Integrated Report

KYUDENKO REPORT

2023

1. Introduction

Contents

Corporate Philosophy

1. Introduction

3. Sustainability
02

Message from the President

03

Growth Trajectory of Kyudenko

09

2. Vision and Strategy
Value Creation Process

11

Initiatives for Promoting Sustainability Management 27
E Environment(1) Promotion of Environmental Management

29

S Society(1) Strategy for Human Capital

33(2) Promoting Diversity

34(3) Occupational Safety and Health36(4) Education and Training

37(5) Coexistence with Local Communities

38(6) Disaster Prevention

39

Long-term Vision

15

Mid-term Management Plan

17(7) Waste

39

Business of Kyudenko

19(8) Innovation [Technology Development]

39(9) Innovation [DX]41

Technology Division
19(Electrical Work, HVAC and Sanitary Facility Work)Electric Power Division(Power Distribution Line Work)

21

Green Innovation Business Division(Renewable Energy Generation Plant Work)

23

Renewable Energy Generation Business

25

Overseas Business, PPP/PFI Business,
Olive Business26

G Corporate Governance

43

Message from the Outside Directors

48

Management Team of Kyudenko

51

1. Introduction

Corporate Philosophy/Action Guidelines/
Charter of Behavior

We contribute to society through providing agreeable
environmental solutions.
2 We keep challenging for sustainable development throughour engineering strength and create a new value.
3 We aim to create a mutual respecting environment
in Kyudenko which utilize and develop employees’
personality.
1

Action Guidelines(1) We will create the future environment with a new perspective(2) We will enhance technological force with creativity and ingenuity(3) We will appropriately accept and respond to customers’ voice(4) We will embrace teamwork in work(5) We will create a vibrant and bright workplace

Kyudenko Charter of Behavior

4. Data Section
Financial and Non-financial Highlights

55

10-year Financial Summary

57

Report on Financial Results and Financial Analysis 59
Consolidated Balance Sheet, Consolidated Statement
61
of Income, Consolidated Statement of Cash Flows
Corporate Profile and Stock Information

64

Business Locations

65

As an integrated utilities engineering service, we will create an environment that aims for ideal harmony of“people”, “environment”, and “technology”, and as a beneficial company that is trusted by society, we will
respect human rights, comply with the spirit of relevant laws, regulations, and international rules, and act
voluntarily to fulfill our responsibilities with a good social conscience, based on the following ten principles.
1. We will engage in the research and development of technologies that meet the requirements of society and customers
to enhance service, safety, quality, and value, pay due consideration to the protection of personal information andcustomers’ information, and provide integrated utilities that will earn our customers’ satisfaction and trust.
2. We will engage in fair, transparent, and free competition, conduct appropriate transactions, and maintain healthy, normal
relationships with politicians and governments.
3. We will disclose accurate corporate information proactively, fairly, and in a timely manner with the aim of practicing
corporate management that is open to all both within and outside the Company.
4. We will give our employees relaxing and enriched lives, ensure safe, comfortable, and open workplaces, and create a
corporate culture that is bright and vibrant, and respects the character, individuality, and diversity of our employees.

Editorial Policy
This report aims to create an opportunity for dialogue with shareholders, investors and other stakeholders, providing them with the Kyudenko Group’s initiatives
for enhancing its corporate value over the medium to long term. We have edited this report to provide an easy-to-understand overview of our business model,
business activities, growth strategies, and non-financial initiatives, with specific examples. We hope this report will help you better understand our Group.

Applicable Period and Scope
Period: April 2022 to March 2023. Including some activities before and after this period.
Scope: Kyudenko Group. Including some reports of Kyudenko alone.

Disclaimer
The financial results forecasts, future outlook, strategies, targets, etc. contained in this report, excluding those related to past or current facts,are forward-looking statements and are based on plans, expectations, and judgements on the basis of the information currently available to theCompany and certain assumptions considered to be reasonable. Therefore, please note that actual results may differ from these forecasts andother forward-looking statements due to changes in economic conditions and various other uncertain factors.

01

Kyudenko Corporation

5. Recognizing engagement in environmental issues as a common challenge for all humanity and an important mission in
our corporate activity, we will act voluntarily and proactively.
6. We will make active contributions to society as a good corporate citizen and strive to exist in harmony with local
communities.
7. We will resolutely confront any anti-social forces or organizations that pose a threat to the order and safety of civic
society.
8. In our international business activities, we will comply with international rules and local laws and regulations, respect
local culture and customs, strive to forge friendships and goodwill, and develop businesses that will contribute to thegrowth and prosperity of those local regions.
9. Recognizing that their role is to realize the spirit of this Charter, top management will set an example for others,
thoroughly disseminate the Charter among all concerned parties, constantly listen to feedback from within and outside
the Company, establish effective internal systems, and strive for the thorough observation of corporate ethics.
10. In the event of a situation that runs counter to this Charter, top management themselves will make their willingness tosolve the problem clear within and outside the Company, strive to solve the problem and prevent recurrences, disclose
information to the community swiftly and with accuracy, pursue accountability, and, having clarified authorities andresponsibilities, impose strict penalties, including on themselves.

KYUDENKO REPORT 2023

02

1. Introduction

Message from the President

On Assuming the Office of President

1. Introduction

We will continue totake on new challenges ona daily basis torealize further growth.

Kazuyuki Ishibashi
Executive Officer
Representative President

My name is Kazuyuki Ishibashi, and I was appointed
president of Kyudenko Corporation in April 2023. The
weight of the management baton that has been passedon since the company was founded is indeed sobering.
Our group’s main business is to breathe life into
buildings, that is, to circulate electricity, air, and waterprovide more comfortable spaces. I recognize that mysingle most significant responsibility is to continue tocreate new value for society and to expand Kyudenko’s
performance driven by our main businesses of power
distribution, electrical work, and HVAC.
The reclassification of COVID-19 to a Class 5
infectious disease has finally made the outlook for the
future business environment more promising.
Meanwhile, the rapid changes in the environment
triggered by the pandemic—including progress indigitalization, heightened awareness of ESG, and thediversification of values and needs—have made itchallenging for society to apply past successful
experiences. To adapt to these changes in theenvironment, we believe it is vital to rapidly ascertain
societal needs and proactively accept challenges.
To date, the Kyudenko Group has always taken on
challenges. Examples include entering the HVAC andsanitary facility work business ahead of its competitors,
expanding its business in the Tokyo metropolitan area,and entering the renewable energy field. In our current
Mid-term Management Plan, we are implementing
various initiatives under the three reforms: construction
capability, productivity, and governance. This culture oftaking on challenges is in our DNA that has been
conveyed from generation to generation since ourfounding, and we believe it is one of the Group’s
strengths. I intend to carry this tradition forward as well,and will strive to further enhance our corporate value.

03

Kyudenko Corporation

KYUDENKO REPORT 2023

04

1. Introduction

Message from the President
Mid-term Management Plan (2020–2024)

Putting All Our Efforts into Achieving
Numerical Targets
See P. 17-18 for details

Initiatives for FY2024, the Fourth Year of the Midterm Management Plan

Accelerating Work Style Reforms through
All-Hands-on-Deck Construction
The Kyudenko Group is facing a significant challenge in theform of a chronic shortage of personnel in the constructionindustry as a whole, along with the regulations limiting
overtime work that will go into effect in FY2024, under thecircumstances of having the largest volume of construction
work on hand in its history. In resolving these issues, we
believe that a fundamental review of previous methods,
approaches, and mechanisms is vital in realizing work stylereforms across the breadth of the Group. As such, thetheme for the current fiscal year, the fourth year of the
Mid-term Management Plan, is “improving productivity fora new era (accelerating work style reform).”

05

Kyudenko Corporation

1. Introduction

The Group is currently in the fourth year of a five-year
Mid-term Management Plan that ends in FY2024. Under
the main theme of “Establish a management foundation
for sustainable growth ~Realization of the threereforms~,” we are making all our utmost efforts to create
a “strong and muscular corporate structure” that can
win the competition even in an economic recession,
while securing order volumes with consideration paid toconstruction capacity.
With regard to numerical targets, we are aiming forsales of 500.0 billion yen and ordinary profit of 50.0
billion yen in FY2024, the final year of the plan. With
regard to the current business environment, we arebeing buoyed by a tailwind in the form of large-scale
redevelopment in Fukuoka, Kyudenko’s hometown, anda sense of urgency concerning the construction ofsemiconductor and other factories in Kyushu.
Construction work in hand is at record levels thanks toour efforts to secure orders for these projects.
Furthermore, concerning profitability, we have been
implementing the “promotion of price negotiations
reflecting rising material and labor costs” as one of ourmost important initiatives since the last fiscal year. Our
focus is currently on improving the profitability at thetime of order receipt.
Given this, we believe that we are on track to achieve
our numerical targets for the final year of the plan, in
terms of both sales and ordinary profit.

As a specific initiative, in April 2023, the Workstyle
Reform Promotion Office see P. 36 for details wasestablished directly under me, the President.
Approximately 40 administrative employees wereassigned to large job sites and the technology divisions ofbranches and sales offices. One of the aims of thisproject is to transfer some administrative tasks related toconstruction work previously accomplished by engineers
to these clerical staff members, thereby reducing theburden on the former. The hope is that this all-hands-ondeck construction system will reduce overtime forengineers. In addition, as the transfer of administrative
work will create an environment in which we can focus
more on process and cost management than ever before,
we aim to further improve construction profitability.
Meanwhile, we encourage administrative employees
to consider this a step on their career path, as they cangain experience in the technology division to deepen
their understanding of front-line operations, while also
realizing the contribution they can make to the company
through their own work.
Toward Sustainable Growth

Realize Total Solutions Including

1 Renewable Energy and Energy Creation in
Addition to the Expansion of Facility Work
Looking ahead at future business development, there is
no doubt that the greatest potential for growth exists in
the Tokyo metropolitan area and the Kansai region. In
the metropolitan area—centering on Tokyo—theappetite for development continues to be robust, and in
the Kansai region, Expo 2025 Osaka, Kansai, Japanand integrated resorts (IR) are forecast to remain strong.
Locally, on the other hand, in Fukuoka, construction
demand will continue for the foreseeable future in linewith large-scale redevelopment projects such as “Tenjin
Big Bang” and “HAKATA CONNECTED.” Also in
Kyushu, there is activity related to semiconductor
factory construction. In response to the activity in eacharea, we aim to further grow our business by maintaining
and expanding our stronghold in Kyushu, while actively
allocating personnel to the Tokyo metropolitan area, theKansai region, and elsewhere.
The Group has the advantage of being equipped toserve as a one-stop shop for electrical and HVAC andsanitary facility work. In addition to these core businesses,
we established the Green Innovation Business Division—
which specializes in renewable energy and energy
creation—in 2021 see P. 23–24 for details . This enables us tooffer total solutions that only we can provide, with newvalue added to our existing strengths, including the
introduction of solar power generation facilities andenergy management systems (EMS), in addition toelectrical, HVAC, and sanitary facility work for buildings.
We believe that fully leveraging these strengths will enable
us to further expand our business areas.

2

Accelerate Efforts
Toward Carbon Neutrality

As the world moves toward carbon neutrality, we viewthe realization of a carbon-free society as a tremendous
business opportunity. Since the feed-in tariff (FIT)
scheme was introduced in 2012, the Kyudenko Grouphas focused on building power plants utilizing renewableenergy sources—primarily mega solar power plants—inadvance of other companies in our industry.
Currently, due to factors including the decrease in theunit price of electricity sold under the FIT scheme, we
assume that the demand for mega solar power plant
construction under the FIT scheme will normalize as it
has in the past. As an alternative, we are focusing on
projects such as solar power PPA business based on aself-consumption model, in addition to construction
orders for wind and biomass power generation.
Moreover, we are expanding energy services from anenergy conservation perspective, and are aiming to
expand the introduction of Kyudenko EMS
see P. 39 for details , a unique energy management systemthat employs lead-acid batteries. In 2022, we installed
the Kyudenko EMS at Ogi City Hall in Saga Prefecture,
our first in Japan. We hope to use this as an opportunity
to develop new business areas, such as the resiliencebusiness for municipalities nationwide and the installationof off-grid systems in remote island areas.
Regarding environmental issues such as climatechange, we are stepping up our efforts not only to win
and undertake construction projects, but to achieve ourown carbon neutrality. We set medium- to long-termgoals last year for lowering our own greenhouse gas(GHG) emissions, and also performed an analysis of thefinancial impact on our business based on the TCFD
recommendations.
We intend to consider and implement further concrete
initiatives toward realizing carbon neutrality by 2050.

KYUDENKO REPORT 2023

06

1. Introduction

Message from the President

The Kyudenko Group presently owns about 500
megawatts of renewable energy sources, including solar
and wind power see P. 25 for details . The operating revenue
generated by this business totaled approximately 4.0
billion yen in the year ended March 31, 2023, and weassume that this will increase even further going
forward. In the future, in addition to renewable energy, I
believe that as a new strategy, we could consider
developing a real estate business by effectively
leveraging aging and unused facilities owned by
Kyudenko. We have established a CRE Strategy
Business division to look into such projects, and weplan to pursue them actively going forward.
This will lead to an increase in the proportion ofrevenue outside of the existing facility work business,ensuring a stable revenue stream that is resilient in theface of economic fluctuations. In the next Mid-termManagement Plan, we plan to establish numericaltargets for these operating revenues, taking into accountthe asset composition balance.

07

Kyudenko Corporation

Human Resource Strategy Linked to

4 Management Strategy
See P. 33 for details

As the foundation necessary to realize and accelerate
the goals and initiatives I have mentioned, humanresources are indispensable.
As a rule, I do not feel that we should order stakeholders
in terms of importance, but I do believe that one categoryof stakeholders that should be prioritized is the employee.
When employees are motivated to work and do their jobs
at a high level of quality, we believe this creates a virtuous
circle, as business performance improves, which in turnsatisfies shareholders and investors. It is vital for companies
to recognize the significance of employees because
shareholders, investors, and customers are important.
Meanwhile, the securing and developing human resources
is not something that can be regarded as a vague concept;
it is necessary to adopt a human resources strategy that isunderpinned by a clear-cut management strategy.
As I mentioned at the beginning, our revenue source isfacility work—mainly power distribution line, electricity,and HVAC. First, we will shift human resources to thisarea. Currently, buoyed by robust construction demand,

5 Focus on Human Resource Development
Based on our conviction that people are one of our mostvaluable assets, we set forth a profile of “ideal humanresources” as a common goal for all employees andencourage their daily growth through human resource
development. In 2012, we established the Kyudenko
Academy as a symbol of our commitment to humanresources development. We systematically conduct ahost of training programs throughout the year—including
training for new hires, tier-based training common to alldivisions, and training to acquire advanced, specialized
knowledge, technologies, and skills.
In recent years, we have begun offering more trainingthat focuses on independent thinking. In 2015, welaunched one such program, the “Next-generation
Leader Development Program” see P. 38 for details todevelop future executives. This system, called the“Kyudenko Management School,” is oriented toward
fostering employees with a bird’s eye view of the Groupand a sense of management from a young age by
dividing them into mid-level, managerial, and executive
tiers. As part of this training, we engage in earnest
discussion on a variety of management issues andmake direct proposals for improving them to the
management team—myself included—in a serious
exchange of opinion. In this way, from identifying issues
to how to present them, we pursue an idealized image
appropriate for a management executive.
Meanwhile, the average age of our employees has been
declining each year, making training the younger generation
crucial. The Kyudenko Group has introduced an on-the-job
training (OJT) system for the cultivation of young employees
who have been with the company for less than three years,
but rebuilt the system in FY2021 see P. 37 for details .
Previously, senior employees who were relatively close in
age to young employees were appointed as mentors toprovide one-on-one training. Based on the most recent
review, however, we clarified in internal rules that we shouldmake use of the entire workplace in the training of young
employees, including the establishment of a new OJTSupporter system to provide general support for elders.
In addition to these ongoing efforts, we introduced an
engagement survey in FY2021 as an initiative to enhance
employee engagement see P. 36 for details . In FY2022, thetarget of the survey was expanded to include all
employees. We are undertaking improvements to resolve
the factors identified in the survey as serving to hinder
growth, so that our employees can feel truly fulfilled intheir work, We believe we can build a firmer relationshipof trust between the company and our employee.

1. Introduction

3 Secure Stable Revenue

the Kyudenko Group is receiving an increasing number oforders—particularly for very large-scale projects.
Meanwhile, these projects are characterized by extended
construction periods, and their performance varies fromone fiscal year to another due to fluctuations in sales andprofits recorded. What is important, therefore, is toexpand small- and medium-sized projects—mainly
renewals, which are relatively immune to economic
impact. As one human resources strategy to accomplish
this, we will promote the multifunctional engineers andtechnicians. In more concrete terms, for example, anengineer could manage the construction of both electricaland HVAC systems, or a technician could play a rolesuch as construction management, traditionally filled byan engineer. While this approach may be challenging
when it comes to very large-scale projects, but we believe
it is feasible for small- and medium-sized projects.
We would also like to shift human resources to recurring
revenue businesses such as power generation, private
finance initiative (PFI), and real estate businesses. As I
noted earlier, the power generation business alone has
produced annual operating revenues of 4.0 billion yen, andwe are also pursuing a corporate real estate (CRE) strategy
for the utilization of unused real estate. In developing abusiness such as this, there are inevitably limits to what we
can achieve with only the knowledge and experience wehave accumulated in facility work to date. We will reassign
employees who are adept at finance and highly motivatedwhen it comes to new business, but we also believe it isnecessary to aggressively recruit specialized personnel
from external sources.

In Closing
The Kyudenko Group will aim to further enhance its
corporate value by continue to make contributions tosociety.
We will meet the expectations of our shareholders andinvestors by maintaining continuous and stable dividend
payment, and executing a flexible capital policy
corresponding to changes in the business environment.
Recently, there has been an increased focus on
improving P/B ratios and return on equity, as represented
by ROE. The Kyudenko Group’s P/B ratio is currently
over 1x and ROE is at 10%. We will not be content withthe status quo, however, and constantly practicemanagement from a stakeholder perspective.
We sincerely hope that you will continue to have highexpectations and offer your support to the KyudenkoGroup going forward.

KYUDENKO REPORT 2023

08

1. Introduction

Growth Trajectory of Kyudenko

Sales■Power distribution line work ■Electrical work ■HVAC and sanitary facility work ■Solar power plant work
(FY2024: renewable energy, etc.)● Ordinary profit■Others

2020
COVID-19 pandemic

500.0

billion yen

Sales(Million Yen)

Ordinary profit(Million Yen)

500,000

2012
Abenomics

1991
Collapse of the
bubble economy

300,000

2016
Introduction of negative interest rates
The 2016 Kumamoto Earthquake

2008
Global financial
crisis

1995
Great Hanshin-Awaji Earthquake

408.1

billion yen
1. Introduction

Our logo is based on the letter “K”, the initial of Kyudenko, and represents a corporate image that aims
at an optimal harmony of“People = red”,“Environment = green” and“Engineering Skill = blue”.
The cuboid extending toward the upper right direction symbolizes our will to pursue dynamic growth.

400,000

75,000

Sales

Origin of our logo

60,000

Sales

315.9

billion yen

45,000

Sales

2007
Postal service
privatization

215.0

billion yen

2011Great East Japan
Earthquake

1986-1991
Bubble economy

200,000

30,000
Sales

105.1

billion yen

15,000100,000

0

0

1944

1980

1985

1995

2000

2005

2010

2015

2020

2022 2023 2024

(plan) (target)

25 years from 1944

25 years from 1970

25 years from 1995

25 years from 2020

Foundation phase when Kyudenko
was born as a company engaging inelectrical and power distribution line
work across the Kyushu region

Establishment and growth phase of a
firm management base, with stocklisting and the 50th anniversary

Growth phase during which theCompany expanded its operations in
the metropolitan area and entered therenewable energy field

Acceleration phase to realize
sustainability by the 100th anniversary

Kyudenko was established in December 1944 as “Kyushu
Denki Koji Corporation” (former Kyudenko) by integrating
fourteen electric work companies in Kyushu.
December 1944 Established Kyushu Denki Koji Corporation
October 1945 Opened Tokyo Satellite OfficeJune1947 Concluded an agreement on contracted
power distribution line work with Kyushu
Haiden Co, Ltd. (current Kyushu ElectricPower Company, Incorporated)July
1964 Started operation of HVAC and sanitaryfacility work
February 1965 Opened Osaka Office

09

1990

Kyudenko Corporation

The Company was listed on the Fukuoka Stock Exchange andOsaka Exchange (second section) in November 1968, anddesignated to the first section of the Tokyo Stock Exchange andOsaka Exchange in September 1972. In December 1989, thecompany name was changed to the current “Kyudenko,” and it
marked the 50th anniversary in 1994.
November 1968 Listed on the Fukuoka Stock Exchange andthe Second Section of the Osaka Stock
Exchange
September1972 Designated to the First Sections of the Tokyo
Stock Exchange and the Osaka Stock
ExchangeMarch1987 Issued the first series of unsecured
convertible bond of 10.0 billion yen
December 1989 Changed the company name to Kyudenko
Corporation

In July 2008, the Company established Tokyo Head Office andstrengthened its management foundation in the metropolitan
area. Prompted by the Act on Special Measures Concerning
Procurement of Electricity from Renewable Energy Sources byElectricity Utilities (also known as the “FIT law”) that went into
effect in 2012, the Company entered the renewable energy
field on a full scale.
June
July
March

2008 Introduced the Executive Officer System
2008 Established Tokyo Head Office2012 Newly established a training center, Kyudenko
AcademyApril
2012 Newly established the Tohoku regional officeMarch2015 Issued the second series of unsecured
convertible bond of 10.0 billion yen
December 2019 Marked the 75th anniversary(FY)

The Company has set out its Long-term Vision toward its 100th
anniversary in 2044. To bring this Long-term Vision to life, theCompany has formulated a new Mid-term Management Plan as agoal to be achieved by FY2024 and is making its utmost efforts.
April2020 Published the Mid-term Management Plan
(2020-2024)
October 2020 Newly established the DX Promotion
Department
July2021 Newly established the Green Innovation
Business DivisionJuly2021 Newly established the Diversity Promotion
Preparation Office
December 2021 Set the Medium- to Long-term Environmental
Management Goals and endorsed the TCFD
recommendations at the same timeApril
2022 Newly established the Environmental
Management Promotion Unit
2022 Established the Sustainability Promotion
April
Committee
KYUDENKO REPORT 2023

10

2. Vision and Strategy

Value Creation Process

Corporate Philosophy
1. W
 e contribute to society through providing agreeable environmental solutions.
 e keep challenging for sustainable development through our engineering strength and
2. W
create a new value.
 e aim to create a mutual respecting environment in Kyudenko which utilize and develop
3. W
employees’ personality.

The Group’s Vision for 2044 (100th anniversary)
Make Next: To Create Smiles for the Future
Four megatrends that the
Kyudenko Group is watchingclosely

1. Transition to a decentralizedenergy society
2. Increased environmental
awareness

Sources of Value Creation (INPUT)

Human capitalBusiness Activities (OUTPUT)

Business Portfolio (FY2023 Plan)

Mid-term Management Plan (FY2020–FY2024)

Long-term Vision (100th anniversary)

Improve productivity for the new era(accelerate promotion of work style reform)

Establish a managementfoundation for sustainable growth~Realization of the three reforms~

The role we will play tocreate a sustainable society
Three Contributions

Others(equipment sales,energy generation
business, etc.)
14.0 billion yen Power
distribution(3%)
line work:(11%)

Sales:

HVAC andsanitary
facility
work:

147.0

billion yen(32%)

Electrical
work:

460.0

250.0

billion yen

Contribute to the realization of affluent life by leveraging ourengineering strength and taking on the challenge of solving
various social problems

Reform ofconstruction
capability

Reform ofgovernancebillion yen(54%)

Renewable energy
generation plant
construction:

SocialrelationshipcapitalNatural capital

Solve social problems
Reform ofproductivity

49.0 billion yen

Manufacturing
capitalIntellectual
capitalNew Value Creation (OUTCOME)

2. Vision and Strategy

Financial
capital

3. Demographic change anddiversified working styles
4. Advancement of digital technology

64.0 billion yen (14%)

Realize a carbon-free society
Issuescarried over(from the previous
Mid-term Management
Plan)

New issues
to be addressed

Contribute to the realization of a carbon-free society throughclean energy(during this Mid-termManagement Plan)

Maintain and develop local public infrastructure
Sales: 460.0 billion yen
KPI

Operating profit: 35.5 billion yen

KPI

Orders: 441.0 billion yen

Sales: 500.0 billion yen
Ordinary profit: 50.0 billion yen

Contribute to the maintenance and development of local
infrastructure through stable power supply, facility works,
urban development, etc.

(Ordinary profit ratio of over 10.0%)

ROIC: Over 10.0%

Foundation to Support Value Creation

Corporate Governance

11

Kyudenko Corporation

Human Resources

KYUDENKO REPORT 2023

12

2. Vision and Strategy

Value Creation Process
Sources of Value Creation: Six Types of Capital
The Kyudenko Group practices CSV management while efficiently combining various sources of value
creation capital to enhance the social and economic value created through these efforts. The enhanced
value will reinforce the capital of the Kyudenko Group, enabling it to create new and greater value. We
will continue to repeat this cycle, which will lead in turn to the sustainable enhancement of ourcorporate value.

With the aim of increasing shareholder value
over the medium to long term throughsustainable growth, we strive to maintain thelevel of shareholders’ equity in preparation for
future risks while also investing in growth. We
have set our target for ROIC—one of ourmanagement indicators—at 10% or more.

