Management System Assessment Center
MSA-QS-4553

Registration date: September 1, 1997 (Valid through: February 27, 2026)
Design and construction of electrical and communication
infrastructure, civil engineering work, and water supply andsewage, gas, and railroad infrastructureManagement System Assessment Center
MSA-QS-4734

Registration date: February 24, 2021 (Valid through: February 23, 2024)

Rokkasho Office, Tokai Office, Kashiwazaki Kariwa Office, Tsuruga
Office, Fukushima Division

Design, construction, and ancillary service of electricity,
instrumentation, and machinery devices involved in theconstruction, repair, and regular inspection of nuclear power plants,
nuclear fuel handling facilities, and related infrastructure

Registration Body for ISO, Inc.
RB-Q11039

Registration date: February 16, 2001 (Valid through: February 28, 2025)

Kandenko Integrated Report 2023

47

Introduction

Social

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Employee Initiatives

Under the corporate motto of “Humanity First,” Kandenko strives for human resource development, creation of an open workplace environment, reforms ofwork practices and annual leave systems, and promotion of diversity among other initiatives
Through these measures, we work to realize a working environment where each employee can take an active role by fully realizing their potential..

Human resources development
Basic Policy on Human Resources Development
While continuously nurturing a professional workforce and managers
trusted by society and customers necessary for sustained growth,Kandenko will develop and raise the capabilities of each employee.

Outline of Initiatives for Human Resources Development
Kandenko has consistently worked on establishing systems tonurture individuals capable of playing active roles on worksites. An
outline of specific initiatives is as follows.

OJT (On the Job Training)
OJT is a program whereby senior employees in the workplaceencourage junior employees to acquire business abilities by(1) Development of personnel

providing guidance on practical knowledge and skills in daily

OJT: Guidance and training through workplace operation
Training: Training for professional expertise and skills

Personnel We Aspire to Be

Training Programs

Self-development: Support upskilling of employees, such as
acquisition of qualifications

operations. It is also important as a way to pass on technologies andskills to young employees.

OJT support system
To improve the efficiency and effectiveness of OJT, we started a(1) Professionals who build and create social trust
Individuals possessing a sense of mission to safeguard
infrastructure and engage with society and customers with asincere attitude(2) Development of a workplace culture andenvironment that fosters human resources

program in fiscal 2023 that complements OJT with the expertise andexperience of seasoned employees.

(3) Development of a human resources development
system (standardization of development methods)

Individuals who generate questions based on needs and craft
value through experimentation and learning

ActionPlan

Improvement

Formulation ofplans

Development of
personnel

Individuals committed to continually refining and systematizing
technologies and skills, passing them on to future generations

Human resources
development through
OJT

through communication(2) Managers who facilitate and foster connection
between People and technologies
Individuals who actively seek information both within and outsideof Kandenko and set goals for themselves
Individuals who solve issues by engaging in communication withpartners.
Individuals who contribute to the next generation with a high levelof expertise and broad perspectives

Developmentof human
resourcesdevelopment
systemContinuous
human
resourcesdevelopment

Developmentof workplaceculture andenvironment

Check

Do

Formulation ofplans

Implementation oftraining*For more information, please visit the webpage below.

Human resources development
https://www.kandenko.co.jp/human_resources_dev/

Kandenko Integrated Report 2023

48

Introduction

SocialSection 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Promoting acquisition of qualifications

Training is designed to equip employees with the necessary skillscommensurate with their positions in the Kandenko Group and to
improve the skills of individual employees.

In acquiring national qualifications required for duties,
the Company provides various support to employees
who are willing to learn and grow on their own.
Support includes in-house seminars and bearing
expenses for correspondence education programs,
external workshops, and examinations.

List of training systems

New employee
introductory training

Follow-up
introductory training

Business skill training
for operations
professionals

Non-managerial positions
New team leader
training

Training for managers
at each level

Managerial
positions

Training for year-round new hires
OJT instructor,
promoter,Instructor training
Assertive communication training
Compliance, information security and legal affairs(e-learning)

Specialist training

Basic and entry-level tospecial advanced training
Training for floor managers, operations
managers, and onsite managers

MOT training

NGG training

Training for next
generation leaders

Training for developing overseas
construction personnel

Selected training

Kandenko employees

Joint training

Training for new
officers

Level Officers

PC skill improvement and IT tool training

Elective training

Business skills training (lectures open to public)
New director andauditor training

Employees

Data Section

Employee Initiatives

Training Systems

Group Company

Section 3
ESG Management Initiatives

List of individuals with credentials
Name of credential

As of March 31, 2023

Name of credential

Number of individuals

Number of individuals

Professional Engineer

204First-class electrician

Associate Professional engineer

362First- and second-class architect

43First- and second-class electric
work managing engineer
First- and second-classconstruction managing engineer
First- and second-class civilengineering managing engineer
Building mechanical and electricalengineer

2,235First- and second-class chief
electricity engineer
Third-class chief electricity
engineerFirst-class instrumentationengineer

680

Certification for grades 1 and 2 of theJapan Business Law Examination

229

Certification for grades 1 and 2 ofConstruction Accounting Specialist

378

First class health officer

866

175
408
103

2,395
42

328

Creating an open workplace
To create a workplace environment with greater
openness, Kandenko Group is currently engaging in
K. Assertion activities under the slogan of “Voice
your findings and appreciate voices.” Assertion is acommunication method to develop smooth
relationships, and the Company’s understanding ofassertion is to respect oneself and others, and frankly
voice findings, questions, and opinions. Continuous
promotion of this activity will encourage proactive
communication among employees and solidify
relationships of trust. Also, the activities will improve
work quality and productivity as they strengtheninter-organizational cooperation and aid in preventing
disasters and accidents.

Implementing assertion
through practicaloperations

Make a request

Superiors
Appreciate
ListenSpeak out

Prevention of disasters andaccidents

Achieving an
open workplaceenvironment

Interorganizational cooperation

Deterring power harassment

utilizing smart devices
Training targeting all employees of the KandenkoGroup etc.

Subordinates

Create an affable atmosphere

Outline of activities
Continuation of awareness-raising activities bySuperiors

Active communication

Company-specific and job level training
Improvement of work quality
Improvement of productivity*White boxes indicate training available to employees of group companies

Kandenko Integrated Report 2023

49

Introduction

Social

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Employee Initiatives

Health management initiatives
Kandenko has been undertaking several initiatives to enhance thewell-being of its employees. We are dedicated to implementing
health management because we believe that fostering the well-beingof our employees—enabling each one to realize their full potential
and work with vitality—is fundamental to the sustainable

Priority items and issues to be addressed

Fostering the culture that embraces diversity and inclusion

Priority items
3. Implementation oflabor management
education

1. Proper managementof work hours

various training programs.

development of the company.
Health Management Declaration
Guided by our corporate motto, “Humanity First,” we cherish eachand every employee, actively promoting their mental and physicalwell-being to enhance the happiness and prosperity of both our
employees and their families. We are committed to creating highcorporate value and ensuring the sustainable growth of the company
through the Kandenko Group Health Management initiative.
Moreover, we contribute to the enduring growth of Kandenko,
aspiring for the increased prosperity and happiness of every
stakeholder associated with the company.

2. Thorough management of
employees working long hours

5. Enhanced healthmanagement

Managers
4. Management of the shift towell-balanced work practices
Employees

Managers

Facilitatecommunication

Issues to be addressed
Human resources development

Health management

Encourage and support promotion of various human resources
Facilitate acquisition of days off and vacations

measures for employees.

Basic policy
Leading and implementing reforms by managers including
executives
Shifting to a work-life balance mindset
Strengthening the occupational health system and encouraging
self-care obligations

We provide annual training
programs, including diversity
seminars and unconscious bias
seminars.

Source: “Practice! Diversity Course(Introduction)” provided by wiwiw

Dissemination of nursing care information
We hold regular online seminars and have established individual
consultation desk.

Proper management of work hours

Reforms of work practices and annual leave systems
To realize a company where each employee can work energeticallyin every workplace, the Company promotes various work practices
and annual leave systems while enhancing health management

Initiatives to foster culture

Facilitating the balance between career and nursing care

Correcting long working hours, operational improvement

Health Management
https://www.kandenko.co.jp/sustainability/
hitoichi/health-management

In pursuit of our corporate philosophy, "Create richer humanenvironments," we recognize the significance of cultivating a culturethat embraces diversity and inclusion, enabling individuals fromvarious backgrounds to play active roles. We are thus offering

Promotion of Diversity
Our goal is to foster an appealing workplace that encourages theactive participation of diverse talents and that respects individual
values and differences. We aim to create an environment where
everyone can work with peace of mind. To achieve this, we haveidentified five key initiatives to promote diversity and inclusion, andwe are implementing various measures: 1. Advancing the career ofwomen; 2. Encouraging male employees to take paternity leave; 3.
Promoting the career of individuals with disabilities; 4. Facilitating
the balance between career and nursing care; and 5. Promoting
work-life balance

Creation of Booklet on Balancing Career and Nursing Care
We offer the Booklet on Balancing Career andNursing Care as a resource for acquiring basic
knowledge on nursing care. Through this booklet,
we encourage employees to shift their mindset
and adopt a workstyle that allows for a balance
between their career and nursing care
responsibilities when faced with the need to carefor their loved ones.

Acquisition of the Tomonin markThe Tomonin symbol is an emblem created by
the Ministry of Health, Labour, and Welfare tofoster the creation and advancement of a work
environment that enables employees to effectively balance theircareers with nursing care responsibilities.
Kandenko Integrated Report 2023

50

Introduction

SocialSection 1
Value Creation Story

Message from the President

Section 3
ESG Management Initiatives

Data Section

Employee Initiatives

Promoting the advancement of women

Action plan (numerical target and current status)

職

割合の（Name）Number and ratio of the number of women in managerial positions and numerical target

45

3.9
30

18

4.5

5.5

（%）
6.0

36

4.6
23

2.0

2020

2021

2022

…

2024

We provide career design seminars
aimed at raising awareness amongfemale employees and facilitating theircareer development.

Kandenkomachi, a community of women working intechnical or specialized roles
We hold Kandenkomachi opinion sharing meetings with the aim ofreforming the awareness of female
employees appointed at worksites andto expand the range of their duties.
These meetings also provide an
opportunity to deepen exchanges

problems.

Promoting work-life balance
Kandenko SunSun School Family Visit Day

Action plan (numerical target and current status)

男性社員の育児休職取得割合
Ratio ofmale employees taking paternity leave

（%）

24

10.9
12

6.3

5.6

2020

2021

0.7
0

2019

2022

…

2024

(Fiscalyear)（年度）* Kandenko's business owner action plan is accessible on the Database of Company
Supporting Women’s Career.

