Exeo Group, Inc. Integrated Report 2022

2022

Integrated ReportPurpose
PurposeBring the benefits ofconnectivity to all
Exeo Group believes access to infrastructure should be universal.

Everyone everywhere deserves the basic support functions to pursue
happiness on their own terms. This is the world we’re aiming for.
Working closely with our partners in a rapidly evolving world,
we’re betting on technology and combined expertise, from hardware
to software, to bring the benefits of connectivity to all.

1

Exeo Group Integrated Report 2022

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2

Progress
Value that breaks the mold enrichingsociety for over a half-century
The strength that we have honed since our establishment is the technological capability to build high-quality
information and communications infrastructure.
As we have adapted this strength according to the needs of the times, we have expanded into business domains
such as electrical, civil, and environmental infrastructure, network integration, and systems integration,
while at the same time enriching people’s lives and contributing to solutions for a variety of social issues.

2010s
Shift to a total
ICT solutions provider
As businesses ramped up their efforts toadapt to the IoT era, characterized by the
spread of smartphones and tablets andthe shift to cloud services, we pivoted to

1980s

become a total ICT solutions provider.

Expansion of business domains
following liberalization of
telecommunications businessWith the liberalization of telecommunications, thetelecommunications industry entered a new era inwhich multiple operators competed to provide better
services. We worked to diversify our business andmeet the diverse needs of telecommunications carriers.

1990s
Responsible for the spreadof mobile communications
and the upgrading ofcommunication networks
In addition to the widespread use of cell phones,

1954-

there was growing demand for high-standard

Development of a high-quality
telecommunication infrastructure
network across Japan

communication and digital communication. With

telecommunication networks such as optical fiber
this business environment providing a tailwind, we
strengthened our construction capabilities tohandle large-scale projects.

As Japan entered a period of rapid economic growth, its
telecommunications network, particularly telephones, became
an indispensable aspect of its infrastructure. We were responsible
for the construction of telecommunications facilities
throughout Japan, contributing to the development of thetelecommunications network.

3

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The society we envision
looking forward to 2030

Vision of society

Global society where
diversity is appreciatedExpanding the possibilities of business throughout
the world with FinTech that supports diverse cloudservices and financial services, to ultimately realize

Our dream is to be a part of solutions to social issues in many different fields,

liberated work styles that are not constrained bylocations or hours and treat all ethnicities andutilizing our technological capabilities honed in the field of information andgenders as equals.

communications infrastructure.
This is what our 2030 Vision advocates. We will drive ongoing growth insociety by using the power of “connecting our world through engineering”

Vision of society

to pioneer a new future.

A smart society where people
live healthy and vibrant lives
Reviving aging infrastructure and using advanced
telecommunications and ICT technologies to transition toward
smart cities and offices. Crafting solutions to problems atworksites in Japan’s super-aging society, including healthcare
and government, with our various systems and services.
Vision of society

Society without
poverty or inequality
Revitalizing primary industries where qualified
Vision of society

workers are increasingly insufficient through efforts
such as building infrastructure, creating local jobs,

Carbon-neutral society

and developing engineers in developing countries,
and using the latest ICT services to create learning
environments that provide equal opportunities for

Vision 2030
Building renewable energy plants including mega solar,

anyone to get the education they need.

biomass, and also offshore wind power which will be

increasingly prevalent going forward, and linking them

2030 Vision

to potential forms of next-generation energy usage via
optimized energy management systems.

5

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Contents
Introduction

Value creation story

P

1

Value creation strategy

P

9

P

Strengthening
our business infrastructure

17P

1 Purpose

9 Value creation process

17 Message from the President

33 ESG approach

7 Contents/Editorial policy

11 Value creation strengths and capital

25 Message from the CFO

35 Safety, quality & BCP

13 Value provided

27 Strategy by segment

15 Financial and non-financial highlights

Governance

41

37 Environment & energy
41 Human resources strategy

Data section

P

51

51 Outside directors’round table discussion
55 Board of Directors
57 Corporate governanceP

65

65 Eleven-year major financial data
67 Analysis of operating results andfinancial status
71 Corporate data

41 Message from the General
Manager of the Human Resources
Development Department
49 Group management
50 DX implementation

Editorial Policy
Referenced guidelines

Scope of reporting

External evaluation●

International Integrated Reporting Framework (Value Reporting Foundation)

MSCI Japan ESG Select Leaders Index

Nadeshiko Brand

D&I Award 2021●

Company-Investor Dialogue for Collaborative Value Creation (Ministry of Economy, Trade and Industry of Japan)●

GRI Sustainability Reporting Standards (Global Reporting Initiative)●

SASB Standards (Sustainability Accounting Standards Board)

Since 2017, The Group has for six consecutive
years been selected as a constituent stock for the
MSCI Japan ESG Select Leaders Index.