Total assets

446.4 billion yen

263.0 billion yen(Year ended March 31, 2023)(Year ended March 31, 2023)

Ordinary profit

32.0 billion yen

35.4 billion yen(Year ended March 31, 2023)(Year ended March 31, 2023)

10.5%(Year ended March 31, 2023)

Human
capital
In line with our conviction that people are oneof our most valuable assets, we provide
employees opportunities to improve theircapabilities and demonstrate the results of
their training to advance the Company andensure every employee has a rewarding job
and achieves self-actualization, with the aimof further growing employees and advancing
the Company further. In recent years, we havealso focused on ensuring the diversity of ourworkforce.

ROIC

8.1%

(Year ended March 31, 2023)

Number of Group employees
10,504 (as of March 31, 2023)(persons engaged)
Number of employees (non-consolidated)
6,472 (as of March 31, 2023)(persons engaged)
Number of female employees
589 (as of March 31, 2023)(non-consolidated)
Number of women in managerial positions
3 (as of March 31, 2023)(non-consolidated)
Number of training held276 (Year ended March 31, 2023)
Number of participants (cumulative)
5,659 (Year ended March 31, 2023)

Intellectual
capital

Kyudenko Corporation(Note) Number of consolidated subsidiaries(Number of patents held) 25 patents, 1 utility model
5 patents pendingThe R&D activities of the Kyudenko Group aremainly conducted by the Technology
Development Department. This department is
responsible for verifying and introducing
advanced technologies and business tools
ahead of the Group companies, and forsolving technical problems in the worksites
and company-wide deployment.

SocialrelationshipcapitalThe Kyudenko Group’s business is built on arelationship of trust based on harmonious
coexistence and dialogue with all stakeholders,
including shareholders, business partners, andcommunity members.

Naturalcapital
We construct and operate renewable energy
generation plants, thereby contributing to thepreservation of the global environment.
Moreover, we aim to achieve virtually zero CO2emissions from our business activities by
2050.

13

51 (as of April 1, 2023)

Number of Group companies

Net assets

Operating profit

ROE

We believe that our strength lies in the ability
to anticipate needs, provide maintenance, andrespond quickly in case of emergency bydeveloping community-based businessactivities and being close to our customers,
which affords them a sense of security.

Business locations in Japan(Head office, branch offices, and business offices)
123 (as of April 1, 2023)

2. Vision and Strategy

Financial
capitalManufacturing
capital(as of January 2023)

Research and development costs
290 million yen (Year ended March 31, 2023)

Coexistence with local communities
A community program, dedicating contributing activities to the
local communityOnce/year
Sports class by the Kyudenko Track and Field Team
Once/year
Promoting communication with shareholders and investors
Individual meetings with investors
Total: 227 (Year ended March 31, 2023)
Briefings for individual investors8 (Year ended March 31, 2023)

Medium- to long-term environmental management goals
Achieve carbon neutrality by 2050
Endorsement of TCFD recommendations
Investment in renewable energy generation plants(Year ended March 31, 2023)

Deals operated by the Group: 55
Deals through investment in equity: 61

KYUDENKO REPORT 2023

14

2. Vision and Strategy

Long-term Vision: Make Next — To Create Smiles for the FutureWith an eye on future megatrends and with our corporate philosophy as a pillar of our business, theKyudenko Group has formulated its long-term vision with a focus on seizing business opportunities andexpanding business in the expected social environment 100 years after its foundation (2044). We have also
defined our role in creating a sustainable society (which we call the “Three Contributions”) and our basic
stance to achieve the vision.
We will instill and pass on this long-term vision as the “Kyudenko-ism” philosophy company-wide, and make
improvements to it as we evolve with the times and in response to changes in our surrounding environment.

Identification of Megatrends
Megatrends(1) Advent of a decentralizedenergy society•Utility 3.0•Local energy•Carbon-free society•RE100(3) D emographic change and diversified
working styles•Population decline and aging society•Freelancing(4) Advancement of digitaltechnology

Business opportunities(1) Transition from large-scale to local small-scale powertransmission and distribution networks(2) The electricity market will go from a monopolistic to a freemarket(3) Increase in renewable energy generation(4) Increase in importance of developing technology to store
electricity(5) Increase in need for EMS know-how(1) Localized EMS needs(2) Enter urban development business, such as smart cities(3) Roll out local services that include not only power
distribution line and facility work, but also electricity sales
business, service water, waste water, telecommunications,waste treatment, etc.
(4) Battery recycling factory, recycling business(5) New business opportunities as an environmental
restoration company(1) F ocus more on the renewable energy business field (e.g., wind
power and biomass power)(2) P rovide complete service that includes installation,
maintenance, removal, and disposal of renewable energy
facilities(3) E stablish technology to reuse/recycle solar panel waste, andtranslate to business(4) N ew business opportunities as an environmental restorationcompany(1) Acceleration of locally self-sufficient decentralized energy due
to depopulation of rural areas associated with population
decline and spread of renewable energy, storage batteries, etc.
(2) Maintenance of infrastructure in depopulated areas of
Kyushu(3) Carrying out projects to resolve challenges such as theincrease of foreign workers in Japan, shortage of workers
in the agriculture and livestock industry, and increasing
aged population(4) Proactively roll out businesses outside Japan with a focus
on Asia(1) AI-based design and construction management(2) On-site construction by robot(3) Improvement of education/training and safety
management virtual experience using AR/VR(4) Creation of new businesses using digital technology(1) With the increase in demand for the renewable energy
business, opportunities will expand where we can takeadvantage of our accumulated experience and businessexpertise in renewable energy construction(2) Companies with the goal of procuring 100% renewableenergy will increase(1) Securing human resources will become more difficult(2) Increase of foreign workers in Japan(3) Reduction of construction market(4) Influx of people into urban areas and depopulation of ruralareas(1) Construction drawings will be prepared by AI(2) A large portion of manufacturing work will be carried out
by robots(3) Education and training with AR/VR will be possible•Use of AI and robots•AR, VR, etc.

Our Long-term Vision Based on Megatrends

To Create Smiles for the Future

The role we will play to create asustainable society
Three Contributions

I.	Solve social problems

Contribute to the realization of affluent life byleveraging our engineering strength and taking on thechallenge of solving various social problems

II.	Realize a carbon-free society

Solve social
problems
Sustainable
society
Maintain andRealize adevelop local publiccarbon-free
infrastructuresociety

Contribute to the realization of a carbon-free society
through clean energy

III.	Maintain and develop local public infrastructure
Contribute to the maintenance and development oflocal infrastructure through stable power supply,
facility works, urban development, etc.

Create an appealing company full of diverse employees
Promote diversity 	
Reinforce alliancesDevelop technological innovations and create businesses

Mid-term Management Plan 2024 measures to be taken by 2024 to realize our long-term vision
Kyudenko Corporation

Expansion of Renewable Energy and Energy
Conservation, and Entry into Recycling
Business

Creating service packages that leverage
our strengths, such as electrical,
HVAC and sanitary facility work,and power distribution line work.
Solar power
generation facilities

LED lighting

Powerdistribution
facilities

Expand to other countries to help
solve hunger problems

HVAC &
temperature
controlequipment
Water
treatment
systemSubstationequipment
Indoor wiring Power
source control system

Expansion of renewableenergy sources such as
wind and biomass

Provision of solar panel life
cycle service that includes
recycling of solar panels
Solar power generation

Recycling andreuse of solar
panelsWind power
generation

Specific examples
	‌New renewable energy sources such as wind and biomass
Control services for energy storage, EMS, etc.
Recycling and reuse of solar panel waste, etc.

Establish a business model thatspans the Japanese market

Example: Kyudenko plant factory model

We will expand the renewable energy field, such as wind and biomass
power, and contribute to realizing a carbon-free society by expanding
our businesses into the environmental field, such as the recycling andreuse of solar panels.

ZEB ZEH
Biomass power Biomass power Control services for energy storage,
generation
generation
EMS, etc. Development of(wood)(garbage)energy-saving systems, etc.

Carbon-free society

We will evolve into a company that provides total support for local
communities’ energy infrastructure and services by expanding ourbusiness from merely building basic infrastructure such as electricity,waterworks, and telecommunications to also providing local public
services and engaging in smart city and other initiatives to create
comfortable communities.
Specific examples
Smart city
PFI, concession
Power transmission	Public services such as water supply and sewerage, and waste treatment facilities
Telecommunication infrastructure
Disaster prevention infrastructure facilities

Introducing Digital Technology

Specific examples

Improve efficiency and sophistication of construction atCreate new value through DX	

Expand and strengthen a wide range of technology fields thatby promoting open innovation

15

	Revitalization of agriculture and livestock production (plant factories,
livestock farms)	‌Support for foreign workers (shared houses, vocational schools)
Services for the elderly (health support, nursing care facilities)

worksites and create new businesses with digital technology

 Explore and enrich our engineering strength

Balance both social value and economic value

Targets we should achieve, priority issues, and specific

Specific examples

meet customers’ expectations

Basic stance to achieve our vision

activities (practice CSV management)

We will actively participate in projects and businesses where we canleverage our strengths, such as our engineering strength, to address
problems faced by local communities and society as a whole, such as
the declining birthrate and increasing aged population in Japan andglobal food problems.

We will improve sophistication, save labor, and increase efficiency inoperations, education, and training related to construction atworksites, including design and construction management, by
introducing cutting-edge technologies such as AI and IoT, and create
new businesses and business models that leverage digital technology.

Contribute to realizing a circular society
by solving social problems through corporate

Involvement in Projects that Solve Social
Problems

characteristics of the Kyudenko Group. We also believe it
will help boost employee motivation since employees will
be able to see how their day-to-day tasks address global
social and environmental problems by picturing where wewant to be as a company.

Building Local Infrastructure and Providing
Public Services

Corporate Philosophy

Long-term Vision

When formulating our long-term vision, we envisioned
what kind of businesses we could do in the future byleveraging our technology and expertise.
While this is an ambitious goal that lays out where wewant to be in the long term by our 100th anniversary in
2044, we believe it is achievable by leveraging the unique

2. Vision and Strategy(2) Increased environmental
awareness

Environment and its impact

Future Businesses

Preparing construction drawings with BIM/CIM
Improving operational efficiency with AI construction management systems
Supporting worksites with drones
Implementing powered suits	‌Virtual training with VR goggles
Services to support health and watch over the elderly

Step

Pursue electrical, HVAC, andpower distribution line work.

Local energy facility company

Step

Build wastewater and waste
treatment facilities

Local utility company

Step

Participate in smart city andother town planning initiatives

Local town planning company

Supply energy and provide
public services to local
communities

Local comprehensive service
company

1
2
3

Step

4

AI-based design and construction management
A I Surveying and Construction
Management Drones
Preparation of construction
drawings (AI, BIM/CIM)
AI Construction
Management System

On-site construction by robot rones for materialDtransport
Remote operation(construction equipment
and work vehicles)Robots and powered suits
for construction work

Advancement of business operations
and creation of new business throughdigital technology
D etection and diagnosis
of signs of failureCollection, storage andanalysis of building andequipment data
Health Support Services

New business creation using digital technology

Construction Management Training
Using AR Smart Glasses
Virtual hands-on training facilities(e.g., Kyudenko Academy)
Training on the installation of power
distribution lines using VR goggles

AR/VR virtual experiential education and training

KYUDENKO REPORT 2023

16

2. Vision and Strategy

Mid-term Management Plan (FY2020–FY2024)
Establish a management foundation for sustainable growth~Realization of the three reforms~

Contents of concrete efforts toward achievement of
the Mid-term Management Plan (contents of efforts to date)

The Kyudenko Group reviewed and analyzed theachievements of the previous Mid-term Management Plan,
sorted out what challenges the Group should continue towork on, and formulated this Mid-term Management Plan
as a goal to be achieved by FY2024 in the process of along-term strategy based on the Corporate Philosophy.
The main theme of this Mid-term Management Plan is“Establish a management foundation for sustainablegrowth ~Realization of the three reforms~.” Based on theachievements and lessons of the previous Mid-termManagement Plan, we recognize that for the renewed
growth of the Kyudenko Group, creating a base to support
the growth should be the top priority. As we secure andmaintain the volume of orders for electrical, HVAC, andsanitary facility works commensurate with our current

In addition to the “three reforms” established in this Mid-term Management Plan and the “issues carried over” set forth in thesummary of the previous Mid-term Management Plan, the Kyudenko Group has put in place “new issues to be addressed”
in response to changes in the business environment. In FY2022, we established the “Promotion of environmental
management” and set and formulated medium- to long-term goals for environmental management and basic sustainability
policies. From FY2023, in response to the increasing number of large-scale projects on hand and with the aim of further
accelerating sustainability management, we have added “Comprehensive progress management of large-scale projects” and“Promotion of human capital management” as new issues, and are endeavoring to achieve sustainable growth.

(Billion Yen)
Plan for FY2024

500.0

Net sales
Breakdown

67.8

334.0

 enewable energy andRES business, etc.

81.0
35.0

Others50.0

Ordinary profit

Over 10.0%

Ordinary proﬁt ratio

Return on invested capital (ROIC)Over 10.0%

Plan460.0 billion yen

391.9 billion yen

61.5(Solar power: 54.5)

376.5 billion yen

54.4

46.9

45.8

(Solar power: 39.7)(Solar power: 46.6)

191.0
155.9

149.1

26.7
2019

81.0

395.7 billion yen

157.7

129.9

Three reforms

500.0 billion yen

Final year
for the previous
Mid-term Plan:
428.9 billion yen

50.0Power distribution
 lectrical work and HVAC
E
and sanitary works

Target for
the final year:

Road map of sales plan

(Solar power: 59.3)

Mid-term Management Plan
Numerical plan (KPIs)
2. Vision and Strategy

Numerical targets for the final year (consolidated)

construction capability, we will make our utmost efforts tocreate a “strong and muscular corporate structure” thatcan win the competition even in an economic recession.
Specifically, we will work on three reforms. “Reform of
construction capability” will secure engineers who support
core businesses, review construction management
methods, and assign engineers to appropriate positions.
“Reform of productivity” will improve quality and costcompetitiveness, which are the source of our competitiveedge, and promote work style reform. “Reform ofgovernance” will work for the creation of a clean and highly
transparent corporate culture. Through the three reforms,
we aim for dramatic growth and development by the final
fiscal year of this Mid-term Management Plan and by thesubsequent 100th anniversary (FY2044).

Reform of construction capability

Reform of productivity

Reform of governanceRestructure OJT system for young employees
Introduce digital training support tools(learning management system (LMS))
Introduce employee engagement survey
Diversify recruitment (expand mid-career hires)
Introduce talent management systemE stablish DX Promotion Department andpromote DX projects
Launch efforts to create innovation throughindustry-academia collaboration
Establish Workstyle Reform Promotion Office(formulate action plan, launch initiatives)

Establish Business Administration Department
Shift to a company with an Audit andSupervisory Committee
Move to Prime Market

148.4

126.1

116.0

108.9

45.8

45.7

46.6

18.9
2021

21.2
2022

19.5
2020

143.0

50.0
35.0
2023

2024

Mid-term Management Plan (2020-2024)■Renewable energy and ES business, etc. ■Electrical work ■HVAC and sanitary facility work
■Power distribution line work ■Others

Specific initiatives and relevance to the SDGs
ESG

Environment

SocialKey challenges

Specific initiatives in the Mid-term Management Plan

Promotion of anenvironment-conscious
town planning trengthen initiatives for concessions, PPP and PFI businesses
S(Participation in waterworks, waste treatment plants, airports/ports,
public facilities, etc.)
Develop new business areas (real estate, agricultural revitalization, etc.)

Enhance energy-saving
and energy-creating
technologies

Expand the renewable energy power generation business
Expand energy services (ES) business
Strengthen Kyudenko EMS business (Indonesia)

Ensuring construction
quality and safe aintain a stable power supply through the construction of powerM
distribution lines
Increase productivity
Promote research and development of advanced technologies and IT(promotion of labor saving and streamlining)
Eliminate significant work-related injuries

Continuing stable
recruitment and promoting
human resource
development

Strengthen hiring of engineers (diversify recruitment)
Reconstruct a development plan that leads to dreams, a sense ofachievement, and confidence
Develop executives and next-generation leaders

Creating a fulfilling andrewarding work
environment

Reduce the turnover rate of young engineers
Secure holidays and reduce overtime work through thorough work
style reforms
Promoting Diversity

Strengthening andGovernance implementing compliancemanagement

17

Kyudenko Corporation

Implement measures to prevent recurrence of fraud
Strengthen and thoroughly implement a governance system based on
the Kyudenko Corporate Governance Guidelines

SDGs

Issues carried over

New issues to be addressed(from the previous Mid-termManagement Plan)(during the current Mid-termManagement Plan)

Deepen measures to improve profit margins
 trengthen and expand the order base of theSdomestic facility work industry
Strengthen the profitability of power distribution
line work
Develop new business areas
Create an attractive workplace environment
Improve corporate value

Promotion of environmental managementC omprehensive progress management of largescale projects
Promotion of human capital management

Establish the Green Innovation Business Division
Establish the Diversity Promotion Office
Implement M&As and capital and operational alliances
Introduce Kyudenko EMS for the first time domestically
Revise measures to improve profit margins
Increase order volumes of contracted power distribution
line work(private renewable energy lines, EV charger construction, etc.)
Establish KYOCERA GREEN INNOVATION, LLC
Promote CRE projects*

Newly established from FY2023

 etting medium- to long-term environmental management
S
goals
Disclosure of analysis based on TCFD recommendations
Establish Environmental Management Promotion Unit andSustainability Promotion Committee
Establish project for progress management related tosignificant matters
Consideration initiated through working group for humancapital management

KYUDENKO REPORT 2023

18

2. Vision and Strategy

Business of Kyudenko

Technology Division(Electrical Work, HVAC and Sanitary Facility Work)Business Strategy

The Technology Division responds to the needs of society byproviding the best infrastructure, based on the engineering
capabilities and construction expertise that we have accumulated
over the years. While we believe that the business environment willremain buoyant for the foreseeable future, particularly in Kyushu,
there are issues such as labor shortages and regulations limiting
overtime work. In addition to inventorying and leveling our operations,
we will promote the digital transformation of worksites, including theuse of BIM, which will help improve construction quality, increase
productivity, and strengthen cost competitiveness.

Strategy

Further improve
proﬁt margins
Strengthen
construction
capability

Kazuhiro Suyama
Managing Executive Officer

Promote work stylereforms

General Manager, Technology Div.

Our Business
when they have problems. We consider this ability to giveour customers peace of mind to be one of our strengths.
Moreover, Kyudenko is the only company ranked in the top
10 in sales in both the electrical work industry and the
HVAC and sanitary facility work industry. By accepting
orders and executing construction work for both types ofwork in a single package, we are able to deliver all kinds offacility works as a one-stop service. This allows us toreduce costs and propose total solutions, including energy
management and energy conservation proposals. We
consider this to be another of Kyudenko’s strengths.
In recent years, we have been expanding our businessoutside the Kyushu region, with a focus on the metropolitan
area. We have been involved in the construction ofnumerous symbolic buildings to date, giving rise to a
virtuous circle in which this track record has helped us towin subsequent orders.

Transition of Business Performance (Excluding Renewable Energy Work)
Sales (Billion Yen)

The year ended March 31, 2023

Sales

292.1

billion yen(up 8.4% year on year)[Breakdown] Electrical work 
158.1 billion yen (up 5.4% year on year)
HVAC and sanitary facility work  133.9 billion yen (up 12.2% year on year)

Orders 		367.2 billion yen(up 29.0% year on year)[Breakdown] Electrical work  212.7 billion yen (up 39.1% year on year)
HVAC and sanitary facility work 154.5 billion yen (up 17.3% year on year)

Strengths
	Strong trust relationships withcustomers and subcontracting
companies built through communitybased business operations
	Engineering capabilities andconstruction track record that enable us
to provide one-stop facility work forboth electrical work and HVAC andsanitary facility work	Industry-leading mobilization capabilities
of both engineers and technicians

19

Kyudenko Corporation

294.2
134.7

273.0 269.5
122.8

119.4

Focus
Initiatives for improvement of profit margins
Based on the profit margin improvement measures developed in 2019, we are devoting efforts to increasing the profit
margin of large-scale projects in particular. It is normal for large-scale projects to span long periods of time, fromobtaining information about the project to the completion of construction work. We are implementing profit margin
improvement measures that particularly focus on the two areas of pre-order and post-order processes.
For example, before accepting an order, we clarify the details of the target project at an early stage and apply frontloading as soon as possible. Participation in such projects from the initial design stages enables us to make effective
proposals, and clarifying the target project also allows us to negotiate and place orders with our subcontracting
companies at an early stage. This achieves stability of order placement to our subcontractors, enabling us tostrengthen the construction system.
After order acquisition, the worksite, branch office and Head Office work in tandem to dispatch support teams that
anticipate the progress and busyness peak of construction, and to share with the sales division information about
additions and changes to the ordered work for the negotiation of prices at each juncture.
Specific measures to improve the profit margin (excerpt)
Factor1

Orders (Billion Yen)

Electrical work
HVAC and sanitary facility
work

333.0

367.2 372.0

292.1
280.5
133.9

147.0
126.4

259.0
118.5

2

284.6

150.2

150.1

158.1

186.0

154.2

140.5

Cost increases dueto the compressionof facility
construction processcaused by building
construction delay

152.8

212.7

224.0

A

Forecasting the busyness peak ofconstruction

B

Measures for increase of construction
subcontractors’ labor costs

Establishment of team supporting
construction
Material ordering linked to designchange and further utilization ofD“Q-mast” which affiliated company
specialized for purchasing material
C

Others

Forecasting the peak of busyness in the whole construction period, make an input plan for workers early and start
the arrangement. Review the plan in a timely manner and make adjustments throughout the company.
Close relationships with construction subcontractors, planned order and allocate appropriate personnel, suppress
labor costs increase. (Branch executives present annual order amount, and exchange information with
subcontractors directly.)
Establishment of a team specialized for supporting construction by employee technicians.
Technical department check whether each branch and affiliated company uses Q-mast for purchasing materials,
in cooperation with “Q-mast”. When utilization does not advance, technical department and Q-mast investigate thecause and solve.

Make design changes possible based on budget by building a good relationship with design office. Engage in frontloading based on Kyudenko’s responsible construction to reduce burden on later stages of construction period.
Sales representative’s help to
For additional work, sales and technology divisions cooperate and before starting construction, be sure to submit
construction site after construction starts each estimate and negotiate the price.
Confirming the delay in building construction work process would be happen at the first construction study
Dealing with delays in the progress of
meeting after receiving an order, and teaching the method which make the facility construction possible in advancebuilding construction workof building construction. (prior construction method, prefabrication method, labor saving method, etc.)
Promote and expand nominatedSales division to promote sales in cooperation with technology division. Establish Infrastructure Businessorders and proposal-based sales.
Department.
Follow-up of engineers’ management Hold meetings of young employees and branch senior managers at least once a month.
capabilities
Share information about each worksite and respond immediately to worksites that require support.
Establishment of personnel request
Establish a desk at Head Office to receive personnel requests from branches. Head Office to make adjustments
desk
across the whole company for appropriate allocation of personnel.
Raising of standards of new
Dispatch Kyudenko’s top engineers to instill Kyudenko’s expertise. Encourage active use of Q-mast.
consolidated subsidiaries

E Approach to “Front Loading”*
F
G
H

154.5

3
159.6

Measures

Cost increasecaused by exceeding
the planned laborand material cost
after receiving an
order

148.0
131.7

Achieve reduction of engineers’ workload through cooperation with the Workstyle Reform Promotion Office
Set appropriate construction periods for project orders prior to conducting negotiations
Promote further digitalization to improve efficiency of engineers’ work

2. Vision and Strategy

The electrical, HVAC and sanitary facility work divisions deliver
facilities that satisfy our customers through the construction of
all types of buildings related to people’s lives, includingcommercial buildings, office buildings, hospitals, and factories.
We provide solutions to our customers’ problems, fromproposals to construction tailored to their needs, not only forconstruction and expansion of buildings but also for renewal
works of existing facilities. We offer safe and reliable services,supporting our customers through after-sales service after theconstruction is complete, providing preventive maintenanceservices and responding promptly to their requests.
With around 100 offices, including branch offices andbusiness offices throughout the Kyushu region, Kyudenko
engages in community-based business activities in our
mission to protect the region’s lifelines. Staying close to ourcustomers enables us to anticipate their needs and to take
immediate action on maintenance and other responses

Specific initiatives

P rovide seamless support for cost management and working process management, with the involvement of the Head
Office from the start of sales activities to the completion of construction
Thoroughly apply front loading and avoid increases in workloads and costs during the construction period
Accelerate the digitalization of existing operations and improve efficiency of engineers’ workEstablish a job rotation system for education for development of the skills of young employees at an early stage
Develop multifunctional workers who have a wide range of techniques and technical skills
Mutual cooperation with business partners in line with the Partnership Building Declaration

I
J
K*Front Loading refers to allocating a greater proportion of the workload in the early design stages and proceeding with work ahead of schedule
2019

2020

2021

2022

Opportunities
	Investment in construction of large-scale
manufacturing facilities in the Kyushu region,
including semiconductor-related facilities
	Demand for construction of large-scale
redevelopment projects such as Tenjin Big
Bang and HAKATA CONNECTED in our
hometown of Fukuoka
	Enhancement of the Company’s appeal interms of improvement of labor environmentand recruitment by putting work stylereforms into practice2023(Forecast)

2019

2020

2021

2022

2023

(Forecast)

Construction Case

Threats and Issues
	Difficulties in securing labor due to afall in the number of workers in theconstruction industry
	Declining profitability due to pricecompetition among industry peers	Declining profitability due to soaring
material prices and labor costs against
the backdrop of rising commodity
prices	Increase in productivity with establishmentof digital infrastructure

FUKUOKA DAIMYO GARDEN CITY

Tenjin Business Center

TOKYO MIDTOWN YAESU
new construction work (electrical work)

KYUDENKO REPORT 2023

20

2. Vision and Strategy

Business of Kyudenko

Electric Power Division (Power Distribution Line Work)The Electric Power Division engages in business activities in ourstrong mission to protect the region’s lifelines. We concentrate ourefforts on construction and education with safety as our top priority.
In recent years, we have been working to eliminate risk factors andimprove harsh working environments with the use of IT and IoT.
While the main focus of our business is work for Kyushu ElectricPower Transmission and Distribution Co., Inc., we are also
accelerating our efforts to expand into new business areas as we
strive to further expand our operations.