Reference
Classification

2019

2020

2021

2022

Ratio of employees taking
childcare leave

70.6%

60.6%

58.8%

63.0%

Paternity leave seminar (e-learning)
We conduct seminars for all employees to promote a workplaceculture that understands and encourages those opting for paternity
leave by fostering an environment where any individual desiring totake paternity leave can do so easily.

This event, which started in fiscal 2019, is part of our work- life
balance initiatives designed to promote communication between
families and workplaces and create a comfortable working
environment while also helping the families who support ouremployees on a daily basis deepen their understanding of ourcompany’s business.

30(Fiscalyear)（年度）

Career seminars for young female employees

We provide a venue for information exchange regarding childrearing
and casual communication among parenting employees. We support
employees raising children, regardless of their gender, in balancing
work and child-rearing through easing their anxiety and sharing

paternity leave as a significant aspect in promoting this endeavor.

36* Double from fiscal 2019
* Kandenko's business owner action plan is accessible on the Database of Company
Supporting Women’s Career.

between worksite supervisors.

Encourage male employees to take paternity leave.

4.0

15

2019

mindset of individuals holding managerial positions.

Numerical target: Raise paternity leave take-up rate to 30% or higher

28
22

We provide seminars on diversity management to transform the

Encouraging men to engage in household chores and childcare is
crucial for the happiness of male employees. We consider taking

Numerical target: Increase the number of women in managerial
positions to at least 36 by the end of fiscal 2024.
性Organizing Sun Cafe Meetings

Diversity seminar for those in managerial positions(e-learning)

Promoting the successful careers of women is a pressing priority for
Kandenko. Consequently, we are dedicated to encouraging women
to take on leadership positions, cultivating a career-oriented
mindset, and nurturing female engineers.

0

Section 2
Value Creation Initiative

The August 2023
event centered aroundthe theme of "Workand Safety." A total of
24 groups, comprisingboth employees andtheir family members,
took part. During thisevent, we presented
our initiative aimed atenhancing worksite
safety. Families who
participated gained adeeper understandingof work and worksites,with such activities aschildren trying on work
clothes and safety
gear as well as parents
and kids
collaboratively crafting
projects using LED lamps.
Kandenko Integrated Report 2023

51

Introduction

Social

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Maintaining and Improving Partnerships with Partner Companies
and Material Suppliers

SocialKandenko Group Procurement Policy

The Kandenko Group kindly requests that our business partners engage in the following acts.
We also request that they encourage their business partners to engage in the same acts as well.

1. Respect human rights (properly manage workers)

Since its founding, Kandenko has conducted business with the aimof ensuring the mutual prosperity of its customers and thecommunities where it works and finds its purpose in this pursuit.
Respect for human rights is the foundation of our business activities.

1. Commitment to respect human rights

Respect the human rights of workers and strive to secure
employment and improve working conditions.

2. Scope of application
3. Initiatives for the respect of human rights

1. Respect for
Human Rights

2. Comply with laws, regulations, and social norms

4. Information disclosure, dialogue, and discussion(properly manage
workers)

2. Comply
with laws,
regulations,and social
norms

7. Developinternal
frameworks

We request that you endeavor to secure a safe and comfortableworking environment.

4. Ensure quality
In addition to realizing safe and high-quality facilities and services,
we also request that you take initiatives in anticipation of events andsafety and quality issues that may arise in connection with such
facilities and services.

Respect for Human Rights

Through this Policy, the Kandenko Group will remain committed topursuing thorough compliance and improving safety and quality andcontribute to the enduring development of society as a partner that
supports social infrastructure for safe and comfortable daily living.

Procurement guideline - Requests for our business partners -3. Ensure health and safety

Data Section

Kandenko Group Human Rights Policy

The Kandenko Group is committed to contributing to the sustainable development of society through the provision of high-quality services bybuilding, maintaining, and improving partnerships with our business partners.

Comply with all applicable laws, regulations, standards, and social
norms in all countries and regions where you conduct business,whether in Japan or overseas.

Section 3
ESG Management Initiatives

6. Information
security

Kandenko Group
Procurement
Policy5. Remediation
6. Implementation of human rights due diligence (process
to identify, prevent, and mitigate negative impacts)
7. System to respect human rights

3. Ensure
health andsafety* For more information, please visit the webpage below.
Kandenko Group Human Rights Policy
https://www.kandenko.co.jp/sustainability/hitoichi/humanrightspolicy

5. Be environmentally conscious
We request that you endeavor to conduct your business activities
with adequate consideration for environmental conservation.

6. Information security

5. Be
environmentallyconscious

4. Ensurequality

Pay sufficient attention to the protection of confidential information
handled in connection with operations and endeavor to ensure
information security.

7. Develop internal frameworks
Strive to develop internal frameworks on the assumption of stableprovision of materials and services.

* For more information, please visit the webpage below.
Kandenko Group Procurement Policy
https://www.kandenko.co.jp/sustainability/procurement-policy

Kandenko Integrated Report 2023

52

Introduction

Social

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Social Contribution Activities

Dispatch of personnel to the Japanese
Antarctic Research Expedition for the first time.
Given the frequent occurrence of extreme weather events globally, including heavy rains and droughts, there is a
growing significance in researching ice sheet, atmospheric, and oceanic changes in the Antarctic region. Such
research is vital because it contributes to the advancement of forecasts for future environmental changes. Since
the first participation in the 28th expedition in 1986, Kandenko has deployed its employees to the Antarctic
Research Expedition on more than 30 occasions. In Antarctica, they play crucial roles by supporting observational
activities, including the maintenance and updating of facilities within the Showa Station.
Photo provided by: The National Institute of Polar Research

Uehara, who joined the expedition on four occasions as a member of wintering parties
The observation parties are divided into the summer party, whichstays in Antarctica for three months during the summer, and thewintering party, which remains there for the entire year. Makoto
Uehara has engaged in the expedition on four occasions as amember of the wintering party. As an experienced veteran, he held
the position of facility setup chief twice, overseeing the facility setup
crews. Because of the limited personnel capacity in Antarctica,
Uehara assumed diverse responsibilities extending beyond electricalwork. He cooperated with other crews in such tasks as operating
heavy machinery for snow removal after blizzards and conducting
surveys on sea ice cracks to find safe travel routes. Having
undergone these experiences, Uehara expresses, "I consistently
recognized that in the challenging environment of Antarctica,
individual efforts alone are insufficient. To accomplish any task,
someone with expertise in a specific field must assume a leadershiprole, and everyone must collaborate." This mirrors construction
projects in Japan, where diverse specialists collaborate to constructa single building. The valuable experience gained by employees
participating in the observation expedition in Antarctica is effectively
applied in our business upon their return to Japan.

Contribution to advancing the prediction of environmental changes
Kandenko is dedicated to establishing a reliable observationalfoundation by leveraging the technologies and skills accumulated asa general infrastructure company and expertise gained throughdeploying employees to Antarctica, contributing to the advancementof environmental change forecasting.

Kandenko Integrated Report 2023

53

Introduction

Social

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Social Contribution Activities

We partnered with Gakken Inc. to co-publish
Denki no Himitsu (Secrets of Electricity), a partof the educational manga series
We created Denki no Himitsu (Secrets ofElectricity) with the aim of providing
elementary school students, their parents, andeducators with an enjoyable learning
experience about electricity. The book covers
the characteristics and mechanisms ofelectricity taught in elementary school classes,
familiar themes in daily life, as well as how
electrical work is conducted and how power isgenerated in an easily understandable manner.
Via Gakken, we have donated around 25,000 copies of this book tonational, public, and private elementary schools (including specialneeds schools), public libraries, and children's centers across Japan.

Sponsorship of the Japan High School Rugby
Championship as an official partner
Kandenko aims for social contribution through sports promotion andhas been sponsoring the Japan High School Rugby Championshiporganized by such associations as the All Japan High School Athletic
Federation and the Japan Rugby Football Union since the 97th
Championship in 2017.

Gakken Manga Himitsu Bunko
https://bpub.jp/gakken-himitsu/

Participation “Zero Disposable Umbrellas by2030 Project”
The project seeks to eliminate the use of disposable umbrellas byintroducing an umbrella-sharing service called "i-kasa" This service
enables users to rent an umbrella at a station or in a city and return it
to a nearby umbrella spot when the rain stops. As a partnercompany, Kandenko is involved in this project in various ways,
including the development of
unique umbrella designs andthe introduction of plans thatallow users to use the i-kasa
service at no cost.

Kandenko has entered into a sponsorship contract with Kokoro Fujii,
a professional sport climber. We made this decision because weobserved an affinity between the power transmission line work
conducted by the Social Infrastructure Work, primarily at elevatedheights, and sport climbing, a discipline focused on climbing. We
plan to collaborate with Fujii in various settings, including a climbing
workshop, to foster understanding of Kandenko's work.
Concurrently, we are committed to promoting and raising awarenessof sport climbing to enhance its popularity.

COMMENT*This book series is not for sale and will not be offered commercially at regular bookstores.
The book will be accessible free of charge on Manga Himitsu Bunko on Gakken Kids Net andGakken Manga Himitsu Bunko.

Gakken Kids Net
https://kids.gakken.co.jp/himitsu/
cat_library/

Entered into a sponsorship agreement with
Kokoro Fujii, a professional sport climber.

Kandenko x Toshiaki Hirose Connection Support
Project
We are currently developing the Kandenko x Toshiaki Hirose
Connection Support Project with the former captain of the Japannational rugby team Toshiaki Hirose as our new Corporate
Communication Captain (CCC).
This project embodies a key message: "connecting individuality tocreate an exciting future." Aligned with this message, Kandenko
employees form a scrum with Mr. Hirose in a collaborative effort,
engaging in various activities,
such as publishing picture
books and organizing incompany events and lecture
sessions.

I am delighted to have the opportunity to work with Kandenko,
a company dedicated to supporting sports among children
and high school students. Together, I aim to be both a bridge
and a beacon, casting light on the future of the entire climbing
sports industry. I anticipate that this will open up the potential
for offering second-career opportunities to those who are
passionate about climbing. I appreciate your support.
Professional sport climber Kokoro Fujii

Photography cooperation: 7B-PUMP TOKYO Akihabara*For more information, please visit the webpage below.

