CORPORATE REPORT 2015

Corporate Philosophy:

Cultivating Technological Capabilities, Seeking
Affluence and Contributing to Society
The corporate philosophy of the KYOWA EXEO Group, which is the basic guideline
for our corporate social responsibility, includes cultivating technological capabilities,
seeking affluence and contributing to society. The corporate philosophy clearly answers the question: “Why does the KYOWA EXEO Group exist?” The utmost groundfor existence is the Group’s technological capabilities. Throughout its existence,
the Group has aimed to be a corporate group that always anticipates and pursues
better technologies at the forefront of leading-edge technologies. The technologicalcapabilities cultivated through these efforts will help create more affluent living environments for people. The Group intends to be a valuable enterprise by contributing
to society through activities in the pursuit of state-of-the-art technologies.

1

Corporate Report 2015

Total ICT Solutions: Contributing to the Realizationof a Brighter Future by Bringing People Together andForming Connections with Society*ICT is an acronym for Information and Communications Technology.

Building a better,brighter future together

Corporate Report 20152

To help you better understand thecorporate activities of the KYOWA EXEO
Group, we are providing an integratedversion issue of the Annual Report andthe CSR Report.
Corporate Data
Company Name

KYOWA EXEO CORPORATION

EstablishedMay 17, 1954

Paid-in Capital¥6,888 million (as of April 1, 2015)

Stock ListingFirst Section of the Tokyo Stock Exchange

Representatives

Kunio Ishikawa, Chairman
Fuminori Kozono, President

Net Sales¥300.9 billion (consolidated)¥236.6 billion (non-consolidated) (as of March 31, 2015)

Number of
Employees

7,988 (consolidated)
3,582 (non-consolidated) (as of March 31, 2015)

Head Office29-20, Shibuya 3-chome, Shibuya-ku, Tokyo
TEL: +81-3-5778-1111 (switchboard)
URL: http://www.exeo.co.jp

West Japan Head
Office6-13, Kyomachibori 3-chome, Nishi-ku, Osaka
TEL: +81-6-6459-1581

Number ofBusiness Offices

Branch offices: 13
Sales offices: 15

Major Banks

Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bankof Tokyo-Mitsubishi UFJ, Ltd.

Independent
Auditor

Kudan Audit Corporation

Editorial Policy
Period Covered by
the Report:
Organizations
Covered by theReport:Reference
Guidelines:
Issuance:
Next Issuance
Scheduled:

From April 1, 2014, to March 31, 2015
(However, in some cases, activities before and after thecoverage period are also included in this report.)
Companies subject to consolidation of the KYOWA EXEO
Group
(However, in some cases, KYOWA EXEO CORPORATION’s
non-consolidated data are used instead of consolidated
data.)GRI “Sustainability Reporting Guideline Version 3.1”
Ministry of Environment “Environmental Reporting Guidelines (Fiscal 2012 Version)”
ISO26000 “Guidance on social responsibility”
July 2015
July 2016

KYOWA EXEO CORPORATION

http://www.exeo.co.jp/overseas/index.html
29-20, Shibuya 3-chome, Shibuya-ku, Tokyo 150-0002, Japan

3

Corporate Report 2015

CONTENTS
05

Milestones of the
KYOWA EXEO Group07
15

Business Overview

23

Special Feature 1

17

Greetings / Message
from the President

21

Special Feature

Corporate Value ofthe KYOWA EXEO
Group

Consolidated Financial
Highlights

25

Special Feature 2

27

Special Feature 3

Corporate Value of the KYOWA EXEO Group

Corporate Value of the KYOWA EXEO Group

Corporate Value of the KYOWA EXEO Group

Provide a comfortableenvironment for
telecommunications

Solve environmental issues
with the Group’s technologicalexcellence and creative
proposals

Provide new forms ofvalue that fulfill social
expectations

Special FeatureSpecial FeatureSpecial Feature

29

CSR Concept

1Management Systems

31

Corporate
Governance32
33

Compliance2

Involvement in the Environment

36

Environmental Management

40
54
55

Financial Section

3

Stock Information
Board of Directors

Risk Management

Notice on forward-looking statements:
This Corporate Report 2014 contains forward-looking statements such as the future business performance of KYOWA EXEO. As thesestatements are based on the information available at the time of the preparation of this report, the actual results might differ materiallyfrom the content described or suggested therein due to various factors. As this corporate report is not intended for the purpose of soliciting investment, all users of this report are advised to undertake decisions concerning investment at their own discretion.
The figures stated in units of ¥100 million and ¥1 million are rounded down.
Corporate Report 20154

Milestones of the KYOWA EXEO Group
Since its foundation in May 1954 as Kyowa Densetsu Kaisha, Ltd.,KYOWA EXEO has continued to create “Linkages” in society.
Corporate History
May 1954

Company established as Kyowa Densetsu Kaisha, Ltd.

Mar. 1999

Relocated head office to current address in Shibuya-ku, Tokyo

1954

Qualified to participate in telecommunications facility
tenders for Nippon Telegraph and Telephone (now NTT)

Apr. 2004

Acquired Daiwa Densetsu Corp.

May 2004

Acquired WAKO ENGINEERING CORP.

Feb. 1963

Listed on the Second Section of the Tokyo Stock Exchange

Apr. 2005

Acquired KANAC Corp.

Sep. 1963

Began engaging in telecommunications and electric power
construction outside that for NTT

Sep. 2009

KANAC Corp. was converted into a wholly owned subsidiary

May 2010

Made Ikeno Tsuken Co., Ltd., a consolidated subsidiary

Feb. 1972

Listed on the First Section of the Tokyo Stock ExchangeAug. 2011

Apr. 1982

Branched out into the software business

WAKO ENGINEERING CORP., Daiwa Densetsu Corporation and Ikeno
Tsuken Co., Ltd., were converted into wholly owned subsidiaries

Jun. 1986

Entered the environment businessNov. 2011

ICOMSYSTECH Co., Ltd., was converted into a wholly owned subsidiary

May 1991

Changed company name to KYOWA EXEO CORPORATION

Dec. 2014

Apr. 1998

Entered into the NI business.

AID Holdings Inc. (the holding company of
ADVANCED INFORMATION DESIGN Co., Ltd.) wasconverted into a wholly owned subsidiaryJul.

Year ended
September 1988:
Achieved annual net sales of¥100 billion

Year ended
September 1974:
Achieved annual net sales of¥50 billion

May 1991
Changed company
name to KYOWA EXEOCORPORATION

1982
Branched out into thesoftware business
1983
Started developing billingsystems.

May 1954
Company established
as Kyowa Densetsu
Kaisha, Ltd.

Feb. 1963
Listed on the Second
Section of the Tokyo Stock
Exchange

Feb. 1972
Listed on the First Sectionof the Tokyo Stock
Exchange1988
Acquired a construction
technology evaluation
statement from the Minister ofConstruction for thedevelopment of a rainfall
storage penetration system

1975
Started establishing a railway
communications network
inside Tehran Province in Iran.

1955
Started coaxial cabling work.

1983
Started optical fiber work.

1986
Started CATV work.

1956
Started telex work.

1954
5

Corporate Report 2015

1990
Entered the food plant
wastewater treatment
business and riverpurification business

1992
Started work on PDC (mova)

1963
Started overseas work
(Honduras)
Started service tunnel(communications tunnel) work
adopting the shield tunnelingmethod.

1986
Entered the environment
business (Water treatment)

Mobile phone base station

1960

1970

1980

1990

Year ended
March 1997:
Achieved annual net sales of¥200 billion

May 2000
Acquired ISO14001
certification
Apr. 2001
Merged with Showa
Technos Corp.

Jan. 1997
Acquired ISO9001
certification
Mar. 1999
Completed
construction of the
new company buildingin Shibuya(head office)1998
Entered into the NI
business.
1999
Developed the Social
Insurance System
Developed SOA
solutions.

1995
Started workon the C·C·Box.
1996
Started Internet
compliant systemestablishment work.

Started developing a“Work Management
System.”2002
Started customer
services.
2000
Started the dioxincountermeasure-compliant
incinerator business

Jun. 2005
Won a gold medal at the 38th
World Skills Competitions in
Helsinki, Finland

Oct. 2009
Won a gold medal at
the 40th World Skills
Competitions in Calgary,
Canada (third consecutive
championship).
May 2010
Made Ikeno Tsuken
Co., Ltd., a consolidated
subsidiary

2003
Sold an Internet videoconference system

2002
Entered into theinstallation of solar
power generation
facilities.

2003
2001
Completed the first bio
Entered into the livestock plant (Iwate Prefecture)excreta disposal business.
2005
2002
Operated the thermiteAcquired the ash fusion style dual-side ash
business from Niigata
fusion furnace businessEngineering Co., Ltd.
in a full-scale
2001
2003
Started IMT (FOMA) work. Started analog antenna
exchange work compliant
with ground digital
broadcasting.
2004
Entered into the KDDI aubase station construction
business full scale.
Started to reestablish therailway communication
network along with thequadruple track extensionof private railway lines in
Mobile phone base station Tokyo
2002
Shifted the B FLET’S
work to full scale.

Tokyo Integrated
Engineering Center(TEC) started operation(Heiwajima).

2009
Entered into an SOA
service agreementwith the Tokyo Stock
Exchange.
2006
Entered into the woodbiomass boiler business.
2006
Started long-term
comprehensive businessconsignment services at
general waste treatmentsites (Tochigi Prefecture)
2010
First general waste
incinerator completed(Aomori Prefecture)

2009
Started WiMAX work.
2010
Shifted the regional
intranet establishment
business to full scale.

Nov. 2011
ICOMSYSTECH Co., Ltd.,was converted into a wholly
owned subsidiary
Nov. 2013
Won a gold medal at the 51st
National Skills Competition in
Chiba (for the fifth time).
May 2014
Formed a capital andbusiness alliance with Eponet,
Inc. and WHERE, Inc.
2011
Received the IBM
Excellent Partner Award
Japan 2010
Authorized as a Core
Business Partner of NTT
DATA CORPORATION
2012
Stated selling theAdaptive Biz Service.
2013
Newly established the
ICT Solution businessheadquarters.
2012
Received an order
to construct a largescale cleaning plant(Wakayama).
Shifted the installationof the mega solar power
generation facilities to fullscale.
Started selling electricity.

Electric vehicle andcharging equipment
2014
Launched EXTravel, an
integrated application
for sightseeing anddisaster prevention
Started collaboration
with NIPPONSYSTEMWARE CO.,LTD.
Launched EXRescue,a system for facilitating
disaster responses
2013
Installation of wood biomass
boiler equipment completed(Kaneyama-machi, Yamagata
Prefecture)2014
Large-scale recycling center
completed (Higashimurayama
City, Tokyo)

Higashimurayama Recycling Center
Mega solar power plant

2011
Entered into theSoftbank mobile
project.
Engaged in the Great
East Japan Earthquake
recovery work.

Started LTE work.
Shifted the analoganalog antenna
exchange work
compliant with grounddigital broadcasting tofull scale.
Started A−XGP work.

2006
Started work on thenext-generation network(NGN).

Feb. 2015
Started the introductionof electric vehicles.

Commenced the work for
installation of charging
equipment for electric vehicles
2014
Conducted construction
work for the postdisaster restoration of Izu
Oshima.

Communications
Infrastructure

1994
Acquired aconstruction
technology evaluation
statement from
the Minister ofConstruction for thedevelopment of ahigh-efficiency riverpurification system

2001
Started developing an
Administrative Organ
Accounting System.

Apr. 2005
Acquired KANAC Corp.

Sep. 2009
KANAC Corp. wasconverted into a wholly
owned subsidiary

Oct. 2011
Won a gold medal at the 41stWorld Skills Competition in
London (fourth consecutive
championship).

Dec. 2014
AID Holdings Inc. (theholding company of
ADVANCED INFORMATIONDESIGN Co., Ltd.) wasconverted into a wholly
owned subsidiary.

Environmental/Social
Infrastructure

1994
Developed the Air
Traffic Control System

Sep. 2003
Acquired OHSAS18001
certification

May 2004
Acquired WAKO
ENGINEERING CORP.

Nov. 2007
Won a gold medal atthe 39th World Skills
Competitions in Shizuoka,
Japan (second consecutive
championship).

May 2014
A ceremony was held tocelebrate the Company’s
60th anniversary.

System Solutions

Nov. 2001
Instituted a complianceprogram

Apr. 2004
Acquired Daiwa Densetsu
Corp.

Mar. 2006
Obtained the Privacy
Mark.

Aug. 2011
WAKO ENGINEERING CORP.,
Daiwa Densetsu Corporation
and Ikeno Tsuken Co., Ltd.,
were converted into wholly
owned subsidiaries

Milestones of the
KYOWA EXEO Group¥300 billion

Jan. 2006
Acquired the ISMS
certification

Business Topics

Year ended
March 2006:
Achieved annual net sales ofStarted the LTEAdvanced work.
MG EXEO NETWORK
INC., a local subsidiaryin the Philippines,
received an order forand commenced a large
access-engineering work
project.

2012
Started the Platinum
Band Project (900 MHz).

Shifted the MNP work to
full scale.

2000

2010

2014
Corporate Report 2015

6

Business Overview

Linking all Communications.
We Contribute to Creating
an Affluent Society
with Two Types of Solutions.
The KYOWA EXEO Group works to contribute to
the realization of an affluent society and perform its
corporate social responsibility by providing highvalue-added ENGINEERING SOLUTIONS andSYSTEM SOLUTIONS.

ENGINEERING SOLUTIONS

Telecommunications Infrastructure
As broadband services are expanding toward the building of a safe and secure ICT society, the diversificationand sophistication of various technologies are underway. We provide consistent quality services from planning and design to construction, operation and maintenance for all types of communications equipment andfacilities throughout the country based on performanceover the years and excellent technologies.

To page 9

7

Corporate Report 2015

Business Overview

Building a better, brighter future together

SYSTEM SOLUTIONS

Environmental and Social Infrastructure:
By developing the electrical and engineering technologies that

Drawing on our ICT technologies, we are offering

we have nurtured in building a telecommunications infrastruc-total solutions in both the network integration (NI)ture, we have accumulated experience in the design andfield, which is establishing LAN/WANs and Internet

construction of electrical and air-conditioning facilities andenvironments, and the system integration (SI) field,

equipment. Utilizing such technologies in the environmental

which is establishing systems for corporations

field, to realize a recycling-oriented society, we are working tosuch as communications carriers, financial institu-

establish a social infrastructure that includes new energy

tions and manufacturers.

facilities, urban civil engineering structures and environmental
plants.

To page 11

To page 12

Corporate Report 20158

Business Overview

ENGINEERING
SOLUTIONNTT Group

We are working to establish various telecommunications facilities for the NTT Group companies.
Access engineering:
We lay optical fiber cable networks,
which are indispensable for highspeed communications networking,and install the Fiber To The Home
(FTTH) system to provide broadband
services such as the Internet tocorporations and households. EXEO’s
world-leading, high-quality construction technologies, which have won
the gold medal at the World Skills
Competition four consecutive years,
are supporting theever-evolving
information
communications age.

9

Corporate Report 2015

Network engineering:

Mobile engineering:

We inspect, design, build, monitor

We provide total services to achieve
comfortable mobile communications
environments not only inside buildings where people gather but also
inside station premises and tunnels.
Our services include negotiations for
installation, prior investigations anddesign of wireless phone basestations, and we establish mobile
communications facilities in general,
conduct
qualitysurveys andprovidevarious typesof maintenance.

and operate next-generation networks (NGNs) using leading-edge
routers and servers. We also design,
construct and maintain switchers,transmission equipment and power
equipment at nationwide legacy facilities, all of which support today’scommunications networks.