The Group has been recognized by the Ministry of
Economy, Trade and Industry and the Tokyo Stock
Exchange for three consecutive years, with selection asa Nadeshiko Brand in 2020 and as a Semi-Nadeshiko
Brand in 2021 and 2022.

The Group was awarded the highest designation“Best Workplace for Diversity & Inclusion” in D&IAward 2021*1 which recognizes the efforts ofcompanies that strive toward
diversity and inclusion.

Period: April 2021 to March 2022 (includes some information relating to before or after the reporting period)*1 Operated by JobRainbow

Scope: Exeo Group, Inc. and its consolidated subsidiaries (in some cases Exeo Group, Inc. only)

IssuedSeptember 2022 (Next scheduled issue: September 2023)

Notice on
forward-looking
statements

This corporate report contains forward-looking statements such as the future business performance outlook of The Group. As thesestatements are based on the information available at the time of the preparation of this report, the actual results may differ materiallyfrom the content described or suggested therein due to various factors. As this corporate report is not intended for the purpose ofsoliciting 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.

7

Exeo Group Integrated Report 2022

DX Certification

Top Hundred Telework Pioneer

PRIDE Index 2021 (Silver)

Exeo Group was recognized as a certified DX operator
in March 2022 based on the DX (digital transformation)
Certification System of the Ministry of Economy,
Trade and Industry.

The Group was selected in fiscal 2018 as a “TopHundred Telework Pioneer,” one of the companies
and organizations recognized by the
Ministry of Internal Affairs andCommunications as having achieved
sufficient introduction and utilizationof telework.

The Group received silver
certification in the PRIDE Index
2021*2 that evaluates workplace
initiatives related to LGBTQ+
and other sexual minorities.
*2 Formulated by volunteer nonprofit organization“work with Pride”

Exeo Group Integrated Report 2022

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Value creation process

Value creation story

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Providing wide-ranging value tosociety using engineering capabilities
cultivated for almost seven decades
Strengths and capital

1

Social background2

Formidable financial
strength

Proven technologicalcapabilities

Social issues●

Aging infrastructure andnatural threats●

Depopulation andhollowing-out due to a
declining population

Changes in industry
and society●

Rapid technologicalinnovation●

Change from goods toexperiential services●

Changes in social
awareness

Telecom carriers business
Optical fiber cabling● Network facilities construction● Telecommunications civil engineering● Telecommunications & electricity
facility projects● Mobile base station installation &maintenance●

Urban infrastructure businessTelecommunications infrastructure
construction● Electrical & air conditioning equipment
projects● Renewable energy-related facilities● Smart energy-related facilities● Waste treatment plant construction &maintenance● Urban civil engineering (pole-free, pipe
jacking, etc.)●

Environmental destruction,
depletion of resources●

Businesses, products, & services

3

Utilizing DX for safety
and quality control

System solutions business

4
5

Corporate culture thatvalues diversity

Long list of partnercompanies

Software development on consignment
Business support solutions● IT infrastructure architecture (servers,
wireless LAN, etc.)● License sales, system operations &maintenance● Global business (telecommunications,electrical & air conditioning, various
solutions)●●

Value creation capabilities (ESG)

6

Combined capabilitiesof the Group➡ p.11-12 Value creation strengths and capital

Safety, quality, BCP
Environment, energy● Human resources strategy● Group management● Advancement of DX

Value provided

Enabling an advanced ICT society
Continued upgrading of broadband telecommunications
Building infrastructure that is resilient to natural disasters● Increasing the population coverage of communications areas● Developing next-generation infrastructure inunderpopulated areas●●