Social Contribution Activities
https://www.kandenko.co.jp/sustainability/philanthropy

Kandenko Integrated Report 2023

54

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Roundtable Discussion with Outside Directors

Engage in deep and broad-ranging discussions
with society to promote effective and transparent governanceOutside Director

Outside Director

Outside Director

Outside Director

Hajime Saito

Miwako Ando

Koji Tanaka

Miwa Suto

Observations by an outside director
regarding changes in the Board of Directors
Saito: For the past four years since I assumed the role of an outside
director, the revitalization of the Board of Directors has been acentral theme in our discussions. I now perceive that it is finallycoming to fruition.
I arrived at this observation primarily because the agendas fordiscussion within the Board of Directors and the timing for these
discussions have been clarified. Consequently, the organization ofquestions and key points has resulted in more effective and efficient
discussions. Another factor is the elimination of the disparity in
information volume between outside directors and inside directors.
In general, internal directors tend to engage in micro-level
discussions, focusing on worksites and specific items. On the other

hand, external directors tend to participate in broader, macro-level
discussions. It is observed that these different ways of discussing
things can make them feel a bit distant from each other. Besides
closing the information volume gap, the perceived distance between
them is also shrinking. I find this to be a positive overall trend.
Ando: I agree. I sense that the Board of Directors is gaining morevitality compared to when I was first appointed in fiscal 2021.
Particularly with the inclusion of Mr. Tanaka, an expert in the field ofelectric energy, bringing the count of outside directors to four, ourdiscussions have become more substantive. Upon my initial
appointment, I frequently hoped for a more open and uninhibited
exchange of ideas from internal directors, extending beyond theirareas of expertise. Now I have observed improvements in this aspect
as well. As Mr. Saito pointed out, the selection of agendas andtiming is also well-coordinated. We are progressing towards
participating in meaningful discussion.
Tanaka: Since my appointment last June, I have interacted withvarious individuals and explored initiatives within Kandenko. I
discovered that the company possesses a robust managementfoundation, encompassing both personnel and advanced
technology, and has experienced steady progress. The Board of
Directors has been involved in more strategic discussions over the
past year. I think this shift mirrors the fact that discussions in theexecutive management council and the entire company as a whole
have become more vitalized. Moreover, there used to be a lack ofcollaboration among sections within the company. However, with theintroduction of the chief officer system in July to promotecollaboration among different internal units, I anticipate an increasein opportunities for substantive discussions.
Suto: As I am recently appointed, allow me to introduce myself. I
come from a background in a strategic consultation firm where I
worked on developing new business, corporate branding, andorganizational culture reform. I've also provided support to venturecompanies. I was appointed as an outside director in June andKandenko Integrated Report 2023

55

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Roundtable Discussion with Outside Directors

discovered that the social role in ensuring a stable supply ofelectricity and the individual employees' sense of mission, those
who uphold this role, were stronger than they might seem from theoutside.

Evaluation of the effectiveness of the Boardof Directors
Ando: As a former public prosecutor specializing in compliance, thediscussion on the inadequacy in a labor accident at a subsidiarycompany, released in this February, made a lasting impression onme during our Board of Directors’ meetings. This case was regularly
reported to and discussed by the Board of Directors. In addition toaddressing preventive measures and governance related to thesubsidiary, special attention was given to identifying the root causeof the incident. One of the root causes discussed was the fear
among those involved of a suspension of a construction project thatwould occur when the labor accident came to light. Consequently,
we are collaborating with industry organizations and clients toestablish a system to prevent such incidents. I believe that we wereable to engage in constructive discussions, as seen in this case,because of the proper information provided to outside directors fromthe involved departments.
Saito: We observe a positive trend where discussions on negative
topics, as mentioned by Ms. Ando, not only lead to resolving theissues but also highlight positive effects simultaneously. This isevidence that the gap in information volume available to outside
directors and internal directors has been closed, and the process ofengaging in discussions for the future under a shared awareness has
been established.
The next step we need involves engaging in concrete discussions on
how to utilize management resources to achieve the ideal form that
Kandenko aspires to while being accountable to investors. I believe
it is the mission of the Board of Directors to continually enhance theeffectiveness of the meeting body while addressing and improving
upon issues like this.
Tanaka: Kandenko conducts an annual quantitative evaluation of theeffectiveness of the Board of Directors. And I am of the opinion thatit has demonstrated effectiveness to some extent. Additionally,

executives, such as the chairman and president, are frequently
communicating with outside directors outside of the Board of
Directors’ meetings. I believe this has a positive effect in ensuring
the effectiveness of the Board of Directors as well. Furthermore, it is
crucial to continually enhance the discussions within the Board of
Directors, avoiding a mere ceremonial response to the corporate
governance code. Personally, as I compare Kandenko with othercompanies I have worked with, I can identify both positive andnegative aspects. Consequently, I strive to highlight and provide
advice based on this perspective. Ms. Suto, as a recently appointed
outside director, what is your impression of Kandenko's Board of
Directors, drawing from your experience across various industries?

groups for each theme, where employees engaged in discussions.
The opinions voiced in these groups were then incorporated into theplan. I believe it proved effective in heightening employee awarenessand leveraging insights from the worksites.

Suto: Participating in board meetings left me with the impressionthat the questions and opinions raised by outside directors sparked
crucial and multifaceted discussions. I acknowledge that thesefactors have led to your observation that the Board of Directors has
become more active. In contrast, based on my experience incorporate branding and organizational climate reform, I believe thatwhile everyone at Kandenko is sincere, diligent, and united with astrong sense of mission, there might be a lack of interest in how
Kandenko is perceived by external parties. In an era wheremanagement is expected to adopt an attitude emphasizing
communication with society, I acknowledge that one of myresponsibilities is to report an external perspective. I aspire tosparking new discussions by posing straightforward questions.

Key points of the Medium-Term
Management Plan as it approaches its final
year and the subsequent Medium-Term
Management Plan
Saito: The existing Medium-Term Management Plan exhibited
progressiveness by not being constrained to the present three-year
period; instead, it projected 20 to 30 years into the future andbackcasted from that perspective. As a result, I believe that we
effectively clarified the themes and objectives of our societal
contributions, while appropriately situating Kandenko within the
broader social context. Another aspect is the establishment of small

Outside Director

Career Summary

Introduction

Miwa Suto

Apr. 1995 Registered as a CPA (current)
Jan. 2001 Partner at Bain & Company
Apr. 2006 Representative director at Planet Plan (current)
Apr. 2008 Specially appointed professor at the Graduate School of Media andGovernance, Keio University (until Mar. 2018)
May 2012 Outside director, ZIGExN (until Jun. 2021)
Jun. 2016 Director, Consumer Product Safety Association (current)
Jun. 2016 Outside director, A.D.Works Group, Co., Ltd. (Audit and Supervisory
Board Member) (until Jun. 2020)
Jun. 2017 Director, Japan Volleyball Association (current)
Mar. 2018 Outside director, Asics (until Mar. 2020)
Apr. 2019 Specially appointed professor at the Graduate School of Media andGovernance, Keio University (current)
Mar. 2020 Outside director, Asics (Audit and Supervisory Board Member)(current)
Jun. 2021 Outside director, Katitas Co., Ltd. (current)
Jun. 2021 Director of the Japan Olympic Committee (current)
Mar. 2023 Outside director, Kosé Corporation (current)
Jun. 2023 Director, Kandenko (current)

Kandenko Integrated Report 2023

56

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Ando: Fiscal 2023 marks the conclusion of our three-year MediumTerm Management Plan, and one of my main priorities is to adhere
to the legal cap on overtime work scheduled to come into effect inApril 2024. This has been extensively discussed during the Board of
Directors’ meetings, and our perspective is that the primary objective
is not merely to reduce overtime work, but rather to concentrate on
enhancing productivity. This approach is anticipated to decrease
overtime work and pave the way for additional steps in the future. As
Mr. Saito mentioned earlier, I was impressed to learn that Kandenko
employees actively contributed their opinions in formulating thecurrent Medium-Term Management Plan. I hope that the businessportfolio will undergo further refinement as a comprehensive
infrastructure company, aiming to fulfill the vision of becoming agreen innovation company in 2044, a vision crafted through thiscollaborative opinion-sharing process.
Tanaka: Kandenko has the foundation of building trust with clients invarious industries through construction services in electrical, HVAC,
telecommunications, and social infrastructure. I have confidence in
Kandenko's significant potential to address diverse client issues,
extending beyond infrastructure construction, and to provide
comprehensive, continuous services to enhance their overall value.
Additionally, I believe that the government-led Green Transformation
Initiative is playing a supportive role in this endeavor. The central
focus of the next Medium-Term Management Plan will be on
formulating a growth scenario that capitalizes on business potentials
and determining effective execution strategies.

Green Innovation Company and ESG
Management

Career Summary

Data Section

Roundtable Discussion with Outside Directors

Suto: I share the same opinion as Mr. Saito. One of the mostsignificant characteristics is that the plan was formulated with regard
to both the business environment in 2044 when Kandenko willcommemorate its 100th anniversary, and in 2023, the plan’sconcluding year. The company's proactive approach in addressing
mid- to long-term societal needs, such as achieving carbon neutrality,
is also compelling. Yet, when formulating long-term objectives, it is
crucial to construct a feasible scenario by clearly distinguishing
between those that progress steadily over a defined time frame andthose that are intermittent and influenced by external factors. I would
like to further explore this point during board meetings.