Business Overview

Building a better, brighter future together

Global development
Starting with orders received for communications cable installation work in Honduras inSouth America in 1963, we have long engaged
in various projects overseas. We have sent
engineers to nearly 100 countries.
Countries to which we have sent engineers since 1992
( Local corporations/ Locations to which our engineers were sent)

Currently, we have local operational bases in Manila,
the Philippines, and Bangkok, Thailand, contributing
to establishing and expanding local telecommunications facilities. Our consolidated subsidiary in thePhilippines, MG EXEO NETWORK INC., in particular,
has an operational structure that can handle projects
in neighboring countries.
ENGINEERING
SOLUTION

Multi-carriers

Establishing various telecommunications facilities forcustomers other than the NTT Group companies
Telecommunications facilities:
We construct telecommunications facilities
for new common carriers (NCCs) such as theKDDI Group and the Softbank Group, municipalities, government agencies, cable television companies, railway companies and othercustomers.
Many of our recent projects support Japanese companies that are developing businesses overseas. Whensuch companies launch large-scale factories overseas,
we are contributing to establishing the local IT environment for them such as constructing LANs and WANs.

Corporate Report 201510

Business Overview

ENGINEERING
SOLUTION

Electricity supply

Urban civil engineering

Environmental engineering

Drawing on the Group’s long-nurtured business results and technologies for stable electricity supply totelecommunications facilities, we areproviding a broad range of consistent
services from design and construction to maintenance for officebuildings and commercial buildings,
as well as telecommunications,power generation, air-conditioning
and hygiene facilities nationwide. We
can handle various projects fromgeneral electrical work to intricate
electric power construction that
requires highly advanced technologies. We are also contributing tosociety inenergy-saving
fields such as
mega solar
power generation and LED
lighting
projects.

With our long-nurtured technologies
in the construction of information
telecommunications facilities, weestablish telecommunications
facilities such as manholes andunderground conduits, rehabilitatebuilding structures and install electricity cables underground. We areestablishing a social infrastructurethat addresses the needs of new
generations with a consistent operational structure from design andconstruction to maintenance. Furthermore, drawing on our experience
as a trailblazer of the shield tunnelingmethod(non-drilling),
we arecontributing to
the installationof lifelines
such as watersupply andsewage.

The Group contributes to thepreservation of the global environment and creating a society where
people can live with a sense of
security. To this end, we utilize ourwaste treatment technologies forincineration and recycling facilities
and our wood biomass boilers andother such renewable energy
technologies and water treatment
technologies for industrial wastewater treatment facilities andsewage treatment facilities. We
offer such comprehensive ecotechnologies
with lowenvironmental
burden fromplanning,
proposal andconstruction
to operation.

11 Corporate Report 2015

Business Overview

Building a better, brighter future together

SYSTEM SOLUTIONS

Network Integration (NI)

System Integration (SI)The Group offers various types of services such as

To help customers solve their management issues, we

designing, constructing and operating servers and LANs

provide system solution services tailored to a variety offor corporations, and improves server/Internet environ-customer needs, which encompass everything fromments and security.

consulting to development, construction, maintenance

Major solutions
Network and server solutions
Wireless LAN solutions
Security solutions
Cloud solutions
Sound (e.g., IP-PBX) solutions
Video solutions
Smart sensing solutions
Energy management solutions
Disaster prevention/mitigationand disaster response solutions
Home network solutions
Operation, monitoringand maintenance services

and operation, by drawing on the latest technologies
such as service-oriented architecture (SOA) and our
powerful solutions.
Major solutions
SOA solutions
EAI/ESB, BPM, BRMS, ETL/BI, etc.

Business support solutions
Adaptive Biz Service (ABS)

Customer-specific billing
solutions
Facility and equipment
management solutions
Financial solutions
Corporate Report 201512

Business Overview

Strength of the KYOWA EXEO Group
Drawing on the Group’s strengths of “Total Process,” “Total Solution” and “Nationwide Expansion,” wecontinue to provide high-quality services to meet diversifying customer needs through the concertedGroup-wide power.

Total Process
We respond to customers’
needs with one-stop
services from planning anddevelopment to construction,
operation and maintenance,
which are sustained by highengineering and technologicalcapabilities.

Total Solution
We meet diversified
customers’ needs byfully drawing on the latest
technologies in a wide
variety of fields such as
telecommunications, civilengineering, electricity,
network integration (NI)and system integration(SI).

From Planningto Maintenance

Nationwide Expansion

Group ofProfessionals Who
Are Acquainted
with Every Kind ofTechnology

SupportNationwide

We are prepared to meet
every kind of customer
need, which can becovered by our operatingbases and Group
companies locatedthroughout the nation.

Total Process (through-process construction)

Planning and development

Construction

Operation and maintenance

SYSTEM SOLUTIONS

Total Solution

ENGINEERING SOLUTIONS

Optical access network
Next-generation network (NGN)
Mobile (Speeding up) 3G

LTE

LTE-Advanced

Underground installation of electricity cables
NI solutions and SI solutions
New energy (solar light, etc.) eco businessElectric equipment
Home ICT and Smart Houses

Nationwide operation, multiple carrier compliant and migration-compliant

13 Corporate Report 2015

Group Structure

Business Overview

Building a better, brighter future together(As of July 1, 2015)

KYOWA EXEO CORPORATION
Tw o M a jor C o n s o l i d a t e d S u b s i d i a r i e s
Daiwa Densetsu Corporation

EXEO TECH CORPORATION

27 Other Consolidated Subsidiaries
Accessengineering

Shinyei Tsushin Co., Ltd., Suncrex Corporation, FUJI DENSETSU CO., LTD., Ecos Hokuei Corporation, Sankyo-Techno Co., Ltd.,KANAC Corporation, K. Technos Co., Ltd., MG EXEO NETWORK, INC., Sigmax Co., Ltd.

Civil
engineering

Exeo Infra Corporation, Infratechno Corporation

Networks

Exeo Network Corporation, Multimedia Engineering Co., Ltd.

Mobile telecommunications

Exeo Mobile Corporation, Toho Communications Co., Ltd., Yuaituken Corporation, Kyoei Densetsu Kogyo Corporation, Denseisya
Corporation

IT

ACCRESCO CO., LTD., ICOMSYSTECH CO., Ltd., AID Holdings Inc. (the holding company of ADVANCED INFORMATION DESIGN Co., Ltd.)Other

KYOWA SECURITY SYSTEM CORPORATION, Kyokuyoh Corporation, Shinwa Seisakusyo Corporation, Exeo Butsuryuu Service
Corporation, Exeo Business Corporation, ASAHI DENWA KOGYO CORPORATIONThe Group companies other than the above: 10 nonconsolidated subsidiaries and 11 affiliates

Business Bases
Domestic bases:((As of July 1, 2015)
Branches/

Offices)Head Office: 29-20, Shibuya 3-chome, Shibuya-ku, Tokyo
Nishi-Nippon Head Office: 6-13, Kyomachibori 3-chome, Nishi-ku, Osaka-shi, Osaka
Hokkaido Branch: 2-20, Minami 21-jo Nishi 7-chome, Chuo-ku, Sapporo-shi, Hokkaido

Iwate Office: 5-7, Honcho-dori 2-chome, Morioka-shi, Iwate

Tohoku Branch: 5-1, Omachi 2-chome, Aoba-ku, Sendai-shi, Miyagi

Yamagata Office: 9-10, Minami Yonban-cho, Yamagata-shi, Yamagata

Koshin Branch: 602-2, Ochiai-cho, Kofu-shi, Yamanashi

Niigata Office: Cosmo Shinano, 4-27 Shinano-machi, Chuo-ku, Niigata-shi, Niigata

Minami Kanto Branch: 12-1 Kanagawahoncho, Kanagawa-ku, Yokohama-shi, Kanagawa

Nagano Office: NTT Kurita Building No. 1, 2423, Inaba, Nagano-shi, Nagano

Tokai Branch: Nishiki SIS Bldg., 10-33, Nishiki 3-chome, Naka-ku, Nagoya-shi, Aichi

Ibaraki Office: 1486 Kasahara-cho, Mito-shi, Ibaraki

Kansai Branch: 6-13, Kyomachibori 3-chome, Nishi-ku, Osaka-shi, Osaka

Chiba Office: Chiba West Building, 24-9 Shinmachi, Chuo-ku, Chiba-shi, Chiba

Miyako Branch: 539-20, Omiya Nishiiru Monzen-cho, Oike-dori, Chukyo-ku, Kyoto-shi, Kyoto

Kanto Naka Office: NTT Shirahata, 1-23, Shirahata 5-chome, Minami-ku, Saitama-shi, Saitama

Hyogo Branch: 1-13, Ekiminami-dori 2-chome, Hyogo-ku, Kobe-shi, Hyogo

Wakayama Office: 5-29-1, Fukiya-cho, Wakayama-shi, Wakayama

Hokuriku Branch: Kanazawa Fit Building, 53-1 Futakuchi-machi-Ni, Kanazawa-shi, Ishikawa

Matsuyama Office: Sumitomo Seimei Matsuyama Ichibancho Building, 15-2,
Ichibancho 1-chome, Matsuyama-shi, Ehime

Shikoku Branch: 148-20, Hayashi-cho, Takamatsu-shi, Kagawa
Chugoku Branch: 7-11, Ogawachi-machi 2-chome, Nishi-ku, Hiroshima-shi, Hiroshima

Yamaguchi Office: 19-2, Ekiminami-machi, Hofu-shi, Yamaguchi

Kyushu Branch: 7-8, Tamagawa-machi, Minami-ku, Fukuoka-shi, Fukuoka

Kumamoto Office: 27-23, Egoe 1-chome, Minami-ku, Kumamoto-shi, Kumamoto

Okinawa Branch: 30-52, Oroku 1-chome, Naha-shi, Okinawa

Kitakyushu Office: 1320-13, Aza Otsuka, Oaza Maeda, Yahatahigashi-ku, Kitakyushu-shi, Fukuoka
Nagasaki Office: NTT WEST Higashi Nagasaki Building, 823 Tanaka-machi, Nagasaki-shi, Nagasaki
Oita Office: NTT Harashin Building, 5-1, Harushinmachi, Oita-shi, Oita
Minami-Kyushu Office: 6, Kasuga-cho 4-chome, Kagoshima-shi, Kagoshima

Bases of Two Major Consolidated Subsidiaries
EXEO TECH CORPORATION

Daiwa Densetsu Corporation:

4-1-23, Heiwajima, Ota-ku, Tokyo

5-1, Omachi 2-chome, Aoba-ku, Sendai-shi, Miyagi

Overseas Bases
Philippines
MG EXEO NETWORK INC.
9/F Floor, DPC Place Building 2322 Chino Roces Ave. 1231
Makati City, Philippines

Thailand
THAI EXEO CORPORATION LTD.
56/8 Moo 1 Soi Chaengwattana 14 Chaengwattana Road,
Thungsonghong, Laksi, Bangkok 10210, THAILAND
Corporate Report 201514

Consolidated Financial and Non-financial Highlights

Financial Information(Billions of yen)

2010

2011

2012

2013

2014

2015 (plan)

Orders received

273.7

288.5

317.8

304.2

301.4

310.0

Net sales

282.2

273.1

301.3

318.5

300.9

305.0

Operating income

12.3

8.9

18.0

20.7

18.3

21.0

Net income

7.7

7.8

11.3

14.9

12.2

13.2

Capital expenditures

4.0

1.9

3.3

7.3

4.2

—

Depreciation expenses

3.0

2.9

2.3

2.2

2.6

—

Total assets

196.9

181.2

200.4

217.0

228.4

—

Net assets

112.2

113.4

122.3

135.6

146.7

—

Interest-bearing Debt

21.3

8.1

9.9

13.3

8.6

—

Net cash provided by (used in) operating activities

0.6

16.4

7.1

9.8

23.1

—

Net cash provided by (used in) investing activities

-1.5

-4.5

-2.1

-7.4

-2.8

—

Net cash provided by (used in) financing activities

-3.6

-17.5

-3.0

-0.9

-12.3

—

Cash and cash equivalents

17.6

12.3

14.6

16.2

24.2

—

Operating results (Fiscal year):

Financial position (at year-end)

Cash flows (Fiscal year)(¥)

Per share of common stock:
EPS

75.58

74.96

109.25147.75123.83136.98Cash dividend

20.0

20.0

22.0

24.0

32.0

32.0
(%)

Financial indicators:
Operating Income to Net Sales

4.4

3.3

6.0

6.5

6.1

6.9

ROE (Note 2)

7.6

7.2

9.6

11.6

8.7

—

ROA (Note 3)

4.1

4.2

5.9

7.1

5.5

—

Equity ratio

53.9

62.4

60.9

62.3

64.0

—

2010

2011

2012

2013

2014

7,729

7,872

7,521

7,553

7,988

Number of new graduates employed (Note 1)

105

92

66

61

73

Number of days of paid leave taken per employee (Note 1)

9.4

11.1

10.1

10.0

11.2

Turnover rate for employees with up to three years of service (%) (Note 1)

6

2

1

5

3

Number of employees with IT-related expert qualifications (Note 1)

139

167

190

219

232

5,975

5,082

6,343 (Note 2)

6,859 (Note 2)

6,397

Notes: 1. Amounts less than ¥100 million were truncated.
2. ROE = Net income ÷ Total shareholders’ equity (yearly average)
3. ROA = Net income ÷ Total assets (yearly average)

Non-Financial Information
Number of employees

CO2 emissions (t-CO2) (Note 1)

Notes: 1. On a non-consolidated basis.
2. These increases are attributable to the change in emission coefficients for power companies that was released by the Ministry of the Environment.

15 Corporate Report 2015

Building a better, brighter future together

Orders received (¥Billion)

317.8

304.2 301.4 310.0

282.2 273.1

Net Sales by Segment

301.3

318.5

300.9 305.0
SYSTEM
SOLUTIONS¥32.5 billion(10.8%)

Environmental andSocial Infrastructure¥36.4 billion(12.1%)NTT Group¥162.7 billion(54.1%)

Multi-carriers¥69.2 billion(23.0%)

2010

2011

2012

2013

2014

2015
(plan)

Operating income (¥Billion)

2010

2011

2012

Net income (¥Billion)

21.0

20.7

2013

2015
(plan)EPS (¥)

14.9

147.75136.98

13.2

18.3

18.0

2014

12.3

7.7

7.8

2010

2011

123.83

12.2

11.3

Consolidated Financial andNon-financial Highlights

273.7

288.5

Net sales (¥Billion)

109.2575.58 74.96

8.9

2010

2011

2012

2013

2014

2015
(plan)

Number of new graduates employed(Foreign students, Male/Female)

Female

Male

2012

2013

2014

2015
(plan)

Number of employees with IT-related
expert qualifications% of foreign citizens

219

102

4.9
71

14
52

2013

2014

2015
(plan)

6,859
6,343

5,975

6,397

5,082

139
16

13
57
48

1.1

2.7

0.0

0.0
2010

2012

CO2 emissions (t-CO2)

167

21

2011

232

190
3

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Corporate Report 201516

Greetings
I hereby express my sincere gratitude for your understanding and support
for the Group’s business activities.
Established in May 1954 to meet the increasing demand for the installation of large-scale telecommunications facilities, the KYOWA EXEO Groupreached its 61st year in 2015.
Since its establishment, the Group has promoted business activities
drawing on its expertise in the creation of information communications infrastructure as a core competence, and provided consistent and integrated
services nationwide for the installation of various information communications facilities and equipment.
Currently, in addition to establishing the information communications infrastructure, the Group has produced many business results in the establishment and management of environmental and social infrastructure byharnessing our long-nurtured environmental, civil engineering and electricalfacility technologies.
Furthermore, in the software development business we started in 1982,
we have a track record of developing solutions and applications that combine ICT and software, thereby we will strive to offer a significant contribution to the advancement of the Internet of Things (IoT) technologies.
The EXEO of the KYOWA EXEO Group is the Latin “exeo,” which refers
to breaking the mold and continually venturing out to address new challenges. Reaffirming the meaning of the company name, we will continue tomake flexible responses to a changing business environment and provide
high-value-added total ICT solutions in a wide range of business fields bygathering the strength of the entire Group, thereby contributing to society
as a corporation creating an affluent living environment. With such an attitude as a pillar of our CSR management, we will aim to achieve the sustainable growth of the Group.
Your continuing support is highly appreciated.