Takahiro Hokahori
Managing Executive Officer

General Manager, Electric Power Div.

Our Business
uses a tool called a “hotstick” to perform work without
directly touching high-voltage lines, ahead of the rest of
the country in 1998.
More recently, we have been focusing on the further
expansion of our new business areas, such as
interconnecting line work related to the construction ofrenewable energy generation plants, which are becoming
popular on a national scale, and sales, design, estimation,and construction work for underground distribution line
works.
In addition, we are stepping up our efforts intechnological development, including the development ofeffective tools, for which we were awarded the Shibusawa
Prize two years in a row, and the reduction of costs andimprovement of safety and construction quality with theuse of digital technologies.

Transition of Business Performance
Sales (Billion Yen)

Orders (Billion Yen)

The year ended March 31, 2023

Sales		46.6 billion yen

46.9

45.7

45.7

46.6 49.0

47.5

45.6

45.6

48.4 49.0

StrategySpecific initiatives

Expansion ofbusiness fields

Acquire orders for interconnecting line work related to renewable energy generation plant construction
Development of engineers for increasing order volumes of underground distribution line work (acquisition of sales andengineering skills)

Increaseproductivity

Improve efficiency of engineers’ work based on inventorying of operations (development of flowcharts)
Improve efficiency of onsite workers through promotion of IT (introduction of tablets)
Rebuild education framework and develop engineers at an early stage by enhancing the contents of education programs

Ensuring safety

Eliminate potential risk factors by using the safety patrol system to analyze data from safety patrols
Raise the leadership standards of leaders (Head Office-led education)
Strengthen education of affiliated and subcontracting companies and engage them in dialogue

Focus
Strengthening of systems for further increasing order volumes
The Electric Power Division launched the Power Infrastructure Work
Section last fiscal year to further increase order volumes. This new
department is focusing its efforts on acquiring orders from new fields,such as underground distribution line works for the removal of utility
poles and interconnecting private line works associated with renewableenergy generation plant construction.
In recent years, work to bury power lines has been moving forward indowntown and sightseeing areas from the standpoint of ensuring safe,
pleasant spaces for pedestrians, preventing urban accidents, andimproving the urban landscape. Our construction experience includes
removing utility poles, installing conduits for a range of undergroundequipment, and installing and connecting cables. We will leverage thiswealth of experience and our extensive technical capabilities to win
more orders.
With respect to interconnecting private line works associated withrenewable energy generation plant construction, as moves to achievecarbon neutrality by 2050 pick up pace around the world, in Japan aswell, policies for the maximum use of renewable energy are being
indicated. This state of affairs represents a major business opportunity
for Kyudenko. As such, we are focusing our efforts on winning projectorders, making the most of the engineering capabilities and expertisethat we have accumulated over the years.
For both underground works and interconnecting private line works,
we are also aiming to go beyond Kyushu to acquire orders all overJapan.

		(up 1.9% year on year)(up 6.1% year on year)

Construction Case2019

	High levels of technical capabilities toprotect the lifelines of all customers
	Unrivalled mobilization capabilities withover 2,000 workers that enable speedy
restoration in the event of a natural
disaster	Development and improvement of tools
and construction methods to increasesafety and efficiency of onsite work

21

Kyudenko Corporation

Underground distribution line work

Interconnecting private line works associated with renewableenergy generation plant construction

Orders		
48.4 billion yen

Strengths

2. Vision and Strategy

As a company that undertakes contracted works from
Kyushu Electric Power Transmission and Distribution Co.,
Inc., the power distribution division engages in the
installation and maintenance of overhead distribution
equipment. This includes the installation of special highvoltage transmission lines, high-voltage transmission lines,
low-voltage transmission lines, and related devices, theinstallation of drop wires and meters, and the installationof communication cables to build automatic control
systems for distribution lines. In particular, in the event of
typhoons and other natural disasters, we leverage ourtechnological capabilities and mobilization capabilities toengage in the early restoration of power.
We have been engaging in safe, secure work every day
since adopting outage-less electrical work, which uses
bypass cables and generators to avoid outages while
work is being performed, and indirect live-wire work, which

Business Strategy

2020

2021

Opportunities
	Growth in underground distribution line
works associated with the replacement
demand of aging power distribution
facilities and the push for the removalof utility poles	Acquisition of orders for power distribution
and underground distribution line works
from new customers in line with theadvent of a decentralized energy society	Expansion of construction fields in lightof the drive for electricity resilience

2022

2023

(Forecast)

2019

2020

2021

2022

2023

(Forecast)Threats and Issues
	Securing human resources due to suchfactors as an aging population withdeclining birth rates
	Deteriorating working environment forworkers due to frequency of outside work	Development of engineers for increasingorder volumes of contracted power
distribution line work and underground
distribution line work (acquisition ofskills aimed at winning orders for 66kV
power cable work)

Contracted power distribution line work

Indirect live-wire work

KYUDENKO REPORT 2023

22

2. Vision and Strategy

Business of Kyudenko

Green Innovation Business Division(Renewable Energy Generation Plant Work)Business Strategy

The Green Innovation Business Unit has contributed to decarbonization through the expansion of“independent stock” in renewable energy and energy services (ES) and through the “one-time-fee businessmodel” that is the construction business.
With respect to the recurring revenue business, we currently own solar power and wind power facilities
with a total generation capacity of 498MW, from which we anticipate CO2 reductions of 330,000 tons.
The recurring revenue business is similar to farming. The renewable energy and ES facilities are the“fields,” which provide stable harvests over a long period of time. We consider finance and O&M to be key
challenges in achieving this.
With talk of “global boiling” being heard around the world, there are still not sufficient renewable energy
facilities to meet the Japanese government’s targets of reducing greenhouse gases by 46% and achievinga renewable energy rate of 36-38% by FY2030. As such, we feel a heavy burden of responsibility.

Katsuhisa Kinoshita
Managing Executive Officer

General Manager, Green Innovation Business Div.

Our Businessenergy business as an operator. We view the Japanese
Government’s 2050 Carbon Neutral Declaration as asignificant opportunity for our business operations. Against
the background of national policy, the Green Innovation
Business Unit is working to expand its business areas
even further, including promoting the introduction of
third-party models (corporate PPA, leases, etc.), EMS, andstorage batteries.
In response to customers’ diversifying needs, we areengaging in the green innovation business to solve
problems in environmental management and to realize acarbon-free society, making the most of the technologicalcapabilities and expertise that we have accumulated over
the years.

Transition of Business Performance

The year ended March 31, 2023

Sales (Billion Yen)

Orders (Billion Yen)(Figures in brackets below represent
solar power generation work)(Figures in brackets below represent
solar power generation work)

178.9(176.5)

66.4

Sales		41.5 billion yen(59.3)

64.0

58.4(54.5)

		(down 15.3% year on year)

49.1(46.6)

41.5(39.7)

Orders		24.8 billion yen(42.8)

2019

Kyudenko Corporation

Deepening of recurring
revenue business (businesses)

Development of PPA business by KYOCERA GREEN INNOVATION, LLC
Acquisition of know-how for future participation in storage battery businessSpread of Kyudenko EMS

Make regional resilience project proposals to local governments
Win projects in isolated island areas overseas (Southeast Asia) leveraging Japanese government subsidies

Focus
Establish KYOCERA GREEN INNOVATION, LLC
In June 2023, in conjunction with KYOCERA Corporation, we established KYOCERA GREEN INNOVATION, LLC, a
new company for the development of a renewable energy service business, centered on a “carport on-site PPA
model.”
The carport on-site PPA model involves the installation of solar carports, which are power generation systems thatcombine a covered parking lot and solar panels built on a company’s premises. The power generated by these solar
carports is then sold to the contracting company. Through business activities under this scheme, which began inearnest in July 2023, we will contribute to the popularization of renewable energy and the expansion of business.
Currently, in light of various factors, including heightened environmental awareness for the achievement of thegovernment’s target of carbon neutrality by 2050 and rising energy costs, a growing number of companies arecontemplating the use of renewable energy. However, the initial investment burden for the purchase and installationof solar power systems and securing an installation location are major challenges for these companies. Our newcompany will promote the carport on-site PPA model, in which it will install a solar power generation system on top of
the covered parking lot, with no initial investment from the contracting company, to promote the further effective useof the contracting company’s premises.
KYOCERA Corporation owns
technology related to solar power· Installation of solar carport
generation systems that offer high· Supply of power
quality and long-term reliability, andKyudenko has a track record of
construction of carports and manysolar power generation plants.
Through this collaboration, which will
Equity investment
leverage our two companies’
respective advantages, we will expand
our business in the renewable energy
market, which is expected to grow
KYOCERAeven further in the years ahead.
GREEN INNOVATION, LLC
Payment of

2020

2021

2022

Opportunities
	Further increase in demand forrenewable energy due to heightened
environmental awareness	Demand for renewable energy as a BCP
measure and as power supply facilities
at a regional level
	Promotion of Kyudenko EMS
domestically for national resilience

2023(Forecast)

2019

2020

24.8

(22.7)(18.2)

23[Solar power] Steady receipt of orders for FIT projects under development
[Solar power] Receipt of orders for power generation facility work, such as self-consumption using rooftop panels
and solar carports, PPA, and self consignment[Wind power] Leveraging of construction track record to establish marginal costs to rival industry peers

Customer (company)

45.1
20.4

	Excellent project development capability
generated from community-based
business operations, and tightconnections with partners in otherindustries	Construction know-how accumulatedwith a top-drawer track record of
construction works in Japan	Establishment of systems for long-term
project management/maintenance andmanagement

Deepening of one-time-fee
business(construction work)

electricity charges(down 45.0% year on year)

Strengths

Specific initiatives

2. Vision and Strategy

Based on our core business divisions, namely, electrical,
HVAC and sanitary facility, and power distribution line
works, we are working to expand construction work andmaintenance and management operations of renewableenergy generation plants, such as solar, wind power, andbiomass.
Since the introduction of the feed-in tariff (FIT) scheme in2012, Kyudenko has been focusing particularly on winningorders for and engaging in EPC work for mega solar
power plants and on the expansion of our business area
beyond Kyushu to the Chugoku/Kansai area and the
Tohoku area. With cumulative orders totaling more than
600 billion yen, this business has grown into one of the
major pillars of Kyudenko’s business.
In addition to receiving orders for power plant
construction work, we are also involved in the renewable

Strategy

2021

2022

20.0
2023

(Forecast)

Construction Case/Business Track Record

Threats and Issues
	Collapse of power generation facilities
affected by natural disasters	Declining profitability due to pricecompetition among industry peers	Declining profitability due to soaring
material prices against the backdrop of
higher commodity prices

Miya River Watarai Solar Park

Kushima Wind Power Generation Plant

KYUDENKO REPORT 2023

24

2. Vision and Strategy

Business of Kyudenko

Business of Kyudenko

Renewable Energy Generation Business

Overseas BusinessWe construct, own, and operate solar power and wind power generation plants and engage in the business of sellingelectricity using the FIT scheme. We also jointly participate in the business of generating and selling solar power, wind
power and biomass power through equity investment and anonymous partnership.

Kyudenko launched its overseas business in 1979 and has since participated in many projects in regions including Asia,
Africa, the Middle East, and Europe, building up a track record in construction work. Despite a period of temporary
stagnation from the 1990s, we established the International Business Division in 2011 and decided to make a foray into
Southeast Asia, which continues to have one of the highest growth rates in the world.
Currently, over 800 employees work in eight countries and regions: Singapore, Malaysia, Vietnam, Thailand, Indonesia,
Myanmar, Bangladesh, and Taiwan. We develop businesses in a wide range of fields, including facility work such as
electrical, HVAC and plumbing, plant engineering business, environmental analysis business, EMS, and renewable energy
business.

Investment in Solar Power and Wind Power Generation Plants and Business Performance
Sales (Billion Yen) (Sales of other business)

Investment in solar power plants

Solar power (Operated by the Group)Wind power (Operated by the Group)
5.1
4.4

0.9

0.9

2017

4.8

0.8

0.8

4.2

4.0

4.0

2018

2019

2020

Deals operated by the Group
Number of
power plants

5.1

4.6
0.7

0.9

3.9

4.1

2021

2022

In operation

49

92MW

87MW

Under construction

—

—

—

Plan

—

—

—

Total

49

92MW

87MW

Deals through investment in equity
Number of
power plants

Profit (Billion Yen) (Operated by the Group: operating profit, equity investment:
non-operating income)Solar power (Operated by the Group)Wind power (Operated by the Group)
Solar/wind power (Equity investment)
2.9

0.7

2017

1.5

1.6

1.3
2018

1.4
2019

1.7

2.1

25

2020

169MW

Under construction

4

697MW

144MW

Plan

—

—

—

Total

55

1,321MW

313MW

2021

350

Investment in wind power plants

Number of
power plants

2022

356

(as of March 31, 2023)

Generation capacity Generation capacity(the entire operation) (that equal to the equity)

In operation

6

47MW

46MW

Under construction

—

—

—

Plan

—

—

—

Total

6

47MW

46MW

Deals through investment in equity
219

217

148

38

38

38

38

39

47

85

92

92

92

92

92

2017

2018

2019

2020

2021

2022

APECO presented with Culture of Acceptance, Respect and Empathy (CARE) Award 2023
Singapore-based Group company, APECO, was presented with a CARE Award 2023 by the Workplace Safety and
Health Council, a statutory body under the Ministry of Manpower, Singapore Government. CARE Awards are presented
by the Singapore Government to employers that have made efforts to form a workplace culture of acceptance, respectand empathy toward their employees.
APECO was recognized for its initiative of building a support system that involved the establishment of a new role withthe title of CARE Advisor within the company.
Thirty four employees first took part in agovernment-designated mental health workshop,
and, as CARE Advisors, they support their coworkers who are mentally stressed by listening totheir concerns. Another initiative involved
assigning highly experienced technicians as
mentors to technicians newly arrived in Singapore
from India and Bangladesh, to give them advice
about setting up their living environments in
Singapore and about safety management andoperations on worksites, helping them to adjust
A senior technician supporting a newSome of APECO’s CARE Advisors
techniciansmoothly to their new environments.

PPP/PFI Business

278
206

Kyudenko Corporation

624MW

Deals operated by the Group

131

110

51

0.0

1.6

Solar power (Operated by the Group)Wind power (Operated by the Group)
Solar/wind power (Equity investment)
336

233

In operation

0.0

Operation output (MW) (Plants in operation only)

261

Generation capacity Generation capacity(the entire operation) (that equal to the equity)

1.5

1.0
0.1

0.1

0.1

0.0
1.2

2.7

1.4

1.9

3.7

3.2

3.1

Generation capacity Generation capacity(the entire operation) (that equal to the equity)

Focus

2. Vision and Strategy

3.5

4.8

(as of March 31, 2023)

Number of
power plants

Generation capacity Generation capacity(the entire operation) (that equal to the equity)

In operation

5

144MW

48MW

Under construction

1

15MW

4MW

Plan

—

—

—

Total

6

159MW

52MW

Orders for PPP/PFI projects
A public-private partnership (PPP) is a scheme where the public andprivate sectors work together to provide public services. A private finance (as of September 2023)
initiative (PFI) is a typical method of PPP. PFI aims to provide public
Participated as a representative company 15 projects
services efficiently and effectively by using the private sector’s funds andParticipated as a constituent company
32 projects
expertise in the design, construction, maintenance, management andParticipatedasacooperatingcompany
5 projects
operation of public facilities and having the private sector take the lead in
Total
52 projects
providing public services.
Leveraging the management expertise and engineering strengthestablished as a community-based provider of integrated utilities engineering services, the Kyudenko Group participates ina number of PPP/PFI projects, which are considered as new methods of social capital development in public works.

Olive Business
The decline in the primary industry is one of the major social
Creating a sixth industry model within a local community
problems Japan is faced with. We, as a community-based
company, therefore wondered if there was any way we could playa part in revitalizing the primary industry—specifically by turning
the industry into the sixth industry and creating a business model
Productionthat seamlessly incorporates production, processing, and sales.
We thus set an eye on olives since we saw a potential in them as
Grow olives in our own orchard
Harvest fruit from mid-September tomid-October every year
a tourism resource. Olives can be used for a wide range of foodproducts and cosmetics, embody a lovely image of an orchard
Processing
Saletree in the Mediterranean region and are also considered as asymbol of peace. The olive business was launched in Amakusa
City, Kumamoto Prefecture in February 2010.
Adhering to our long-term vision, we will continue to address
various problems in society and local communities and contribute
Extract olive oil in the orchard
Sell at storeswithin 24 hours
to the realization of affluent life through our olive business.
KYUDENKO REPORT 2023

26

3. Sustainability

Initiatives for Promoting Sustainability Management(1) Basic Sustainability Policy(4) Important Issues (Materialities) and Orientation of Measures

Based on the corporate philosophy, the Kyudenko Group will create a sustainable society andGovernanceDiscussion and reporting

Instructions, advice, and supervision

Management Meeting
Discussion and reporting

Dialogue

Instructions, advice, and supervision

Create a basic policy for sustainability promotion, identify materialities, and formulate, promote,and evaluate an action plan based on this policy.
Meets at least twice a year in principle
Composition: Chairperson, President; Vice Chairperson, Vice President (in charge of corporate
strategic planning); Committee Members, Persons appointed by the Chairperson
Secretariat: Environmental Management Promotion Unit

(3) Materiality Identification Process

27

Kyudenko Corporation

Promote energy saving related construction (proposals for energy
efficiency improvement (ES) construction, EV charging equipment, ZEB,
energy saving equipment, etc.)

B

Respond to TCFD and reduce our own CO2 emissions

Diversity, Labor practices,
Create an environment that embraces diverse
Employment,
values and maximizes individual capabilities
Human rights

D

Promote diversity and inclusion, build diverse and flexible work styles,
and respect human rights

Occupational safety Create rewarding workplaces with safety as theand healthhighest priority

E

Eliminate significant work-related injuries, promote health andproductivity management, improve employee engagement

Education andtraining

Strengthen the overall human capacity (businessperformance, human capacity, creativity (thinking skills))

D

Strengthen human resource development and build diverse career maps

Communities

Maintain and develop local infrastructure throughstable supply of electricity and facility work, etc.

C

Maintain and develop social infrastructure through existing businesses

C

Disaster-resistant urban development, disaster recovery, support forareas affected by disasters, community contribution activities

Innovation

Create new value through technologicaldevelopment and active collaborationA

Create new business areas, improve productivity, promote investment in
DX and technology development, promote open innovation, promote M&A

Waste

Contribute to the formation of a circular society

A

Promote 3R (reduce, reuse, recycle), promote green purchasingE

Enhance corporate governance, ensure compliance, implement
information security management, strengthen risk management,
ensure fair transactions in the supply chain

Organizational governanceAnti-corruption
Compliance
Implement fair and transparent business practices
Fair business practices
Anti-competitive behavior(5) Important Issues (Materialities) System Diagram

Step 2

PrioritizesocialissuesWe selected social issues
from those identified in Step 1
to be prioritized based on a
two-axis assessment of“importance to society” and“importance to the Company.”

Step 3

Considerimportantissues

The working team examined
the important issues andselected 27 items from theperspective of what requires
our focus with respect to thepriority social issues identified
in Step 2.
Further discussion led to thelist being narrowed down to
11 items, and we thenobtained the consultant’s
advice to confirm the validityof the list.

Step 4

Identify
importantissuesThe 11 issues agreed upon in
Step 3 are identified asimportant issues after
deliberation by the
Sustainability Promotion
Committee—chaired by the
President—and approved by
the Management Meeting and
the Board of Directors.

Corporate Philosophy
Long-term Vision

A. Solve social problems
Create new value through technologicaldevelopment and active collaboration
Contribute to the formation of a circularsociety

B. Realize a carbon-freesociety
Contribute to the spread and expansionof clean energy
Contribute to energy conservation
Kyudenko to achieve carbon neutrality
by 2050

C. Maintain and develop
local public infrastructure
Maintain and develop local infrastructure
through stable supply of electricity andfacility work, etc.
Use our technical capabilities tocontribute to infrastructure developmentthat is resistant to natural disasters

Foundation to Support Value
Creation (Corresponds to
Corporate Philosophy 3)

Regarding social issues, we
identified items that are
relevant to our business basedon those listed in the GRI
Standards, ISO 26000, andSDGs—all global standards—
as well as examples fromother companies and advice
from our consultants.

B

Climate change
Carbon-free society
Contribute to energy conservation*
EnergyValue Creation by Business(Corresponds to Corporate
Philosophy 1 and 2)

Presentation of policies and plans,
and provision of information

Head office (each division, department and office), Tokyo Head Office,branches, regional offices and business offices, affiliated companies

IdentifysocialissuesPromote energy creation related construction and projects (solar, wind,biomass, PPA, EMS, etc.)

Sustainability Promotion Committee

Planning, progress management,
and reporting of results

Step 1

B

Orientation of measures(Note) 1. (*) Items related to the environment: Disclose information based on the recommendations of the TCFD (Task Force on Climate-Related Financial Disclosures).
2. System diagram: A: Solve social problems B: Realize a carbon-free society C: Maintain and develop local public infrastructure D: Strengthening human capital E:
Strengthening a sound management base
3. Important issues (materialities) will be reviewed as necessary depending on future changes in the social situation.

(Corresponds to the Three Contributions of the Long-term Vision)

Stakeholders

Information
disclosure

Contribute to the spread and expansion of clean
energy*SDGs

3. Sustainability

Board of Directors

SystemdiagramUse our technical capabilities to contribute toDisaster prevention infrastructure development that is resistant tonatural disasters

improve the corporate value of the Group by solving social issues through its business activities.

(2) Governance System

Important issues (materialities)

Kyudenko to achieve carbon neutrality by 2050*

Society

Basic Policy

Social challenges
Environment

We operate our business under the Corporate Philosophy: “1. We contribute to society through providing agreeable
environmental solutions.” “2. We keep challenging for sustainable development through our engineering strength andcreate a new value.” “3. We aim to create a mutual respecting environment in Kyudenko which utilize and develop
employees’ personality.” In addition, we have formulated a long-term vision for our 100th anniversary (2044), under which
we aim to deliver both social and economic value by working to solve social problems, realize a carbon-free society, andmaintain and develop local public infrastructure.
In accordance with this corporate philosophy and long-term vision, we have established a Basic Sustainability Policy andimportant issues (materialities) in order to focus more on improving corporate value from a long-term perspective while
taking into consideration factors such as the global environment, society, and the economy.
In the future, the Group will contribute to the creation of a sustainable society by promoting a planned and proactive
approach to important issues (materialities) under the Basic Sustainability Policy.

D. Strengthening human capital
Create an environment that embraces diverse values and maximizes individual capabilities
Strengthen the overall human capacity (business performance, human capacity, creativity(thinking skills))

E. Strengthening a sound management baseCreate rewarding workplaces with safety as the highest priority
Implement fair and transparent business practices

Mid-term Management Plan (FY2020–FY2024)
KYUDENKO REPORT 2023

28

3. Sustainability

E Environment(1) Promotion of Environmental Management:

3) Scenario analysis results and measures in response

Initiatives based on TCFD Recommendations

In line with our Corporate Philosophy and Long-term Vision, we are working to solve
various social issues related to sustainability by leveraging our technological prowess as
an integrated utilities engineering company. This includes the construction of facilities
related to energy conservation and clean energy, and disaster-resistant infrastructure.
In December 2021, we set the Medium- to Long-term Environmental Management Goals and endorsed therecommendations of the Task Force on Climate-related Financial Disclosure (TCFD), recognizing that addressing
environmental issues including climate change is one of important issues (materialities).
We will continue to enhance our efforts to realize a sustainable society and disclose information in accordance with theframework proposed by the TCFD recommendations.

(i) GovernanceThe contents of such matters will be discussed andreported to the Management Meeting, and importantmatters among them will be discussed and reported to theBoard of Directors.
The Board of Directors monitors and provides necessary
instructions and advice to the Management Meeting,which in turn offers the same to the Sustainability
Promotion Committee on climate change and othersustainability plans and measures.
(The Governance System chart is shown on page 27.)

Category

No.