2030 Vision

Enabling a convenient urban lifestyleLandscapes of globally comparable standards by
undergrounding overhead power lines● Expanding public investments for building national resilience● Renewal of aging waste disposal plants● Advancing use of renewable energy sources● Promoting “barrier-free” access for people with disabilities●

Vision of society in 2030

Realizing a prosperous society throughIoT technologies
Reforming industrial structures through the cloud, IoT, bigdata, etc.
● Promoting more extensive communication● Solutions for advanced security● Providing the environment for work style reforms andproductivity improvement● Providing ICT environments for high-quality education●

A smart society where people live
healthy and vibrant lives
Global society where diversity is enjoyedSociety without poverty or inequality

Increasing our business value while
helping to achieve the SDGs

●

●

●

●

➡ p.27-32 “Strategy by segment”

Carbon-neutral society

Organizational culture that prioritizes safety and quality
Addressing climate change through environmental
management● Corporate culture in which diverse human resources thrive● Creating synergies through Group-wide collaboration● Strengthening our business infrastructure through DX➡ p.13-14 “Value provided”➡ p.33-50 “Strengthening our business infrastructure”

9

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Value creation strengths and capital

Value creation story

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Pooling the combined capabilities of
the Group to offer comprehensive solutions
1

Formidable financial
strength

Our strength lies in having little interest-bearing debt and maintaining a high level of shareholders’

For business improvement and strength

equity to total assets. Based on this sturdy financial foundation, we invest in growth through a●three-pronged approach of M&A, innovation, and investing in digital. Our policy for shareholder
returns is to continue paying stable dividends with a target DOE (dividend on equity) of 3.5%
while buying back shares in a flexible manner.

Generating Group-wide synergies to boost earning power● Focusing on investment in growth areas and on strengthening businesses
while maintaining appropriate balance between capital and liabilities●

Continuously providing stable shareholder returns

Our telecom carriers business provides a full range of services from planning and design to2

Proven technologicalcapabilities

construction, operation, and maintenance throughout Japan. Our urban infrastructure businessFor business improvement and strength

leverages the electrical and civil engineering technologies that we have developed through●telecommunications construction. Our system solutions business deploys ICT (Information and●Communication Technology) to deliver solutions that meet the diverse needs of our customers.

Multi-skilling
Mutual support between fixed and mobile phone● Integrating ICT into on-site construction technology

We create value that harnesses our diverse technological capabilities in these three businesses.

In the areas of engineering solutions (telecom carriers, urban infrastructure) and system

3

Utilizing DX for safety
and quality control

solutions in which we do business, the use of DX to strengthen and rationalize safety andquality control has been an important topic. We are actively utilizing DX to improve
operational efficiency and accuracy, such as by deploying AI in safety and quality inspections
for telecommunications construction work.

4

Corporate culture thatvalues diversity

For business improvement and strength

Number of ESPs*1 andVE*2 Proposals

8,666*1 ESP: Exeo Solution Proposals*2 VE: Value Engineering

Nikkei Smart WorkManagement Survey

consecutive yearsof dividend increases

Holders of technologyrelated professional
qualifications(cumulative total)

27,500DX certification

Automating business processes with ServiceNow, RPA, etc.
Actively utilizing technologies such as BIM/CIM and AI● Enhancing security to operate business more securely

For business improvement and strength●

Company promotes diversity and inclusion as a top management priority and has been selected as

56.6% 10●

work environments where diverse human resources such as mid-career hires and female andresources capable of navigating sudden technological innovations and market changes. The

Dividends●

In this era of uncertainty and turbulent changes referred to as VUCA, it is essential to establish
international employees can harness their capabilities, in order to secure and develop humanShareholders’Equity to Total Assets

Rebuilding the personnel system to accommodate new work styles● Employee learning & development and assignments according to eachindividualʼs capabilities and career path●a Nadeshiko Brand and Semi-Nadeshiko Brand for three consecutive years starting in fiscal 2020.

Selected as
Nadeshiko Brand

PRIDE Index 2021

Human resources development based on our shared Group-wide
Career Development System (CDP)

It is increasingly important to establish the foundations of good relationships with partner

5

Long list of partnercompanies

companies working together with us on-site in order to provide high-quality solutions to ourFor business improvement and strength

customers. To expand the potential value that connectivity can create and build relationships of●even greater mutual benefits and success, we must actively create opportunities to exchange
information on market needs and exchange ideas on how to improve operations, while building

Increasing productivity through nearshoring and offshoring● Deploying global business success cases domestically in Japan● Creating value through co-creation and collaboration with customers

Business partner companies (in Japan)

3,375

even stronger relationships in which we grow together as partners.