Fuminori Kozono
President
KYOWA EXEO CORPORATION

17 Corporate Report 2015

Message from the President

Greetings /Message from the President

Promoting the restructuring of our businessportfolio, we will develop our solution business
into the second pillar of the Group’s businesses.
Business Results for Fiscal 2014
Although we had aimed for year-on-year increases in sales
and income to achieve record net sales and operating
income for fiscal 2014, a decline in NTT-related works andother factors resulted in decreases in sales and income
compared with the previous year.
In the Group’s core business segment—telecommunications
infrastructure—fixed telecommunications-related sales havebeen on a decline, and mobile telecommunications-related
sales did not grow as we had expected due to reduced
investments during the second half of the year despite afavorable result in the year’s initial period. Our systemsolutions business also suffered a year-over-year decline insales, although we engaged in such efforts as promoting
M&As and tapping new business opportunities to expand therange of the segment’s businesses. Meanwhile, ourenvironmental and social infrastructure business enjoyed asignificant increase in sales from the previous year because
we received an order of a large project for the installation ofelectrical facilities as the recovering corporate earnings aided
by the government’s economic and monetary policies havebeen boosting the redevelopment of the Tokyo metropolitan
area.

For fiscal 2014, the Group recorded orders received
amounting to ¥301.4 billion (down 1% year over year), andachieved consolidated net sales of ¥300.9 billion (down 6%
year over year) and operating income of ¥18.3 billion (down
11% year over year).

Tasks Addressed and Achievements in Fiscal 2014
Although we had decreases in sales and income for fiscal
2014, some results were productive, such as further raisingbusiness efficiency through the reorganization of the Group
companies and consolidation of the bases for construction
work, as well as significantly increasing the businessassociated with government agency projects such as for
wireless digital communications for fire and disastermanagement and the installation of electrical facilities related
to the redevelopment of the Tokyo metropolitan area.
To counter the declining trend of capital investments bytelecommunications carriers, we have engaged in marketing
efforts aimed at expansion of the system solutions businessto make it a new pillar of business that promotes ourcontinued growth. Specifically, we aggressively proposedsystem solutions for the fields where the Group’s strengths
can be exploited, including new energy, geo services,
Corporate Report 201518

Message from the President
sensors, culture and education, medical care, health andwelfare. An example of such efforts in the geo service field
includes the EXTravel, a multilingual smartphone applicationthat serves the purposes of sightseeing and disasterprevention. Based on the EXTravel, we developed and started
the delivery of navigation services via smartphone applications
for sightseeing in Nikko and Kyoto Daigoji in fiscal 2014.
These events, although perhaps a tiny step, make us feel that
our efforts have been steadily bearing fruit.
As another effort to expand peripheral and new businesses
for the future, we acquired ADVANCED INFORMATIONDESIGN Co., Ltd., in December 2014, which has a goodtrack record in developing software such as systems mainly
for financial institutions.

Outlook for Fiscal 2015
For fiscal 2015, we aim to return to year-over-year increases
in sales and profits and achieve record-high operating
income.
In the telecommunications infrastructure business,telecommunications carriers tend to curtail their capital
investments, but they are expected to continue steadyinvestments for upgrading base station equipment toaccommodate increases in the volume and velocity of mobile
traffic. In line with the governmental initiatives for building
national resilience and revitalizing local communities, ICT
investments by municipalities are also expected to increase.
In the environmental and social infrastructure business,growing demand is expected for the undergrounding ofoverhead power lines and the installation of electricalequipment associated with redevelopment projects in theTokyo metropolitan area, whereas orders for the
refurbishment of aging social infrastructure are also
anticipated. In the system solutions business, we see
favorable signs that strong corporate earnings are pushing
forward IT investments and other investments to develop
systems for accommodating the liberalization of electricity
markets and the introduction of the “my number” system,
along with investments for related businesses. Moreover, we
see various ICT technologies, including sensors and cloudcomputing, used for factories, automobiles and various
facilities of social infrastructure, which makes us envisage thearrival of a society where all things are connected to theInternet, the IoT era, drastically changing business and social
systems.
Under these business circumstances, we will continue topromote the growth strategy of expanding our systemsolutions business to ensure continued growth. This is being
done by placing a focus on four target fields: the “newenergy” field in anticipation of the liberalization of electricity
markets; the “security/cloud” field, which is becoming
increasingly important due to the advancement of ICT; the“geo solutions” field to address the need for sightseeing
information and support for disaster management utilizing
elements such as mapping information, GPS andsmartphones; and the “global” field for promoting theinitiatives led by the Group’s local subsidiary in the Philippines
to establish ICT mainly in Southeast Asia. These fields not

19 Corporate Report 2015

only are expected to enjoy the expansion of markets, but also
capitalize on the Group’s strengths. Especially in the newenergy field, we have been involved in businesses concerningenergy management systems (EMSs) and quick chargers. In
addition, we will aggressively sell the Group’s hightechnologies and nationwide networking capabilities to power
producers and suppliers (PPSs), as well as traditional powercompanies, to expedite the expansion of businesses.
To reinforce efforts to raise productivity, we placed aperson responsible for promoting business process reengineering in each business headquarters. By reviewing theprocess of business operation in each headquarters, we willsolidify the Group’s competitive strength for further businessexpansion and seek improvements in terms of quality, costand delivery timing to ensure the supply of valuable services
to our customers.

Image of KYOWA EXEO in 2020
To provide a hint as to the future growth of the Group, we
have set the target portfolio of our businesses we aim toachieve in 2020—the year when the Olympic and Paralympic
Games will be held in Tokyo: 50% will be accounted for by
the telecommunications carrier business for the NTT Groupand new common carriers (NCCs); 25% will be accounted
for by the urban infrastructure business, which consists of
non-carrier telecommunications, environmental and social
infrastructure; and 25% will be accounted for by the solution
business. Although the telecommunications carrier businessis not expected to achieve large growth, we will secure stable
income by continuing efficient operations based on our
accumulated experience while expanding the range ofbasic policy of stable dividends, while considering businessresults, the future business environment and investments for
ensuring financial strength and business expansion.
We raised the annual dividend per share by ¥8 to ¥32 in
fiscal 2014, and the same annual dividend is planned forfiscal 2015.
We also plan to purchase ¥5.0 billion in shares of treasury
stock in fiscal 2015, which is an increase of ¥2.0 billion
compared with the previous fiscal year. The recent level of thetotal return ratio—the sum of dividends paid and sharebuybacks as a proportion of consolidated net income—should be high enough to fully satisfy our shareholders.
In addition, we will strive to ensure a stable high level ofreturn on equity (ROE) by promoting the growth of income
and enhancing capital efficiency.
Doing a good job and being appreciated by customers
leads to higher employee morale and better businessperformance. In the end, that results in the distribution ofhigher profits to shareholders. We will strive to enhance
corporate value through raising business performance andaggressively distributing profits to shareholders.

Distributing returns to shareholders
The KYOWA EXEO Group regards profit distribution toshareholders as an important managerial issue and has a

Greetings /Message from the President

businesses to include maintenance and other related
businesses. Meanwhile, we will focus on the enlargement of
the urban infrastructure and solution businesses, which havesignificant growth potential.
In particular, we are thinking of doubling the scale of oursolution business. To enable that, we have about 1,500
system engineers engaged in various kinds of systemdevelopment, as well as professional engineers who havehigh expertise and accumulated experience in the field of
telecommunications networks. Combining such systemdevelopment and network building capabilities, we willcontinue to support the construction of foundations for theincreasingly sophisticated ICT society, thereby cultivating thesolution business into a new pillar of business for ensuring thesustainable growth of the Group.

Operation highlight
Orders received (¥billion)

304.2

2013

Net sales (¥billion)

318.5

310.0

301.4

2014

Operating income (¥billion)

300.9

2015
(plan)

2013

2014

305.0

18.3

2015
(plan)

2013

2014

2015
(plan)

FY20

FY15
15%

Close Up

25%

21.0

20.7

25%

¥305.0 bn

60%

Expansion of sales and businessdomains by development into new
domains¥400.0 bn

50%

25%
Telecom carriers business

Maintain level by expansion of domain despite decrease in investment

Urban infrastructure business

Expansion of business chances in 2020 to national resilience, etc.

Solutions business

Development into new domains (new energy, etc.)
Expansion of software development

Corporate Report 201520

Special Feature

Corporate Value of the KYOWA
We face a wide array of social issues to be addressed, including global warming due toJapan and its falling birthrate and aging population. The KYOWA EXEO Group is willing tothese issues and achieve growth in a harmonious way with society.
Connection between the Group’s businesses and the social issues it recognizes
Major social issues:

Declining fixed-line

phonesLabor shortage in theconstruction industry
Social needs toward

the Tokyo Olympics
and Paralympics
Transition to thenext-generation
wireless technology(5G)
Reinforcement ofdisastermanagement, etc.

21 Corporate Report 2015

Developing total ICT solutions on a group-wide basis

Medium- to long-termbusiness environment:

Medium-Term
Management Plan
Medium-Term Vision

to create value and build a solid base for growth

Global warming
Water risk
Energy problems
Urban concentration
Japan’s fallingbirthrate, super aging
population, etc.

Telecommunications
Infrastructure Business

Environmental
and Social
Infrastructure
Business

KYOWA EXEO
Group’s Technological
Capabilities

SystemSolutions
Business

EXEO Groupclimate change, the declining population of
offer its “linking” technologies to help solve

Telecommunications Infrastructure Business

Important issues for the KYOWA EXEO
Group to achieve sustainable growth

Developing human resources /developing and handing down
technologies

PICK UP!

The telecommunications infrastructure business can meet social needs as follows.
Enhances the quality of telecommunications (e.g., speed of connection)
Facilitates the operations that address the reception difficulty for the 700-MHz bandSpecial Feature 1: Provide a comfortable environment

for telecommunications

Facilitates the spread of LTE-Advanced
Ensures a smooth transition to the next-generation wireless technology (5G)

See page 23

PICK UP!

The environmental and social infrastructure business can meet social needs as follows.
Promotes active use of natural energy
Preserves water resources
Offers flexible solutions to problems with waste in local communities
Ensures a globally comparable level of landscape bypromoting the undergrounding of overhead power lines

System Solutions Business

The system solutions business can meet social needs as follows.
Provides leading-edge ICT technologies
Promotes the deepening of communication

Contributing to ensuring
the sustainability of theEarthSpecial Feature 2: Solve environmental issues with the Group’s

technological excellence and creative proposals

See page 25

PICK UP!

Special Feature
Corporate Value of the KYOWA EXEO Group

Environmental and Social Infrastructure Business

Creating a comfortableenvironment for
telecommunications

Creating new formsof communication
Special Feature 3: Provide new forms of valuethat fulfill social expectations

Creates solutions with a focus on safety and security
Creates new value

See page 27

Corporate Report 201522

Special Feature

Corporate Value of the KYOWA EXEO Group1

Special Feature

Provide a comfortable
Currently, being able to connect anywhere is taken "forvolume of information that they are expected to handle isattention throughout the world, ensuring a comfortable

Employees' Talk
<Connection between the Group's businesses and solutions to social issues ➀>As Team EXEO, the KYOWA EXEO Group makes concerted approaches tovarious challenges, including higher transmission speed and wider area coverage.
Current status of the mobile technology
Currently, people of all ages from elementary school kids tosenior citizens in their 80s have one or more mobile terminals, such as cell phones and tablet PCs. This phenomenal
spread of mobile terminals has occurred because they areused not only as a communication device for calling or texting but also to fulfill functions that previously were available
only through personal computers, such as connecting to
the Internet and using various applications, transforming
into an information-utilizing terminal.
Japan's telecommunications environment for mobile
phones is now approaching the final stage of the LTE installation process. Although the LTE is now the prevailingstandard for wireless telecommunication in Japan, the LTEAdvanced standard, which enables 10 times faster wirelesstelecommunication than the LTE, already has been introduced in some areas and will become more widely available in Japan starting this year. Furthermore, preparations
for introducing the fifth-generation standard of wirelesstelecommunication are about to begin toward the Tokyo
Olympic/Paralympic year of 2020.
To meet the social demand for higher transmission rates,
it is imperative to accelerate efforts to upgrade the telecommunication infrastructure, including the installation/im-

provement of base stations. To meet such demand, Team
EXEO will respond to expectations by exercising active
leadership with its proven technologies and speediness.

Collaborative strength of Team EXEO
To address the latest needs of the times while ensuring thequality of the telecommunication speed and area coverage,
it is important to make full use of the Group's nationwide
network of construction/installation forces so that the rightamount of labor is delivered to the right places. To achieve
that, close collaboration is indispensable between the
Company and the Group companies.
Cell phones and other mobile terminals exchange information with each other by means of radio waves, which
are invisible and sent by base stations that consist of antennas and other equipment. Currently, the number of basestations for telecommunications is said to be around
600,000 nationwide. When the LTE-Advanced service,
which started in the previous fiscal year, becomes more
widely available, it will be necessary to renew all the equipment of each base station to enable better services. To accomplish this task, the ability to manage the work process
to ensure maximum efficiency will be required in addition to
sufficient technological capabilities to deliver results of astable quality. Efficient onsite management in collaboration
with the Group companies for speedier realization of theservices demanded by society will also be important.
The KYOWA EXEO Group has been making a concerted
effort to address this social demand by networking the installation forces including the Group companies throughout
Japan to enable their closer collaboration and flexible allocation of personnel to required sites.

Handing down technologies andcontributing to future society
Highly advanced and updated technologies of a stable
quality are indispensable for ensuring the comfortable telecommunications environment demanded by society. To
keep offering such technologies, we must maintain the highquality of the Group's installation technologies and share
Installation of a base station for mobile phones

23 Corporate Report 2015

environment for telecommunications
granted". Because the latest mobile terminals can do jobs comparable to those of PCs, theincreasing more and more. Toward the 2020 Tokyo Olympics, which is receiving considerable
telecommunications environment is a major issue of Japan and the KYOWA EXEO Group.

Special Feature
Corporate Value of the KYOWA EXEO Groupthem throughout the Group, while learning the latest technologies at all times. A corporate culture of communicatingknowledge is established within the employees of the
KYOWA EXEO Group, including intensive trainings given at
its Technology Training Center and on-the-job training (OJT)
at various sites where experienced employees pass ontheir skills to newer employees. At the same time, acquiring
multiple skills is encouraged. We are currently working on
building a system to enable the flexible allocation of labor
forces according to changing onsite needs by reeducating
the employees who engaged in the installation of wired
communication facilities or civil engineering work through
OJT.
We are also deliberating on how the KYOWA EXEO
Group can better serve the needs that might arise when, inthe near future, mobile telecommunications carriers try to
upgrade and spread their own communications facilities.
While proceeding with the installation and enhancement oftelecommunications facilities, we are constantly seeking
measures to fulfill various forms of social demand.
Toward the Tokyo Olympics and Paralympics in 2020,
moves for the introduction of the fifth generation (5G) service are about to begin. By actively utilizing the latest technologies while maintaining its proven technologies to ensure
a comfortable telecommunication environment, the KYOWA EXEO Group will continue to make concerted efforts
on a Group-wide basis to contribute to the creation of future society.