Projected financial impact

Degree ofimpact2°C

4°C

Impactperiod(ii) Strategy
1) Preconditions for scenario analysis
We conducted a scenario analysis to assess the impact of climate change-related risks and opportunities on ourbusinesses, strategies, and financial plans, and to consider measures we might take in response.
The following three preconditions were selected for the analysis.
We have examined this issue under the preconditions of Step 1. From Step 2 onward, we will enhance information
disclosure, reviewing it as appropriate depending on the situation.
Step 3

Scope

Kyudenko (non-consolidated),
all domestic segment businesses

Kyudenko Group including domestic
consolidated subsidiaries,
and all domestic segment businesses

Kyudenko Group including overseas
consolidated subsidiaries,
all segment businesses

Reference year

FY2030FY2040FY2050

Envisioned
scenarios

2°C (*1) and 4°C

1.5°C and 4°C

1.5°C and 4°C

Migration risk

Step 2

Step 1

Recycling andother regulations

1

Cost increases due tointroduction of carbon tax(energy costs, material
procurement costs)

MediumLarge Small to longterm

2

Increase capital investment in
Short toMedium Medium medium
conversion to renewableterm
energyInvest capital efficiently based on cost-effectiveness and degreeof priority
Consider introduction of Kyudenko EMS2
Verify hydrogen production and storage using renewable energy
and utilization of exhaust heat3

Increase in material
procurement costs in linewith the development of thecircular economy

MediumMedium Medium to longtermE stablish procurement route for recycled materials incooperation with Q-mast1
Promote the 3Rs (reduce, reuse, recycle)

Short toMedium Medium mediumtermP romote research into low carbon, decarbonization, andrecycling technologies, etc.
Create innovation through industry-academia collaboration andtie-ups with startup companies
Utilize subsidies from Japan’s Ministry of the Environment andthe New Energy and Industrial Technology Development
Organization (NEDO)
Conduct joint feasibility study and other projects withcompanies and municipalities that are active in decarbonization(*1) We will continue to analyze and study measures on the basis of the 1.5°C rise scenario.
The Sustainable Development Scenario (SDS) of the IEA1 and the RCP2.6 Scenario of the IPCC2 were selected as the 2°C rise scenario. The IEA’s Stated Policies Scenario(STEP) and the IPCC’s RCP8.5 scenario were selected as the 4°C rise scenario.
1: IEA: International Energy Agency
2: IPCC: Intergovernmental Panel on Climate Change

2) Proceeding with scenario analysis
For the analysis, we established a working team comprising members from related divisions to examine risks andopportunities for each of the categories proposed under the TCFD recommendations regarding changes in the external
environment expected in FY2030, the reference year.

Risks

Migrationrisk
Physical risk

Policies and law

MarketTechnology

Reputation

Acute

Chronic

Resource efficiency

Financial impact

Opportunities Energy source

MarketResilience

Products and services(Source: Prepared by the Company, based on “Practical guide for Scenario Analysis in line with the TCFD recommendations 3rd edition” from the Ministry of the Environment,
Government of Japan)

29

Kyudenko Corporation

Increased
replacement costfor low-carbon
technologies andproducts

CountermeasuresP romote initiatives to reduce fossil fuel-derived energy
consumptionReplace existing equipment with high-efficiency air conditioning,
introduce energy-saving equipment and devices, and develop
and introduce AI-based air conditioning controllers
Establish material procurement system in cooperation with
Q-mast1
Strengthen collection of the latest material price informationand share it promptly among related parties

Introduction ofcarbon pricing(carbon tax)

4

Increased R&D costs toacquire new technologies

3. Sustainability

In April 2022, the Company established the Sustainability
Promotion Committee, which is chaired by the President
and consists of executives and leaders of related divisions
appointed by the chairperson. The purpose of theCommittee is to address various issues surrounding
sustainability, including efforts to cope with climatechange.
The Sustainability Promotion Committee deliberates on
the basic policy for sustainability promotion, identificationof materialities, and formulation, promotion, and evaluationof action plans based on this policy. (Meets at least twicea year in principle)

will seek to improve the working environment throughmeasures such as installing heat-resistant equipment atwork sites. We will also actively promote work style reforms
to create a more comfortable working environment.
At the same time, we will actively contribute todecarbonization and low carbon through the businesses
we undertake, while also achieving business growth. The
Company will accelerate new technology development andthe improvement of technical capabilities related to energy
creation and energy conservation-related construction, andbuild an organization and structure capable of coping withgrowing demand. Beyond existing business areas, we will
work to develop new business areas for decarbonization,
low carbon, and the creation of a circular society. Moreover,
we will respond to the growing demand for disasterprevention and mitigation measures and leverage ourtechnology and expertise in proposing disaster-resistanturban development. With the aim of maximizing ourcontribution to early recovery in the event of a weatherrelated disaster, we will develop equipment and technology
while improving our internal organization and strengthening
our communication system with related agencies.
We will continue to regularly conduct scenario analysis to
identify climate change-related risks and opportunities,
enact measures to address them, and reflect them in ourbusiness plans.

The 2°C rise scenario assumes a society in which carbon
pricing is introduced in developed countries and someemerging countries. The 4°C rise scenario, meanwhile,
assumes a society in which current climate change
measures continue in developed countries and GHG
emissions are not reduced globally.
Under the 2°C rise scenario, stricter carbon regulationsin Japan will drive energy costs and procurement costs formaterials upward. Meanwhile, as the move toward
decarbonization accelerates, we expect to see increased
demand for businesses related to renewable energy andenergy conservation. Under the 4°C rise scenario, demandfor businesses related to renewable energy and energy
conservation will grow, but at a more moderate rate thanthe 2°C rise scenario. Regarding the degree of temperature
increase and the severity of weather events such as
typhoons and floods, we assume that the difference fromthe 2°C rise scenario will not be significant in 2030.
Based on the results of the scenario analysis, we looked
at measures to minimize climate change-related risks andmaximize opportunities. We will respond to the tighteningof decarbonization- and low carbon-related regulations byaugmenting various initiatives to reduce consumption offossil fuel-derived energy and by introducing energy-saving
equipment. In response to the negative impact on theworking environment of rising average temperatures, we

Degree of impact: Assessing the financial impact on our business in terms of “large,” “medium,” and “small”
Impact period (time frame during which impact is expected to manifest): short term (2022–2025); medium term (2026–2030); long term (2031–)
1 Q-mast: 	A consolidated subsidiary of the Company, Q-mast’s main business is the sale of construction materials, machinery, and equipment for electric and
HVAC facilities.
2 Kyudenko EMS: A renewable energy generation-side energy management system, not building or facility-side system.
A system that can control multiple power generation sources including solar, wind, small-scale hydro in a comprehensive manner and, together withstorage batteries, stably transmit power to the demand side around the clock.
The EMS allows stable transmission of electricity—even to fragile micro-grids in locations such as remote islands and can be used as a base-load powersource. In Japan, the Company can offer a wide range of proposals that extend beyond disaster prevention, such as supplying 100% renewable energy
to buildings for normal operation as well as ensuring the availability of electric power in times of disaster (resilience).

KYUDENKO REPORT 2023

30

3. Sustainability

E Environment

Category

No.

Projected financial impact

Degree ofimpact2°C

Acute

Intensificationof extreme
weather4°C(iii) Risk management
ImpactperiodCountermeasures

Physical risk

5

Increased costs related tocompany-owned facilities
and construction sites
damaged in weather
disasters

Short toMedium Medium mediumterm ather up-to-date information on hazard maps and disasterG
prevention and mitigation measures
C onsider risk reduction measures for facilities located in high-riskareasConsider building a construction cooperative structure in
conjunction with construction cooperative associations in theevent of a disaster

6

Damage to the Company’s solar
Short toMedium Medium medium
power generation facilities
term
resulting from a disasterInspect hazardous areas and implement disaster prevention
measures

Increased costs to address
labor shortages anddeclining productivity
resulting from deteriorating
work environments atconstruction sites

 onsider and introduce new heat countermeasures to reduceC
the occurrence of heat stroke and health hazards at work sites
Ensure proper labor management and formulate a support
system for construction workers
Strengthen the Company’s appeal and corporate promotion to
students
Promote consideration and introduction of advanced initiativesof the Construction RX Consortium3

7Chronic

Increase inaveragetemperature

8

Decrease in electricity sales
revenue due to higher
temperatures resulting in lower
power generation at the company’ssolar power generation facilities

MediumLarge Large to longterm

MediumSmall Small to longterm

 emote monitoring to measure the volume of electricity
R
generated and detect abnormal values and fault locations at an
early stage

Category

No.

Projected financial impact

Degree ofimpact2°C1Development andexpansion of
low-carbon
products andservices;
recycling
regulations, etc.

Opportunities

Spread of nextgeneration
technologies

Disasterprevention,
mitigation, andnational
resilience
initiatives

31

Kyudenko Corporation

24°C

ImpactperiodCountermeasures

For climate change-related risks and opportunities
identified in line with TCFD recommendations, we will
incorporate each countermeasure into the Mid-termManagement Plan, develop and implement them in thepolicies and business plans of each division and branch
office, and periodically review them to avoid or mitigate
risks and expand opportunities for profit.

(iv) Metrics and targets
2030

Reduce CO2 emissions intensity by at least 50% (compared with 2013)

2050

Achieve carbon neutrality
Intensity: (Scope 1 + Scope 2) / Kyudenko’s non-consolidated net sales (t-CO2/100 million yen)

Action items toward achieving these goals
Introduction of EMS into Kyudenko Academy
Deployment of EVs and chargers (special vehicles for construction that cannot be replaced are not eligible)
Environmentally friendly capital investment in equipment related to office buildings

3. Sustainability

3 Construction RX Consortium Formed in September 2021 by 16 general contractors. With the aim of improving the productivity and appeal of the industry, theConsortium works to increase efficiency and reduce labor at construction sites, including cooperation in technological development in theareas of construction robots and IoT. RX is short for “robotics transformation.” As of November 22, 2022, the Consortium comprised 27 full
members and 112 cooperating members (Kyudenko is a cooperating member).

The identification and assessment of the risks posed byclimate change to the Company and consideration of
measures to address those risks are led by theEnvironmental Management Promotion Unit anddeliberated by the Sustainability Promotion Committee
through cross-departmental discussions.
Matters deliberated by the Sustainability Promotion
Committee are discussed and reported to the Management
Meeting and the Board of Directors as necessary.

Utilization of graduate feed-in tariffs (FITs) (assets at the end of project period)
R&D through industry-academia collaboration

CO2 emissions per 100 million yen of net sales
6.0

Increase in sales and profit
due to growing demand forenergy creation-related
construction and business(solar power generation
including PPA, onshore andoffshore wind power
generation, biomass power
generation, EMS, etc.)

Short toLarge Large medium
term

Increase in sales due to
growing demand in the energy
conservation field (energy
efficiency improvement (ES)construction, EV charging
facilities, ZEB, etc.)

Short toLarge Medium medium
term

5.0
4.0
 einforce internal organizational structure to cope withR
growing demand
Develop new technologies and augment technical capabilities
Utilize company-owned renewable energy facilities (following
expiration of FIT)
Promote optimal energy-saving system proposals
Facilitate planning and proposal of water reuse systems insewage treatment facilities and private factories

3.0
2.0
1.0
0.0

FY2013

FY2019FY2020

FY2021

FY2022

FY2030(reference year)

3

Increase in sales and profit due tohigher demand for construction
work related to water reuse

Short toMedium Medium medium
term

4Promote new businesses
utilizing next-generation
technologies

MediumMedium Medium to longterm

Establish an internal support system for new businesses

5

Contribute to rapid recovery
from disasters

Short toLarge Large mediumterm einforce the liaison system with internal organization andR
relevant agencies to facilitate rapid disaster recovery
Development of work equipment and tools that contribute to
rapid recovery
Kyudenko EMS proposal

6

Increase in sales due to growing
demand for disaster prevention
and mitigation measures in
response to the increasing
frequency and severity of
weather-related disasters

MediumSmall Small to longterm

CO2 emissions volume
UnitE stablish an internal organizational structure capable of copingwith growing demand
Make technical proposals to municipalities on disasterresistant urban development (measures to prevent andmitigate disaster impact)

FY2013(1)

FY2019FY2020

FY2021

FY2022(2)

Change fromreference year(2)-(1)

FY2030

Scope 1

t-CO2

9,059

7,670

6,816

6,947

7,454

-1,605—

Scope 2

t-CO2

5,677

5,094

5,163

5,262

6,080

+403

—

Kyudenko (non-consolidated) / total

t-CO2

14,736

12,764

11,97912,20913,534-1,202—

Net sales

100 million yen

2,597

3,651

3,374

3,226

3,330

+733

—

Intensity

t-CO2/
100 million yen

5.67

3.50

3.55

3.78

4.06

-1.61

2.83

Intensity unit reduction rate(compared with FY2013)

%

—

-38.2

-37.3

-33.3

-28.3

—

-50

Intensity: (Scope 1 + Scope 2) / Kyudenko’s
Scope 1: Direct greenhouse gas (GHG) emissions generated by business activities
non-consolidated net sales (t-CO2/
Scope 2: Indirect emissions resulting from the use of electricity, heat, and steam supplied by external entities
100 million yen)
Scope 3: Indirect emissions other than Scope 1 and Scope 2 (emissions by other companies related to the activities of the Company)*The Company will work to expand the scope, including Scope 3.

KYUDENKO REPORT 2023

32

3. Sustainability

S Society(1) Strategy for Human Capital(2) Promoting Diversity

Our corporate philosophy is to “aim to create a mutual respecting environment in Kyudenko which utilize and develop
employees’ personality.” Based on this, we have established a policy on developing human resources — our mostimportant management resource — and formulated the Human Resource Development Charter to instill the policy in all
employees. In line with our conviction that people are one of our most valuable assets, we provide employees opportunities
to improve their capabilities and demonstrate the results of their training to advance the Company and ensure every
employee has a rewarding job and achieves self-actualization, with the aim of further growing employees and advancing
the Company further.
In the management strategy process of the Mid-term Management Plan, for us to achieve the reform of our construction
capability and reform of productivity, we believe it is necessary to link human resources strategy to management strategy
and to engage in it with a sense of speed. To this end, we are implementing specific measures.

The business environment surrounding the Company has been changing drastically due to the falling birthrate and aging
population, globalization, and diversification of individual values. Under these circumstances, in order to create new value,enhance its competitiveness, and continue sustainable growth, the Company needs to add different ideas and diverse
perspectives. Promoting diversity is therefore an imperative. Having established the “Objectives” based on its Corporate
Philosophy and the Charter of Behavior, we will recognize and accept the “differences” between our diverse talents as theindividuality of each person, and turn such “differences” into its “strengths.”

For details, please refer to “2. Concept and Initiatives on Sustainability (3) Strategy
for Human Capital and Diversity” of the securities report for the 95th fiscal year.
https://www.kyudenko.co.jp/ir/docs/2023_95_yuka-02.pdf (Japanese)

Initiatives for Realizing Human Capital Management
Board of Directors
Discussion andreportingInstructions, advice,and supervision

Management Meeting
Discussion andreportingInstructions, advice,and supervision

Sustainability Promotion Committee(chaired by the President)
Discussion andreporting

Human Capital Management
Working Group

Corporate Philosophy, Long-term Vision

Present
Future(ex. in ten years)

g bu

Current business portfolio

The As-Is statusof human resourcesand organization
Points at
issue:
rategyeurce st d for the futur
o
s
e
r
n
e
Huma
requir
How tosecuretalents

Capture the As-Is status andquantify the gap between As-Is and To-Be

33

Kyudenko Corporation

Management strategy

Future business portfolio

Define the human resources and organization
required based on the needs of business

The To-Be statusof human resourcesand organization

Relevance to SDGs

How to bridge
the gap?

The main objective of the Women’s Active Participation Promotion Team established in theprevious fiscal year (FY2022) is to formulate initiatives towards solving issues in the active
participation of women and develop women leaders. The more than 30 members of the team
were divided into five groups for discussions, the outcome of which were presented to the
management team including the President. These presentations triggered new awareness andled to the revision of internal system* and other achievements.
Joined by new members, the team is continuing activities this fiscal year, holding a series of discussions towards making
the solutions suggested in the presentation a reality.

Focus*Revised the childcare support scheme
As a result of the revision, the ceiling of the child’s age that makes an employee eligible for childcare short work hour scheme(which used to be from three years old until the beginning of the child’s fourth year in the primary school) has been raised tothe end of the child’s sixth year in primary school, and the maximum number of hours that an eligible employee is entitled totake off from work (which used to be one hour per day) was extended to two hours per day.
The revision has added to the choice of work styles and created an environment that facilitates the balancing of work andchildcare.

How much investment isneeded to bridge the gap?

Investment

The human resourcesand organization asleft in inaction

Set numerical KPIs related
to the To-Be status

Basic Policy on Diversity Promotion

Objectives
1. We will create a corporate culture that respects
and utilizes diversity.
We will create a corporate culture that respects andrecognizes diversity in terms of gender, age, disability,
race, ability, values, sexual minority, etc., and utilize it
as a strength of the organization.
2. Promote the development of diverse humanresources and their activities.
We will promote the hiring, training, and promotion ofdiverse human resources, and support diverse careerdevelopment and skills development.
3. Create an attractive work environment that isrewarding and challenging.
We will strive to improve engagement by creating aworkplace environment in which employees want towork and continue to work, including an environment inwhich each individual can maximize his or her abilities
and in which diverse and flexible work styles are possible.

Women’s Active Participation Promotion TeamA graphic representation of discussions in the Human Capital Management Working GroupetoManag siness closer

Kyudenko Charter of Behavior
1. ………………………………………
4. We will give our employees relaxing and enriched lives, ensure safe,
comfortable, and open workplaces, and create a corporate culture that isbright and vibrant, and respects the character, individuality, and diversityof our employees.
10. ………………………………………

Leader, Sub-leader,
14 members from head office divisions

The working group analyzed the current state, found out issues, and pictured the human resources and organization as theyought to be in the future, based on which they are currently discussing ways to formulate and implement a human resource
strategy that is linked to the management strategy and designed to increase the feasibility of the envisaged picture.

brin
How toCorporate Philosophy
1. We contribute to society through providing agreeable environmental solutions.
2. We keep challenging for sustainable development through our engineeringstrength and create a new value.
3. We aim to create a mutual respecting environment in Kyudenko which utilize
and develop employees’ personality.

Instructions, advice,and supervision

Status of Discussion at the Human Capital Management Working Group:
trategy e idealthment sBasic Policy on Diversity Promotion

3. Sustainability

Since the Company is built on a labor-intensive business model
centering on contract works, it is essential to improve theproductivity of each of its employees.
To improve productivity, it is important that the Company createsa workplace environment that allows each and every employee tofind his/her work meaningful and aim to attain self-actualization.
The Company believes that enhancing employee engagement andhaving a greater number of enthusiastic talents will pave the way toits future performance and appreciation by society.
The Company established the Human Capital Management
Working Group consisting of members gathered from acrossdivisions, which is currently discussing ways to implementhuman capital management in essence.
The result of discussions will be brought to the Sustainability
Promotion Committee, the Management Meeting, and the Boardof Directors before it is published.

Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/initiatives/en_diversity.html

Identify human resource agenda items
important for the management strategy
Bridge the gap and formulate and implement a humanresource strategy that would enhance corporate value

Retaining and Supporting the Active Participation of
Female Technicians
Aiming to expand job categories for women, the electrical work divisions hire women
technicians and regularly host trainings and meetings for exchange of views in order to makeworkplace environments more women friendly. This fiscal year, the training session was heldwith the participation of supervisors, with the aim of deepening
Current number of technicians (as of April 1, 2023)
communication and mutual understanding.
To remove any worries and anxiety that new hires may have about
Division
Total number of technicians of which, Female technicians
work place environment, we host meetings at which they can exchangeElectrical work600
30
views with their senior colleagues prior to their assignment to posts.

KYUDENKO REPORT 2023

34

3. Sustainability

S Society
Promoting the Utilization of Childcare Leave by Male Employees
To make the wish of male employees to do their part in childcare come true, the Company promotes their utilization ofchildcare leave. Specifically, we are working to create anChildcare leave utilization rate among male employees
environment conducive to taking childcare leaves byYear ended March 31, 2022 Year ended March 31, 2023
making widely known the intra-company systems and thePercentage of male employees who utilized childcare leave
44.3%
55.6%
stories of those who have taken the leave, through inNumberofmale
employees
whoutilizedchildcare
leave
105
135
house trainings, posters, in-house magazines and other*Thepercentageofmale
employees
whoutilizedchildcare
leave
is
the
percentageofthe sum ofmeans.

those who utilized childcare leave, etc. and those who utilized paid leave for childcare purposes.

Focus(3) Occupational Safety and Health
Promoting Health and Productivity Management
We consider our employees’ health to be an important management resource. To raise our employees’ awareness of“putting health first” and support their voluntary health promotion activities, we have established the “Kyudenko Health andProductivity Management Declaration.” We work together as an organization to be recognized as a Certified Health &Productivity Management Outstanding Organization by achieving “a work environment with peace of mind” and “creation ofa happy and agreeable work environment,” as well as maintenance and improvement of the health of our employees
including their families.

Voices of those who utilized childcare leave
Division: HVAC and Plumbing (Engineer)

Length of leave taken: one month

I had been wanting to utilize childcare leave since around the time I learned that my wife was expecting, and she was happy
that I took the leave. My older child was also happy because I made it a point to spend a lot of time with the kid during theleave. Indeed, it was great to have more time with my family. The leave turned out to be an opportunity to renew my gratitude
to my wife, because it taught me not only the joy but also the challenges of parenting.
Supervisor’s comment
I was a little bewildered when he first told me that he would like to utilize childcare leave, because of the labor shortage that
we are suffering. But remembering how, in my younger days, my child started crying at the sight of me coming home early,
and how my wife would complain that I should care more about my family, I decided to support him, saying that it wascommendable of him that he properly cared about his family. I am deeply grateful to the staff who covered for him during his

Division: Electric (Technician) Length of leave taken: 28 days
It was the first time for me to take care of a newborn, and I found everything new and impressive, including bathing the baby. I
didn’t utilize childcare leave when my first two kids were born. Looking back, I somewhat regret that and wish that I did. When
my older kids were babies, they would start crying when they saw me come home, which made me sad. But now, I am very
happy that, after the childcare leave, they just naturally rush to greet me when I come home.
Supervisor’s comment
I was aware of those promoting the utilization of childcare leave when he came up to me with his plan, so I agreed with all myheart. He told me well in advance of the start of leave, so everything went smoothly, from explaining to the team members,arranging the staffing on worksites to adjusting schedules, etc.

Understanding of Employment of Employees with Disabilities
Aiming to pave the way for employees with disabilities to perform to the best of their abilities and continue working
vigorously, we provide trainings via the Learning Management System (LMS) to promote the understanding of employmentof persons with disabilities.

35

Kyudenko Corporation

Promotion of Work Style Reform
The Group defines work style reform as a “reform for the Company and its employees to grow together, aiming to create
new values and realize a prosperous life.” Since FY2017, with the Promotion Committee for Work Style Reform establisheddirectly under the President, we have been striving to work in time-effective ways by incorporating innovative technologies
and ideas unhindered by existing modes. In FY2023, we established the Workstyle Reform Promotion Office and started
strengthening the system for reducing the workload and improving productivity, in particular of engineers. In line with theWork Style Reform Action Plan that has been drawn up, we will implement the plan at a brisk pace. The main point of thereform currently under way is to allocate administrative employees to large job sites and technology divisions of branch
offices and business offices, and transfer a part of the clerical work concerning construction work that have been handled
by engineers to those administrative employee. With this all-hands-on-deck construction system, we plan to reduce theworkload of engineers, curb their overtime work, and enhance their engagement.
We believe what is important in work style reform is not merely eliminating long working hours, but also aiming to improve
productivity by creating new technologies and improving operational efficiency. This will result in reducing long working
hours, which will in turn enable further improvement in pay. By making these efforts, we strive to ensure sustainable growth
so that employees can enjoy economic affluence.
Work Style Reform Action Plan (excerpt)

Work Improvement

Respect for human rights is stipulated in the Charter of Behavior see P. 02 for details . As means of education for the purpose,
we incorporate human rights education into the curriculum of new hire training as well as distribute a video program forhuman rights education intended for all employees via the LMS.
At the training sessions, which refer to SDGs, employees renew their understanding of the importance of learning abouthuman rights, learn the history of Buraku discrimination in Japan, and develop an eye to notice any and all types of
discrimination and human rights problems.

In July 2021, we launched an employee engagement survey, using theEngagement score (non-consolidated)
Benchmarkengagement measurement tool, Wevox, to strengthen the relationship ofKyudenkotrust between employees and the Company. In April 2022, the target ofthe survey was expanded to include all employees. Using the results ofthese monthly surveys, we visualize the strengths and weaknesses of72
individual departments and learn about how rewarding employees feel
their work is, their stress levels, their interpersonal relationships at work,
69
69
and other aspects through numerical data. To build a rewarding work
68 68 68 68 68
68 68 68 68 68
environment, we will promote activities to improve the organization andencourage discussions, with the aims of increasing the number of
2023
2022
employees who are enthusiastic about their work and creating workplace
4
5
6
7
8
9 10 11 12 1
2
3
environments where such employees can take up challenges and fully
demonstrate their abilities, through which we intend to enhance profitability
and productivity as well as reduce turnover rate.

Personnel Measures

Respect for Human Rights

Employee Engagement

3. Sustainability

absence.

Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/initiatives/en_health.html

Measures eploy staff to large job
Dsites

A ssign staff to sales offices(to handle small- and medium-sized
construction projects)
 evise the policy to secureR
personnel
Transfer task

Details-1 Deploy technicians

Deploy head office engineers to branch offices ahead
Deploy technicians

Deploy materials staff-2 Deploy clerical employees

Deploy clerical employees from head and branch offices to large job sites-1 Deploy technicians-2 Deploy, train, and hire clerical employees

Deploy clerical employees belonging to branch offices to technical work
Switch clerical work in branch offices to temporary employees-1 Review the work location selection system-2 Review the contact rehiring system-3 Review mid-career hires-1 Transfer construction manager’s tasks
to other departments

Establish area type: new scheme
Extend reemployment period
Ease hiring criteria
Safety (ex. Training, etc.) Sales (ex. receive order sheet, and issue invoices, etc.)
Affairs (ex. manage materials, subcontracting, expenses , etc.)

Reduce workload-1 Reduce workload at technology divisions Review business processes (ex. preparing documents, etc.) Review the number of meetings and their-2 Reduce workload at common and clerical members Review Kyudenko Academy’s training programs (ex. enrich and streamline the contents)
Review how engagement surveys should be conducted
divisionsImprove productivity(ex. paperless, etc.)-1 Operational efficiency through DX

Use electronic official seals and review payment process Introduce and utilize P/L management system.
Digitize construction project documents (including contracts with subcontractors)

KYUDENKO REPORT 2023

36

3. Sustainability

S Society
Initiatives for Safety

Next-generation Leader Development Program —Kyudenko Management School

Safety is a company’s most important social responsibility that deserves the highest priority. With the basic philosophy of“Safety takes precedence over everything (Safety and health are the foundation for management and a major premise of allactivities),” the Kyudenko Group ensures all employees thoroughly implement ‘thinking and practicing’ safety on their own
to prevent accidents.
To implement without fail the Basic Plan for Safety and Health Management formulated at the beginning of the fiscal year,
the labor and management work as one to carry out safety and health management activities based on the Occupational
Safety and Health Management System (OSHMS). We aim to keep on raising the level of safety and health throughcontinuous and effective implementation of occupational safety and health activities.

In FY2015, we launched the “Next-generation Leader Development Program” to develop future executives and boost thefield of executive candidates who will be able to drive the Company’s management. The Program develops employees who
are able to take a bird’s-eye view of the Kyudenko Group when they are in managerial positions, mainly through personnel
rotations (career path) and education (training). Participants are divided into senior executive, special management, andmanagement tiers for the purpose of this program.
Selected members come together four or five times a year at our training facility, Kyudenko Academy, where they engage
in discussions on management issues while gaining the knowledge necessary for management. In the final session, theypresent a business proposal to the management.
To date, a cumulative total of 270 candidates have been selected for this program, which has led to the development ofexecutive personnel, with executives and directors being appointed from among their number.

Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/initiatives/en_safety.html

Training of Mid-career Hires

Eliminating Work-Related Accidents

Focus
Sharing the findings of safety patrols utilizing image management tools
We capture the videos of safety patrols using 360-degree cameras and store the images in the image management tool sothat managers of offices, branches and the head office can check the situation of operations, etc. Having multiple managers
to provide suggestions and instructions on unsafe situations or actions allows us to improve the knowledge and awareness of
not only construction staff but also the safety patrollers.
Since the footage of worksites can be checked with a 360-degree view, we are expanding its use into the management ofworking processes and quality.
Control of driving using connected AI dashboard cameras
The AI automatically detects eight types of unsafe driving behaviors (distracted driving, sudden steering, ignoring stop signs,
sudden back up, sudden acceleration, sudden deceleration, overspeed, and inter-vehicular gap) and immediately alerts thedriver with an alarm. The system is working as a great deterrent to high-risk driving behaviors, as it reports (by sending anemail) particularly unsafe driving to the manager in real time, among other functions. What is more, it is contributing toadvancing the work style reform by drastically reducing the work load of managers who previously had to watch and checkthe recorded videos.

Strengthen OJT for Young Employees
The Kyudenko Group has been cultivating humanresources mainly through on-the-job training (OJT). In thelight of the rapidly changing world these days, we see theneed to change the way companies develop and train
human resources to one that is better adapted to thetimes, while also continuing the OJT as before. It is against
this background that we reviewed the OJT system foryoung employees in FY2021. Specifically, we clarified ininternal rules that we should make use of the entire
workplace in the training of young employees andestablished a new OJT Supporter system to provide
general support for elders.

37

Kyudenko Corporation

Within theworkplaceMembers of the workplaceOJT Supporter

Supervisor

Outside theworkplaceMembersof otherdepartments
Trainee (young employee)

Seniors, colleagues

Persons outside
the company

Juniors, contemporaries

We designate a certain period in mid-October every year as a community
program period, dedicating contributing activities to the local community, during
which we engage in contribution activities rooted in the community, such as
cleaning/equipment inspection activities at community and cultural facilities using
its aerial work vehicles and blood donation and provision of bazaar items towelfare facilities. We have also cooperated in community activities, such as bydonating crime-prevention equipment, emergency goods to cope with disasters,
traffic crossing flags, crime prevention patrol cars with rotating blue lights, andother items to administrative agencies.
This year, we donated portable power stations to administrative agencies andother organizations as a support for measures against the frequent typhoon,
torrential rains and other natural disasters.
This year marked the 55th round of such activities, which have become familiar
as a core of the Group’s social contribution activities, and widely known and wellregarded within and outside the company.

Track and Field TeamOJT support relationships diagram

Elder(5) Coexistence with Local Communities
A Community Program, Dedicating Contributing Activities to the Local Community

Safety management activities through the use of digital technology(4) Education and Training

3. Sustainability

With regard to safety management, we provide position-based training delivered bylecturers inside and outside the Kyudenko Group to not only the Group’s employees
but also those who belong to our subcontracting companies at our education
facility, “Kyudenko Academy,” in a planned manner. In the “Safety Lore Hall Training”
uniquely offered by Kyudenko, we started using a larger screen (2.1 m high, 9.0 mwide) that replaced the old one as part of equipment replacement.
Our other efforts include the creation in full swing of Kyudenko’s original educational videos using illustrations and avatars
with the aim of improving the safety management ability of young engineers and technicians in particular and enhancing thedegree of their understanding of the trainings, which are offered for viewing at any time. For situations where it is difficult toprovide group training, we also have in place an online education environment utilizing a learning management system.
We aim to eliminate work-related accidents by hammering into each worker the necessity of “compliance with worksafety standards” and “risks of non-compliance” until he/she understands, becomes convinced and practices compliancewith those standards.

Aiming to secure diverse talents, the Company is increasingly hiring mid-career
personnel. In view of the rising number of mid-career hires, we launched the
Mid-career Hire Training Program targeting these employees in the previous fiscal
year (FY2022).
The training aims to deepen their understanding of our corporate philosophy,
organization, culture, history, etc., so that they can share the same sense of
purpose with all other employees and become more engaged, which will lead toorganizational revitalization.
This fiscal year (FY2023), which marked the second year of the program, we
upgraded the trainings by introducing new content to the curriculum, including
the human resources and labor affairs systems, diversity, and other topics, basedon the opinions of the trainees.

Respective roles
CategoryRole

OJT SupporterA ssist and share information with the supervisor regarding education of new hires
Provide general support to elders and new hires

Elder

Provide operational, reflective, and mental support regarding education of new hires

Backed by a 70-year history since its establishment, the Kyudenko Track and Field
Team trains daily aiming to win the Men’s and Women’s All Japan Industrial Teams
Ekiden and produce Olympics athletes, with the purpose of “enhancing thecorporate image of Kyudenko,” “boosting employee morale,” and “contributing tosociety,” based on close ties with the local community. The Kyudenko Track and
Field Team has produced Japan national team members of the Olympics andWorld Athletics Championships and many other international games. In addition,
the Team has participated in the All Japan Industrial Teams Men’s Ekiden (Gunma)
held on January 1 for 48 consecutive years (the longest record of all participatingteams) and has participated in the All Japan Industrial Teams Women’s Ekiden(Miyagi) 32 times. We will continue to work hard to produce more Japan nationalteam members and win the Men’s and Women’s All Japan Industrial Teams Ekiden.

Focus

Akasaki of Kyudenko won second place in the Marathon Grand Championship (MGC)
Kyudenko’s athlete Akira Akasaki won the second place in the Marathon Grand Championship (MGC) held on October 15,
2023. Akasaki was joined by team mates Horio and Otsuka, who finished sixth and eighth place, respectively.
KYUDENKO REPORT 2023

38

3. Sustainability

S Society(6) Disaster Prevention
Kyudenko EMS
Kyudenko EMS is an energy management system that makes it possible to tame the intense output fluctuations thatcharacterize solar power, wind power and other renewable energy sources to realize a stable supply of power. Kyudenko
EMS, which we developed in-house, was selected by the Ministry of the Environment, Japan, for a subsidy program in
2016, under which we built the first overseas demonstration facility in Sumba, Indonesia. The numerous inhabited islands inIndonesia were powered mostly by diesel-engine generators and tended to suffer power shortages that were hampering
their industrial development. The country’s government and local authorities expressed high hopes for this attempt tostabilize renewable energy supply using Kyudenko EMS.
In February 2022, we installed Kyudenko EMS in Ogi City Hall in Saga Prefecture for the first time in Japan. This project is an
off-grid power supply system in which all electricity for Ogi City Hall is supplied by renewable energy 24 hours, 365 days a year
without connection to power grids operated by electricity companies. This is the first case of the application of the resilience
program to strengthen disaster prevention bases that is being promoted by the national government. Ogi City Hall is the firstmunicipality in Japan to introduce a self-sufficient power supply system, in which all electricity is generated from renewableenergy and used in the building without being fed back into the grid. We consider it extremely significant that we were able tointroduce in Japan the system that we developed in-house based on our experience in the past years with the demonstration
facility in Sumba, Indonesia. Looking ahead, we plan to steadily and widely spread the Ogi City model as a scheme designed torealize a carbon-free society and bolster disaster prevention facilities, and grow it into a new pillar of our business.

(7) Waste

One of the Company’s materialities is to “contribute to the formation of a circular society.” We regard the issue of waste as
one of the important social problems and plan to take measures such as 3R (reduce, reuse, and recycle) and green
procurement.

(8) Innovation [Technology Development]
Technology Development at Kyudenko
Based on the main theme of the Mid-term Management Plan, “Establish a management foundation for sustainable growth~Realization of the three reforms~,” our Technology Development Department solves various challenges as a generalengineering company, and creates value for the future society through development of cutting-edge technologies topromote sustainable growth. It assumes a role of verifying and introducing cutting-edge technologies and operational tools
ahead of the Group companies and solving on-site technical issues before rolling out, while cooperating with otherdepartments and divisions. As part of our efforts to contribute to creating a sustainable society and achieve SDGs goals, italso works on technology creation through cooperation between industry and academia and securing human resources topromote “creation of new value for the future society,” “improvement of corporate value,” and “improvement ofoperational efficiency.”

Use of Cutting-Edge Technologies that Support Activities at Worksites
Validation of constructions using “air flow simulations”
The “air flow and temperature” in the completed building is a very
important element to consider when designing a building. In thedesign phase, we implement preliminary examination of advanced
HVAC quality using “heat and air flow simulations,” which enables us
to graphically visualize the points to suggest improvements or theenergy-saving effect.
The picture shows an example of air flow simulations of amultipurpose hall, for which we explored the positioning of air outlets
and inlets that prevents draft (unwanted, unpleasant current of air) in
the seating area. Coordinating the system more closely with visuallyoriented platforms such as 3D-CAD and BIM (building information
modeling) to respond to the future more advanced design, we
facilitate consensus building among related parties to ensure smooth
progress of projects and improvement of construction quality.

39

Kyudenko Corporation

CO2 emissions
volume-4.5% to-13.2%

Energycost-2.4% to-15.8%*Calculated with the assumption that energy
consumption reduction effect due to “shorter
operating hours” approximately equals to
CO2 emission reduction effect, energy costeffect[Total expected effect of “improved
operational efficiency” and “shorter
operating hours” obtained from trial
experiments at three facilities]

Initiatives for Cooperation between Industry and Academia
Development of Illuminance Measurement Robots using a Swarm Robot System
In December 2021, we concluded a Comprehensive Collaboration Agreement with
Kyushu University with the aim of “creating innovation toward solving social
problems.” Subsequently, in FY2022, we launched a project in collaboration withKurazume Laboratory (Graduate School of Information Science and ElectricalEngineering, Kyushu University) to jointly develop “Illuminance Measurement
Robots using a Swarm Robot System.” In FY2023, we plan to bring demonstrative
robots into the worksites. (The picture on the right is a prototype of illuminancemeasurement robot)
Going forward, we will further expand the scope of collaborative cooperation,
push on with the “improvement of sophistication and labor-saving in design,
construction and survey using robotic technology,” thereby leading to our further
development and evolution together with our Corporate Strategic Planning Division,
DX Promotion Department, Technology Division and Green Innovation Business Division.

3. Sustainability

Contribute to the Formation of a Circular Society

HVAC heat source control using AI technology for large stores
While the initiatives for reducing CO2 emissions toward decarbonization are being
rapidly accelerated, it is required to reduce CO2 emissions by 51% (compared to2013) in “Commercial Industry” which includes large-scale facilities and buildings, inorder to achieve the government-set goal to reduce greenhouse gas emissions by
46% by 2030 and further aim for 50% reduction. To realize CO2 emissions reduction
in “Commercial Industry,” it is key how to optimize HVAC heat source control sinceenergy consumption by HVAC systems accounts for a large part of the total energy
consumption. Meanwhile, HVAC heat source control at large-scale facilities andbuildings has been traditionally conducted by maintenance personnel, leveraging
their experience and intuition to adjust parameters, and issues such as successionof technologies dependent on individuals and lack of successors have arisen.
In light of this background, we worked with GRID INC., which has unique stateof-the-art AI technology, to jointly develop “Heat load prediction and digital twin to
optimize Air Conditioning Heat Source Control AI” incorporating GRID’s digital twin/
AI-optimized technology based on their abundant experience in the social
infrastructure field.
In FY2023, we are working to install the system in full scale at stores that haveintroduced the system on experimental basis, with an eye to installing it on
individual air conditioning systems such as multi air conditioning system forbuildings in the next fiscal year.

Effective use of combustion ash from wood biomass power plant
For the purpose of effectively using combustion ash emitted from the wood biomass power plant operated by the Group,
we work to explore the recycling of combustion ash as materials for fertilizers, examine its effectiveness as fertilizer for plantcultivation, and look for suitable crops for which the fertilizer can be used. The results of our initiatives in FY2021 confirmedthat combustion ash fertilizer is usable as substitute for potassium fertilizer.
Leveraging these, we will promote theimprovement of economics of eachindustry and the revitalization of local
communities, aiming to complement
Harvesting
the establishment of a circular society inSoundrealizing a carbon-free society thecultivation
Transportingof forests
Group is working on.
In addition, from FY2022, we started
Wood chip planta new initiative for examining thecultivation of “fast-growing Japanesepaulownia” to explore the wood which
Fuel
companies
is used as source of fuel at the woodbiomass power plant. Since “fastCO2 absorption
CO2 emission
Wood biomass
growing Japanese paulownia” grows
Thinning
power plantfaster than traditional paulownia, andChipprocessing
has properties to absorb CO2 threetimes as much compared to cedar andCrop
Pruning
production
cypress, it is expected to help ensure
local and stable supplies of wood.
Power
Therefore, this initiative is positioned asplantsMowing
Local production
and consumption
key to establishing a circular society
Revitalization of local
Recycling
and realizing a carbon-free society.
communities
Cultivatingof bark andCooperating universities: Hiroshima
University, University of Miyazaki,
and National Institute of Technology,
Kagoshima College

Tree
planting

combustionash

Makingfertilizer

Sale

Image of wood biomass power generation and combustion ash circulation

KYUDENKO REPORT 2023

40

3. Sustainability

S Society(9) Innovation [DX]Vision of Information System the Kyudenko Group Aims For

The Kyudenko Group will improve its services as an integrated utilities
engineering service company through the promotion of DX and thus enhance
its corporate advantage, while at the same time contributing to the local
community by solving social issues.
Kyudenko has been certified as a DX-certified operator
In order to contribute to “reform of productivity,” one of the three reforms inby the Ministry of Economy, Trade and Industry.
the Mid-term Management Plan, we are currently promoting streamlining andlabor saving by fundamentally reviewing our business processes as well as utilizing cutting-edge technology andinformation technology. In the future, we hope to transform our corporate culture and adapt to Society 5.0, where cyberand physical spaces will be highly integrated, thus developing a strong corporate structure and high profitability that will
enable us to beat the competition in Japan and around the globe.

Progress of DX project

Finished project

Use of company-issue smartphones by all employees

Development of remote work environment(Create an internal digital environment)(Create an internal digital environment)

Distribute company-issue smartphones to all employees
Use of e-mail, chat functions, and file sharing
Build business card management system
Use in safety and worksite management

Ongoing project

Project under consideration

Improve operational efficiency with paperless andseal-less operations(Create an internal digital environment)

Eliminate use of paper at executive meetings
Standardize various conference materials
Eliminate need to place seals on paper documents
and develop document workflow
Prepare for reevaluation of intranet

Reevaluation of work processes (1)Reevaluation of work processes (2)Building of company-wide shared databases(Reevaluate processes andreform operations with digital technology)(Reevaluate processes andreform operations with digital technology)(Reevaluate processes andreform operations with digital technology)

Replace accounting system
Reevaluate power distribution system
Reevaluate sales system
Reevaluate purchasing system
Reevaluate estimation and construction systems

Introduce Learning Management System (LMS)Introduce talent management system
Replace attendance, personnel and payroll systems
Build P&L administration system
Introduce outsourcing operations platform

Research and introduction/verification of AI

Promotion of use of construction DX(Promotion of use of latest technology)(Promotion of use of latest technology)

Introduce AI air-conditioning control system
Research and study for use of AI
Cooperation with start-ups

Information exchange with industry peers
Cooperation with general contractors and design firms
Research and study of BIM and large-scale VDI

Build company-wide shared databases
Build shared operations database
Expand past data analysis functions

Development and placement of digital talent(Establishment of systems anddevelopment of talent to support digitalization)P lan for reinforcement and development of DX
Promotion Department staff
Plan for appointment and development of local DX
promotion staff
Digital literacy improvement plan for all employees

Digitalization of On-site Operations
Reduction of workload on site through digitization
The Company will implement DX at construction sites by both reducing
overtime work and improving productivity through the development of digital
infrastructure and the promotion of operational reforms, thus overcoming theconstruction industry’s 2024 problem (regulations limiting overtime work) andstrengthening its management foundation for further expansion of its
business.
In FY2022, we aimed for the realization of paperless work and teleworking
by developing internal infrastructure that could handle high-speed, largecapacity communications, while at the same time lending smartphones,
tablet terminals, and mobile PCs to employees who needed them, and weare beginning to see some results from our digitization efforts.

Kyudenko Corporation

Business data
Minimal manual input
required

BIM data

Introduction of a mechanism
to fully utilize existing data

Introduction of a mechanism
to reduce manual data entry

Business utilization of generative AI
ChatGPT, which has become synonymous with generative AI, is now recognized as a common service available toeveryone and has the potential to revolutionize intellectual work in our lives and society in the future. However, use of
ChatGPT, which is publicly available on the internet, runs the risk of having confidential company information stored aslearned data when we put in questions of such nature. Therefore, our Group has built a dedicated generative AI
environment on our existing business chat tool “direct” to provide an environment where interactions with generative AI canbe utilized without having them leaked to outside parties.
Going forward, we will promote the use of generative AI for tasks such as doing research and summarizing minutes toimprove on-site business efficiency.

Holistic Enhancement of Information Security
The digital infrastructure development that we have implemented since FY2021
has made it possible to access company data from a variety of company
devices.
Addressing security risks that hinder the utilization of corporate data is amajor issue for the Kyudenko Group. Accordingly, we have designated FY2023
as the “First Year of Kyudenko Group Information Security” and haveinitiated holistic measures in technology, organization, people, and physicalaspects. While we are currently focusing on security infrastructureenhancement measures (technical measures), we will also implement
organizational measures such as the establishment of a cyber security system,
as well as regular security education, training, and awareness-raising activities
for officers and employees to prevent damage from cyber attacks. Also at ouraffiliated companies, we plan, just as at Kyudenko, to initiate endpoint security
measures, internal fraud and information leakage countermeasures, and e-mailsecurity measures by the end of FY2023.

Contents of specific measures

Technical
measuresAntivirus measures
Including early detection of ransomware
Measures against unauthorized accessMeasures against information leakage/tampering
Reinforcement of monitoring systems

Organizational
measuresE stablishment of an information security
promotion system
Establishment of internal regulations

Personnel
measures

Security education and training
Educational activities to create awarenessPhysicalmeasures

Disaster measures
Access control

Recruitment and Development of Human Resources Who Can Promote DX
Holding a meeting using signage

Call for ideas for operational efficiency through digitization
We solicit ideas from a wide range of divisions, branches, and offices, listen
to the problems they are facing on-site, and test-implement various digital
tools suited to on-site situations to solve these problems.
For example, we have utilized a smartphone application for turnout
Conducting a safety morning meeting using an
management through low-code development and implemented on-site
information sharing tool
verification of a tool that allows multiple people to share information by
writing on drawings and blueprints at the same time.
If the results of the implementation tests conducted at each location show that these tools can be effective, we willproceed with the company-wide horizontal rollout of these measures.

41

Future Image of Kyudenko DX

3. Sustainability

Use of cloud functions for e-mail and file servers
Mobile PC distribution plan
Reinforce internal infrastructure environment
Boost teleconferences and web conferences

Transformation to information system that enables datadriven management
The Group aims for “data-driven management” in which
management decisions are based on objective data, and isbuilding an information system and databases that will help
implement it.
We are making efforts to reduce the amount of manual data
entry into the information system by promoting research on the useof BIM and AI for the future, as well as eliminating duplicate entry
into the information system and entry of underutilized data to
reduce the input workload of employees. In addition, we arefocusing on creating an environment that can guarantee theconfidentiality, availability, and integrity of business data while
simplifying the composition of increasingly complex databases.

The Ministry of Economy, Trade and Industry (METI) has
announced that global digitization will cause a shortage of up to790,000 IT personnel by 2030. The Group also faces an urgent
need to secure human resources who will be future generalist andIT professional candidates. We are recruiting for a wide range of
positions, from new graduates to advanced level engineers, andfocusing on developing DX and IT human resources.
At the same time, as part of measures to improve the digital
literacy of officers and employees, the Company has revised its
internal regulations regarding the budgeting of examination fees
and the provision of rewards, thus encouraging as many
employees as possible to challenge themselves to obtain Di-Litequalifications recommended by the METI (IT Passport, Deep
Learning for GENERAL, and Data Scientist Certification).
Please refer to the Company’s website for details about thedigital promotion human resource development plan.
https://www.kyudenko.co.jp/en/initiatives/en_dx.html

Targeted number of personnel capableof promoting DX as of April 2025:
approx. 700(approx. 10% of all employees)
DX human resources: approx. 40
IT human resources: approx. 80

Number of personnel
capable of promoting DX
as of April 2023:
approx. 400

DX human resources: approx. 30
IT human resources: approx. 70

Digital human resources:
approx. 580

Digital human resources:
approx. 300*IT human resources include personnel from the Group’s systemdevelopment companies.

KYUDENKO REPORT 2023

42

3. Sustainability

G Corporate Governance
The Kyudenko Group aims for (1) sustainable growth and long-term increase of our corporate value through the realizationof our Corporate Philosophy, (2) support and trust by stakeholders including shareholders, customers and local community,and (3) realization of appropriate and efficient corporate management. Consequently, we established the Kyudenko
Corporate Governance Guidelines, and we will continue to work to realize the best possible corporate
governance.
Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/enir/cg/en_guideline.html

With the aim of further strengthening the supervisory function of the Board of Directors and further enhancing the corporate
governance system, the Company transitioned from a Company with Audit & Supervisory Board to a Company with Audit
and Supervisory Committee with the resolution at the Annual General Meeting of Shareholders held in June 2022.
In addition, we have adopted the “Executive Officer system” to separate the “decision-making and oversight function”
and the “execution of operations function” of the Board of Directors and to implement efficient and speedy management
and have established an “internal control system” to harmonize risk management, efficiency, and legality of operations to“enhance corporate governance.”

Election/Dismissal
Cooperation

Audit andElection/Dismissal

Audit
and
oversight

Supervisory
Committee

Board of Directors
8 Directors

Consultation Nomination/Remuneration Advisory Committee(including 3 Independent Outside Directors)

Recommendation (including 6 Independent Outside Directors)(excluding Directors serving as Audit
and Supervisory Committee Members)

8 Directors

4 Directors serving as Audit and Supervisory Committee Members(3 Independent Outside Directors)

Assistance

ReportAccounting audit

Audit

ReportInstruction/Report

Internal Control Committee(Secretariat: Business Administration Department)

Appointment and dismissal

Executive Officer Representative President

Cooperation

Compliance Committee

Management Meeting

FemaleInternal Directors(excluding Directors serving as Audit
and Supervisory Committee Members) :5

Director serving as an Audit andSupervisory Committee Member:

1

Business Administration Department
Instruction

Divisions, offices, branch offices, and business offices

Internal audit
Development of compliance system
Compliance education
Risk management

Board of Directors

Nomination Advisory Committee

The Company has adopted a system where the Board of Directors
determines important matters and oversees execution of operations,while the Executive Officers dedicate themselves to executing operations
based on decisions made by the Board of Directors. The Board of
Directors consists of 12 Directors, of which six are Outside Directors(including one female), and they meet once a month in principle.
The Company also regularly holds the Management Meeting (once aweek) to discuss matters which require prior discussion and matterson important business execution, which are among the matters to bedeliberated at the meetings of the Board of Directors, and the Meetingof Branch Office General Managers (12 times a year) to confirm thestatus of business execution.