6

Combined capabilitiesof the Group

Our Group includes companies that operate community-based businesses, and we have strong

For business improvement and strengthbases of operations in regions throughout Japan. In order to harness this strength to the fullest,●

we are building systems that can flexibly utilize human resources within the Group. At the same●time, we continue to explore M&A targets capable of being growth drivers, with which we could
generate even more synergies.

11

Exeo Group Integrated Report 2022

Reorganize Group companies according to business domain and area
Visualize & standardize business processes, unify management systems● Mutual support and sales cooperation for order receiving andconstruction operations

Number of
consolidated
subsidiaries

107

Number of consolidated
employees

15,847
Exeo Group Integrated Report 2022

12

Value provided

Value creation story

Value creation strategy

Strengthening our business infrastructure

Helping to bring about a prosperous
society through “connectivity”

Governance

Data section

Proportion of all electric power produced inJapan*6 comprised of renewable energy(except hydropower)

10.3

％

Domestic FTTH households
Coverage
Telecom carriers business

Next-generation
mobile infrastructure

99.3

*2

%

From behind the scenes, the Group’s
telecom carriers business supports the
spread of 5G, the next-generation

operations services according to the needsof all telecom carriers.

Infrastructure plan by March 2024
Domestic 5G population coverage

95

Over

*1

%

Creating
the infrastructure for
an information society
For data centers, we provide

standard in mobile telecommunications.
We provide design, construction, andUrban infrastructure businessTelecom carriers business

Being able to use
the internet anytime,
anywherecomprehensive engineering that spans

Plan to furninsh computers
through the GIGA School Program

One computer
per student in all elementaryand junior high schools*4

the fields of electrical, electric power,
and telecommunications construction.
We leverage advanced technology tomeet various needs that are particular
to data centers, including high-quality,
stable power supply equipment, as

System solutions businessSupportingchildren’s learning

well as entrance/exit management anddevelopment and operations for all types

building interior-exterior surveillance

The Group has installed GIGA Schoolof telecommunications infrastructure

systems for advanced information

Packages at approximately 5,000 publicthroughout Japan with an all-in-one

security.

elementary and junior high schools in

system. We handle a broad range ofJapan, accounting for roughly one-sixth of

construction projects, including forall such schools in the country. We are

network equipment to construct optical

helping to provide better ICT environments

fiber networks such as optical access,to children throughout Japan.
*4 Furnished to 98.5% of local governments as ofMarch 31, 2021 (from Ministry of Education,
Culture, Sports, Science and Technology(MEXT) “Status of Furnishing and Usage to
Implement the GIGA School Program”)
https://www.mext.go.jp/a_menu/other/ext_
00921.html

indoor and outdoor base stations
required for mobile telecommunications.
*2 From the Ministry of Internal Affairs andCommunications (MIC) “Survey on
Broadband Infrastructure Coverage Rate
at End of FY2020”
https://www.soumu.go.jp/menu_news/
s-news/01kiban02_02000440.html

Total floor area ofdomestic data centers*3

2.63

Supportingnext-generation
work styles
We support implementations of cloud

For telecom carriers, we handle

servers, and routers, as well as the

System solutions businessservices providing office environmentsthat improve work efficiency and allow
people to work comfortably anywhere,anytime. Doing so, we are helping to

Pursuing a clean
energy society

create workplace environments thatcater to diverse work styles.

Rate of telework
implementation
by Japanese companies

57.4

Urban infrastructure business*5

As climate change worsens, renewableenergy is garnering more attention andcomprising a greater proportion of power
generated each year. Through our businessin renewable energies, from solar power to%*5 From the Ministry of Internal Affairs andCommunications (MIC) “FY2021
Communication Usage Trend Survey”
https://www.soumu.go.jp/menu_news/s-news/0
1tsushin02_02000158.html

biomass, offshore wind power generationand more, we are helping to achieve acarbon neutral society.
*6 From the Agency for Natural Resources andEnergy website
https://www.enecho.meti.go.jp/about/pamphlet/energy2021/007/

million m2*1 Aim of the Ministry of Internal Affairs and Communications (MIC)