Profile:Yoshihiro Akiyama (joined the Company in 2002)
Facility Construction Department, Mobile Engineering Division,
DoCoMo Business Headquarters

Reference: NTT DoCoMo's planned network development (Source: NTT DoCoMo's presentation material for financial results, edited by the Company.)(Fiscal Year)

2014

2015

LTE

2016

2017

LTE-Advanced
370 Mbps

Transmission rate:

225 Mbps
CA

Technology:

2020

300 Mbps
ExtendedCA

3.5-GHz band

5G
1 GbpsExtended
MIMO, etc.

MIMO
Carrier Aggregation (CA)
Add-on cells (3.5 GHz)
700 MHz
Corporate Report 201524

Special Feature

Corporate Value of the KYOWA EXEO Group2

Special Feature

Solve environmental issues with theEnvironmental problems are global social issues. Amonglargest number of waste incinerator plants and therefore
to the various municipalities of Japan suffering from waste
plants suited to their respective needs.

Employees' Talk
<Connection between the Group's businesses and solutions to social issues ➁>The KYOWA EXEO Group proposes waste treatment plants for the
harmonious coexistence of humans and the Earth
Promoting the creation of a recyclingoriented society
Reflecting on the conventional society of mass production, mass consumption and mass disposal, there has
been a significant call for ecological lifestyles to protect
the global environment throughout the world. The realization of a recycling-oriented society is a big social issue we must address. A recycling-oriented societymeans a society where the consumption of natural resources is minimized by promoting the efficient use
thereof, thus reducing waste so that environmental burdens are minimized.
The realization of a recycling-oriented society is what
all people and corporate entities are asked to aim for. In
particular, municipalities responsible for domestic waste
disposal must take the initiative and act to promote reAmount of waste incineration per person (kg)(Reference: Environmental Statistics and other documents from the Ministry of the Environment)Japangional efforts to address this issue.
By addressing the issue of waste disposal, the KYOWA EXEO Group offers its various technologies to contribute to the creation of a recycling-oriented society.
They include comprehensive engineering of waste treatment plants from design and construction to operation
management, waste treatment technologies combinedwith the telecommunications technology the Group specializes in to produce differentiated incineration and recycling facilities, and renewable energy technologies,
such as wood biomass boilers.

Creative ability to propose solutions toregional issues
The construction of the Shusuien Recycling Center, forwhich the Company had received an order from Higashiyama City, Tokyo, was completed in June 2014 to
replace the existing waste treatment facility, which had
been degraded with odor and noise, annoying neighborhood residents and being blamed for a poor working
environment. In designing and constructing a new recycling facility that can treat and recycle the bottles andFranceGermany
UnitedStatesNorwaySouth Korea
UnitedKingdom
FinlandSpain
0

25 Corporate Report 2015

50

100

150

200

250

300

350

Recycling facility

Group's technological excellence and creative proposals
them, the KYOWA EXEO Group addresses the waste problem in Japan, which has the world's
imposes a significant burden to the global environment. The Group has been closely attentive
problems and has helped them to solve such social issues by constructing waste treatment

Special Feature
Corporate Value of the KYOWA EXEO Groupcans collected from 70,000 households in Higashiyama
City, the Company took the utmost care to protect theliving environment for the nearby residents by installingdeodorizing equipment using activated charcoal andsound insulating walls at the site, among other measures. In addition, the new facility adopted a single line
for separating bottles and cans, instead of the previous
method of using different lines. Based on the accurate
identification of client needs, we address them by combining the Group's knowledge in the most appropriate
way to deliver the best results, thereby producing newvalue that contributes to society.

As a woman and a member of Team EXEO
I am currently engaging in a project to construct a
waste treatment facility with large area coverage thatprocesses domestic waste from three municipalities,
which is scheduled to be completed in February 2016.
This waste incineration/recycling facility not only adopts
an advanced and effective method of waste treatment
but also has the ecological feature of recycling the thermal energy produced during the incineration process togenerate power, which is used to operate various equipment within the facility.
It might still be uncommon for women to work on aconstruction site as I do, but being a woman does not

Profile:Mami Nishihara (joined the Company in 2012)
Engineering Department, Environmental Projects Division, Electrical& Telecoms Engineering / Environmental Projects Headquarters

bother me when doing daily jobs for this project, possibly due to the ambience of my workplace that makes
employees less aware of gender differences. Still, sometimes a feminine sense of caring can cheer up the people at the site, increasing the work efficiency.
Waste treatment plants are indispensable facilities forcommunities. As a member of Team EXEO, I will seek
better and wider application of the technology of the
KYOWA EXEO Group so that we can contribute tobuilding a society that is friendlier to the global environment.

A morning assembly at the site

Corporate Report 201526

Special Feature

Corporate Value of the KYOWA EXEO Group3

Special Feature

Provide new forms of
The forms of communication are evolving continuously.
enable the acquisition of location/positional information,of safety, security and disaster prevention. The KYOWA
terminals must achieve continuing evolution to ensure that

Employees’ Talk
<Connection between the Group’s businesses and solutions to social issues ➂>Utilizing the potential of ICT technologies, we have developed an
application for school trips to create new forms of communication.
Expectations for new forms of communication
Recently, the number of foreign tourists visiting Japan
has been increasing—exceeding 13.41 million in 2014,
which is a significant increase from 8.35 million in 2012.
To come up with a convenient way to introduce the culture of Japan to these tourists in their native language,
while at the same time delivering information for disasterprevention, we developed the EXTravel application for
smartphones and tablet PCs in fiscal 2013 which is amultiple-language application integrating information forsightseeing and disaster prevention. In fiscal 2014, theEXTravel application was adopted by Nikko City andother municipalities that are promoting local tourism.
In fiscal 2014, when we were looking for other waysof using EXTravel, we came up with the idea of using it
Concerns over the security of students on a school trip (Number of schools)(Reference: A survey by the Educational Tour Institute)■Public junior high ■Private junior high ■Public high schools ■Private high schools■High schools - unclassified ■Private unified lower and upper secondary schools

Accidents 4

9

24

2
11

Confirmation of safety
3
in case of disaster

9

22

2
4

3

2
3 5 5

Getting lost2
1
6

Unable to contact

The debut of the EXTravel-based application for school trips and its distinctive
features

1
7

2
1
5 4 5

Being a victim
of a crime

Others 1
0

27 Corporate Report 20151020

for school trips, for which safety and security are the
top priorities. Especially after the disaster of the Great
East Japan Earthquake, parents have given great attention to schools’ preparedness for disaster. Therefore,
schools place the top priority on ensuring safety and theprompt evacuation of students in case of an emergency.
The use of mobile phones might be sufficient to address the issue of disaster prevention alone. Meanwhile,the use of ICT technologies can be effective for students’ lear ning and enable them to ha ve timely
communications with their parents and teachers. With
this perspective, a new form of communication basedon EXTravel has been developed.

30

40

50

60

70

80

Because school trips have different purposes from trips
in general, the development of the school trip application started from scratch by hearing opinions and requests from prospective users of the application, including teachers and students, as well as experts on thisissue. Although user-friendliness is a basic premise, we
examined various functions that might be included invalue that fulfill social expectations
Take for example, smartphones, WiFi or beacons. These new communication technologies
thereby offering advanced features that are not only convenient but also serve the purposes
EXEO Group believes the new ways of communication enabled by advanced mobile
people enjoy their lives wherever they are without fear and irrespective of national borders.

Great potential of the ICT technologies opens
up the future
After the application’s trial, we interviewed parents andteachers, as well as the students who used theSpecial Feature
Corporate Value of the KYOWA EXEO Groupthe application.
In December 2014, we gave it a trial by having highschool students use the application on a school trip to
Hawaii. For the pre- and post-trip learning opportunities
in Japan, we provided the students with the functions of
the application using the cloud technology. While touring
Hawaii, we provided them with tablet PCs in which theapplication had been installed. The application was
equipped with many distinctive features that utilize theadvantages of the ICT technologies. For example, thestudents were given the mission of talking to the local
people in English and taking a picture or video of it witha tablet PC. The pictures and videos uploaded to thecloud were then viewable by their parents. For theteachers, the application informs them of the whereabouts of the students in great detail and, in case of an
emergency, provides disaster prevention functions
which enable them to navigate the students to theevacuation area. The application also delivers a chatfunction between teachers and student groups. With
many distinctive features, the EXTravel-based application has realized new forms of communication that fulfill
the expectations of potential users.

Profile:(Left) Kumiko Kamibayashi (joined the Company in 2003)
Business Promotion Department, New Energy Promotion Division, ICT
Solutions Headquarters(Right) Shingo Fujishima (joined the Company in 2002)
Geo Solutions Promotion Department, Solution Promotion Division, ICT
Solutions Headquarters

application during the school trip. The feedback fromthem was generally favorable.
Combining these ICT technologies with theknowledge accumulated within the Group can create
new forms of communication. The growing applicationof these ICT technologies might produce greater ideas
to ensure safety and security in times of emergency
and much more.
Paying attention to social issues and demand, we
will continue to enhance the comfort, safety andsecurity of people’s lives in the context of the ICT
technologies.

Corporate Report 201528

CSR Concept

Performing Corporate Social Responsibility (CSR) through Its Primary Businesses
The KYOWA EXEO Group’s basic CSR policy is to materialize its corporate philosophy and perform its social
responsibility through its daily business activities. The Group seriously addresses promoting corporate governance, compliance and risk management and works to ensure sincere and highly transparent business operations to contribute to the sustainable growth of society.

Basic CSR Policy
CSR Structure of

The KYOWA EXEO Group will,through its business activities,
conduct environment-friendly
management and contribute to thepreservation of environment andsustainable growth of society inorder to realize the corporate
philosophy.

the KYOWA EXEO Group
Corporatephilosophy
Development
Developmentof the KYOWA
of society
EXEO Group

ENGINEERING
SOLUTIONSThe corporate philosophy of the KYOWA

SYSTEM
SOLUTIONS

EXEO Group, which is the basic guideline forour corporate social responsibility, includes
cultivating technological capabilities, seeking
affluence and contributing to society, and wework to make integrity and transparency thefundamental norms of our management.
We recognize that efforts to achieve ourcorporate philosophy are indeed efforts toward CSR, and we are working to promote

Guidelines for CSR activities

Self-awareness of contribution to society as a company
Promotion of contribution to society and social contribution
activities through business activities
Establishment of a culture of safety and quality
Full information disclosure and communication
Adherence to corporate philosophy and respect for human rights
Environmental protection activities
Creation of workplaces conducive to satisfactory work

ComplianceCorporate governanceRisk management

Business operations with integrity and transparency as the norm

CSR.

Our Themes to Be Addressed in Fiscal 2015 (Classification by ISO26000 Standards)
Core themes in
Major
the ISO26000 stakeholders

Our themes

Measures to be taken

Organization in
chargeEducating on and improving the awareness of laws and regulations and the Basic
Ethics of the KYOWA EXEO Group through compliance-promoting activities
Promotion of compliance

Organizational
governance

Human rights

29 Corporate Report 2015

All
(Corporate
philosophy)(Basic ethics)(Actionguidelines)

Employees

Thorough adherence to social norms

Risk
Analysis of the causes, responses and background of recent conflicts and incidents, as Management
well as the prevention of recurrence via lateral intra-organizational information exchanges
Division
Fermentation of information security literacy to ensure zero information accidents
Amendments to the ISMS-related standards to reflect the 2013 revision. (to beassessed in July 2015)

Appropriate risk management

Principle that human resources are our chief asset,
Fermentation of the Connection Culture

Reduction of management risk

Corporate Planning Division

Reinforcement of business continuity planning (BCP)

General Affairs Division

Enhancement of the internal controls of the Group subsidiaries

Risk Management
Division

Respect for human rights and utilization of diversified human resources (Reinforcement of efforts to promote diversity)

Human Resources
Division

Building a better, brighter future together

CSR Promotion Systems (Relationships with All Stakeholders)
Rather than having a specific division responsible
for CSR activities, at the KYOWA EXEO Group, we
recognize that CSR is something that every member of the staff should put into practice throughout
the business process. In 2009, we reorganized the
CSR Promotion Division that until then had beentasked with promoting CSR, and we establishedthe new CSR Activities Division as the department
responsible for disseminating information about
activities.
In 2010, we launched the CSR Committee,
chaired by the President, with meetings held
whenever necessary. Moreover, as a lower-level
organization of the CSR Activities Division, a staff
member in charge of CSR is assigned to every department or office and to every Group company
so that there is a group-wide system of CSR
promotion.

CSR Committee

Secretariat (CSR Activities Division)
Staffers in charge (a staff member in charge of CSR is assigned to every
department or office and to every Group company)of CSR

Customers
Organizational
consideration

Business
partners

Core themes in
Major
the ISO26000 stakeholders

Our themes

Fair businesspractice

Corporatephilosophy

Participation inand establishmentof communities

CSR Concept*The ISO26000 standard provides organizations including
companies with the best international guidance on socially
responsible behavior and possible actions.

ConsumerissuesShareholders
and investors

Continuing to be a Company Trusted
by All Stakeholders
In addition to striving to ensure ever-greater
information disclosure, the KYOWA EXEO Groupwill engage in proactive communication with all our
stakeholders in order to fulfill our corporate social
responsibility. Effective from fiscal 2011, theGroup’s relationships with various stakeholders areclassified based on the seven core themes set
forth in the ISO26000* standard.

(chaired by the President of KYOWA EXEO)

▶P.1
Labor
practice

Basic Ethics▶P.32

Society/
Environment

Basic Actions Declaration ▶P.32

Group
companies

Environment
Human rights

Measures to be taken

Employees

Organizationin charge

Development and cultivation of human resources
Human Resources
Division
Creation of ideal working conditions (Promotion and reinforcement of work-life balance)
Group Business
Promotion of reorganization to raise the consolidated competitive edge
Development Division
Environmental preservation activities toward the prevention of global warming Promotion of energy-saving activities General Affairs Division
Thoroughly impartial transactions in accordance with the “Procurement Policy including Green Procurement” Procurement Division
Assurance and improvement of quality
Construction departments
Rooting of the “safety quality culture”
Safety & Quality Control
Customers
Elimination of serious accidents (physical for employees and at equipment/facilities)
Consumer
Headquarters
issues
Improvement of customer satisfaction Thorough management of customer satisfaction
Sales Department
Shareholders and investors Emphasis on return of profits and communications Enhancement of IR activity for impartial and fair information disclosure Corporate Planning Division
Promotion of social contribution activities
General Affairs
Contribution to society and local communities
Participation in
Division
Promotion of local community contribution activities
and development
Society
Verification of external questionnaires, Compliance with the ISO26000
General Affairs Division,of communities
Improvement of social evaluation
standards, Issuance of integrated reports
Corporate Planning DivisionPrinciple that human resources are our chief
asset,Fermentation of the Connection Culture
Development of group businesses andGroup companies
improvement of consolidated operating results
Environment
Environment Promotion of environment-friendly management
Fair business practice Business partners Ensuring transparency and the fair competition principle
Labor practice

Employees

Corporate Report 201530

Management Systems

Establishing Various Mechanisms to Promote Globally
the Overall Group

Corporate GovernanceEndeavoring to ensure transparent management by establishing sound management systems and strengthening internal controls
The KYOWA EXEO Group aims to maintain the full trust of shareholders and all other stakeholders by operating with integrity
and a high standard of transparency. To this end, we are confident that it is one of the significant management issues to establish and maintain an organizational structure and management systems through which corporate governance can effectivelyfunction. Moreover, it is our basic CSR policy to make ongoing improvements to strengthen corporate governance mechanisms that are suitably tailored to the Group’s circumstances, including the assessment of structures for monitoring management in light of changes in social conditions, laws and other developments.

