To Create a Vibrant Environment for All Members of Society
The Taisei Group creates “safe, secure, and attractive spaces” and“high value” in harmony with the nature, and strives to build a global society
filled with dreams and hopes for the next generation.

The Taisei Group is rich inactive, diverse human resources working at various sites. At the site of (tentative name) Toranomon 2-10 Project of Tokyo
Office, Hotel Okura Tokyo Building Reconstruction Project, we engage in the “Kensetsu Komachi” initiative, which is promoted by the Japan Federation of Construction Contractors, for different activities intended to create a “comfortable workplace” through the synergy of both men and women
working at the same workplace. In recognition of such efforts, we won the 3rd Kensetsu-komachi Empowerment Award of Excellence sponsored by
the Japan Federation of Construction Contractors in 2017.

Hotel Okura Tokyo Main Building Reconstruction Project /(Tentative Name) Toranomon 2-10 Project
Taisei has been constructing two buildings for the Okura Tokyo, a high-rise building(41st floor) and a middle-level building (17th floor), on the former site where the mainbuilding of the Hotel Okura Tokyo on the 10 ground floors was dismantled.
As for the office floors in the high-rise building, we set up a special purpose
company (SPC) jointly with Hotel Okura Co., Ltd., and others to promote the officeleasing business through the SPC.
The buildings are scheduled to open in 2019. We aim to promote the project byleveraging the know-how of office building development. In this way, we canachieve an office that is highly evaluated by customers and the smooth operationof complex facilities centered on representative luxury hotels in Japan.

Client:Location:
Designer:

Hotel Okura Co., Ltd.
Toranomon, Minato-ku, Tokyo(Tentative Name) Toranomon 2-10
Planning Design JV(Taisei Corporation – TANIGUCHI andASSOCIATES – KANKO KIKAKUSEKKEISHA – NIHON SEKKEI, INC. –P.T. Morimura & Associates, LTD. –NTT FACILITIES, INC. JV)Supervision: Mitsubishi Jisho Sekkei Inc.
Scheduledcompletion: June 2019

Taisei Group Philosophy

Taisei Spirit
Taisei Group
Philosophy

To Create a Vibrant Environment for
All Members of Society

Active and Transparent Culture/
Value Creation/Evolution of Tradition
Key concepts that all Taisei Group officers andpersonnel must adhere to in order to pursue andrealize the Taisei Group Philosophy

Objectives to be pursued by the Taisei Group (Goals)

Taisei Spirit
Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole

Medium-term Business Plan
(FY2018-2020)

Overall
Principles ofConduct

OverallManagement
Perspective

Please visit our official website for the Action Guidelines for
Taisei Personnel and the Taisei Group as a Whole and Policies
of Taisei Corporation.

Clients/End-Users

1 T A I S E I ANNUA L R EPORT 2018

Shareholders/Investors

Suppliers

Employees

Local Communities etc.

About the Taisei Group
3 Message from President
5 The Taisei Group Corporate History
7 Taisei Group’s Now/Present
9 11-Year Financial and Non-Financial
Summary

About the Taisei Group

Contents

11 Value Creation Process
13 Recognition of Tasks and Medium- andLong-Term Goals
15 Medium-term Business Plan
(2018–2020)

Women engineers and men engineers from
Taiwan, At the site of (tentative name) Toranomon
2-10 Project of Tokyo Office, Hotel Okura Tokyo
Main Building Reconstruction Project,

Special Feature
19 Special Feature 1<Talk> President and Investor

Value Creation Story of the Taisei Group

Value Creation Story of theTaisei Group

25 Special Feature 2

Period of Coverage• The main subject of this report is the actual results for the fiscal year ended March2018 (April 1, 2017 – March 31, 2018). Some contents concern the data for theprevious fiscal year or the most recent activities.

1 SDGs X Innovation Dialogue
2 SDGs X ZEB
3 TAISEI i-Innovation®

Business Section
36 Civil Engineering
37 Building Construction
38 Real Estate Development

ESG Section
39 The Taisei Group CSR

Scope of Coverage• In principle this report covers the activities of Taisei Corporation and the Taisei Group
companies (consolidated subsidiaries) as of March 31, 2018, unless otherwise noted.

47 Members of the Board, Audit &Supervisory Board Members, Chairman
and Executive Officers, Executive Fellows

Guidelines on Non-Financial Information Disclosure• United Nations Global Compact• GRI Sustainability Reporting Standards• ISO26000: 2010 (International Organization for Standardization)• Integrated Reporting Framework (International Integrated Reporting Council: IIRC)• Environmental Reporting Guidelines (2012)• Guidance for Collaborative Value Creation (METI)

51 Corporate Governance and Internal
Controls

Third-Party Opinions and Third-Party Assurance on This Report• Kanji Tanimoto, DBA, Professor, School of Commerce, Waseda University• “Independent Assurance Report” on the environment data and indices by Ernst &Young ShinNihon LLC
Date of Issue• September 2018
Note Regarding Forward-Looking Statements
Opinions and predictions, etc., expressed in this report are based on the judgment of the Company atthe time of preparation of this document. Therefore, please be aware that there is a possibility that theresults of the actual target values, etc., could be different from the stated future estimates, due tochanges in various factors.

Special Feature

Taisei Corporation’s Innovation, toward
Its Realization

Business Section

http://www.taisei.co.jp/english/csr

29 Special Feature 3

54 Risk Management/Compliance

ESG Section

WEB<Supplementary Note on Employees>“Employee” refers to employees of Taisei Corporation. “Personnel” refers to personnel working
at Taisei Corporation, including dispatched and seconded personnel.

Messages from the External Membersof the Board

Data Section
57 Explanation and Analysis ofBusiness Results
89 Independent Auditor’s Report
90 Third-Party Opinion
91 Outline of the Company
93 Overseas Network

Data Section

Editorial Policy
This report is intended to help readers better understand the creation of our corporate
value as a whole, such as corporate activities, financial statements, and managementtasks in line with Taisei Groups Philosophy and Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole.
The 2018 issue features the President’s talks, and messages and dialogues with theExternal Members of the Board, combined with important ESG
information, which provides clues to the interviews and dialogues, todisclose inclusive and brief corporate information. Further details about
the initiatives related to ESG and sustainability are available in the“CSR” section on Taisei Corporation’s official website.

94 A Graphic Advertisement of the TV CM"Singapore"

TA I SE I A N N UA L R E P O R T 2 0 1 8

2

Message from President

To Our Stakeholders

Yoshiyuki Murata
President and Chief Executive Officer,
Representative Director

Review of Previous Medium-term Business Plan (FY2015–2017)
During the three years of the previous Medium-term

the considerable trouble we caused. In the belief that theBusiness Plan, we made collective efforts in management

charged facts do not constitute a violation of the Anti-

Goals such as “Undertaking strategic approaches

Monopoly Act, we will make a plea in the proceedings.

regarding focused projects” “Actively contributing to

Nevertheless, we take this charge very seriously and will

improving infrastructures” and “Promoting the development

implement measures such as tightening the rules onof next-generation technologies” under the basic policy ofcontacts with competitors.

“Deep cultivation of our primary business of construction.”

In addition, TAISEI ROTEC CORPORATION, one of our

As a result, we have achieved record-high profits for

subsidiaries received punishment for violating the Anti-

three consecutive years and further stability in terms of our

Monopoly Act including a surcharge payment order. We

financial standing in the fiscal year 2017.

deliberated this matter in the Compliance Committee andOn the other hand, we were indicted on suspicion of

the Board meetings to set the Rule for Application forviolating the Anti-Monopoly Act in association with theLeniency and develop the in-house leniency system, in

Chuo Shinkansen Project. We extend our deepest apology

order to prevent similar incidents in the future.

to all of our stakeholders, including our shareholders, for

3 T A I S E I ANNUA L R EPORT 2018

Domestic construction demand should remain strong until

The Taisei Group has set its philosophy: “To Create a Vibrant

2020. However, with a steady decrease in the JapaneseEnvironment for All Members of Society.” It is also a group

population, we cannot expect construction demand to grow.

goal to be constantly pursued by all the officers andInstead, any changes in the economic environment in Japan

personnel of the Taisei Group in daily operations.

or overseas might trigger a sharp decrease in domestic

To achieve the group philosophy, we need to fulfill aconstruction demand due to financial constraints. For thismission as a company operating not only in Japan but

reason, we need to change our corporate structure to one

also in the world, through innovation, in reaction to thethat can resist and survive a time of fierce shakeout/selection

movements toward solutions to universal social issues,

within the industry as we had before, if it returns.

such as the Paris Agreement and sustainable development

Based on a recognition of these challenges, we havelaunched the Medium-term Business Plan (FY2018–2020).

goals (SDGs).
In the new Medium-term Business Plan, we haveidentified eight ESG tasks (Materiality) that are considered

About the Taisei GroupTo Create a Vibrant Environment for All
Members of Society

Value Creation Story of the Taisei Group

Market Environment Surrounding theConstruction Industry

to be particularly important for the Taisei Group.

policy is “to establish the foundation for growth with theconstruction business at the core.”
We will ensure the highest levels of safety and quality
and pursue customer satisfaction and solid performanceboth at the same time, while being committed to “workstyle reform” and “productivity improvement” in an integrated
manner, as a leading company in the industry.
●

The market environment in Japan is uncertain after the
Tokyo 2020 Olympics and Paralympics. Based on the
belief that we need to expand our business scale andproject areas in order for the Taisei Group to ensure

achievement of SDGs through the Taisei Group’s corebusinesses: civil engineering, building construction, andreal estate development.

Special Feature

Under the new Medium-term Business Plan, our basic

Our initiative for this materiality is to secure the

Our officers and personnel will work toward theachievement of our goals to gain the trust of all our
stakeholders. They will do this by positively executing themanagement tasks and key measures laid down in the Planin a bid to increase the value of the Taisei Group to society,and, to strengthen returns to shareholders and our financial
foundation simultaneously.
We would appreciate your high hopes as well as

Business Section

Medium-term Business Plan (FY2018–2020)

continued support for our efforts toward further growth.

sustainable growth in such context, we target a business
ESG Section

scale of ¥2.0 trillion.
●

For the expansion of our business scale and project
areas, the sustainable growth of our overseas business isessential, given the future of the domestic market. In lightof setbacks we experienced in the past, we believe now,
especially when we have an enhanced structure in place
to generate profits in the overseas business, is the perfect

Data Section

time to build it into an engine of growth.
●

We will make investments for growth of ¥300 billion in total
in order to increase added value and profit opportunities
in the construction and peripheral businesses in Japanand overseas.

TA I SE I A N N UA L R E P O R T 2 0 1 8

4

About the Taisei GroupThe Taisei Group Corporate History
Carrying the modernization of Japan,
as well as the post-war reconstruction anddevelopment of new-born JapanFoundation–1959● Kihachiro Okura❶❷ Ginza Restoration●
Project●Lake Biwa Lock❸and Tunnel

Involving in numerous national projects andaccommodating diversifying construction needs
with total power/collective strengths

1960–2009● Hotel Indonesia❻❼ New Kuala Lumpur International Airport, Malaysia●● Rokumeikan building❹❽ Bangkok Ring Road Cable-stayed Bridge●❺ Tokyo Underground Railroad (Ueno –Asakusa)●

Founder Kihachiro Okura

The history of Taisei Corporation began when Kihachiro Okura (❶)
established Okura Gumi Shokai in 1873.
Okura delivered one successful project after another, including
the Ginza Renga Gai project to resurrect Ginza, which was burned
down by a major fire, as an unburnable brick-cladded district (❷);
the lock and tunnel at Lake Biwa, which became a pioneer
modernistic civil engineering work (❸); and Rokumeikan, a building
for entertaining foreign guests and diplomats in its heyday during
the Meiji era (❹).
In 1927, he also engaged in the construction of the firstsubway in the East, 2.2 km between Ueno and Asakusa (thecurrent Ginza Line) (❺).

Birth of Taisei Corporation
Okura Gumi had difficulty surviving when designated as a target ofthe dissolution of zaibatsu (industrial group) but started over again
under a new name, Taisei Corporation in 1946. Introducing an
employee shareholder program, Taisei Corporation became a nonfamily firm, which is rare among Japanese construction companies.

5 T A I S E I ANNUA L R EPORT 2018

❾ Kao Ping Hsi Cable Stay●
Bridge, Taiwan R.O.C.

❿ Djibouti Palace Kempinski Hotel●

New Kuala Lumpur International Airport,
Malaysia (❼)

The modern form and functional design was carried out by thelate Japanese architect, Kisho Kurokawa. The Company
constructed the main terminal.

Completed Construction of Hotel Indonesia (❻)

This was our first post-war overseas project. At the time this was
the only international class hotel in Indonesia, so 30 years later in1993 it was declared to be a historical asset of Jakarta City.

Djibouti Palace Kempinski Hotel (❿)
This remarkable project was the design and construction of ahigh-class five-star hotel in just nine months.

2010–Present

About Origin of
Corporate Name andCorporate Emblem
Origin of Corporate Name
Derived from the Dharma name (posthumous
Buddhist name) of the founder Kihachiro⓭Bosphorus Strait Crossing Railway Tunnel (Turkey)●

Okura. “Taisei” is taken from a line in the
Chinese classic texts, “Mencius.” It has ameaning of the “corpus” of people’s virtues,
which can be associated with accomplishingsomething, or gathering many pieces to build
up something. As such, it was chosen as the⓬ Almas Tower, Dubai●⓮ Hamad International Airport (Qatar)●

most suitable for our company name.

About the Taisei Group

Promoting technology innovation to respond to socialchanges and their incidental challenges, with the aim ofcreating future values

Value Creation Story of the Taisei Group

Since the foundation of Okura Gumi Shokai by the Founder Kihachiro Okura in 1873, Taisei Corporation
has contributed to the development of society through building safe and comfortable living environments.
Here is a story nurtured with dreams and passions over a period of 145 years and to be handed down tothe colorful future.

“Kensetsu” is a translation of the English
word “construction,” and it represents theconstruction. We were the first construction
company that adopted in its corporate namein Japan, and many other companies
followed suit.

Special Featurefields of both civil engineering and building

Corporate Emblem● No.2 Terminal Building, Noi Bai International Airport (Vietnam)⓯

It represents the corporate philosophy of
Taisei Corporation, which pursues higher,
with nature. The orange color stands for abright future, the blue for advanced
technologies, and the green for abundantnature. An image of a natural environment on
the irreplaceable earth—land, sea, and sun—,Business Section

deeper, and wider operations in harmony

and us, human beings, with Taisei Corporation

In 2013 Taisei Corporation completed the construction of Bosphorus Strait
Crossing Railway Tunnel, which connects Europe and Asia via railroad tunnels(⓭). The installation of a tunnel on the 60-meter deep bottom of the sea, theworld-record depth for a submerged tunnel, was very challenging work.
Nevertheless, we finally realized the Turkish people’s long-cherished dream withour collective best technologies. In addition, a long list of our achievements inthe construction of domestic and international airports was acknowledged in theworld, which brought us orders for Hamad International Airport in Qatar (⓮) andNo.2 Terminal Building at Noi Bai International Airport, a construction of thelargest scale in North Vietnam (⓯). Taisei Corporation will link the know-how
accumulated in these track records to its next airport projects worldwide.

and wider than ever while maintaining abalance with the natural environment is
depicted with energy and dynamics.
Taisei Corporation adopted this symbol
mark in April 1990, as a new corporate
signature for the VI (visual identity) campaign,

ESG Section

Serving World Infrastructure Businesses

continuing to conduct activities higher, deeper,and officially adopted as its corporate
emblem on April 1, 2003.

Data Section⓰ New National Stadium (Japan)●

Photo courtesy: ©JSC (As of June 1, 2018)

The Stadium in a 100-Year Old Forest
With an eye on 100 years from now, New National Stadium will open to the
public and in accord with Jingu no Mori (Jingu Forest) (⓰). With the accumulated
technologies and know-how applied, the project is currently under way toconstruct a solid stadium that can be used for many years, by making it highly
durable, long lasting, easy-to-maintain, and natural energy-supported andlimiting the available are according to the size of events; completion is expected
in November 2019.
* The name after completion is “National Stadium.”

TA I SE I A N N UA L R E P O R T 2 0 1 8

6

About the Taisei Group

Taisei Group’s Now/Present
Using its high-level technology developed over many
years, the Taisei Group operates various businesses
centered on Civil Engineering, Building Construction,
and Real Estate Development. It contributes to thesustainable development of society through building
safe and comfortable living environments and aims to
improve its corporate value across the group.

FY2017 Data
¥1,743.4 billion■ Net sales¥1,585.4 billion(up 5.3% YoY)
(up 6.6% YoY)

■ Operating income¥181.8 billion■ Net income attributableto owners of parent■ Net assets¥126.7 billion(up 29.1% YoY)

■ Return on equity (ROE)(up 40.0% YoY)¥669.0 billion(up 17.2% YoY)

20.5%
(up 3.8 points YoY)

■ Number of personnel(including Non-Japanese)
Male
Female14,032710
11,7182,314(As of March 31, 2018)

Composition by Segment

Real Estate
Development¥12.9 billion
7.0%
Building
Construction¥96.3 billion
52.9%

Through the construction of facilities and structures that
support people’s lives and industries and accord with theenvironment, we work for social capital improvements. In
recent years, we have built our own CIM system in which
ICT and 3D data are integrated in an effort to improve thequality and productivity of construction at a number ofcivil engineering sites.
p.36 Commitment of Chief of Civil Engineering Division■ Orders received

Real Estate
Development¥119.8 billion
7.2%
Building
Construction¥1,060.5 billion
63.9%

Civil Engineering

Others ¥12.3 billion
0.7%

Net Sales by
Segment

Building Construction
By accommodating various needs for R&D activities andengineering technologies to deal with environmental andenergy issues, improved antiseismic and disasterprevention systems for business continuity purposes incase of disaster, etc., we provide safe, secure, andcomfortable environments and highly convenient buildings.
We have been involved in a number of constructions
that symbolize an era, inside and outside Japan.
p.37 Commitment of Chief of Building Construction Division

Real Estate Development
We study buildings comprehensively throughout their
entire life cycle and build an optimized consensus in orderto support the promotion of large development projects,
and actively engage in projects as a developer.
Our efforts help improve not only the efficiency of
public works and services, but also public finances.
p.38 Commitment of Chief of Urban Development Division

Civil Engineering¥466.4 billion
28.1%

OthersOthers ¥1.1 billion
0.6%

Operating Income
by Segment

Civil Engineering¥71.5 billion
39.3%● Net sales and operating income include intersegment transaction.

Composition percentages are figures calculated from simple sum totals.

7 T A I S E I ANNUA L R EPORT 2018

Main Domestic Subsidiaries
TAISEI ROTEC CORPORATION■ Pavement and civil engineering■ Real estate development and facility Taisei-Yuraku Real Estate Co., Ltd.
management■ Construction of housing complexes TAISEI U-LEC CO., LTD.
■ General building services construction TAISEI SETSUBI CO., LTD.
■ Order-made individual housing
TAISEI HOUSING CORPORATION
construction■ General engineering including
SEIWA RENEWAL WORKS CO., LTD.
foundation works

About the Taisei Group

Site Preparation for Promotion of Collective Relocation
for Disaster Prevention and Development Project of
Public Restoration Housing, Kesennuma City

Lines of Business

Value Creation Story of the Taisei Group

Tunnels, bridges, roads, dams, anddecontamination, maintenancepreservation, and builds social
infrastructure

Renewal Project of Ebie Sewage Treatment Plant in Osaka City

Airports, office buildings, commercial
facilities, factories, hospitals, and the
housing business, renovation,
demolition

Business Section

Tokyo International Airport Terminal 2 Construction Work ofInternational Facilities

Nishi-Shinagawa
1-chome Area 1st
Type Urban Land
Redevelopment
New Constructionof Building Facilities
and Public Facilities(Block A)

Special Feature

Lines of BusinessLines of Business

Redevelopment, PFI*, property
management, and condominium
sales projects

ESG Section

Meguro Station Front Area 1st Type Urban Land
Redevelopment New Construction of Building Facilities

Lines of BusinessContract research, technology
provision, and environmental measurements

Overseas Business Offices

Overseas Subsidiaries/Affiliated Companies■ Taipei■ Middle East (Doha)■ Singapore■ Kuala Lumpur■ Jakarta■ India■ Pakistan■ PT. TAISEI PULAUINTAN CONSTRUCTION INTERNATIONAL(Indonesia)■ TAISEI (THAILAND) CO., LTD.
■ VINATA INTERNATIONAL CO., LTD. (Hanoi/Hochiminh City)■ CSCEC-TAISEI CONSTRUCTION, LTD. (Beijing/Shanghai)■ TAISEI PHILIPPINE CONSTRUCTION INCORPORATED■ PT. INDOTAISEI INDAH DEVELOPMENT (Indonesia)■ TAISEI MYANMAR CO., LTD.

■ Vietnam (Hanoi/Hochiminh City)■ Thailand■ Philippine■ Myanmar■ Sri Lanka■ North Africa■ Istanbul

Data Section(Tentative Name) Vinata Towers Project (Vietnam)* PFI: Stands for Private Finance Initiative and describes a method to enhance public capital such as public facilities byutilizing private funds, management methods and technical capabilities.

TA I SE I A N N UA L R E P O R T 2 0 1 8

8

About the Taisei Group

11-Year Financial and Non-Financial Summary

TAISEI CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2008 through 2018

Financial Highlights (Consolidated)
Millions of Yen(except for per share figures)

March 31, 2008

March 31, 2009

March 31, 2010

March 31, 2011

March 31, 2012

Net sales:
Construction contracts
Real estate development and otherTotal% change from previous year

¥ 1,517,770
193,944
1,711,714(8.6)%¥ 1,467,070
174,112
1,641,182(4.1)%¥ 1,289,809
152,166
1,441,975(12.1)%¥ 1,079,139
138,980
1,218,119(15.5)%¥ 1,171,927
151,577
1,323,504
8.7%

Costs and expenses:
Cost of sales
Selling, general and administrative expenses
Total
Operating income (loss)
Income (loss) before income taxes
Income taxes
Net income (loss) attributable to owners of parent

1,567,091
95,767
1,662,858
48,85642,172
13,878¥24,447

1,545,918
95,9201,641,838(656)(38,449)(9,404)¥ (24,401)

1,318,593
87,755
1,406,348
35,62735,516
14,462¥
21,222

1,100,022
81,803
1,181,825
36,294
19,3748,514¥
10,883

1,206,014
81,004
1,287,018
36,486
16,673
15,480
¥
1,181

¥

¥

¥

¥

¥

Revenue:

Per share data of common stock(in yen and dollars):
Net assets
Net income (loss) attributable to owners of parent
Cash dividends
Financial ratios:
Net income (loss) attributable to owners ofparent as a percentage of total revenue
Total costs and expenses as a percentage of total revenue
Dividends paid as a percentage of net income
Financial position data:
Current assets
Current liabilities
Net property, plant and equipment
Long-term liabilities
Shareholders' equity
Net assets
Other data:
New orders received during the year
Contract backlog at the end of year
Shares issued (thousands)

318.1222.97
6.00

239.87(22.93)
5.00

262.1519.74
5.00

253.94
9.58
5.00

255.60
1.04
5.00

1.4%

(1.5)%

1.5%

0.9%

0.1%

97.1%
26.1%

100.0%
---%

97.5%
25.3%

97.0%
52.2%

97.2%
482.3%¥ 1,120,798
1,003,741
244,594
291,550
283,135
373,988¥ 1,082,037
1,074,229
236,705
248,400
252,905
284,713¥ 912,895
894,026
238,534
250,083
274,779
297,179¥ 847,467
808,052
232,000
235,607
290,282
290,598¥ 982,931
921,196
212,639
219,101
284,714292,602¥ 1,753,692
1,885,554¥ 1,524,578
1,768,950¥ 1,244,439
1,571,414¥ 1,254,095
1,607,390¥ 1,379,572
1,663,459

1,064,803

1,064,803

1,090,622

1,140,269

1,140,269*1 U.S. dollar amounts were translated from yen, for convenience only, at the rate of U.S. $ 1 = ¥106.24*2 The net assets per share and the net income per share are calculated assuming that the consolidation of shares took place at the beginning of the year, because the consolidation ofshares, at the ratio of 1 share for 5 shares, was implemented on October 1, 2017.

Non-Financial Highlights (Consolidated)
Number of Personnel (Consolidated)/■男性 ■女性
Numberof Female Managers (Non-Consolidated)■ Male■ Female

Female managers(People)16,00013,748

13,977

14,032(People)(Cases)

200

400

150

300

100

200

50

100

0

0

2,314

2,243
11,734

2,038
11,71012,00011,718

8,000

83

4,000
0

Number of Patent Applications Filed*

62

53
2015

2016

2017

(FY)

316

311

2015

2016

253

2017

* The totals for Taisei Corporation and our 6 major Group companies.

9 T A I S E I ANNUA L R EPORT 2018

(FY)

March 31, 2015

March 31, 2016

March 31, 2017

March 31, 2018

March 31, 2018

¥ 1,254,291
162,205
1,416,496
7.0%¥ 1,321,289
212,184
1,533,473
8.3%¥ 1,404,530
168,740
1,573,270
2.6%¥ 1,394,677
151,212
1,545,889(1.7%)¥ 1,342,455
144,798
1,487,253(3.8%)¥ 1,445,277
140,221
1,585,498(6.6%)$

1,304,677
76,213
1,380,890
35,60632,82812,399¥20,051

1,402,446
77,254
1,479,700
53,773
46,593
14,120¥32,0891,425,295
77,5581,502,853
70,417
66,98028,755¥38,177

1,348,302
80,1191,428,421
117,468
117,797
40,996¥
77,045

1,260,968
85,462
1,346,430
140,823
135,190
44,793¥90,566

1,318,880
84,7581,403,638
181,860
182,297
55,508¥
126,788

¥

¥

¥

¥

¥

¥

299.8417.60
5.00

335.4228.17
6.00

418.61
33.52
8.00

442.6765.85
16.00

496.6078.57
20.00

2,975.02*2
561.36*2
85.00*3

1.4%

2.1%

2.4%

5.0%

6.1%

8.0%

97.5%
28.4%

96.5%
21.3%

95.5%
23.9%

92.4%
24.3%

90.5%
25.5%

88.5%
22.3%

$

13,603,887
1,319,851
14,923,739

12,414,157
797,797
13,211,954
1,711,785
1,715,898
522,478
1,193,411

28.003*2
5.284*20.800*3$¥ 1,012,639
907,281
206,076
292,514299,336
343,300¥ 1,076,213
946,097
181,051
268,802327,067
384,166¥ 1,136,497
984,762
169,973
258,373
370,140
492,114¥ 1,112,305
927,777
177,529
211,767
437,533
521,278¥ 1,223,572
986,994
175,983
202,271
485,396
570,814¥ 1,352,263
1,022,626
188,397
239,179
563,913669,020$

12,728,379
9,625,620
1,773,315
2,251,309
5,307,916
6,297,252¥ 1,404,407
1,651,370¥ 1,645,896
1,763,793¥ 1,765,743
1,956,266¥ 1,671,061
2,081,438¥ 1,655,036
2,249,221¥ 1,743,498
2,407,221$

16,410,938
22,658,330

1,140,269

1,140,269

1,171,269

1,171,269

1,146,753

224,541*3 Total annual dividends per share as of March 31, 2018 is ¥85.00 (U.S. $0.8), which is the sum of the interim dividend per share of ¥10.00 (U.S. $0.1) and the year-end dividend pershare of ¥75.00 (U.S. $0.7). Due to the consolidation of shares at the ratio of 1 share for 5 shares implemented on October 1, 2017, the year-end dividend per share of ¥75.00 reflects
this consolidation, while the interim dividend per share of ¥10.00 does not. If the interim dividend per share is calculated based on the consolidation of shares, it would be ¥50.00(U.S. $0.5), making the total annual dividends per share ¥125.00 (U.S. $1.2).

Frequency Rates (at Least 4 Days off Work)*1*2

Total CO2 Emissions*3

Frequent rates are the number of fatalities and injuries at worksites per one
million cumulative working hours, which represents the frequency ofoccurrence of occupational accidents.

(t-CO2)400,000

1.0

0.59

0.5

337,000

332,000 340,000

300,000

0.49

Data Section

0.59

About the Taisei Group

March 31, 2014

Value Creation Story of the Taisei Group

March 31, 2013

Special Feature(except for per
share figures)

Business Section

Millions of Yen(except for per share figures)

ESG Section

Thousands of
U.S. Dollars*1

200,000
100,000

0

2015

2016

2017

(CY)

*1 The targets of frequency rates are set on the basis of all accidents entailing days off
work including a small and medium sized employers and self-employed workers.
*2 The totals for Taisei Corporation and our 6 major Group companies.

0

2015

2016

2017

(FY)

*3 The totals for Taisei Corporation and our 7 major Group companies.

TA I SE I A N N UA L R E P O R T 2 0 1 8 10

Value Creation Story of the Taisei Group

Value Creation Process
The Taisei Group strives to maximize the value created through dialogue with stakeholders, and aims toachieve sustainable development together with society by proactively getting involved in social challenges
which the Group needs to resolve through its businesses.
Materiality refers to an important task to be addressed by the Taisei Group.
It is considered to connect global tasks, such as SDGs, and the Taisei Group’s structure of values and policies.

Changes in External Environment / Risks and Opportunities
Climate changes, increasing energy demand,
growing world population, aging society,aging infrastructure,
decreasing productive-age population in Japan

Taisei Group Philosophy

Materiality for
the Taisei Group
Realization ofa sustainable andenvironmentallyfriendly society“To Create a Vibrant
Environment for
All Members of Society”
Corporate Governance＞＞＞Technologies
Work-Site Capabilities

Operation andChallenge-Tackling
management;
Capabilities
maintenance andpreservation
Procurement
and work
implementation＞＞＞

Thoroughmanagement oflabor safety andsanitary
conditions

Promotion ofcompliance

Designandengineering

Medium-term Business Plan
(FY2018 - 2020)
Promotion of
supply chain
management

11 T A I S E I ANNUA L R EPORT 2018

The source of ourcompetitive advantage

Strategy,planning,
anddevelopment＞＞＞

Technical
development forrealizing asustainable
society

The Taisei Group’s
Strengths＞＞＞

Ensuring quality
and impronving
technology

Renovation
anddemolition

＞＞＞

＞＞＞

Value Chain

Cultivation oftechnical staff
and securinghumanresources

Realization of an
attractive working
environment thatis good towork inBy seeking to achieve the TaiseiGroup Philosophy, the Taisei Groupwill create safe, secure and attractive
spaces, and high value in harmony
with the nature, as well as strive tobuild a global society filled withdreams and hopes for the next
generation.

Creating Value throughDialogue with Stakeholders
Clients/
End-Users
Shareholders/
Investors

Suppliers

Business Section

Sustainable
Development
through Value
Creation

About the Taisei GroupSpecific social challenges, such as
Sustainable Development Goals(SDGs) and the Paris Agreement havebeen set out as global common goals
to be achieved. The Taisei Group willcontribute to realization of asustainable and better world toresolve these challenges.

Value Creation Story of the Taisei Group

Objectives to be Pursued
by the Taisei GroupSpecial Feature

Contributing to Solving
Global Challenges

Data Section

ESG Section

Employees

TA I SE I A N N UA L R E P O R T 2 0 1 8 12

Value Creation Story of the Taisei Group

Recognition of Tasks and Medium- andLong-Term Goals
Recognition of the Business Environment (Risks and Opportunities)
After the 2020 Tokyo Olympics and Paralympics Games are held, it is anticipated that we will face the risk of a sharp decline
in construction demand and a recurrence of a period of severe shakeout. The following table summarizes our forecasts ofthe business environment after 2020 in terms of risks and opportunities.
Present

2020 Onwards

Measures against aging of social infrastructure
and infrastructure development to strengtheninternational competitiveness are urgent tasks● Expansion of the scope of general contractors’
business as a result of spread of concessions

Worldwide Trends

Market environment●

Public works

Private sector

A high level of work contract volume will continue
up to 2020
● Projects will materialize from 2020 onwards●

Strong construction investment in newly developing
countries● Accelerating overseas penetration by Japanesedevelopers● Large-scale exports of infrastructure led bygovernment●

As a result of continuation of infrastructure development, a constant level of
public works investment will be maintained●

Important public works infrastructure concession projects will become
established as part of the general contractor business segment●

Although there is much latent demand, such as urban redevelopment, research andproduction facilities, renewal of buildings from the period of high economic growthrate, etc., the sense of lack of clarity in the long term cannot be brushed away●

Overall expansion of the construction market overseas●

The Japanese growth strategy of infrastructure exports continues●

The amended Labor Standards Act will also apply to the construction industry●

The result of work style reform will affect the growth of company●

Staff shortages actualize, and productivity improvements, and ensuring supply
capability will have a great effect on the growth of company●

The strategy for growth by specialization of each company will become clear●

There will be increasing importance of accumulation of technical capability
and know how in response to diversifying and advanced customer needs●

Potential for unexpected new participants (high tech, IT related, ventures, etc.)●

Overseas

Work stylereformProductivity
improvement●●

Dealing corrections of long working hours
Work style reform and shortages of staff will befactors for productivity improvement andoptimization of tender prices

Development of technologies to contribute toproductivity improvement is an urgent task
● Activities are required with specialist contractors●

Moves to strengthen and expand business areas
other than the domestic construction industry(overseas, energy, real estate, etc.)● Start of competition for introduction of advanced
technology●

Competitive
trendsImportant ESG Tasks for the Taisei Group (Materiality)
On the basis of social challenges such as SDGs and by referring to experts’ opinions, we have identified eight materialitythat are particularly important and to be dealt with by the Taisei Group, in terms of their importance for society and for
management of the Taisei Group.
p.41 Materiality
ESG

Materiality

Environment

Realization of a sustainable and environmentally friendly society
Ensuring quality and improving technology
Technical development for realizing a sustainable society
Promotion of supply chain management

SocialThorough management of labor safety and sanitary conditions
Cultivation of technical staff and securing human resources
Realization of an attractive working environment that is good
to work in

Governance

13 T A I S E I ANNUA L R EPORT 2018

Promotion of compliance

SDGs

etc.

etc.

etc.

etc.

etc.

etc.

etc.

etc.

About the Taisei Group[ Management Tasks ]Summary of Basic Policies
●

●

●

●

Sustainable growth of overseas business, andconversion to a corporate structure that isgenuinely suitable for the overseas market
Investment for growth will be carried out in order toexpand added value and opportunities for revenue
in the construction and peripheral businesses bothin Japan and overseas, to construct the basis forsustainable growth in the Taisei GroupAs a leader in the construction industry we will
set an example by the public and private sectorsof unified initiatives for work style reform andproductivity improvement for growth in theconstruction industry
We re-acknowledge that improving customer
satisfaction by ensuring safety and quality is amajor precondition for companies to be selectedby customers, and is a source of growth

1
2
3
4
5
6

Sustainable growth of overseas
business

Strategic input of management
resources into target fields

p.17

p.17

Innovative construction production systems(productivity improvement)— “TAISEI i-Innovation” —p.18

Realizing an attractive working environment(work style reform)
p.18— “TAISEI Lively Plan” —Pursuit of safety and quality— “TAISEI QUALITY” —Strengthening management
infrastructure

p.18

Special Feature

To establish the foundation for growthwith the construction business at the corep.18

[ Management Numerical Targets ]In the peak busy period until 2020 the highest level of safety and quality will be maintained, and both customer
satisfaction and business results will be achieved● Our financial standing will be further strengthened by permanently maintaining substantially debt-free operation,
increasing our equity capital ratio, etc.
●

Business Section[ Basic Policies ]Value Creation Story of the Taisei Group

Medium-term Business Plan (2018–2020)

FY2017 Actual

FY2020 Target

Net sales

1,585.5

1,870.0

Operating income

181.9

187.0

Net income attribute toowners of parent

126.8

130.0

ROE

20.5%

12% or higher

Dividend ratio

22.3%

About 25%

Interest-bearing debt

247.3

Less than ¥300 billion

Net interest-bearing debt*(440.1)(Permanent substantially debt-free operation)

Equity ratio

34.6%

40% or higher*Net interest-bearing debt = interest-bearing debt - cash and deposits

ESG Section(Billions of Yen)

Data Section

Consolidated

Medium-term Business Plan
(FY2018-2020)

In order to grow sustainably in the uncertain business environment after the Olympics,
the target business scale in the medium-and long-term is ¥2 trillion.