13

Exeo Group Integrated Report 2022

*3 From the IDC Japan “Forecast of Domestic Data
Center Floor Area”
https://www.idc.com/getdoc.jsp?containerId=prJPJ
49021022

Exeo Group Integrated Report 2022

14

Financial and non-financial highlights

Financial

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Scope of data collection: Exeo Group, Inc. and its consolidated subsidiaries

Orders received¥

Value creation story

Net sales

595.3 billion 6

Change year on year

-

¥

％

Orders received (¥Billion)

Operating profit

594.8 billion 4

Change year on year

+

¥

％

Net sales (¥Billion)

Profit attributable to owners of parent

42.3 billion 16

Change year on year

Operating profit (¥Billion)

¥

％

+

Operating profit margin (%)

27.7 billion 15

Change year on year+％

Profit attributable to owners of parent (¥Billion)

42.3
631.0
556.3

595.3

573.3

424.3
317.8

304.2

301.4

300.4

324.1

594.8

36.6
31.7

524.5
25.6

423.7

325.0

301.3

318.5

300.9

287.4

298.8

40.2

31.1

312.6

18.0

20.7

18.3

18.4

27.7

20.8

24.1
14.9
11.3

0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)ROE

9.4％ 0.6

ROA

5.3％ 0.1

Change year on year+

ROE(%)

0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

Change year on year

points+Shareholders’ equity (¥Billion)

ROA(%)

Total assets (¥Billion)

12.1

15.6

13.7

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

Earnings per share

Dividend per share¥points17.9
12.2

250.64 15

Change year on year

¥

％

+

Earnings per share (¥)

96 17

Change year on year+％

Dividend per share (¥)

Payout ratio (%)

535.6
263.8

121.9

135.3

146.2

150.7

157.8

266.4

285.6

96

491.5

303.3
416.4

390.25

444.9

82
70
80

250.64

175.5
200.4

217.0

228.4

238.3

243.4

217.33261.3

189.42147.75109.25123.83 125.90

145.24139.7522

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)Non-financial

CO2 emissions (Scope1, 2)

79,872 t-CO 7.8

15,847 10+％

2

Number of consolidated subsidiaries (Companies)

13,151

7,903

8,074

+

79,872

13,882 14,374

46

50

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

pointsPercentage of annual paid leave taken

62.1％ 0.8

Change year on year+

pointsExeo Group, Inc. (%)

Exeo Group, Inc. (%)

Exeo Group, Inc. and five major subsidiaries* (%)

Exeo Group, Inc. and five major subsidiaries* (%)

86,583

8,331

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

Exeo Group Integrated Report 2022

1.62％ 0.21％

15,847

16,575 15,560

15-Change year on year

CO2 emissions (t-CO2)

Number of consolidated employees (People)

7,988

Ratio of women in managerial positions

Change year on year

Change year on year

7,553

38

* Five major subsidiaries: C-Cube, Seibu Electric Industry, Nippon Dentsu, Daiwa Densetsu, and Exeo Tech

Number of consolidated employees

7,521

24

32

14,042 15,272 13,822 15,709 14,859 12,675

2012 2013 2014 2015 2016 2017 2018 20192020 2021

Exeo Group, Inc.

Consolidated(FY)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (FY)

Exeo Group Integrated Report 2022

16

Message from the President

Value creation story

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Pooling the Group’s“connectivity” for the“benefit of all” on a global level
Tetsuya Funabashi
President & CEO

Changing our company name and establishing our purpose

Seeking breakthroughs as a corporate group with a stronger
sense of unity than everTop
Message17

Exeo Group Integrated Report 2022

In October of last year (2021), we changed the name of our company from Kyowa Exeo to
Exeo Group, Inc. During approximately 30 years under the name Kyowa Exeo we actively
conducted M&A in different business fields, including the management integration of threecompanies in Western Japan*1 in 2018, as we rapidly grew in scale and expanded into new
business domains. As a result, the number of companies that constitute the Group grew to over
100, and our overall revenues jumped to more than double the level of ten years ago. However,for us to continue growing from this point onward, we will need our member companies to be
more than just part of the sum. It will be important to integrate capabilities of enterprises thathave wide-ranging, diverse knowledge, expertise, and specializations, and maximize the valuethat the Group creates overall by harnessing synergies. The new company name Exeo Group,
Inc. represents our strong determination and expectation to embark on a new phase together,
Our value system
Corporatephilosophy