Promotion of internal control
The KYOWA EXEO Group works to thoroughly adhere to compliance, manage various risks and properly and efficiently execute business operations. At the same time, to ensure the reliability of financial reporting, the Group has stipulated the Basic
Guideline for Establishing Internal Control Systems in accordance with the relevant provisions of the Companies Act andaddresses its appropriate and efficient operation.
The Internal Control Committee, which was established in April 2003, reviews the execution of duties by the directors to further promote reinforcing internal control systems.
In June 2014, the Risk Management Division was established to integrate compliance-related duties, which had been
distributed among more than one department, thereby enabling the centralized management and treatment of compound risks.
▶To view the Basic Guideline for Establishing Internal Control Systems, visit

http://www.exeo.co.jp/overseas/management/cg.html

KYOWA EXEO’s Corporate Governance System

As of June 23, 2015

General meeting of shareholders

President
Management Council
Directions,Supervision

ReportAudit

Consultation,Directions

Response,Report

Operating officers and organizational heads
Representatives of Group companies

Internal Control Committee

Business and administrative departments and branches
Supervision
ReportCompliance Committee

Group companies

Information Security Committee

ReportDirections

CSR Committee

ReportRisk Management DivisionInternal Audit Division
Legal Office
Credit Control Office

31 Corporate Report 2015

Information Security Management OfficeInstructions
Collaboration

Corporate Lawyer

Internal audit

Independent Auditor

Nomination Committee
Compensation Committee

Appointment/Dismissal
Appointment/Dismissal
Appointment/Dismissal
Consultation
Audit
Board of Corporate Auditors Determination of the appropriateness
Board of Directorsof accounting audits
Statutory auditors
Directors
Response (12, including one independent officer)
Report (four, including one independent officer)
Report
Audit
ReportSupervision
ReportReportBuilding a better, brighter future together

ComplianceIn the KYOWA EXEO Group, everybody on the management team maintains a high standard of ethics—integrity—when conducting business.
Furthermore, individual directors and employees make principled actions grounded in compliance to fulfill their social responsibility.

EXEO Group Basic Actions Declaration
In case we are forced to select either earnings or
ethics in our own activities, we shall prioritize without
hesitation laws and regulations and corporate ethics.
Individual directors and employees of the Group makeprincipled actions grounded in compliance, the guiding force ofour business activities, in the practice of our business activities;
engage in socially trusted management; and perform their social
and legal responsibilities. They promote compliance toward theCompliance program

Tools:● Compliance ManualGroup’s corporate philosophy, Basic Actions
Declaration, Basic Guideline for Establishing Internal
Control Systems, matters to be observed and so on● Manuals by risk at each Group company● Compliance training materials, etc.

realization of the corporate
philosophy of “Contributing

Systemto Society,” in accordancewith the “EXEO Group Basic

Follow-up:

Actions Declaration,” a codeof conduct of the Group.

Compliance training for management executives▶Please refer to the website below for the full text

Development:● Evaluation on● Compliance planningcompliance observance● Monitoring● Compliance training● Support Desk
● Lawyer Hot Lineof EXEO Group Basic Actions Declaration

Matters to be observed in business activities■ Relationships with customers
Elimination of accidents; assurance of quality; improvement of and respect for technologies; transparent
transactions; appropriate inducement; confidentiality■ Relationships with industries and business partners
Fair competition; compliance with industry-specific laws and regulations; impartial transactions; fairtransactions

Corporate Governance/ComplianceB a s i c E t h i c s o f t h e K Y O WA E X E O G r o u p

Matters to be observed regarding societyManagement with responsibility; information disclosure; control of insider information; protection of theenvironment; ensuring the security of society; resolute attitude against antisocial forces
Matters to be observed internally at the company
Respect for human rights; ensuring the physical safety of employees; conservation of company assets;
appropriate accounting procedures; observance of authority; maintenance of discipline

Corporate Report 2015

32

Management Systems

http://www.exeo.co.jp/csr/compliance.html#kihonkoudou

Management Systems

Promotion Systems and Activities

Initiatives to Promote
Measures taken

Description

Conducting training for management executives (e.g.,
Chairman, President, General Managers of the Head
Office, Branch Managers, Presidents of the Group
companies) by inviting outside experts as lecturers(Held three times in fiscal 2014.)

Evaluation oncomplianceobservance

Inspecting the observance status of compliance plans,
which have been prepared by the respective branches
and Group companies, as well as the relevant laws
and regulations, for evaluation; compliance mind-set ofeach employee is checked in terms of his/her level ofunderstanding

Compliancepromotion andenhancement month

October was designatedas the annual Compliance
Promotion andEnhancement Month in2010. Various campaign
measures such as signage
and meetings encourage
in-depth understandingof and raise awarenessamong employees.

Guidance
Legal Office,Risk Management Division(Support Desk)

Compliance Committee(Harassment Investigation Committee)
Collaboration

Guidance andcontrol

Whistle-blowing system[Departments and Branches]
Responsible Compliance
Promoter
Persons in Charge of
Promoting Compliance
Employees

Collaboration

Compliance training
for management
executives

Advisory andcollaboration

Group Business Development Division

Conducting basic training for new employees andbrush-up training with specific themes to be observedin business activities

CommandManagement andcontrol of thepromoting system

Compliance training(Twice or more per
year)

KYOWA EXEO Group
Compliance Officer(President of KYOWA EXEO)

Guidance andoversight on the spot
and of trading units

Establishing the Support Desk regarding complianceand the Lawyer Hot Line for direct consulting orcommunicating with corporate lawyers

KYOWA EXEO CORPORATION:

Referrals andconsulting

Whistle-blowing
systemPromoting System

Corporate lawyers (Lawyer Hot Line)

The Company instituted a compliance program in November
2001 and extensively applied the program to Group
companies in March 2003. Consequently, the group-wide
EXEO GROUP Compliance System was established.
To promote compliance, the formulation of the EXEO
Group Compliance Manual and the establishment of a
dedicated promotional department followed. Compliancetraining is given to employees of the Group companies on
an ongoing basis.

Group companies
Compliance Officer at each company (President)
Responsible compliance promoter at each company
Employees of each Group company

Risk Management
Establishing the promoting system, the KYOWA EXEO Group actively addresses risk management in all its
business fields.

Basic Stance on Risk Management
To realize further business expansion and new growththrough the provision of the total ICT solutions, the KYOWA
EXEO Group strives to appropriately control risk factors by
reducing exposure to risks and adverse effects for risk that

33 Corporate Report 2015

might occur in overall business activities. Meanwhile, it isnecessary for the Group to minimize the economic loss and/or damage in case of exposure to any risk. The Group’s risk
management is set up on such recognition.

Building a better, brighter future together

Risk Management System
The KYOWA EXEO Group takes appropriate risk control
measures based on the identification, analysis andassessment of various risks across the Group to pursue
sound business activities.
The risk management system of the Company and
the Group as a whole is based on the Risk Management
Rules. Possible risks are classified as shown in the tablebelow, and measures are taken to prevent the occurrenceof such risks or minimize the damage should they occur.
The Internal Audit Division is responsible for monitoring
the ongoing measures taken to manage business processrisks and regularly reports on the Group-wide status ofrisk management to the top management.

Risk management system
Presiden of KYOWA EXEO

Internal Audit Division

Risk Management Division
The Company's Head Office staff organizations

Responsible persons for risk management
Heads of Head Office organization units and
Branch Managers of the Company andPresidents of subsidiaries

Risk Assessment/Management System by Risk Category
Risk Management Category
Management
risk
Business risk

Description of the Risk

Risk Assessment/Management

Business environment risk

Risk relating to changes in the management andbusiness environments

Management
strategy risk

Risk relating to the decision making concerning
management and business strategies, etc.

Risk control measures are taken in accordancewith rules and regulations related to business
management, which are determined by the relevantrisk management unit.

Business process risk

Disaster risk

Risk relating to daily business operations

The persons responsible for risk control takeleadership in promoting risk control measures inline with the risk control policies determined ty therelevant risk management unit.

Risk relating to the occurrence of natural
disasters

Risk control measures are taken in accordancewith rules and regulations related to disastermanagement, which are determined by the relevantrisk management unit.

committee members who are the heads of Head Office
staff organizations. Meetings of the Committee are held
quarterly.

Major initiatives taken in fiscal 2014 were as follows:Made the EXEO content available to the Group companies▲ ▲ ▲To ensure and reinforce the security level that is demanded
internally and externally, the KYOWA EXEO Groupestablished the Information Security Committee in June
2004. The Committee makes decisions on the policies ofmeasures to be taken to improve the information securityof the Group and strives to improve measures to protect
information security against accidents and incidents.
The Information Security Committee is chaired by the
Chief Information Security Officer (CISO) and consists ofCompliance/Risk Management

Major efforts to manage information security risk

Thoroughly executed employee training toward enhanced awareness of information security

Enhanced inspections of private-use personal computers at home, etc.

Major efforts to manage credit risk
The KYOWA EXEO Group has established systems
for credit management and claim management/collection relative to the companies with which it has
business relationships to ensure the prompt collectionof construction contract fees and other receivables andavoid or minimize the risk of having uncollectible debt.
We regard credit management as an important issueof risk management, which is necessary to solidify thefoundations for our construction/installation forces bymonitoring the reliability of suppliers and subcontractors

and securing good-performing business partners.
With the recognition that credit management is a
crucial managerial task for the continued development
and expansion of the Group's businesses, we will gather
the necessary information through credit agencies'
reports and other avenues to examine and determine
the appropriate scale of trading with business partners.
Collaboration with related organizations will also be soughtas necessary to reinforce the Group's credit management,
thereby stabilizing its business management.
Corporate Report 2015

34

Management Systems

Initiatives for Business Process Risk Management

Management Systems

Promoting the Group's Unified Efforts
to Implement the ISO-Compliant
Management Systems
The Company has established the ISO-compliant
management systems described below to accomplish
its managerial policies and targets. In September 2014,
the Company and three major subsidiaries acquireda group-based ISO certification and are committed to
improving productivity by implementing the ISO-compliant
management systems in a unified manner across the Group.

ISO Management Systems
This is a system for assuring thequality of the Company's products
and services to enhancecustomer satisfaction.

This is a system for minimizing
employees' risk and companies'
risk in case of a disaster toimprove business performance.

This is a system for promoting
and continually improving efforts
to reduce the environmental
burden caused by businessactivities and contribute toenvironmental preservation.

Environment
Management
System (ISO14001)
May 2000

Quality
Management
System (ISO9001)
Occupational
Health and Safety
Management
System (OHSAS18001)

Information
Security
Management
System (ISO27001)
November 2004

This is a system for protecting
information assets concerning
corporate activities.

February 1999

September 2003

Personal Information
Protection
Management System(PrivacyMark)March 2006

This is a system for ensuring theappropriate handling andsecurity of personal information.

The KYOWA EXEO Group's
Management System Policies
The KYOWA EXEO Group has established unified policies
and targets across the Group for each of the management
systems for quality, the environment, occupational healthand safety and information security. According to thepolicies and targets, the relevant organizations plan activities
and measures and implement them as required by thestandardized management systems.
These efforts concerning the management systems are
regularly reviewed by the top management for continuous
improvement.

Efforts for the Protection of Personal
Information
The Company established the Privacy
Policy in March 2005 when the Act on
the Protection of Personal Information
became effective, thereby familiarizing
all employees with the policy. We also
introduced the Personal Information
Protection Management System
to reinforce efforts to manage the protection of personal
information.

35 Corporate Report 2015▶For the details of the KYOWA EXEO Privacy

Policy, visit:h t t p : / / w w w. e x e o . c o . j p / c o m p a n y / p p o l i c y. h t m lInvolvement in the Environment

While Promoting Resources Recycling and Effective Utilization of Resources,
Developing Environment Preservation Activities Toward the Prevention of
Global Warming and Other Concerns
Environmental Management
The Group works to reduce the environmental impact accompanying business activities,
and every employee acts with “what he/she can and he/she should do” in mind.

Basic Stance on Environment
Preservation Activities
Coexistence with the global environment is a social
responsibility of corporations and is a significant element increating a sustainable society.
The KYOWA EXEO Group engages in business activities
as a company that offers customer-satisfying solutions
based on its core IC networking technologies. The Group
therefore pays careful attention to coordination with theenvironment in its business activities and endeavors
to reduce the environmental impact that inevitably
accompanies such activities. Meanwhile, every employeeof the Group is committed to environment preservation
activities with “what he/she can and he/she should do” inmind—always taking into account the effects of businessactivities on global environment.

Promotion of an Environmental
Management System
In promoting the environmental management system (ISO14001),
of which certification has been continuously obtained since
May 2000, the Company works to reduce the environmental
impact on an ongoing basis through companywide environment
preservation activities according to the PDCA cycle. The
Company identifies predictable environmental risks, which are
determined depending on onsite working environments, thelocation conditions of the building and other factors, sets up
specific environment-related targets and extensively applies themto all the departments at the Head Office and branches.

Environmental Education
Environment preservation activities cannot be achieved without
low-key efforts for the activities and strong consciousness ofevery employee regarding the improvement of environmental
issues. Consequently, the Head Office and branches prepare
their respective plans and conduct environmental education
programs so that all the employees can understand theimportance of environmental preservation and voluntarily andpositively participate in such activities in their daily lives. With
this approach, precise knowledge and consciousness ofenvironmental issues and preservation initiatives have beensteadily disseminated among employees.
The educational training courses in fiscal 2014 included
the environmental operation training aimed at mastering theknowledge required for promoting environmental activities andthe basic training mainly for new employees on the environment
management system. A total of 179 persons attended thesecourse lectures.

Joined the Clean-up Campaign to Beautify Mt. Fuji
The latter term of the Mt. Fuji clean-up campaign organized by the Mt.
Fuji Beautification Foundation took place on September 9, 2014, andwas joined by 25 employees working at the Company's Koshin Branch
Office and the Group companies. (The total number of participantsin the campaign was around 450.) The clean-up activities weredone mainly on the fifth and sixth stations, collecting 80 kg of waste,
combustibles and non-combustibles together. This was a decreaseof as much as 70 kg compared with the latter-term campaign of theprevious year.
Partly because Mt. Fuji was listed as a World Cultural Heritage inJune 2013, climbers' and tourists' manners concerning waste are
improving. So that we can continue to be proud of Mt. Fuji and handdown this beautiful world heritage site to coming generations, we willcontinue to participate in these activities.

36 Corporate Report 2015

Building a better, brighter future together

Initiatives toward Prevention of Global Warming and Preservation of Biodiversity
EXEO’s forests (Mori), which extending
nationwide, are groomed by employees’ hands
Embracing the opportunity of the Company’s 50th
anniversary of its foundation, forest preservation
activity started and the Company continues tomaintain government-owned forests for up to 60 years.

Seizing the opportunity of the 50th anniversary of its foundation, theCompany became strongly conscious of the prevention of global
warming and contributing to local communities. Giving its approval tothe maintenance enhancement campaign of forest resources, which
was then promoted by the Forestry Agency, the Company entered into a
profit-sharing afforestation contract* with the Hokkaido, Tohoku, Kansai,
Kyushu, Chugoku and Kyushu regional forest offices regarding so-called
corporate forests. The Company named the forests “EXEO’s forests” andcontinues their maintenance activity, which also serves as an occasion
for social assembly and recreation among employees and their families.
*Profit-sharing afforestation contract: Agreement on the maintenance activities ofgovernment-owned forests (natural forests), which are premised on there being no logging.