In order to ensure transparency in decision-making and independence
and objectivity of the functions of the Board of Directors, the Company
has established the Nomination Advisory Committee consisting of threeor more members, a majority of whom are Independent Outside
Directors. The Committee discusses, among other things, proposals for
the General Meeting of Shareholders regarding the nomination anddismissal of Directors, matters related to the selection of theRepresentative Directors and Directors with specific titles, succession
plans, and the composition of the Board of Directors in terms of genderand skill diversity, and reports the contents of these discussions to theBoard of Directors.

Audit and Supervisory Committee
The Audit and Supervisory Committee consists of four members
including one full-time internal Audit and Supervisory Committee
Member who is familiar with the Company’s business, and threeoutside Audit and Supervisory Committee Members who have extensive
experience and wide-ranging knowledge as corporate managers. The
Committee meets once a month in principle. The full-time Audit andSupervisory Committee Member has been engaged in the finance andaccounting divisions of the Company for many years and has extensive
knowledge of the divisions.

Remuneration Advisory Committee
In order to ensure transparency in decision-making, and independence
and objectivity of the functions of the Board of Directors, the Company
has established the Remuneration Advisory Committee consisting of
three or more members, a majority of whom are Independent Outside
Directors. The Committee discusses proposals for the General Meetingof Shareholders regarding revisions to the total amount of remuneration
for Directors, the remuneration system for Directors (excluding
Directors serving as Audit and Supervisory Committee Members) and
Executive Officers, and individual remuneration amounts, and reports
to the Board of Directors.

Outside Directors

Directors(excluding Directors serving as Audit
and Supervisory Committee Members) :3

Directors serving as Audit andSupervisory Committee Members:

3

50.0%

2
Outside Directors

63Percentage of
Outside Directors

50.0%

Percentage of
Outside Directors

75.0%

The number of Outside Directors of the Company is six, ofwhich three are elected as Outside Directors serving as
Audit and Supervisory Committee Members. All the Outside
Directors have been confirmed to fall under none of thegrounds for disqualification prescribed by the IndependenceStandards for Outside Officers established by the Company
and deemed to have no conflict of interest with generalshareholders of the Company. The Company thus has filed
a notification to designate them as Independent Officers
stipulated by the Tokyo Stock Exchange.

The Compliance Committee (chaired by the Executive
Officer and President) is established to determine the basic
policy and activities for compliance, prepare plans, confirm
the implementation method, and discuss measures, etc.
The Business Administration Department draws up andamends Compliance Regulations and manuals while
continuously conducting compliance education as adivision in charge of compliance, and the Kyudenko Group
Compliance Desk is also available for direct reporting andconsultation by employees.
Any information received at the Compliance Desk isinvestigated, analyzed, and organized, and then reported
to the Compliance Committee as well as the Board of
Directors.

Independence Standards for Outside Officers
An Outside Officer is determined to be independent by the Company ifnone of the following attributes applies to:The Outside Officer himself/herself, his/her spouse, or his/her relative
within the second degree of kinship:
A person who is an executive of the Company or a group company of the Company
1 or was an executive of the Company or a group company of the Company within
the past 10 years prior to his/her appointment as an Outside Officer.

2

A person who is an executive of a corporation that is a business partner of theCompany, and in any of the most recent three past fiscal years of the Company,
has made payments to the Company representing more than 2% of nonconsolidated net sales of the Company in that fiscal year; or a person who is an
executive of a financial institution, which provides indispensable financing to theCompany, and cannot be easily replaced because of the Company’s reliance on
the financing from such institution.

3

A person who is an executive of a corporation of which the Company is abusiness partner, and in any of the most recent three past fiscal years of theCompany, has received payments from the Company representing more than 5%of non-consolidated net sales of such corporation in its most recent fiscal year.

4

A person who received remuneration exceeding 10 million yen directly from theCompany in any of the most recent three past fiscal years of the Company forproviding professional services concerning law, accounting, tax affairs, or
consulting services to the Company (excluding compensation as Director of theCompany) (If the recipient of such remuneration is an organization, a person who
is affiliated with such organization).

5

A person who belongs to an organization or an entity that received a donation oraid exceeding 10 million yen per year on average over the most recent three
past fiscal years of the Company.

6

A person who is an executive of a corporation, etc. that is a shareholder of theCompany which substantially owns 10% or more of the voting rights of the Company.

Group companies

Execution of operations

3

Compliance System

Report Instruction

Report監査

Kyudenko Corporation

Internal Directors

Outside Officers(Secretariat: Business Administration Department)

Director and Executive Officer in charge

43Internal Directors

3. Sustainability

Audit
Cooperation Cooperation

Since June 2022

Percentage of Outside Directors

General Meeting of Shareholders

Audit and Supervisory Committee’s Office

Until June 2022

Outside Directors

Corporate governance system

Accounting Auditor

FY2022
Directors

Corporate Governance System

Election/Dismissal

Composition of the Nomination Advisory Committee
and Remuneration Advisory Committee

Composition of the Board of Directors

Internal Control System and
Risk Management System
As part of the effort to develop its internal control system
and risk management system, the Company has built an“internal control system” that is both efficient and legal,
while making use of the legal compliance system andcorporate culture that it has built up to date. In addition,
the Company promotes compliance activities throughout
the Group and endeavors to enhance transparency andfairness in management, thereby contributing broadly tosociety while living up to the trust of shareholders,customers, local communities, and other stakeholders,and “improving corporate value.”
Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/enir/cg/
en_internal.html

Our Initiatives Concerning the Corporate Governance Code
The Company is working to improve its corporate governance. As a company listed on the Tokyo Stock Exchange (TSE),
the Company aims to achieve sustained growth and increase its corporate value in the medium to long term by complying
with each of the principles of the Corporate Governance Code set forth in TSE’s Securities Listing Regulations
and disclosing pertinent information.
Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/enir/cg/en_code.html

KYUDENKO REPORT 2023

44

3. Sustainability

G Corporate Governance

Overview of Evaluation of Board of Directors EffectivenessRemuneration, etc. of Officers

We conducted an evaluation based on a registeredquestionnaire for all 12 Directors conducted in March 2023.
The purpose of the annual evaluation is to regularly verify
whether the Board of Directors is functioning properly, andtake appropriate measures such as correcting problems
and enhancing strengths in order to ensure the board
carries out its role and responsibilities effectively. Based on
the results of the questionnaire, issues and points for
improvement are identified and shared to improve theeffectiveness of the Board of Directors going forward.

The Company’s Board of Directors has resolved a policy for determining the content of remuneration, etc. for individual
Directors (excluding Directors serving as Audit and Supervisory Committee Members) (hereinafter referred to as the“Determination Policy”).
The Board of Directors has also confirmed that the remuneration, etc. for each individual Director for the current fiscal
year are in line with the Determination Policy in that the method of determining the content of remuneration and the content
of the remuneration, etc. that has been determined are consistent with the Determination Policy and in that therecommendations from the Remuneration Advisory Committee have been given due consideration.

FY2022 Board of Directors effectiveness evaluation
Evaluation
result

The Board of Directors was concluded to be effective based on
the analysis of the survey results, given that the overall average
evaluation score was higher than last year.

Selected issues

Director training

Measures

Although the average evaluation score for training has
improved from the previous year, it is still lower than the
average scores for other questions. Therefore, we will continue
to consider and implement specific measures this fiscal year.

Status of Audit

Policy on determining the details of individual remuneration, etc., for Directors

1 Basic policy

Audit by the Audit and Supervisory Committee
The Audit and Supervisory Committee conducts an audit in accordance with the “Code of Audit and Supervisory Committee
Auditing and Supervising Standards” established by the Audit and Supervisory Committee, and also with the audit policy, audit
plan, audit methods, assignment of duties, etc. In the current fiscal year, the Committee designated, as a priority audit item, theimplementation status of the most important initiatives in the Basic Management Policy, in addition to basic audit items such as
the status of execution of duties by Directors and the establishment and operation of the internal control system.
The Company has established the Audit and Supervisory Committee’s Office with Audit and Supervisory Officer and five
dedicated staff members, which assists the duties of the Audit and Supervisory Committee and its members.

Accounting audit

Under the yearly plan, the Business Administration
Department that is responsible for conducting internal
audits evaluates whether management activities of eachdepartment/division are performed according to the
management policy, and audits whether such activities areappropriately processed according to internal rules suchas regulations, administrative authority, and manuals toreport the audit results and measures for improvement to
the Internal Control Committee (chaired by the Executive
Officer and President). The deliberations of the Internal
Control Committee are reported directly to the Board of
Directors and the Audit and Supervisory Committee.

The Company has concluded an audit contract with Ernst& Young ShinNihon LLC. Two of the audit firm’s certified
public accountants carried out the accounting audit,
neither of whom has audited the Company for more thanseven consecutive years. In the year ended March 31,
2023 (the 95th fiscal year), the Company paid 60 million
yen as fees for the audit and certification services. There isno special interest between the Company and Ernst &Young ShinNihon LLC or the Engagement Partners.

Cooperation of the Audit and Supervisory Committee with the internal audit divisionand the Accounting Auditor
Status of cooperation with the internal audit division
Regular meetings were held with the Business
Administration Department, which is the internal audit
division, to receive reports on internal audit plans, audit
implementation status, and audit results, to exchange
opinions, and to provide information on the results ofon-site inspections of branches and subsidiaries
conducted by the full-time Audit and Supervisory
Committee Member, thus enhancing mutual cooperation.
The full-time Audit and Supervisory Committee Member
attended the Internal Control Committee meetings, and
the General Manager of the Business Administration
Department, who has jurisdiction over the internal audit
division, attended the Audit and Supervisory Committee
meetings to report on the proceedings of the Internal
Control Committee meetings and exchange opinions.

In addition, consultations and information received at theCompliance Desk were reported regularly or as needed by
the Business Administration Department, which is incharge of the internal reporting system.
Status of cooperation with the Accounting Auditor
The Audit and Supervisory Committee maintained
appropriate cooperation with the Accounting Auditor
through regular meetings and the exchange of informationand opinions as needed, and worked to improve thequality and efficiency of auditing on both sides.
Specifically, at the beginning of the fiscal year, the Audit
and Supervisory Committee received an explanation ofmatters such as an audit plan from the Accounting Auditor
regarding a priority audit item, audit schedule, audit system,and digital initiatives, and exchanged opinions with them.

FY2022: Cooperation between the Audit and Supervisory Committee and the Accounting Auditor
Cooperation

Explanation of audit plan and quarterly review plan
Quarterly review report
Audit report (the Companies Act and the Financial Instruments and Exchange Act)
Internal control audit report
Regular meetings
Exchange of information and opinions

45

Kyudenko Corporation

April

May

June

July

August September October November December January February March

Level ofremuneration

In consideration of the business environment surrounding the Company, the salary level of employees, and the level of
remuneration for officers of other companies, incentives are set to improve performance.

Procedure for3 determining
remuneration(1) T he system of remuneration for Officers and the amount of individual remuneration shall be deliberated by the Remuneration
Advisory Committee, a majority of which is composed of Independent Outside Directors, and determined by the Board of
Directors.
(2) T he Board of Directors resolves that the amount of individual remuneration for Officers shall be entrusted to the Executive
Officer and President, and he/she shall make a decision based on the report of the Remuneration Advisory Committee.

Composition
structure(1) Directors (excluding Directors serving as Executive Officers or Audit and Supervisory Committee Members)
Remuneration shall be fixed monetary remuneration and fixed stock remuneration determined for each position, and nobonuses or retirement benefits shall be paid. Furthermore, the ratio of fixed monetary remuneration to fixed stock
remuneration shall be approximately 90:10, and Outside Directors (excluding Directors serving as Audit andSupervisory Committee Members) shall receive only fixed monetary remuneration in light of their duties.
(2) Directors serving as Executive Officers
Remuneration shall be fixed monetary remuneration, variable monetary remuneration, and fixed stock remuneration
determined for each position, and no bonuses or retirement benefits shall be paid.
Furthermore, when 100% of the performance targets are achieved, the ratio of fixed monetary remuneration to variable
monetary remuneration to fixed stock remuneration shall be approximately 60:30:10.

Details of eachremuneration(1) Fixed monetary remuneration
A certain amount of basic remuneration determined for each position is fixed monthly remuneration.
(2) Variable monetary remuneration
Variable monetary remuneration shall be provided by adding or subtracting the monthly remuneration for the next fiscal
year according to the degree of achievement of the performance targets for each fiscal year, and the degree ofachievement of the performance-linked base amount determined by position shall be calculated based on the degreeof achievement of the “consolidated net sales” and “consolidated ordinary profit” targets for each fiscal year, as well as
the results of individual evaluations for each fiscal year. The target “consolidated net sales” and “consolidated ordinary
profit” are determined by the Board of Directors based on the figures announced every fiscal year.
(3) Fixed stock remuneration
For the purpose of providing incentives for the improvement in medium- to long-term performance and the increase incorporate value, points equivalent to the number of shares determined by position shall be awarded at a certain time eachyear, and at the time of retirement, the Company’s shares shall be delivered according to the cumulative number of points.

45

3. Sustainability

Internal audit

2

We position the remuneration plan for Officers as an important element of “fair treatment” for Officers who are responsible
for the development of the Company, and have the following basic policy.
(1) The details must be appropriate for appointing and securing excellent human resources who will realize our corporate philosophy.
(2) The details must contribute to the stable and sustainable improvement of corporate value.
(3) The remuneration plan shall be highly independent, objective, and transparent, and the details shall be accountable tovarious stakeholders.

Outline of the fixed stock remuneration plan
The plan is a stock remuneration plan where a trust established by the Company through the contribution of money(hereinafter the “Trust”) acquires the Company’s shares, and the number of the Company’s shares equivalent to the numberof points that the Company grants to each Director will be delivered to each Director through the Trust.
1 Eligible persons of the plan
2 Target period
Maximum amount of money to be contributed by the Company as a source of3 capital for the Company’s shares necessary to deliver to the eligible persons
as specified in 1 during the target period of three fiscal years as stated in 2

4 Method of acquiring the Company’s shares
5 Maximum number of points awarded to the eligible persons as specified in 1
6 Basis for granting points
7 Timing of delivery of the Company’s shares to the eligible persons as specified in 1

Directors of the Company (excluding Directors serving as Audit and Supervisory
Committee Members and Outside Directors)
Three fiscal years (The target period may be extended by determination of the Boardof Directors)
Total of 180 million yen(If the target period is extended, the maximum amount is the number of fiscal years
extended multiplied by 60 million yen.)
Method of disposal of treasury stock or method of acquisition on the exchange
market (including Off-Hours trading)
25,000 points per fiscal year
Points are awarded according to position, etc.
In principle, at the time of retirement
KYUDENKO REPORT 2023

46

3. Sustainability

Message from the Outside Directors

G Corporate GovernanceMatters concerning the resolution of the General Meeting of Shareholders regarding remuneration, etc.
The amounts of monetary remuneration for Directors were resolved at the Annual General Meeting of Shareholders held in
June 2022 as follows:	The maximum amount of remuneration for Directors (excluding Directors serving as Audit and Supervisory Committee
Members) shall be 700 million yen per year (including 50 million yen per year for Outside Directors).
	The maximum amount of remuneration for Directors serving as Audit and Supervisory Committee Members shall be 110
million yen per year.
In addition, the amount of stock remuneration, which is separate from the monetary compensation, was resolved at theAnnual General Meeting of Shareholders held in June 2023 as follows:	The maximum amount of money to be contributed to the Trust shall be 180 million yen in total for the target period
consisting of three fiscal years.
The maximum total number of points to be granted as stock remuneration shall be 25,000 points per fiscal year.

Matters concerning delegation of authority to determine the details of individual remuneration, etc. for Directors
At the Company, the Executive Officer and President determines the specific details of the amount of remuneration for eachindividual Director (excluding Directors serving as Audit and Supervisory Committee Members) based on a resolution ofdelegation by the Board of Directors. This authority pertains to the allocation of variable monetary remuneration based on
business performance, and the reason for delegating the authority is that he is judged to be most familiar with theCompany’s business situation and can flexibly determine the amount of remuneration while taking a bird’s-eye view of theCompany’s overall performance.
The Board of Directors has established the Remuneration Advisory Committee to ensure that such authority is properly
exercised by the Executive Officer and President and that the Executive Officer and President determines individual
remuneration based on its recommendation. Thus, the authority thus delegated is deemed to be in line with the
Determination Policy.

Matters concerning remuneration, etc., for Directors serving as Audit and Supervisory Committee Members

Sumio
Kuratomi
Director(part-time)

I am always conscious of offering my honest opinions on
various initiatives and aims, from the two perspectives ofwhether they meet societal needs and whether they leadto the growth of the company. The Kyudenko Group is a
corporate group that contributes to society through its
main businesses of power distribution line work, electricalwork, and HVAC and sanitary facility work, as well as
business activities in the renewable energy field and otherareas with high social and environmental affinity. We hope
to continue to anticipate societal needs of society andmake proposals through bodies such as the Board of
Directors so that we can strive toward business activities
with concrete initiatives and vision.
Extremely important in the continued growth of the
Kyudenko Group are the human resources that underpin
this growth. It is heartening to me that the company has
incorporated a number of people-oriented initiatives in its
Mid-term Management Plan, including bolstering the
education system for young people and introducing
employee engagement.

June 2013	Representative Director and President, NISHI-NIPPON RAILROAD
CO., LTD.
June 2016	Representative Director and President Executive Officer, NISHINIPPON RAILROAD CO., LTD.
June 2016 Director, the Company (to the present)
April 2021	Representative Director and Chairman, NISHI-NIPPON RAILROAD
CO., LTD. (to the present)

The current favorable business environment—
particularly in Kyushu—is serving as a tailwind for the
Kyudenko Group. There is concern, however, that theemployees involved in this could potentially overextend
themselves. In the interest of dispelling this concern, we
have high hopes for the efforts of the Workstyle Reform
Promotion Office, newly established this fiscal year. While I
believe that individual departments have been focusing on
reducing workloads, I am convinced that our efforts will
gain speed and effectiveness now that we have created acompany-wide, cross-functional organization. Whilefollowing the PDCA cycle, we look forward to a status
report to the Board of Directors.
There will continue to be frenetic change in theenvironment enveloping companies. That is why I expect
this company to become the Kyudenko of Japan, as well
as of Asia, by implementing the initiatives set forth in its
Long-term Vision and Mid-term Management Plan—with
its Corporate Philosophy as a pillar, and by steadily
ramping up its efforts year by year.

3. Sustainability

The remuneration for Directors serving as Audit and Supervisory Committee Members consists only of fixed monetary
remuneration in consideration of their role of supervising overall management from a standpoint independent of businessexecution, and is determined through discussions among the Audit and Supervisory Committee Members.

Career summary

Disclosure of Information to and Communication with Shareholders and Investors
Disclosure of information

Career summary

The IR activities are promoted to ensure transparency of corporate activities and enhance the soundness of management
by disclosing financial statements, securities reports, and other documents for which disclosure is required by the stock
exchange as well as important facts to shareholders and investors in a timely and appropriate manner, in addition to
publishing the Group’s management policy, business activities, compliance activities, social contribution activities, andvarious other information on the Company’s website and its Integrated Report.

Enhancement of communication

HirokoShibasaki
Director(part-time)

April 2012	Executive Officer and General Manager of Fukuoka Branch Office,
TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD.
April 2015	Managing Executive Officer, TOKIO MARINE & NICHIDO FIRE
INSURANCE CO., LTD.
April 2018	Advisor, TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD.
(retired in March 2019)
June 2019	Outside Director, Audit and Supervisory Committee Member,
MAZDA MOTOR CORPORATION (to the present)
June 2021	Director, the Company (to the present)

Please refer to the Company’s website for details.
https://www.kyudenko.co.jp/en/enir/cg/en_code.html

The IR activities of the Company are conducted by the Finance
Division, which is in charge of IR, in cooperation with theBusiness Administration Department, Corporate Strategic
Planning Division, and General Affairs Division to promote
communication with stakeholders including shareholders.
The Executive Officer and President and Officer responsible forfinance hold a financial results briefing for analysts andinstitutional investors twice a year, and materials for the briefing
are disclosed on the Company’s website. The Company also
holds individual briefings and responds to interviews for analysts,
institutional investors, and individual investors as necessary. The
summary of such financial results briefings and individual
briefings is reported at the Management Meeting and the Boardof Directors meeting to share the information with the Directors.

Status of communication, etc.

IR activities

3. Mid-term Management Plan
FY2022Financial results briefing
Conference with overseas investors
Briefings for individual investors
Individual meetings, other

47

Kyudenko Corporation

2 times
3 times
8 times
227 times

The following are the main questions, requests, andcommunication themes at the financial results
briefings held in FY2022.
1. Business environment surrounding the Company
 tatus of factory construction trends and redevelopment
S
projects in the Kyushu area where the Company is based
Status of profitability at the time of order receipt
Future development of Uku solar power project
Risks associated with rising material and labor costs

2. Shareholder returns
Our approach to shareholder returns

 ossibility of achieving targets of 500.0 billion yen in net
Psales and 50.0 billion yen in ordinary profit

4. Others
Downside risk of performance forecasts

It is my third year since I became an Outside Director. In
the interest of enhancing the effectiveness of the Board of
Directors, we have had the opportunity to observe training
and conduct site visits to see how employees are rooted
in the community and enriching their lives. In addition, bydeepening our conversation directly with the people at theworksites, we were able to learn about unexpected issues
and how harsh the present situation is. Our intent is toprovide awareness. With this in mind, we will constantly
work toward resolving risks and issues from the standpoint
and perspective of our stakeholders.
We are making progress in terms of the objectives of the
Mid-term Management Plan, and we are growing
remarkably from a leading enterprise in Kyushu into anational and global entity. However, there are numerous
issues—such as climate change, Japan’s 2024 problem,and securing human resources—that cannot be resolved
overnight. A century after the Great Kanto Earthquake,
infrastructure development and maintenance, as well as
future urban development and construction needs are
rapidly advancing. While our company is certainly on theleading edge of this trend, it cannot have been easy toensure safety during the summer given the extreme
temperatures.
The basis for all measures is ensuring compliance, safety,
and security. In Japan—a country with a high incidence ofdisasters—it is essential to ascertain the potential risks inadvance and how we might prevent them from occurring.
As with risk management, the company’s growth andcorporate culture are created through human resource
development and diversity, as well as the awareness, potential,
and challenges of each individual. I was the first female manager
and executive in the non-life insurance industry, and at first I
faced only high barriers. As we worked day by day to overcome
these obstacles, an increasing number of people reached out
to us, and we saw the fruits of our efforts. These were the resultof mutual, diligent study and cooperation. While the company
maximizes its employees’ strengths as human assets, it is vitalfor individuals to take an interest in their surroundings.
By 2044—the year Kyudenko will celebrate its 100th
anniversary—many changes are expected to occur,
including digital transformation, carbon neutrality, andgeopolitical risks. I hope we will all push forward with spirit
toward realizing a sustainable society.
KYUDENKO REPORT 2023

48

3. Sustainability

Message from the Outside Directors
Career summary

Tatsuya
KanekoDirector(part-time)

June 2005	Managing Officer, TOYOTA MOTOR CORPORATION (retired in June
2011)
June 2011	Director and Senior Managing Executive Officer, DAIHATSU
MOTOR CO., LTD.
June 2013	Vice President and Director, DAIHATSU MOTOR CO., LTD. (retired
in June 2015)
Representative Director and President, TOYOTA MOTOR KYUSHU, INC.
June 2015	June 2018 Representative Director and Chairman, TOYOTA MOTOR KYUSHU, INC.
(retired in June 2021)
June 2022	Director, the Company (to the present)

created plans—and we must be bold enough to revise them
if needed.
Second, with regard to performing management for the
purpose of achieving a balance between needs andresources, I think the Kyudenko Group is positioned on the
resource, i.e. technology side of the business. Since I
personally am on the marketing side of things, I would like toraise the issue from that perspective while also playing a rolein the Director’s diversity.
It is my view that, going forward, securing human resources inJapan will become increasingly difficult. In this case, carefulselection is important on the demand side (business), as isproper prioritization. Meanwhile, the resource side (people,
equipment, and funds) is also required to resolve complex
problems such as raising productivity through DX and enhancing
engagement. We are no longer in an era in which jobs (demand)increase constantly as in the past. Naturally, Kyudenko’s policies
and Mid-term Management Plan have been formulated basedon such considerations. In promoting this, I would like to raise
the issue from the aforementioned perspective.

Toru
Yoshizako
Director
Audit and Supervisory
Committee Member(part-time)

I was appointed an Outside Audit & Supervisory Board
Member in June 2021 and an Audit and Supervisory
Committee Member in June 2022. Now that I am in mythird year, I increasingly feel the weight of responsibility as I
have the authority to exercise my voting rights at theBoard of Directors meetings.
At meetings of the Audit and Supervisory Committee andthe Board of Directors, we leverage our experience to provide
opinions and recommendations from an external perspectivewith the aim of exercising management supervision andauditing the Directors’ execution of their duties.
Also, for the purpose of communicating with executive
officers in workplaces, we have attended two in-person
audits so far. Including each branch’s audit result reports,
we recognized that each of them has fully ascertained theissues in the workplace and is indeed working toaccurately resolve them in line with company-wide
policies. I believe it is important that this situation continue,
and that top management and head office managerial
personnel further promote dialogue with the workplaces.