TA I SE I A N N UA L R E P O R T 2 0 1 8 14

Value Creation Story of the Taisei Group

Medium-term Business Plan (2018–2020)❶ Review of the previous Medium-term Business Plan andoverview of the new Medium-term Business Plan
The Taisei Group launched a new “Taisei Group Medium-term Business Plan (FY2018–2020)”
starting from the fiscal year 2018. Under the new Medium-term Business Plan, the mostimportant tasks are the sustainable growth of overseas business and conversion to a corporate
structure that is genuinely suitable for the overseas market, in preparation for the future.
In this section, we review the past Medium-term Business Plan and explain the goals andmanagement tasks we will pursue under the new Medium-term
Business Plan.

Medium-term
Business Plan
(2015–2017)
Basic Policy

Medium- andlong-term target forbusiness scale

Medium-term
Business Plan
(2018–2020)¥2.0

trillion

Basic Policy
To establish the foundation forgrowth with the construction
business at the core

In order to grow sustainably in theuncertain business environment
after the Olympics,

Deep cultivation of
the construction industry,
our businessthe target business scalein the medium-and
long-term is ¥2 trillion
2015

2016

2017

2018

2019

2020

In an effort to make steady progress for sustainable
development, the Taisei Group achieved the targets under
the Medium-term Business Plan (FY2015-2017) in its final
fiscal year thanks to the brisk construction market, and
the Group’s financial standing was also further stabilized
and strengthened.
Meanwhile, we are currently surrounded by various
issues, such as uncertainty over the business environment
after the Tokyo 2020 Olympics and Paralympics and labor
shortage. We thus believe now is the time to deal with“work style reform” and “productivity improvement”
simultaneously and integrally.
We will increase the value of the Taisei Group to society
and achieve medium- and long-term goals, by breaking
down measures for these issues into our strategies andby implementing the management tasks and key
measures under the new Plan unfailingly.

・・・In light of the business environment at homeand overseas from 2020 onward,

we will strengthen our efforts inoverseas markets where growth isexpected.

We will improve production
capability by increasing productivity andworkforce, and will accelerate
growth in target fields by making
alliances, having open innovation, etc.

We will implement measures to achievea business scale of ¥2.0 trillion
under the Medium-term Business Plan
(FY2018–2020),while taking account of thebalance of main business segments* including
overseas projects and the approaches such as
project investments and M&A deals.
*Main business segments

1. Domestic construction projects
2. Overseas construction projects
3. Development and real estate
projects

15 T A I S E I ANNUA L R EPORT 2018

4. Construction peripheralbusinesses
5. Group companies

About the Taisei GroupIn order to construct the business foundation to enable sustainable growth from 2020
onwards, we aim to increase the added value in the construction and peripheral businesses
and to expand opportunities for revenue.
<Funds><Applications>

Newly earned cash

Return to shareholders
Investment for growth

Accumulated to date

Sustainable growth andaccelerated growth

Cash on hand
Investment for sustainable growth and accelerated growth

Total 300 billion yen●

Strengthening overseas business and targeted fields*

150 billion yen●

Investment in technical development

60 billion yen●

Investment in work style reform and productivity improvement

60 billion yen●

Investment in human resources, development of infrastructure, etc.

30 billion yen

Special Featureduring the new Medium-term Business Plan

Value Creation Story of the Taisei Group

Investment for GrowthTargets for Work Style Reform and Productivity Improvement
In order to respond to the social demand for correction of long working hours and the legal system,(standalone) targets will be set in stages for work style reform and productivity improvement.

Business Section*Target fields: Energy and environment, urban development and PPP, renewal, engineering

FY2018FY2019FY2020

Healthmanagement
Overtime

0 persons 100 hours or more
per month

Average 80 hours or less permonth

Continue average 80 hours orless per month(Preparation time for average
70 hours or less per month)

Rest days +time off in lieu

Target for all employees 8 rest days per 4 weeks (rest days + time off in lieu) 104 days or more per annum

Closure ofwork sites

Work towards uniformly closing
sites on Saturdays(2nd Saturday of every monthis closed day)Realization of 6 closed days
every 4 weeks for all work sites(excluding sites for whichapplication is difficult)Work towards realizing 8 closed
days every 4 weeks for all worksites by 2021
(excluding sites for whichapplication is difficult)

ESG Section<Work Style Reform> *In accordance with the roadmap for correction of long working hours of 2024 ―TAISEI Lively Plan ―<Productivity Improvement>●

FY2016
Productivity

Medium-term
Business Plan
（FY2018-2020）
Productivity during
this period

10%UP(compared with
FY2016)

Target for
FY202520%UP(compared with FY2016)

Data Section

Transformation of awarenessTechnical development● Reduction in work
● Utilization of temporary staff● Promotion of client
understanding, etc.
●

TA I SE I A N N UA L R E P O R T 2 0 1 8 16

Value Creation Story of the Taisei Group

Medium-term Business Plan (2018–2020)❷ Key Measures for Management Tasks

1

Sustainable growth of overseas business

Sustainable growth of overseas business, and conversion to a corporate structure that is genuinely suitable for theoverseas market.

(1) Sustainable growth of overseas business(2) Conversion to a corporate structure that is genuinely suitable for the overseas market
Explore and expand traditional areas and expand project areas in countries that we have already advanced into
Explore infrastructure export projects and STEP projects*1, cultivate new markets/areas such as entry into PPP*2 andconcession projects● Enhance construction capability and price competitiveness through the promotion of alliances with global contractors and local partners● Develop overseas staff by expanding the studying and training abroad programs and by hiring global and local human resources actively●●*1 STEP projects: Stands for Special Terms for Economic Partnership, translated into Japanese as “honpogijyutsukatsuyojyoken” (terms and conditions on the use of Japanesetechnologies), a program introduced in July 2002 for the purpose of promoting “aid/support that shows the face” of Japan by using brilliant Japanesetechnologies and know-how in the transfer of technology to developing countries.

*2 PPP: Stands for Public Private Partnership, translated into Japanese as “kanminrenkei” (private-public initiative) or “kanminkyodo” (government-private sector cooperation), aform of providing efficient and high-quality public services in which public services previously provided by the national government or local municipalities are opened up to
the private sector and operated under private-public cooperation.

2

Strategic input of management resources into target fields

Promotion of higher added value Taisei global business and expansion of opportunities for revenue by deploying
management resources (human resources, funds) in the target fields and on technologies for differentiation, with aneye on the medium-and long-term business environment from 2020 onwards.

(1) Bringing higher added value to target fields where our core strengths can be exhibited
Energy andEnvironment

RenewalStrengthening the competitiveness to win
orders through participation in energy
management projects (EM) and energy
supply projects (ESP) in the ZEB/Smart
communication field Strengthening thecompetitiveness to win orders byconstructing design and construction
systems in the fields of thermal power andrenewable energy● Support for winning orders throughenvironment-related evaluation technologies
and soil decontamination technologies, etc.
●

Strengthening of proposals and sales forrenewal by utilizing the technologies wepossess as well as new technologies● Strengthening the renewal production system
by technical development, improvement inprocurement capability, etc.
● Promotion of winning orders for large-scale
renewal and repair project of aged
infrastructure (bridges, tunnels, etc.)●

Urban Development
and PPPEngineering

Strengthening the competitiveness to win
orders by participation in large-scale
private sector projects and PPP/PFI*3
projects, and steady promotion oflarge-scale redevelopment projects● Participation in important infrastructure
concession projects, such as airports, etc.
● Strategic investments in in-housedevelopments and promotion of building
operation●

Expansion of business area won in thelife sciences field, with pharmaceuticals
as the core
● Promotion of upstream sales throughconsulting and FS*4 commissions● Expansion of orders through proposals
differentiated with labor-saving
technologies utilizing the IoT, AI, etc.
●

(2) Research and development into technologies
leading to higher added value(3) Expansion of sales with an eye on themedium- and long-term

Development of construction technologies leading todifferentiation● Advanced planning technologies● Promotion of technical developments by open innovation● Further enhancement of the functions of facilities at theTechnology Center by incorporating advanced technologies●●

Flexible response to new construction needs in response tochanges in society such as low birth rate and high rate of aging● Creation of business opportunities through alliances indifferent business areas, etc.
● Strengthening of sales for significantly aged facilities, etc.

*3 PFI: Stands for Private Finance Initiative and describes a method to enhance public capital such as public facilities by utilizing private funds, management methods and technical capabilities.
*4 FS: Stands for Feasibility Study and involves examining and assessing the feasibility of the project.

17 T A I S E I ANNUA L R EPORT 2018

Taking advantage of the current busy period to reform theconstruction production system to improve productivity
and overcome the pressure of being fully occupied, by
technical development, work efficiency, strengthening
relationships with cooperating companies, etc.

We aim to realize an attractive working environment by
taking the lead in work style reform as a leader in theindustry, so that the officers and personnel of the TaiseiGroup and those involved in the construction industry
can work with vitality and cultivate the future leaders.

(1) Improvement in production capability(1) Corrections of long working hours
p.45 Initiatives to Correct Long Working Hours(2) Realization of 2 rest days per week for all work sites(2) Development of labor saving and work saving
construction technologies

The number of days per week that work sites are close shallbe increased in stages to achieve 8 closed days in 4 weeks
for all work sites in FY2021 (excluding work sites for whichapplication is difficult)p.35 Special Feature 3
Utilization of ICT, IoT, big data, AI, etc.
Development of structural methods and fabrication ofmembers with new shapes using 3D printers(3) Promotion of work style that enable utilizationof diverse human resources●

p.43 Leveraging ICT Strengths to Realize Immediately Effective Productivity Improvements(3) Strengthening of collaboration with Souyukai
members and cooperating companies
Enhancement of support for Souyukai, such as training for
Souyukai members mainly at the Kounosu Training Center● Strengthening of initiatives to secure and cultivate staff bypromotion of the introduction and operation of aconstruction career advancement system, and continuous
instruction on participation in social insurance●

Promotion of creating a working environment to realize flexible
work style such as teleworking, childcare support, etc.
● Investigation of a system to enable the capabilities of theelderly to be used, by raising the motivation of the elderly sothat they can use their capabilities● Promotion of diversity (respecting the diversity of humanresources) and inclusion (making the most of individual
personnel) by promoting the use of women, foreigners, thedisabled, and promoting understanding of lesbian, gay,bisexual and transgender (LGBT) issues and others.
●

p.46 Diversity and Inclusionp.45 Popularization and Promotion of Construction Career Up System (CCUS)

5

Pursuit of safety and quality −“TAISEI QUALITY”−

In this busy time once again we will sincerely face thebasics of the construction industry, namely safety andquality, to ensure the highest level of safety and quality.

6(1) Elimination of major disasters and accidents(2) Prevention of major quality problems

Business Section●●

Special Feature

Securing technical staff by appropriate deployment of staff,
and utilizing temporary staff● Improvement of efficiency of site management byorganizational procurement, etc.
●

About the Taisei Group−“TAISEI Lively Plan”−

Value Creation Story of the Taisei Group

4−“TAISEI i-Innovation”−

Realizing an attractive working
environment (work style reform)

Strengthening management infrastructure

Transforming the management infrastructure in responseto the requirements of society and the times, to gain thehigh trust and evaluation of all our stakeholders.

(1) Training and strengthening human resources(2) Promotion of Group cooperation(3) Strengthening the governance and compliance system(4) Strengthening the ICT infrastructure

ESG Section

3

Innovative construction production
systems (productivity improvement)

Reinforce the Taisei Group Value Chain

Platform for value creation

Design and engineering

Constant
innovation

Procurement and work implementation

Operations and management; maintenance andpreservation; renovation and demolition

Data Section

Strategy, planning, and development

Governance, respectfor human rights,
human resource
development* The above value chain is mapped by referring to the “SDG Compass” recommended by the United Nations Global Compact.

TA I SE I A N N UA L R E P O R T 2 0 1 8 18

Special Feature

1<Talk> President and Investor

Inject soul into the Taisei Group Philosophy:“To Create a Vibrant Environment for All
Members of Society,” and fly high in the world
We had an exchange of views on the future of the new TaiseiGroup, including the new Medium-term Business Plan
launched in FY2018 and medium- and long-term goals, with
Mr. Megumi Sakuramoto, an analyst specializing in ESG.
Regarding our initiatives to improve the value of the TaiseiGroup to society, Mr. Sakuramoto offered his views from an
investor’s point of view.

Management Centering on Sustainability
Sakuramoto: I have been in the investment world for solong, and one question about differences between companies
that are highly rated by investors and those that are not
has always stuck in my mind. In my opinion, the striking
differences lie in the adequacy with which top management
recognizes issues or has foresight, such as the future outlook.
So today I would like to know about the future of Taisei
Corporation or how its future should be, according to
President Murata.
First of all, Taisei Corporation has set the eight ESG
tasks or Materiality (see table on the right) in the new
Medium-term Business Plan. I wonder if you have any
given, natural priorities in there.
Murata: Our first priority is “promotion of compliance” inrelation to governance. Profits are absolutely necessary for
a company to survive, but for that purpose social credibility
is important. The lack of social credibility makes it difficult
for a company to grow sustainably.

19 T A I S E I ANNUA L R EPORT 2018

Then “realization of an attractive working environmentthat is good to work in” in relation to the securing of humanresources is also an important theme. By creating a
comfortable working environment, we can attract talented
people and that will eventually lead to “cultivation of technicalstaff and securing human resources” and “ensuring quality
and improving technologies,” I believe.
Sakuramoto: I agree with you on: what ultimately mattersto a company is human resources.
I think how many competent human resources acompany can pull in or foster is a key factor in boosting
future corporate value.
Murata: As to “cultivation of technical staff and securing
human resources,” we will have mass retirement of skilledconstruction workers in time as they are getting old. Taking
actions for this is important too.
We started industry-wide promotion of a “construction
career advancement system” this year, to register skilledconstruction workers’ qualifications, their status of social

About the Taisei Group
Value Creation Story of the Taisei GroupSpecial Feature

Land, Infrastructure and Transport.

attractive and thus see an increasing number of applicantsThis system could improve the working conditions ofcoming knocking on the door.

skilled workers. I hope through introducing and promoting

Important ESG Tasks for the Taisei Group (Materiality)
Issues facing human society

ESG

Materiality
Realization of a sustainable and environmentally

Environment friendly society

Ensuring quality and improving technology

Social challenges such as
SDGs and Paris Agreement

Technical development for realizing asustainable society
Promotion of supply chain management

SocialThorough management of labor safety andsanitary conditions
Cultivation of technical staff and securing humanresources
Realization of an attractive working environmentthat is good to work in

Governance Promotion of compliance

Data Section

On the basis of social
challenges such as SDGs* andby referring to experts’ opinions,
we have identified eightmateriality that are particularly
important and to be dealt withby the Taisei Group, in termsof their importance for society
and for management of theTaisei Group.

p.41 Materiality

Business Section

the system we can make the construction industry more

ESG Section

insurance and such like, in coordination with the Ministry of*United Nations “Sustainable Development Goals”

TA I SE I A N N UA L R E P O R T 2 0 1 8 20

Special Feature 1 <Talk> President and Investor

In parallel with the initiative to increase the number ofproactively is the mission of the construction company, andapplicants, it is crucial to work on technology development

it should lead us to one of the Materiality, “realization of a

toward higher productivity in construction works. Initiatives

sustainable and environmentally friendly society,” in the end.

to save labor and power such as construction robots using

By engaging in these ESG tasks (Materiality), we also

AI and IoT should become major innovations.
Further, creating new business fields by collaborating

should be able to contribute to sustainable development ofsociety, while generating profits for Taisei Corporation.

with people from different industries through alliances and

Sakuramoto: You are managing the company while placing

open innovation, this is important to us, too.

the ESG and SDGs at its core, with future sustainability in

My hobbies are mountain hiking and stream fishing, so

your mind.

I have spent plenty of time in nature. As a private individual,

Murata: That is correct. SDGs are the needs of society inI have firsthand knowledge of the significance of harmony

relation to what it should be in 2030. I can see manywith nature.

business opportunities there that we should take in our

To recognize the importance of environmental issues

business strategies and corporate activities.

and engage in environmental preservation and creation

President and Chief Executive Officer,
Representative Director

Yoshiyuki Murata

Defensive Governance, Offensive Governance
Sakuramoto: As an analyst myself, I watch corporate
governance closely, naturally. You mentioned “promotion ofcompliance” earlier and brought up the importance ofdefensive governance, so to speak. Now I am curious toknow about offensive governance for sustainable growth
as well. That’s the investor’s point of view.
Murata: The overseas business was one of the
management tasks under the previous Medium-term
Business Plan (FY2015–2017), but actually we still haven’t
experienced much success. So the new Medium-term
Business Plan sets out “sustainable growth of overseas
business” and “conversion to a corporate structure that isgenuinely suitable for the overseas market” as the mostimportant tasks, and we will earmark ¥150 billion out of¥300 billion growth investments for strengthening theoverseas business and target fields.* I think that having
effective offensive governance based on lessons from pastexperience is imperative when pursuing corporate growthin overseas markets.
Sakuramoto: Converting corporate structures sounds likea very difficult challenge.
Murata: We will have to invest considerable time indeveloping the business so that it can be a mainstay at atime of low demand, with an eye on the future outlook forthe domestic market. More importantly, we should not*Target fields: energy and environment; urban development and PPP; renewal; and engineering

21 T A I S E I ANNUA L R EPORT 2018

setting of the medium- and long-term target business

continue while making assessments and decisions from ascale of ¥2.0 trillion means a lot to us.
At the same time, declaring internally and externally that

Business Plan are typical of Taisei Corporation or are you

management task is a major thing, in terms of the fact that
how we should be in the future is clarified.
As to the outlook for the future business environment,

particular about?

I’m afraid the domestic construction market will be shrinking.

Murata: In the process of developing this plan, we had

Under such circumstances, it is hard to achieve the target

discussions countless times in the board meetings. Attending“business scale of ¥2.0 trillion” in the domestic market only.

External Members of the Board have abundant experience

I will spearhead and follow through with the plan, together

and insight as top management or as diplomats, and they

with our officers and personnel.

gave us their candid opinion about what Taisei Corporation

Sakuramoto: In overseas projects, we have a different

should be in the future. As the fruit of such efforts, thedifficulty from domestic projects, where orderers

Special Feature

Chief ESG Analyst,
Responsible Investment Dept.
Asset Management One Co., Ltd.

Megumi Sakuramoto

Business Section

Joined the former Yasuda Trust andBanking Company (current Mizuho Trust &Banking) in 1990 after years with Pacific
Consultants International. Moving on to
Mizuho Pension Research Institute in2013, he has been in his current post since2016. A member of the review meeting forthe promotion of reduced supply chain
emissions and the review meeting on
environmental information and corporate
value (under the Ministry of Environment).

(customers) and contractors engage in works based on a

Sakuramoto: Indeed, Japanese general contractors aretacit understanding. What type of methodology is in yourstill not so distinguished/recognized in the world.

mind for overseas operations that you are passionate about?

Murata: The ultimate goal in overseas projects is to satisfy

Murata: We have been involved in a number of overseas

orderers (customers) as well. In overseas projects, we

projects, but I have to admit that we are not as good as our

discuss with orderers (customers), construct, complete,

peer companies, in terms of project size and profitability.

and deliver safe and secure buildings in exactly the same

Therefore, in order to catch up with them within the next

way as in domestic projects. I believe we can deliver

three years, we need to go into partnership with local

projects with higher profitability if we take advantage of thegeneral construction companies in various countries andlessons we learned before in the overseas business,

also need to make investments in overseas development

ensure risk management, and disseminate the merits ofprojects. Through such investments, I hope we will reach a

the Japanese style (projects), in which we stand close tolevel in the future where we are ranked among the top

orderers (customers).

contractors in the world as a Japanese general contractor.

Value Creation Story of the Taisei Group

Sakuramoto: What parts or points in this Medium-term“sustainable growth of overseas business” is our top

ESG Section

Sustainable Growth of Overseas Business

Data Section

long-term perspective.

About the Taisei Groupmeasure success or failure in the short term but should

TA I SE I A N N UA L R E P O R T 2 0 1 8 22

Special Feature 1 <Talk> President and Investor

Importance of Information Disclosure
Representing Consistency between Value
Creation Process and Management

immediately and to transmit that internally and externally in

Sakuramoto: Many of the investors are most interested incovered, and as long as they are not missed we can get asustainability regarding the new Medium-term Businessspecific image of Materiality leading to improvements inPlan. Thus, we pay close attention to the potential of

corporate value, where consistency/coherence transpires.

medium- and long-term improvement in corporate value.

Materiality is necessary in fact, that is why it was chosen.

You use a phrase “in preparation for the future” in the

The actual management condition can’t deviate from that.

an easy-to-understand way is important.
Sakuramoto: There are some crucial parts to be definitely

Medium-term Business Plan too. Achieving the plan would

Murata: Things that we, general contractors, cancreate an image leading to medium- and long-term growthdemonstrate to our stakeholders, different from otherof Taisei Corporation as market participants expect.

industries, are construction results and human resources.

My impression from meeting with many top executives

Starting with sales representatives, all the staff involved inis that there is a gap between the value creation process

projects must be trusted by orderers (customers).

or Materiality and the actual management condition, andFor example, our TV commercials created by Mr. Makoto

that makes quite a few companies look incoherent/

Shinkai, an animator, have been on air for a couple ofinconsistent. Of course, I understand they change fromyears to help viewers recognize actually us with an image

time to time depending on the environment and don’t haveof young employees working abroad in a lively way.

to go out of their way to stay coherent all the time. Still, I

Sakuramoto: TV commercials featuring employees

would very much appreciate information disclosure where

working overseas definitely appeal to young people, and I

consistency or coherence can be judged from the outside.

think the Taisei Corporation brand penetrates into the general

If I may ask, what do you think about this?

public completely.

Murata: To prepare this Medium-term Business Plan, we

However, the image of the whole construction industry

identified materialities from among social challenges based

is somewhat bad, and talented young people tend toon the opinions of experts, then applied them in thechoose other industries. In terms of sustainability of society,process of planning specific actions. Social challenges are

the construction industry is a very vital necessity. I would

constantly changing. But I think a system to implement

like Taisei Corporation to take the initiative in putting inpolicies/measures responding to such changes

efforts to improve the image of the construction industry. I
strongly hope you will do that.

23 T A I S E I ANNUA L R EPORT 2018

Sakuramoto: As an ESG analyst, my given duty is to solve
issues for the entire market and raise its standard. But it is
not easy to raise the standard for every single construction
company. I have a feeling that they will be selected and

Sakuramoto: Indeed. The phrase “we value diversity…” atthe top of the description of “Active and Transparent
Culture” reveals to me that Taisei Corporation has beencommitted to promoting diversity since the early stage.
Investors compare and review tons of companies. Amongthem the “Taisei Spirit” seems to exist with dignity. Just like aeliminated gradually.

Corporation, it has been and will be inherited forcefully even if

increasingly important too. We are chosen by orderers(customers), certainly, but sometimes we are chosen by
specialized contractors to work with. Also, for Taisei
Corporation to be chosen by students as a company towork for is extremely important.
From that perspective, our Group Philosophy, “To Createa Vibrant Environment for All Members of Society,” hasworkers, workplace, and the environment change.
Murata: To prepare for the future, we will inject soul into
the phrase, “To Create a Vibrant Environment for All
Members of Society,” further. And we will brush up thethree Taisei Spirits: “Active and Transparent Culture,”“Value Creation,” and “Evolution of Tradition.” In fact, thatshould directly link to the sustainable development of Taisei

significance. Before anything else, if we don’t work in a

Corporation in a very powerful way.

and specialized contractors.
In addition, we set “Taisei Spirit” within the Taisei Group
Philosophy framework (see figure below). Its first line goes“Active and Transparent Culture,” which had been built byour predecessors, and I have felt it myself while building

require countermeasures, such as SDGs and ESG, or
contributions, the time is changing at this very moment, andthat seems to make these words take on more meaning.
Sakuramoto: You are right. Please lead the company(pursue management) in line with the view you presented
today. Thank you for having me today.

my career with this company. To me this is the best quality,
the pride of Taisei Corporation.

Taisei Group Philosophy

We value diversity and, through open and active communication

Active andlines and networks both internal and external to the Taisei Group,
Transparent
seek to cultivate a transparent and active corporate culture in which
Cultureall of our officers and personnel are able to reach their full potential.

Value
Creation

Not limited to our understanding of society at large, we carefully take
into account the needs of our clients and using all of the technology
and know-how at our disposal, together with our passion for
innovation and ingenuity, seek to construct innovative and valuableengineering projects that inspire and impress our clients.

Evolution of
Tradition

We aim to instill within the Taisei Group the Japanese tradition ofmonozukuri (precise, superb craftsmanship) and continually challenge
ourselves to provide ever more valuable contributions to society andensure our continued development and growth as a respected
corporate group.

Taisei Spirit
Overall
Principles ofConduct

OverallManagement
Perspective

Special Feature

be shared among all the Taisei Group officers and personnel

birthrate and aging population and environmental issues,

Business Sectionsociety through our daily operations. I want this mindset to

Now that social challenges, such as the declining

ESG Sectionsociety or make other people happy. We can contribute toData Section

lively/vibrant way ourselves then we can’t contribute to

Key concepts that all TaiseiGroup officers and personnel
must adhere to in order topursue and realize the TaiseiGroup Philosophy

Value Creation Story of the Taisei Groupgene that makes Taisei Corporation continue to be Taisei

Murata: I think for us “to be chosen” will become

Taisei Spirit

About the Taisei Group

Requirements for the Taisei Group to Be “Chosen”

TA I SE I A N N UA L R E P O R T 2 0 1 8 24

Special Feature

2

Messages from the External Members of the Board

The External Members of the Board System
Strengthens Corporate Governance andHelps Corporate Value Improvement
In recent years, the role played by external members of the board in the company
includes functions not only of checking management from an external point of viewwhich leads to enhanced governance, but also of improving corporate value throughproactive recommendations for growth strategies based on insights coming fromdifferent industries and fields.
Taisei Corporation now has three new External Members of the Board withsuccessful, extensive careers in corporate management or in public affairs. This has
been done in an effort to earn the confidence of our stakeholders by exploring future
possibilities of the general construction industry and evolving together with society.

25 T A I S E I ANNUA L R EPORT 2018

External Memberof the Board

Toru Tsuji

Profile
1961
1999
2003
2008
2011

Joined Marubeni-Iida Co., Ltd. (current Marubeni Corporation)
President and Chief Executive Officer, Representative Director
Chairman of the Board, Representative Director
Corporate Advisor, Member of the Board
Member of the Board, Taisei Corporation (incumbent)

About the Taisei Group

Hoping for Growth in Global Markets Leveraging
the Characteristics of the Japanese Company

The Board of Taisei Corporation takes an open-minded

and in fact I have done my part in providing assistance forstance to outsiders’ opinions, and I do feel I can speakbusiness decisions and governance, I believe. Especially

actively at a place for free and frank discussions. External

about overseas expansion, an important theme Taisei

Members of the Board are not necessarily familiar with

Corporation is planning, I have offered recommendationsindustry knowledge or the company’s internal affairs, but

actively on how to deal with country risks or on the

management seems willing to revitalize the Board and makeimportance of human resource development, based on myit function more organically by respecting our opinion.

knowledge gained in a general trading company.

of the board system has penetrated into Japanese

What do you expect for the future of
Taisei Corporation?

companies fairly well, and the roles played by them have

How will we capture growth opportunities after the Tokyo

been expanding as well. In that context, the Board of Taisei2020 Olympics and Paralympics? This is one of the

Corporation that I have engaged in as an External Member

management tasks for the future of Taisei Corporation.

made great progress and the management meetings haveThat is why focusing on overseas expansion is called for,evolved into more open and transparent ones in these pastas I mentioned earlier. In my view, we can expect Taisei

seven years. I believe it will move on to the process ofCorporation to grow significantly in the global market.

Board of Taisei Corporation in 2011, the external members

further maturity.

We need to work on the development and recruitmentof great talent, which is a key to one of the management

How do you apply your experience inthe board meetings?

tasks under the new Medium-term Business Plan,

I have been engaged in the management of a generalyears based on a long-term perspective. Needless to say,trading company over the years. By applying that experience

we will have to take larger risks than in the domesticin order to offer advice from an outsider’s point of view, I

business, inevitably, and that will require us to makewish to encourage the Board to increase corporate value.

business decisions deliberately and precisely.

As a super general contractor, Taisei Corporation shares“sustainable growth of overseas business,” over five to ten

I hope Taisei Corporation will realize overseas expansion

many things in common with general trading companies

with its sensibility unique to a Japanese company, such as

such as the fact that most of its businesses are built on aattentive response to clients and suppliers and total power

uniquely Japanese model. From that standpoint, there is(collective strengths) as a super general contractor.

Data Section

Since I assumed my post as External Member of theSpecial Featuremuch room for me to give productive advice to management,

Business Section

What is your impression of the Board?

ESG Section

Reason for appointment
Rich experience as top management of a general trading company and a global
point of view

Value Creation Story of the Taisei Group

Concurrent positions
June 2008 – June 2012 External Member of the Board, Konica Minolta Holdings, Inc.
June 2008 – June 2013 External Member of the Board, Sekisui Chemical Co., Ltd.

TA I SE I A N N UA L R E P O R T 2 0 1 8 26

Special Feature 2 Messages from the External Members of the Board

Establishing a Strong Governance Structure by
Developing “Bottom-Up Communication Capability”
External Memberof the Board

Fumio Sudo

Profile
1964
2001
2002
2003
2005
2010
2011

Joined Kawasaki Steel Corporation (Current JFE Steel Corporation)
President and Chief Executive Officer, Representative Director
Member of the Board of JFE Holdings, Inc. (Part-time)
President and Chief Executive Officer,
Representative Director of JFE Steel Corporation
President and Chief Executive Officer,
Representative Director of JFE Holdings, Inc.
Honorary Advisor
Member of the Board of Taisei Corporation (incumbent)

Concurrent positions
June 2010 – June 2016

External Member of the Board, JS Group Corporation(current LIXIL Group Corporation)
External Member of the Board, New Otani Co., Ltd.
Chairman of the Management Committee, Japan Broadcasting Corporation
External Member of the Board, Takeda Pharmaceutical
Company Limited
June 2012 – March 2014 External Member of the Board, Tokyo Electric Power Company(current Tokyo Electric Power Company Holdings, Inc.)
April 2014 – June 2017 Chairman of the Board, Tokyo Electric Power Company Holdings, Inc.
June 2010 – Present
April 2011 – May 2012
June 2011 – June 2017

Reason for appointment
Rich experience as top management of a number of companies

What is your view on the mission of theExternal Members of the Board?

External Members of the Board has always been smooth

The External Members of the Board are outsiders whose

and open. The details of these monthly exchanges of

appointment is approved through the resolution of theviews are reported to management without fail. I think

general meeting of shareholders. So, our greatest mission

corporate governance works soundly.

is to fulfill such shareholders’ mandate. In fulfilling such

Communication between management and thelike management meetings, including the Board’s, from theDo you see any challenges to be addressed incorporate governance?

shareholders’ point of view. And we have a role to maintain

Even globally operating Japanese companies have still not

objectivity based on an outsider’s point of view, and toestablished effective and global standard-based

check if business decisions and voting are executedcompliance structures in some cases. As to a gap offollowing proper procedures and if accountability is fulfilled.

perception about peculiarly Japanese business practices

duty, we are always asked if we can see things at places

Management is required to go between shareholders

between the inside and outside of the constructionand executive officers (executions) and to build a structureindustry, we need to disseminate compliance awarenessto reward shareholders through profit generation andthat meets the global standards across the board.

increases in corporate value. Functioning effectively in

The enhancement of governance has been dealt withorder to support such management system is an important

mainly by Members of the Board, Executive Officers, andresponsibility of the External Members of the Board.

the manager level, enthusiastically. What I wish them tofocus on going forward is the development of “bottom-up

How is the Board involved in management?

communication capability.” To do this, higher-ups must

We now have three External Members of the Board formake efforts to exercise their power of communication andTaisei Corporation, with an increase of one member whenreceptiveness to bring out bottom-up communication. I

Ms. Nishimura joined us in June 2017. Before that we had

want them to be conscious of this point to build a stronger

been separately lectured by the staff on the agendas of thegovernance structure. Its realization should lead to

Board. With the new member, all three of us started to meet

improvements in compliance as well as productivity.

on a monthly basis to get lectures and exchange views on
the agendas with one another. In addition to an increase in
the number of the members, I find our discussions are now
more stimulated, with larger synergies generated.

27 T A I S E I ANNUA L R EPORT 2018

Profile

Atsuko Nishimura

1979
1999
2001
2004
2008
2012
2014
2016
2017

Joined the Ministry of Foreign Affairs
Counselor/Minister, Permanent Mission of Japan to the United
Nations
Envoy, Embassy of Japan in Belgium
Professor, Graduate School of Law, Tohoku University
Administrator, the Japan Foundation
Adviser Extraordinary, Japan Oil, Gas and Metals National
Corporation
Ambassador Extraordinary and Plenipotentiary, Embassy ofJapan in Luxembourg
Ambassador Extraordinary and Plenipotentiary, in charge of
Women, Human Rights, and Humanitarian Affairs
External Member of the Board, Taisei Corporation (incumbent)

Concurrent positions
June 2017 – Present External member of the Board, INPEX Corporation

Reason for appointment
A broad range of insights, international sense, and objective point ofview based on many years’ experience as a diplomat

How do you evaluate the effectiveness of
the Board?

stakeholders’ confidence is widely spread among the

For the Board to fulfill its duty as a management

employees of Taisei Corporation. Going back to the basics thatsupervisory function effectively, it is important to sharecompliance is the first step in responding to their confidence,

information related to the agendas appropriately. In thatsharing problem awareness with every single member of therespect, Taisei Corporation allows sufficient time to provide

organization, and making company-wide efforts to implement

explanations for the External Members of the Board on thecompliance are the important things, in my opinion.

Also, site inspections, which are an extremely effective way
to grasp the actual conditions, are performed.
Thanks to these elaborate forms of support andpreparation, we, External Members of the Board, provide
frank opinions and recommendations in the Board
meetings, from a viewpoint different from the internal
members of the Board.
As a result, our deliberations have become stimulated
and meaningful, while important decisions are precisely
made based on multilateral considerations; I personallygive high scores to the effectiveness of the Board.

What is your view on compliance?
Compliance is a major premise for a company to survive
and grow in society, and its implementation without fail isrequired as a corporate responsibility. To respond to suchdemand of society, we must develop the rules andstructures of internal controls on compliance and oversee
their effective application at work sites.

Taisei Corporation is now at a crucial stage where it has toenvision its future in view of changes in the businessenvironment and step up measures. I am convinced thatSpecial Feature
Business Section

views with the staff, every time, ahead of the meetings.

What is your agenda as the External Member ofthe Board?