Degree of environmental contribution of EXEO’s forests (Mori), achievement in fiscal 2014
(According to the Forestry Agency Report 27 Rin Koku Gyo No. 6)

Degree of environmental contribution: One year (effects for the period ofApril 2013–March 2014 converted in the respective units shown below)

Area
Absorbed and fixed CO2(ha) Watershed pondage or water Sediment runoff prevention
quality purification volume volume (in terms of a 10-ton
volume (in terms of CO2
emitted by a person in a year)(in terms of 2-L PET bottles)
truck loading 5.5 m3)

Term of contract

RegionLocation

60 years(1/2005–3/2065)

KyushuKarimawashi-yama government-owned
forest, Uto-shi, Kumamoto Prefecture

5.36

3,711 m3
(1,855,000 bottles)

70 m3(13 trucks)

15 t(48 persons)

21 years(2/2005–3/2026)

Kansai

Kitayama government-owned forest,
Nishinomiya-shi, Hyogo Prefecture

1.14

465 m3(233,000 bottles)

14 m3(3 trucks)

3t(9 persons)

60 years(8/2006–3/2066)

Hokkaido

Chitose government-owned forest,
Chitose-shi, Hokkaido Prefecture

3.10

1,181 m3
(591,000 bottles)

40 m3(7 trucks)

8t(26 persons)

22 years(10/2006–3/2028)

TohokuFubosan government-owned forest,
Shiroishi-shi, Miyagi Prefecture

2.48

656 m3(328,000 bottles)

20 m3(4 trucks)

5t(16 persons)

20 years(3/2007–3/2027)

Chugoku

Noroyama government-owned forest,
Kure-shi, Hiroshima Prefecture

3.29

1,664 m3
(832,000 bottles)

40 m3(7 trucks)

7t(20 persons)

15.37

7,677 m3
(3,839,000 bottles)

184 m3(34 trucks)

38 t(119 persons)

Total

Content of Activities
Five branches, of which the business area is located near EXEO’sforests (Mori), regularly conduct forest preservation and cleaning
activities such as maintenance of walking trails, mowing ofbottom weeds, cutting ivy and putting up bird houses.

Forest exploration is also conducted as part of the recreation
activities for employees and their families. Such events are also
used for enlightening activities to explain the importance ofpreventing global warming and biodiversity preservation.

Hokkaido Branch Office

Involvementin the Environment
Environmental Management

Chitose-shi, Hokkaido
Kansai Branch Office

Chugoku Branch Office

Shiroishi-shi, Miyagi

Uto-shi, Kumamoto

Kyushu Branch Office

Kure-shi, Hiroshima

Nishinomiya-shi, Hyogo

Tohoku Branch Office

Corporate Report 201537

Involvement in the Environment

Fiscal 2014 Material Balance of the Company (Non-consolidated)
To make environment-friendly business activities effective and reduce the accompanying environmental load as much as possible, we strive
to understand and analyze the kinds of resources and energy sources that are used and the environmental load that has been produced.

INPUT
Total energy input

OUTPUT
172,238 GJ

Electric power purchased
Solar power generation electricity output

69 MWhCity gas

79 km3LPG

2 km3

Gasoline

1,078 kℓLight oil

257 kℓKerosene

11 kℓ

Water resource input

Electricity sold6,195 MWh

Total greenhouse effect gas emissions

11,096 tons (CO2 conversion)

12,261 MWh

Environmentfriendly businessactivities

57 km3

Electric power sourced

6,267 tons (CO2 conversion)

Fuel sourced

3,381 tons (CO2 conversion)

Waste sourced

4,383 tons (CO2 conversion)

Water resource sourced

11 tons (CO2 conversion)

Power generation and electric power selling sourced

2,906 tons (CO2 conversion)

EXEO’s forests (Mori) sourced

38 tons (CO2 conversion)

Waste emissions and recycled volume

29,922 tons

Industrial waste emissions

3,631 tons

General waste emissions

278 tons

Total recycled volume

26,014 tons

Total displacement

57 km3

The Company’s CSR initiatives (nonconsolidated; environment/society-related), fiscal 2014 targets and full-year results of activities and fiscal 2015 activity targets
Measures taken①Reduction in power
consumption (General
Affairs)
Set power consumption
management targets.
Work to precisely grasp themonthly management of
power consumption values

Reduction
in CO2②Reduction in gasoline usedemissions(Procurement/Safety &(On the basis of medium-term planning based on the revised
Energy Conservation Law)
Monthly management of total power consumption
Turning off lights during break time, room temperature setting andeconomy in electricity
Enhanced use of "Cool Biz" and "Warm Biz" ambient-temperaturecompliant wear
Review of conversion to energy-saving equipment and devices at their
new installation or renewal (e.g., air conditioners, PCs, LED lights)

Fiscal 2014 targets and full-year results of activities
Fiscal 2014 targets❶Economy in power used
Against fiscal 2009:
A 1% reduction every year for five consecutive years toward a
cumulative total of 5% or more in accordance with the Energy
Conservation Law[Fiscal 2009: 10.93 kWh/m2 5-year later target: 10.39 kWh/m2]❷Restriction on peak power used
Against fiscal 2010:
Summer Voluntary targets are set to meet the government's
electricity-saving request
Tokyo, Kansai and Kyushu Electric Powers' jurisdictions
10%
Hokkaido Electric Power's jurisdiction
7%
Other Electric Powers' jurisdictions
5%

Gasoline card control (monthly management of amounts used)
Purchase and renewal of vehicles with good fuel efficiency
Study on partial introduction of hybrid and idling-stop vehicles
Eco-driving education
Reduction in the number of vehicles owned
Expanded introduction of "telematics" (Already introduced by the
Tohoku and Kyushu branches)
Promoted introduction of electric vehicles

Against fiscal 2009:
A 1% reduction every year for five consecutive years in accordancewith the Energy Conservation Law[Target: 98.9 l/thousand km]③Use of green energy(Electrical & Environmental,
General Affairs)
Promote the use of solar
power generation systems,
etc.

Review of implementing solar power generation systems oncompany-owned buildings
Continued participation in the solar power generation business
Maintenance of EXEO's forests

Sell electricity of 10 mWh or more in total (Install new capacity of 5 mW or more)
Installations being considered:
June 2015: 1,050 kW planned in Oizumi, Hokuto City
March 2016: 903 kW planned in Chiyodako, Kofu City
March 2016: 1,204 kW planned in Hosaka, Nirasaki City
March 2016: 1,095 kW planned in Ubaishi, Nirasaki City
March 2016: 1,323 kW planned in Akeno, Hokuto City

④Reduction in paper consumption (General Affairs)
Take paperless-oriented
initiatives to reduce paper
consumption volume

Investigated the status of paper consumption(Data on the volume of paper used at all-in-one printers are managed)
Promoted storage via the digitization of materials

Against fiscal 2010:
A 4% reduction every year for five consecutive years toward a
cumulative total of 16% or more
[Target: 17,262 fm]

Quality Control)
Review reduction in thenumber of vehicles owned
Implement gasoline
card-based management
measures

Reductionin general
waste

Content of specific initiativeromotion of rooftop
Initiatives of ⑤Pgreening (General Affairs)
promotinggreenery of ⑥Promotion of greenery withinbuildings
the premises (General Affairs)

Studied the possibility at parking lots on company-owned premises

Improvement of the green purchasing
ratio (Procurement)

Set the target ratios of purchasing eco-products (except those used forconstruction/installation)

38 Corporate Report 2015

Studied the possibility targeted at permanently owned company assets

Study the possibility of introducing greenery at the technology centerand branch buildings to be constructed in the future.
Against fiscal 2011:
A 1% improvement every year for five consecutive years toward a cumulative total
of 3% or more improvement of the green purchasing ratio (58.8%)[Target: 61.8%]

Building a better, brighter future together

Fiscal 2014 Initiatives Regarding the Prevention of Global Warming
As for the reduction of power consumption, power-saving
measures for equipment are taken including the conversion ofelectric appliances to energy-saving type ones and the enhanced
use of inverters for diverse equipment. In addition, companywide
initiatives mainly taken by the responsible person on each floor
Change in power consumption (per square meter)(kWh/m2)
16
12

10.69

10.63

9.72

9.53

8.26

8
4
0

2010

2011

2012

2013

2014

include setting the energy-saving mode for PCs, removing
unnecessary lighting devices, turning off lights during lunchtime
hours and setting appropriate temperatures for air conditioners.
Moreover, every employee aggressively promotes electricitysaving activity in his/her daily actions.

Change in city gas consumption (at the Head Office building) (per square meter)(m3/m2)
6
5
4
3
2
1
0

5.1
3.4

5.4

4.0

Change in gasoline and light oil consumption (per travel distance)( /thousand km)
120
101.0

5.0

94.6

93.5

2011

2012

87.1

92.6

2013

2014

80
40

2010

2011

2012

2013

0

2014

2010

Promotion of Recycling and Effective Utilization of Resources
The KYOWA EXEO Group proactively addresses abating volumes
and the appropriate treatment of waste, as well as promoting
its reuse as recycled resources in the pursuit of reduced waste
volume and complete recycling. The waste category covered bythis initiative is industrial waste produced from the construction
work of information and communication facilities and generalwaste discharged from offices.
Change in industrial waste emissions (per value of finished work)
254.6

300

100
0

82.2

40

194.1

184.1

200

Change in general waste emissions (per person)(kg/person)(kg/¥million)

107.2

Asphalt, concrete debris, electric wire trash, etc., are properly
treated via a sorting control for further reuse or recycling.
Moreover, ongoing initiatives include the enhanced use of properamounts for work materials, requests for collection of packaging
materials to suppliers and guidance on the necessary steps toworkers for recycling via onsite patrols.

36.1

35.2

Change in total recycled volume(tons)

32.9
25.3

30

29.4

20,0002011

10,000

2012

2013

2014

0

2010

❶E
 conomy in power used 2
Fiscal 2014: 8.26 kWh/m( 15% compared with fiscal 2013)
Fiscal 2013: 9.72 kWh/m2 Fiscal 2009: 10.93 kWh/m2❷Results of the restriction in peak power used

2012

2013

2014

0

2010

2011

2012

2013

2014

(Target)+19% ( 7%)7% ( 10%)24% ( 10%)30% ( 10%)15% ( 5%)

❶Economy in power used
A 1% reduction year over year
[Target: 8.18 kWh/m2]❷Restriction in peak power used
Summer Set voluntary targets to meet the government's electricity-saving request
A 1% reduction year over year for each of the Electric Power Companies'
jurisdictions

Fiscal 2014: 92.6 l/thousand km(Fiscal 2009: 104.0 l/thousand km)

A 1% reduction year over year
[Target: 91.7 l/thousand km]

Total volume of electricity sold: 6.1 mWh
New plant of 1,117 kW in capacity completed in February 2015 in Ishido, Hokuto
City.

Planned plant installations:
June 2015: 835 kW planned in Ishioka City (Kitafuchu)
July 2015: 1,175 kW planned at Ishioka Technology Center
August 2015: 126 kWh planned at Hyogo Technology Center
January 2016: 2,200 kW planned at Matsue Solar Farm

Second half of fiscal 2014: 16,948 fm( 8.48% compared with the first half of fiscal 2014)
First half of fiscal 2014: 18,519 fm

Cultivation of shiitake mushrooms started with 200 mushroom logs in March
2015 at the Koshin Branch Office.

KYOWA EXEO CORPORATION (the Company): 57.9%(Group companies except the Company 68.8%; the entire Group 62.3%)

Involvementin the Environment
Environmental Management

Hokkaido Electric Power's jurisdiction
Tokyo Electric Power's jurisdiction
Kansai Electric Power's jurisdiction
Kyushu Electric Power's jurisdiction
Other Electric Powers' jurisdictions

2011

Fiscal 2015 activity targets

Full-year results of activities

Summer

26,014
18,320 20,533 19,103 16,460

20
10

2010

30,000Investigate the status of the storage of materials via paper media
Abolish the use of the file meter (fm). For all-in-one printers, paper consumption is
managed by recording the number of pieces of paper used.
Promote storage via the digitization of materials
Reduce the volume of documents for use at conferences; Promote the paperless officeTargets: Continue voluntary efforts at each office/center
April 2015: Trial hydroponic cultivation of leaf vegetables using LEDs at the Koshin
Branch Office
July 2015: Greening of the space on the inside of the outer walls at the Hyogo
Technology Center
Because the fiscal 2014 target has not been achieved, the target remains the same.
[Target: 61.8%]

Corporate Report 201539

Financial Section

Financial Highlights (Consolidated)■Orders Received ■Net Sales■Gross Profit(¥Millions)(¥Millions)
317,862
282,264

273,788

2011/3

288,532

318,513

301,319

273,134

304,201

300,912

36,113

301,446

35,74030,29926,806

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3■Operating Income■Ordinary Income(¥Millions)(¥Millions)

2013/3

20,734

2014/3

2015/3

20,602
18,35818,046

18,58918,11913,246

12,390

9,178

8,919

2011/338,543

2012/3

2013/3

2014/3

2015/3■Net Income

2011/3

2012/3

2013/3

2014/3

2015/3■Total Assets ■Net Assets(¥Millions)(¥Millions)

14,91012,264

11,313

7,780

7,856

2011/3

2012/3

196,918

112,232

2013/3

2014/3

2015/3

2011/3

200,412217,091

228,422

181,291

113,4112012/3

122,387

2013/3

135,687

2014/3

146,768

2015/3(¥Millions)

Orders Received
Net Sales
Gross Profit
Operating Income
Ordinary Income
Net Income
Total Assets
Net Assets

40 Corporate Report 2015

2011/3

2012/3

2013/3

2014/3

2015/3

273,788282,264
30,29912,39013,246
7,780
196,918
112,232

288,532
273,134
26,806
8,919
9,178
7,856
181,291
113,411317,862
301,319
36,11318,04618,11911,313
200,412122,387

304,201
318,513
38,543
20,73420,602
14,910217,091
135,687

301,446
300,91235,74018,35818,58912,264228,422
146,768

Building a better, brighter future together

Trends by Segment (Consolidated)
Orders Received by Business Segment (Consolidated)(¥Millions)
317,862
273,788

2011/3

288,532

304,201

Telecommunications infrastructure (NTT group engineering)
Telecommunications infrastructure (Non-NTT telecom engineering)
Environmental and social infrastructure
SYSTEM-SOLUTIONS

301,446(¥Millions)

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

Telecommunications infrastructure(NTT group engineering)

164,421

171,061

178,869

171,084

160,375

Telecommunications infrastructure(Non-NTT telecom engineering)

59,18464,07568,83866,934

67,685

Environmental and social
infrastructure

24,90528,991

37,65931,883

41,578SYSTEM-SOLUTIONS

25,277

24,40432,49434,29931,807273,788288,532

317,862304,201

301,446

Total

Net Sales by Business Segment (Consolidated)(¥Millions)

Telecommunications infrastructure (NTT group engineering)
Telecommunications infrastructure (Non-NTT telecom engineering)
Environmental and social infrastructure
SYSTEM-SOLUTIONS

318,513
301,319282,264

2011/3300,912273,134

2012/3(¥Millions)

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

Telecommunications infrastructure(NTT group engineering)

164,562

166,199

173,321

173,544

162,729

Telecommunications infrastructure(Non-NTT telecom engineering)

69,601

56,11463,801

77,25969,139Environmental and social
infrastructure

23,782

26,39931,795

33,11736,537

SYSTEM-SOLUTIONS

24,317

24,42032,401

34,59232,506282,264

273,134

301,319

318,513300,912

Total

Outstanding Orders by Business Segment (Consolidated)(¥Millions)

117,996
105,455

Financial Section

103,758

101,054

Telecommunications infrastructure (NTT group engineering)
Telecommunications infrastructure (Non-NTT telecom engineering)
Environmental and social infrastructure
SYSTEM-SOLUTIONS(¥Millions)

85,634

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

Telecommunications infrastructure(NTT group engineering)

38,99243,85449,352

46,89344,539Telecommunications infrastructure(Non-NTT telecom engineering)

16,83024,81230,301

20,051

18,653

Environmental and social
infrastructure

25,57628,16834,03132,796

37,838SYSTEM-SOLUTIONS

4,234

4,218

4,310

4,016

4,424

85,634

101,054

117,996

103,758

105,455

Total

Corporate Report 201541

Financial Section

Profitability Indices (Consolidated)■Gross Profit to Net Sales■Operating Income to Net Sales