Career summary

Yukinori
Michinaga
Director
Audit and Supervisory
Committee Member(part-time)

June 2016	Managing Executive Officer, SAIBU GAS CO., LTD.
April 2019	Representative Director and President, Executive Officer, SAIBUGAS CO., LTD.
June 2019	Audit & Supervisory Board Member, the Company
April 2021	Representative Director and President, Executive Officer, SAIBUGAS HOLDINGS CO., LTD. (to the present)
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

As an Outside Director, I am particularly mindful ofbolstering management oversight by auditing both thelegality and propriety of business execution and offering
appropriate opinions and advice at the Board of Directors
meetings.
I have been involved in the energy business for a long time,with the bulk of my experience having been accumulated in
the IT and ICT fields. Given that our company’s integrated
utilities engineering service and my experience in the energy
business are closely linked to the provision of optimal energy
services through a variety of facilities and equipment, weneed to pay attention to the propriety of business execution
from the perspectives of energy conservation, carbon
neutrality, and efficiency through the implementation of DX.
Kyudenko has undertaken a bold change to a structurein which half of the members of the Board of Directors are
Outside Directors. Through active discussion from a varietyof perspectives, we believe that we have achieved great
improvement in management oversight.
Meanwhile, in a swiftly changing business environment,
it is vital to make accurate decisions speedily. To this end,
we believe enhancing information provision to Outside
Directors is essential. Although the Audit and Supervisory

49

Kyudenko Corporation

Committee continues to receive sufficient information
through means such as provision in advance of Board
meeting materials and explanations of agenda items, aswell as periodic briefings concerning internal audits,
compliance, and internal controls, we will continue working
to obtain a broad range of timely information and promote
sweeping discussions based on factors such as risk withthe aim of strengthening governance.
We concentrate on strengthening human capital in our
promotion of sustainability management. Under the
Human Resource Development Charter, we are alreadyfocusing on the development of young people. The key toachieving sustainable growth amidst a rapidly changing
environment is to cultivate human resources who do not
simply accept the status quo, who are always curious, andwho possess the spirit of continuous self-improvement
and accepting of challenges. In addition to bolstering andenhancing our systems, I would like everyone to work
cooperatively to foster a corporate culture that appreciates
employees who take on challenges.
As the Kyudenko Group approaches its upcoming
100th anniversary, I am determined to contribute to theGroup’s steady growth.

June 2009	Executive Officer, General Manager of Kagoshima Branch Office,KYUSHU ELECTRIC POWER CO., INC.
June 2013	Representative Director and Vice President, KYUSHU ELECTRIC
POWER CO., INC. (retired in June 2016)
June 2016	Representative Director and President, KYUDEN SANGYO.CO., INC.
(retired in June 2021)
June 2021	Audit & Supervisory Board Member, the Company
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

With regard to safety in particular, we are monitoring itwith considerable interest from the viewpoint of a former
engineer in the power transportation sector. Despite anumber of disaster prevention measures having been
implemented based on past disaster instances, it isdifficult to eliminate serious accidents caused by electric
shocks, crashes, and heavy machinery. This can be
attributed to basic behaviors and established rules not
being adhered to. My hope is that, through dialogue, wewill be able to persuade employees and business partners
to comply. Moreover, work style reform will become more
and more common in the future. We are aware that safety
is the greatest social responsibility a company can have
imposed on it. Let us be sure not to let the pursuit ofsimple efficiency lead to the neglect of safety.
Based on a sound management foundation thatincorporates compliance, a safety-first mindset, and fairness
and transparency, I look forward to making significant strides
toward the realization of our Long-Term Vision.

3. Sustainability

A year has passed since I was appointed an Outside Director.
I believe that at the Board of Directors meetings, thesecretariat provides detailed explanations—in advance, as
well as during meetings—operates the forum in a mannerthat encourages the voicing of opinions, and responds
sincerely to questions and opinions.
Now, I would like to note two points that I personally bearin mind as Outside Director.
First, I feel that the most important role of management is
an appropriate response to future changes, so I would like toensure my antenna are up to enable me to convey information
on noteworthy changes and to offer opinions that will lead toawareness.
Currently, a large gear is about to be set into motion in thearenas of global politics and economics. The environment
surrounding Japan is in the midst of drastic change. Japan is
at a very critical juncture regarding its ability to put an end tonearly 30 years of deflation and set its economy back on
track. With such major change taking place, we believe it isvital to proactively seize opportunities—even for newly

Career summary

Career summary

Hidetoshi
Soeda
Director
Audit and Supervisory
Committee Member(part-time)

I have served as an Audit & Supervisory Board Member for
one year and as a Director, Audit and Supervisory
Committee Member for two years. My view is that
Kyudenko’s governance is effective, as outside officers
with wide-ranging experience provide a variety of
proposals to both the Board of Directors and the Audit
and Supervisory Committee.
In the briefings that precede the Board of Directors
meetings, explanatory materials are clearly organized andprovided in an easily comprehensible format, and theworkplace side offers detailed explanations, ensuring an
open dialogue. Their opinions are also reflected in
discussions at meetings of the Board of Directors. We
have had many opportunities to visit solar power
generation facilities and the Kyudenko Academy, whichhave been very helpful in deepening our understanding ofour business.
We believe that governance in overseas operations is
crucial for the Kyudenko Group. Because culturaldifferences can cause governance-related issues in certain
countries and regions due to barriers to understanding
and communication, it is important that information related
to foreign operations be transparent and accurate from the

March 2015	Director and Managing Executive Officer, General Manager ofSales & Marketing Div., Head of Tokyo Branch Office, SEIKO
ELECTRIC CO., LTD.
March 2018	President and Representative Director, General Manager of Sales& Marketing Div., SEIKO ELECTRIC CO., LTD.
March 2019	President and Representative Director, SEIKO ELECTRIC CO., LTD.
(to the present)
June 2021	Audit & Supervisory Board Member, the Company
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

perspective of the parent company. In this context, I feelthat my role as an Outside Director is to draw on myconsiderable experience in overseas business and provide
advice when appropriate.
We feel that the challenge for Kyudenko will be how toclearly communicate its intent with regard to contributing
to societal demands, including carbon neutrality and theSDGs, to not only capital markets but to its employees aswell as new hires. When speaking with President Ishibashi,
he says repeatedly—and very passionately, I might add—
“Our company should not simply pursue profits. We wantto create a fine workplace where employees are able to dotheir jobs comfortably. It’s impossible for us to create newvalue for society unless our employees are happy.” If
President Ishibashi’s “purpose based management”
permeates the entire company, it should lead to the further
creation of corporate value. I expect great things!

KYUDENKO REPORT 2023

50

3. Sustainability

Management Team of Kyudenko
Directors

Ichirou Fujii

Kazuyuki Ishibashi

Shinji Kato

Yukinori Michinaga

Director and Chairman

Executive Officer
Representative President

Director
Audit and Supervisory Committee
MemberDirector
Audit and Supervisory Committee
Member (part-time)

April 1982 Joined the Company
April 2012 General Manager, Corporate Planning Div.
April 2017	President of Kyudenko Academy, Human Resources and Labor
Affairs Div.
June 2019 Audit & Supervisory Board Member
June 2022 Director, Audit and Supervisory Committee Member (to the present)

June 2016 Managing Executive Officer, SAIBU GAS CO., LTD.
April 2019	Representative Director and President, Executive Officer, SAIBUGAS CO., LTD.
June 2019	Audit & Supervisory Board Member, the Company
April 2021	Representative Director and President, Executive Officer, SAIBUGAS HOLDINGS CO., LTD. (to the present)
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

June 2018	Director and Managing Executive Officer, KYUSHU ELECTRIC
POWER CO., INC.
June 2020	Representative Director and Executive Vice President, KYUSHUELECTRIC POWER CO., INC. (retired in June 2023)
June 2023 Joined the Company, Director and Chairman (to the present)

1982
2015
2017
2020
2022
2023

Joined the Company
Director and Managing Executive Officer
Director and Senior Managing Executive Officer
Director and Vice President Executive Officer
Representative Director and Vice President Executive Officer
Executive Ofﬁcer Representative President (to the present)

Masaaki Jono

Keizo Fukui

Toru Yoshizako

Hidetoshi Soeda

Representative Director
Vice President Executive Officer

Director
Senior Managing Executive Officer

Responsible for overall operations

Responsible for business administration (legal,
compliance, and internal control) and financeDirector
Audit and Supervisory Committee
Member (part-time)

Director
Audit and Supervisory Committee
Member (part-time)

June 2009	Executive Officer, General Manager of Kagoshima Branch Office,KYUSHU ELECTRIC POWER CO., INC.
June 2013	Representative Director and Vice President, KYUSHU ELECTRIC
POWER CO., INC. (retired in June 2016)
June 2016	Representative Director and President, KYUDEN SANGYO.CO., INC.
(retired in June 2021)
June 2021 Audit & Supervisory Board Member, the Company
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

March 2015	Director and Managing Executive Officer, General Manager of Sales &Marketing Div., Head of Tokyo Branch Office, SEIKO ELECTRIC CO., LTD.
March 2018	President and Representative Director, General Manager of Sales& Marketing Div., SEIKO ELECTRIC CO., LTD.
March 2019	President and Representative Director, SEIKO ELECTRIC CO., LTD.
(to the present)
June 2021 Audit & Supervisory Board Member, the Company
June 2022	Director, Audit and Supervisory Committee Member, the Company(to the present)

1973 Joined the Company
2015 Director and Managing Executive Officer
2017 Director and Senior Managing Executive Officer
2020 Director and Vice President Executive Officer
2022	Representative Director and Vice President Executive Officer(to the present)

July

2006	General Manager, e-Business Sales Dept., MIZUHO CORPORATEBANK, LTD. (currently MIZUHO BANK, LTD.)May 2009	Joined the Company, General Manager, Sales Dept., Tokyo Head
OfficeJune 2019 Director and Managing Executive Officer
June 2023 Director and Senior Managing Executive Officer (to the present)

Tomoyuki Oshima

Sumio Kuratomi

Director
Senior Managing Executive
Officer

Director (part-time)

1981 Joined the Company
2015 Executive Officer, General Manager, Saga Branch Office2017 Senior Executive Officer, General Manager, Saga Branch Office2019	Managing Executive Officer, President, Tokyo Branch Office, Tokyo
Head Office
June 2020	Managing Executive Officer, General Manager, Sales Div., Tokyo
Head Office
June 2023	Director and Senior Managing Executive Officer, Representative, Tokyo
Head Office and General Manager, Technology Div. (to the present)

Skills Matrix of the Board of Directors
Expected skill areas
Name

Representative, Tokyo Head Officeand General Manager, Technology
Div.

April
April
April
April

June 2013	Representative Director and President, NISHI-NIPPON RAILROAD
CO., LTD.
June 2016	Representative Director and President Executive Officer, NISHINIPPON RAILROAD CO., LTD.
June 2016 Director, the Company (to the present)
April 2021	Representative Director and Chairman, NISHI-NIPPON RAILROAD
CO., LTD. (to the present)

Hiroko Shibasaki

Tatsuya Kaneko

Director (part-time)

Director (part-time)

Positions and responsibilities

Ichirou
Fujii

Director andChairmanKazuyuki
Ishibashi

Executive Ofﬁcer
Representative
President
Representative Director
Vice President Executive
Officer
Director
Senior Managing
Executive Officer
Director
Senior Managing
Executive Officer

Masaaki
Jono
Keizo
Fukui
Tomoyuki
OshimaSumio
Kuratomi

Tatsuya
KanekoJune 2005 Managing Officer, TOYOTA MOTOR CORPORATION (retired in June 2011)
June 2011	Director and Senior Managing Executive Officer, DAIHATSU
MOTOR CO., LTD.
June 2013	Vice President and Director, DAIHATSU MOTOR CO., LTD. (retired
in June 2015)
June 2015	Representative Director and President, TOYOTA MOTOR KYUSHU, INC.
June 2018	Representative Director and Chairman, TOYOTA MOTOR KYUSHU, INC.
(retired in June 2021)
June 2022 Director, the Company (to the present)

Remuneration
Corporate
Advisory
management/
Committee
Management
strategy

Finance/
Accounting

Legal/Riskmanagement

HR and laboraffairs/HR Sales/Marketing Technology/
R&D/Safety
development

Sustainability/
ESG/DX

Globalexperience

Independent
OutsideIndependent

FemaleDirector

Director
Audit and Supervisory
Committee Member
Yukinori Director
Audit and Supervisory
Michinaga Committee Member
Director
Toru
Audit and Supervisory
Yoshizako Committee Member
Hidetoshi Director
Audit and Supervisory
Soeda
Committee Member

Shinji
Kato

Nomination
Advisory
Committee

OutsideDirector

HirokoDirector
Shibasaki

April 2012	Executive Officer and General Manager of Fukuoka Chuo Branch,
TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD.
April 2015	Managing Executive Officer, TOKIO MARINE & NICHIDO FIRE
INSURANCE CO., LTD.
April 2018	Advisor, TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD.
(retired in March 2019)
June 2019	Outside Director, Audit and Supervisory Committee Member,
MAZDA MOTOR CORPORATION (to the present)
June 2021 Director, the Company (to the present)

3. Sustainability

April
June
April
June
June

April
April
April
June
June
June

OutsideIndependent
Full-time
OutsideIndependent
OutsideIndependent
OutsideIndependent*This matrix does not represent all the expertise and experience possessed by Directors.

51

Kyudenko Corporation

KYUDENKO REPORT 2023

52

3. Sustainability

Management Team of Kyudenko
Executive Officers (excluding those who concurrently serve as Directors)

Kyudenko Corporation

Tadatsugu
Kitagawa

Kazuhiro
SuyamaKenji
MoritaHitoshiYasukawa

Akira
Shirouzu

Senior Managing
Executive Officer

Senior Managing
Executive Officer

Managing
Executive Officer

Executive Officer

Executive Officer

Executive Officer

General Manager,
Sale Div.

General Manager,
Fukuoka Branch Office

General Manager,
Technology Div.
Responsible for
procurement

Responsible for ElectricPower Div.

Responsible for
Secretarial Office,human resources andlabor affairs, andgeneral affairs

General Manager,
Finance Div.

Takahiro
Hokahori

Katsuhisa
Kinoshita

Ryoji
ManabeYujiroKishidaHiroyuki
Yamashita

TakashiIshimatsu

Managing
Executive Officer

Managing
Executive Officer

SeniorExecutive Officer

Executive Officer

Executive Officer

Executive Officer

General Manager,
Electric Power Div.
Responsible for safety

General Manager,
Green Innovation
Business Div.

Deputy General
Manager,
Technology Div.

Deputy General
Manager, Green
Innovation BusinessDiv. and General
Manager, International
Business Department,
Technology Div.

Seconded to
Ergotech Co., Ltd.

General Manager,
Tokyo Branch Office,Tokyo Head Office

Yoichi
Sato

Tomoyuki
Soeda

Eiji
Funatsu

Shinji
Mitsuyama

Masahiro
TomoikeKazuhiro
MimuraSeniorExecutive Officer

SeniorExecutive Officer

SeniorExecutive Officer

Executive Officer

Executive Officer

Executive Officer

Deputy General
Manager,
Sale Div.

Responsible forcorporate strategicplanning and DX
promotion

General Manager,
Oita Branch Office

General Manager,
Kagoshima Branch
OfficeGeneral Manager,
Nagasaki Branch Office

General Manager,
Sales Div.,Tokyo Head Office

Masakiyo
Amakawa

HideakiUshijima

Dai
Kinoshita

Executive Officer

Executive Officer

Executive Officer

Deputy General
Manager,Green Innovation
Business Div. andGeneral Manager,
Infrastructure Business
Div.

Reporting to Green
Innovation Business
Div.

General Manager,
Business
Development Dept.,
Sale Div.

KYUDENKO REPORT 2023

3. Sustainability

53

Yasuhiro
Yamamoto54

4. Data Section

Financial and Non-financial Highlights
Financial information

Non-financial information

Sales by region (consolidated, excluding power distribution line work) (unit: million yen)
■ 2021.3 ■ 2022.3 ■ 2023.3

Orders by region (consolidated, excluding power distribution line work) (unit: million yen)
■ 2021.3 ■ 2022.3 ■ 2023.3

220,625
213,156
200,952

Ratio of women in managerial positions (non-consolidated) (unit: %)■ Number of persons in managerial positions (unit: persons) ● Percentage of women in managerial positions (unit: %)■ Number of women in managerial positions (unit: persons)
373
367
298

353

337

315

15

94,19689,251
82,884

Kanto, Tohoku and Chubu

13,097
21,66930,617
Kansai and Chugoku

90,704
97,903

6,791
4,878
Kyushu14.8

Kanto, Tohoku and Chubu

2018.3

17,587
5,117
1,873

Kansai and Chugoku

Overseas

Status of power generation business (consolidated, operated by the Group) (unit: million yen)

■ Sales (wind power) ■ Sales (solar power) ● Operating profit

14.0

14.5

15.2

14.6

5,089
4,447

7.0

0.54
17,276
17,585
17,311

77,851

5,806

Overseas

4,822

9.0
6.5
2019.3

9.0

9.2

8.4

8.4

6.1

6.4

2020.32021.3

9.8
8.8

9.0
8.1

7.0

6.7

2022.32023.3

1,450

3,508

1

1

2

3

2018.32019.32020.32021.32022.32023.3

Promotion of mid-career hires to managerial positions (non-consolidated)■ Number of mid-career hires in managerial positions (unit: persons)● Percentage of mid-career hires in managerial positions and above (unit: %)
10.0

10.6

10.8

99

104

8.9
7.7

8.1
93

11

10

10

3

6

3

4

5

5

5

5

2018.32019.32020.32021.32022.32023.3Results of mid-career recruitment (non-consolidated) (unit: persons)■ Number of mid-career hires ● Ratio of mid-career hires (unit: %)
29.1
152

81

4,049

13.3

14.2

63

60

62

4,191

3,916

938

883

790

827

774

933

2018.32019.32020.32021.32022.32023.3

EPS, cash dividends (consolidated) (unit: yen)
■ Net profit per share (EPS) ■ Cash dividends per share ● Payout ratio (unit: %)356.89

1,024

2

1,557

4,031

0.32

2

61
4,205

0.34

8
8

9.1

26.7
375.1727.0
370.0028.3

353.482019.32020.32021.32022.32023.3

Employment rate of employees with disabilities (non-consolidated) (unit: %)

29.6

27.0
370.052018.3● Employment rate of employees with disabilities ● Statutory employment rate
■ Number of employees with disabilities (unit: persons)
130.0
117.0

371.93

122.0

128.5

131.0

112.0

2018.32019.32020.3

8.7

8.4
38

36

25.2

1,468

4,691
1,733

1,143

1,593
1,583

5,124

0.59

0.54

2021.32022.332
2023.3

Number of employees (consolidated, employed) (unit: persons)■ Engineers ■ Technicians ■ Salespersons, administrative staff, etc.
10,425

10,504

1,841

1,916

1,921

4,038

4,036

4,028

4,185

4,007

4,045

4,215

4,481

4,398

2019.32020.32021.32022.32023.3

9,752

9,862

9,921

10,092

1,775

1,800

1,838

4,078

4,055

3,899

2018.3

4. Data Section

Status of power generation business (consolidated, equity investment) (unit: million yen)

■ Non-operating income (wind power) ■ Non-operating income (solar power)

4,877
1,748

1,449
9.8

11

11

2,205

15.7

9.6

15

0.85

182,467

Transition of profit ratio (consolidated) (unit: %)● Gross profit ratio ● Operating profit ratio ● Ordinary profit ratio ● Net profit margin

10.3

15

266,529
209,222

KyushuCurrent number of non-Japanese employees (non-consolidated) (unit: persons)■ Regular employees ■ Non-regular employees

774
2.4
876
-101

2018.3

1,412
38

2019.31,447
1352020.31,279
1882021.31,066-422022.3

2.2

1,749
-156
2023.3

ROE, ROIC (consolidated) (unit: %)

90

100

2018.32019.3100

2020.31002021.31002022.32.2

1102023.3

Capital investment, depreciation and amortization (consolidated) (unit: million yen)

● ROE ● ROIC

2.2

■ Capital investment ■ Depreciation and amortization

2018.62019.62.2
2.0

2020.6

2.3

2.3

2.2

2.3

2021.62022.62.3

2.3

2023.6

Results of periodic recruitment (non-consolidated) (unit: persons)■ Engineers ■ Technicians ■ Salespersons, administrative staff, etc.

Number of training held and number of participants (unit: times and persons)
Number of training held ● Academy ● Non-Academy (including web)
Number of participants ■ Academy ■ Non-Academy (including web)
199

16.8

29

15.6
5,512

14.0
13.2

13.1
11.7

12.1
10.0

4,245
11.4

6,074
4,353

5,961
4,148

5,739

5,791

195

4,403
3,586

55

2019.3

Kyudenko Corporation

2020.32021.310.5

2023.32019.32020.32021.3

30

336

24
142

30
186

164

2022.32023.3

5,970

299

2018.4184

2019.4194

2020.4200

2021.41422022.4

1,488

191

5,635
1,237

200

5,659

5,974
4,974

1,128

131

40
131

188

2018.3

157

360

3,379

9.4

2022.3

362
21

6,018

8.1
2018.3

416

412

2,882
95

69

2,941

2,376
114

85

76

80

4,482

4,398

4,846

1,881

2,033

3,283

2018.32019.32020.32021.32022.32023.355

1282023.4

1,001

162

KYUDENKO REPORT 2023

56

4. Data Section

10-year Financial Summary
Financial item
(Unit: million yen)

2014.32015.32016.32017.32018.32019.32020.32021.32022.32023.3279,310

315,949

311,346

341,771

360,872

408,143

428,939

391,901

376,563395,783

Operating profit

7,136

16,75725,19730,732

34,72636,74736,022

32,99833,13732,083

Ordinary profit

8,908

18,16327,55132,18737,34239,92438,64335,90636,82835,462

Profit attributable to owners of parent

3,681

11,517

17,901

22,29725,296

26,691

26,24525,042

26,216

26,349

Capital investment

14,226

7,606

6,127

7,469

4,245

4,353

4,148

3,586

4,403

3,379

Depreciation and amortization

4,305

5,262

5,475

5,449

5,512

6,074

5,961

5,739

5,791

6,018

Research and development costs

313

288

255

235

286

326

290

254

267

290

Cash flows from operating activities

12,767

19,117

10,77614,187

29,90326,054

38,222

9,184

5,252

17,386

Cash flows from investing activities(14,456)(11,816)(13,597)(17,951)(3,717)(11,298)(12,136)(4,232)(7,536)(3,113)

Free cash flow

(1,688)7,300(2,820)(3,763)

26,185

14,75526,086

4,951(2,284)

14,273

733

1,190

2,295

3,732

5,635

7,108

7,099

7,084

7,086

7,087

Net assets

94,438104,658

113,199

141,503

164,139

182,176

197,442

221,741

241,194

263,017

Total assets

225,727

254,942

262,040

300,478

325,153357,271368,482

366,532

378,396446,410

Interest-bearing debt

25,31933,93931,98636,12820,07819,18917,854

15,772

14,25937,560

Sales

Cash dividends paid

(Unit: yen)

51.95

174.54272.45327.22356.89375.17370.00353.48370.05371.93

Net assets per share

1,405.38

1,555.33

1,693.45

1,995.00

2,269.48

2,534.46

2,761.07

3,102.61

3,375.43

3,681.85

Cash dividends per share

13

25

45

70

90

100

100

100

100

110

Operating profit ratio (%)

2.6

5.3

8.1

9.0

9.6

9.0

8.4

8.4

8.8

8.1

Net profit margin (%)

1.3

3.6

5.7

6.5

7.0

6.5

6.1

6.4

7.0

6.7

Gross profit margin (%)

9.1

11.7

14.5

15.2

15.7

14.8

14.0

14.5

15.2

14.6

Return on equity (ROE) (%)

3.9

11.9

16.7

17.8

16.8

15.6

14.0

12.1

11.4

10.5

Return on asset (ROA) (%)

1.6

4.7

6.9

7.9

8.1

7.8

7.2

6.8

7.0

6.4

Return on invested capital (ROIC) (%)

3.9

8.5

11.9

13.0

13.2

13.1

11.7

10.0

9.4

8.1

Equity ratio (%)

41.1

40.3

42.4

46.6

49.7

50.5

53.1

60.0

63.2

58.4

Total asset turn over (times)

1.2

1.3

1.2

1.2

1.1

1.1

1.2

1.1

1.0

1.0

Payout ratio (%)

25.0

14.3

16.5

21.4

25.2

26.7

27.0

28.3

27.0

29.6

Kyudenko Corporation

KYUDENKO REPORT 2023

4. Data Section

57

Net profit per share58

4. Data Section

Report on Financial Results and Financial Analysis(1) Overview of financial results for the year ended
March 31, 2023
During the fiscal year ended March 31, 2023, the economy
was supported by increased capital investment in Japan,
mainly in the manufacturing sector, while prices of various
goods and services, including energy, rose due toheightened geopolitical risks. In addition, the impact of
COVID-19 on business activities has been subsiding since
the summer expansion period.
While several large projects were ordered amid theapparent rise in material and labor prices, the Group was
required to employ difficult order-winning strategies suchas those for securing construction capacity and negotiating
prices. Also, the full-scale start of construction of a large
mega solar project, which had been delayed, was further
postponed, mainly due to the impact of COVID-19.
Recognizing the realities of this business environment
and taking into account a summary of FY2021, the Groupidentified FY2022, the third year of the current Mid-termManagement Plan (which lasts for five years, from FY2020
to FY2024), as the year of “practice of business reforms
adapted to changes in the environment.” In particular, we
focused on company-wide efforts to “Improve productivity
by implementing business reforms” and “Promote pricenegotiations to reflect rising material and labor costs” inorder to solve the biggest challenges we faced, such as
the receipt of orders for and the execution of large-scale
projects and the sharp rise in material and labor costs.