Purpose2030 Vision

Enduring passion

Our role in society

Where to aim for 2030

Carbon-neutral
society

Cultivating
technologicalcapabilities,
seeking affluence,and contributing
to society“Bring thebenefitsof connectivity
to all”

Redirect
inner passion
to the outside world

Society
without
poverty or
inequality

A smartsociety where
people live
healthy andvibrant lives

Globalsociety where
diversity is
enjoyedExeo Group Integrated Report 2022

18

Message from the President*1 Three companies inWestern Japan
C-Cube Corporation
Seibu Electric Industry Co., Ltd.
Nippon Dentsu Co., Ltd.
p.1-6 “Purpose”

Value creation story

with more unity than ever before. Our previous name “Kyowa” contained the characters for theJapanese expressions “kyoryoku” (cooperation) and “wagoh” (harmony), but by changing thetitle to “Group” borrowed from English, I think we are demonstrating the attitude to aim foreven more growth on a global level.
In addition to the change of our company name, our “purpose” which we announced in May
of this year (2022) is also highly significant from the standpoint of bolstering unity. This purpose
expresses the role that the Group should fulfill in society, or in other words, the meaning of oursocial existence. The first step that we took in coming up with this purpose was to tabulate
employees’ opinions toward the Company. We conducted a survey questionnaire of all Group
employees and received approximately 9,000 responses. Additionally, we listened to the opinionsof customers, business partners, and many others from outside the Company. Gathering thesevaried opinions while at the same time discussing them internally on a regular basis, we
ultimately expressed them in written form as our purpose.
The statement “Bring the benefits of connectivity to all” expresses our “aspirations” andrepresents our commitment to society. We expect each of our employees to always keep thispurpose in mind and make themselves more deeply aware and responsible for what they themselves
must do in order to achieve it as they go about their jobs each day. Additionally, we plan to use
this newly established purpose as a means to bolster the strength of our corporate brand.

Achievements of fiscal 2021

Highest ever net sales and operating profit in the first year of
the medium-term plan

*2 Promoting Advanced Radio
Environment Improvements
Projects for which the Ministryof Internal Affairs andCommunications partiallysubsidizes the maintenanceand management costs of
installing high-speed,large-capacity wireless stations
in geographicallydisadvantaged areas such as
underpopulated or remoteareas, outlying islands,
peninsulas, mountain villages,
designated rural areas, andheavy snowfall areas.

In fiscal 2021, the Group embarked upon a new Medium-Term Management Plan (FY2021-FY2025).
This Medium-Term Management Plan (medium-term plan) was formulated based on 2030 Vision(described below), our management policy from a long-term perspective which we announced in thespring of 2021. The new medium-term plan declares numerical targets of ¥630.0 billion in net sales,¥47.0 billion in operating profit (7.5% operating profit margin), ROE of 9.0% or higher, and ¥280 or
higher in EPS to be achieved in fiscal 2025. It also clarifies the challenges we face in each of the threebusiness segments - telecom carriers, urban infrastructure, and system solutions - which comprise ourbusiness domain. We are implementing our growth strategies based on these challenges.
Looking back on progress in each business segment in 2021, in the telecom carriers business,
construction for the Japanese government’s nationwide Project on Promoting Advanced Radio
Environment Improvements*2 reached its main phase, and we worked on it from multiple locations
Performance-related achievements and targets
FY2021 (Actual)

FY2020 (Actual)

Net sales

Operatingprofit

¥

573.3

¥

36.6

¥

¥

billionbillion(Operating profit margin 6.4%)

594.8

¥

42.3

¥

billionbillion（Operating profit margin 7.1％）

8.8

ROE

FY2025 (Target)