Outside Director

Section 3
ESG Management Initiatives

Miwako Ando

Apr. 1985 Appointed as a Public Prosecutor
Jan. 2014 Chief Prosecutor of Tokushima District Public Prosecutors Office
Jul. 2015 Chief Prosecutor of Kumamoto District Public Prosecutors Office
Jul. 2016 Public Prosecutor of Supreme Public Prosecutors Office
Mar. 2017 Retired as a Public Prosecutor
Apr. 2017 Professor of Graduate School of Law of Hosei University
Jun. 2019 Registered as an Attorney-at-Law (current)
Jun. 2021 Director, Kandenko (current)
Apr. 2023 Part-time lecturer at Faculty of Law, Hosei University (current)

Saito: Despite variations in ESG perceptions among countries andcompanies, the most important aspect of ESG that Kandenko should
focus on is human resources. Ms. Ando previously discussed thelegal limit on overtime work. Because of its labor-intensive nature,
the construction industry has undergone a slower standardization of
overall operations compared to various other industries. In order toshift from the current reliance on human resources and to combat
the labor shortage in Japan, the entire industry, in collaboration withthe government and the private sector, must actively pursue therecruitment of women and international personnel. As one of thelargest general infrastructure companies in Japan, Kandenko must
demonstrate its dedication to actively investing in human resources
more explicitly to society.
Tanaka: I agree. I believe it is crucial to increase investment in
human resources to foster the growth of a company. As Kandenko
endeavors to broaden its business domains in the pursuit ofbecoming a green innovation company, it now requires skills andexpertise that it does not yet possess. To achieve this, we need toassist the company in implementing job rotation and advocating forreskilling. This way, employees can accumulate diverse experiences,acquire new knowledge, and develop skills to play more active rolesin their respective fields. Simultaneously, Kandenko should exert
efforts to recruit individuals who can contribute new skills to theorganization. In conjunction with these efforts, by actively promoting
diversity, including creating additional opportunities for women to
take on key roles, I believe Kandenko can enhance the depth of its“Humanity First”.
Ando: In my view, the concept of the “Hito-Ichi value” underscores
the notion that individuals actively involved in the actual work
represent the most crucial asset accumulated by Kandenko, alabor-intensive company. As Mr. Tanaka pointed out, the significanceof human resources development will continue to grow in the future.
Therefore, the company must create an environment in which every
employee can work comfortably. In that regard, Kandenko still
appears to be a workplace predominantly oriented toward males,
and it must move away from that perception. Kandenko has set atarget to have at least 36 women in managerial positions by the endof fiscal 2024. Nevertheless, it should persist in increasing thenumber of women in managerial roles beyond that in the future.
Considering the nature of the construction industry, addressing thischallenge requires collective efforts of the entire industry. On a
personal note, I am inclined to engage in ongoing discussions with
Kandenko employees and provide diverse advice to relevant
departments in collaboration with the newly appointed Ms. Suto.
Suto: I also aim to contribute to this matter alongside Ms.Ando,
while carefully listening to the perspectives of individuals on theworksites. In addition to the previously mentioned strategies, suchas leveraging the potential of women and international humanresources and emphasizing reskilling, I also want to focus on the

Kandenko Integrated Report 2023

57

Introduction

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Data Section

Roundtable Discussion with Outside Directors

In that context, it could be the opportune time to upgrade themechanisms and systems that have sustained Kandenko's “Hito-Ichi
value”, transforming them into a format that resonates with younger
generations. As societal values evolve, our aim is to establish a work
style that aligns with the expectations and demands of younger
generations, coupled with productivity innovation through DX.

A Board of Directors Dedicated to
Supporting the Future of Kandenko

Outside Director

Koji Tanaka

Apr. 1974 Joined Hitachi, Ltd.
Apr. 2011 Representative Executive Officer, Executive Vice President andExecutive Officer, Hitachi, Ltd.
Jan. 2014 Chairman, Mitsubishi Hitachi Power Systems, Ltd. Outside director(until Mar. 2018)

Career Summary

Section 3
ESG Management Initiatives

Jun. 2014 Outside Director, Hitachi Metals, Ltd. (until Jun. 2015)
May 2016 President, The Institute of Electrical Engineers of Japan (IEEJ) (until
May 2017)
Jun. 2016 Director, Hitachi Chemical Company, Ltd. (until Jun. 2017)
Apr. 2017 Representative Executive Officer, Executive Vice President andExecutive Officer, Hitachi, Ltd. CEO, Nuclear Energy Business Unit
Apr. 2018 Advisor, Hitachi, Ltd. (until Apr. 2020)
Jun. 2018 Director, Hitachi Chemical Company, Ltd. (until Jun. 2019)
Jun. 2018 Director, Hitachi Construction Machinery Co., Ltd. (until Jun. 2019)
Jun. 2018 Chairman of the Board, Outside Director, Hitachi Transport System,
Ltd. (until Jun. 2020)
Jun. 2022 Director, Kandenko (current)

younger generations, who will emerge as the future leaders of
Kandenko. I believe that the sustainability of Kandenko's business
depends on whether younger generations can envision a promising
future within the company and remain motivated in the long term.

the conventional constraints of the company.
Saito: I believe that corporate value for a company like Kandenko,
responsible for social infrastructure, is heightened collectively with all
stakeholders, encompassing not only investors but also society andemployees. Given the close connection of this business to society atlarge, fostering a two-way dialogue between Kandenko and society is
crucial for achieving mutual understanding and shared perspectives. To
this end, effective communication with all stakeholders is of particularimportance, and we aim to support the enhancement of this capability.

Suto: To contribute to the enhancement of Kandenko's governance,
I intend to visit worksites and engage in direct conversations with
the individuals working there to deepen my understanding of thecompany's operations. Although Kandenko has gathered successful
experiences thus far, I believe there may be customs andconventional practices that have been unquestioningly followed
within the company. We are currently in the process of reviewing
these practices as we embark on the transformation of the company
into the next-generation Kandenko Group. I aim to present candid
questions and share my opinions, creating an opportunity to infuse
the company with a breath of fresh air.
Ando: As an expert, I intend to maintain a stance of freely expressing
my thoughts, particularly concerning aspects related to compliance.
Some unquestioned conventional practices within a company may
appear unreasonable from the perspective of a legal expert.
Therefore, in my role as a director at Kandenko, I would adopt an
objective stance. Regarding overall management, I aim to leverage
my experience as a prosecutor to fortify the foundational aspects
required for further growth while employing my imagination tocomprehend what is really happening at worksites.
Tanaka: As a fundamental principle, the role of the Board of
Directors is to contribute to the enhancement of corporate value. To
achieve this, we need to reshape Kandenko from a global standpoint
to align with the evolving society driven by advanced technologies
like generative AI. As an external director, I aim to clarify a path andmeasures for Kandenko to realize its full potential by engaging in
discussions with executives from an impartial standpoint, free from

Outside Director

Career Summary

Governance

Message from the President

Hajime Saito

Apr. 1979 Joined The Dai-Ichi Kangyo Bank, Limited
Apr. 2009 Managing Executive Officer and Head of Internal Audit Group of
Mizuho Financial Group, Inc.
Jun. 2009 Managing Director and Head of Internal Audit Group, Mizuho
Financial Group, Inc.
Apr. 2010 Managing Director, Head of Risk Management Group, Head of
Human Resources Group, and Head of Compliance Group, Mizuho
Financial Group, Inc.
Apr. 2011 Deputy President & Executive Officer of Mizuho Securities Co., Ltd.
Jun. 2011 Deputy President and Deputy President & Executive Officer ofMizuho Securities Co., Ltd.
May 2015 Deputy President, Mizuho Capital Co., Ltd.
Apr. 2016 President, Mizuho Capital Co., Ltd. (until Apr. 2019)
Jun. 2019 Director, Kandenko (current)
Kandenko Integrated Report 2023

58

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate GovernanceCorporate Governance System

Corporate Governance

Outline of the Corporate Governance System

Internal

OutsideAppointment,
dismissal

ReportGeneral Meeting of Shareholders

Kandenko acknowledges that enhancing its corporate
governance system is a crucial undertaking to ensure theefficiency, transparency, and appropriateness of management

Appointment, dismissal

ReportAppointment, dismissal

Reportand business execution, allowing us to continue being acompany valued by our stakeholders.

Decision-making, monitoring, and oversight

To do so, we will implement measures to foster equality in

Audit

Board of Directors (Directors)

shareholder rights and improve communication with

Audit by Audit & Supervisory Board Members

Audit & Supervisory Board Members (Audit& Supervisory Board)shareholders, and actively engage with stakeholders throughReportcomprehensive and timely information disclosure.
Simultaneously, for the purpose of securing the company's
sustainable growth and enhancing its corporate value in the

Supervision andoversight

Nomination andCompensation Committee

ReportAuditing Officemedium to long term, we will formulate management policies
and establish a system for their implementation.

Senior Management
Committee

Decision-making, monitoring and

Audit,
reportoversight, business execution

Basic Corporate Governance Policy

President / Director
responsible for business

ESG Promotion
Committee

Accountant audit
Independent Accounting Auditor

Internal Control Committee
Safety, Environment & Quality
Committee

In keeping with the content and the spirit of the Corporate

Audit

ReportGovernance Code established by the Tokyo Stock Exchange,
Kandenko implements a basic corporate governance policythat sets out its basic approach with the aim of enhancing thepractical effectiveness of corporate governance.

Business execution

Internal Control Division

Directors, executive officers(Division managers, department
managers, branch heads)*Please see our website for more specific details.

Complianceconsultations
Outsideconsultations

Employees
Corporate Governancehttps://www.kandenko.co.jp/
sustainability/governanceAffiliated companies

Kandenko Integrated Report 2023

59

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate Governance• Board of Directors
The Kandenko Board of Directors, which consists of
12 members, including four outside Directors, meetsregularly once a month and additionally whenevernecessary to discuss important business matters andto reach final decisions, taking account of thecontributions of the independent Directors and otherconsiderations. The Board also oversees theexecution of business by the Directors. Importantmanagerial issues, including those that will be brought
up at a Board of Directors’ meeting, are discussed by
the Management Council, which meets regularly eachweek and additionally whenever necessary. In theseways, we strive for rational corporate administration.
Moreover, we have introduced an Executive Officer
system, which separates managerial oversight frombusiness execution, to accelerate the decision-making
process and reinforce business execution while
enhancing the efficiency of the Directors’ businessexecution system. To foster swift responses tochanges in the operating environment and invigorate
management, Directors’ terms are limited to one year
from the time of appointment.

Number of meetings held in
fiscal 2022

“16”

Name

Number of Board of
Directors’ meetings
attended

Chairman and Director

Seiichi Fubasami—

President and Executive
Officer

Toshio Nakama

16 times/16 times

Executive Vice President andExecutive Officer

Nobuhiro Iida

16 times/16 times

Executive Vice President andExecutive Officer

Yuji Ueda

16 times/16 times

Senior Managing Director andExecutive Officer

Mitsuru Fujii

16 times/16 times

Senior Managing Director andExecutive Officer

Hiroyuki Enoki—

Managing Drector andExecutive Officer

Koichi Nakahito

15 times/16 times

Managing Drectror andExecutive Officer

Hirofumi Tamogami—

Director

Hajime Saito

16 times/16 times

Director

Miwako Ando

15 times/16 times

Position*

Director

Koji Tanaka

12 times/12 times

Director

Miwa Suto—*The variation in the number of meetings attended is due to differences in the timing of appointments.
Number of meetings held in
fiscal 2022

• Board of Auditors“15”

Kandenko has employed an Auditor system for some time. Five Auditors, including three from outside
the Company, conduct audits appropriately based on legal requirements and Kandenko’s audit policy.
The outside members heighten our system’s independence and neutrality. They attend our Board of
Directors’ meetings and other important meetings
Number of Board of
Directors’ meetings
PositionNamewhere they express their independent and objective
attended
opinions. Auditors, including outside members,
Full-time Audit & Supervisory
Shoichiro
meet with the Company’s Directors on a regular—
Board Member
Kashiwabara
and irregular basis to ask about the state of the
Full-time Audit & Supervisory
Hidekazu Tanaka
15 times/15 times
latter’s work. We provide the Auditors with theBoard Members
Auditing Office to enable the complete and effective
Audit & Supervisory Board
Sumihito Okawa
15 times/15 times
Memberfulfillment of their duties.
Audit & Supervisory Board
MemberTakashi Suetsuna

13 times/15 times

Audit & Supervisory Board
Member

Shoichi Muto

15 times/15 times• Independent Accounting Auditor
Kandenko appointed Inoue Audit Corporation as its independent accounting auditor. The three CPAs
who audit Kandenko’s accounts are Masami Hiramatsu, Katsuhiro Suzuki, and Masamichi Sakuma, noneof whom have audited our accounts for over seven consecutive years. Four other CPAs, two persons
who has passed the CPA examination, and two additional persons assist with the account audits.