Taisei Corporation, as a company that continues tosupport the development of society, will establish a new
business platform and achieve its sustainable growth, and I
will do everything in my power to realize that, on my part.
A proactive attitude toward universal social challenges,
such as initiatives for SDGs in particular, helps incorporate
evaluation nowadays. I will offer effective advice using my

ESG Section

materials. It also sets up occasions for an exchange of

I can feel that an eagerness to fully respond to

experience with public organizations such as the United
Nations and insight as leverage.
I am also glad to see Taisei Corporation is committed tocreating a pleasant working environment for women as theconstruction industry becomes increasingly interested in theempowerment of women. The realization of a workplace
where diverse human resources work actively is imperative

Data Section

agendas and related matters, along with well-prepared

About the Taisei Group

External Memberof the Board

Value Creation Story of the Taisei Group

Responding to Stakeholders’ Confidence, Reinforcing
a Platform for the Realization of Further Growth

for the sustainable growth of companies. In terms of that, I
will actively work to promote a more open work.

TA I SE I A N N UA L R E P O R T 2 0 1 8 28

Special Feature

1

3

SDGs

Taisei Corporation’s Innovation,
toward Its Realization

Innovation Dialogue

Toward value creation that explores the future of theconstruction industry

Companies are expected to incorporate sustainable development goals (SDGs) into their businesses
and to exert creativity and innovations for business solutions. Under such circumstances, we invited Ms.
Mariko Kawaguchi from Daiwa Institute of Research, who has deep knowledge of SDGs, and had adebate about the essence of SDGs and how innovations should be.

Facilitator
Taisei Technology Center
Technology Planning Dept.
Taisei open innovation,
Manager

Takashi Hasebe

Executive Officer
Chief of Taisei Technology
CenterIchiro Nagashima

Chief Researcher Daiwa
Institute of Research

Mariko Kawaguchi(Member of the Board, United
Nations Global Compact Network
Japan; Co-CEO, Japan Sustainable
Investment Forum (NPO); Chartered
Member of Securities Analysts
Association of Japan)

Managing Executive Officer
In charge of Technology;
In charge of Energy &Environment

Taisei Technology Center
Technology Planning Dept.
Taisei open innovation,
Manager

Kazuhiko Hombu

Shino Kashiwakura(Joined Ministry of International Tradeand Industry (current Ministry of
Economy, Trade and Industry) in
1977. Engaged in COP as one of thechief negotiators for the Japanesedelegation from 2006–2010)

New Meanings of “SDGs” according to Expert

beings, based on which, I believe, we should set the

Kawaguchi: There is a line “Transforming Our World” indirection to head in, pursue themes related to our companies,

the first part of SDGs agenda. This can be read as: toand achieve goals.

transform our world in order to create a society breaking

In addition, for SDGs, companies face a question notaway from atypical 20th-century mantra that places theabout how to continue traditional businesses by arranging

economy above anything else is the original purpose. As

existing initiatives, but about how to use new innovations infor myself, I consider SDGs as a “constitution” of all humanestablishing sustainable businesses. To discuss how Taisei

What Does “SDGs” Mean?
● An acronym standing for “Sustainable Development Goals”● Goals for sustainable development by 2030 adopted at the United Nations

summit in September 2015

● Contains 17 global goals and 169 targets● All the United Nations member states are asked to make efforts; actively

promoted in Japan.

29 T A I S E I ANNUA L R EPORT 2018

perspective, first I would like to know about the innovations

first group is about a scheme of business matching in whichthat Managing Executive Officer Hombu thinks about.

we research industry-ready technologies. The second is

Hombu: When I was previously involved in the innovation

about establishing an OI promotion structure and its support

policy, an innovation didn’t mean an R&D achievement/

activities, such as appointing internal OI supporters, in orderoutcome but was defined as follows: such achievement/

to materialize ideas to solve medium- and long-term

outcome is released on the market as a product, it is widely

challenges. And the third group is about activities to create

spread, and then it brings about the transformation ofa place for conversing with various partners by organizing

economic society. This idea that a technology doesn’t

co-creation sessions in order to search for future challenges

become an innovation until it is widely spread is very

and ideas for budding businesses/new business seeds.

important to the present Taisei Corporation, in my opinion.

There are possibilities for innovations created from newideas we come up with in the course of setting future goals
higher, such as SDGs, and repeating trial and error with avariety of partners to that end. As a place for the creationof such innovations or for fostering innovators, I believe
open innovation activities as such are important.

About the Taisei GroupTeam’s projects are roughly divided into three groups. The

Value Creation Story of the Taisei Group

Corporation’s innovation should be in light of SDGs’

Kashiwakura: In the OI activities, we held co-creation
sessions four times with IHI Corporation in 2017. We haveoutside the Company; they are from different industries orentrepreneurs that we have never had a chance to get
Also, in order to achieve CO2 emissions targets for

involved with in our daily operations and have comeJapan under the Paris Agreement, energy consumption by

together in the hope of creating something with us.
I realize that co-creation out of partnership with thekiloliters in terms of crude oil by 2030. This is hard to achieve

most distant outside parties from us trigger the broadening

unless some radical innovations come up in the constructionof unexpected ideas and creation of innovations.

industry. In this sense, I have hope for Taisei Corporation’s
open innovation (OI) activities, which are built on cooperative
relations with outside companies (see the column below).

Business Section

companies and households must be cut by about 23 million

Special Feature

had more than 100 participants in total from inside andPromoting Open Innovation with Society
Kawaguchi: How about innovations in the OI activities?
Hasebe: To me innovation in the OI activities is value creation
diffusion, as Managing Executive Officer Hombu said. The OIESG Section

through an invention on the premise of its permeation/

Taisei Corporation’s Open Innovation (TOI Lab.)

Major activities:●Launched full-scale operations in 2016

●Matched about 150 internal needs for technologies and technology seeds ofsmall and medium-size businesses●Held four co-creation sessions under the theme of “City and Health” in 2017

Data Section

Mission/purpose: To aim to create new values for society by cooperating withunconventional cutting-edge technologies and knowledge
in a time of significant change that is unprecedented

jointly with IHI Corporation, and more than 100 people participated in them

●Engaged in the strategy program 2017 sponsored by the Kanto Bureau of

Economy, Trade and Industry, METITA I SE I A N N UA L R E P O R T 2 0 1 8 30

Special Feature 3 Taisei Corporation’s Innovation, Toward Its Realization

1 SDGsTaisei Corporation’s Unique/Distinctive
Innovation, toward Its Realization

Innovation Dialoguethat can lead to higher added values, in coordination withventure companies.

Kawaguchi: One of the most memorable projects of Taisei
Corporation to me is “Otemachi Forest” (see the column

Kawaguchi: Indeed, we are increasingly demanded of

below). It is a method to make and grow a forest of“patient capital or a stance to wait and see if there isvegetation suitable for the project site over the three years,

business growth” or “tolerance toward investingat a different site in advance, before replanting. I was moved

management resources from a long-term perspective,”by your fantastic work and also felt something distinctive

according to the investment world.

about Taisei Corporation when I first saw the forest in front ofskyscrapers downtown, a couple of years later.
Let’s move on to the next topic. About the Technology

Which of the 17 SDGs to be achieved by 2030 do you
think are closely associated with Taisei Corporation,
Managing Executive Officer Hombu?

Center’s projects, about how Taisei Corporation’s uniqueinnovation should be led from SDGs’ perspective, I would
like to know what is on your mind, Technology Center
Chief Nagashima.
Nagashima: To us at the Technology Center, innovationmeans technology development, naturally. For example,
our urban ZEBs, “ZEB Demonstration Building” at theTechnology Center and JS Hakata Watanabe Building (seepp. 32–34) are one of those projects with the theme ofbringing value creation that responds to their own SDGs.
Also, we need innovations in every process of theconstruction industry, from design to construction, andoperation and maintenance. While the mass retirement of
aged skilled construction workers is becoming an issue forthe construction industry, productivity improvement has
become a pressing matter. Currently, we promote productivity
improvement and work style reforms under the “TAISEI
i-Innovation®” (see p.35), including mechanization andautomation at production sites and streamlining with BIM/CIM.
Further, we receive visitors as well as create opportunities
to promote exchange by inviting people from different
industries and fields at the Technology Center. Goingforward, we will further develop the OI activities into a
company-wide scale and accelerate technology development

SDGs as a Gold Mine of Innovations
Hombu: “7. Affordable and Clean Energy,” “11. Sustainable
Cities and Communities,” and “13. Climate Action” arerelated to the fields where new values can be created andoffered through the things Taisei Corporation produces. In
other words, we should realize socioeconomic activities that
require less energy, solutions to climate changes with
reduced CO2 emissions, and more disaster-resistant cities
through structures and buildings. To provide these newvalues could be the most important thing we can do.
Hasebe: I consider the gap between the present situation
and what is sought by SDGs to be a gold mine ofinnovations, and we should actively capture the growth
opportunities offered by SDGs, too.
We will consider SDGs as a connection to future OI
activities and as a project to contribute to the company and

Urban Redevelopment Project:
Otemachi Tower "Otemachi Forest"

the development of society, and consider the OI activities as● Replanting trees that were grown at

an effort to spread them inside and outside the company.

a different site from 2010 to 2013 aspart of the “pre-forest” method
project (upper-right picture)● Creating a natural forest throughenhancement of an urban ecosystem
by aligning with the surrounding
greenery such as the Imperial Palace.
Also functioning as an oasis forpeople.
● A forest being arranged to face“Plaza,” an open ceiling space fromthe underground to the ground.
Realizing a space filled with green
and light (bottom-right picture)

31 T A I S E I ANNUA L R EPORT 2018

an activity, not just a method, to have a culture take root, in
Kawaguchi: The key points are: (i) how innovations should
be positioned in the company for sustainable growth; and(ii) how SDGs should be rolled out to connect to thetransformation of society. They are based on the recognition
that it is necessary to achieve SDGs and see the gap
between the present situation and SDGs as a great
opportunity to make innovations. I hope Taisei Corporation
will enjoy continued success.

Taisei Corporation’s efforts for ZEB are regarded as a great
contribution in achieving SDGs.
To discuss the seeds and results of our innovative actions for
ZEB, including JS Hakata Watanabe Building (completed in2018), we interviewed Miyoshi Kato, Executive Fellow ofTaisei Corporation, who leads our energy strategies.

JS Hakata Watanabe Building is the first ZEB
upgrade tenant office building in Japan.
What does it mean to Taisei Corporation?

What are the fundamental technologies appliedin ZEB?

As energy issues and global warming caused by increasing

purpose and our brand-new technologies to minimize initial

CO2 emissions escalate, Taisei Corporation has committed

costs as much as possible; and 52% of the energy

to the penetration of ZEB since its early stage. ZEB, anconsumption is reduced compared to standard buildings.

acronym for Net Zero Energy Building, is a building withFor example, we limited heat intrusion or loss fromzero net energy consumption for the whole building on an

windows and outer walls with high heat-shielding Low-E pairannual basis. This is achieved by saving energy while

glass*1 and rigid urethane heat insulating material, and we

keeping the indoor environment comfortable, combined

allowed more natural light to be taken in while adoptingwith creating energy through means such as solar power.

high-efficiency LED lights in the entire building. Through these

The Strategic Energy Plan approved by the Cabinet

methods, we have managed to reduce energy consumption.
We also adopted high-efficiency multi air conditioning

public buildings, etc. by 2020 and in averaged new

systems for buildings and atmosphere treating air

buildings by 2030.” In accordance with this road map,

conditioning systems with a high-efficiency chiller for air

Taisei Corporation has striven to have ZEB penetrate.

conditioning, as well as elevators using regenerative

More specifically, we constructed ZEB Demonstration
Building in 2014 on the premises of the Taisei Corporation
Technology Center to promote the effective combination oftechnologies and new technology development andSpecial Feature

In JS Hakata Watanabe Building, we applied a mix of general-

Business Section

meeting in 2014 sets out: “to aim to realize ZEB in new

About the Taisei Group

Japan’s first ZEB tenant office building thatbrings about a positive impact on society

Value Creation Story of the Taisei Group

ZEB

electric power*2 generated when brakes are applied.
Taisei’s original technologies include “T-Zone Saver,” anext-generation human detection system.
This system enables device-by-device lighting control

completed the renewal of ZEB update Taisei Sapporo

based on information about whether a person is present

Building (Chuo-ku, Sapporo) in 2016.

and air conditioning optimization control based on the

ESG Section

2

SDGs

JS Hakata Watanabe Building (Hakata-ku, Fukuoka),which was recently completed, is a tenant office building
However, it has been certified as “ZEB Ready” (energy
consumption reduction of 50% or more) and as top rank
(five stars) in the Building-Housing Energy-Efficiency

Executive Fellow
In charge of Energy &Environment

Miyoshi KatoLabeling System (BELS) led by the Ministry of Land,
Infrastructure, Transport and Tourism, innovative

Data Section

where ZEB was initially considered difficult to achieve.

technologies have come to fruition, in a way.
*1 Low-E pair glass: Low-E stands for Low Emissivity (low radiation). For two pieces of glass (double-glazed glass), a special
metal film is provided on the inner surface portion.

*2 Regenerative electric power: Technology to convert surplus energy generated in equipment into electricity and reuse it.

TA I SE I A N N UA L R E P O R T 2 0 1 8 32

Special Feature 3 Taisei Corporation’s Innovation, Toward Its Realization

2 SDGsZEB

TAISEI Wellness Office

In JS Hakata Watanabe Building we pursue not only ZEB but also higher added-values through theestablishment of an environment where people can work healthily and comfortably (wellness). With a focus
on functions for working as well as on working style, we are making various working styles possible.
Communication zone

Desk work zone

Bright and pleasant office space where naturallight reaches the desk work zone through windows

Staff lounge that can be used flexibly according to
the work styles and mood

Guest lounge coordinated under the theme of“Japanese style”

conditions of the atmosphere and indoor loads, to reduceroom, and air conditioning systems with latent heat

energy consumption efficiently.

storage material*5 to enhance comfort.

Also, facility control information is visualized on a real-time

Currently, Japanese companies are working on workbasis so that energy data can be collected by BEMS*3 forstyle reform in various fields. In my view, ZEB should

specialized engineers to manage, allowing energy-saving

contribute to energy saving as well as health management

operations to be supported.

that is connected with corporate intellectual productivity,
by making a place of work more comfortable. I should say,Apart from energy reduction, what other values
does ZEB offer?

we create new values for office buildings that can promote

In a ZEB tenant office building such as JS Hakata Watanabe

working environment, by making tenant office buildings,

Building, Taisei Corporation pursues improvements inwhich account for most office buildings, ZEB.

the health of workers therein and provide a comfortablefeasibility through energy cost reduction such as by savingenergy, as well as more comfort and higher added values thatwould erase the notion that energy saving equals endurance.

New Definition of ZEB
Building achieving anenergy consumption
reduction of 100% or moreIn the building, we also work to create a comfortable

Building achieving anenergy consumption
reduction of 75% or more

office environment with the emphasis on “wellness” that
promotes mental and physical health of workers andBuilding achieving anenergy consumption
reduction of 50% or moreincreases productivity. Making effective use of shared

As the definition of ZEB for its
quantitative judgment criteria
released by the ANRE on
December 17, 2015, theagency specified the following
ZEB levels.

spaces, we set lounges for guests or for employees to get
together. In office rooms, we introduce “T-Light® Blind*4,” alighting device to take in natural light even to the back of aRoad Map for ZEB Penetration with Government’s Target
TAISEI Corporation Road Map for ZEB Penetration

Japan’s first urban ZEB(ZEB Demonstration
Building)

Penetration of marketable ZEB

ZEB demonstration in
renewal(Taisei Sapporo Building)Government’s road map for ZEB (Strategic Energy Plan)

Japan’s first ZEB upgrade
tenant office(JS Hakata Watanabe Building)
FY2017

Penetration andexpansion of ZEB
FY2020

Promoting ZEB in new public buildings

FY2030

Promoting ZEB
upgrade averaged for
new buildings*3 BEMS: Stands for Building Energy Management System. A system to efficiently manage electricity such as building illumination and air conditioning, and energies such as heat
*4 T-Light® Blind: A new blind device that simultaneously performs daylighting and light blocking. The lighting device improves comfort and energy saving by leading natural light.
*5 Air conditioning systems with latent heat storage material: Air conditioning systems that improve comfort and energy saving by installing latent heat storage material
under the OA floor and storing heating heat and outside air cool air.

33 T A I S E I ANNUA L R EPORT 2018

About the Taisei Groupthought that more tenant office buildings will be
converted to ZEB.

The impact of human activities on the global environment

Following JS Hakata Watanabe Building, we received

is becoming a great concern. In 2015, in the search for aorders for the New Head Office Building of Kinki Sangyo

solution SDGs were adopted at the United Nations, andCredit Union (Chuo-ku, Osaka), a high-rise building intended

the Japanese government also drew up the “SDGs Action

to become “ZEB Ready,” and for Aichi Prefecture

Plan 2018.” Priority issues are energy saving and renewable

Environmental Research Center, Aichi Prefecture Eisei

energy, for which ZEB is considered to be a major initiative.

Research Institute (Kita-ku, Nagoya), public facilities intended

In addition, the Paris Agreement, which was adopted theto become a ZEB ranked among the best in the nation, in ansame year, sets a greenhouse gas reduction target of 26%

effort to accelerate the penetration of marketable ZEB.

by 2030, relative to the 2013 level. ZEB penetration has
become a pressing matter.
In fact, the link between the level of energy saving and

Besides, to respond to the business environment
surrounding the energy field or social challenges flexibly andeffectively, we are promoting citywide energy efficiency, suchthe value of assets, such as a rent/rental fee structure

as having the ZEB effect applied not to a single separate

based on the level of energy saving, has already beenbuilding, but to a smart community (see the column below).

recognized overseas as the energy-saving performance

Taisei Corporation’s efforts for ZEB are considered tobe those leading up to SDGs achievement. Also, as a

asset value of real estate with a higher environmental

prospective field that is expected to become a growth

performance is expected to rise as well, and this will be amarket, we will be totally committed to having ZEB evolve

favorable factor when attracting tenants. Thus, it isand penetrate.

Application of Large-Scale Fuel Cells to Smart Communities Target
We participated in the YSCP Demonstration Business*. The aim is tomake optimized use of area-wide energy and have energy interchange
at times of disaster. We demonstrated a system that can use energy
efficiently while maintaining comfort at the same time on the premisesof the Technology Center in coordination with local energy
management systems (jointly with Toshiba Corporation).
With regards to the application of large-scale next-generation fuelcells (SOFC) as an energy supply for smart communities, Japan’s first
demonstration test has been under way since FY2017 at theTechnology Center. We are working to realize smart cities by, forexample, making efforts to optimize area-wide energy by developing
and introducing area energy management systems (AEMS) andexperimenting electric power interchanges to company facilities
outside the premises (self-wheeling).

On premises of Taisei Corporation
Technology Center
Micro cogeneration Storagebattery
systemLarge-scale,next-generationfuel cell

Photovoltaics

Building B

ESG Section

indication system for buildings prevails. In Japan, theBusiness Section

What do you think about the impact that Zeb
has on society and its future?

Value Creation Story of the Taisei Group

Japan’s top-class ZEB public facilities: ZEB upgrade in renewal: Taisei Sapporo
Aichi Prefecture Environmental Research Building (Chuo-ku, Sapporo)
Center, Aichi Prefecture Eisei ResearchInstitute (Kita-ku, Nagoya)Company facilities
outside premises
Recreation facility

AEMS
Building A

ZEB
demonstrationbuilding

Company housing

Data Section

Aiming for “ZEB Ready” skyscraper: The New Head Office
Building of Kinki Sangyo Credit Union (Chuo-ku, Osaka)Special Feature

The ZEB Demonstration Building(Totsuka-ku, Yokohama)

Weather/measured data

*YSCP Demonstration Business: The Yokohama Smart City Project Demonstration Project, on which Yokohama city has collaborated with private companies. In 2010, the city
was selected by the Ministry of Economy, Trade and Industry (METI) as a “Next-Generation Energy and Social System Demonstration Area.”

TA I SE I A N N UA L R E P O R T 2 0 1 8 34

Special Feature 3 Taisei Corporation’s Innovation, Toward Its Realization

3 TAISEI i-Innovation®

3

TAISEI i-Innovation®

Next-generation, unmanned construction
robots to solve social challenges
Under “TAISEI i-Innovation®,” Taisei Corporation is promoting
productivity improvement by saving labor and seeking greater
efficiency at production sites.

Labor-Saving/High-Efficiency Robots

Automatic reinforcementbinding robot

T-iROBO® Rebar
Under development

We are developing an autonomous
reinforcement binding robot that fixes
crossing reinforcing steel with a wire,
etc. in collaboration with the Chiba
Institute of Technology. It detects
intersections and obstacles using two
types of laser sensors and repeats
reinforcement binding operations
accurately. By robotizing binding work,
which accounts for approximately
10–20% of the reinforcement process,we can assign workers to do othertasks. We will further advance thedevelopment for greater work efficiency.

Realistic sensation-type remote
video image system

Concrete floor finishing
robot

T-iROBO® Remote
ViewerIn application

T-iROBO®
Slab Finisher

We have developed a realistic
sensation-type remote video image
system that enables heavy equipment
to be operated safely and securely froma remote place, even in an off-limits
situation, such as in disaster relief work
and in a high radiation environment. A
wide angle of view in the vicinity shot bya camera set on the side of the heavyequipment is wirelessly transmitted toa head-mounted display (HMD), andits panoramic image is displayed foran operator. It is possible to shorten
the working time compared with theconventional method using monitor.

Work to finish a concrete floor takes atoll on workers’ bodies with longhours of work in an awkward position.
By expanding the functions ofremotely controlled “T-iROBO® SlabFinisher,” we have developed asemi-autonomous control system(supervised by the University ofTsukuba). The robot starts working
automatically once the range androute (of work) are inputted. It
alleviates the physical load of workers
and increases work efficiency.

In application

Future Robotic Arms

Development of remote control systems
that allow a sense of manual dexterity

Under development

The development of a remote-operation system using tactile pressure transmission
technology is under way. Work requiring pressure/power adjustment in an off-limits
environment can be done via our remote operation system connecting theInternet, and the accumulation and learning of operation data will allow the robot
to work autonomously. We expect the system to be introduced at manufacturing
facilities, such as food and pharmaceutical factories, and to save labor andimprove productivity in production areas, as well as to reduce operational costs forfacilities.

35 T A I S E I ANNUA L R EPORT 2018

Tactile pressure operation side (front); remotely controlledside (back)CivilEngineering
Business Environment
Continuation of busy/peak period with high level of work volume on hand
Intensifying social demands for correcting long hours of work andsecuring days-off● Movement to improve the construction industry workers’ conditions inorder to secure leaders/successors● Concerns over lower productivity due to a decreasing number of skilledconstruction workers as they are aging, etc.
● Accelerated overseas operations necessary with an eye on post-2020
sustainable growth● Increase in the number of projects on nuclear-related facilities andrenewable energy● Increasing demand for highway network development, and formaintenance, repair and renewal of aged infrastructure●

About the Taisei Group

Business Section● The figures include intersegment transaction.

Sales / Operating margin■Sales (Billions of Yen) ●Operating margin (%)

449.4

11.1

12.3

2015

2016

466.4
15.3

2017

(FY)

Sales

Operating income(Up 3.8% YoY)

(Up 29.6% YoY)¥466.4 billion ¥71.5 billion▶ Operating margin
15.3%
Sales in the Civil Engineering segment
increased 3.8% year on year, to ¥466.4 billion
reflecting higher sales in the Company and its
consolidated subsidiaries. Operating income
rose 29.6% to ¥71.5 billion due to an increasein sales and an upturn in gross profit margin.

Special Feature

Overview of Segment

455.7

Productivity improvement• In cooperation with Group companies and specialized contractors, we willfurther improve productivity, safety and sanitary levels, and construction
quality, by building a new production system using IoT and AI.
• Work style reforms and productivity improvement are inseparable. By
promoting “TAISEI i-Innovation®,” we will consistently correct long hours ofwork and secure days off.
● Restructuring and growth of overseas civil engineering business• To restructure the overseas civil engineering business, we will secure andfoster diverse talents systematically.
• By trying every option available including making alliances or M&A deals withforeign companies in overseas markets, we will grow the overseas business.
● Nuclear-related facilities, etc.
• We will continue our efforts for safety improvement in order to develop interim
storage facilities on a full-scale basis and to reopen nuclear power plants.
● Engagement in operation and management, infrastructure development, etc.
• We will engage in the operation and management field such as PPP*1 andconcessions*2 and also actively participate in the energy and environmental
field making use of our technologies as leverage.
• To respond to the development and renewal of infrastructure, we will exert
the collective strengths of the Taisei Group.
● Pursuit of safety and compliance• We will make every effort to achieve “zero fatal accidents / zero serious
accidents.”• We will ensure compliance to realize customer satisfaction and better
performance at the same time, and continue to be a partner trusted byour customers.
●

Business Section

Business Strategies

Shigeyoshi Tanaka

ESG Section

Executive Vice Presidents,
Member of the Board;
Chief of Civil Engineering Division

Value Creation Story of the Taisei Group●In the 1st JAPAN Construction International Award competition, which was created by the
Ministry of Land, Infrastructure and Transport and Tourism (MLIT) in an effort to reinforce
Japan’s competitiveness and to encourage the overseas expansion of Japanesecompanies, the two projects of ours, Bosphorus Strait Crossing Railway Project (Turkey)and Hamad International Airport (Qatar), were awarded the MLIT Minister’s Award.
In the Bosphorus Strait Crossing Railway Project, our high-level technologies to connect
submerged caissons and shield tunnels under the sea in addition to the world-record depth
submerged tunneling construction were recognized.
p.5 The Taisei Group Corporate History

Award ceremony (April 11, 2018)

Data Section

Awarded MLIT 1st JAPAN Construction International Award*1 PPP: Stands for Public Private Partnership, translated into Japanese as “kanminrenkei” (private-public initiative) or “kanminkyodo” (government-private sector cooperation), a formof providing efficient and high-quality public services in which public services previously provided by the national government or local municipalities are opened up to the private
sector and operated under private-public cooperation.

*2 Concession: A concession refers to a sale of a right to operate airports, water supply, etc. by public entities, such as governments, to private entities, while keeping their ownership. It reduces thefinancial burden of maintaining and developing infrastructure on governments and local municipalities and creates business opportunities to operate infrastructure for private companies.

TA I SE I A N N UA L R E P O R T 2 0 1 8 36

Business Section

Building
Construction
Business Environment

Senior Managing Executive Officer,
Member of the Board;
Chief of Architecture & Engineering
Division (Integrated);
Chief of Building Construction Division● The figures include intersegment transaction.

Sales / Operating margin■Sales (Billions of Yen) ●Operating margin (%)

5.6
2015

1,060.5

9.0

7.5

2016

2017

●

Continuation of busy/peak period with high level of work volume on hand●

Increased demand for renewal of facilities that were constructed during
the years of high-speed growth●

Accelerating reforms of construction and production systems using ICT,
industry-wide work style reforms for securing and fostering leaders/successors, and environmental improvement in preparation for therevision of the Labor Standards Act relating to the correction of longhours of work

As we are in for an unprecedented busy/peak time, we will engage in thefollowing strategies unfailingly, with an aim to execute construction works
steadily and to achieve a “business scale of ¥2.0 trillion” under the Mediumterm Business Plan (FY2018–FY2020), which was launched this year.
● Productivity improvement (domestic and overseas business)• We will promote “TAISEI i-Innovation®” by introducing ICT at work sites
and utilizing BIM, IoT, and AI, and will strengthen production systems by
establishing a support department.
• In a bid to convert to a corporate structure more suitable for overseas
markets, we will establish and strengthen production systems byaccelerating the securing and fostering of global talents.

Overview of Segment

977.7

Robust construction demand including national projects for the Tokyo
2020 Olympics and Paralympics and large-scale urban redevelopment
projects

Business Strategies

Norihiko Yaguchi

1,015.4●

Renewal• In the renewal field, we will invest management resources and strengthen
production systems by developing technologies, making alliances, andimproving procurement capability.
● Work style reforms and correction of long hours of work
• With the central role played by the Work Style Reforms Promotion Section
established in April 2018, the head office and construction sites will work
together to achieve “eight close downs every four weeks.” We will also aim
to achieve the goal by cooperating with member companies of Soyukai, anassociation of our core subcontractors, and employees’ union, in line with
Taisei Corporation’s road map for the correction of long hours of work.
●

(FY)

Sales

Operating income(Up 8.5% YoY)

(Up 31.4% YoY)

¥1,060.5 billion ¥96.3 billion▶ Operating margin
9.0%
Sales in the Building Construction segment
increased 8.5% year on year, to ¥1,060.5 billion.
Operating income rose 31.4% to ¥96.3 billion
due to an increase in sales and an upturn ingross profit margin.

Ensuring quality, safety, and compliance• We will pursue 0 (zero) fatal accidents/serious accidents and zero serious
quality troubles by ensuring work processes in accordance with the Taisei
Occupational Health and Safety Management System, and bydisseminating and ensuring quality control standards and procedures.
• We will make continued efforts for the development of systems to ensurecompliance.

●

Productivity Improvement and Technology Innovation
under “TAISEI i-Innovation®”

Under the “TAISEI i-Innovation®,” Taisei Corporation promotes efforts for
productivity improvement and technology innovation, for the purpose of
exploring the future of the construction industry with advanced ICT.
By rolling out ICT utilization across the board not only at construction
sites in Japan and overseas, but also in all the businesses, such as backoffices, technology R&D departments, and administration departmentsthat support work sites, we have established a company-wideorganization to promote ICT utilization so that the entire company canbenefit from its outcome.
p.35 Special Feature 3

37 T A I S E I ANNUA L R EPORT 2018

Digital morning
meeting billboard

60 persons in charge of i-Innovation
promotion nationwide
Sharing good practices of productivity
improvement andscaling them out

We cannot doanything without ICT at work sites!
ICT training

Upskilling ICT
is a shortcut
to productivity
improvement!

● The figures include intersegment transaction.

Sales / Operating margin■Sales (Billions of Yen) ●Operating margin (%)

7.4
2015

10.9

10.7

2016

2017

PPP/PFI projects• We also have a track record in the PPP/PFI projects, which is one of themethods for developing public facilities. We started operating Takamatsu
Airport in April 2018 to build up know-how about the airport concession(a right to operate public facilities, etc.). We will take on projects
domestically and internationally going forward.
• To secure stable earnings in the real estate development projects inaddition to the PPP/PFI projects, the long-term management of facility
operation is essential. Therefore, we will further promote our efforts for thefacility operation business.

●

(FY)

Sales

Operating income(Down 1.6% YoY)

(Down 2.6% YoY)

¥119.8 billion ¥12.9 billion▶ Operating margin
10.7%

ESG Section

Sales in the Real Estate Development segment
decreased 1.6% year on year, to ¥119.8 billion.
Operating income fell 2.6% to ¥12.9 billion due
to lower sales.

Overseas building construction business• By enhancing the function of our Singapore office, we will strategicallyoperate real estate development projects mainly in Southeast Asia.
Following the Vinata Towers Project in Vietnam, we will work to expand
development areas in Southeast Asian countries including Taiwan.

●

About the Taisei Group

Active development investments in Southeast Asian countries
Value Creation Story of the Taisei Group●Urban redevelopment projects• In the urban redevelopment field, which represents urban renaissance, we
are involved in about 20% of nationwide development projects. In largescale private development projects, such as the “(Tentative Name)
Toranomon 2-10 Project, Tokyo Main Building” (see p.1) started in May
2016, we have been promoting them as a project operator.
• We will continue to operate large-scale development projects, whileproviding support for the promotion of projects in a number of zones,
primarily in the Tokyo metropolitan area and regional core cities, with ouraccumulated know-how.

Overview of Segment

119.8

Increased utilization of private finance for airports, etc. under the PPP/PFI
Promotion Action Plan (formulated by Cabinet Office)●Katsuyuki Kanai

121.7

●

Business Strategies

Senior Managing Executive Officer;
Chief of Urban Development Division

127.6

Infrastructure development for the Tokyo 2020 Olympics and Paralympics
and active private investment

Special Feature

Business Environment●

Business Section

Real Estate
Development

It is our first real estate development project in Vietnam that we engage in
Hanoi, as a joint project with other Japanese companies.
As project phase 1, we completed and opened a 256-unit apartmentbuilding with 24 stories above ground and two underground levels in June
2018. The building was designed and constructed by our local subsidiary,
Vinata International Co., Ltd.
Taisei Corporation has been involved in obtaining various licenses andpermissions, setting up business companies, and drawing up plans forfacilities in relation to the project, and will engage in the management of the
project as a member of the project operators.

Data Section

Vinata Towers Project, Development Project Phase 1 Opened(Tentative name) Vinata Towers Project (Vietnam)

TA I SE I A N N UA L R E P O R T 2 0 1 8 38

ESG Section

The Taisei Group CSR
Taisei Group
Philosophy

Taisei Group Philosophy

Taisei Spirit

To Create a Vibrant Environment
for All Members of Society

Active and Transparent Culture/
Value Creation /Evolution of Tradition

Taisei Spirit

Objectives to be Pursued
by the Taisei Group(Goals)Overall Principles ofConduct

Key Concepts That All Taisei Group Officers andEmployees Must Adhere to in Order to Pursue
and Realize the Taisei Group Philosophy

Overall Management
Perspective

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole① Cultivating an open corporate culture⑧ Respect for traditions② Securing a pleasant working environment⑨ Promoting partnerships with subcontractors
and suppliers③ Respect for fundamental human rights
and diversity④ Creating a vibrant environment for
all members of society⑩ Promoting environmental conservationand creation⑪ Communication with local communities⑤ Striving to create value⑫ Conduct in the international community⑥ Pursuing customer satisfaction⑬ Appropriate disclosure of information⑦ Ensuring and improving safety and quality⑭ Fulfilling social responsibilities

Medium-term Business Plan
(FY2018-2020)

Individual Policies (Taisei Corporation)● Risk Management Policy● Policy on Intellectual Property● Policy on the Protection of● Declaration of Biodiversity Preservation

Personal Information● Quality Policy● Health and Safety Policy● Environment Policy● Environmental Targets● Policy on Business Continuity inTimes of Disaster● Information Disclosure Policy● Procurement Policy● Human Rights Policy● Fundamental Corporate Governance Policy● Fundamental Policy toEnhance Operational Compliance Systems● Code of Conduct on the Use of Social Media● IR Policy● Social Contribution Policy■ CSR Our Structure of Values and Policies
In order to pursue the Group ideal "to create a vibrant environment for all members of society", all officers and employees share the"Taisei Spirit", and carry out corporate actions based on the Group Action Guidelines and Individual Policies "Overall Principles ofConduct" and"Overall Management Perspective" and Medium-term Business Plan. The aim is to create new social value in thecourse of these actions through the wishes and expectations of our stakeholders, while being aware of the issues of sustainable
society and contributing towards their resolution.

■ To Share Our Philosophy and Values
To spread and consolidate the Group Philosophy among employees while connecting it to social demands and in-house initiatives,
we have operated annual trainings about the Group Philosophy based on an e-learning format since FY2011. In FY2017, we heldan e-learning session for employees on the theme of the relationship between the Group Philosophy and improvements in corporate
value required by the Japan Business Federation’s Charter of Corporate Behavior, with a participation rate of 96%.

■ System for Promoting CSR
A CSR Committee (5 board members and officers) has been
established in the Taisei Group, with an Executive Vice
President, Representative Director (Chief of Business
Administration Division) as Chairperson of the Committee, andthe CSR Promotion Section of the Corporate Communication
Department as the secretariat.
The Committee periodically deliberates and reports on theGroup's initiatives regarding non-financial aspects, mainly
Environmental, Social, and Governance (ESG).
The CSR Promotion Section provides training andguidance on CSR, and exchanges opinions with the various
departments and Group companies to promote CSR
activities, for application in day-to-day activities. Also,
discussions regarding policies, systems, and mechanisms forpromoting CSR activities are carried out at business
committees such as the Environment Committee.