(%)

(%)
12.0
10.7

12.1

11.9

6.5

6.0

9.8

6.1

4.4
3.3

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3■Ordinary Income to Net Sales■Net Income to Net Sales

(%)

(%)

6.0

6.5

2013/3

2014/3

4.7
4.1

3.8

6.2

4.7

2015/32.8

2.9

2011/3

2012/3

3.4

2011/3

2012/3

2013/3

2014/3

2015/3■Return on Equity ■Return on Assets■Total Assets Turnover(%)(Times)2013/3

2014/3

1.58

1.53

2015/3

11.6
9.6
7.6

8.7

7.2

1.50

1.44

2011/3

2012/3

1.35

7.1
5.9
4.1

4.2

2011/3

2012/3

2013/3Gross Profit to Net Sales (%)
Operating Income to Net Sales (%)
Ordinary Income to Net Sales (%)
Net Income to Net Sales (%)
Return on Equity (%)
Return on Assets (%)
Total Assets Turnover (Times)

42 Corporate Report 2015

5.5

2014/3

2015/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

10.7
4.4
4.7
2.8
7.6
4.1
1.50

9.8
3.3
3.4
2.9
7.2
4.2
1.44

12.0
6.0
6.0
3.8
9.6
5.9
1.58

12.1
6.5
6.5
4.7
11.6
7.1
1.53

11.9
6.1
6.2
4.1
8.7
5.5
1.35

Building a better, brighter future together

Stability Indices (Consolidated)■Shareholders’ Equity to Total Assets■Current Ratio

(%)

(%)
62.4

62.3

60.9

64.0

53.9

217.5

215.0

206.4

206.3

2012/3

2013/3

2014/3

2015/3

177.9

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3■Quick Assets to Current Liabilities■Fixed Assets Ratio

(%)

(%)

164.3

2012/3

157.8

162.6

170.8

2013/3

2014/3

2015/3

59.8

57.7

56.2

58.7

61.3

2011/3

2012/3

2013/3

2014/3

2015/3

133.5

2011/3■Interest Coverage Ratio■Debt Equity Ratio(Times)

(%)

19.2
619.3
9.9
6.7

289.7

5.9

117.5

6.7

187.0
2012/3

2013/3

2014/3

Shareholders’ Equity to Total Assets (%)
Current Ratio (%)
Quick Assets to Current Liabilities (%)
Fixed Assets Ratio (%)
Interest Coverage Ratio (Times)
Debt Equity Ratio (%)

2011/3

2015/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

53.9
177.9
133.5
59.8
6.7
19.2

62.4
215.0
164.3
57.7
289.7
6.7

60.9
206.4
157.8
56.2
117.5
7.6

62.3
206.3
162.6
58.7
187.0
9.9

64.0
217.5
170.8
61.3
619.3
5.9

Corporate Report 2015

Financial Section

2011/37.6

43

Financial Section

Stock Price Indices (Consolidated)■Earnings Per Share■Book-value Per Share

(¥)

(¥)

147.75

1,482.82
1,350.05

123.83

1,199.86

109.25

75.58

74.96

2011/3

2012/3

2013/3

1,027.98

2014/3

2011/3

2015/3

1,084.44

2012/3■Price Earnings Ratio■Price Book-value Ratio(Times)(Times)

11.0
9.9

10.4
9.2

2012/3

2013/3

2014/3

2014/3

2015/3

1.0

9.0
0.8

2011/3

2013/3

2015/30.7

2011/3

2012/30.9

0.8

2013/3

2014/3

2015/3■Cash Dividends Per Share■Payout Ratio ■Total Shareholder Return Ratio

(¥)

(%)
63.5

32.0

20.0

20.0

22.0

50.2

46.5

24.0

36.3
26.5
26.5

26.7

25.8
20.1

2011/3

2012/3

2013/3

Earnings Per Share (yen)Book-value Per Share (yen)Price Earnings Ratio (Times)
Price Book-value Ratio (Times)
Cash Dividends Per Share (yen)Payout Ratio (%)
Total Shareholder Return Ratio (%)

44 Corporate Report 20152014/3

2015/3

2011/3

2012/3

2013/316.2
2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/375.58
1,027.98
11.0
0.8
20.0
26.5
26.5

74.96
1,084.44
9.9
0.7
20.0
26.7
63.5

109.25
1,199.86
9.2
0.8
22.0
20.1
46.5

147.751,350.05
9.0
1.0
24.0
16.2
36.3

123.83
1,482.82
10.4
0.9
32.0
25.8
50.2

Building a better, brighter future together

Other Indices (Consolidated)■Selling, General and Administrative Expenses■Capital Expenditures(¥Millions)(¥Millions)

17,90817,886

18,067

17,80917,382
7,372

4,219

4,045

3,360
1,964

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3■Depreciation Expenses■Interest-bearing Debt(¥Millions)(¥Millions)
3,039

2013/3

2014/3

2015/3

21,326
2,947
2,660
2,308

2,264
13,374
9,908

8,679

8,178

2011/3

2012/3

2013/3

2014/3

7,521

7,553

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3■Number of employees(People)7,872

2011/3

2012/3

Selling, General and Administrative Expenses (¥Millions)
Capital Expenditures (¥Millions)
Depreciation Expenses (¥Millions)Interest-bearing Debt (¥Millions)
Number of employees (People)

7,988

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

17,908
4,045
3,039
21,326
7,729

17,886
1,964
2,947
8,178
7,872

18,067
3,360
2,308
9,908
7,521

17,8097,372
2,264
13,374
7,553

17,382
4,219
2,660
8,679
7,988

Corporate Report 2015

Financial Section

7,729

45

Financial Section

Consolidated Balance Sheets(¥Millions)

2011/3

2012/3

2013/3

2014/3

2015/3ASSETS
Current assets
Cash and deposits
Notes receivable, accounts receivable from completed construction contracts
Short-term investment securities
Costs on uncompleted construction contracts and other
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Noncurrent Assets
Property, plant and equipment
Buildings and structures
Machinery, vehicles, tools, furniture and fixtures
Land
Other property and equipment
Intangible assets
goodwill
Other intangible assets
Investments and other assets
Investment securities
Net defined benefit asset
Deferred tax assets
Other investments and other assets
Allowance for doubtful accounts
Total assets

133,466
17,18582,462499
25,617
3,451
4,372
(122)
63,452
48,447
17,777
1,067
29,179
422
2,435
98
2,337
12,569
7,001
―
495
7,468
(2,396)
196,918

116,010
5,849
76,311
6,515
21,799
2,971
2,632
(68)
65,28047,736
16,975887
29,319
553
4,938
3,294
1,644
12,605
6,872
―
617
7,363
(2,248)181,291

131,906
8,306
86,245
6,315
24,082
4,037
2,995
(77)
68,50547,707
16,528727
29,364
1,087
4,658
2,621
2,036
16,139
9,847
―
916
6,820
(1,444)200,412

137,656
10,29392,307
5,919
22,521
4,131
2,548
(65)
79,43450,767
17,5411,700
30,923
601
4,894
1,940
2,953
23,773
13,991
7,575
―
4,053
(1,846)217,091

138,813
12,526
84,691
11,76522,010
4,976
2,903
(60)
89,60952,005
17,732
2,408
30,342
1,521
6,278
3,065
3,213
31,325
16,896
11,774―4,474(1,819)228,422

LIABILITIESCurrent liabilities
Notes payable, accounts payable for construction contracts
Short-term loans payable
Income taxes payable
Advances received on uncompleted construction contracts
Provision for bonuses
Provision for directors' bonuses
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for asset retirement
Provision for Loss on dissolved welfare pension fund
Other current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directors' retirement benefits
Allowance for investment loss
Net defined benefit liability
Other noncurrent liabilities
Total liabilities

75,03335,482
―
4,419
3,787
435
87
154
350
―
―
30,317
9,653
2,139
1,411
4,367
423
104
―
1,205
84,686

53,95731,025
1,237
3,809
4,400
562
105
704
246
―
―
11,864
13,922
6,310
1,042
4,875
410
102
―
1,182
67,87963,91635,553
3,563
6,663
1,662
1,029
127
405
269
101
―
14,54014,107
5,694
2,131
4,705
392
93
―
1,090
78,024

66,72035,089
7,550
5,441
1,971
1,039
142
359
824
―
123
14,178
14,683
5,367
3,532
―
397
48
4,456
881
81,40463,81935,193
2,180
1,964
2,248
1,049
173
296
5,456
―
123
15,134
17,834
5,974
5,732
―
262
17
4,682
1,163
81,653

NET ASSETS
Shareholders' Equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

105,543
6,888
6,097
103,315(10,758)
639
639
―
―
361
5,687
112,232
196,918

112,170
6,888
6,230
109,067(10,016)
1,002
1,002
―
―
217
19
113,411
181,291

119,077
6,888
6,300
118,296(12,408)
2,904
2,895
9
―
231
174
122,387
200,412

129,868
6,888
6,645
130,822(14,487)
5,446
3,631
21
1,794
175
195
135,687
217,091

134,696
6,888
6,879
137,957(17,029)
11,579
5,157
35
6,386
263
229
146,768
228,42246 Corporate Report 2015

Building a better, brighter future together

Consolidated Statements of Income(¥Millions)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Foreign exchange gains
Reversal of allowance for doubtful accounts
Land and house rent received
Other
Non-operating expenses
Interest expenses
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Impairment loss
Provision for bonuses
Loss on liquidation of subsidiaries

Provision of allowance for Loss on dissolved welfare pension fund
Other
Ordinary income
Extraordinary income
Gain on revision of retirement benefit plan
Gain on negative goodwill
Gain on reversal of subscription rights to shares
Gain on sales of noncurrent assets
Gain on bad debts recovered
Extraordinary loss
Loss on disaster
Reversal of allowance for doubtful accounts
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Income before minority interests
Minority interests in income(loss)
Net income

2011/3

2012/3

2013/3

2014/3

2015/3282,264
251,965
30,29917,90812,390
2,218
70
191
―
―
126
1,830
1,362
92
51
―
90
―
―
―
1,127
13,246
517
517
―
―
―
―
315
315
―
13,449
4,683
633
5,316
8,132
352
7,780

273,134
246,327
26,806
17,886
8,919
1,310
37
284
―
―
181
806
1,051
60
―
84
196
―
―
―
709
9,178
2,863
―
2,660
203
―
―
―
―
―
12,041
4,199
145
4,344
7,697
(158)
7,856

301,319
265,205
36,11318,06718,046
1,845
39
170
364
―
186
1,084
1,772
59
―
224
545
265
231
―
445
18,119
―
―
―
―
―
―
―
―
―
18,1198,192(1,405)
6,786
11,332
19
11,313

318,513279,969
38,54317,80920,734
1,083
20
173
73
122
146
547
1,215
51
163
―
318
―
―
123
558
20,602
3,797
―
―
―
2,238
1,559
571
―
571
23,828
8,837
76
8,914
14,914
4
14,910300,912265,171
35,74017,382
18,358
1,254
26
243
438
―
146
399
1,024
52
313
―
208
―
―
―
449
18,589
1,180
―
―
―
1,180
―
―
―
―
19,769
6,823
669
7,493
12,276
11
12,264

Consolidated Statements of Comprehensive Income
Financial Section(¥Millions)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Comprehensive income
BreakdownComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

2011/3

2012/3

2013/3

2014/3

2015/3

8,132

7,697

11,332

14,914

12,276

(32)
―
―
(32)
8,099

371
―
―
371
8,068

1,892
22
―
1,915
13,247

735
29
―
765
15,680

1,526
36
4,592
6,154
18,430

7,767
332

8,219
(150)

13,21433

15,65821

18,39733
Corporate Report 201547

Financial Section

Consolidated Statements of Changes in Net Assets(¥Millions)Shareholders' equity
Capital stock
Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Changes of items during the period
Disposal of treasury stock
Increase (decrease) in cash and cash equivalents
resulting from merger and acquisition(consolidated
subsidiary and nonconsolidated subsidiary)
Total changes of items during the period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Net income
Change of scope of consolidation
Increase (decrease) in cash and cash equivalents
resulting from merger and acquisition(consolidated
subsidiary and nonconsolidated subsidiary)
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period
Purchase of treasury stock
Disposal of the treasury stock
Change of scope of consolidation
Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of the treasury stock
Change of scope of consolidation
Increase (decrease) in cash and cash equivalents
resulting from merger and acquisition(consolidated
subsidiary and nonconsolidated subsidiary)
Total changes of items during the period
Balance at the end of current period
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders'equityTotal changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders'equityTotal changes of items during the period
Balance at the end of current period
Remeasurements of defined benefit plans
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders'equityTotal changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Change of items during the period
Net changes of items other than shareholders'equityTotal changes of items during the period
Balance at the end of current period
Subscription rights to shares
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Increase (decrease) in cash and cash equivalents
resulting from merger and acquisition(consolidated
subsidiary and nonconsolidated subsidiary)
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period

48 Corporate Report 2015

2011/3

2012/3

2013/3

2014/3

2015/3

6,888
―
―
6,888

6,888
―
―
6,888

6,888
―
―
6,888

6,888
―
―
6,888

6,888
―
6,888

6,009

6,097

6,230

6,300

6,645

87

133

69

324

234

―

―

―

20

―

87
6,097

133
6,230

69
6,300

344
6,645

234
6,879

97,590―103,315―

109,067―

118,296―

130,822(2,352)(2,054)
7,780―(2,103)7,856―(2,084)
11,313―(2,429)14,910―(2,776)
12,264
―

―

―

―

44

―

5,725
103,315

5,752
109,067

9,228
118,296

12,525130,8229,487
137,957(11,272)(10,758)(10,016)(12,408)(14,487)

(1)
546
(30)
514
(10,758)(2,691)
3,464
(31)
741
(10,016)(3,000)608―(2,392)(12,408)(3,003)924―(2,079)(14,487)(3,002)460―(2,542)(17,029)

99,215―105,543―

112,170―

119,077―

129,868(2,352)(2,054)
7,780
(1)
634
(30)

(2,103)7,856(2,691)3,597(31)(2,084)
11,313(3,000)678―(2,429)14,910(3,003)
1,249―(2,776)
12,264(3,002)
694
―

―

―

―

64

―

6,327
105,543

6,627
112,170

6,906
119,077

10,791
129,868

7,179
134,696

652

639

1,002

2,895

3,631

(12)
(12)
639

363
363
1,002

1,892
1,892
2,895

736
736
3,631

1,525
1,525
5,157

―

―

―

9

21

―
―
―

―
―
―

9
9
9

11
11
21

14
14
35

―

―

―

―

1,794

―
―
―

―
―
―

―
―
―

1,794
1,794
1,794

4,592
4,592
6,386

652

639

1,002

2,904

5,446

(12)
(12)
639

363
363
1,002

1,901
1,901
2,904

2,542
2,542
5,446

6,132
6,132
11,579

272

361

217

231

175

89
89
361

(143)
(143)
217

13
13
231

(56)
(56)
175

88
88
263

5,167

5,687

19

174

195

520
520
5,687

(5,668)(5,668)
19

155
155
174

21
21
195

33
33
229

105,307―112,232―

113,411―

122,387―

135,687(2,352)(2,054)
7,780
(1)
634
(30)

(2,103)7,856(2,691)3,597(31)(2,084)
11,313(3,000)678―(2,429)14,910(3,003)
1,249―(2,776)
12,264(3,002)
694
―

―

―

―

64

―

596
6,924
112,232(5,448)
1,179
113,411

2,070
8,976
122,387

2,507
13,299135,687

6,254
13,434
146,768

Building a better, brighter future together

Consolidated Statements of Cash Flows(¥Millions)