• Nomination and Compensation Committee
To enhance the effectiveness and transparency of
the Board of Directors, Kandenko has instituted theNomination and Remuneration Committee. This
committee deliberates and reviews mattersconcerning the nomination and compensation of
directors, auditors, and those in other positions.
The outline of the committee is as described on theright.

Name: Nomination and Compensation Committee
Composition: Chairman (committee chair), President,
Independent outside directors
Matters for discussion: Matters related to theappointment and compensationof directors and auditors
Other matters related tocorporate• Effectiveness evaluation
Kandenko carries out self-evaluations by all Directors and Auditors after the end of each fiscal year
regarding the effectiveness of the Board of Directors. The content of the evaluation is analyzed andassessed by the Board of Directors.
The assessment of the initiatives for ensuring effectiveness and the self-evaluation revealed feedback on
aspects like the revitalization of the board of directors, the manner of providing information to external
directors, and furthering discussions on management strategies. Nevertheless, we affirm that the overall
effectiveness of the board of directors was upheld in fiscal 2022.
The Company will continue to raise the effectiveness of the Board of Directors as a whole in light ofthese opinions.

• Internal audit
For internal auditing, six staff members of the Internal Audit Division carry out the audit in accordancewith the Internal Control Enhancement Plan. The audit results are reported to the Internal Control
Committee and the Management Council, and as appropriate to the Board of Directors to enable any
required remedial action to be taken.
The Independent Accounting Auditor and the Internal Audit Division report their findings to the Board ofAuditors and regularly discuss these matters with the Auditors, including outside members. Opinions areexchanged whenever necessary so that cooperation is ensured. While the Auditors (including outside
members), Independent Accounting Auditor, and the Internal Audit Division carry out their audits, theyreceive regular reports on the state of maintenance and operation of internal control from each division
responsible for business execution.

Kandenko Integrated Report 2023

60

Introduction

Governance

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate Governance

Policy on Appointment of Directors and Auditors

Outside Directors and Outside Auditors

The Company has determined the diversity and size of its Board of Directors in consideration of its
business characteristics and the need to ensure the effectiveness of its governance function.
Kandenko’s policy in appointing directors and auditors, regardless of their gender, nationality, etc., is toselect individuals with extensive experience, insight, etc., that will contribute to the sustainable growth of
Kandenko and the enhancement of its corporate value over the medium to long term. These individuals
are determined by the Meeting of the Board of Directors after deliberation and review by the Nomination
and Remuneration Committee.
Additionally, in the selection process for the positions of outside director and auditor, we are choosing atleast one individual with experience in managing other companies, under the condition that they cancontribute to the role of a director or auditor from an independent and objective standpoint in theexecution of directorial duties.

Outside Directors and Outside Auditors

Below is a skills matrix illustrating the knowledge, experience, and abilities of our directors and auditors.

• Independence Criteria for Outside Directors and Outside Audit &Supervisory Board Members

Name

Corporate
management

ESG /Compliance

Finance /Accounting

Humanresources andlabor

Sales /
MarketingOperation andmanagement

Purchasing

Technology
New business development /DX / IT

Overseasbusiness

Seiichi Fubasami

be independent as long as they do not trigger any of the following exclusion criteria:(2) The candidate is a business executive of a major shareholder of Kandenko (a shareholder with 10%

Nobuhiro Iidaor more of the voting rights including indirect holdings) or a business executive of a company of

Yuji Ueda

which Kandenko is a major shareholder.

Mitsuru Fujii

Director

Kandenko considers candidates for outside director and outside Audit & Supervisory Board Members to(1) The candidate is or has been a business executive of Kandenko or a Kandenko’s subsidiary.

Toshio Nakama(3) The candidate is a business executive of a major creditor of Kandenko (a creditor who has provided

Hiroyuki Enoki

loans of more than 1% of consolidated assets in the most recent fiscal year).

Koichi Nakahito(4) The candidate is a business executive of a major business client of Kandenko (a client accounting

Hirofumi Tamogami

for more than 1% of consolidated net sales of completed construction contracts in the most recent

Hajime Saito

fiscal year) or a business executive of a company of which Kandenko is a major business client.

Miwako Ando

(5) The candidate is a representative employee or an employee of an accounting auditor of Kandenko.

Koji Tanaka(6) The candidate is a person who has, or a member of a group that has, received from Kandenko

Miwa Sutomaterial benefits or gifts of high value (more than ¥10 million excluding corporate officers’
remuneration).

Shoichiro
Kashiwabara

AuditorCurrently, the Company has four outside Directors and three outside Auditors. Among them, six are independent
Directors as defined in Rule 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange.
We appoint outside Directors and outside Auditors to fulfill monitoring and oversight functions and toenhance transparency; therefore, in accordance with the Companies Act and other regulations, we lookfor candidates whose experience and insight etc. outside the Company will be useful to Kandenko andwho can oversee and audit the Directors’ execution of duties from an independent and neutral
standpoint. Regarding outside Auditors, the Board of Auditors’ meeting first agrees on the candidates,
the Board of Directors approves them, and then they are presented at a general meeting of shareholders
for a vote.

(7) The candidate is a business executive of a company with a reciprocal relationship with Kandenko

Hidekazu Tanaka

through outside officers.

Sumihito Okawa(8) The candidate has a relative (a spouse or relative within the second degree of kinship) to whom any

Takashi Suetsunaof (1) to (6) above applies (restricted to officers and senior employees).

Shoichi Muto

*In the matrix above, we use
directors and auditors.

(9) The candidate has triggered any of (2) to (8) above in the past five years.
to denote up to four of the particularly specialized skills that each individual possesses, as well as expected skills for their roles as

Kandenko Integrated Report 2023

61

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate Governance

Remuneration for Directors and Auditors etc.
• Matters concerning the Policy for the Determination of the Details ofRemuneration for each Director
Kandenko has passed a resolution on the Policy for the Determination of the Details of Remuneration for each
Director (“Decision-Making Policy”) at the Meeting of the Board of Directors after deliberation and review by
the Nomination and Remuneration Committee, which was established to improve effectiveness and ensure
the transparency of the Board of Directors. The outline of the Decision-Making Policy is as follows.
Remuneration etc. for Directors shall be within the total amount of remuneration approved by a General
Meeting of Shareholders and shall consist of basic remuneration, bonuses, and restricted share-based
remuneration (outside Directors only receive basic remuneration and bonuses.) Remuneration etc. foreach Director is determined according to the Director’s responsibilities, and the details are resolved at
the Meeting of the Board of Directors after deliberation and review by the Nomination and Remuneration
Committee. Proposals for the payment of bonuses, which take into consideration its nature linked withbusiness performance, are submitted to a General Meeting of Shareholders for approval. Basic
remuneration is paid regularly each month and bonuses are paid promptly after approval at an Annual
General Meeting of Shareholders.
Restricted share-based remuneration is paid at a certain time each year within the remuneration limit
approved at a General Meeting of Shareholders, with the aim of allowing Directors to share the benefits
and risks of stock price fluctuations with shareholders and to motivate Directors to further contribute toraising share prices and improving medium- to long-term corporate value. The percentage of therestricted share-based remuneration in each Director’s remuneration is set at 10%.

• Matters concerning Resolutions of the General Meetings of Shareholders
Regarding Remuneration etc. for Directors and Auditors
Based on a resolution of the 93rd Annual General Meeting of Shareholders held on June 28, 2007, theCompany set the total remuneration for Directors at no more than ¥780 million per year. This resolution
was applicable to 16 Directors.
Furthermore, based on a resolution of the 107th Annual General Meeting of Shareholders held on June29, 2021, the Company decided to pay Directors (excluding outside Directors) restricted share-based
remuneration within the scope of the abovementioned limit on remuneration, and such remuneration to
be paid in order to grant shares with restriction on transfer shall be monetary remuneration claims, thetotal amount of which shall not exceed ¥100 million per year, and the maximum number of commonshares to be issued or disposed of shall not exceed 200,000 shares per year. This resolution was• Reason for the Board of Directors to have determined that the details of
remuneration etc. for each Director to observe the Decision- Making Policy
The details of remuneration etc. for each Director are deemed to observe the Decision-Making Policy
because the Nomination and Remuneration Committee has conducted deliberation and review withregard to the consistency with the Decision-Making Policy, and the Board of Directors passed its
resolution based on the results of such deliberation and review.

• Amount of remuneration etc. for Directors and Auditors
Total amount of remuneration by type*Classification

Number ofrecipients

Total remunerationetc.
Basic remuneration

Director(of which, outside
Directors)

15(4)¥465 million(¥37 million)

Auditor(of which, outside
Auditors)

5(3)¥88 million(¥34 million)

Bonuses

Restricted
share-based
remuneration¥314 million(¥31 million)¥112 million(¥6 million)¥38 million(—)¥88 million(¥34 million)

—
(—)

—
(—)

The number of recipients and the amount of remuneration etc. includes two Directors who retired at the conclusion of the 108th Annual
General Meeting of Shareholders held on June 29, 2022.

State of Progress of the Internal Control System
Based on the Basic Policy for Enhancing the Internal Control System adopted by the Board of Directors(enacted April 2006, revised May 2015), Kandenko has established an Internal Control Committee
chaired by the company president that discusses issues relating to the internal control system. The
Company also lays down internal control regulations that set out the basic principles of internal control
and management regulations for affiliated companies that set out relevant management principles.
Through these and other measures, Kandenko has put in place a system to ensure appropriate businessconduct by the Company and by the corporate group consisting of Kandenko and its subsidiaries.
Additionally, to promote adaptation to the internal control reporting system introduced in fiscal 2008 in
accordance with the Financial Instruments and Exchange Act, the Company has set up a department incharge of reviewing internal controls relating to financial reporting in order to promote appropriate
operation and evaluation and to ensure the credibility of financial reporting.

applicable to 11 Directors.
Based on a resolution of the 93rd Annual General Meeting of Shareholders held on June 28, 2007, theCompany set the total remuneration for Auditors at no more than ¥120 million per year. This resolution
was applicable to five Auditors.