Diagram of CSR Promotion System
Members of
the Board

President

CSR Committee

Corporate Communication
Department ofCorporate Planing Office
CSR Promotion Section

Compliance Committee
Technology Committee
Central Safety Committee
Environment Committee
Risk Management Committee

Each
Department

Group
Companies

Central Labor Affairs Committee etc.

*1 Composed of the Corporate Planning Office, Safety Administration Division, Building Construction Division, Civil Engineering Division and Procurement Division*2 The organization of the Taisei Corporation's main cooperating companies

39 T A I S E I ANNUA L R EPORT 2018

The CSR
Procurement
Committee*1

The
Souyu-kai*2

Respect for Global Initiatives
The Universal Declaration of Human Rights

United Nations Global Compact

Sustainable Development Goals (SDGs)

ILO Core Labour Standards

ISO26000GRI Standards

United Nations Guiding Principles on Businessand Human Rights

Charter of Corporate Behavior(the Japan Federation of Construction Contractors)

Integrated Reporting Framework

Council for Better Corporate Citizenship (CBCC)

CARE International Japan,
international NGO

Participation in CSR-related Groups
Global Compact Network Japan (GCNJ)

About the Taisei Group
Value Creation Story of the Taisei GroupThe Taisei Group implements CSR management by identifying CSR issues extracted from our Overall Management Perspective andOverall Principles of Conduct, as well as the core subjects of ISO26000, the international standard for corporate social responsibility
at organizations.
In identifying issues and promoting activities, we respect all global initiatives and continually confirm the status of the sharing andprogress of issues.
Furthermore, in order to consider CSR from a more global perspective and link it with sustainability-related social issues, we areconstantly expanding our CSR activities by pursuing active participation in and cooperation with CSR-related organizations, in linewith our CSR management framework such as participation (as a signatory) in the United Nations Global Compact. We publish thestatus and results of our activities on the CSR page of the Taisei Group official website, while working to improve corporate value by
deepening dialog with various stakeholders.

Special Feature■ CSR Management

Communication with Major Stakeholders

We have established our Quality Policy and Health and Safety Policy in an effort to provide good-quality, safe andsecure construction products, support for business continuity at times of disaster, and related services.
● We listen to various opinions and requests through customer satisfaction surveys and take advantage of them toimprove quality and increase productivity.
●

Customers

We have established our Fundamental Corporate Governance Policy, Information Disclosure Policy, and IR Policy inan effort to conduct timely and appropriate disclosure of corporate information and constructive dialog aimed atsustainable growth and medium- to long-term improvement of corporate value.
● In addition to promoting communication through the annual general meeting of shareholders and by issuing theshareholder newsletter, we feed back the opinions and content of our discussions with shareholders to the
management ranks.
● We strive to promote constructive dialog through explanations of our performance and management strategy fromthe President as well as question-and-answer sessions at results briefings and meetings with overseas
institutional investors.
●

Shareholders/Investors

We have established our Procurement Policy, carry out CSR procurement activities, and promote partnerships
through fair and impartial transactions.
● In cooperation with the Taisei Health, Safety and Environment Cooperation Association, comprising specialized
contractors across Japan, we make efforts to eliminate work-related accidents at workplaces, prevent healthproblems and environmental accidents, and promote environmental conservation activities.
●

Suppliers

We strive to realize a pleasant working environment through efforts including respect for employees’ human rights
and implementation of compliance education and trainings.
● We comply with labor-related laws and regulations, give due consideration to workplace health and safety, and haveestablished an EAP, various consultation desks for matters including nursing care, a "Corporate ethics helpline"and"Group helpline" to handle issues such as discrimination and sexual harassment, while also implementing
personnel satisfaction surveys.
● We hold regular consultations with the employees union regarding the workplace environment and labor conditions.

Business Section

Taisei Group: Responsibility and Approach

ESG Section

Stakeholders

Employees

We have formulated our Social Contribution Policy, Environmental Policy, and Declaration of Biodiversity
Preservation, under which we pursue our business activities.
● In addition to the Taisei Corporation Public Trust of Funds for Natural and Historic Environments, an organization forthe preservation of the natural environment, and the Taisei Foundation, which subsidizes new technical fields for the
next generation, we make efforts to spread construction culture by lending architecture and paintings by thearchitect Le Corbusier and through other means.
● We strive to contribute to resolve social issues through actions based on participation (as a signatory) in the United
Nations Global Compact and support for various global initiatives such as SDGs (Sustainable Development Goals).
●

Local communities,
international society,global environment

Data Section●

TA I SE I A N N UA L R E P O R T 2 0 1 8 40

ESG Section

The Taisei Group CSR■ Materiality

Materiality Reverification Process

In FY2017, we reverified our material issues
and KPIs, and identified eight material issues
based on 21 factors selected from theperspective of CSR issues and megatrends
such as SDGs.
These eight material issues werecategorized, and the efforts made in eachcategory were reorganized as KPIs. We willcontinue to conduct regular reviews of theoperating status of KPIs in the CSR
Committee, and disclose information in the
Integrated Report.

❶ Selection of Relevant Issues●●

Held hearings in the Taisei Group to identify issues based on ISO26000.
Identified 21 factors that have an impact on medium- to long-term corporate value.

❷ Reverifying Importance of Issues
Ranked 21 factors in order of importance for stakeholders on ESG survey forms and expert surveys.
Analyzed factors based on medium- to long-term vision of Taisei Corporation and its
management departments.
● Narrowed down 21 factors to eight issues by ESG category.
●●❸ Determination of Material Issues
Confirmed appropriateness of the process through dialogue with experts.
Confirmed that there were no discrepancies with megatrends such as SDGs, United Nations
Global Compact, GRI Standard (sustainability reporting guidelines)● Final approval by the Board of Directors after deliberations by the CSR Committee.
●
●

ESG

E

8 material issues

Realization ofa sustainable andenvironmentally friendly society

Ensuring quality andimpronving technology
Technical development forrealizing a sustainable society
Promotion of supply chain
management

S

Thorough management oflabor safety andsanitary conditions
Cultivation oftechnical staff andsecuring human resources

Realization of an attractive
working environment that isgood to work inG

Promotion of compliance

KPIs (Key Performance Indicator)

Scope of report

Unit

FY2017 results/targets

FY2018 targets●

At construction stage
CO2 emissions per construction cost(intensity)

Taisei Corporation%

28.4/18

25*1●

At construction stage
Total CO2 emissions

Taisei Corporation%

48.4/47

51*1●

At building operation stage*2
Design-build estimated CO2*2 emissions

Taisei Corporation%

48.1/37

38*1●

Promotion of recycling
construction waste Final disposal rate

Taisei Corporation%

3.2/4.0

3.7●

Implementation of proposals that consider
biodiversity Number of proposals

Taisei Corporation

cases

52/30

30

●

Zero environmental accidents

Taisei Corporation

cases

0/0

0
Civil Engineering: 100
Construction 100●

Customer satisfaction

Taisei Corporation%

Civil Engineering: 95/100
Construction 90/100●

Productivity (Net sales/number of employees
working at construction sites)

Taisei Corporationー

107/110

110＊3●

Number of patent rights registered

Taisei Corporation

cases

191/200

180●

Number of patent applications filed

Taisei Corporation

cases

235/250

230

Organization of main
cooperating companies ofTaisei Corporation

%

ー*4

70.0

●

Implementation rate of companies where
CSR activity survey was conducted●

Number of fatal accidents

Taisei Corporation

projects

4/0*5

0

●

Average overtime hours per month

Taisei Corporation

hours

37.5/35.0

35●Construction Career Up System
Worksite registration rate*6

Taisei Corporation%

ー*6

60% or more*7●

Number of female engineers

Taisei Corporation

persons

621/610640●

Number of female managers

Taisei Corporation

persons

83/70

130

●

Turnover rate of employees within 3 years of hiring*8

Taisei Corporation%

4.3/4.5 or less

4.5 or less●Rate of taking childcare leave by males

Taisei Corporation%

93.8/100

100●

Number of major information security accidents

Taisei Group＊9

cases

0/0

0

●

"Corporate ethics helpline" and"Group Helpline" response rate

Taisei Group%

100/100

100*1 Target values are compared to FY1990.
*2 Predicted CO2 emissions at operation stage of design and construction projects (including popularization and promotion of ZEB).
*3 The actual result for FY2016 is set at 100. 110 is the target for the end of FY2020.
*4 Not implemented in FY2017. The actual result for FY2016 was 61.6%.
*5 Actual results from January 2017 to December 2017.

41 T A I S E I ANNUA L R EPORT 2018

*6 As the registration has not yet begun, actual results are to be reported starting in FY2018.
*7 Applies to worksites of 1.0 billion yen or more, with a remaining construction period of six months ormore. 60% or more is the target up to December 2019.
*8 The turnover rate of new graduates in general and expert positions within three years of hiring.
*9 Refers to Taisei Corporation and the eight major Group companies.

Environmentetc.

● Promoting Environmental Management
Under the group philosophy “To Create a Vibrant Environment for All Members of Society,” Taisei Corporation, through its construction
activities, strives for development of high-quality social infrastructure and improvement of the living environment in harmony with nature.
Moreover, considering the realization of a sustainable society to be the origin of environmental management, Taisei Corporation and
its Group companies actively strive for an “environmentally friendly society,” while setting medium- to long-term targets and single-yeartargets in line with the Environmental Policy and pursuing environmentally friendly activities to achieve those targets.
Single-year environmental targets are set each year on a company-wide scale, based on our medium- to long-term targets.
Specifically, Taisei Corporation operates an environmental management system (EMS) in compliance with ISO14001:2015, andidentifies risks and opportunities related to environmental problems taking into account compliance with environmental laws andregulations, various issues in the construction business and social demands and expectations related to climate change and other issues.
We pursue environmental activities while implementing a PDCA (plan-do-check-act) cycle with a view to achieving our planned
environmental targets.

● TAISEI Green Target 2050
Taisei Corporation revised its medium- to long-term targets in 2018 in light of the most recent developments such as the effectuation of
the Paris Agreement and the adoption of the SDGs, which are attracting keen interest worldwide. Based on our Environmental Policy, we
aim to realize a sustainable environmentally friendly society, which is one of the Taisei Group’s material issues (materiality).
p.29 Special Feature 3

Value Creation Story of the Taisei Group

Realization of a Sustainable and Environmentally Friendly Society

About the Taisei Group

Materiality

CO2 emissions＊
Aim for●To realize a sustainable,
resource recycling society●

Aim for final disposal rateof construction waste of

0%

-80%

To create a society where
people co-exist with nature

Minimizing impact
on natural capital

A Society Where
Safety is Ensured●

To realize a society where
safety is ensured
Aim to provide value
with zeroenvironmental risk

2030 Targets
CO2 emissions atconstruction stage
Predicted CO2 emissions
at operation stage

-62%
-55%

* Total CO2 emissions at construction stage and predicted CO2 emissions at operation stage
・All CO2 reduction rates are comparisons with FY1990.

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact●●

Deterioration of creditworthiness and loss of opportunities to receive orders due toviolation of environmental laws and regulations or environmental accidents.
Increased costs due to construction suspensions or delays resulting from shortages ofraw materials or electricity.

KPIs

Positive Impact●●

Increased opportunities to receive orders due to development and practical applicationof environmental technologies.
Market expansion due to reinforcement of infrastructure to address climate change.
FY2018 Targets

At construction stage CO2 emissions per construction cost (intensity)

25%*1

At construction stage Total CO2 emissions

51%*1

At building operation stage Design-build estimated CO2*2 emissions

38%*1

Promotion of recycling construction waste Final disposal rate

3.7%

Implementation of proposals that consider biodiversity Number of proposals

30 casesZero environmental accidents (Implementation of management procedure
based on “Operation Manual for Priority Environmental Issues” )0 cases

ESG Section

To realize a society with noclimate change risk

Nature Co-existingSociety

Department Responsible for Promotion

Environment Division

Data Section●

Recycling Oriented
SocietyBusiness Section

Low Carbon
Society

Special Feature

TAISEI Green Target 2050
Environmental Targets of Taisei Corporation by 2050

*1 Target values are comparisons with FY1990.
*2 Predicted CO2 emissions at operation stage of design and construction projects (including popularization and promotion of ZEB).

TA I SE I A N N UA L R E P O R T 2 0 1 8 42

ESG Section
SocialMateriality

Ensuring Quality and Improving Technology

etc.

● Provision of High-Quality Construction Products
and Related Services● Leveraging ICT Strengths to Realize
Immediately Effective Productivity Improvements

Under the slogan of “ensuring and improving safety and quality”
stated in the Group Action Guidelines, Taisei Group formulates
the “Quality Policy,” which governs our corporate activities. We
obtained ISO 9001 certification in 1996 for the first time in theJapanese construction industry. We operate and establish aquality management system covering from design andconstruction to after handover in order to provide customers
with construction products and after-sales service with safety
and comfort.
Additionally, in conjunction with the quality management
system, “TAISEI QUALITY” activities have been implemented
since 2009 to ensure thorough awareness and application of
the quality management standards and procedures within theentire Group. We also conduct customer satisfaction interviews
and surveys to ensure proper quality management andeliminate any defects caused by quality, in cooperation with therelevant departments.

Since FY2017, Taisei Corporation has been pursuing an initiative
aimed at productivity improvement and technological innovation
based on ICT, under the name “TAISEI i-Innovation®.” We are
striving to implement this initiative company-wide, withapproximately 80 employees responsible for its promotion
assigned to the head office and branches.
We are moving ahead with introduction of construction robots
at construction sites, and we are working to make maximum useof our ICT strengths as the most immediately effective measure
for achieving improvement in production capacity.
We have also developed and established an Internet-based
platform, which we have expanded in line with ICT progress andsocial demands. It is now one of our strengths that an operational
style using ICT has been well established at all construction sites.
Specifically, we have steadily introduced programs including the“Worksite Net,” an information-sharing network that can be usedby both in-house and external parties involved in projects focusedon worksite offices, and the “Field Pad,” an app linked to the“Worksite Net” that allows browsing and recording of construction
management information even when not in the office.
p.35 TAISEI i-Innovation®

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact

Positive Impact

Decline in market competitiveness by losing customer trust.
● Interruption or suspension of business, loss of opportunities to receive orders, or
financial loss due to the occurrence of quality defects.

Continuing business and creation of business opportunities through cooperation andbuilding trusting relationships with customers.
● Winning clients’ trust by providing good-quality, comfortable buildings.

●●

FY2018 Targets

KPIs

Civil Engineering: 100%
Building Construction: 100%

Customer satisfaction

110*

Productivity (Net sales/number of employees working at construction sites)

Department Responsible for Promotion

Civil Engineering Division
Building Construction Division* 110 is the actual result for FY2016.

SocialMateriality

Technical Development for Realizing a Sustainable Society
Taisei Corporation was ranked first in the “ranking of patentassets scale for the general contractor industry” by Patent Result
Co., Ltd. for five consecutive years from April 2012 to March2017. With regard to technologies aimed at resolving social
issues, staff members of the Taisei Technology Center visit eachconstruction site every year and survey patentable technologies

etc.

and acquire patents for them. In FY2017, we acquired patents
for a method of detecting specific microorganisms useful insolving environmental problems and a method of
decontaminating soil that contains radioactive substances. We
will continue to carry out technological development and patentacquisition of technologies to solve social issues.

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact●

Decline in market competitiveness and financial loss due to fewer application trackrecords for development of new proprietary technology.

Positive Impact●

Contribute to solving social issues by improving technological capability throughbusiness and increase market competitiveness.
FY2018 Targets

KPIs

Number of patent rights registered

180 cases

Number of patent applications filed

230 cases

43 T A I S E I ANNUA L R EPORT 2018

Department Responsible for Promotion

Taisei Technology Center(Intellectual Property Department)

SocialTaisei Corporation adopted Promoting Partnerships with Supply
Chains and formulated the “Procurement Policy” as part of theGroup Action Guidelines to promote CSR procurement activities
with cooperating companies and across the whole supply chain.
Internally, we carry out e-learning for all officers andemployees, and hold briefings for executive personnel.
For suppliers, we conduct CSR activity surveys in Japan andoverseas. In addition to confirming CSR initiatives at eachcompany, we also hold hearings at companies where initiatives
are lacking, and identify points for improvement and confirm
challenges for the future.
In future, we will expand the survey to cover building
contractors with whom we have constant ongoing transactions, inaddition to Souyu-kai member companies (an organization of
main cooperating companies), and carry out awareness-raising
for a wider range of suppliers.

etc.

As for materials suppliers who handle raw materials
associated with environmental impact or raw materials fromdeveloping countries, we conduct hearing surveys tracing backthrough distribution channels to check whether there are humanrights abuses or illegal acts in the procurement process.
Furthermore, in response to the recent increase in foreigntechnical intern trainees, we visit suppliers and carry out hearing
surveys to confirm the working
environment and management
system for foreign interns
employed by our suppliers.

Overseas CSR Procurement
Briefing (Singapore)

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact

Value Creation Story of the Taisei Group

Promotion of Supply Chain Management

About the Taisei Group

Materiality

Positive Impact

Suspension of raw material supply due to occurrence of procurement risks.
● Sustainable supply of raw materials due to procurement risk management.
● Increased cost due to interruption or delays in construction resulting from suspension of procurement. ● Improved competitiveness as a result of securing good-quality cooperating companies.
● Decline in reputation owing to occurrence of human rights risks.
● Maintenance of reputation by preventing human rights risks.

KPIs

Implementation rate of companies where CSR activity survey was conducted

FY2018 Targets

Department Responsible for Promotion

70.0%

Corporate Communication Department(CSR Promotion Section)

Special Feature●

Social● Health and Safety Policy and OHSMS System
Based on the ideal of “Safety First,” Taisei Corporation works hard to ensure safety in atangible form day to day in concerted efforts among its employees, group companies andcooperating companies. We are committed to this under the “Health and Safety Policy,”*which the President indicates by systematizing and organizing the “Taisei Occupational
Health and Safety
Management
System” (TAISEIOHSMS), toeliminate accidents
and damage andprevent third-party
accidents.
The President’s patrol

The award ceremonyetc.

● Improving Health and
Safety Standards
Taisei Corporation’s safety record in2017 was 66 accidents entailing days
off work, of which 48 were accidents
entailing four or more days off work,and four fatal accidents.
The frequency rate was 0.46. In
2018, we have again set targets ofachieving “zero fatal accidents” and“zero serious accidents,” and will
promote various measures aimed at“shifting from recurrence-prevention
safety management to preventive
safety management.”

ESG Section

Thorough Manafement of Labor Safety and Sanitary Conditions

Business Section

Materiality

Negative Impact●●

Decline in customer trust due to occurrence of fatal accidents.
Lower productivity due to occurrence of work-related accidents.

KPIs

Number of fatal accidents

Positive Impact●●

Maintenance of reputation by preventing fatal accidents.
Improved productivity as a result of achieving a safe workplace environment.
FY2018 Targets

Department Responsible for Promotion

0 projects

Safety Administration Division

Data Section

Impact on Corporate Activities and KPIs (Non-Consolidated)

TA I SE I A N N UA L R E P O R T 2 0 1 8 44

ESG Section
SocialMateriality

Cultivation of Technical Staff and Securing Human Resourcesetc.

● Initiatives to Correct Long Working Hours
In order to correct long working hours, Taisei Corporation has set atarget for average overtime hours per month as a KPI each fiscal
year. In order to achieve the target, we implement measures that are
truly highly effective, reflecting the opinions of employees who workat construction sites. In addition, with regard to closing construction
sites, as a member company of the Japan Federation ofConstruction Contractors, will work as one with the entire industry.

Roadmap for Correction of Long Working Hours
FY2018

Medium-term Business Plan
FY2019FY20200 employees working
100 hours permonth or more

FY2021

FY2022

FY2023

FY2024

100% achievement
Average of 80 hours per month or less 960 hours per year

Overtime work

Preparation period

Preparation period
Holidays + substitute holidays(excluding paid leaves)

Application ofamendments to Labor
Standards Act

100% achievement
Average of 70 hours per month or less 840 hours per year

Average of 45 hours permonth in principle Maximumof 720 hours per year

Aim for “8 holidays per 4 weeks (holidays + substitute holidays) 104 days per year or more” for all employees
Site closed second Saturday of every month

Construction site closed days

March 2020: 100%

Site closed 6 days per 4 weeks*1

March 2022: 100%

Site closed 8 days per 4 weeks*1*1 Excluding offices where application is difficult.

● Popularization and Promotion of Construction Career Up System*2 (CCUS)
In coordination with cooperating companies, we are promoting the
introduction and popularization of CCUS, which registers
certifications of skilled construction workers and status of enrollment
in social insurance programs.
CCUS, which has been promoted together with the Ministry ofLand, Infrastructure, Transport and Tourism and various constructionindustry organizations, started as an important infrastructure linked tosecuring the technicians who will support the industry in the futureand improving their working conditions.

*2 Evaluation tool for “visualizing” skills and experience of each skilled worker in a unified framework within the industry.

● Promotion of Women’s Participation and Advancement in the Workplace Realized by Kensetsu Komachi
Kensetsu Komachi, a nickname for women working in the construction industry, was created by the Japan Federationof Construction Contractors based on a firm commitment to “establish efforts related to the promotion of women’s
participation and advancement in the construction industry as ongoing, established activities.” In order for Taisei
Corporation to develop further, it is essential that we become a company where women can participate than everbefore. We believe we can create new value by actively incorporating women’s perspectives within the Company.
p.1-2 To Create a Vibrant Environment for All Members of Society

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact●●

Lower market competitiveness due to decline in customer trust.
Decline in organizational capabilities and loyalty of personnel due to insufficient humanresources development and lack of diversity.

●●

Reinforcement of technological capabilities and human resources development through customer needs.
Increased organizational capabilities and loyalty of personnel by fostering excellent anddiverse human resources.
FY2018 Targets

Department Responsible for Promotion

35 hours

Human Resources Department

Construction Career Up System Worksite registration rate

60％ or more*3

Civil Engineering Division
Building Construction Division

Number of female engineers

640 persons

Human Resources Department

Average overtime hours per month
KPIs

Positive Impact*3 Applies to worksites of 1.0 billion yen or more, with a remaining construction period of six months or more. 60% or more is target for December 2019.

45 T A I S E I ANNUA L R EPORT 2018

SocialRealization of an Attractive Working Environment that is Good to Work in
Promotion of Diversity and Inclusion

Diversity of Human Resources
Female Employees

Non-Japanese Employees⃝Active employment in careers with promotions⃝Expanding fields of employment⃝Implementation of career development training⃝Establishment of consultation desks⃝Creation of handbook for receiving departments

Senior Personnel⃝Raising awareness through e-learning for all officers
and employees⃝Installing restroom signs comfortable for anyone’s use

Diversity of working styles⃝“Working style reform”through use of ICT in daily operations⃝Enhancement of support framework to balance childcare/ nursing care and work
⃝Support for male employees’ participation in childcare● Improving Retention Rate ofYoung Employees● Improved Childcare Leave Usage Rate by Male Employees
We have targeted a childcare leave usage rate by male employees of 100% as
one of our work-style reform measures, and are
involving the employees’ assigned departments
and their supervisors in this company-wide effort.
In addition to joining the Ikuboss*1 Corporate
Alliance in April 2017, we have also received the
Ikumen Enterprise Award 2016 and recognition
based on the Act on Advancement of Measures
to Support Raising Next-Generation Children.

We strive to eliminate mismatching of employees andjobs through measures such as providing detailed job
descriptions during the recruitment screening process
and conducting construction site visits. We also work
to retain employees by striving to create a pleasantworking environment, through holding interviews withyoung employees after they join the Company, andintroducing a mentorship program on a trial basis.

A male employee on childcare leave

Impact on Corporate Activities and KPIs (Non-Consolidated)
Negative Impact

Positive Impact

Decline in organizational capabilities and loyalty of personnel due to insufficient humanresources development and lack of diversity.
● Deterioration of reputation due to decline in trust from personnel.
●

Increased organizational capabilities and loyalty of personnel by securing and fostering
excellent and diverse human resources.
● Maintenance of reputation by preventing human rights risks.
●

FY2018 Targets

KPIs

Value Creation Story of the Taisei Group⃝Preparation of reemployment system thatprovides fulfilling workLGBT

Special Feature

As one of the issues addressed in
the Medium-term Business Plan,
we aim to encourage diversity
management, focusing on creatinga workplace in which employees
are able to take the most active
possible role, taking advantage of
their diversity in terms of sex,
nationality, disability, values, the wayof working and career.

Number of female managers

130 persons

Turnover rate of employees within 3 years of hiring*2

4.5% or lessRate of taking childcare leave by males

Department Responsible for Promotion

Human Resources Department

100％

Business Section● Diversity and Inclusion

etc.

About the Taisei Group

Materiality*1 Management and superiors who understand and actively support participation in child care by their male employees and subordinates.
*2 The turnover rate of new graduates in general and expert positions within three years of hiring.

Materiality

Promotion of Complianceetc.

ESG Section

Governancep.54-56 Risk Management/ComplianceImpact on the Taisei Group’s Corporate Activities and KPIs (Consolidated)
Negative Impact

Positive Impact

*3

KPIs

Number of major information security accidents*4"Corporate ethics helpline" and "Group helping" response rate

Maintenance of competitiveness through appropriate information management.
● Continuation of business and creation of business opportunities through appropriate risk management.
● Maintenance and enhancement of corporate value through reinforcement of global
compliance system.
●

FY2018 Targets

Department Responsible for Promotion

0 cases

Information Planning Department

100％

General Affairs Department

Data Section

Interruption or suspension of business due to information security accidents.
● Decline in reputation due to occurrence of human rights or corruption risks.
● Interruption or suspension of business, or loss of opportunities to receive orders, due todisregard for compliance.
●*3 Number of major security breaches of electronic information related Taisei Group. The scope of calculation includes Taisei Corporation and our 8 major Group companies.
*4 Scope of application: the Taisei Group.

TA I SE I A N N UA L R E P O R T 2 0 1 8 46

ESG Section

Members of the Board, Audit & Supervisory Board Members,Chairman andMembers of the Board
Takashi Yamauchi Chairman, Representative Director
1969.06
1999.06
2002.04
2004.06
2005.06
2007.04
2015.04

Kazuhiko Dai

2015.04
2017.04

Masahiro Sakai

2015.04
2017.04

Norihiko Yaguchi2017.04

Toru Tsuji

2003.04
2008.04
2011.06

1979.04
2011.04
2013.04
2013.06
2015.04
2017.04

1979.04
2011.04
2013.04
2015.04
2015.062017.04

Yasushi Yoshinari
Joined the Company
Executive Officer
Managing Executive Officer
Managing Executive Officer,
Member of the Board
Senior Managing Executive Officer,
Member of the Board
Chief of Architecture &Engineering Division (Integrated);
Chief of Building Construction Division[Present Position]

Joined Marubeni-Iida Co., Ltd.
President and Chief Executive Officer,
Representative Director
Chairman of the Board,
Representative Director
Corporate Advisor, Member of the Board
Member of the Board of Taisei Corporation[Present Position]

1979.04
2011.04
2015.04
2015.06
2018.04

Fumio Sudo

Atsuko Nishimura External Board Member
2001.06
2004.09
2008.06
2012.04
2014.04
2016.072017.06

47 T A I S E I ANNUA L R EPORT 2018

Joined Ministry of Foreign Affairs of Japan
Minister/Counsellor of Permanent Mission ofJapan to the United Nations
Minister of Embassy of Japan in Belgium
Professor of Tohoku University Graduate School of Law
Administrative Vice President of the Japan Foundation
Advisor of Japan Oil, Gas and Metals National Corporation
Ambassador Extraordinary andPlenipotentiary to Grand Duchy of Luxembourg
Ambassador Extraordinary and Plenipotentiary for
Women, Human Rights and Humanitarian Affairs
Member of the Board of Taisei Corporation[Present Position]

Joined the Company
Executive Officer
Managing Executive Officer
Senior Managing Executive Officer
Senior Managing Executive Officer,
Member of the Board
Executive Vice President,
Member of the Board
Chief of Civil Engineering Division[Present Position]

Director
Joined the Company
Executive Officer
Managing Executive Officer
Managing Executive Officer,
Member of the Board
Managing Executive Officer,
Member of the Board
Chief of Medical &Pharmaceutical Business Division[Present Position]

External Board Member
1964.04
2001.06
2002.09
2003.04
2005.04
2010.06
2011.06

1979.04
1999.08

Joined the Company
Executive Officer
Managing Executive Officer
Managing Executive Officer,
Member of the Board
Senior Managing Executive Officer,
Representative Director
Executive Vice President,
Representative Director
Chief of Business Administration Division[Present Position]

Shigeyoshi Tanaka Director

External Board Member
1961.04
1999.04

Joined the Company
Executive Officer
Managing Executive Officer
Managing Executive Officer,
Member of the Board
President and Chief Executive Officer(Representative Director) [Present Position]

Shigeyuki Sakurai Representative Director

Joined the Company
Executive Officer
Managing Executive Officer
Managing Executive Officer,
Member of the Board
Senior Managing Executive Officer,
Member of the Board
Executive Vice President,
Member of the Board
Deputy Chief of Marketing &Sales Division (Integrated);
Supervising Marketing & Sales (Building
Construction) Divisions [Present Position]

Director
1978.04
2012.04
2015.04
2015.06

2015.04

Joined the Company
Executive Officer
Managing Executive Officer
Senior Managing Executive Officer
Senior Managing Executive Officer,
Member of the Board
Executive Vice President,
Representative Director
Executive Vice President, Representative Director
Chief of Marketing & Sales Division (Integrated);
Chief of Marketing & Sales (Civil Engineering)
Division; and In charge of Safety Administration[Present Position]

Director
1977.04
2012.04
2013.04
2013.06

President, Representative Director
1977.04
2011.04
2013.04
2013.06

Joined the Company
Executive Officer
Managing Executive Officer
Senior Managing Executive Officer
Senior Managing Executive Officer,
Member of the Board
President and Chief Executive Officer,
Representative Director
Chairman, Member of the Board(Representative Director) [Present Position]

Representative Director
1974.04
2007.04
2010.04
2011.04
2013.06

Yoshiyuki Murata

Joined Kawasaki Steel Corporation
President and Chief Executive Officer,
Representative Director
Member of the Board of JFE Holdings, Inc.
(Part-time)
President and Chief Executive Officer,
Representative Director of
JFE Steel Corporation
President and Chief Executive Officer,
Representative Director of JFE Holdings, Inc.
Honorary Advisor
Member of the Board of Taisei Corporation[Present Position]

Audit & Supervisory Board Member (Full-Time)1973.04
2003.072004.04
2007.04
2007.06
2010.04
2010.072015.04
2015.06

Terunobu Maeda

2003.01
2009.04
2011.06

1998.03
2004.072005.09
2010.03
2011.032012.06

Shigeru Morichi

Joined Fuji Bank, Ltd.
Director
Managing Director
Vice-president
Director of Mizuho Holdings, Inc.
President andChief Executive Officer, Director
President and Chief Executive Officer ofMizuho Financial Group
President Emeritus
Audit & Supervisory Board Member ofTaisei Corporation [Present Position]

Kiwamu Miyakoshi External Audit & Supervisory Board Member
1977.04
1987.04

1975.04
2008.04
2015.06

Joined the Company
General Manager of Accounting Dept.,
Business Administration Div.;
Project Manager of Accounting Dept.
Executive Officer
Managing Executive Officer
Managing Executive Officer, Member of the Board
Senior Managing Executive Officer,
Representative Director
Executive Vice President, Representative Director
Member of the Board
Audit & Supervisory Board Member of the Company[Present Position]

External Audit & Supervisory Board Member
1968.04
1995.06
1997.05
2001.05
2002.01
2002.04

Takashi Matsuyama Audit & Supervisory Board Member (Full-Time)

Joined National Police Agency
First Secretary, Embassy of Japan inGermany, Ministry of Foreign Affairs
Police Commissioner,
Tokushima Prefectural Police
Auditor-Secretary,
Hanshin Expressway Company Limited
Police Commissioner,
Ibaraki Prefectural Police
Chief of Police, Chugoku District
Chief of Police, Kanto District
Audit & Supervisory Board Member ofTaisei Corporation [Present Position]

External Audit & Supervisory Board Member
1966.04
1987.03
1996.04
2004.04
2004.04
2011.04
2012.06

Kunitoshi Saito

Joined the Company
General Manager of Auditing Department
Audit & Supervisory Board Memberof the Company [Present Position]

Joined Japan National Railways
Professor of Civil Engineering, School of Engineering,Tokyo Institute of Technology
Professor of Social Infrastructure Engineering,
Graduate School of Engineering, University of Tokyo
Professor,
National Graduate Institute for Policy Studies
Vice Chairman, The Institution For Transport Policy Studies
President, The Institute For Transport Policy Studies
Director of Policy Research Center of
National Graduate Institute for Policy Studies[Present Position]
Audit & Supervisory Board Member ofTaisei Corporation [Present Position]

External Audit & Supervisory Board Member
1977.04
2009.122011.05
2013.032016.06

Joined Board of Audit of Japan
Director General of 3rd Bureau,
Board of Audit
Director General of 5th Bureau,
Board of Audit
Secretary General, Board of Audit
Audit & Supervisory Board Member ofTaisei Corporation [Present Position]

Special Feature

Misao Akune

Value Creation Story of the Taisei Group

Audit & Supervisory Board Members

About the Taisei Group

Executive Officers, Executive Fellows (As of August 23, 2018)

Notes 1: Toru Tsuji, Fumio Sudo and Atsuko Nishimura are External Members of the Board as defined by the Companies Act, Article 2-XV.
2: Terunobu Maeda, Shigeru Morichi, Kiwamu Miyakoshi and Kunitoshi Saito are External Audit & Supervisory Board Members as defined by the Companies Act, Article 2-XVI.
3: Toru Tsuji, Fumio Sudo, Atsuko Nishimura, Terunobu Maeda, Shigeru Morichi, Kiwamu Miyakoshi and Kunitoshi Saito are independent officers in accordance with the rules of Tokyo Stock

Data Section

ESG Section

Business Section

Exchange and Nagoya Stock Exchange.