Segment income (operating profit) decreased by 1,619
million yen (5.3% decrease) to 28,908 million yen ascompared to the fiscal year ended March 31, 2022, due tothe increased proportion of large new construction
projects with relatively low profit margins that we hadreceived in the previous fiscal year or earlier, and increased
fixed costs associated with the increase of newly
consolidated subsidiaries, DX investment, and postCOVID measures, despite the increase in sales.
Other business
Sales increased by 3,305 million yen (27.3% increase) to15,428 million yen as compared to the fiscal year ended
March 31, 2022, due to increases in the power generationand facility management businesses.
Segment income (operating profit) increased by 513
million yen (20.5% increase) to 3,015 million yen ascompared to the fiscal year ended March 31, 2022, due toan increase in sales.
(2) Overview of financial position as of March 31, 2023
AssetsCurrent assets increased by 61,241 million yen to 278,220
million yen as compared to March 31, 2022, as a result offactors such as an increase in cash on hand and in banks.
Fixed assets increased by 6,773 million yen to 168,189
million yen as compared to March 31, 2022, as a result offactors such as an increase in asset for retirement benefits.
As a result, total assets increased by 68,014 million yen
to 446,410 million yen as compared to March 31, 2022.
Liabilities
Current liabilities increased by 18,244 million yen to141,691 million yen as compared to March 31, 2022, as aresult of factors such as an increase in advances received
on uncompleted construction contracts.
Long-term liabilities increased by 27,947 million yen to
41,702 million yen as compared to March 31, 2022, as aresult of factors such as an increase in long-term debt.
As a result, total liabilities increased by 46,192 million
yen to 183,393 million yen as compared to March 31,
2022.

(3) Overview of cash flows for the year ended March
31, 2023
Cash and cash equivalents (hereinafter referred to as“Cash”) as of March 31, 2023 increased by 26,060 million
yen to 63,851 million yen as compared to March 31, 2022.
Cash flows from operating activities
Cash provided by operating activities was 17,386 million
yen (an increase of 12,134 million yen in cash inflow ascompared to the fiscal year ended March 31, 2022).
This was mainly due to the recording of profit before
income taxes and an increase in advances received on
uncompleted construction contracts, which exceeded anincrease in notes and accounts receivable on completed
construction contracts, an increase in inventories, andconsumption tax payments.
Cash flows from investing activities
Cash used in investing activities was 3,113 million yen (adecrease of 4,423 million yen in cash outflow as comparedto the fiscal year ended March 31, 2022).
This was mainly due to the expenditures for purchase ofinvestments in securities and purchase of property andequipment, which exceeded proceeds from sales ofinvestments in securities.
Cash flows from financing activities
Cash provided by financing activities was 11,615 million
yen (an increase of 21,807 million yen in cash inflow ascompared to the fiscal year ended March 31, 2022).
This was mainly due to proceeds from long-term debt
exceeding the expenditures for payment of cash dividends
and repayments of long-term debt.

(4) Future outlook
In the construction industry going forward, prices are
expected to rise, especially labor costs, and there areconcerns about a shortage of construction capabilities
that is likely to result, for example, from improving thelabor environment in preparation for regulations limiting
overtime work from FY2024. With the largest amount ofwork ever in progress, the Group needs to establish an
optimal workforce system while promptly responding toregulations limiting overtime work, and we recognize thatthese are the biggest challenges we face.
Recognizing the realities of this environment, we havedetermined that in order to solve the challenges we face, itis essential to fundamentally review our past methods,
approaches, and systems, to realize group-wide work
style reform, and to improve productivity. We have set thetheme of the Basic Management Policy for FY2023, thefourth year of the Mid-term Management Plan, as “improve
productivity for the new era,” and will accelerate our work
style reform for further growth of the Group.
We recognized that in order to adapt to an environmentthat is changing at an unprecedented speed, not only do
we need to make progress in the renewable energy
business, DX, and other initiatives set forth in the roadmapof the Mid-term Management Plan, but we also need topromote environmental management and CSV
management as part of our management strategy.
Accordingly, we have added “Promote human capitalmanagement” to the list of “new issues to be addressed,”
which are included in the reforms and issues in the Midterm Management Plan. On top of that, we have chosen
the following in particular from among the new issues tofocus on for FY2023: “Implement reform of productivity,”“Promote human capital management,” “Strengthen andexpand the order base,” “Develop new business areas,”“initiatives for promoting sustainability management,”“Strengthen the governance system and thoroughimplement compliance,” and “Eliminate significant workrelated injuries.” We will define and implement specificmeasures for each of these items.

4. Data Section

Facility work
The value of orders received increased by 65,032 million
yen (17.3% increase) to 440,507 million yen as comparedto the fiscal year ended March 31, 2022, as sales andtechnology divisions adopted a unified approach to sales
in order to earn orders for large redevelopment projects
and projects that had been delayed due to the COVID-19
pandemic, while responding to capital investment andexpansion of data centers in the manufacturing industry,
mainly in Kyushu.
Sales increased by 15,914 million yen (4.4% increase) to
380,355 million yen due to strong orders, despite sluggish
growth resulting from delays in the start of construction oflarge solar installations.

Net assets
Total net assets increased by 21,822 million yen to263,017 million yen as compared to March 31, 2022, as aresult of factors such as the recording of profit attributableto owners of parent.

(unit: million yen, lower row is composition ratio)(unit: million yen, lower row is the ratio to sales)

Gross profit

Ordinary profit
Profit attributable to owners ofparentNet profit per share

59

Kyudenko Corporation

376,563395,783(100.0%)(100.0%)57,361

57,889(15.2%)(14.6%)

33,13732,083(8.8%)(8.1%)

36,82835,462(9.8%)(9.0%)

26,216

26,349(7.0%)(6.7%)

370.05 yen

The year ended March 31, 2023
Year-on-year
Plancomparison
400,000
105.1%(100.0%)100.9%
96.8%
96.3%
100.5%

371.93 yen

59,000(14.8%)

32,500(8.0%)

35,000(8.8%)

26,000(6.5%)

Current assets

Progress
98.9%

98.7%
101.3%

Fixed assets
Total assets

98.1%

Current liabilities
Liabilities

Operating profit

Results

AssetsSales

The year ended
March 31, 2022

Long-term liabilities
Total liabilities

101.3%
Total net assets

367.00 yen

Total liabilities and net
assetsMarch 31, 2022

March 31, 2023

216,979

278,220(57.3%)(62.3%)

161,416

168,189(42.7%)(37.7%)

378,396446,410(100.0%)(100.0%)123,446

141,691(32.6%)(31.7%)

13,75441,702(3.6%)(9.3%)

137,201

183,393(36.3%)(41.1%)

241,194

263,017(63.7%)(58.9%)

378,396446,410(100.0%)(100.0%)

Increase/decrease

61,241
6,773

Major reason for increase/decrease
Cash on hand and in banks +28,512
Notes receivable, accounts receivable on completed
construction contracts and other accounts receivable +12,226
Raw materials and supplies +8,573
Investments in securities +3,319
Asset for retirement benefits +4,321

68,014
18,244

Advances received on uncompleted construction contracts+15,087

27,947Long-term debt +27,110

46,192
21,822Retained earnings +19,263

68,014KYUDENKO REPORT 2023

60

4. Data Section

Consolidated Balance Sheet

Consolidated Statement of Income(Unit: million yen)March 2022

March 2023

AssetsMarch 2022

39,021

67,534

Notes receivable, accounts receivable
on completed construction contracts
and other accounts receivable

136,676

148,902

Notes payable, accounts payable
on construction contracts andother accounts payable
Electronically recorded
obligations

66,66969,832

22,07828,762

987—

Short-term borrowings

6,865

2,461

Costs of uncompleted
construction

5,592

7,428

Income taxes payable

7,309

5,984

Merchandise

1,107

1,203

Advances received on uncompleted
construction contracts
Provision for loss on
construction contracts

11,46326,550

187

21

Other current liabilities

8,872

8,077

Short-term investments

Raw materials and supplies

22,79031,364

Other current assets

10,83821,790Allowance for doubtful
accounts
Total current assets(34)
216,979(3)
278,220

Fixed assets
Property and equipment
Buildings and structures

73,06076,16841,059Land

29,677

29,914

Leased assets

7,628

8,087

Construction in progress

1,112

45,607382

Accumulated depreciation(71,694)(78,415)

Total property andequipment

80,84481,745

Customer related assets

755

821

1,739

1,518

Other intangible assets

1,873

1,938

Total intangible assets

4,368

4,278

2,782

3,341

Provision for retirement benefits
for directors (and other officers)

328

327

Liability for retirement benefits

4,015

3,980

Other long-term liabilities

3,134

3,448

Total long-term liabilities

13,75441,702

137,201

183,393

Net assets

Common stock

12,561

12,561

Capital surplus

12,987

13,046

Retained earnings

214,655

233,918

Treasury stock

(9)

(10)

240,194259,516

10,445

(218)

(16)

4,288

2,468

Translation adjustments

208

688

5,279

5,652

(2,898)(1,774)313

89

Asset for retirement benefits

6,124

Deferred tax assets
Other

Kyudenko Corporation

Lease obligations

2,428

Long-term loans receivable

Total assets

30,604

1,848

64,494

Total fixed assets

3,494

Accumulated othercomprehensive income
Unrealized holding gain on
securities
Unrealized loss on hedging
instruments

61,175

Allowance for doubtful
accounts
Total investments andother assets

Long-term debt

Total shareholders’ equity

Investments and other assets
Investments in securities

141,691

Shareholders’ equity

Intangible assets
Goodwill

123,446

Long-term liabilities

Total liabilities

Retirement benefit liability
adjustments
Total accumulated othercomprehensive income (loss)

(979)

(985)

76,20382,166

Non-controlling interests

161,416

168,189

Total net assets

378,396446,410

Total liabilities and net assets

FY2022

380,355(1,059)

1,325

2,059

2,175

241,194

263,017378,396446,410

Construction contracts

364,440

Other

12,123

15,428

Total net sales

376,563395,783

310,615

326,874

Cost of sales
Construction contracts
Other
Total cost of sales

8,586

11,019319,201

337,894
53,480Gross profit
Construction contracts

53,824

Other

3,536

4,408

Total gross profit

57,361

57,889Selling, general and administrative expenses

24,22425,806

Operating profit

33,13732,083Non-operating income
Interest income

48

63

Dividend income

747

716

1,514

732

Gain on investments in partnership

910

1,427

Rent income

329

322

Other

775

867

4,326

4,130

Equity in earnings of affiliates

Total non-operating income
Non-operating expenses
Interest expenses

387

424

Extra retirement payments

84

58

Payment fees

75

99

Provisions of allowance for doubtful accounts subsidiary35

17

Settlement payments

—

87

Other

52

63

Total non-operating expenses
Ordinary profit

635

750

36,82835,462

4. Data Section

Machinery, vehicles, tools,
furniture and fixtures

Total current liabilities

FY2021
Net sales

Current liabilities

Cash on hand and in banks(Unit: million yen)March 2023

Liabilities

Current assets

61(Unit: million yen)

Extraordinary income
Gain on sales of property and equipment

4310

Gain on sales of investments in securities

811

4,247

Total extraordinary income

816

4,558
223

Extraordinary loss
Loss on disposal and sales of fixed assets

286

Loss on sales of investments in securities

36—

Impairment loss on investments in securities

489

602

Impairment losses—

326

Loss on liquidation of a subsidiary—74

Total extraordinary loss

811

1,227

Profit before income taxes

36,83338,793

Income taxes – current

11,365

11,157

Income taxes – deferred

(871)

1,198

Total income taxes

10,493

12,355

Profit26,33926,437

Profit attributable to non-controlling interests
Profit attributable to owners of parent

123

88

26,216

26,349KYUDENKO REPORT 2023

62

4. Data Section

Consolidated Statement of Cash Flows

Corporate Profile and Stock Information
Corporate profile
Corporate
Name

Kyudenko Corporation

Established December 1, 1944
(Unit: million yen)

FY2021

FY2022

Cash flows from operating activities

Head Office 1-23-35 Nanokawa, Minamiku, Fukuoka city,
815-0081 JAPAN
Tel: +81-92-523-1691
Fax: +81-92-524-3269
Capital12,561 million yen

Number of
Employees(Consolidated) 10,504(Non-consolidated) 6,472

Construction Approved by Minister of Land, Infrastructure, Transport
Business
and Tourism (Sp. 29) No. 1659
LicenseElectrical Contracting Work Civil Engineering BusinessArchitectural and
Telecommunications
Construction BusinessEngineering
Firefighting Facilities Work Paving Work
Scaffolding and Excavation
Plumbing Work
Machinery, Equipment, and Business
Steel Structure Work
Facility Work
Water Supply Facilities Work Interior Finishing Business
Sanitation Facilities Work

Major Offices [Japan]
Head Office
Tokyo Head Office
Fukuoka Branch Office
Kitakyushu Branch Office
Oita Branch OfficeMiyazaki Branch Office
Kagoshima Branch Office

Kumamoto Branch Office
Nagasaki Branch Office
Saga Branch Office
Tokyo Branch Office
Yokohama Branch OfficeKansai Branch Office
Okinawa Branch Office
Uku Project Development
OfficeProfit before income taxes

36,83338,793

Depreciation and amortization

5,791

6,018

—

326

(152)

(24)

(2,860)(3,064)

Fiscal year

Every year from April 1 to March 31 in the following year

Total number of authorized shares

250,000,000 shares

(907)

1,544

Held every year in June

Total outstanding shares

70,864,961 shares

123

(170)

Annual general meeting ofshareholders(910)(1,427)

Interest and dividend income

(796)

(780)

Year-end March 31
Interim September 30

7,194Gain on investments in partnership

Record date of dividends
payment

Number of shareholders

Interest expenses

387

424

Method of public noticeElectronic public notice will be posted on the Company’s website(https://www.kyudenko.co.jp). However, if an electronic public
notice cannot be made due to an accident or other unavoidable
reason, it will be posted on the Nihon Keizai Shimbun.

Impairment losses
Decrease in allowance for doubtful accounts
Increase in retirement benefit asset(Decrease) increase in liability for retirement benefits andprovision for retirement benefits for directors (and other officers)
Increase (decrease) in provision for loss on construction contracts

Foreign exchange gain

(126)

(168)

(1,201)

(414)

(4)

(310)

Loss on disposal of fixed assets

282

208

Impairment loss on investments in securities

489

Gain on sales of investments in securities(775)(4,786)(11,791)585(1,689)(8,266)(8,545)

153

9,552

(3,923)

15,076(2)

87

Decrease in consumption taxes, net(6,036)(4,090)

Other, net

2,298(6,386)

Subtotal

16,19329,522796

763

Equity in earnings of affiliates
Gain on sales of property and equipment, net

Increase in accounts receivable
Decrease (increase) in costs of uncompleted construction contracts
Increase in inventories
Increase in notes and accounts payable on construction contracts(Decrease) increase in advances received on uncompleted construction contracts(Decrease) increase in long-term accounts payable

Interest and dividend income received
Interest expenses paid
Net cash provided by operating activities

Status of shares

Stock exchange listing

Prime Market of Tokyo Stock Exchange
Fukuoka Stock Exchange

602

Stock index

JPX-Nikkei Index 400(4,247)

Securities code

1959

Category of business

Construction

Trading unit of shares

100 shares

Shareholder registryadministrator

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

Office of administrator

Stock Transfer Agency Business Planning Dept.,
Sumitomo Mitsui Trust Bank, Limited
https://www.smtb.jp/personal/procedure/agency/(Mailing address)
2-8-4 Izumi, Suginami-ku, Tokyo, 168-0063(Contact number)Phone 0120-782-031 (toll-free in Japan)[Weekdays 9:00-17:00]

(387)

(424)

(11,350)(12,474)

5,252

17,386(3,738)

Payments into time deposits(1,352)
1,732

1,503

Purchase of property and equipment(3,931)(2,940)

Proceeds from sales of property and equipment

169

445

Payments of disposal of property, plant and equipment

(210)

(126)

(4,817)(3,415)Purchase of investments in securities
Proceeds from sales of investments in securities

3,992

5,754

Purchase of shares of subsidiaries resulting in change in scope of consolidation(2,871)

(97)

(127)

(34)

Payments of long-term loans receivableCollection of long-term loans receivable

153

366

Other, net

(273)

(831)

(7,536)(3,113)Net decrease in short-term borrowings

(34)

(18)

Proceeds from long-term debt—

27,000

Repayments of long-term debt

(1,811)(7,057)(1)(2)(7,086)(7,087)

Net cash used in investing activities
Cash flows from financing activities

Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders

(2)

(2)

Repayments to non-controlling shareholders

(22)

(22)

—

60

Other, net

Proceeds from sale of shares of subsidiaries not resulting in change in scope of consolidation(1,233)(1,253)

Net cash provided by (used in) financing activities(10,191)

11,615301

171

Net increase (decrease) in cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents(12,175)

26,060Cash and cash equivalents at the beginning of the year

49,80037,791

Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation
Cash and cash equivalents at the end of the year

166—

37,791

63,851

Major shareholders(as of March 31, 2023)
Number of shares held
(thousand shares)

Name

Shareholding ratio (%)

15,980
7,189
5,249
3,249
3,133
1,916
1,413
1,300
1,142
1,133

Kyushu Electric Power Company, Incorporated
The Master Trust Bank of Japan, Ltd. (trust account)
Custody Bank of Japan, Ltd. (trust account)
THE NISHI-NIPPON CITY BANK, LTD.
The Bank of Fukuoka, Ltd.
Kyudenko Employees Shareholding Association
THE BANK OF NEW YORK MELLON 140044
Kyudenko Labor Union
Nishi-Nippon Railroad Co., Ltd.
MUFG Bank, Ltd.

22.55
10.14
7.40
4.58
4.42
2.70
1.99
1.83
1.61
1.59

Note: Shareholding ratio is calculated excluding treasury stock (1,082 shares).

Distribution of shares
Individuals and others
6,762
10,033 thousand shares (14.2%)(as of March 31, 2023)

Other domestic corporations
106
21,501 thousand shares (30.3%)

Financial institutions
46
24,426 thousand shares (34.4%)

Cash flows from investing activities
Proceeds from withdrawal of time deposits(as of March 31, 2023)

Foreign individuals
247
13,654 thousand shares (19.3%)

Securities companies
32
1,248 thousand shares (1.8%)

Treasury stock 1
1 thousand shares (0.0%)

Policy on dividends of surplus and trend of dividends
Policy on dividends of surplus
With respect to profit distribution, we will strive to maintain a soundfinancial position and make appropriate returns to shareholders that areconscious of capital cost while strengthening our management base toimprove performance and securing internal reserves necessary for further
business expansion.
With respect to dividends, we will meet the expectations of ourshareholders by maintaining continuous and stable dividend payment,
based on a consolidated payout ratio target of 25%, comprehensively
considering the business environment, performance, and financial
condition.

Trend of dividends
2019.32020.32021.32022.32023.32024.3(forecast)Interim dividends

50 yen50 yen50 yen50 yen50 yen55 yenYear-end dividends

50 yen50 yen50 yen50 yen60 yen55 yenTotal

100 yen

100 yen

100 yen

100 yen

110 yen

110 yenRating information(as of March 31, 2023)

Name of rating institution

Name of rating

RatingRating and Investment Information, Inc. (R&I)

issuer rating

A¯

Trend of stock price/volume
Kyudenko stock price

Nikkei 225 stock price

(Yen)

(Yen)

6,000

30,0004,000

20,0002,000

10,00000Volume(Thousand shares)

1,200
600
0
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2017
2019
2020
2021
2022
2023
2018

63

Kyudenko Corporation

4. Data Section

Income taxes paid

Stock information(year)KYUDENKO REPORT 2023

64

4. Data Section

Business Locations
Facility work

Overseas Locations

Material sales

Real estate

Software development

Power generation

OthersDomestic Locations
Japan Head Office
Uku Project Development Office
Nagasaki Branch Office
Saga Branch Office
Head Office, Fukuoka Branch Office andFukuoka regional office

Kyulien Environment Improving Co., Ltd.
Line of business: Environmental analysis, electrical works

Kyudenko (THAILAND) Co., Ltd.
Line of business: Electrical works, HVAC and sanitary facility works
and energy-saving works

Kitakyushu Branch Office

Kyudenko Vietnam Co., Ltd.
Line of business: Electrical works, HVAC and sanitary facility works

Oita Branch Officeand consulting service on construction technology

Kumamoto Branch OfficeMiyazaki Branch Office
Kagoshima Branch Office

Kyudenko Malaysia Sdn. Bhd.
Line of business: Electrical works, HVAC and sanitary facility works
and fire prevention facility works

Tohoku regional office

Asia Projects Engineering Pte. Ltd. (APECO)

Saitama regional office
Tokyo Head Office andTokyo Branch Office
Yokohama Branch Office
Nagoya regional officeKansai Branch Office
Kobe regional office
Chugoku regional office
Yamaguchi regional office
Okinawa Branch Office

APECO
Line of business: Plant installation works, maintenance and
EPC works and district cooling facilities works

Kyudenko Indonesia Rep. OfficeLine of business: Diffusion and commercialization of EMS

Myanmar Branch OfficeLine of business: Electrical works and HVAC andsanitary facility works

TaiwanOthersKyulien Environment Improving Co., Ltd.
No. 49, Ln. 90, Gong 5th Rd., Longtan District, Taoyuan City, Taiwan

Malaysia
Facility work

Kyudenko Malaysia Sdn. Bhd.
59-8 The Boulevard, Mid Valley City, No. 1, Medan Syed Putra Utara 59200 Kuala Lumpur Malaysia

VietnamFacility work

Kyudenko Vietnam Co., Ltd.
No.170, Tran Quang Khai st., Tan Dinh Ward, District 1, Ho Chi Minh City, Vietnam

ThailandFacility work

Kyudenko (THAILAND) Co., Ltd.
Unit 16B, Floor 16, Bangnathani Building, 1/33, Soi Bangna-Trad 34, Bangna Sub-district, Bangna District, Bangkok

Singapore
Facility work

Asia Projects Engineering Pte. Ltd.
32 Penjuru Road, Singapore 609136

65

Kyudenko Corporation(as of April 1, 2023)

Domestic consolidated subsidiaries (46 companies)
Fukuoka
Real estate
kyu-denko home, Inc.
Material sales Q-mast Co., Ltd.
Facility work
Setsubihoshu center Co., Ltd.
SoftwareAutomation technology Co., Ltd.
OthersNet medical center Co., Ltd.
OthersPortal Co., Ltd.
Others
Kyudenko friendly Co., Ltd.
Others
Bayside place hakata Co., Ltd.
Facility work
Kakusokukeisou Co., Ltd.
Facility work
Fukuoka densetsu Co., Ltd.
Facility work
Chikugo densetsu Co., Ltd.
Facility work
Fukuto densetsu Co., Ltd.
Facility work
Fukusetsu Co., Ltd.
Facility work
Kitasetsu Co., Ltd.
Oita
Facility work
Oita densetsu Co., Ltd.
Facility work
Fusokogyo Co., Ltd.
Miyazaki
Facility work
Meikousha Co., Ltd.
Facility work
Miyaei Co., Ltd.
Kagoshima
OthersThree in Co., Ltd.
Facility work
Minamikyushu densetsu Co., Ltd.
Facility work
Kaei densetsu, Co., Ltd.
Facility work
Kyukinsetsubikogyo Co., Ltd.
Power generation Shibushi mega solar power generation Co., Ltd.
Power generation Kagoshima solar farm, Co., Ltd.
Power generation Kirishima Wood Biomass Power Co., Ltd.
Kumamoto
Facility work
Yuei densetsu Co., Ltd.
Facility work
Kuma densetsu Co., Ltd.
Facility work
Higo-setubi Co., Ltd.

(as of April 1, 2023)

Nagasaki
Facility work
Facility work
Facility work
Saga
OthersFacility work
Facility work
Miyagi

4. Data Section

Overseas group companies

Choei Co., Ltd.
Chohoku densetsu Co., Ltd.
Kyusetsukougyou Co., Ltd.
kyudenko hokuzan kanko Co., Ltd.
Jinnouchikoumuten Co., Ltd.
Ariake densetsu Co., Ltd.

Power generation Natori mega solar kyudenko
green kikaku limited liability partnership
Aichi
Power generation Atsumi Green Power Co., Ltd.
Tokyo
Facility work
Kyukousogosetsubi Co., Ltd.
Facility work
Kyutie Co., Ltd.
Facility work
Chuorika Kougyo Co., Ltd.
Chiba
Facility work
Syoueidensetsu Co., Ltd.
Kanagawa
Facility work
Ergotech Co., Ltd.
Ibaraki
Facility work
Seiwakougyou Co., Ltd.
Fukushima
Facility work
Sanyudensetsu Co., Ltd.
Osaka
Facility work
Koteradengyo Co., Ltd.
Facility work
Kawachikougyou Co., Ltd.
Okinawa
Facility work
Ryuhou Engineering Corporation

KYUDENKO REPORT 2023

66

Kyudenko Corporation
1-23-35 Nanokawa, Minamiku, Fukuoka city, 815-0081 JAPAN
Tel: +81-92-523-1691 Website: https://www.kyudenko.co.jp/
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