Kandenko Integrated Report 2023

62

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate GovernanceCompliance System
To clarify important points in the Kandenko Group’s business activities and encourage deeper inculcationof compliance, we have enacted the Kandenko Group Charter of Corporate Behavior, and we arepromoting its establishment and raising the awareness of all Group employees about the Charter. We
have set up internal and external compliance consultation points for employees and an internal system
where legal violations can be reported. We are working to establish and maintain a corporate culture offairness and transparency. (Number of consultations received in fiscal 2022: 70 cases)
In its attitude toward antisocial forces, the whole Kandenko organization is committed to a resolutestance rejecting any action that could raise suspicion of an inappropriate relationship. Backing thisstance are the Kandenko Group Charter of Corporate Behavior and the Internal Control Enhancement
Plan adopted by the Internal Control Committee, which form the basis for education, training, andrelated activities to ensure compliance and promote full awareness throughout the organization.

Risk Management System
The Kandenko Group operates a set of internal regulations on risk management. Having categorized anddefined risks relating to business operations item by item, Kandenko devises countermeasures to match
their degree of impact and likelihood of occurrence. In addition to taking advance measures of this kindto prevent risk, Kandenko has designated reporting channels and response systems in place for the
event of the risk materializing.
Additionally, the Internal Control Committee meets periodically to check the operating status of the risk
management system and to analyze and evaluate risk status and related matters, while theestablishment of a dedicated Internal Control Division serves to strengthen the risk management system.
Described below are factors that could possibly have a significant impact on decisions made byinvestors.
Recognizing the potential for such risks, the Kandenko Group is making efforts to prevent theiroccurrence and minimize their impact on our business activities if they do occur.
Moreover, the statements described below regarding the future reflect judgments made by the KandenkoGroup based information available up to the end of the fiscal year ended March 31, 2023.

• Changes in the business environment
In the event that significant changes occur in the business environment, such as decreases inconstruction-related investments or capital investment in electric power facilities and equipment
exceeding projected changes, it is possible that the actual financial performance or other results of theCompany could be affected. Sales to the TEPCO Group account for about 30% of the KandenkoGroup’s sales.

• Fluctuations in the cost of materials or labor costs
Should the cost of materials or labor costs increase significantly, and the increase cannot be reflected in
the contracted fees, it is possible that the actual financial performance or other results of the Company
could be affected.
To address this risk, the Company discusses reflecting such cost increases in construction contracts andworks to reduce costs by diversifying the supply chain and other measures.

• Work and related risks
If work undertaken by Kandenko turns out to be seriously defective or an accident occurs in the course ofwork, it is possible that the actual financial performance or other results of the Company could be affected.
To address this risk, the Company is working to ensure construction quality by analyzing factors and taking
countermeasures against facility accidents and providing training etc. using past accidents as examples.

• Credit risk of client company
In the construction industry, the contracted fee for each transaction is very large, and in many cases, thecontract is subject to the payment of a large construction fee at the handover of the completed
construction. Should the client company suffer from a credit shortage before the Company can receive
payment of the construction fee, it is possible that the actual financial performance or other results of theCompany could be affected.
To address this risk, the Company strives to prevent the occurrence of bad debts by thoroughly checking
the credit status of client companies.

• Asset holding risk
As it is necessary to have such assets as real estate and securities for business activities, should
something happen, such as a significant decline in the fair value of the held assets or a dramatic drop in
the profitability of the real estate for business purposes, it is possible that the actual financial
performance or other results of the Company could be affected.
To address this risk, the Company manages real estate for business purposes by monitoring impairment
and other risks. Of investment securities, cross-shareholdings are investigated annually by the Board of
Directors etc. in terms of the significance of holdings and asset efficiency etc. and, in principle, shares
whose holding significance has declined are sold.

Kandenko Integrated Report 2023

63

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Corporate Governance• Liability for employees’ retirement benefits
Should the fair value of pension assets decline, or should there be changes in the assumptions, such as
the return on investments or discount rate used to calculate the liability for employees’ retirement benefits,
it is possible that the actual financial performance or other results of the Company could be affected.
To address this risk, the Company has established a basic policy for the management of pension assets
and regularly assesses the assets under management.

• Legal regulations
The Company is subject to legal regulations, including the Construction Business Act, the Antimonopoly
Act, and the Industrial Safety and Health Act. Should there be any changes, such as the revision or
repeal of legal regulations or the enactment of new legal regulations, or if changes are made to criteria
for their application or administrative sanctions are handed down based on the legal regulations, it ispossible that the actual financial performance or other results of the Company could be affected.
To address this risk, each division responsible for business execution and the legal affairs division
constantly monitor trends, such as the revision, abolition, and establishment of new legal regulations,and strive to comply with legal regulations by checking their response and state of compliance.

• Risk of information leakage

Systems to Ensure Appropriate Business Conduct by Kandenko and the
Corporate Group Consisting of Kandenko and Its Subsidiaries
Kandenko has put in place a system to promote information sharing with its subsidiaries under which the
Kandenko Board of Directors receives reports on important matters relating to the business conduct ofsubsidiaries, including their accounting and internal control operations.
Moreover, for the purpose of risk management at subsidiaries, internal regulations are in place whosebasic aim is to eliminate risks in advance and to minimize the impact on business activities in the eventthat a risk situation materializes. Additionally, Kandenko provides advice and other support for thecreation of risk management systems at subsidiaries, and periodically checks and evaluates the statusof risk management at its subsidiaries.
By periodically receiving reports from its subsidiaries, Kandenko is able to check their conduct ofbusiness, ascertain the state of management operations at the subsidiary, and offer advice and othermeasures to tackle management issues.
In parallel, the Internal Audit Division carries out internal audit of subsidiaries in accordance with theInternal Control Enhancement Plan. The audit results are reported to the Internal Control Committee andthe Management Committee, and as appropriate to the Board of Directors, to enable any remedial action
to be taken.

In the event that a large amount of damage is incurred as a consequence of the theft of information due
to cyberattacks or the falsification or loss of system data, it is possible that the actual financial
performance or other results of the Company could be affected.
To address this risk, the Company has developed internal regulations and work to strengthen the securityof its information systems and educate its employees. In order to minimize the impact of cyberattacks,
we have implemented a Computer Security Incident Response Team (CSIRT) within the organization.
Through the CSIRT, we are defining roles and establishing reporting systems.

• Disaster risk
If business activities are interrupted or delayed because of the occurrence of natural disasters, such aslarge-scale earthquakes and typhoons, it is possible that the actual financial performance or other resultsof the Company could be affected.
To address this risk, the Company has developed internal regulations and is implementing suchmeasures as informing employees, implementing measures against power-outages at its offices, andpromoting the stockpiling of emergency supplies.

Kandenko Integrated Report 2023

64

Introduction

Governance

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Management

Toshio Nakama *1

Nobuhiro Iida *1

Yuji Ueda *1

Mitsuru Fujii

Hiroyuki Enoki

Chairman and Director

President and Executive Officer

Executive Vice President andExecutive Officer

Executive Vice President andExecutive Officer

Senior Managing Director andExecutive Officer

Senior Managing Director andExecutive Officer

Koichi Nakahito

Hirofumi Tamogami

Hajime Saito *2

Miwako Ando *2

Koji Tanaka *2

Miwa Suto *2

Managing Director and Executive
OfficerManaging Director and Executive
Officer

Director

Director

Director

Director

AuditorDirector

Seiichi Fubasami *1

Shoichiro Kashiwabara

Hidekazu Tanaka

Sumihito Okawa *3

Takashi Suetsuna *3

Shoichi Muto *3

Audit & Supervisory Board Members(Full time)

Audit & Supervisory Board Members(Full time)

Audit & Supervisory Board Members

Audit & Supervisory Board Members

Audit & Supervisory Board Members*1 President*2 Directors Hajime Saito, Miwako Ando, Koji
Tanaka, and Miwa Suto serve as outside
directors in accordance with Article 2, Item
15, of the Companies Act.
*3 Auditors Sumihito Okawa, Takashi
Suetsuna, and Shoichi Muto serve as
outside directors in accordance with
Article 2, Item 16, of the Companies Act.

Kandenko Integrated Report 2023

65

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

D ATA S E C T I O N
67Consolidated 11-Year Financial Summary

68

Consolidated Financial Statements

70

Non-financial information

71

Company Profile72

Stock Status

Kandenko Integrated Report 2023

66

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Consolidated 11-Year Financial Summary(Unit: millions of yen)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

447,741

437,930

436,682447,673

470,943507,205

563,550

616,143556,045495,567

541,579

7,364

8,284

9,388

16,416

26,39729,26130,012

34,69330,04130,64332,748

1.6

1.9

2.1

3.7

5.6

5.8

5.3

5.6

5.4

6.2

6.0

Ordinary profit

8,301

9,089

10,336

17,077

27,34530,03130,79535,56531,04331,754

34,059Profit (loss) attributable to owners of theparent

3,952

4,226

4,615

9,412

17,591

19,05819,70322,515

20,147

20,315

21,167

Comprehensive income

8,238

7,327

11,984

7,137

18,422

22,927

20,31915,68529,222

19,831

21,024

Total assets

364,008359,933

366,177

407,681424,874

443,751459,854488,701

456,999

470,967

487,828

Total net assets

184,269

189,692

193,345

197,980

213,356

230,810

245,954

255,821

279,459

293,514

308,457

ROE (%)

2.2

2.3

2.5

4.9

8.8

8.8

8.5

9.3

7.8

7.3

7.3

ROA (%)

2.3

2.5

2.8

4.4

6.6

6.9

6.8

7.5

6.6

6.8

7.1

Equity ratio (%)

49.49

51.45

51.44

47.22

48.72

50.51

51.85

50.62

59.17

60.30

61.17

Net assets per share (yen)881.41906.29922.05942.42

1,013.33

1,097.36

1,167.30

1,211.13

1,323.90

1,389.96

1,460.23

Earnings per share (yen)

19.34

20.69

22.59

46.07

86.11

93.31

96.46

110.23

98.64

99.45

103.59Cash dividends per share (yen)