TA I SE I A N N UA L R E P O R T 2 0 1 8 48

ESG Section
ChairmanTakashi Yamauchi

Executive Officers
President and Chief Executive Officer
Yoshiyuki Murata
Executive Vice Presidents
Kazuhiko Dai
Chief of Marketing & Sales Division (Integrated);
Chief of Marketing & Sales (Civil Engineering) Division;
In charge of Safety Administration
Shigeyoshi Tanaka
Chief of Civil Engineering Division
Shigeyuki Sakurai
Chief of Business Administration Division
Masahiro Sakai
Deputy Chief of Marketing & Sales Division (Integrated),
Supervising Marketing & Sales (Building Construction)
Divisions
Senior Managing Executive Officers
Yoshinobu Shigeji
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)
Katsuyuki Kanai
Chief of Urban Development Division
Haruhiko Kono
Chief of Design Division
Shoji Kondo
Chief of Nagoya Branch
Norihiko Yaguchi
Chief of Architecture & Engineering Division (Integrated);
Chief of Building Construction Division
Takao Kanai
Chief of Marketing & Sales (West Japan) Division
Managing Executive Officers
Kazuhiko Hombu
In charge of Technology;
In charge of Energy & Environment
Masahiro Oshima
Chief of Corporate Planning OfficeSatoru Tsutae
Deputy, in charge of Civil Engineering, International
Operations Headquarters;
Deputy Chief of International Marketing & Business
Development Division, in charge of Civil Engineering

Hiroshi Suzuki
Chief of International Marketing & Business Development
DivisionTakeshi Kagata
Chief of Kansai Branch
Jirou Taniyama
Deputy Chief of Civil Engineering Division;
General Manager of Civil Engineering Department
Yoshiro Aikawa
Chief of Marketing & Sales (Building Construction)
Division II
Keiji Hirano
Deputy, in charge of Administration, International
Operations Headquarters
Hiroshi Tsuchiya
Chief of Marketing & Sales (Building Construction)
Division I
Susumu Morita
General Manager of Energy Business Strategy Department
Noriaki Kon
Chief of Sapporo Branch
Tetsuya Hanyu
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)
Nobuyuki Hayashi
General Manager of Design Department, Civil Engineering
Division
Atsushi Yamamoto
Chief of Marketing & Sales Promotion Division
Kyo Murai
Chief of Procurement Division
Hiroshi Kimura
Deputy Chief of Marketing & Sales (Civil Engineering)
Division;
In charge of Olympic Projects
Jo Iwata
Chief of Proposal & Solutions Division;
In charge of Olympic Projects
Fumihiko Sudoh
Chief of Tokyo Branch

Yoshitaka Inoue
Chief of International Operations Headquarters

Yuichi Kitaguchi
In charge of New National Stadium Project, Tokyo Branch

Yasushi Yoshinari
Chief of Medical & Pharmaceutical Business Division

Yasumitsu Sakurai
Deputy Chief of Architecture & Engineering
Division (Integrated);
General Manager of International Projects Management
Department;
General Manager of Profit Achievement Ratio (PAR)Management Section

Hiroshi Shirakawa
Chief of Yokohama Branch
Masaharu Okada
Chief of Marketing & Sales (Building Construction)
Division III
Masao Yoshikawa
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)

49 T A I S E I ANNUA L R EPORT 2018

Satoshi Imamura
Chief of Nuclear Facilities Division

Shun Kitano
Chief of Safety Administration Division

Yoshio Abe
Deputy Chief of Marketing & Sales (Civil Engineering)
Division;
General Manager of Marketing & Sales Department

Hiroshi Harada
In charge of Civil Engineering Projects, Civil Engineering Division

Akira Ejima
Chief of Chugoku Branch

Atsushi Suzuki
Chief of Mechanical & Electrical Division

Iwao Nishioka
Chief of Hokushinetsu Branch

Shunichi Sonoda
Deputy Chief of Marketing & Sales (Building Construction)
Division III;
General Manager of Marketing & Sales Department

Akira Nakaya
Chief of Shikoku Branch

Makoto Ohta
General Manager of Construction Engineering Department;
General Manager of International Projects Management
Department, Civil Engineering Division
Toru Inaba
Deputy, in charge of Building Construction & Engineering,International Operations Headquarters
Yasushi Kamezawa
Chief of Environment Division

Yoshihiko Ikeuchi
Deputy Chief of Marketing & Sales (Civil Engineering)
Division;
General Manager of Marketing & Sales Department
Ichiro Nagashima
Chief of Taisei Technology Center
Weiyu Chung
General Manager of Taipei Office;General Manager of Marketing & Business Development
Department (Taiwan), International Marketing & Business
Development Division

About the Taisei Group

Masahiko Okada
General Manager of Secretarial Department

Value Creation Story of the Taisei Group

Taku Yamamoto
Deputy Chief of International Marketing & Business
Development Division, in charge of Building Construction

Shinji Kawamura
Deputy Chief, in charge of Building Construction, Kansai
BranchSpecial Feature

Executive Officers
Shimpei Oguchi
Deputy Chief of Marketing & Sales (West Japan) Division,in charge of Building Construction

Executive Fellows
Toshihiko Tsuka
In charge of Information Planning, Corporate Planning Office

ESG Section

Shinsaburo Sawa
Deputy Chief of Marketing & Sales (Building Construction)
Division I;
General Manager of Marketing & Sales Department

Business Section

Yoshihiro Teramoto
Chief of Kyusyu Branch

Hirotoshi Ikeda
Deputy Chief of Architecture & Engineering Division (Integrated);

Yozo Shinozaki
Deputy Chief of Design Division
Tsuyoshi Maruya
Deputy Chief of Taisei Technology Center;
General Manager of Infrastructure Technology Research
Department

Data Section

Miyoshi Kato
In charge of Energy & Environment

TA I SE I A N N UA L R E P O R T 2 0 1 8 50

ESG Section

Corporate Governance and Internal Controls■ Basic Policy for Governance and Management Systems
Taisei Corporation (the “Company”) has established thisFundamental Corporate Governance Policy*1 in order toachieve sustainable development and improvement in themid- to long-term value of the Company and its subsidiaries
and affiliates (collectively, the “Taisei Group”) in accordancewith the philosophy of the Taisei Group, being "to create avibrant environment for all members of society" (the “TaiseiGroup Philosophy”) and the so-called “Taisei Spirit”, which
embodies our commitment to “Active and Transparent
Culture”, "Value Creation" and "Evolution of Tradition."
In line with the basic policy, the Taisei Corporation’s Board
gives its undivided attention to important management
decisions and the supervision of corporate affairs. The Board
is composed of 11 Members of the Board (eight Internal
Members of the Board and three External Members of theBoard). In order to enhance the effectiveness of the Board, theCompany has established several committees of the Boardand introduced a system of Executive Officers, in addition toholding meetings solely for External Members of the Boardand holding various sessions for exchange of opinions among
Members of the Board and Audit & Supervisory Board
Members. The External Members of the Board (two men and
one woman), who have objective viewpoints based on theirexperience and insight as corporate managers or a diplomat,
bring diversity to the deliberations of the Board while
contributing to strengthen supervision of management. In
addition, the Audit & Supervisory Board (including four
External Audit & Supervisory Board Members), operating
independently of the Board and the operating divisions, works
in close collaboration with the Accounting Auditors andAuditing Department, the in-house auditing department, toimplement independent and effective audits and to strengthen
the auditing system across the whole Group.

■ Effectiveness of Board of Directors
In FY2016, Taisei Corporation conducted an evaluation of theeffectiveness of the Board by means of self-evaluation by theMembers of the Board and Audit & Supervisory Board
Members, followed by deliberations by the Board withreference to an overall evaluation by the External Members of
the Board and a third-party opinion from a lawyer.
The results of the evaluation indicated that the Board isfunctioning effectively overall, that steady efforts are being
made to improve its operations by leveraging the Board’s

diverse composition, and that this seems to be connected to
improved results. A recommendation that the Board should
devise a timeframe to allow even fuller discussion of importantmanagement strategies was among other opinions noted.
In addition, in response to the FY2016 evaluation, theCompany made efforts to invigorate operations of the Board
in FY2017 through measures such as holding free debatesand exchange of opinion sessions on medium- to long-term
themes of the Company, and implementing training and visits
to worksites.
The Company aims to further enhance the operation of
the Board of Directors based on the FY2017 evaluation.
p.25-28 Message from External Members of the Board■ Ensuring Credibility of Financial Reporting
Internal controls on financial reporting based on the Financial
Instruments and Exchange Act are recognized as one of themost important issues for a corporation. We have set up theinternal systems including daily monitoring to ensure thecredibility of the financial reporting disclosed to the public. The
effectiveness of the system is evaluated by the Audit
Department and audited by KPMG AZSA LLC. The results aredisclosed in the Internal Control Report and in the Audit Reportof Internal Controls. We will fulfill our social responsibility as acorporation by continuing to ensure the effectiveness of theseinternal controls.
In order to continue to operate the internal control systems
relating to financial reporting in a sound manner, we are also
publishing messages from the President, implementing
e-learning, and other campaigns to raise awareness among
officers and employees.

■ Promotion of Internal Controls
At Taisei Corporation, the Board has established a “Basic
Policy for Development of a System for Ensuring Appropriate
Business Operations” to ensure the credibility of financial
reporting and systems for conducting operations in an
appropriate and efficient manner as a Group. Through thesesystems, we will deliver improved risk management andcompliance. The Company implemented a range ofmeasures in FY2017, such as organizing two training
sessions led by a lawyer on the topic of “Responsibilities andRoles of Executive Officers.”
p.54 Risk Management / Compliance

Main History of Corporate Governance at Taisei Corporation

Strengthening the Board’s management decisions and supervisory function
Introduced a System of
Executive Officers(Number of Membersof the Board: from 49 to 12)

●

1999

Introduced Independent External
Members of the Board
Number of Members of theBoard: 12(Including 2 External Membersof the Board)

●

2003

●

Established
Fundamental
Corporate
Governance Policy

http://www.taisei.co.jp/english/profile/corp_policies.html

51 T A I S E I ANNUA L R EPORT 2018

(Including 3 External Members of the Board)
Audit & Supervisory Board Members: 6(Including 4 External Audit & Supervisory Board Members)

2015* See our official website for the Taisei Corporation Fundamental Corporate Governance Policy.
WEB

Members of the Board: 11

2017About the Taisei Group■ Governance System
Governance System
General Meeting of Shareholders ❶AuditGroup Companies

SupportOperating Division

Appoint / Supervise
President and Chief Executive Officer

Committees of the Board ❸Report / Advice

Operations Committee ❽Operating Division

Special Committee ❾Operating Division

Collaborate❶General Meeting of Shareholders (held on June 28, 2018)
The Company shall endeavor to dispatch the convocation notice of its
General Meeting of Shareholders at least three weeks prior to thescheduled date of such General Meeting of Shareholders in order toprovide its shareholders time to sufficiently consider the agenda of such
General Meeting of Shareholders and exercise their voting rights
appropriately. In addition, prior to dispatching each notice, theCompany shall announce electronically the information relevant to such
General Meeting of Shareholders through the TDnet system and its
official website.

❷Members of the Board/Board (convened 13 times in FY2017)
The Board, entrusted by the shareholders, shall pursue activities for thecommon benefit of the Company and its shareholders, and shall be
responsible for maintaining an efficient and effective corporate
governance structure to facilitate the growth of the Company in asustainable manner and improve its corporate value in the mid- tolong-term. For the purpose of fulfilling the responsibility described in thepreceding paragraph, the Board shall exercise its supervisory functionof the Company's overall operating activities, thus ensuring
appropriateness, fairness, and transparency for the management, andshall make decisions regarding the execution of material businessdecisions as provided for in the laws and regulations, the Articles ofIncorporation, the Board Regulations, and the Application Standards
for the Board Regulations of the Company.
Nomination of a prospective Member of the Board and election of
an Executive Officer shall be determined by the Board after thecompletion of deliberations by the Executive Personnel Committee
established within the Board.
At least two (2) of the Members of the Board shall be Independent
External Members of the Board in order to ensure that the independentand objective oversight of the execution of the Board’s operations may
be effectively carried out.

❸Committees of the Board
For the purpose of expediting deliberations and decisionmakings by the Board, the Company has established thefollowing committees within the Board: 1) the Executive
Personnel Committee responsible for deliberating on the
personnel-related matters of the Members of the Board andExecutive Officers; 2) the Remuneration Committee responsiblefor deliberating on the remuneration of the Members of theBoard and Executive Officers; 3) the Finance Committee
responsible for deliberating on the potential acquisition andholding of significant assets; 4) the CSR Committee responsiblefor deliberating on matters to enhance the entire Group’s CSRbased business management.

❹Audit & Supervisory Board (convened 14 times in FY2017)
As an entity independent of the Board and the Operating
Divisions, and in accordance with the Audit Policy established by

the Audit & Supervisory Board, the Audit & Supervisory Board
Members audit the performance of the Member of the Board
including attending the meetings of the Board and hearing ofreports on business conditions from the Members of the Board.
The Audit & Supervisory Board Members and the Chief
Executive Officer, the Auditing Department and the Accounting
Auditors hold regular meetings to arrive at mutual understanding
and to improve the effectiveness of the audits.

❺Audit & Supervisory Board Members’ Department

Value Creation Story of the Taisei Group

Auditing Department ❻Internal Audit

Prior Consultation and ReportingSpecial Feature

Collaborate

Audit & Supervisory Board
Members’ Department ❺Board ❷
Members of the Board
External Members of the Board

In order to assist the Audit & Supervisory Board Members in theperformance of their duties, the Audit & Supervisory Board
Members’ Department has been set up independently of theBoard as a dedicated organization to support the Audit &Supervisory Board Members with the collection of appropriate
information and other tasks.

❻Auditing Department
Based on the annual auditing plan, the Auditing Department also
conducts internal audits of administrative and management
systems, as well as the legality and rationality of the managementof corporate affairs at all in-house departments and Group
companies.

Business Section

Audit❼Accounting Auditors
The Accounting Auditors submit reports on the audit plan andthe audit results to the Audit & Supervisory Board, the
Accounting Department and other internal control departments
as needed.
To ensure the external accounting auditors conduct fair andappropriate audits, the management of the Company, Audit &Supervisory Board Members and the Auditing Department shallhave meetings on a regular and as-needed basis, and exchange
their opinions with the external accounting auditors. Further, theBoard shall respond appropriately if external accounting auditors
detect dishonest practices and request that appropriate action
be taken, or indicate errors or problems.

ESG Section

Audit & Supervisory Board ❹Audit & Supervisory Board Members
External Audit & Supervisory Board Members❽Operations Committee
We have set up a range of operations committees including theTechnology Committee, the Central Safety Committee, theEnvironment Committee, the Risk Management Committee,and
the Central Labor Affairs Committee to deliberate matters thatinvolve consultations with the President.

❾Special Committee

Data Section

Collaborate

Collaborate

Accounting Auditors ❼Appoint

Appoint

Appoint

We have set up the Compliance Committee chaired by an
external expert as a Special Committee to respond to
consultations with the President and we endeavor to reinforce
the promotion of compliance.

TA I SE I A N N UA L R E P O R T 2 0 1 8 52

ESG Section

Corporate Governance and Internal Controls■ Support System for External Members of the Board and■ Remuneration for Officers
Remuneration for the Members of the Board is determinedfrom a comprehensive perspective that includes the scale,content, and performance of our business, as well as
individual job specifications and responsibilities. Based on a
resolution passed at the 146th Annual General Meeting of
Shareholders on June 27, 2006, the sum total of monthly
remuneration for the Members of the Board shall not exceed¥70 million. Based on a resolution passed at the 134th
Annual General Meeting of Shareholders on June 29, 1994,
the sum total of monthly remuneration for Audit & Supervisory
Board Members shall not exceed ¥12 million.
Further, where remuneration for the Members of the Board isconcerned, the system of remuneration shall reflect performanceand will be determined by the Board after deliberation by the
Remuneration Committee, which carries out preliminary reviews
ahead of board meetings, while remuneration for Audit &Supervisory Board Members shall be determined upon
consultation with the Audit & Supervisory Board.

External Audit & Supervisory Board Members

The Secretarial Department is responsible for assisting
operations of External Members of the Board, and the
Audit & Supervisory Board Members’ Department, whichis independent of Members of the Board, is responsible forassisting operations of External Audit & Supervisory Board
Members. The responsible officers and employees of theSecretarial Department distribute materials and provide
explanations concerning proposals to External Members of theBoard prior to the meetings of the Board held in principle oncea month. For External Audit & Supervisory Board Members,
the responsible employees of the Audit & Supervisory Board
Members’ Department provide explanations and distributematerials in advance regarding proposals. Information is also
provided in a timely manner to External Members of the Board
and External Audit & Supervisory Board Members.

■ Implementation of Training for Members of the Board
and Audit & Supervisory Board Members

Amounts of Remuneration and Others Paid to Membersof the Board and Audit & Supervisory Board Member(Unit : ¥ Million)

External
Category

Number ofPayeesMember of the
Board

Total

Amount Paid

Number ofPayeesAmount Paid

3

41

11

696

Audit &
Supervisory
Board Member

4

55

6

129

Total

7

96

17

825

(Note) All remuneration and others paid to Audit & Supervisory Board Members and Members of theBoard are basic remuneration.

The Company holds necessary training seminars for Members of
the Board and Audit & Supervisory Board Members in order forthem to fulfill their functions to supervise and audit its business.
Seminars covering related laws and regulations, the Articles ofIncorporation, the Board Regulations, and internal processes fordetermining important policies of the Company, etc. are provided
when officers assume their positions. In addition to this training,
the Company continuously provides opportunities for Membersof the Board and Audit & Supervisory Board Members toundergo trainings provided by third-party organizations. We also
implement measures such as visits to worksites as needed forExternal Members of the Board and External Audit & Supervisory
Board Members to deepen their understanding of the TaiseiGroup and our business.

Major Activities of External Members of the Board and External Audit & Supervisory Board Members
Classification

Name

Major Activities

Memberof the Board

Toru Tsuji

He attended all the board meetings held in the current fiscal year. Based on the deep insights obtained from his
experience as a manager in a different industry and from his neutral position and view as an external member of theboard, he offered useful opinions to the Company’s management in order to establish an internal control system andstrengthen corporate governance and a compliance system.

Memberof the Board

Fumio Sudo

He attended all the board meetings held during the current fiscal year. Based on the deep insights obtained from his
experience as a manager in a different industry and from his neutral position and view as an external member of theboard, he offered useful opinions to the Company’s management in order to establish an internal control system andstrengthen corporate governance and a compliance system.

Memberof the Board

Since she assumed the position of an external member of the board in the 157th General Meeting of Shareholders
held on June 29, 2017, she attended all the board meetings held during the current fiscal year. Based on her
Atsuko Nishimura abundant international sense obtained from her experience as a diplomat and from her neutral position and view as
an external member of the board, she offered useful opinions to the Company’s management in order to establish
an internal control system and strengthen corporate governance and a compliance system.

Audit & Supervisory
Board Member

He attended all the board meetings held in the current fiscal year and 13 out of a total of 14 audit & supervisory
Terunobu Maeda board meetings held during the same period. He offered his opinions as and when appropriate based on his
broad knowledge of finance and accounting.

Audit & Supervisory
Board Member

Shigeru Morichi

He attended all the board meetings and audit & supervisory board meetings held in the current fiscal year. He
offered his opinions as and when appropriate based on the deep insights obtained from his experience as auniversity professor.

Audit & Supervisory
Board Member

KiwamuMiyakoshi

He attended all the board meetings and audit & supervisory board meetings held during the current fiscal year.
He offered his opinions as and when appropriate based on the deep insights obtained from his experience asa police officer.

Audit & Supervisory
Board Member

Kunitoshi Saito

He attended all the board meetings and audit & supervisory board meetings held during the current fiscal year. He
offered his opinions as and when appropriate based on the deep insights obtained from his experience at theBoard of Audit of Japan.

53 T A I S E I ANNUA L R EPORT 2018material with commentary, summaries of the President’s
speeches and the main question and answer sessions(Japanese and English) in addition to the Medium-term
Business Plan and materials distributed at results briefings. In
addition, we disclose information to overseas investors in
English in our annual reports and on the Taisei Corporation
official English website.
We also report on key business and ESG (Environment,
Society, Governance) initiatives on the shareholder
newsletter in order to further deepen our shareholders’
understanding of our corporate activities.
p.40 Communication with Major Stakeholders

About the Taisei Group

Taisei Corporation established the Information Disclosure
Policy in 2006, and stated principles for ensuring appropriate
information disclosure and transparency in the Fundamental
Corporate Governance Policy. These policies form the basis
for our practice of timely and appropriate information
disclosure. In 2015, the Company established the IR Policy,
and strives to promote constructive dialog throughdiscussions with shareholders and investors, IR briefings, andthe annual general meeting of shareholders.
We strive for fair information disclosure via the Taisei
Corporation official website, where we publish explanatory

Value Creation Story of the Taisei Group■ Accountability

At Taisei Corporation, we have formulated a Risk Management
Policy and built systems to implement risk management
across the whole company in order to respond to risk
escalation following changes in the business environment.
In terms of handling risk management, we identify andselect risks that influence business activities every year.
Depending on their importance, we classify them into
categories such as “important company-wide risk” or “riskwithin the jurisdiction of head office”. As well as preparing
countermeasures, we also implement pragmatic risk
management by clarifying supervisory roles and jurisdictions
among the departments.
Specifically, information on incidents and accidents withthe potential to have a serious impact on the management of
the corporation is centralized at the CRO Secretariat. We
implement effective risk management across the whole
company including measures to prevent any reoccurrence bysharing this information with the Risk Management
Committee and the Risk Management Council.

Taisei Corporation has established the Policy on BusinessContinuity in Times of Disaster to meet its responsibilities as a
general construction company supporting the infrastructure
for economic activities. We aim to become a company
earning the trust of society by contributing to business
continuity at central and local governments and corporations
while maintaining our business functions in time of disaster.
The Company has recently enhanced bases to serve as
backup locations in case head and branch offices aredamaged in a disaster in order to further ensure solid basefunctions in time of disaster.
At head office, we strengthened our disaster response
capabilities by enhancing our employee dormitory “Premier
Hatsudai” “Dormitory Shimura” and other facilities and setting
them up as new backup locations for head office.
In addition, we update our Business Continuity Planning(BCP) annually in order to fulfill the duties noted above,
including reinforcement of our crisis management systemoverseas in FY2015, and acquiring new certifications related
to the BCP (Certification of Organizations Contributing to
National Resilience).
Thanks to these efforts, we were able to swiftly respondto requests for reconstruction and supplies from our business
partners during the Kumamoto Earthquake that occurred in
April 2016.

Company-Wide Risk Management System
President
CRO
Incident / Accident Response

Business Section■ Initiatives for Business Continuity Planning (BCP)ESG Section■ Company-Wide Risk Management

Special Feature

Risk Management / ComplianceCountermeasures and Prevention of Reoccurrence
Risk Management Committee
Risk Management Council

Data Section

CRO Secretariat

Head Office
Risk Management Promotion Committee
Head Office

Branch Offices

Branch Offices
Risk Management Promotion Committee➡Please refer to the business and other risks in the Securities Report for the main issues that may
have a major impact on investor decisions.

Dormitory Shimura

Delivery of supplies after the
Kumamoto Earthquake

TA I SE I A N N UA L R E P O R T 2 0 1 8 54

ESG Section

Risk Management/Compliance■ Compliance Policy and Systems■ Raising Awareness of Compliance

The Group Action Guidelines for the Taisei Group state that inorder to fulfill its social responsibilities, the Taisei Group shalladhere to laws and regulations, etc. (laws and ordinances,bylaw, administrative guidance, customs and other social
rules, and various company rules and regulations). The
guidelines also state that the company must act in good faithand fulfill contracts and promises with customers, suppliers, orthe local community in all sincerity. This is the basis ofcompliance for all officers and employees of the Taisei Group.
As indicated in the diagram below, each department at
Taisei Corporation has deployed managers, promoters, andimplementers to install the in-house compliance promotion
system and to strengthen compliance based on the opinions
and recommendations of the Compliance Committee.

Taisei Corporation systematically implements educationand training to raise awareness of compliance. We strive
to establish awareness for compliance among personnel
by implementing e-learning and publishing the Compliancenewsletter on familiar topics related to compliance, and are
expanding these efforts to personnel of Group companies
as well.
We also endeavor to strengthen group compliance byorganizing periodic conferences for staff who are responsible
for legal affairs at the domestic Group companies as a system
for information sharing and exchange of opinions regarding
issues related to legal affairs.
In addition, we are working to enhance awareness forcompliance by holding compliance-related trainings for
specialized contractors.

Compliance Promotion System
Organization

President
CP*1 Committee

Administrative Structure
Head OfficeBusiness Administration Div.

Personnel

Secretariat

CP General Manager
CP General Promoter(Chief of Business(General Manager of
Administration Division) General Affairs Department)

CP Promotion Section*2

Publish the Compliance newsletter (once a month)
Implement e-learning●●

Organize conferences for staff with responsibility for legal
affairs at ten Group companies in Japan (once a year)● Guidance on KPI establishment to six companies in Japan●

Group company

Compliance training at the Safety Conference*4(once a year / 12 branch offices)● Compliance training for new employees of Souyu-kai
member companies (twice a year)● Promote CSR procurement●

Implementation Structure
Head Office

Description

Specialized contractors /Souyu-kai

Branches

Division CP Manager(Chief of Division)
Division CP Promoter(General Manager in
Charge of Administration)

Division CP Manager(Chief of Branch)
Division CP Promoter(Administrative Manager)

CP Implementers(All Department General Managers)*3

CP Implementers(All Department General Managers)*3

All Executives and Employees

All Executives and Employees

p.44 Promotion of Supply Chain Management*4 A conference that aims to inform specialty constructors about safety management.

*1 CP: abbreviation of compliance*2 Promotes and embeds compliance awareness among officers and employees. Also functions as asecretariat for the Compliance Committee.
*3 All heads of departments are appointed compliance implementers. The heads of each department
educate and inform all officers and employees in their own departments about compliance.
p.52 Governance System

In response to violation of the Anti-Monopoly Act at TAISEI ROTEC CORPORATION, a Group company, we engaged
in deliberations at the Compliance Committee chaired by an external lawyer and at the Board of Directors meetings
throughout FY2017. Based on the recommendations of the Compliance Committee, we established regulations
concerning applications for surcharge exemption and an in-house leniency system. Furthermore, with regard to the Linear
Chuo Shinkansen construction project, the Company and our counsellor were indicted on suspicion of violation of AntiMonopoly Act in March 2018. We take this matter very seriously, and are reviewing measures such as further tighteningof the rules relating to contacts with competitors which could lead to suspicion of violation of the relevant laws andregulations, and will implement those measures accordingly.

55 T A I S E I ANNUA L R EPORT 2018

Eliminate Anti-Social Forces

Taisei Corporation has adopted Promoting Partnerships
with Supply Chains in its Group Action Guidelines, andstipulates that relationships of fairness and mutual trust be
built with suppliers and that transactions be conducted onan equal footing.
Furthermore, we have set out Measures for Dealing with
Anti-Social Forces and Organizations, stipulating that wewill take a resolute stance against anti-social forces and will
not comply with illegitimate demands. In order to eliminate
anti-social forces, we have included a condition in ourcontracts, including the basic contract for specialized
sub-contractors, declaring that the supplier is not ananti-social force and that if revealed otherwise, the contract
may be cancelled without notice.

■ Verification of Compliance with Laws andRegulations (Guidance)

In order to ensure the legitimacy of bids, Taisei Corporation
operates an in-house system whereby the heads of branch
offices confirm, produce the documents, and keep all bids
on file.
Every year, the legal department verifies the legitimacyof bids and checks compliance with the Construction
Business Act, Antimonopoly Act and the Subcontractors
Protection Act. The results are reported to the in-house
Auditing Department.

About the Taisei Group
Value Creation Story of the Taisei GroupSpecial Feature■ Initiatives to Ensure Fair Subcontracts andTaisei Corporation has formulated an Intellectual Property
Policy*, based on which we practice our Intellectual Property
Strategy. We strategically manage and utilize all intellectual
property including patents, copyright, construction andbusiness know-how to promote management that is focusedon intellectual property. Regarding management of intellectual
property, we intend to improve operational efficiency throughbuilding a search function for our own patents and preparing a
database for managing patents. We have tightened thehandling of classified information and we have established
Rules for Handling Intellectual Property Information in order toprevent leaks of technical know-how or other confidential
business information. We also take measures to reduce the riskof infringing the intellectual property rights of third parties, suchas making technical departments and business departments
thoroughly aware of other companies’ patent information.
In addition, we conduct training to ensure that employees
are fully informed about this policy and utilize intellectual
property strategically in order to strengthen ourcompetitiveness and improve our corporate value.
In addition, we conduct training to ensure that employees
are fully informed about this policy and utilize intellectual
property strategically in order to strengthen ourcompetitiveness and improve our corporate value. In FY2017,
we conducted intellectual property courses for technicaldepartments in the head office and operational departments inbranch offices, including the utilization of application rights anda series of awareness campaigns about infringement.
p.43 KPIs Number of patent rights registered / Number of patent applications filed■ Information Security Measures
At the Taisei Group, we have formulated policies and action
guidelines in order to protect and make appropriate use ofcompany information.
Under the slogan “ICT Safety First!,” Taisei Corporation
implements a range of information security measures.
Together with all Group companies, specialized constructors,
and other partner companies, we aim for zero incidents
related to information security. We have been promoting atighter information security environment at overseas businessoffices and construction sites since FY2016.
We have summarized the minimal rules to be followed in a
pamphlet, and conducted education and instruction for all
officers and employees as well as specialized constructors
and other partner companies.
Taisei Corporation has systematically built rules andregulations concerning company-wide information security
systems and information management. We established
Taisei-SIRT in order to strengthen the system for responding
to security incidents* involving electronic information. We havebeen actively involved in the Nippon CSIRT Association sincejoining in March 2013.
p.46 KPIs Number of major information security accidents

Business Section

p.46 KPIs Corporate ethics helpline and Group response rate

Intellectual Property Strategy

ESG Section

At the Taisei Group, we have set up the "Corporate ethics
helpline" and "Group helpline", a system for whistleblowing and consultation where acts contravene laws
and ordinances or the Group Action Guidelines. We haveestablished consultation desks in-house and at an externalorganization (a law firm).
Based on the Whistleblower Protection Act, allinformation about the whistleblower is treated asconfidential and any adverse action as a direct result of any
whistleblowing is prohibited.
Since April 2016, we are accepting anonymous tips inorder to nip a wide range of illegal activities in the bud.
We carry out fact-finding investigations on thewhistleblowing reports received, and respond appropriately,
including taking corrective measures as needed.
We also take measures to conceal all information onwhistleblowers and strive to thoroughly prohibit any adverse
treatment of them.

■ Practicing Intellectual Property Policy andData Section■ Whistleblowing and Consultation System* Electronic information security incidents: Incidents and accidents including information leaks that threaten information security or have an impact on business operation.

TA I SE I A N N UA L R E P O R T 2 0 1 8 56

Explanation and Analysis of Business Results
TAISEI CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2017 and 2018

Contract backlog at the beginning of the year

Millions of Yen

Thousands of U.S. Dollars*1(except for per share figures)(except for per share figures)

2017

2018

2018

¥ 2,081,438¥ 2,249,221$ 21,171,131

8.1%

1,655,036

1,743,498

16,410,938

5.3

New orders received during the year

Change (%)

1,487,253

1,585,498

14,923,739

6.6

Contract backlog at the end of the year

¥ 2,249,221¥ 2,407,221$ 22,658,330

7.0%

Net income attributable to owners of parent¥¥

Net sales

90,566

126,788

Per share (in yen and dollars)

392.87561.36*

Cash dividends applicable to the year

22,90728,032Per share (in yen and dollars)

42.9
22.4

3

325.0

85.00*

0.800*

570,814669,020

6,297,252

17.2

2483.01

2975.02*2

28.003*2

19.8

1,760,079

1,930,825

18,174,181

9.7

Net assets
Per share (in yen and dollars)
Total assets

5.284*

2

263,855
3

20.00

40.0%

$ 1,193,411
2*1 U.S. dollar amounts above and elsewhere in this Annual Report were translated from yen, for convenience only, at the rate of U.S. $ 1 = ¥ 106.24, the approximate exchange
rate at March 31, 2018.
*2 The net assets per share and the net income per share are calculated assuming that the consolidation of shares took place at the beginning of the year, because theconsolidation of shares, at the ratio of 1 share for 5 shares, was implemented on October 1, 2017.
*3 Total annual dividends per share as of March 31, 2018 is ¥ 85.00 (U.S. $ 0.8),which is the sum of the interim dividend per share of ¥ 10.00 (U.S.$ 0.1) and the year-end dividend
per share of ¥ 75.00 (U.S. $ 0.7). Due to the consolidation of shares at the ratio of 1 share for 5 shares implemented on October 1, 2017, the year-end dividend per share of¥ 75.00 reflects this consolidation, while the interim dividend per share of ¥ 10.00 does not.
If the interim dividend per share is calculated based on the consolidation of shares, it would be ¥ 50.00 (U.S. $ 0.5), making the total annual dividends per share ¥ 125.00(U.S. $ 1.2).

Status of Results
The Japanese economy during this fiscal year moderately recovered

Under these circumstances, the Company and its affiliatedoverall as capital investment mildly increased in response to strong

companies reported consolidated results of its operations ascorporate performance, and consumer spending rebounded withfollows:

the improvement in the employment and income environment.

Orders received of ¥ 1,743.4 billion yen, 5.3% increase

In the domestic construction market, both government andcompared to the previous fiscal year, net sales of ¥ 1,585.4 billion

private investments in construction moderately increased, allowing

yen, 6.6% increase, operating income of ¥ 181.8 billion yen, 29.1%

the construction industry to maintain a solid business environment.

increase, net income attributable to owners of parent of ¥ 126.7
billion yen, 40.0% increase compared to the previous fiscal year.

Major new orders received during FY ended March 2018
ClientProject

Japan Airport Terminal Co., Ltd.

Tokyo International Airport Terminal 2 Construction Work of International
Facilities

Mitsui Fudosan Co., Ltd.

Toyosu 2nd District 2-1 Project (Tower B)

Tokyo Metro Co., Ltd.

Improvement Work of Ginza Station of Ginza Line and Other Two Stations(Building Construction, Electric Engineering and Civil Engineering Works)

Ebie Water Link Co., Ltd.

Renewal Project of Ebie Sewage Treatment Plant in Osaka City

Ministry of the Environment

Interim Storage Facility for (Futaba District 2) Soil Interim Storage Facility
Construction for FY 2017

➡ p.8

➡ p.8

Major projects completed during FY ended March 2018
ClientProject

Meguro Station Front Area Urban Land
Redevelopment Consortium

Meguro Station Front Area 1st Type Urban Land Redevelopment New
Construction of Building Facilities➡ p.8

Nishi-Shinagawa 1-chome Area Urban Land
Redevelopment Consortium

Nishi-Shinagawa 1-chome Area 1st Type Urban Land Redevelopment New
Construction of Building Facilities and Public Facilities (Block A)➡ p.8

Futamatagawa Station South Area Urban Land
Redevelopment Consortium

Futamatagawa Station South Area 1st Type Urban Land Redevelopment New
Construction of Building Facilities

West Nippon Expressway Company Limited

Construction Work of the Shinmeishin Expressway Minoh Tunnel East

Kesennuma City

Site Preparation for Promotion of Collective Relocation for Disaster Prevention
and Development Project of Public Restoration Housing, Kesennuma City

57 T A I S E I ANNUA L R EPORT 2018

➡ p.8

3. Real Estate Development

results for reporting segments include internal transactions between

As for the real estate industry, the condominium market has

segments).

shown to be more polarizing as we see that while demandremained strong mainly for properties in central Tokyo with sales

1. Civil Engineering

prices maintaining high levels, some properties in the suburbs

In our Group, net sales increased by 3.8% compared with thetook a long time to sell. Further, the building leasing market

previous consolidated fiscal year to ¥ 466.4 billion, due to an

remains steady as the rent continued to moderately rise amid

increase in net sales for both the Company and its consolidated

strong demand mainly in central Tokyo.

About the Taisei Group

Results according to reporting segment, etc., are as follows (theyear to ¥ 71.5 billion, due to an increase in net sales and an

previous consolidated fiscal year to ¥ 119.8 billion, due to a

improvement in gross profit margin.

decrease in net sales for the Company. Also, operating income
decreased by 2.6% year on year to ¥ 12.9 billion, due to a decrease

2. Building Construction

in net sales.

In our Group, net sales increased by 8.5% compared with theprevious consolidated fiscal year to ¥ 1,060.5 billion, due to an

4. Otherincrease in net sales for the Company. Also, operating income

In our Group, net sales decreased by 5.6% compared with theincreased by 31.4% year on year to ¥ 96.3 billion, due to an

previous consolidated fiscal year to ¥ 12.3 billion, and operating

increase in net sales and an improvement in gross profit margin.

income decreased by 7.2% year on year to ¥ 1.1 billion.