2012/3

2013/3

2014/3

2015/3614
13,449
3,039
―
―
(278)
188
(854)
―
―
―
(262)
92
―
(9,263)(2,902)(1,409)5,269(156)(2,766)
402
4,548
262
(91)
(4,104)(1,535)(3,449)
746
(387)
(675)
―

16,435
12,041
2,947
196
215
―
(201)
93
47
―
―
(322)
60
―
6,951
3,931
836
(4,579)612
485(2,442)
20,875321(56)(4,704)(4,523)(1,545)
496
(590)
(36)
317

7,160
18,119
2,308
545
678
―
(796)
(169)
466
―
―
(209)
59
―
(9,842)(2,214)(3)
4,516(2,738)1,810(145)
12,385208(60)(5,373)(2,160)(2,359)
426
(430)
(565)
720

9,888
23,828
2,264
318
688
―
388
(4,705)
10
555
(470)
(193)
51
(2,074)(6,008)
1,581
4,343
(473)
308
(384)
(10)
20,015
195(52)(10,269)(7,477)(5,575)2,890(2,002)(3,233)309

23,167
19,769
2,660
208
849
―
(32)
―
(347)
4,631
(2,004)
(270)
52
(867)
8,095
877
(623)
(454)
277
189
44
33,055270(37)(10,121)(2,828)(3,434)
1,990
(612)
(738)
203

―

(3,752)

―

―

(361)

―
315
1,915
(3,650)(892)(1,041)
50
(180)
(3)
677
(2,054)
(68)
(138)
(22)
(4,594)22,229
―

(173)
236
522
(17,533)(2,015)(1,114)5,000(15,180)(2,691)829(2,104)
―
(258)
(10)
(5,631)
17,634
301

(267)
125
190
(3,038)
2,450
(739)
―
―
(3,000)580(2,083)
―
(244)
32
1,993
12,304
313

(17)
119
31
(905)
4,000
(340)
―
―
(3,003)
1,127(2,429)
―
(259)
43
1,548
14,611――109
16(12,343)(6,799)
(124)
―
(110)
(3,002)669(2,777)
―
(199)
83
8,078
16,213
―

―

―

―

53

―

17,634

12,304

14,611

16,21324,291
Corporate Report 2015

Financial Section

Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Gain on negative goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in net defined benefit asset (liability)
Interest and dividends income
Interest expenses
Loss (gain) on sales of noncurrent assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in costs on uncompleted construction contracts and other
Decrease (increase) in other operating assets
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in advances received on uncompleted construction contracts
Increase (decrease) in other operating liabilities
Other, net
Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) investing activities
Purchase of property and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Proceeds from long-term loans payable
Redemption of bonds
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other, net
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation
Increase (decrease) in cash and cash equivalents resulting from merger
and acquisition(consolidated subsidiary and nonconsolidated subsidiary)
Cash and cash equivalents at the end of period

2011/349

Financial Section

Financial Highlights (Non-consolidated)■Orders Received ■Net Sales■Gross Profit(¥Millions)(¥Millions)
243,418
213,973

204,678

2011/3247,358
227,593
235,305

218,527 200,061

236,672
236,236

21,49524,207

2013/3

2014/3

21,32618,3202012/3

2013/3

2014/3

2015/3

2011/3

2012/3■Operating Income■Ordinary Income(¥Millions)(¥Millions)12,444

11,956

11,347
10,0129,201

2012/3

2015/3

12,747
10,962

9,753
7,259

6,651

2011/323,3392013/3

2014/3

2015/3■Net Income

2011/3

2012/3

2013/3

2014/3

2015/3

185,730

188,122■Total Assets ■Net Assets(¥Millions)(¥Millions)
13,235
159,787

172,435
153,493

10,334
7,274
80,5995,624

84,53389,06895,754

102,552

4,466

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3(¥Millions)

Orders Received
Net Sales
Gross Profit
Operating Income
Ordinary Income
Net Income
Total Assets
Net Assets

50 Corporate Report 2015

2011/3

2012/3

2013/3

2014/3

2015/3

204,678
213,973
21,495
9,201
9,753
5,624
159,787
80,599218,527
200,061
18,320
6,651
7,259
4,466
153,493
84,533

243,418
227,593
23,33911,347
11,956
7,274
172,435
89,068235,305
247,358
24,207
12,444
12,747
10,334
185,730
95,754

236,236
236,672
21,326
10,012
10,962
13,235
188,122
102,552

Building a better, brighter future together

Trends by Segment (Non-consolidated)
Orders Received by Business Segment (Non-consolidated)(¥Millions)

243,418

235,305

236,236

218,527
204,678

Telecommunications infrastructure (NTT group engineering)
Telecommunications infrastructure (Non-NTT telecom engineering)
Environmental and social infrastructure
SYSTEM-SOLUTIONS(¥Millions)

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

Telecommunications infrastructure(NTT group engineering)

122,680

124,821

132,355

130,375

125,428

Telecommunications infrastructure(Non-NTT telecom engineering)

47,03955,52859,66059,783

58,132

Environmental and social
infrastructure

17,332

21,86329,88623,48432,391SYSTEM-SOLUTIONS

17,625

16,31321,517

21,661

20,284

204,678

218,527

243,418

235,305

236,236

Total

Net Sales by Business Segment (Non-consolidated)(¥Millions)
213,973

247,358
227,593236,672

200,061

Telecommunications infrastructure (NTT group engineering)
Telecommunications infrastructure (Non-NTT telecom engineering)
Environmental and social infrastructure
SYSTEM-SOLUTIONS(¥Millions)

2011/3

2012/3

2013/3

2014/3

2015/3

2011/3

2012/3

2013/3

2014/3

2015/3

Telecommunications infrastructure(NTT group engineering)

123,041

119,991

126,691

131,193

127,237

Telecommunications infrastructure(Non-NTT telecom engineering)

57,666

46,26555,07969,832

61,038Environmental and social
infrastructure

16,662

17,18024,606

24,581

28,173SYSTEM-SOLUTIONS

16,602

16,624

21,21521,751

20,222

213,973

200,061

227,593247,358

236,672

Total

Financial Section
Corporate Report 201551

Financial Section

Non-consolidated Balance Sheets(¥Millions)

2011/3

2012/3

2013/3

2014/3

2015/3ASSETS
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable from completed construction contracts
Short-term investment securities
Costs on uncompleted construction contracts
Raw materials and supplies
Short-term loans receivable
Prepaid expenses
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Noncurrent assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Lease assets
Construction in progress
Intangible assets
Software
Other intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans receivable
Claims provable in bankruptcy, claimed provable in rehabilitation and other
Long-term prepaid expenses
Prepaid pension cost
Other investments and other assets
Allowance for investment loss
Allowance for doubtful accounts
Total assets

105,593
15,720201
61,896499
15,148
43
7,649
202
2,210
2,115
(94)
54,19334,877
13,44647085
2642
19,952
270
7
1,981
1,764
216
17,334
3,951
9,118
1,630
134
157
2,769
1,811
(237)
(2,002)
159,787

91,3754,259
154
56,7496,506
14,072
113
6,850
214
1,817
690
(54)
62,11834,80912,855
408
101
1
536
20,547
352
6
1,370
1,201
169
25,937
4,326
17,263
1,634
229
133
3,362
1,116
(162)
(1,966)
153,493

106,015
5,662
231
67,312
6,315
16,212
314
6,032
235
2,511
1,252
(63)
66,41935,05912,407434
94
0402
20,795
416
508
1,823
1,004
818
29,536
7,418
17,144
1,599
58
108
3,941
890
―
(1,624)
172,435

109,286
8,489
106
72,095
5,919
15,213
47
3,434
242
2,595
1,201
(59)
76,44438,966
12,809
1,274
829
0
670
22,973
266
143
2,771
2,635
136
34,706
11,562
17,173
488
56
83
4,918
2,107
―
(1,684)
185,730

108,185
9,074
1,147
63,863
11,765
14,365
79
2,500
277
3,332
1,823
(46)
79,93639,372
12,733
1,191
1,169
0
590
22,459
223
1,003
3,003
2,159
844
37,56013,836
19,653
642
56
65
2,506
2,315
―
(1,517)
188,122

LIABILITIESCurrent liabilities
Notes payable
Accounts payable for construction contracts
Short-term loans payable
Lease obligations
Convertible bond-type bonds with subscription rights to shares
Accounts payable-otherAccrued expenses
Income taxes payable
Advances received on uncompleted construction contracts
Deposits received
Provision for warranties for completed construction
Provision for loss on disaster
Provision for loss on construction contracts
Provision for asset removal
Other current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Allowance for investment loss
Asset retirement obligations
Other noncurrent liabilities
Total liabilities

76,201
485
32,615500
91
15,000
720
5,303
3,565
2,127
14,653
118
145
207
―
666
2,986
1,904
202
499
104
―
275
79,187

61,690―29,027
1,000
130
―
749
4,982
2,778
3,707
18,209
372
―
181
―
551
7,269
6,296
249
381
102
―
239
68,96075,835―34,511
3,500
160
―
1,292
6,458
4,542
1,228
22,959
62
―
245
101
775
7,531
5,694
287
1,375
93
―
80
83,367

82,375―34,663
7,500
113
―
1,277
6,683
3,453
1,457
25,638
98
―
729
―
758
7,601
5,367
177
1,837
48
―
169
89,976

78,210―35,085
1,073
96
―
2,170
4,724
414
1,332
26,290
76
―
5,175
―
1,771
7,358
5,000
153
1,993
17
121
72
85,569NET ASSETS
Shareholders' equity
Capital stock
Capital surplus
Legal retained earnings
Reserve for advanced depreciation of noncurrent assets
General reserve
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Subscription rights to shares
Total net assets
Total liabilities and net assets

79,498
6,888
6,035
1,547
313
68,900
6,541(10,727)
739
739
361
80,599159,787

83,273
6,888
6,738
1,547
325
72,300
5,483(10,010)
1,042
1,042
217
84,533
153,493

86,141
6,888
6,814
1,547
323
74,6008,375(12,408)
2,695
2,695
231
89,068172,435

92,291
6,888
7,139
1,547
1,348
74,60015,255(14,487)
3,287
3,287
175
95,754
185,730

97,745
6,888
7,373
1,547
2,088
74,60022,277(17,029)
4,544
4,544
263
102,552
188,12252 Corporate Report 2015

Building a better, brighter future together

Non-consolidated Statements of Income(¥Millions)

2012/3

2013/3

2014/3

2015/3

Net sales

213,973

200,061

227,593247,358

236,672

Cost of sales

192,477

181,740

204,254

223,150

215,346

Gross profit

21,49518,32023,33924,207

21,326

Selling, general and administrative expenses

12,294

11,66911,991

11,763

11,313Operating income

9,201

6,651

11,347

12,444

10,012Non-operating income

1,565

1,198

1,563

1,152

1,504

Interest income

38

37

41

33

33

Interest on securities

43

14

14

8

13

Dividends income

256

241

133

129

193

Land and house rent received

408

478

473

468

466

Foreign exchange gains

―

―

446

―

474

Reversal of allowance for doubtful accounts

―

―

―

305

168

Reversal of allowance for investment loss

―

77

171

―

―

Other

817

348

284

208

155

1,012

590

954

848

554

Interest expenses

51

49

72

66

57

Bad debts expenses

102

28

14

17

―

Loss on disposal of equipment and materials

―

8

118

―

―

Loss on disposal of fixed assets

―

13

177

―

―

Rent expenses

141

126

157

152

202

Penalty for contract breach

―

―

―

86

―

Impairment loss

―

―

280

187

150

Other

716

364

133

339

144

9,753

7,259

11,956

12,747

10,962Extraordinary income

―

203

―

3,709

6,669

Extraordinary loss

196

―

―

571

―

Income before income taxes

9,557

7,462

11,956

15,885

17,632

Income taxes-current

3,491

2,790

5,297

5,499

3,837

Income taxes-deferred

440

206

(615)

51

558

Total income taxes

3,932

2,996

4,681

5,550

4,396

Net income

5,624

4,466

7,274

10,334

13,235Non-operating expenses

Ordinary income

Corporate Report 2015

Financial Section

2011/353

Stock Information(as of March 31, 2015)

Major Shareholders
Fiscal Year-End

March 31Annual Shareholders’MeetingJune 23, 2015

Japan Trustee Services Bank, Ltd.
(Trust Account)

6,153

5.22

Stock Listing

Tokyo Stock Exchange (First Section)

5,766

4.89

Ticker Code

1951

Japan Trustee Services Bank, Ltd. (Sumitomo ElectricIndustries, Ltd., Retirement Benefit Trust Account reentrusted
by Sumitomo Mitsui Trust Bank, Limited)

Common Stock

Authorized: 300,000,000
sharesIssued: 117,812,419 shares

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

4,059

3.45

Number of shares Percentage of total
held (thousand)shares issued (%)

Total Number of 12,804
Shareholders
Transfer Agentand Registrar

Sumitomo Mitsui Trust Bank,
Limited 1-4-1, Marunouchi,
Chiyoda-ku, Tokyo, JapanESOP Association of KYOWA EXEO CORPORATION

3,921

3.33

CMBL S. A. RE MUTUAL FUNDS

3,543

3.01

JUNIPER

2,311

1.96

Sumitomo Realty & Development Co., Ltd.

2,081

1.77

Japan Trustee Services Bank, Ltd.
(Trust Account 9)

2,018

1.71

SUMITOMO LIFE INSURANCE COMPANY

2,000

1.70

Japan Trustee Services Bank, Ltd.
(Sumitomo Mitsui Trust Bank, Retirement Benefit Trust Account)

1,834

1.56

Note: In addition to the above, treasury stock of 19,165,000 shares (16.27%) is held by theCompany.

Composition of Shareholders

Individuals
and others
16.06%

Financial
institutions
30.40%
Securities
companies
1.11%

Foreigncompanies
27.41%

Other
corporations
8.75%

Treasury stock
16.27%

Stock Price Range and Trading Volume on the Tokyo Stock Exchange
Stock Price
(¥)
1,500

1,000
Trading Volume(Million Shares)
500

20

15

10

5

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3

2010

54 Corporate Report 2015

2011

2012

2013

2014

2015

0

Board of Directors

Building a better, brighter future together(as of June 23, 2015)

Chairman Kunio Ishikawa

President Fuminori Kozono

Director and Executive
Operating Officer

Director and Executive
Operating Officer

Director and Managing
Operating Officer

Director and Managing
Operating Officer

Director and Managing
Operating Officer

Takayuki Watanabe

Takashi Sakai

Yoshiaki Matsuzaka

Noritsugu Totani

Tsutomu Ota

Director and Managing
Operating Officer

Director

Director(Independent Director)

Director(Independent Director)

Standing Statutory
AuditorKumiko Kitai

Kazuteru Kanazawa

Yuji Sugita

Yasuo Otsubo

Yuki Sakuyama

Managing
Operating Officers

Standing Statutory
AuditorHaruhiko Watanabe

Statutory Auditor

Akira Yamada

Statutory Auditor(Independent Auditor)

Kozo Meguro

Corporate Report 2015

Stock Information /Board of Directors

Yoshiharu Takizawa
Hisamitsu Hoshi
Genzaburo Oe
Tomohiro Kurosawa
Eiichi Matsuda
Junichi Sato

Operating Officers

Toshimitsu Kiribayashi Fumio Kumagai
Kazuyuki Kaihatsu Yuji Sato
Atsuo Yuhara Kazuo Sato
Hiroshi Yamashita Takayuki Yamada
Hideyuki Goto Yutaka Motohashi
Masafumi Yoshihara Masato Suwabe
Hideki Obara Koichi Mino
Hideo Higuchi

5529-20, Shibuya 3-chome, Shibuya-ku, Tokyo 150-0002, Japan
URL: http://www.exeo.co.jp/overseas/index.html