12.00

12.00

14.00

14.00

20.00

24.00

26.00

28.00

28.00

28.00

32.00

Net cash provided by (used in) operating
activities

15,401Δ2,2182,921

18,042

6,751

11,46928,251

29,155

12,87327,1507,455

Net cash provided by (used in) investing
activities

Δ12,748

Δ5,8392,253

Δ7,101

Δ17,867

Δ10,015

Δ10,131

Δ13,481

Δ972

Δ9,224

Δ6,635

Net cash used in financing activities

Δ2,900Δ4,540Δ3,74319,807Δ169

Δ7,857

Δ9,153

Δ7,151

Δ26,317

Δ7,789Δ7,319Cash and cash equivalents at end of period

50,55038,69740,15770,89959,61254,09963,06871,57957,18767,42361,015

Number of employees (persons)

8,732

8,821

8,839

8,915

9,244

9,571

9,818

10,003

10,154

10,264

10,320For the fiscal year ended March 31
Net sales
Operating profit
Operating profit ratio (%)

Kandenko Integrated Report 2023

67

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETPrevious
consolidated
fiscal year
(March 31,
2022)(Unit: millions of yen)

Assets

Notes receivable, accounts
receivable from completed
construction contracts andother

Current
consolidated
fiscal year
(March 31,
2023)

Liabilities

Current assets
Cash and deposits

Previous
consolidated
fiscal year
(March 31,
2022)

Current
consolidated
fiscal year
(March 31,
2023)

67,61462,931

185,675

205,535

Securities

4,999

2,299

Costs on construction
contracts in progress

9,547

9,594

Current liabilities
Notes payable, accounts
payable for construction
contracts and other
Short-term borrowings
Lease liabilities

Other

20,88824,635

Allowance for doubtful
accounts

Δ556

Δ1,212

Total current assets

288,170

303,783

Income taxes payable
Advances received on
construction contracts inprogress
Provision for warranties forcompleted construction
Provision for loss on
construction contracts
Other

80,241
6,792

88,163
7,590

711

840

6,815

4,966

12,349

9,581

146

164

9,927

8,069

30,306

31,576147,290

150,953

Long-term borrowings

6,607

5,451

Lease liabilities
Deferred tax liabilities for land
revaluation
Retirement benefit liability

1,694

1,899

6,560

6,287

13,813

13,457

Total current liabilities
Noncurrent liabilities

Non-current assets
Property, plant, andequipment
Buildings and structures

102,322102,022

Machinery, vehicles, tools,
furniture and fixtures

63,97965,592

Other

1,486

1,321

Land

60,49659,544

Total noncurrent liabilities

30,162

28,417

Leased assets

3,685

4,383

Total liabilities

177,452

179,370

Construction in progress
Accumulated depreciation
Total property, plant, andequipment
Intangible assets

1,246

761

Δ118,799

Δ121,343

112,930
5,694

110,960
5,884

Investments and other assets
Investment securities

48,27451,703

Deferred tax assets

9,180

8,652

Other

8,000

8,112

Δ1,284

Δ1,266

Allowance for doubtful
accounts
Total investments and otherassetsTotal non-current assets
Total assets

64,171

67,200182,797

184,045

470,967

487,828

Net assets
Shareholders’ equity
Share capital

10,264CONSOLIDATEDSTATEMENT OF INCOME

10,264(Unit: millions of yen)

Current
consolidated
fiscal year
⎛ From April 1, 2021, ⎞ ⎛ From April 1, 2022, ⎞⎝ to March 31, 2022 ⎠ ⎝ to March 31, 2023 ⎠

20,92521,809Valuation difference on
available-for-sale securities

Δ382

545

60,143

Deferred gains or losses onhedges55

55

26,07727,394

Δ767

Δ1,38530,64332,748Remeasurements ofdefined benefit plans, netof taxTotal other comprehensive
incomeΔ1,093

Δ784Interest income

23

14

Comprehensive income

19,831

21,024

Dividend income

976

1,072

Foreign exchange gains

149

189

Comprehensive income
attributable to

Net sales of completed
construction contracts

495,567

541,579

Cost of sales of completed
construction contracts

438,846

481,436

Gross profit (loss) oncompleted construction
contracts

56,721

Selling, general andadministrative expenses
Operating profit (loss)
Non-operating income

361
1,637

Comprehensive income
attributable to owners of
the parent

19,237

20,400Interest expenses

187

181

Comprehensive income
attributable to noncontrolling interests

594

624

Other

168

145

Total non-operating
expenses

355

326

31,754

34,059Non-operating expenses

Ordinary profit (loss)
Extraordinary income
Gain on sale of non-current
assets—177

Gain on sale of investment
securities

254

172

Total extraordinary income

254

350

Impairment loss

67

1,683

286

202
—

Extraordinary losses

6,378
273,487

Treasury shares

Δ561

Δ536

Loss on retirement of
non-current assets

289,594

Loss on COVID-19

514

Loss on disaster

150

—

Other

11

16

Remeasurements of defined
benefit plans
Total accumulated othercomprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

273,784

14,315

14,868Δ189

Δ134

Δ5,276

Δ5,896

1,342

Δ33

10,191

8,803

9,538

10,059293,514

308,457

470,967

487,828

Other comprehensive income

316

Total non-operating income

6,456

Total shareholders’ equity

Profit (loss)

1,466

Other

257,625

Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Deferred gains or losses onhedges
Revaluation reserve for land

Previous
Current
consolidated
consolidated
fiscal year
fiscal year
⎛ From April 1, 2021, ⎞ ⎛ From April 1, 2022, ⎞⎝ to March 31, 2022 ⎠ ⎝ to March 31, 2023 ⎠Previous
consolidated
fiscal year

Retained earnings

Capital surplus

CONSOLIDATED STATEMENT OF(Unit: millions of yen)
COMPREHENSIVE INCOME

1,031

1,902

Profit (loss) before incometaxes

30,97832,507

Income taxes - current

10,907

10,087

Income taxes - deferred

Δ854

609

Total income taxes

10,052

10,697

Profit (loss)

20,92521,809609

641

20,315

21,167

Total extraordinary losses

Profit (loss) attributable to noncontrolling interests
Profit (loss) attributable toowners of the parent

Kandenko Integrated Report 2023

68

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Consolidated Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(Unit: millions of yen)

Shareholders’ equity
Previous consolidated fiscal
year(From April 1, 2021, to March 31, Share capital
2022)

Balance at beginning of period

10,264

Capitalsurplus

6,441

Retainedearnings

Δ588

Valuationdifference on Deferred
Total
gains orshareholders’ available-for- losses onsaleequityhedgessecurities

259,118

14,681

Δ245

Total

Revaluation Remeasurements accumulated
otherreserve for of defined benefit
planscomprehensive
land

Noncontrollinginterests

incomeΔ5,247

2,110

11,2999,042—

279,459——

Dividends of surplus

Δ5,719Δ5,719Δ5,719Profit (loss) attributable toowners of the parent

20,315

20,315

20,315

Reversal of revaluation
reserve for land

29

Purchase of treasury shares

14

Disposal of treasury shares

29

29

Δ0

Δ0

Δ0

27

42

42

Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Δ366

55

Δ29

Δ767

Δ1,107

496

Δ611

—

14

14,62526

14,666

Δ366

55

Δ29

Δ767

Δ1,107496

14,054

10,264

6,456

257,625Δ561

273,784

14,315Δ189

Δ5,276

1,342

10,191

9,538

293,514(Unit: millions of yen)
Shareholders’ equity

Accumulated other comprehensive income

Current consolidated fiscal year
(From April 1, 2021, to March 31,
Share capital
2022)

Balance at beginning of period

10,264

CapitalsurplusRetainedearnings

Treasuryshares6,456

257,625

Δ561

Valuation
Total
difference on Deferredgains orhareholders’ available-for- lossesonequitysalehedgessecurities
273,784

14,315

Δ189

Total
Revaluation Remeasurements accumulated
otherreserve for of defined benefit
planscomprehensive
land
incomeΔ5,276

1,342

10,191

Noncontrollinginterests

Total net
assets

9,538

293,514

Changes during period
Purchase of shares of
consolidated subsidiaries

Δ90
Δ5,925

Dividends of surplus

Δ90

Δ90

Δ5,925Δ5,925

Profit (loss) attributable toowners of the parent

21,167

21,167

21,167

Reversal of revaluation
reserve for land

619

619

619

Δ0

Δ0

Δ0

25

37

Purchase of treasury shares
12

Disposal of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period—
10,264Δ77

15,861

6,378

273,48725

Δ536

15,809289,594

37
553

55

Δ619

Δ1,376

Δ1,387

520

Δ866

553

55

Δ619

Δ1,376

Δ1,387520

14,942

Δ5,896Δ33

8,803

10,05914,868Δ134

Previous
Current
consolidated
consolidated
fiscal year
fiscal year
⎛ From April 1, 2021, ⎞ ⎛ From April 1, 2022, ⎞⎝ to March 31, 2022 ⎠ ⎝ to March 31, 2023 ⎠Total net
assetsChanges during period
Purchase of shares of
consolidated subsidiaries(Unit: millions of yen)

Accumulated other comprehensive income

Treasuryshares242,999

CONSOLIDATED STATEMENT OF CASH FLOWS

308,457

Net cash provided by (used in) operating
activities
Profit (loss) before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for loss on
construction contracts
Increase (decrease) in retirement benefit
liability
Interest and dividend income
Interest expenses
Loss (gain) on sale of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in costs on construction
contracts in progress
Increase (decrease) in trade payables
Increase (decrease) in advances received on
construction contracts in progress
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes refund (paid)
Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities
Net decrease (increase) in time deposits
Purchase of property, plant, and equipment
Proceeds from sale of property, plant, andequipment
Purchase of investment securities
Proceeds from sale and redemption of
investment securities
Loan advances
Proceeds from collection of loans receivable
Other
Cash flows from investing activities
Net cash used in financing activities
Net increase (decrease) in short-termborrowings
Proceeds from long-term debt
Repayments of long-term borrowings
Repayments of lease liabilities
Dividends paid
Other
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash andcash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

30,9787,435
67

32,507
8,033
1,683

Δ25

638

4,380

Δ1,857

Δ2,240Δ1,778

Δ1,000
187
Δ254
6,546

Δ1,087181
Δ172
Δ20,004

1,568

Δ46

Δ8,591

7,920

Δ294

Δ2,768

Δ4,20334,5511,000
Δ187
Δ8,214Δ4,83818,4101,087
Δ181
Δ11,860

27,1507,455—
Δ7,241

1,275
Δ5,46045

1,392

Δ1,958

Δ3,043

1,367

205

Δ940
1,046
Δ1,543
Δ9,224

Δ790
650
Δ864
Δ6,635

Δ620

—

—
Δ632
Δ760
Δ5,719
Δ56

200
Δ557
Δ879
Δ5,925Δ156

Δ7,789Δ7,319100

90

10,236Δ6,40857,18767,42367,42361,015

Kandenko Integrated Report 2023

69

Introduction

Section 1
Value Creation Story

Message from the President

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Non-financial information (As of March 31, 2023)