(Consolidated) Orders received
Millions of Yen
2017

Value Creation Story of the Taisei GroupIn our Group, net sales decreased by 1.6% compared with thesubsidiaries. Also, operating income increased by 29.6% year on

2018

Civil engineering¥

Building construction
Real estate development
OthersTotal

427,594¥

520,407

1,101,472

1,099,950

115,337

113,411

10,6309,727¥ 1,655,035¥ 1,743,497

Special Feature

Name of reporting segment, etc.:(Consolidated) Sales
2017

2018

Name of reporting segment, etc.:
Civil engineering¥

422,847¥

441,269

Building construction

938,548

1,020,765

Real estate development

115,225

113,736

10,6309,727¥ 1,487,252¥ 1,585,497

Notes: 1. In Orders received and Sales, transactions between segments have been eliminated.
2. As it is difficult to define production performance at our Group, “overview of production” is omitted.

ESG Section

Total

Data Section

OthersBusiness Section

Millions of Yen

TA I SE I A N N UA L R E P O R T 2 0 1 8 58

Explanation and Analysis of Business Results
TAISEI CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2016 and 2017

Cash Flows
1. Cash Flows from Operating Activities

2. Cash Flows from Investing Activities

Income before income taxes of ¥182.2 billion was earned in thisA balance of expenditure of ¥11.8 billion was incurred in thisterm, which, together with other factors, resulted in a balance ofconsolidated fiscal year due to the acquisition of property, plant andexcess revenue of ¥ 207.0 billion for this consolidated fiscal year

equipment, etc. (excess revenue of ¥ 6.2 billion in the previous(excess revenue in the previous consolidated fiscal year was

consolidated fiscal year).

¥ 218.1 billion).
3. Cash Flows from Financing Activities
A balance of expenditure of ¥ 41.6 billion was incurred in thisconsolidated fiscal year due to the acquisition of treasury stockand cash dividends paid, etc. (expenditure of ¥60.0 billion in theprevious consolidated fiscal year).

Cash Flows Status（Billions of Yen）■ Cash flows from operating activities■ Cash flows from investing activities
300.0■ Cash flows from financing activities
Increase / decrease in cash and cash equivalents

218.1

200.0

207.0

163.0
138.7

100.0

95.3

88.5
16.0

24.0

34.5

0

(100.0)(68.8)

2013

152.5

(13.9) (30.4)(17.2)

2014

6.2(11.8)(25.0) (35.1)

2015(60.0)

2016(41.6)

2017 (FY)As a result of the above, cash and cash equivalents at the end ofbillion year on year). In addition, of the balance of interest-bearing

this consolidated fiscal year was ¥ 687.3 billion (an increase ofloans associated with procurement of finance at the end of this¥ 152.5 billion compared with the end of the previous consolidated

consolidated fiscal year, non-recourse loans were ¥ 3.4 billion (afiscal year), and the balance of interest-bearing loans associateddecrease of ¥ 0.1 billion year on year).

with procurement of finance was ¥ 247.3 billion (an increase of ¥9.2

Analysis of Financial Position and Business Results
1. Overview

2. Financial Position

Although the business results for this consolidated fiscal year did(1) Assets

not achieve the predictions at the beginning of the fiscal year for net

As a result of an increase in cash and time deposits, total assets

sales, predictions were achieved for orders received, operating

increased by 9.7% or ¥ 170.7 billion compared with the end of theincome, recurring income, and net income attributable to owners ofprevious consolidated fiscal year to ¥ 1,930.8 billion.

parent. Also, as net income attributable to owners of parent
increased by ¥ 36.2 billion from the previous consolidated fiscal year

(2) Liabilities

to ¥ 126.7 billion, ROE (return on equity) increased by 3.8% toTotal liabilities increased by 6.1% or ¥ 72.5 billion compared with

20.5%.

the end of the previous consolidated fiscal year to ¥ 1,261.8

Despite an increase of ¥ 1,261.8 billion in liabilities due to anincrease in accounts payable, trade, net assets increased to ¥669.0
billion due to posting of net income attributable to owners of parent,
and the ratio of capital to assets increased by 2.3% compared withthe end of the previous consolidated fiscal year to 34.6%. Also, thebalance of interest-bearing loans associated with procurement offinance increased by ¥ 9.2 billion from the end of the previous
consolidated fiscal year to ¥ 247.3 billion (including non-recourse
loans of ¥ 3.4 billion, down ¥ 0.1 billion).

59 T A I S E I ANNUA L R EPORT 2018billion, due to an increase in accounts payable, trade.

compared with the previous consolidated fiscal year, due to an

due to posting of net income attributable to owners of parent,

increase in income resulting from net sales growth in Civil

etc., despite carrying out an acquisition and cancellation ofEngineering and Building Construction and an improvement intreasury stock.

gross profit margin.

3. Business Results(3) Net Income Attributable to Owners of Parent(1) New Orders and Net Sales

Net income attributable to owners of parent increased by 40.0%

New orders received have increased in Civil Engineering, increasing

to ¥ 126.7 billion compared with the previous consolidated fiscal

overall by 5.3% compared with the previous consolidated fiscal year

year, due to an improvement in extraordinary loss (income)to ¥ 1,743.4 billion.

stemming from reaction to the posting of losses incurred in relation

Also, net sales increased in Civil Engineering and Building

to the Anti-Monopoly Act in the previous term.

Construction, increasing by 6.6% to ¥ 1,585.4 billion, compared withthe previous consolidated fiscal year.

Dividend Policy
The Articles of Incorporation of the Company permit an interim
dividend to be allocated, in accordance with Paragraph 5 of Article
454 of the Companies Act, with dividends allocated twice every
year, at the middle and at the end of the fiscal year. These
dividends are decided at the General Meeting of Shareholders forthe end of term and the Board meeting for the interim dividend.
At the Board meeting on May 11, 2018, acquisition of treasury
stock, the maximum limitation of which is 8,780 thousand shares(¥36.0 billion), was resolved in order to increase shareholder
returns and to improve the capital efficiency.

Business Section

The Company has made it a basic policy to pay long-term stabledividends to shareholders. The Company tries to reinforce internal
reserve for the future business operation, and returns the profit to
the shareholders by way of a special dividend and the like when
the business performance of the Company is well.
With regard to the dividend at the end of the fiscal year ended
March 31, 2018, comprehensively taking into account bothachievement of much greater performance than the initial plan,and business surroundings in the future, etc., it has been decided
to allocate a dividend of ¥ 75.00 per share.
The Company conducted 1-for-5 consolidation of shares on
October 1, 2017. When the share consolidation is not taken into
consideration, the total dividend for the fiscal year ended March
31, 2018, including the interim dividend of ¥ 10 is ¥ 25 per share,a ¥ 5 increase compared to the dividend of the previous fiscal
year.

About the Taisei GroupOperating income increased by 29.1% to ¥ 181.8 billion

the end of the previous consolidated fiscal year to ¥ 669.0 billion,

Value Creation Story of the Taisei Group(2) Operating Income

Net assets increased by 17.2% or ¥ 98.2 billion compared with

Special Feature(3) Net Assets

Millions of Yen

Yen

Total dividend amount

Dividend per share¥ 11,212¥ 10.00

16,81875.00

Resolution meeting date:
Board meeting, November 10, 2017
General Meeting of Shareholders, June 28, 2018

ESG Section

Total dividend amount and dividend per share

Note: The dividends on retained at the record date of this term are as shown above.

Data Section* Since the record date falls on September 30, 2017, the dividend per share based on a resolution of the Board meeting held on November 10, 2017 does not take into account the shareconsolidation (1-for-5 consolidation of shares) as of October 1, 2017.

TA I SE I A N N UA L R E P O R T 2 0 1 8 60

Consolidated Balance Sheets
TAISEI CORPORATION and Consolidated Subsidiaries
March 31, 2017 and 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen
ASSETS

2017

2018

¥

¥

2018

Current assets:
Cash and time deposits (Notes 3 and 4) ...............................

535,592

687,456$ 6,470,783

Notes and accounts receivable, trade (Note 4 and 7) ............

420,131441,631

4,156,918

Cost on uncompleted contracts ............................................

67,05350,094

471,517

Cost on development projects in progress ............................

102,743

86,207

811,436

Other inventories ...................................................................

3,462

2,757

25,951

Deferred income tax assets (Note 9) ......................................

28,046

24,777233,217

Other current assets(Note 7) .................................................

66,84359,514560,185

Allowance for doubtful accounts ...........................................

(298)

(173)

(1,628)

Total current assets ............................................

1,223,572

1,352,263

12,728,379

Buildings and structures (Notes 6,10 and 21) ....................

123,479

136,975

1,289,298

Machinery, vehicles, tools, furniture and fixtures (Note 6,10 and 21) ...

55,071

56,173528,737

Land (Notes 6,10,18 and 21) .............................................

119,826

119,964

1,129,179

Construction in progress ...................................................

922

1,523

14,335299,298

314,635

2,961,549

Accumulated depreciation .................................................

(123,315)(126,238)(1,188,234)

Net property, plant and equipment .....................

175,983

188,397

1,773,315

Intangibles (Note 10) .............................................................

5,085

11,554

108,754

Investment securities (Notes 4, 5 and 6) ............................

309,015337,382

3,175,659

Net defined benefit asset (Note 11) ....................................

10,7789,561

89,994

Deferred income tax assets (Note 9) ...................................

3,029

2,008

18,901Other assets (Note 6) .........................................................

35,082

31,413295,679

Allowance for doubtful accounts ........................................

(2,465)(1,753)(16,500)

Total investments and other assets .....................

355,439

378,6113,563,733

Total fixed assets ..................................

536,507

578,5625,445,802

Total assets ...........................................

¥ 1,760,079¥ 1,930,825$ 18,174,181

Fixed assets:
Property, plant and equipment:

Investments and other assets:

The accompanying notes are an integral part of these balance sheets.

61 T A I S E I ANNUA L R EPORT 2018

2017

2018

¥

¥

2018

Current liabilities:
Notes and accounts payable, trade (Note 4 and 7) ................
Short-term loans (Notes 4, 6 and 8) ......................................

424,494
71,417509,576$ 4,796,461

69,304652,334

Current portion of long-term debt (Notes 4 and 8) .................

53,554

31,449296,019

Income taxes payable ...........................................................

31,13930,843

290,314

Advances received and progress billings on uncompleted contracts (Note 15) ...

175,689

148,516

1,397,929

Deposits received (Note 4) ....................................................

171,132

182,142

1,714,439

Allowance for warranty on completed contracts ....................

3,391

3,129

29,452

Allowance for losses on construction contracts .....................

15,666

9,394

88,422

Allowance for losses on order received .................................

15

3

28

Other current liabilities(Note 7) ...............................................

40,497

38,270360,222

Total current liabilities ...............................

986,994

1,022,626

9,625,620

Long-term debt (Notes 4, 6 and 8) ........................................

113,928

147,321

1,386,681

Deferred income tax liabilities (Note 9) ...................................

11,351

21,658203,859

Deferred income tax liabilities for revaluation of land (Notes 9 and 18) ....

4,184

3,286

30,930Retirement benefits for directors and audit & supervisory board members ..

432

391

3,680

Allowance for losses on investments in subsidiaries and affiliates ...

66

40

377

Long- term liabilities:

Allowance for environmental spending ..................................

90

89

838

Allowance for losses on Anti-Monopoly Act (Note 19) ...........

11,036

10,694

100,659

Net defined benefit liability (Note 11) ......................................

41,26235,787

336,851

Other long-term liabilities .......................................................

19,922

19,913

187,434

202,271

239,1792,251,309

Total liabilities ...........................................

1,189,265

1,261,805

11,876,929

Issued: 224,541,172 shares ..............................................

122,742

122,742

1,155,328

Capital surplus ......................................................................

85,15060,199566,632

Business Section

Total long-term liabilities ........................................................

About the Taisei Group

LIABILITIES AND NET ASSETS

Value Creation Story of the Taisei Group

Millions of Yen

Special Feature

Thousands of
U.S. Dollars(Note 1)

Net assets (Notes 12 and 22):
Shareholders' equity:
Common stock

278,614

382,4623,599,981(1,110)(1,490)(14,025)

Total shareholders' equity ........................

485,396

563,9135,307,916

Unrealized holding gains on securities, net of taxes ...............

82,463

98,579927,890

Deferred losses on hedging derivatives, net of taxes (Note 14) ...

(158)

(115)

(1,082)

Accumulated other comprehensive income:

Revaluation reserve for land (Note 18) ...................................

773(1,245)(11,719)

Foreign currency translation adjustments ..............................

(2,969)(3,058)(28,784)

Remeasurements of defined benefit plans, net of taxes (Note 11) ....

3,275

9,079

85,458

Total accumulated other comprehensive income ....

83,384103,240

971,763

Non-controlling interests: .........................................................

2,034

1,867

17,573

Total net assets ........................................

570,814669,020

6,297,252

Total liabilities and net assets ...................

¥ 1,760,079¥ 1,930,825$ 18,174,181

Data Section

Retained earnings .................................................................
Less: Treasury stock, at cost .................................................

ESG Section

Authorized: 440,000,000 shares

TA I SE I A N N UA L R E P O R T 2 0 1 8 62

Consolidated Statements of Income
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2017

2018

Construction contracts ......................................................

¥ 1,342,455¥ 1,445,277$ 13,603,888

Real estate development (and other) (Note 10) ..................

144,798

140,221

1,319,851

1,487,253

1,585,498

14,923,739

Cost of sales (Note 20) ..........................................................

1,260,968

1,318,880

12,414,157

Selling, general and administrative expenses (Note 20) .........

85,46284,758797,797

1,346,430

1,403,638

13,211,954

140,823

181,860

1,711,785

Interest and dividend income ................................................

3,913

4,332

40,776

Interest expenses ..................................................................

(2,157)(1,684)(15,851)

Taxes and dues .....................................................................

(758)

(13)

(122)

Litigation settlement ..............................................................

(955)

(15)

(141)

2018

Revenue:
Net sales (Note 16):

Costs and expenses (Note 16):

Operating income (Note 16) ......................................................
Other income (expenses):Foreign exchange gains (losses) ............................................

2,276

—

—

Investment gain on equity method ........................................

1,379

1,004

9,450
7,333

Gains on sales of investment securities .................................

2,878

779

Gains on sales of property and equipment ............................

552

35

329

Reversal of allowance for losses on Anti-Monopoly Act .........

—

117

1,101

Impairment losses on fixed assets (Note 16 and 21) ..............

(685)(3,632)(34,187)

Losses on Anti-Monopoly Act (Note 19) ................................

(11,640)——

Other, net (Note 5) .................................................................
Income before income taxes .....................................................

(436)

(486)

(4,575)(5,633)

437

4,113

135,190

182,297

1,715,898(45,506)(51,437)(484,159)

Income taxes (Note 9):
Current ..............................................................................
Deferred ............................................................................

713(4,071)(38,319)(44,793)(55,508)(522,478)

Net income ...............................................................................

90,397

126,789

1,193,420

Net income (loss) attributable to non-controlling interests .........

169

(1)

(9)

126,788$ 1,193,411

Net income attributable to owners of parent .............................

¥

90,566¥

U.S. Dollars(Note 1)

Yen
Amounts per share of common stock:
Net income (Note 22) ........................................................

¥ 78.57¥ 561.36$ 5.284

Diluted net income (Note 22) .............................................

—

—

—

Cash dividends applicable to the year (Note 12) ................

20.00

85.00

0.8

The accompanying notes are an integral part of these statements.

63 T A I S E I ANNUA L R EPORT 2018

Consolidated Statements of Comprehensive Income

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2017

2018

2018

¥ 90,397¥ 126,789$ 1,193,420

Unrealized holding gains on securities, net of taxes ...............

(2,691)

16,112

151,657

Deferred gains (losses) on hedging derivatives, net of taxes ...

2

(7)

(66)

Foreign currency translation adjustments ..............................

(404)

(30)

(282)

Remeasurements of defined benefit plans, net of taxes .........

5,923

5,794

54,537

Share of other comprehensive income of associates accounted for by the equity method ...

(438)

(1)

(10)

Total other comprehensive income ........................................

2,392

21,868205,836

Comprehensive income ............................................................

¥ 92,789¥ 148,657$ 1,399,256

Owners of parent ..................................................................

¥ 93,014¥ 148,662$ 1,399,303

Non-controlling interests .......................................................

(225)

(5)

(47)

Net income ...............................................................................

About the Taisei GroupTAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Value Creation Story of the Taisei Group

Other comprehensive income (Note 23):

Business Section
ESG Section
Data Section

The accompanying notes are an integral part of these statements.

Special Feature

Comprehensive income attribute to:

TA I SE I A N N UA L R E P O R T 2 0 1 8 64

Consolidated Statements of Changes in Net Assets
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Millions of Yen

Balance at March 31, 2016 ...........................................

Commonstock

Capital surplus

Retainedearnings¥ 122,742¥ 104,465¥ 210,721

Treasury stock
¥

(395)

Total
shareholders’equity¥ 437,533

Cumulative effect of changes in accounting policies .....

—

—

12

—

12

Restated balance at beginning of year ........................

122,742

104,465

210,733(395)

437,545

Dividends .....................................................................

——(22,032)—(22,032)

Net income attributable to owners of parent .................

——

90,566—90,566

Sale of treasury stock ...................................................

—

0

—

1

1

Acquisition of treasury stock ........................................

—

—

—

(20,031)(20,031)Retirement of treasury stock ........................................

—(19,315)—

19,315—

Reversal of revaluation reserve for land ........................

—

—

(596)

—

(596)

Changes of scope of consolidation ..............................

—

—

14

—

14

Changes of shares from transaction with none-controlling shareholders ...

—

—

—

—

—

Changes of scope of equity method .............................

—

—

(71)

—

(71)

Changes other than shareholders’ equity, net ...............

—

—

—

—

—

Balance at March 31, 2017 ...........................................

¥ 122,742¥ 85,150¥ 278,614¥ (1,110)¥ 485,396

Cumulative effect of changes in accounting policies .....

—

—

—

—

—

Restated balance at beginning of year ........................

122,742

85,150278,614(1,110)485,396

Dividends .....................................................................

——(24,958)—(24,958)

Net income attributable to owners of parent .................

——

126,788—

126,788

Sale of treasury stock ...................................................

—

0

—

2

2

Acquisition of treasury stock ........................................

—

—

—

(25,047)(25,047)

Retirement of treasury stock ........................................

—(24,665)—

24,665—

Reversal of revaluation reserve for land ........................

—

—

2,018

—

2,018

Changes of scope of consolidation ..............................

—

—

—

—

—

Changes of shares from transaction with none-controlling shareholders ...

—

(286)

—

—

(286)

Changes of scope of equity method .............................

—

—

—

—

—

Changes other than shareholders’ equity, net ...............

—

—

—

—

—

Balance at March 31, 2018 ...........................................

¥ 122,742¥ 60,199¥ 382,462¥ (1,490)¥ 563,913

Thousands of U.S. Dollars (Note 1)

Capital surplus

Retainedearnings

Treasury stock

Total
shareholders’equity$ 1,155,328$ 801,487$ 2,622,496$ (10,448)$ 4,568,863

—

—

—

—

—

Restated balance at beginning of year ........................

1,155,328

801,487

2,622,496(10,448)

4,568,863

Dividends .....................................................................

——(234,921)—(234,921)

Net income attributable to owners of parent .................

——

1,193,411—

1,193,411

Sale of treasury stock ...................................................

—

0

—

19

19

Acquisition of treasury stock ........................................

—

—

—

(235,759)(235,759)

Retirement of treasury stock ........................................

—(232,163)—

232,163—

Reversal of revaluation reserve for land ........................

——

18,995—18,995

Changes of scope of consolidation ..............................

—

—

—

—

—

Changes of shares from transaction with none-controlling shareholders ...

—(2,692)——(2,692)

Changes of scope of equity method .............................

—

—

—

—

—

Changes other than shareholders’ equity, net ...............

—

—

—

—

—

Balance at March 31, 2018 ...........................................

$ 1,155,328$ 566,632$ 3,599,981$ (14,025)$ 5,307,916

CommonStock
Balance at March 31, 2017 ...........................................
Cumulative effect of changes in accounting policies .....

The accompanying notes are an integral part of these statements.

65 T A I S E I ANNUA L R EPORT 2018¥ (214)¥177¥ (2,158)¥ (2,624)

Total
accumulated
othercomprehensive
incomeNon-controllinginterests¥ 80,342¥ 3,403

Total net
assets¥ 521,278

—

—

—

—

—

—

—

12

85,161(214)

177(2,158)(2,624)80,342

3,403

521,290

—

—

—

—

—

—

—

(22,032)

—

—

—

—

—

—

—

90,566

—

—

—

—

—

—

—

1

—

—

—

—

—

—

—

(20,031)

—

—

—

—

—

—

—

—

—

—

596

—

—

596

—

—

—

—

—

—

—

—

—

14

—

—

—

—

—

—

—

—

(2)

—

—

—

—

(2)

—

(73)

(2,696)

56

—

(811)

5,899

2,448

(1,369)1,079¥ 82,463¥ (158)773¥ (2,969)

3,275¥ 83,384¥ 2,034¥ 570,814

—

—

—

—

—

—

—

—

82,463(158)773¥ (2,969)

3,275

83,384

2,034

570,814

¥

¥

—

—

—

—

—

—

—

(24,958)

—

—

—

—

—

—

—

126,788

—

—

—

—

—

—

—

2

—

—

—

—

—

—

—

(25,047)

—

—

—

—

—

—

—

—

—

—

(2,018)——(2,018)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(286)

—

—

—

—

—

—

—

—

16,116

43

—

(89)

5,804

21,874(167)

21,707¥ 98,579¥ (115)¥ (1,245)¥ (3,058)

9,079¥ 103,240¥ 1,867¥ 669,020

Total
accumulated
othercomprehensive
incomeNon-controllinginterests¥

Value Creation Story of the Taisei Group

Revaluation
reserve for landRemeasureForeign currency ments of definedtranslation
benefit plans, net
adjustmentsof taxes

Special Feature¥ 85,161

Deferred losses
on hedging
derivatives, netof taxes

Business Section

Unrealized
holding gains on
securities, net oftaxes

About the Taisei Group

Millions of Yen

Deferred losses
on hedging
derivatives, netof taxes

Revaluation
reserve for land$RemeasureForeign currency ments of definedtranslation
benefit plans, net
adjustmentsof taxes

Total net
assets$ 776,195$ (1,487)

7,276$ (27,946)$ 30,826$ 784,864$ 19,145

—

—

—

—

—

—

—

$ 5,372,872—

776,195(1,487)

7,276(27,946)

30,826784,864

19,1455,372,872

—

—

—

—

—

—

—

(234,921)

—

—

—

—

—

—

—

1,193,411

—

—

—

—

—

—

—

19

—

—

—

—

—

—

—

(235,759)

—

—

—

—

—

—

—

—

—

—

(18,995)——(18,995)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(2,692)

—

—

—

—

—

—

—

—

151,695

405

—

(838)

54,632205,894(1,572)

204,322$ 927,890$ (1,082)$ (11,719)$ (28,784)$ 85,458$ 971,763$ 17,573$ 6,297,252

Data Section

Unrealized
holding gains on
securities, net oftaxes

ESG Section

Thousands of U.S. Dollars (Note 1)

TA I SE I A N N UA L R E P O R T 2 0 1 8 66

Consolidated Statements of Cash Flows
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2017

2018

2018

¥ 135,190
6,268
685
(854)
(6,451)(2,662)
11,036(3,913)2,156(2,276)217(2,787)
1,371(552)(1,378)23,431
17,490
3,091
3,346
167
1,406
(18,138)
15,54050,937
4,977
13,722
252,019¥ 182,297
7,050
3,632
(836)
(6,272)(5,476)(342)(4,332)
1,684
145
4
(769)
280
(35)
(1,004)(21,538)
16,948(4,895)
7,442
1,217
3,374
85,141(27,146)
11,011(2,567)
9,930
254,943$ 1,715,898
66,35934,187(7,869)(59,036)(51,544)(3,219)(40,776)
15,8511,365
38(7,238)2,635(330)(9,450)(202,730)
159,526(46,075)
70,04911,45531,758801,402(255,516)
103,643(24,162)
93,4682,399,689

Cash received (paid) during the year for:
Interest and dividend received ...............................................
Interest paid ..........................................................................
Income taxes paid .................................................................
Net cash provided by (used in) operating activities .........

8,139(2,338)(39,662)
218,158

4,792(1,684)(51,031)207,020

45,106(15,851)(480,337)
1,948,607

Cash flows from investing activities:
Decrease (increase) in time deposits .....................................
Purchase of marketable and investment securities ................
Proceeds from sale of marketable and investment securities ...
Purchase of property, equipment and intangible assets .........
Proceeds from sale of property, equipment and intangible assets ...
Other, net ..............................................................................
Net cash provided by (used in) investing activities ..........

1,652(2,097)
9,912(7,227)
4,155
(99)
6,296

705
(6,171)
2,041(9,354)591
336(11,852)

6,636(58,086)
19,211(88,046)
5,563
3,163
(111,559)

Cash flows from financing activities:
Increase (decrease) in short-term loans .................................
Proceeds from long-term loans .............................................
Repayment of long-term loans ..............................................
Repayment of long-term non-recourse loans payable ...........
Issue of bonds ......................................................................
Redemption of bonds ...........................................................
Acquisition of treasury stock .................................................
Cash dividends paid, including those to minority interest .......
Other, net ..............................................................................
Net cash provided by (used in) financing activities ..........

17,07632,950(54,975)(1,600)—(10,000)(20,031)(22,032)(1,449)(60,061)(2,105)44,850(43,404)(100)
19,968(10,000)(25,047)(24,957)(888)(41,683)(19,814)422,157(408,547)(941)
187,952(94,126)(235,759)(234,912)(8,358)(392,348)

Effect of exchange rate changes on cash and cash equivalents ...
Net increase (decrease) in cash and cash equivalents ...............
Cash and cash equivalents at beginning of year .......................
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation ....
Cash and cash equivalents at end of year (Note 3) ...................

(1,382)
163,011
371,73145¥ 534,787(925)
152,560
534,787—¥ 687,347(8,706)
1,435,994
5,033,763—$ 6,469,757

Cash flows from operating activities:
Income before income taxes .................................................
Depreciation and amortization ...............................................
Impairment losses on fixed assets .........................................
Increase (decrease) in allowance for doubtful accounts .........
Increase (decrease) in allowance for losses on construction contracts ...
Increase (decrease) in net defined benefit liability ...................
Increase (decrease) in allowance for losses on Anti-Monopoly Act ...
Interest and dividend income ................................................
Interest expenses ..................................................................
Foreign exchange losses (gains) ............................................
Write-down of investment securities ......................................
Gain (Loss) on sale of marketable and investment securities ..
Write-down of cost on development projects in progress ......
Losses (gains) on sales of property and equipment ...............
Investment gain on equity method ........................................
Decrease (increase) in trade receivables ................................
Decrease (increase) in cost on uncompleted contract ...........
Decrease (increase) in inventories other than cost on uncompleted contract ....
Decrease (increase) in other current assets ...........................
Decrease (increase) in net defined benefit asset ....................
Decrease (increase) in investment and other assets ...............
Increase (decrease) in trade payables ....................................
Increase (decrease) in advances received and progress billings on uncompleted contracts ...
Increase (decrease) in deposits received ...............................
Increase (decrease) in other current liabilities .........................
Other, net ..............................................................................

The accompanying notes are an integral part of these statements.

67 T A I S E I ANNUA L R EPORT 2018

Notes to Consolidated Financial Statements(b) Valuation of Assets and Liabilities of Subsidiaries
In the elimination of the investments in subsidiaries, the assets and liabilities of the subsidiaries including the portion allocated to noncontrolling interests are recorded based on their fair value at the time the Company acquired control of the respective subsidiaries.
(c) Goodwill
Significant excesses of investment cost over net equity of consolidated subsidiaries and affiliated companies accounted for by the equity
method are recognized as goodwill (negative goodwill, if credit balance), and amortized principally over the estimated useful lives or less thantwenty years on a straight-line basis. However, immaterial goodwill is charged to income in the year of acquisition. Negative goodwill iscredited to income upon occurrence.
(d) Foreign Currency Translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end exchange rates. The resulting
exchange gains and losses are reflected in the consolidated statements of income. All revenues and expenses associated with foreign
currencies are translated at rates of exchange prevailing when such transactions are made.
The financial statements of consolidated foreign subsidiaries and affiliated companies under the equity method are translated into
Japanese yen at exchange rates prevailing at the respective year-end dates except for shareholders’ equity accounts, which are translated
at historical rates. The resulting foreign currency translation adjustments are presented in accumulated other comprehensive income in the
net assets section of the consolidated balance sheets.

Value Creation Story of the Taisei GroupSpecial Feature

The financial statements of non-consolidated subsidiaries, and investments in affiliated companies in which the Group does not have control
but has the ability to exercise significant influence, are accounted for by the equity method.
The financial statements in 20 subsidiaries, mainly consist of TOKYO ACADEMIC SERVICE Co., Ltd. and EHIME HOSPITAL PERTNERS
Co., Ltd. are accounted for by the equity method for the year ended March 31, 2018. 1 non-consolidated subsidiary newly established isincluded in the scope of equity method.
Investments in 40 affiliated companies are also accounted for by the equity method for the year ended March 31, 2018 (41 affiliatedcompanies for the year ended March 31, 2017). 1 affiliated company that was newly established is included in the scope of equity method.
2 affiliated companies are excluded from the scope of equity method because the Group sold its shares.
Exclusion of certain small-scale non-consolidated subsidiaries (TAIMEI INDUSTRIES Ltd. and the other) and the affiliated company(NIGIYAKASHI RESIREIT BRIDGE TWO, LLC.) from the scope of equity method does not have material effect on the consolidated financial
statements.
All consolidated subsidiaries other than 10 consolidated overseas subsidiaries have the same balance sheet date, March 31,
corresponding with that of the Company. As for the 10 consolidated overseas subsidiaries whose fiscal year ends at December 31, theirfinancial statements as of December 31 are used in preparation of the consolidated financial statements. Significant transactions, if any, inthe period from January 1 to March 31 have been adjusted in the consolidated financial statements.

Business Section

2. Summary of Significant Accounting Policies(a) Consolidation and equity method
The Company prepares the consolidated financial statements including the accounts of the Company and those of its majority-owned
subsidiaries, whether directly or indirectly controlled. The consolidated financial statements include the accounts of 31 subsidiaries for theyear ended March 31, 2018 (29 subsidiaries for the year ended March 31, 2017). PT. TAISEI PULAUINTAN CONSTRUCTION
INTERNATIONAL and other 1 company are included in the scope of consolidation because the companies were newly established.
Exclusion of certain small-scale subsidiaries from the scope of consolidation does not have material impact on the consolidated financial
statements.
All significant intercompany transactions, account balances and unrealized gains or losses have been eliminated in consolidation.

ESG Section

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Taisei Corporation (the “Company”) and its consolidated subsidiaries (collectively the“Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its
related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain
supplementary information, included in the statutory Japanese language consolidated financial statements but not required for fairpresentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2018, which was ¥ 106.24 to U.S. $ 1. The translations should not be construed as
representations of what the Japanese yen amounts have been, could have been, or could in the future be when converted into U.S. dollars
at this or any other rate of exchange.

About the Taisei GroupTAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018(f) Securities
Securities held by the Group are classified into (a) debt securities intended to be held to maturity (hereafter “held-to-maturity debt securities”),(b) equity securities issued by subsidiaries and affiliated companies, and (c) all other securities that are not classified in any of the categories
above (hereafter “available-for-sale securities”).
Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries and affiliated companies that are
not consolidated or accounted for by the equity method are stated at moving-average cost. Available-for-sale securities with available fairmarket values are stated at fair market value. Unrealized gains and losses on available-for-sale securities, net of applicable income taxes arereported as a separate component of accumulated other comprehensive income in the net assets section. Realized gains and losses onsales of such securities are computed using moving-average cost. Other securities with no available fair market value are stated at movingaverage cost.

Data Section(e) Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investmentswith maturities not exceeding three months at the date of purchase and with insignificant risks of change in value are considered to be cash
and cash equivalents.

TA I SE I A N N UA L R E P O R T 2 0 1 8 68

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018(g) Revenue Recognition of Construction
Revenue associated with construction contracts of which the outcome can be reliably estimated is accounted for by the percentage-ofcompletion method; otherwise contract revenue is accounted for by the completed-contract method. The percentage of completion at theend of the reporting period is determined by the percentage of the cost incurred to the estimated total costs.
(h) Inventories
The Company and its certain subsidiaries develop real estate projects on their own account. Cost on development projects in progress aremainly stated at the lower of cost based on the specific-identification cost method or net realizable value. For this purpose, the cost includes
the purchase cost of land, incidental costs, direct development costs and (in relation to certain developments by one of the subsidiaries)
interest expenses.
Cost on uncompleted contracts is mainly stated at cost based on the specific-identification cost method.
(i) Property, plant and Equipment
Property, plant and equipment except for buildings and structures are recorded at cost and depreciated principally by the declining-balancemethod over the standard useful lives prescribed in the Corporation Tax Law. Buildings and structures are principally depreciated by thestraight-line method.
(j) Accounting for Lease Transactions
Finance leases, except for certain immaterial or short-term finance leases in which ownership is not transferred to lessee, are capitalized.
Capitalized leased assets whose ownership is transferred to lessee are depreciated by the same method of depreciation applied to property,
plant and equipment. Capitalized leased assets whose ownership is not transferred to lessee are depreciated to a residual value of zero by
the straight-line method over a useful life period corresponding to the lease contract period.
(k) Derivatives and Hedge Accounting
Derivative financial instruments are stated at fair value and changes in fair value are recognized as gains or losses unless derivative financial
instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated domestic
subsidiaries defer recognition of gains or losses resulting from changes in fair value of the derivative financial instruments until related losses
or gains on hedged items are recognized.
If interest rate swap contracts are used as hedge and meet certain hedging criteria, net amounts to be paid or received under theinterest rate swap contracts are added to or deducted from the interest on liabilities for which the swap contract were executed.
(l) Income Taxes
The Company and its wholly owned domestic subsidiaries apply the system of consolidated tax returns.
(m) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided to reserve for probable losses from bad debt. It consists of the estimated uncollectible amountof certain identified doubtful receivables and the amount estimated on the basis of the past default ratio for normal receivables.
(n) Allowance for Warranty on Completed Contracts
Allowance for warranty on completed contracts is provided as the amount estimated using an actual ratio of related losses during the pastcertain periods.
(o) Allowance for Losses on Construction Contracts
Allowance for losses on construction contracts is provided with respect to construction projects for which eventual losses are reasonably
estimated.
(p) Allowance for Losses on Order Received
Allowance for losses on order received is provided with respect to orders (excluding construction contracts) for which eventual losses arereasonably estimated.
(q) Retirement Benefits for Directors and Audit & Supervisory Board Members
Retirement benefits for directors and audit & supervisory board members of certain consolidated subsidiaries have been set up inaccordance with each company’s regulations.
(r) Allowance for Losses on Investments in Subsidiaries and Affiliates
Allowance for losses on investments in subsidiaries and affiliates is provided for estimated losses from certain subsidiaries and affiliates inliquidation.
(s) Allowance for Environmental Spending
Allowance for environmental spending is provided based on estimated costs for disposal of Polychlorinated Biphenyl (“PCB”) waste, which is
obligated to dispose by the Act on Special Measures Concerning Promotion of Proper Treatment of PCB Waste.
(t) Allowance for Losses on Anti-Monopoly Act
Allowance for losses on Anti-Monopoly Act is provided based on estimated payment for penalties under the Anti-Monopoly Act.
(u) Accounting Method for Retirement Benefit
Net defined benefit liability is provided for severance and retirement benefits for employees and executive officers of the Company’s certain
consolidated subsidiaries based on estimated amounts of projected benefit obligations and plan assets at the year-end.
In calculating projected benefit obligations, the method of attributing estimated amounts of retirement benefits to the period until thisfiscal year is based on the benefit formula basis.
Past service costs are amortized using the straight-line method (some consolidated subsidiaries use the declining-balance method) over
1-10 years, which is not longer than an average remaining service period of the employees when the costs are incurred.
Actuarial gains and losses are amortized from the subsequent fiscal year (some consolidated subsidiaries amortize actuarial gains andlosses from the current fiscal year) using the straight line method (some consolidated subsidiaries use the declining balance method) over
1-10 years, which is not longer than an estimated average remaining service period of the employees when the gains or losses are incurred.

69 T A I S E I ANNUA L R EPORT 2018

Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Cash and time deposits ..........................................................................

¥ 535,592¥ 687,456

Less: Time deposits with maturities exceeding three months ..................

(805)

(109)

(1,026)

Cash and cash equivalents .....................................................................

¥ 534,787¥ 687,347$ 6,469,757$ 6,470,783

4. Financial Instruments(1) Policies for using financial instruments
The Group restricts investments to the low risk assets such as deposits, and raise funds by the indirect finance such as loans from bank aswell as by the direct finance such as issuing corporate bonds or commercial papers.
Derivative financial instruments are employed mainly for hedging fluctuation in interest rate and foreign currency exchange, and not used
to speculate.
Receivables: trade notes and trade accounts are exposed to the credit risks of customers. In order to reduce such risks, the Group conducts
strict credit examinations when orders are received, and afterward manage the receivables individually and make effort to detect reduction of
credit risks early.
For investment securities which are mainly held-to-maturity debt securities and shares held to keep the relationship with business
partners, the Group regularly monitors the fair values or financial positions of the invested companies, and revises the portfolio timely (except
for held-to-maturity debt securities) considering the relationship with them.
Debts, trade payables: trade notes and trade accounts are debts mostly due within one year. Loans, commercial papers and bonds areprimarily for working capital, and have maturity dates of five years or less. Although the loans or bonds issued at variable rates are exposed
to interest rate fluctuation risk, the risk is hedged by derivative transactions (interest rate swap contracts).
The Group primarily utilizes derivative transactions related to interest rates in order to mitigate the fluctuation risk in interest rates or to
reduce financing costs, and derivative transactions related to currency in order to mitigate the foreign exchange risk. These transactions are
exposed to the fluctuation risk in interest rates and the foreign exchange risk. However, the Group is exposed to limited risk, because mostof them are hedged by the corresponding transactions. They consider the credit risk to be low, because they conduct derivative transactions
solely with reliable international financial institutions.
The Group executes and manages derivative transactions in accordance with internal rules. Their Finance Departments are responsible
for conducting, evaluating transactions and managing related risks.
(2) Fair Value of Financial Instruments(a) Book values of the financial instruments included in the consolidated balance sheet, the fair values of said items as of March 31, 2017and 2018, were as follows. Items for which it is extremely difficult to calculate the fair value were not included in the following table (see“Note 2” below).

About the Taisei Group
Value Creation Story of the Taisei GroupSpecial Feature

3. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2017 and 2018 consisted of the following:

Business Section(x) Accounting standard issued but not yet effective
The following standard and guidance were issued but are not yet effective- “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30, March 30, 2018)(1) Overview
The IASB and the FASB jointly developed and issued a converged Standard on the recognition of ‘Revenue from Contracts with Customers’(IFRS 15 for IASB and Topic 606 for FASB.) in May, 2014. IFRS 15 will be applied from the fiscal year beginning on or after January 1, 2018
and Topic 606 will be applied from the fiscal year beginning after December 15, 2017. Under these circumstances, the ASBJ developed theconverged standard for revenue recognition and issued the “Accounting Standard for Revenue Recognition” along with “Implementation
Guidance on Accounting Standard for Revenue Recognition”.
In developing the ‘Accounting Standard for Revenue Recognition,’ the principal policy of the ASBJ is to incorporate the basic concept of
IFRS 15 from the perspective of comparability between financial statements, as one way to establish consistency with IFRS 15. The ASBJ
will add alternative treatments in the case that there are different accounting treatments prevalent in accounting practices in Japan that
require consideration, to the extent that they do not impair comparability.
(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards onthe consolidated financial statements.

ESG Section(w) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact onpreviously reported results of operations or retained earnings.

Data Section(v) Net Income and Cash Dividends per Share
Net income per share is calculated by dividing net income available to common shares by the weighted average number of common shares
outstanding during the year. Cash dividends per share shown for each year represent dividends declared as applicable to the respective
years.

TA I SE I A N N UA L R E P O R T 2 0 1 8 70

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Millions of Yen
2017Book Value

Fair Value

Difference

ASSETSCash and time deposits ..........................................................................

¥ 535,592¥ 535,592

Notes and accounts receivable, trade .....................................................

420,131

420,131¥——

Investment securities
Debt securities intended to be held to maturity ...................................

570

584

14

Available-for-sale securities .................................................................

243,869

243,869—

LIABILITIES
Notes and accounts payable, trade ........................................................

424,494

424,494—

Short-term loans and long term loans due within one year .......................

114,601

114,859(258)

Short-term non-recourse loans payable ..................................................

100

101

(1)

Straight bonds due within one year .........................................................

10,00010,109(109)—

Non-recourse bonds due within one year ...............................................

——

Deposits received ...................................................................................

171,132

171,132—

Straight bonds ........................................................................................

30,00030,417(417)

Non-recourse bonds payable .................................................................

500

508

(8)

Long-term loans .....................................................................................

79,99580,851(856)

Long-term non-recourse loans payable ..................................................

2,950

3,000

(50)

[Derivative financial instruments (*)] .........................................................

22

22

—

Millions of Yen
2018
Book Value

Fair Value

Difference

ASSETSCash and time deposits ..........................................................................

¥ 687,456¥ 687,456

Notes and accounts receivable, trade .....................................................

441,631441,627(4)¥—

Investment securities
Debt securities intended to be held to maturity ...................................

662

678

16

Available-for-sale securities .................................................................

270,938

270,938—

Notes and accounts payable, trade ........................................................

509,576

509,576—

Short-term loans and long term loans due within one year ......................

87,03087,114(84)

LIABILITIESShort-term non-recourse loans payable ..................................................

2,950

2,967

(17)

Straight bonds due within one year .........................................................

10,00010,012(12)

Non-recourse bonds due within one year ...............................................

500

503

(3)

Deposits received ...................................................................................

182,142

182,142—

Straight bonds ........................................................................................

40,00040,309(309)

Non-recourse bonds payable .................................................................

—

—

—

Long-term loans .....................................................................................

106,900

107,813(913)

Long-term non-recourse loans payable ..................................................

—

—

—

[Derivative financial instruments (*)] .........................................................

(10)

(10)

—

Thousands of U.S. dollars
2018Book Value

Fair Value

Difference

ASSETSCash and time deposits ..........................................................................

$ 6,470,783$ 6,470,783

Notes and accounts receivable, trade .....................................................

4,156,918

4,156,880

38

$

—

Investment securities
Debt securities intended to be held to maturity ...................................

6,231

6,382

(151)

Available-for-sale securities .................................................................

2,550,245

2,550,245—

Notes and accounts payable, trade ........................................................

4,796,461

4,796,461—

Short-term loans and long term loans due within one year ......................

819,183

819,974(791)

Short-term non-recourse loans payable ..................................................

27,76727,927(160)

Straight bonds due within one year .........................................................

94,127

94,239(112)

Non-recourse bonds due within one year ...............................................

4,706

4,734

28

Deposits received ...................................................................................

1,714,439

1,714,439—

Straight bonds ........................................................................................

376,506

379,415(2,909)LIABILITIES

Non-recourse bonds payable .................................................................

—

—

—

Long-term loans .....................................................................................

1,006,212

1,014,806(8,594)Long-term non-recourse loans payable ..................................................

—

—

—

[Derivative financial instruments (*)] .........................................................

(94)

(94)

—

71 T A I S E I ANNUA L R EPORT 2018

LIABILITIES∙ Notes and accounts payable, trade, Short-term loans and Long term loans due within one year and Deposits received
The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fairvalue of long-term loans due within one year is based on the same method as that for long-term loans.
∙ Long-term loans
The fair value of long-term loans is based on the present value of discounted cash flows by the interest rate which may be applicable when
the same kind of loans is conducted.
∙ Bonds
The fair value of marketable bonds is based on the quoted market value, otherwise the fair value of nonmarketable bonds is based on thepresent value of discounted cash flows by the interest rate reflecting the estimated redemption terms and issuer’s credit risk.
[Derivative financial instruments]
See the notes on “14. Derivative Transactions”.

About the Taisei Group

Note 1: The calculation method of the fair values of financial instrument and securities, derivative transactions
ASSETS∙ Cash and time deposits and Notes and accounts receivable, trade
The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fairvalue of receivables due after one year are based on the present values of discounted cash flows reflecting the interest rate, the estimatedcollection terms and credit risks with respect to each receivables categorized by collection terms.
∙ Investment securities
The fair values of marketable securities are based on the quoted market value, and bonds are based on the market value, the price indicatedby a third party such as broker or the present value of discounted cash flows.
See the notes on “5. Securities” for notes pertaining to securities categorized by the purposes for which they are held.

Value Creation Story of the Taisei Group(*) Note: The assets and liabilities are reported as net amounts. Any items for which the total becomes a net liability are indicated inparentheses.

Special Feature

Note 2: Financial instruments for which it is deemed to be extremely difficult to calculate the fair value
Nonmarketable securities (book value amount to ¥ 64,576 million and ¥ 65,789 million ($ 619,249 thousand) as of March 31, 2017 and2018, respectively) are not included in the Assets Investment securities–Available-for-sale securities above, as it is extremely difficult to
calculate the fair values because they have no quoted market prices and the future cash flows cannot be estimated.
Note 3: Scheduled redemption amounts after the consolidated balance sheet date for monetary claims and securities with period of
maturities as of March 31, 2017 and 2018 were as follows:
Millions of Yen
2017
Due after one year but
within five years

Due within one year¥

Due after five years but
within ten years

Time deposits .........................................................................................

¥ 535,125—¥ —Notes and accounts receivable, trade .....................................................

420,127

4

—

148

178

244

Debt securities intended to be held to maturity
Government bonds .........................................................................
Available-for-sale securities
Government bonds .........................................................................

26

Total ...................................................................................

¥ 955,426

¥

245

—

427

¥ 244

Business Section

Investment securities

Millions of Yen

Due within one year
Time deposits .........................................................................................
Notes and accounts receivable, trade .....................................................

¥

687,018¥

Due after five years but
within ten years—¥ —440,051

1,580

—

45

380

236

Investment securities

ESG Section

2018
Due after one year but
within five years

Debt securities intended to be held to maturity
Government bonds .........................................................................
Available-for-sale securities
0——

Total ...................................................................................

¥ 1,127,114¥ 1,960¥ 236

Data Section

Government bonds .........................................................................

TA I SE I A N N UA L R E P O R T 2 0 1 8 72

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Thousands of U.S. Dollars
2018
Due after one year but
within five years

Due within one year

Due after five years but
within ten years

Time deposits .........................................................................................

$ 6,466,660

Notes and accounts receivable, trade .....................................................

4,142,046

14,872

—

424

3,577

2,221

$

—

$

—

Investment securities
Debt securities intended to be held to maturity
Government bonds .........................................................................
Available-for-sale securities
Government bonds .........................................................................

0

—

—

Total ...................................................................................

$ 10,609,130$ 18,449$ 2,221Note 4: See the notes on “8. Short-term Loans and Long-term Debt” for notes pertaining to the aggregate annual maturities of long term
debt after the consolidated balance sheet date.

5. Securities(1) Following tables summarized acquisition costs, book values and fair values of securities with fair values available as of March 31, 2017and 2018:(a) Debt securities intended to be held to maturity:∙ Securities with fair values exceeding book values
Millions of Yen
2017
Type
Government bonds ............................

Book value

Fair value

Difference

¥ 570

¥ 584

¥ 14

Millions of Yen

Thousands of U.S. Dollars

2018
Type
Government bonds ............................

2018

Book value

Fair value

DifferenceBook value

Fair value

Difference

¥ 662

¥ 678

¥ 16

$ 6,231$ 6,382$ 151∙ Securities with fair values not exceeding book values
Millions of Yen
2017
Type
Government bonds ............................

Book value

Fair value

Difference

¥—

¥—

¥—

Millions of Yen

Thousands of U.S. Dollars

2018
Type
Government bonds ............................

2018

Book value

Fair value

DifferenceBook value

Fair value

Difference

¥—

¥—

¥—

$—

$—

$—

(b) Available-for-sale securities:∙ Securities with book values exceeding acquisition costs
Millions of Yen
2017
Type

Book value

Acquisition cost

Difference

Equity securities .................................

¥ 227,878¥ 107,689¥ 120,189

Government bonds ............................

271

264

7

Others ...............................................

1,045

641

404

Total ........................

¥ 229,194¥ 108,594¥ 120,600

Millions of Yen

Thousands of U.S. Dollars

2018

2018

Type

Book value

Acquisition cost

DifferenceBook value

Acquisition cost

Difference

Equity securities .................................

¥ 257,429¥ 113,851¥ 143,578$ 2,423,089$ 1,071,640$ 1,351,449

Government bonds ............................

—

—

—

—

—

—

Others ...............................................

975

642

333

9,178

6,043

3,135

Total ........................

¥ 258,404¥ 114,493¥ 143,911$ 2,432,267$ 1,077,683$ 1,354,584

73 T A I S E I ANNUA L R EPORT 2018

About the Taisei Group∙ Securities with book values not exceeding acquisition costs
Millions of Yen
2017
Type

Book value

Acquisition cost

Equity securities .................................

¥ 14,562¥ 16,328

Difference¥ (1,766)

Government bonds ............................

0

0

(0)

Others ...............................................

114

114

(0)

Total ........................

¥ 14,676¥ 16,442¥ (1,766)

Millions of Yen

Thousands of U.S. Dollars
2018

Type

Book value

Acquisition cost

Equity securities .................................

¥ 12,420¥ 14,291

Government bonds ............................

0

Others ...............................................
Total ........................

DifferenceBook value

Acquisition cost

Difference¥ (1,871)$ 116,905$ 134,516$ (17,611)

0

(0)

0

0

(0)

114

114

(0)

1,073

1,073

(0)

¥ 12,534¥ 14,405¥ (1,871)$ 117,978$ 135,589$ (17,611)(2) Total sales of available-for-sale securities and the related gains and losses for the years ended March 31, 2017 and 2018 were as follows:
Millions of Yen
2017
OthersTotal¥ 6,999¥ 30¥ 7,029

Gains on sales of available-for-salesecurities .........................................

2,878

0

2,878

Losses on sales of available-for-salesecurities .........................................

90

—

90

Special Feature

Equity securities

Millions of Yen
2018
Equity securities

OthersTotal¥ 1,531¥—¥ 1,531

Gains on sales of available-for-salesecurities .........................................

779

—

779

Losses on sales of available-for-salesecurities .........................................

20

—

20

Business Section

Type
Total amount of available-for-salesecurities sold .................................

Thousands of U.S. Dollars
2018
Type

Equity securities

Total amount of available-for-salesecurities sold ..................................

OthersTotal$ 14,411$—$ 14,411

Gains on sales of available-for-salesecurities .........................................

7,332

—

7,332

Losses on sales of available-for-salesecurities .........................................

188

—

188

(3) Impairment losses on securities
The Group recognized impairment losses on the following securities for the years ended March 31, 2017 and 2018 were as follows:
Thousands of
U.S. Dollars

Type

2017
¥ 217

2018
¥4

2018
$ 38

Data Section

Millions of Yen
Write-down of investment securities ...

ESG Section

Type
Total amount of available-for-salesecurities sold .................................

Value Creation Story of the Taisei Group2018

TA I SE I A N N UA L R E P O R T 2 0 1 8 74

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

6. Pledged Assets(1) The following assets were pledged as liabilities as of March 31, 2017 and 2018:
Secured liabilities
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Long-term non-recourse loans payable ..................................................

¥ 2,950

Long-term loans .....................................................................................

1,600

—

—

Non- recourse bonds payable ................................................................

500

—

—

Short-term non-recourse loans payable ..................................................

100

2,950

27,767

Short-term loans .....................................................................................

—

1,600

15,061

Non-recourse bonds due within one year ...............................................

—

500

4,706

Total ...................................................................................

¥ 5,150¥ 5,050$ 47,534

¥

—

$

—

Pledged Assets
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Land .......................................................................................................

¥ 6,311¥ 6,311$ 59,403

Buildings and structures net of accumulated depreciation ......................

1,236

1,182

11,126

Machinery, vehicles, tools, furniture and fixtures, net of accumulated depreciation ...

7

11

104

Total ...................................................................................

¥ 7,554¥ 7,504$ 70,633(2) The following assets were pledged principally as collateral for loans of companies which were not consolidated as of March 31, 2017 and2018:
Millions of Yen
2017

Thousands of U.S. Dollars
2018

Investment securities ..............................................................................

2018¥ 3,173¥ 2,895$ 27,249

Other assets ...........................................................................................

1,593

1,589

14,957

Total ...................................................................................

¥ 4,766¥ 4,484$ 42,206

7. Amount of notes receivable and notes payable with maturity on the balance sheet date (the bank holiday)
Notes receivable and notes payable are processed on the clearing date or the settlement date. As March 31, 2018 was a bank holiday,
notes receivable and notes payable maturing on that day could not be settled and were included in the consolidated balance sheets, as
follows:
Millions of Yen
2017
Notes receivable (Trade) ......................................................................
Electronically recorded monetary claims ..............................................

Thousands of U.S. Dollars
2018

¥

—
—

2018
¥

593
1,066

$

5,582
10,034

Notes receivable (Other) ......................................................................

—

54

508

Notes payable (Trade) .........................................................................

—

6,606

62,180Electronically recorded obligations ......................................................

—

21,628203,577

Notes payable (Other) .........................................................................

—

8

75

75 T A I S E I ANNUA L R EPORT 2018

The Group has had no difficulty in renewing such notes and overdraft facility agreements, when they considered such renewal advisable.
Long-term debt as of March 31, 2017 and 2018 consisted of the following:
Millions of Yen
2017

Thousands of U.S. Dollars
2018

About the Taisei Group

8. Short-term Loans and Long-term Debt
Short-term loans as of March 31, 2017 and 2018 mainly consisted of short-term notes and overdrafts from banks. The weighted averageinterest rates of short-term loans as of March 31, 2017 and 2018 were 0.5%.

2018

Bonds and notes:
Issued by the Company:—$—

1.146% yen bonds due in 2018 (*1) ................................................

500

500

4,706

0.66% yen bonds due in 2018 ........................................................

10,00010,00094,127

0.67% yen bonds due in 2020 ........................................................

10,00010,00094,127

0.14% yen bonds due in 2022 ........................................................

—

10,00094,1270.527% yen bonds due in 2022 ......................................................

10,00010,00094,127

0.38% yen bonds due in 2027 ........................................................

—

10,00094,127Loans, principally from banks and insurance companies:
Secured loans (*2) ...............................................................................

4,650

3,450

32,473

Unsecured loans .................................................................................

121,579

124,125

1,168,345

Capital lease ...........................................................................................

753

695

6,541

167,482

178,770

1,682,700

Amount due within one year ...................................................................

(53,554)(31,449)(296,019)

Total long-term debt (due after one year) .................................................

¥ 113,928¥ 147,321$ 1,386,681(*) Note 1: This bonds is non-recourse liabilities for the Group.
2: These loans as of March 31, 2017 and 2018 include ¥ 3,050 million and ¥ 2,950 million ($ 27,767 thousand) of non-recourse
loans payable for the Group, respectively.
The annual interest rates applicable to long-term loans due within one year averaged 1.1% and 0.8% as of March 31, 2017 and 2018,
respectively, and the annual interest rates applicable to long-term loans due after one year averaged 0.7% and 0.6% as of March 31, 2017and 2018, respectively.
The aggregate annual maturities of long-term debt (including current portion) as of March 31, 2018 were summarized as follows:Year ending March 31,

Millions of Yen

Value Creation Story of the Taisei Group¥Special Feature¥ 10,000Thousands of U.S. Dollars

2019 .................................................................................................

¥ 31,449

2020 .................................................................................................

28,447$

296,019
267,7622021 .................................................................................................

34,537325,0852022 .................................................................................................

16,785

157,991

2023 .................................................................................................

47,879450,6682024 and thereafter ..........................................................................

19,673

185,175

Total ...................................................................................

¥ 178,770$ 1,682,700

Business Section

1.58% yen bonds due in 2017 ........................................................

Data Section

ESG Section

The Company had a commitment line contract of up to ¥ 50,000 million to secure financing from several correspondent financial institutions
in case of an emergency which was already expired on August 31, 2017.

TA I SE I A N N UA L R E P O R T 2 0 1 8 76

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

9. Income Taxes
Taxes on income consist of corporation, enterprise and inhabitants taxes.
The following table summarized the significant differences between the statutory tax rate and the Company’s effective tax rate for financial
statement purposes for the year ended March 31, 2017 and 2018.
2017
Statutory tax rate ....................................................................................

2018
30.9%

—%

Permanent differences:Non-deductible expenses ...................................................................

3.8—

Non-taxable income ............................................................................

(0.4)

—

Per capita inhabitant tax and others ........................................................

0.4—

Changes in valuation reserve ..................................................................

0.3—

Effect of enacted changes in tax laws and rates on Japanese tax ...........

0.0—

Share of profit of entities accounted for using equity method ..................

(0.3)

—

Others ....................................................................................................

(1.6)

—

Effective tax rate .....................................................................................

33.1%

—%

The reconciliations for the year ended March 31, 2018 are not presented because the difference between the statutory tax rate and theeffective tax rate was less than or equal to 5% of the statutory tax rate.
Significant components of deferred income taxes at March 31, 2017 and 2018 were as follows:
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Deferred income tax assets:
Disallowed portion of expenses and losses:
Net defined benefit liability ...............................................................

¥ 37,312¥ 35,566$ 334,770
122,581

Inventories .......................................................................................

15,02013,023

Accrued bonuses ............................................................................

6,979

7,107

66,896

Fixed assets ....................................................................................

4,991

2,830

26,638Advances received ..........................................................................

2,276

1,173

11,041Others .............................................................................................

8,522

7,842

73,814

Tax loss carryforward ..........................................................................

519

532

5,008

Unrealized profits ................................................................................

7,497

7,523

70,811

Sub-total ............................................................................

83,11675,596

711,559

Valuation allowance .............................................................................

(3,861)(4,288)(40,361)

Total ...................................................................................

79,25571,308671,198

Unrealized holding gains on securities .................................................

(36,347)(43,446)(408,942)

Gains on securities contribution to employee retirement benefit trust ...

(17,711)(17,711)(166,708)

Net defined benefit asset ....................................................................

(4,272)(3,830)(36,050)

Others .................................................................................................

(1,201)(1,194)(11,239)

Total ...................................................................................

(59,531)(66,181)(622,939)

Net total .............................................................................

¥ 19,724

Deferred income tax liabilities:

¥

5,127

$

48,259In addition to the deferred income taxes shown above, deferred tax liabilities concerning revaluation of land amounting to ¥ 4,184 million asof March 31, 2017 and ¥ 3,286 million ($ 30,930 thousand) as of March 31, 2018 were included in the consolidated balance sheets,
respectively.

77 T A I S E I ANNUA L R EPORT 2018

(2) The amounts of investment and rental property which booked in consolidated balance sheets, the amounts of increase or decrease, andfair value as of March 31, 2017 and 2018 were as follows:
Millions of Yen

About the Taisei Group

10. Investment and Rental Property(1) The Company and certain consolidated subsidiaries hold some office buildings for rent in Tokyo and other areas. The rental income on
office buildings for rent was ¥ 2,708 million and ¥ 2,683 million ($ 25,254 thousand) at the year ended on March 31, 2017 and 2018,
respectively. Rental income is mainly booked in Net sales: Real estate development and other, and rental cost is mainly booked in Cost of
sales.

2017
Increase (decrease)

March 31, 2017

¥ (4,637)

March 31, 2017

¥ 56,693¥ 63,452

Millions of Yen
2018
Book value
April 1, 2017
¥ 56,693

Fair value

Increase (decrease)

March 31, 2018

¥ 25,754

March 31, 2018

¥ 82,447¥ 100,065

Thousands of U.S. Dollars
2018Book value
April 1, 2017
$ 533,631

Increase (decrease)

Fair value
March 31, 2018

$ 242,414

March 31, 2018

$ 776,045$ 941,877

Note 1: The carrying amount is stated at cost of acquisition less accumulated depreciation and impairment losses.
Note 2: The main reason of decrease for the year ended March 31, 2017 was the effect of liquidation of consolidated subsidiary amounting¥ 2,968 million. The main reasons of increase for the year ended March 31, 2018 was the reclassification from inventories (realestate) amounting ¥ 26,032 million, ($ 245,030 thousand).
Note 3: The book value as of March 31, 2017 and 2018 included asset retirement obligations of ¥ 219 million and ¥ 206 million ($ 1,939
thousand), respectively.
Note 4: The fair value of investment and rental property as of March 31, 2017 and 2018 were mainly calculated by the Company according
to the appraisal standard of real-estate (including those which were adjusted by the land price index, if any).

11. Employees’ Severance and Retirement Benefits
1. The Company and its main consolidated subsidiaries have adopted the defined-benefit pension plans and defined-contribution pension
plans. The defined-benefit pension plans adopted consist of defined-benefit corporate pension plans and lump-sum payment plans.
Liabilities and expenses for severance and retirement benefits of the Company and its consolidated domestic subsidiaries are
determined based on amounts obtained by actuarial calculations. The Company may also pay additional retirement benefits which are notsubject to actuarial calculation.
The Company has established a retirement benefit trust.

Special Feature¥ 61,330

Business Section

April 1, 2016

Fair value

Value Creation Story of the Taisei GroupBook value

2. Defined-benefit pension plans(1) Movement in retirement benefit obligations
Millions of Yen

Thousands of U.S. Dollars
2018

Balance at beginning of the year .............................................................

¥ 147,980¥ 145,642$ 1,370,877

Current service cost ............................................................................

6,224

6,312

59,413

Interest cost ........................................................................................

937

907

8,537

Actuarial loss (gain) .............................................................................

1,561

1,310

12,331

Benefits paid .......................................................................................

(11,050)(10,502)(98,852)

Past service costs ...............................................................................

(122)

(450)

(4,236)

Other ..................................................................................................

112

161

1,515

Balance at end of the year ......................................................................

¥ 145,642¥ 143,380$ 1,349,585

Some of the consolidated subsidiaries use simplified method for the calculation of retirement benefit obligations.
Retirement benefit expenses in the consolidated subsidiaries applying simplified method are recorded in current service cost.

ESG Section

2018

Data Section

2017

TA I SE I A N N UA L R E P O R T 2 0 1 8 78

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

(2) Movements in plan assets
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Balance at beginning of the year .............................................................

¥ 114,998¥ 115,157

Expected return on plan assets ...........................................................

1,568

1,938

18,242

Actuarial loss (gain) .............................................................................

5,884

6,246

58,791$ 1,083,933

Contributions paid by the employer .....................................................

1,039

1,056

9,940

Benefits paid .......................................................................................

(6,870)(6,360)(59,865)

Other ..................................................................................................

(1,462)(883)(8,311)

Balance at end of the year ......................................................................

¥ 115,157¥ 117,154$ 1,102,730(3) Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability (asset)
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Funded retirement benefit obligations .....................................................

¥ 142,938¥ 140,567$ 1,323,108

Plan assets .............................................................................................

(115,158)(117,154)(1,102,730)

27,78023,413

220,378

Unfunded retirement benefit obligations ..................................................

2,704

2,813

26,479Net total at year-end ...............................................................................

30,484

26,226

246,857

Net defined benefit liability ......................................................................

41,26235,787

336,851

Net defined benefit asset ........................................................................

(10,778)(9,561)

Net total at year-end ...............................................................................

¥

30,484¥(89,994)

26,226$

246,857(4) Retirement benefit expenses
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Current service cost ................................................................................

¥ 6,225¥ 6,312Interest cost ...........................................................................................

937

907

8,537

Expected return on plan assets ..............................................................

(1,568)(1,938)(18,242)

Net actuarial loss amortization ................................................................

5,480

4,238

39,891

Past service costs amortization ...............................................................

(1,393)(1,288)(12,123)

Other ......................................................................................................

53

1

9

Total retirement benefit expenses for the year .........................................

¥ 9,734¥ 8,232$ 77,485$ 59,413(5) Remeasurements of defined benefit plans
Items recorded in remeasurements of defined benefit plans, before tax were as follows:
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Past service costs ..................................................................................

¥ (1,271)¥ (838)Actuarial gains and losses ......................................................................

9,803

9,174

86,352

8,532¥ 8,336$ 78,464

Total balance as of March 31, 2017 and 2018 ........................................

¥$ (7,888)(6) Accumulated remeasurements of defined benefit plans
Items recorded in accumulated remeasurements of defined benefit plans (before considering tax effect) were as follows:
Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Unrecognized past service costs ............................................................

¥ (7,205)¥ (6,368)

Unrecognized actuarial gains and losses ................................................

2,414(6,760)(63,629)

Total balance as of March 31, 2017 and 2018 ........................................

¥ (4,791)¥ (13,128)$ (123,569)

79 T A I S E I ANNUA L R EPORT 2018

$ (59,940)

48%

20

20

General accounts .............................................................................

19

18

Special accounts ..............................................................................

3

3

Short-term assets .............................................................................

1

1

Other ................................................................................................

12

10

100%

100%

Total ...................................................................................

The retirement benefit trust established for corporate pension plans accounted for 36% and 41% of total plan assets, for the fiscal year
ended March 31, 2017 and 2018, respectively.
( ii ) Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered indetermining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions as of March 31, 2017 and 2018 were as follows:
2017

2018

Discount rate
The Company and its consolidated domestic subsidiaries

0.5∼1.5

Consolidated overseas subsidiaries

5.7∼8.5

6.3

0.8∼3.5

1.0∼3.0

Long-term expected rate of return

0.4∼1.5

3. Defined-contribution pension plans
Amount payable for defined-contribution pension plans of the Company and its consolidated subsidiaries were ¥ 2,436 million and ¥ 2,490
million ($ 23,438 thousand), for the fiscal year ended March 31, 2017 and 2018, respectively.

Data Section

12. Net assets
Net assets comprise three subsections; which are shareholders’ equity, accumulated other comprehensive income and non-controllinginterests.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“the Law”), when a dividend distribution of surplus is made, the smaller of an amount equal to 10%of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be
set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Law, appropriations of legal earnings reserve and additional paid-in capital generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statementsof the Company in accordance with the Law.
The number of treasury stock owned by the Company, consolidated subsidiaries and affiliated companies adopting the equity method
as of March 31, 2017 and 2018 were 1,408 thousand shares and 290 thousand shares, respectively. The consolidation of shares at the ratioof 1 share for 5 shares was implemented on October 1, 2017.
Total annual dividends per share as of March 31, 2018 is ¥ 85.00 (U.S. $ 0.8),which is the sum of the interim dividend per share of¥ 10.00 (U.S. $ 0.1) and the year-end dividend per share of ¥ 75.00 (U.S. $ 0.7). Due to the consolidation of shares at the ratio of 1 sharefor 5 shares implemented on October 1, 2017, the year-end dividend per share of ¥ 75.00 reflects this consolidation, while the interim
dividend per share of ¥ 10.00 does not. If the interim dividend per share is calculated based on the consolidation of shares, it would be¥ 50.00 (U.S. $ 0.5), making the total annual dividends per share ¥ 125.00 (U.S. $ 1.2).

Value Creation Story of the Taisei Group45%

Bonds ...............................................................................................

Special Feature

Equity securities ................................................................................

Business Section

2018

ESG Section2017( i ) Plan assets comprise:

About the Taisei Group(7) Plan assets

TA I SE I A N N UA L R E P O R T 2 0 1 8 80

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

13. Lease Transactions
Operating leases(a) Lessee
Future minimum lease payments as of March 31, 2017 and 2018 were as follows:
Millions of Yen

Thousands of U.S. Dollars

2017
Due within one year ................................................................................

2018¥ 4,3272018¥ 4,584$ 43,148

Due after one year ..................................................................................

23,36021,265200,160

Total ...................................................................................

¥ 27,687¥ 25,849$ 243,308(b) Lesser
Future minimum lease receipts as of March 31, 2017 and 2018 were as follows:
Millions of Yen

Thousands of U.S. Dollars

2017

2018

2018

Due within one year ................................................................................

¥ 3,913¥ 3,793

Due after one year ..................................................................................

20,325

20,168

189,834

Total ...................................................................................

¥ 24,238¥ 23,961$ 225,536$ 35,702

14. Derivative Transactions(1) Derivative transactions of the Company and its consolidated subsidiaries as of March 31, 2017 and 2018 were as follows:( i ) Derivative transactions which were not accounted for by the hedge accounting· Currency-related transactions(a) Over-the counter transactions
Corresponding derivative transactions for the year ended March 31, 2018 was not applicable. Information for the year ended March 31,2017 was as follows:
Millions of Yen
2017
Contract amount
Forward foreign exchange contract (long commitment)
to buy Qatari Riyal ...................................................................................

Due after
one year

Total¥ 6,558

Unrealized gain
(loss)

Fair value
¥—

¥ 23

¥ 23

Note: Fair value was determined at the quoted price obtained from the counterparty financial institutions.
( ii ) Derivative transactions which were accounted for by the hedge accounting as of March 31, 2017 and 2018 were as follows:∙ Currency related transactions
Main items hedged by forward foreign exchange contracts are accounts payable for construction contracts.
Millions of Yen
2017
Contract amount
Forward foreign exchange contract (short commitment)

Total

to sell Euro .............................................................................................

Due after one year
¥ 17

Fair value

¥—

¥ (0)

Millions of Yen
2018
Contract amount
Forward foreign exchange contract (short commitment)

Total

to sell U.S. dollars ...................................................................................

Due after one year
¥ 395

Fair value¥—¥ (10)

Thousands of U.S. Dollars
2018
Contract amount
Forward foreign exchange contract (short commitment)
to sell U.S. dollars ...................................................................................

Total

Due after one year
$ 3,718

Note: Fair value was determined at the quoted price obtained from the counterparty financial institutions.

81 T A I S E I ANNUA L R EPORT 2018$—

Fair value$ (94)

Special treatment of swap
Millions of Yen
2017
Contract amountDue after one year
¥ 64,590

Fair value¥ 36,400¥—

Millions of Yen
2018
Contract amount
Total
Interest rate swaps receive floating rate, pay fixed rate ...........................

Due after one year
¥ 50,540

Fair value¥ 43,770¥—

Thousands of U.S. Dollars
2018
Contract amount
Total
Interest rate swaps receive floating rate, pay fixed rate ...........................

Due after one year
$ 475,715

Fair value$ 411,992

Value Creation Story of the Taisei GroupInterest rate swaps receive floating rate, pay fixed rate ...........................

$—

Note: Fair value of interest rate swaps was included in the corresponding hedged long-term debt (long-term debt due within one year wasconsidered as short-term debt) as those interest rate swaps were recorded as an adjustment to the corresponding hedged long-term
debt under the special treatment.

15. Related Party Transactions
The Company had no transaction with related individuals, including shareholders and directors, for the year ended March 31, 2017and2018.

Special Feature

Total

About the Taisei Group∙ Interest Rate-Related Derivatives:
Main items hedged by interest rate swap contracts are long-term debts.
The following interest rate swaps are used as hedges. The net amounts to be paid or received are added to or deducted from interests.

The Company’s consolidated subsidiaries had the following transaction with related individuals, including shareholders and directors, for theyear ended March 31, 2017, but no transaction was made for the year ended March 31 2018.