Item
Number of employees(consolidated)

Unit

Overall

Persons

Overall
Number of employees

Average age

Years of service

Turnover rate

Number of users of thenursing care leave
program

10,320

7,202

7,350

7,497

7,619

7,682

7,007

7,123

7,180

458

490

496

502

Overall

41.5

41.6

41.7

41.9

42.1

41.5

41.6

41.6

41.8

42.1

Female

41.4

41.7

42.1

42.6

43.4

Overall

19.1

19.1

19.0

19.1

19.4

19.3

19.2

19.2

19.3

19.5

Female

16.0

16.3

16.5

16.4

16.9

Overall

1.9

2.0

2.1

1.8

2.4

Male

Male

Male

Age

Years

%

1.9

2.0

2.1

1.8

2.5

1.1

1.5

1.2

1.6

1.9

Percentage of
employees using thechildcare leave
program

Unit
OverallMale%

FemalePercentage of employees using the spousechildbirth leave program

Actual results
Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

5.7

6.2

13.1

11.2

18.3

0.0

0.7

6.3

5.6

10.9

100.0

100.0

100.0

100.0

100.0

%

58.8

70.6

60.6

58.8

63.0

Number of foreign
employees

Persons

13

11

15

14

16

Female technical andengineering staff

Persons

81

84

94

105

108

Percentage of
employees rehired after
mandatory retirement
age

%

87.3

81.8

86.8

89.8

89.1

Average annual salary

OverallThousands of Yen

7,562

7,752

7,689

7,547

7,449

Male

Thousands of Yen

7,723

7,918

7,841

7,694

7,602

FemaleThousands of Yen

5,222

5,335

5,496

5,486

5,367

%

67.6

67.4

70.1

71.3

70.6

Ratio of women’s

Age

41

40

40

39

39

Persons

1,720

1,764

1,792

1,864

1,932

Paid leave usage rate

Overall

%

49.3

56.5

59.9

66.9

72.4

Overall

Hours

183.6

184.4

178.1

175.4

173.0

wages to men’s wages

Number of women in
managerial positions

Persons

17

18

22

23

28

Average total working
hours per person/
month

Percentage of female
employees inmanagerial positions

%

3.7

3.9

4.5

4.6

5.5

Ratio of employees who take stress check

%

93.1

93.8

95.2

95.6

96.8

Work engagement

%

—

—

—

82.5

82.7

Employment rate%

2.6

Employee engagement

%

—

—

—

—

66.6

Number of employee training hours* (Companywide joint training etc.)

Total
hours

34,35935,813

22,862

26,60037,658

Number of employee training days* (Companywide joint training etc.)

Total
days

4,581

4,775

3,048

3,547

5,021

Number of participants in training* (company-wide
joint training etc.)

Total
numberofpersons

1,218

1,910

1,618

2,114

2,442

2.2

2.2

2.3

2.7

331

333

305

314

330

313

317

289

303

307

Female

18

16

16

11

23

Overall

156

74

106

79

81

104

72

93

67

73

52

2

13

12

8

Male

Male

Persons

Persons

FemalePercentage of
mid-career hires offull-time workers

10,264Item

Fiscal 2022

6,892

Persons

Overall

Number of mid-careerhires

10,154

Fiscal 2021

442

Number of men in
managerial positions

Number of regular hires

10,003Fiscal 2020

6,760

Earliest age

Employment of persons
with disabilities

9,818

Fiscal 2019

FemaleMale

FemalePromotion to
managerial positions

Actual results
Fiscal 2018

2.1

1.0

1.4

1.0

1.0

1.5

1.0

1.3

0.9

1.0

Female

11.4

0.4

2.7

2.4

1.6

Overall

3

4

3

5

3

1

3

2

3

3

2

1

1

2

0

OverallMale

Male
Female%Persons*Training provided by Education & Training Center

Kandenko Integrated Report 2023

70

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Company Profile (As of March 31, 2023)

Company outline

The Company’s website

Company name

Kandenko Co., Ltd.

Established

September 1, 1944

Head Office

4-8-33 Shibaura, Minato-ku, Tokyo, 108-8533 Japan

Paid in capital¥10,264 million

Total number of

205,288,338 shares

The Company sees its website as one of the important sources of
information. Please visit our website where we post IR information, an
introduction to our technologies and services, and the latest news.

https://www.kandenko.co.jp/
To shareholders and investors:

shares issued
Employees

Consolidated 10,320 persons, Non-consolidated 7,682

https://www.kandenko.co.jp/ir

persons

Network
Domestic Offices
Overseas Offices

Domestic Offices
Head Office

4-8-33 Shibaura, Minato-ku, Tokyo, Japan

Tama Branch

2-24-6 Myojincho, Hachioji-shi, Tokyo, JapanTokyo Branch

4-8-33 Shibaura, Minato-ku, Tokyo, Japan

Kansai Branch

Nakanoshima Festival Tower 20th Floor, 2-3-18
Nakanoshima, Kita-ku, Osaka, Japan

Kanagawa Branch 1-1-8 Hiranuma, Nishi-ku, Yokohama-shi,
Kanagawa, Japan

Nagoya Branch

Nagoya Toho Building 6th Floor, 1-2-7 Sakae,
Na- ka-ku, Nagoya-shi, Aichi, Japan

Kyushu Branch

Yakuin Business Garden 4th Floor, 1-1-1
Yakuin, Chuo-ku, Fukuoka, Japan

Chiba Branch

2-1-24 Shinjuku, Chuo-ku, Chiba-shi, Chiba,
Japan

Saitama Branch

1-195-1 Sakuragicho, Omiya-ku, Saitama-shi,
Saitama, Japan

Ibaraki Branch

2-7-14 Jonan, Mito-shi, Ibaraki, Japan

Tochigi Branch

91-1 Imaizumicho, Utsunomiya-shi, Tochigi,
Japan

Gunma Branch

215-6 Furuichimachi, Maebashi-shi, Gunma,Japan

Hokkaido Branch J&S Resona Building 3rd Floor, 4-1-2 Kitaichijo
Nishi, Chuo-ku, Sapporo-shi, Hokkaido, Japan
Tohoku Branch

Sendai Daiichi Seimei Tower Building, 4-6-1
Ichiban-cho, Aoba-ku, Sendai-shi, Miyagi,
Japan

Nagano Branch

1629-32 Midoricho, Nagano-shi, Nagano,Japan

Yangon Branch

No (291), Corner of Yazathingyan 7th & 8th
Street, Yatana Road, South Okkalapa
Township,Yangon. Myanmar

Yamanashi Branch 4-12-25 Chuo, Kofu-shi, Yamanashi, Japan
Shizuoka Branch

8-12 Yoneyamacho, Numazu-shi, Shizuoka,
Japan

Overseas Offices
Singapore
Regional Branch

2 Leng Kee Road #05-08 Thye HongCentre, Singapore 159086

Taiwan Branch

6F-1, No. 45, Section 1, Minchuan
Eastern Road, Taipei, Taiwan

Overseas business
https://www.kandenko.co.jp/business/construction/oversea
Kandenko Integrated Report 2023

71

Introduction

Message from the President

Section 1
Value Creation Story

Section 2
Value Creation Initiative

Section 3
ESG Management Initiatives

Data Section

Stock Status
The shares of common stock of Kandenko are listed on the Prime Market of the Tokyo Stock
Exchange.
On March 31, 2023, there were a total of (in thousands) outstanding shares 14,973 shareholders.
The table below lists our main shareholders.

Main shareholders (As of March 31, 2023)
Name

Stock-Related Information
Number of shares held

Shareholding ratio

1

TEPCO Power Grid, Inc.

94,753,552

46.36%

2

The Master Trust Bank of Japan, Ltd. (Trust Account)

15,584,900

7.62%

3

Custody Bank of Japan, Ltd. (Trust Account)

7,872,300

3.85%

4

Kandenko Group Employees Shareholding Association

6,429,630

3.14%

5

STATE STREET BANK AND TRUST COMPANY 505001

3,070,266

1.50%

6

THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT

2,744,500

1.34%

7

Mizuho Bank, Ltd.

2,177,439

1.06%

8

DFA INTL SMALL CAP VALUE PORTFOLIO

1,471,800

0.72%

9

STATE STREET BANK WEST CLIENT-TREATY 505234

1,452,900

0.71%

10 JP MORGAN CHASE BANK 385781
Total

Fiscal year-end

March 31

Ordinary general meeting ofJuneshareholders
Record dates for dividend

March 31 for the fiscal year-end dividend.

payments

September 30 for the interim dividend.

Record date

The date on which shares must be owned for shareholders to exercise voting rights at the general
meeting of shareholders is March 31. If other votes are required, the record date will be set andannounced in advance.

Public announcements

Public announcements will be posted electronically. However, if we cannot issue an electronic
notification, we will place a notice in the Nihon Keizai Shimbun published in Tokyo. Kandenko’s
URL for public notices is as follows.
https://www.kandenko.co.jp//

1,354,695

0.66%Transfer agent

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

136,911,982

66.99%

Transfer agent contact point

Sumitomo Mitsui Trust Bank, Limited Stock Transfer Agency Department, 2-8-4 Izumi, Suginami-(inquiries about stock-relatedku, Tokyo 168-0063, Japan
Tel: 0120-782-031 (toll-free)*The shareholding ratio is calculated by subtracting 938,779 shares of treasury stock from the total number of shares issued.

Number of Shares Held by Type of Shareholder (As of March 31, 2023)

matters)

Monthly Stock Price(Unit: Yen)

Treasury shares

0.45% (0.47%)

Individuals, other

14.71% (14.32%)

1,500

1,250

Foreign companies etc.

17.28% (16.21%)

Financial institutions

1,000

17.20% (18.72%)
750

Japanese companies

50.36% (50.28%)0Note: Figures in parentheses show data as of March 31, 2022.

Apr.
2022

Mar.

June

July

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2023

Feb.

Mar.

Apr.

May

June

July

Aug.

Sep.

Kandenko Integrated Report 2023

72

Kandenko Co., Ltd.
4-8-33 Shibaura, Minato-ku, Tokyo, 108-8533 Japan
TEL: 03-5476-2111
https://www.kandenko.co.jp/