Description oftransaction

AmountBalance at the end of the year
Account

Amount(a) Takashi Yamauchi(b) The director of the Corporation(c) —(d) 0.02%

House renovation workby Taisei Housing Co.,
Ltd.

¥ 19

—

¥—

(a) Hajime Tanabe(b) Close relative of the director of the
Corporation
(c) —
(d) —

Housing construction
by Taisei Housing Co.,
Ltd.

¥ 66

Advances received andprogress billings on
uncompleted contracts¥ 20

Data Section

Notes 1. Consumption taxes were not included in the transaction amounts.
2. Transaction conditions and policies to decide transaction conditions(1) The purchase price of land was determined on an arm’s length basis considering the market price. The amount of transaction
above represents the price on the contract for sales of real estate.
(2) Transaction condition including the contract price was determined properly on an arm’s length basis as in the case of othergeneral transactions. The amount of transaction above represents the contract price on the construction contract.

ESG Section

2017
Transactions during the year ended March 31, 2017

Business Section

Millions of yen(a) Name(b) Attribution(c) Capital (Million yen)(d) Equity ownership percentage of theCompany

TA I SE I A N N UA L R E P O R T 2 0 1 8 82

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017 and 201816. Segment Information(1) Segment Information(a) General information on reportable segments
Each reportable segment of the Group is a business unit in the Group, whose discrete financial information is available. Reportable segments
are reviewed periodically at the Board of Directors Meeting in order to determine distribution of management resources and evaluatebusiness result of each reportable segment.
The headquarters in the head office are established by the products of construction and the services. Each headquarter proposes
comprehensive domestic and oversea strategies with respect to products and services, and operates its business activities.
The Group consists of segments identified by products and services based on the headquarters, and identifies the three segments, “Civil
engineering,” “Construction contracts,” and “Real estate development” as reportable segments: “Civil engineering” delivering construction ofcivil engineering, etc.; “Construction contracts” delivering construction of building and housing, etc.; “Real estate development” deliveringpurchase, sale and rental of land and buildings, etc.
(b) Basis of measurement of net sales, profit or loss and other material items on reportable segment
The accounting methods for each reportable segment are the same as that set forth in the “Summary of Significant Accounting Policies”.
The profit (loss) of a reportable segment is based on the operating income (loss) before amortization of goodwill in Consolidated Statementsof Income. In addition, conditions of intersegment transactions and transfers are determined by considering market prices as in the case ofother general transactions.
Assets of the Group are not allocated to the segments. However, the corresponding depreciation expenses are allocated to the segments
according to the rational bases such as the usage of assets.
(c) Information of net sales, profit or loss and other material items on reportable segment
Segment information as for the years ended March 31, 2017 and 2018 were as follows:
Millions of Yen
2017
Reportable segments
Civilengineering

Construction
contracts

Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ...................................

¥ 422,847¥ 938,549¥ 115,226¥ 10,631¥ 1,487,253

Intersegment ................................

26,60939,167

6,540

2,398

74,714¥(74,714)—¥ 1,487,253—

Total .......................

449,456

977,716

121,766

13,029

1,561,967(74,714)

1,487,253

Operating income ............................

¥ 55,200¥ 73,373¥ 13,310¥ 1,201¥

143,084¥ (2,261)¥

140,823

Depreciation and amortization .........

¥

2,926

¥

2,305

¥

1,113

¥

91

¥

6,435

¥

(167)

¥

6,268

Increase (decrease) in allowance forlosses on construction contracts¥(6,664)

¥

213

¥

—

¥

—

¥

(6,451)¥—¥(6,451)

Notes 1. “Others” presented businesses such as incidental business to the construction business, leisure business, and other service
businesses, which are not included in reportable segments.
2. Adjustment amount of operating income was ¥ 26 million, which included intersegment elimination.
3. Segment operating income was adjusted against operating income of Consolidated Statement of Income.
Millions of Yen
2018
Reportable segments
Civilengineering

Construction
contracts

Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ...................................

¥ 441,270¥ 1,020,765¥ 113,736¥ 9,727¥ 1,585,498

Intersegment ................................

25,16139,788

6,095

2,574

73,618(73,618)—

Total .......................

466,4311,060,553

119,831

12,301

1,659,116(73,618)

1,585,498

Operating income ............................

¥ 71,519¥

96,399¥ 12,966¥ 1,114¥

181,998

¥

(138)

¥

181,860

Depreciation and amortization .........

¥

3,135

¥

2,895

¥

1,064

¥

80

¥

7,174

¥

(124)

¥

7,050

Increase (decrease) in allowance forlosses on construction contracts ....

¥

(2,171)¥(4,101)

¥

—

¥

—

¥

(6,272)¥—¥(6,272)

83 T A I S E I ANNUA L R EPORT 2018¥—

¥ 1,585,498

2018
Reportable segments
Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ...................................

$ 4,153,520$ 9,608,105$ 1,070,557$ 91,557$ 14,923,739

Intersegment ................................

236,832

374,51057,37024,228692,940(692,940)—

Total .......................

4,390,352

9,982,615

1,127,927

115,785

15,616,679(692,940)

14,923,739$—$ 14,923,739

Operating income ............................

$

673,183$

907,370$

122,045$ 10,486$ 1,713,084$(1,299)$ 1,711,785

Depreciation and amortization .........

$

29,509$27,249$10,015$753$

67,526$(1,167)$

66,359

Increase (decrease) in allowance forlosses on construction contracts ...

$(20,435)$(38,601)

$

—

$

—

$

(59,036)$—$(59,036)

Notes 1. “Others” presented businesses such as incidental business to the construction business, leisure business, and other service
businesses, which are not included in reportable segments.
2. Adjustment amount of operating income was ¥ 138 million ($ 1,299 thousand), which included intersegment elimination.
3. Segment operating income was adjusted against operating income of Consolidated Statement of Income.
(2) Related Information(a) Information about products and services
The information about products and services is included in “(c) Information of net sales, profit or loss and other material items on reportablesegment” of “(1) Segment Information” for the years ended March 31, 2017 and 2018.
(b) Information about geographic areas∙ Net sales
The information about net sales was not presented for the years ended March 31, 2017 and 2018 since sales to unaffiliated customers inJapan accounted for more than 90% of sales of Consolidated Statement of Income.
∙ Property, plant and equipment
The information about property, plant and equipment was not presented for the years ended March 31, 2017 and 2018 since the amounts
of property, plant and equipment that located in Japan accounted for more than 90% of the amounts of property, plant and equipment ofConsolidated Balance Sheet.

Value Creation Story of the Taisei Group

Construction
contracts

Special Feature

Civil
engineering

About the Taisei Group

Thousands of U.S. Dollars(d) Information about impairment losses on fixed assets of reportable segment for the years ended March 31, 2017 and 2018 were as
follows:
Millions of Yen
2017
Reportable segments

Civil engineering
Impairment losses on fixed assets .....

¥ 74

Construction
contracts

Real estatedevelopment

¥—

¥ 666

Others¥—Elimination
and/orcorporate¥ (55)

Business Section(c) Information about major customers
The information about major customers was not presented for the years ended March 31, 2017 and 2018 since net sales to any customer
were less than 10% of the amounts of sales of Consolidated Statement of Income.

Total
¥ 685

ESG Section

Millions of Yen
2018
Reportable segments

Civil engineering
Impairment losses on fixed assets .....

¥ 183

Construction
contracts

Real estatedevelopment¥ 219¥ 3,284

Others¥—Elimination
and/orcorporate¥ (55)

Total¥ 3,631

Thousands of U.S. Dollars

Civil engineering
Impairment losses on fixed assets .....

$ 1,723

Construction
contracts

Real estatedevelopment$ 2,061$ 30,911

Others$—Elimination
and/orcorporate$ (518)

Total

Data Section

2018
Reportable segments$ 34,177

TA I SE I A N N UA L R E P O R T 2 0 1 8 84

Notes to Consolidated Financial Statements (cont.)
TAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2017and 2018(e) Information about amortization and unamortized balance of goodwill of reportable segment
Information about amortization and unamortized balance of goodwill for the years ended March 31, 2017 and2018 was not applicable.
(f) Information about gains on negative goodwill of reportable segment
Information about gains on negative goodwill for the years ended March 31, 2017 and 2018 was not applicable.

17. Contingent Liabilities
The Group was contingently liable as guarantors for borrowings of the companies, which were not consolidated, with the amount of ¥ 686
million and ¥ 919 million ($ 8,650 thousand) as of March 31, 2017 and 2018, respectively.
In addition, the Group was contingently liable to invest in the specific purpose company for their repayment and other obligations ofborrowings with the amount of ¥ 15,680 million and ¥ 15,680 million ($ 147,590 thousand) as of March 31, 2017 and 2018, respectively.
The amounts indicate their shares of the additional investment obligations.

18. Revaluation Reserve for LandIn the year ended March 31, 2002, certain consolidated domestic subsidiaries executed revaluation of their land for business in accordancewith the Law Concerning Revaluation of Land (the “Law”).
As a result of this revaluation, deferred income taxes concerning the differences between the amounts after revaluation and the bookvalues before revaluation were stated in the assets and liabilities in the consolidated balance sheets. The differences between theseamounts, net of taxes, were stated as “Revaluation reserve for land” in “Accumulated other comprehensive income”.
The revaluation was executed in accordance with the method prescribed in the Article 2, Items 3, 4 and 5 of the Law on November 30,
2001 and March 31, 2002.
One of the consolidated subsidiaries, which was merged with another consolidated subsidiary on December 1, 2001, executed therevaluation on November 30, 2001.
Excess amount of the book values of the revaluated land over the fair values as of March 31, 2017 and 2018 was ¥ 3,702 million and¥ 2,374 million ($ 22,346 thousand), respectively (including the excess amount of ¥ 26 million and ¥ 1,489 million ($ 14,015 thousand)related to investment and rental property as of March 31, 2017 and 2018, respectively).

19. Losses on Anti-Monopoly Act
Corresponding Losses on Anti-Monopoly Act for the year ended March 31, 2018 was not applicable.
Losses on Anti-Monopoly Act amounted to ¥ 11,640 million for the year ended March 31, 2017.
The consolidated subsidiary of the company (TAISEI ROTEC CORPORATION) recognized the estimated penalties mentioned above at the
fiscal year ended March 31, 2017.

20. Research and Development Expenses
Research and development expenses, which were included in selling, general and administrative expenses and cost of sales, amounted to¥ 11,165 million and ¥ 11,608 million ($ 109,262 thousand) for the years ended March 31, 2017 and 2018, respectively.

21. Impairment Losses on Fixed Assets
Impairment losses on fixed assets for the years ended March 31, 2017 and 2018 consisted of the following:
2017
Use

Type of assets

Location

Assets reclassified from business purpose to trading purpose

Land and Building

Kanagawa and others (5 lots)

Assets for business use

Building, Machinery and equipment and others

Kumamoto and others (6 lots)

Idle assets

Land

Osaka and others (5 lots)
2018

Use

Type of assets

Location

Assets reclassified from business purpose to trading purpose

Land and others

Tokyo and the other (2 lots)

Assets for business use

Building, Machinery and equipment, Building and, others

Kyoto and others (4 lots)

Idle assets

Land

Miyagi (1 lot)

85 T A I S E I ANNUA L R EPORT 2018

Millions of Yen
2017

Thousands of U.S. Dollars
2018

2018

Assets reclassified from business purpose to trading purpose
Buildings and structures ......................................................................

¥

Land ...................................................................................................

402

¥

208

305

$ 2,871

3,222

30,327

Others .................................................................................................

—

—

—

Subtotal ..........................................................................................

610

3,527

33,198About the Taisei GroupThe Company and its consolidated domestic subsidiaries grouped their fixed assets based on units, for which decisions for investments
were made. Book values of the fixed assets listed above were reduced to recoverable amounts and impairment losses were recognized asfollows:

45

19

179

—

66

621

Machinery and equipment ...................................................................

29

18

170

Others .................................................................................................

0

0

0

Subtotal ..........................................................................................

74

103

970

Idle assets
Buildings and structures ......................................................................

—

—

—

Land ...................................................................................................

1

2

19

Others .................................................................................................

—

—

—

Total ...................................................................................

¥

1

2

19

685

¥ 3,632$ 34,187

The recoverable amount of the fixed assets for the years ended March 31, 2017 and 2018 were their net realizable values mainly based onamounts determined by valuations made in accordance with real estate appraisal standards.

22. Per Share Data
Net assets per share and net income per share as of and for the years ended March 31, 2017 and 2018 were as follows:Yen
2017
Net assets per share

U.S. Dollars
2018

2018

¥ 2,483.01¥ 2,975.02$ 28.00

Net income per share .............................................................................

392.87561.36

5.284

Diluted net income per share ..................................................................

—

—

—

Diluted net income per share for the years ended March 31, 2017 and 2018 were not presented because the Company had no shares withdilutive effects.
Calculation bases for basic net income per share for the years ended March 31, 2017 and 2018 were as follows:
Millions of Yen
2017

Business Section

Subtotal ..........................................................................................

Special Feature

Buildings and structures ......................................................................
Land ...................................................................................................

Value Creation Story of the Taisei Group

Assets for business use

Thousands of U.S. Dollars
2018

2018

Net income attributable to owners of parent ........................................
Net income not available to common stock holders ............................

¥

90,566—¥

126,788$ 1,193,411——
1,193,411

Net income attributable to owners of parent available to common stock ...

90,566

126,788

Average common stock outstanding (in thousands share) ...................

230,523

225,859

Data Section

The net assets per share and the net income per share are calculated assuming that the consolidation of shares took place at the beginningof the fiscal year, because the consolidation of shares, at the ratio of 1 share for 5 shares, was implemented on October 1, 2017.

ESG Section

Basic net income per share

TA I SE I A N N UA L R E P O R T 2 0 1 8 86

23. Comprehensive Income
Recycling adjustments and tax effects for each component of other comprehensive income were as follows:
Millions of Yen

Millions of Yen

Thousands of U.S. Dollars

2017

2018

2018

Unrealized holding gains on securities
Amount incurred .................................................................................

¥ (2,910)¥ 23,537

Recycling ............................................................................................

(959)

(327)

(3,078)Before Tax .......................................................................................

(3,869)23,210218,468$ 221,546

Tax effect .........................................................................................

1,178(7,098)(66,811)

Unrealized holding gains on securities, net of taxes .........................

(2,691)

16,112

151,657(94)

Deferred gains or losses on hedging derivatives
Amount incurred .................................................................................

(1)

(10)

Recycling ............................................................................................

4

0

0

Before Tax .......................................................................................

3

(10)

(94)

Tax effect .........................................................................................

(1)

3

28

Unrealized gains or losses on hedging derivatives, net of taxes .......

2

(7)

(66)

—

—

—

(423)

(45)

(423)

Revaluation reserve for landTax effect ............................................................................................
Foreign currency translation adjustments
Amount incurred .................................................................................
Recycling ............................................................................................

19

15

141

Foreign currency translation adjustments, net of taxes .....................

(404)

(30)

(282)

Remeasurements of defined benefit plans
Amount incurred .................................................................................

4,445

5,386

50,696

Recycling ............................................................................................

4,087

2,951

27,777

Before Tax .......................................................................................

8,532

8,337

78,473Tax effect .........................................................................................

(2,609)(2,543)(23,936)

Remeasurements of defined benefit plans, net of taxes ...................

5,923

5,794

54,537

(438)

(1)

(10)

2,392

¥ 21,868$ 205,836

Share of other comprehensive income of associates accounted for by the equity method
Amount incurred .................................................................................
Total other comprehensive income ................................

87 T A I S E I ANNUA L R EPORT 2018¥

Notes to Consolidated Financial Statements (cont.)( i ) Reason of acquisition of treasury stock
The Company decided to acquire its treasury stock in order to enhance the shareholders’ value per share and to improve the capitalefficiency.

Data Section

ESG Section

Business Section

Special Feature( ii ) Details(a) Type of stock to be acquired: Common stock of the Company(b) Number of stocks to be acquired: Up to 8,780,000 stocks (3.92% of the total outstanding stocks excluding treasury stock)(c) Total cost of acquisition: Up to ¥ 36,000 million ($ 338,855 thousand)(d) Period of acquisition: From May 14, 2018 to September 30, 2018

Value Creation Story of the Taisei Group

24. Subsequent Event(1) Acquisition of treasury stock
The Company resolved the item related to the acquisition of treasury stock at the board of directors held on May 11, 2018, in accordancewith the article 156 of the Japanese Corporate Law (the “Law”), which is applicable as replacement of the article 165, paragraph 3 of thelaw, as detailed below.

About the Taisei GroupTAISEI CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2016 and 2017

TA I SE I A N N UA L R E P O R T 2 0 1 8 88

Independent Auditor’s Report

89 T A I S E I ANNUA L R EPORT 2018

About the Taisei Group

Third-Party Opinion
Introduction
Starting the current fiscal year, the Taisei Group’s annual reporthas been renamed the “integrated report.” At the same time, theGroup has reduced the number of pages in the paper version of
the report and has provided information such as KPIs and reports

with respect to the composition of the report, I believe there arepoints that are easy to understand and points that should be
improved. I would also like to point out some areas that seem tobe issues with regard to compliance-related disclosure.

IssuesKanji Tanimoto
Professor,
Ph.D. in Business Administration
School of Commerce,
Faculty of Commerce,
Waseda University

time, the Compliance Committee and the Board of Directors
discussed in detail the Taisei Group’s compliance system (inFirstly, the connections linking the corporate philosophy, policies,

particular, prohibiting interaction with other companies in theand top message to specific management initiatives, and theindustry, in-house leniency, etc.), and stricter rules are being

connections between the Medium-term Business Plan targets andconsidered as future measures to address bid-rigging suspicions.

the value creation process based on ESG, are explained more

I believe it would have been better to disclose that process and its

clearly than they were in the past. In addition, dialogues andcontents. Finally, regardless of what the prosecutor decides in theinterviews occupy many pages of the current report in an effort toend, I hope that the circumstances surrounding these events will

convey the Company’s message and value creation story.

be disclosed in the next fiscal year’s report.

However, the purpose of an integrated report is to disclose whatkind of management was carried out during the year and whatkind of economic and social outcome was gained as a result, andSpecial Feature

website. Moving detailed data to the website is effective; however,

Value Creation Story of the Taisei Groupon individual management issues related to ISO26000 on its

Going Forward
In general, it is difficult for individual employees to think about CSR“Data” section).

management when engaging in their daily activities unlessorganizational initiatives and check functions are clearly working.

emphasized a little more in this report. The misconduct at TAISEI

Furthermore, CSR is an area that is evolving year by year, and new

ROTEC was mentioned only in a small box article in the previous

standards and terminologies are appearing. While the Company

fiscal year’s report, and the current fiscal year’s report also

strives to reflect these new developments and to demonstrate its

confined itself to simply describing future efforts. A suspension ofunderstanding of them in the report, they may not be properlybusiness due to violation of the Anti-Monopoly Act is serious, andassimilated unless they fit with the actual conditions in thecalls for more than just an apology. The Group’s report should layorganization. Specific efforts related to CSR, how the message

out why such a problem occurred, the circumstances that led up

and story presented in this report are connected to daily businessto it, and what measures will be taken in future as a result.

activities, are found in individual business activities.

Furthermore, the suspicions related to bid-rigging inWith regard to CSR procurement activities for example, Taisei

connection with the Linear Chuo Shinkansen Project, which

Corporation continues to carry out steady efforts aimed at Souyu-

became a major problem in the previous fiscal year, are also

kai member companies. In addition to conducting surveys ofreferred to only in a box article. The Company has not disclosed

suppliers, I have heard that CSR officers visit worksites and thatany official information other than issuing a short press releaseindividual branch managers strive to communicate CSR in theirstating “This is utterly unacceptable” after the Company’s

own words. The accumulation of work such as this is vital.

counsellor was arrested and indicted. Although the Company may

In conclusion, with regard to CSR initiatives, the Taisei Group

have been unable to comment in detail because the matter wasset out its philosophy and Action Guidelines in the report, and it

under investigation in the period from April to June when thismust continue efforts to promote the collection and integration ofreport was being written, it is questionable whether it was right tonon-financial data for all Group companies going forward. As amake no disclosure at all. On the other hand, the President’s New

foundation of such initiatives, the Group is called upon to continueYear’s Reflection to employees and the President’s Message into thoroughly improve understanding and implement initiatives

this report talk about efforts to thoroughly implement compliancewith regard to CSR in each business division, at the branch officein order to avoid raising this kind of doubt. Moreover, at the sameand business office level, as well as in Group companies.

Data Section

In addition, compliance-related disclosure should have been

ESG Section

show in detail the results of specific initiatives (“ESG” section,

Business Section

I believe it would have been better to devote a few more pages to

TA I SE I A N N UA L R E P O R T 2 0 1 8 90

Outline of the Company

Corporate Data (As of March 31, 2018)
Name
Established
Paid-in capital
Number of
employees
Representative
Head office

TAISEI CORPORATION
December 28, 1917
¥122.7 billion

Domestic Network

8,501 people (non-consolidated)
Yoshiyuki Murata,
President and Chief Executive Officer
25-1, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo, Japan
TEL. 81-3-3348-1111 (main number)

SapporoTohoku (Sendai)
Hokushinetsu (Niigata)
Kanto (Saitama)

Head Office
TokyoInternational Operations
Headquarters (Shinjuku, Tokyo)

Nagoya
Kyoto
Kobe

Chiba

Tokyo, Osaka, Nagoya, Fukuoka,
Sapporo, Sendai, Hiroshima,
Yokohama, Niigata, Takamatsu, Chiba,
Saitama, Kobe, Kyoto

Branches

Yokohama
Technology Center (Yokohama)Kansai (Osaka)

Taisei Technology Center(Yokohama City)

Shikoku (Takamatsu)
Chugoku (Hiroshima)

Overseas Network (As of August 1, 2018)

Kyushu (Fukuoka)

Head Office
Branch Office
Technology Center

CSCEC-TAISEI CONSTRUCTION, LTD.
(Head Office)Beijing

ISTANBULPAKISTANINDIANORTH AFRICACSCEC-TAISEI CONSTRUCTION, LTD.
(Shanghai Branch)
TAIPEITAISEI MYANMAR CO., LTD
MYANMAR

MIDDLE EASTTAISEI PHILIPPINE CONSTRUCTION INCORPORATEDPHILIPPINESRI LANKA

VINATA INTERNATIONAL CO., LTD. VIETNAM (Head Office)
VIETNAM (Hanoi)

KUALA LUMPUR
PT.TAISEI PULAUINTANCONSTRUCTION INTERNATIONAL
JAKARTA

VINATA INTERNATIONAL CO., LTD. VIETNAM(Hochiminh City Branch Office)
VIETNAM (Hochiminh City)

PT. INDOTAISEIINDAH DEVELOPMENT

TAISEI (THAILAND) CO., LTD
THAILANDSINGAPORE

Share Information (As of March 31, 2018)
Major Shareholders (Top 10):

Status of Shares
Number of Shares Authorized
Number of Shares Issued
Number of Shareholders

440,000,000
224,541,172
79,971Name of Shareholder

Distribution of shares [Status according to ownership]
Financial institutions
65,995,000 shares(29.39%)Securities companies
5,859,000 shares(2.61%)

Ordinary companies
16,425,000 shares(7.32%)

Stock Listings
Code
Transfer Agent

Overseas corporations, etc.
82,117,000 shares(36.57%)

Individuals, others
54,144,000 shares(24.11%)

Tokyo, Nagoya
1801
Mizuho Trust & Banking Co., Ltd.
1-2-1, Yaesu, Chuo-ku,
Tokyo 103-8670, Japan

91 T A I S E I ANNUA L R EPORT 2018

The Master Trust Bank of Japan, Ltd.
(Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)
Retirement Benefit Trust in Mizuho Trust(Mizuho Bank, Ltd. Account)
Taisei Associates’ Shareholding Plan
Japan Trustee Services Bank, Ltd.
(Trust Account No.5)
State Street Bank West Client-Treaty 505234
Taisei Employees’ Shareholding Plan
Japan Trustee Services Bank, Ltd.
(Trust Account No.7)
GOVERNMENT OF NORWAY
Japan Trustee Services Bank, Ltd.
(Trust Account No.1)

Number of
Shares Held

(Unit: Thousand Shares)

Ratio of
Shares Held(%)

13,164

5.87

11,536

5.14

7,857
5,251

3.50
2.34

4,262
4,228
3,765

1.90
1.89
1.68

3,564
3,199

1.59
1.43

3,164

1.41

Note: The Company’s own shares (289,640-) are excluded in calculating the
Ratio of Shares Held.

★

Auditing Dept.

Engineering Planning Dept.

Industrial Affairs Dept.

Engineering Solution Dept.

Energy Business Strategy Dept.

Life-science Project Dept.

Corporate Communication Dept.

Industrial Facilities Project Dept.

Information Planning Dept.

Project Management Dept.

Human Resources Dept.
Legal Dept.

International Projects Management Dept.

Accounting Dept.

Productivity Promotion Dept.

Finance Dept.

Power Plant Construction Planning Dept.

Safety Administration Dept.

Building Construction Dept.

Subcontractor Relations Dept.

Building Construction Div.

Planning & Administration Dept.
Environmental Technology Innovation Dept.

Environment Div.

Natural Symbiosis Engineering Dept.
Geo-Environmental Technology Dept.
Technology Planning Dept.
Intellectual Property Dept.

Architecture & Engineering Div.(Integrated)

Environmental Administration Dept.

Estimate Dept.
Mechanical & Electrical Div.

Infrastructure Technology Research Dept.

Administration Dept.
Architectural Design Depts.
Structural Engineering Depts.
Structural Planning Dept.
M&E Engineering Depts.
Design Div.

Planning & Design Dept.

Production Engineering Technology Dept.

Quality Management & Technology Dept.
Construction Administration Dept.

PresidentInternational Projects Dept.

Structural Engineering Dept.

Nuclear Facilities Dept.

Advanced Analysis Technology Dept.

Specific Project Dept.

Civil Engineering Dept.

Strategy Dept.

Environmental Engineering Dept.

Civil Engineering Dept.
Construction Engineering Dept.

Marketing & Sales Promotion Dept.
Marketing & Sales Promotion Div.

Planning & Business Promotion Dept.

Civil Engineering Div.

Real Estate Information Dept.

International Projects Management Dept.

Business Design & Master Plan Consulting Dept.

Coordination & Analysis Dept.

Marketing & Sales Div.(Integrated)

Projects Information Analysis & Strategy Dept.

Procurement Dept.Ⅰ

Life Cycle Care Promotion Dept.
Marketing & Sales Depts.

Marketing & Sales (Building Construction) Div.Ⅱ

Marketing & Sales Depts.

Marketing & Sales (Building Construction) Div. Ⅲ

Marketing & Sales Depts.

Medical & Pharmaceutical Business Div.

Design Dept.
Project Analysis & Information Dept.

Project Solutions Dept.

Marketing & Sales (Building Construction) Div.Ⅰ

Machinery Dept.
Estimate Dept.

Customer Satisfaction Dept.
Proposal & Solutions Div.

M&E Planning Dept.

Advanced Technology Development Dept.

Planning Dept.
Nuclear Facilities Div.

Mechanical & Electrical Dept.
Operations Planning Dept.

Urban Engineering Research Dept.

Taisei Technology Center

Technology Control Dept.

Procurement Div.

Procurement Dept.Ⅱ
Procurement Dept.Ⅲ
Planning & Administration Dept.

Marketing & Sales Depts.
Marketing & Planning Dept.
Planning & Management Dept.
Administration Dept.

Project Development Dept.Ⅰ

Safety Administration & Environmental Dept.

Project Development Dept.Ⅱ
PPP Projects Dept.
Urban Redevelopment Dept.Ⅰ

Urban Development Div.

Special Feature

Safety Administration Div.

Value Creation Story of the Taisei Group

Technology Strategy Dept.

General Affairs Dept.
Business Administration Div.

Life-science Proposal Dept.

Corporate Planning Dept.

BranchMarketing & Sales Depts.
Building Construction Dept.

ESG Section

Corporate Planning Office

Engineering Div.

Business Section

Secretarial Dept.

About the Taisei GroupTAISEI CORPORATION Organization Chart (As of August 1, 2018)

Design Dept.

Urban Redevelopment Dept.Ⅱ

Civil Engineering Dept.

Development Business Dept.
Development Business Dept.(International)
Property Management Business Dept.

Planning & Business Promotion Dept.
Marketing & Sales (West Japan) Div.

Marketing & Sales Depts.
Project Engineering & Promotion Dept.

International Marketing & Business Development Div.

★
Audit & Supervisory Board Member

International Business Strategy Dept.

Marketing & Sales Depts.

Marketing & Business Development Depts.

Administration Dept.
International Operations Headquarters

Safety Administration & Environmental Dept.
Building Construction & Engineering Dept.
Civil Engineering Dept.

Data Section

Marketing & Sales (Civil Engineering)Div.

Sales Mindset/Skills Training Dept.

Audit & Supervisory Board Members’ Dept.

TA I SE I A N N UA L R E P O R T 2 0 1 8 92

Overseas Network (As of August 1, 2018)

Overseas Business Offices

Overseas Subsidiaries / Affiliated Companies

TAIPEI OFFICE Zone B, 6F, No. 16, Sec. 4, Nan-Jing E. Road,
Taipei, Taiwan R. O. C.
TEL. 886-2-2578-5656 FAX. 886-2-2578-3300

PT.TAISEI PULAUINTAN CONSTRUCTION INTERNATIONALPLAZA OLEOS 18th Floor JI. TB Simatupang No.53, Pasar
Minggu Jakarta Selatan, 12520, Indonesia
TEL. 62-21-2278-3906 FAX. 62-21-2278-3903

MIDDLE EAST OFFICE (Doha) Corner Abdullah Bin Jassim St.
United Bank Bldg. 4th Floor, Facing QNB Bldg, Doha - Qatar, PO
BOX 47366
TEL. 974-4443-4174 FAX. 974-4443-7176
SINGAPORE OFFICE 16 Collyer Quay, Level 21, Singapore,
049318TEL. 65-6818-9779
KUALA LUMPUR OFFICE 9-3, 9th Floor, Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur, MALAYSIA
TEL. 60-3-2070-6155 FAX. 60-3-2070-6010
JAKARTA OFFICE PLAZA OLEOS 18th Floor JI. TB Simatupang
No.53, Pasar Minggu Jakarta Selatan, 12520, Indonesia
TEL. 62-21-2278-3902 FAX. 62-21-2278-3903
INDIA OFFICE #602, 6th Floor, Tower B, Global Business Park,
M.G. Road, Gurgaon, Haryana-122002, India
TEL. 91-124-466-9800 FAX. 91-124-466-9888
PAKISTAN OFFICE Office-A, 5th Floor, Block-A, Saudi Pak
Tower, 61-A, Jinnah Ave., Islamabad, Pakistan
TEL. 92-51-8316620 FAX. 92-51-8316629
VIETNAM OFFICE (Hanoi) 2nd Floor,Block A,Song Da Building
Pham Hung Road,My Dinh1,Nam Tu Liem District Hanoi,
S.R.VIETNAM
TEL. 84-24-3553-5033 FAX. 84-24-3553-5002

TAISEI (THAILAND) CO., LTD. 9th Floor, Thanapoom Tower,
1550 New Petchburi Road, Kwaeng Makkasan, Khet Rachtavee,
Bangkok 10400, THAILAND
TEL. 66-2-207-0330 FAX. 66-2-207-0332
VINATA INTERNATIONAL CO., LTD. (Head Office)3rd Floor,Block C,Song Da Building Pham Hung Road,My
Dinh1,Nam Tu Liem District Hanoi, S.R. VIETNAM
TEL. 84-24-3553-3839, -3840 FAX. 84-24-3553-3788
CSCEC-TAISEI CONSTRUCTION, LTD. (Head Office)4th Floor, Building No. 8, Foreign Culture Creativity Park, 19
Chegongzhuang Xi Road, Haidian District, BEIJING, P.R.C.
100048TEL. 86-10-6845-1267 FAX. 86-10-6845-1266(Hochiminh City Branch Office) 7th FL, VIETNAM CHAMBER
OF COMMERCE AND INDUSTRY TOWER,171 Vo Thi Sau St.,
District3, Hochiminh City, S.R.VIETNAM
TEL. 84-28-3932-1765 FAX. 84-28-3932-1764(Shanghai Branch) 3rd Floor No.6419 SanLuLu, Pudong Xin Qu,
Shanghai, P.R.C. 200120
TEL. 86-21-6209-9757 FAX. 86-21-6209-9758
TAISEI PHILIPPINE CONSTRUCTION INCORPORATED 23rd
Floor, BDO Equitable Bank Tower, Paseo de Roxas, Salcedo
Village, Makati City, PHILIPPINES
TEL. 63-2-886-0670 FAX. 63-2-886-0663

VIETNAM OFFICE (Hochiminh City) VIETNAM CHAMBER OFCOMMERCE AND INDUSTRY, Hochiminh City Branch Building
7th FL, 171 Vo Thi Sau St., Ward7, District-3, Hochiminh City,
S.R.VIETNAM
TEL. 84-28-3932-1759 FAX. 84-28-3932-1758

PT. INDOTAISEI INDAH DEVELOPMENT
Kawasan Industri Indotaisei, Kota Bukit Indah Sector IA, Block B
Karihurip, Cikampek, Karawan, Jawa Barat, INDONESIATEL. 62-264-351-003 FAX. 62-264-351-026

THAILAND OFFICE 9th Floor, Thanapoom Tower, 1550 New
Petchburi Road, Kwaeng Makkasan, Khet Rachtavee, Bangkok
10400, THAILAND
TEL. 66-2-207-0330 FAX. 66-2-207-0332

TAISEI MYANMAR CO., LTD. 2nd Floor Tokyo Enterprise
Building, No.32, Pyay Road, 61/2 miles, Hlaing Township, Yangon,
Myanmar
TEL. 95-1-654-838 FAX. 95-1-654-838

PHILIPPINE OFFICE 23F Tower 6789, 6789 Ayala Avenue,1227
Makati City, Metro Manila, PHILIPPINES
TEL. 63-2-528-3117 FAX. 63-2-528-3117
MYANMAR OFFICE 2nd Floor, Tokyo Enterprise Building, No.32,
Pyay Road, 61/2 miles, Hlaing Township, Yangon, Myanmar
TEL./FAX. 95-1-654-838
SRI LANKA OFFICE No.177, 3rd Floor, Galle Road, Colombo
03, Sri Lanka
TEL. 94-11-2446194 FAX. 94-11-2446198
NORTH AFRICA OFFICE 25th, Rd. No.10, Station Sqr, Maadi,
Cairo, ARAB REPUBLIC OF EGYPTTEL. 20-2-2378-3609 FAX. 20-2-2380-1362
ISTANBUL OFFICE Barbaros Mah. Seyit Ahmet Deresi Sok.
Bahar Sitesi Yani, 34662 Altunizade - Uskudar Istanbul, TURKEY
TEL. 90-216-651-8160 FAX. 90-216-651-8180

93 T A I S E I ANNUA L R EPORT 2018

A Graphic Advertisement of the TV CM “Singapore”
The commercial depicts a female engineer engaged in the construction work of the Thomson-East Coast Line, which will run through the north-south corridor of central Singapore, working
actively toward the future, while reminiscing about her hometown friends.

[ On the Cover ]Bountiful nature and values
generated therein are rendered asbeads of dew/water on a petal.
Also, the geometric patternrepresents the increasingly complex
and diverse roles we are to play.

［ I n q u i r i es ］

TAISEI CORPORATIONCSR Promotion Section,
Corporate Communication Department,
Corporate Planning OfficeE-mail : t-csr@pub.taisei.co.jp URL : http://www.taisei.co.jp/english/

1808.15000.T.S
1809.1800.T.S