9.4

％

％

630.0
47.0

billionbillion（Operating profit margin 7.5％）

9.0

19

Exeo Group Integrated Report 2022

¥

217

¥

250

¥

Progress in Medium-Term Management Plan

Steadily acquiring the resources needed for the future of the GroupIn order to establish solid business infrastructure that cannot be swayed by economic and social
circumstances, we are pursuing a business strategy to further expand our business in urban
infrastructure and system solutions and grow our sales in each segment to roughly equal
proportions in fiscal 2030. M&A is one of the key strategies for this business portfolio revision,
which is essential to the future growth of the Group.
In fiscal 2021, we continued to vigorously conduct M&A. In urban infrastructure, the Group
added Ryosei Systems, Ltd. (currently Ryosei, Ltd.) which specializes in laying of electric power lines,
and Kidoh Construction Co., Ltd. which has advanced technology and a strong track record in

2020

2015

2025

Data section*3 NCCs
Abbreviation for Type I New
Common Carriers whoentered the market after
Japanʼs telecom liberalizationin 1985. The Group uses thisterm in reference to threecompanies: KDDI, SoftBank,and Rakuten Mobile.

*4 GIGA School Program
The program promoted by
Japanʼs Ministry of Education,
Culture, Sports, Science andTechnology (MEXT) to provide
each student with one device
together with high-speed
network service. Its aim is toachieve an educational ICT
environment capable ofdeveloping the qualities andcapabilities of various children,
including those with special
needs, without leaving any ofthem behind.

2030

System solutions

13％
30％

40％

47％

Systemsolutions

Telecom
carriers

26％％ or moreor moreGovernance

Illustration of business portfolio changes

27％

280

Strengthening our business infrastructure

throughout the Group. Investments in mobile base stations by NCCs*3 also continued, andconstruction on base stations also proceeded smoothly.
In our urban infrastructure business which we have positioned as a growth business,
construction on large data centers as well as electrical and civil engineering work such as
tunnel facilities proceeded smoothly. For renewable energy-related business, we also began
preparations to participate in woody biomass and offshore wind power generation. In oursystem solutions business, which is similarly positioned as a growth field, we have been
seeing results from projects in the educational field where we have strength, such as for highschool IT and for “after-GIGA” – digital environments in schools following up on Japan’s
Global and Innovation Gateway for All (GIGA) digital classrooms initiative. The Group-wide
consulting business spearheaded by Digital Consulting Headquarters which was established
two years ago has also entered into full-scale operation.
At the same time, our global business which had been in the upfront investment phasesuffered from the impact of lockdowns in each country, primarily in the field of telecommunications
construction. However, thanks to steady advancements in solutions business such as digital trade
platforms, we were able to expand the size and also improve the profitability of our global business.
As a result of the aforementioned efforts, our orders received for the fiscal year totaled¥595.3 billion (-6% year-on-year), net sales were ¥594.8 billion (+4% year-on-year), and operating
profit was ¥42.3 billion (+16% year-on-year). Orders received decreased year-on-year due to reversion
from special demand the previous fiscal year for projects related to Japan’s GIGA School Program*4,
but we recorded record highs in both net sales and operating profits, and we made steady progressin bolstering our profitability (earning power) with an operating profit margin of 7.1% (6.4% theprevious year) and ROE of 9.4% (8.8% the previous year). Looking at these numbers from acomprehensive standpoint, it would seem that we got off to an extremely good start in the initialfiscal year of the medium-term plan.

30％
Telecom carriers

EPS

Value creation strategy

64％
Urban infrastructure23％

C o n ti n u

o u s g ro

w th

Urban
infrastructure
Sales ratios of the threesegments will be 1:1:1

Exeo Group Integrated Report 2022

20

Message from the President*5 Pipe jacking method
technology
Non-open cut method to lay
pipes through tunnel-shaped
holes excavated undergroundwithout any open-cut
construction.

Value creation story

pipe jacking method technology*5. In system solutions, we added operations and maintenanceservices company IT-it Co., Ltd. (currently Exeo System Management, Inc.) to the Group as apartner. Globally, we added IoT solutions business operator Ascent Solutions to the Group, as
well as 68 Systems which mainly does business in railway signals and telecommunications.
We believe that each of these companies possesses resources that are needed for the future
growth of the Group in aspects such as business models, technologies, organization, and humanresources. In fact, synergy effects are already being produced in areas such as human resource
development and business partnerships.
Going forward, we will actively move to acquire new resources through M&A, while at thesame time dedicating effort to supporting each company that has been added to the Group.
Including the reorganization of Group companies, we will be working toward additional growth
for the Group by striving to optimize our business resources.
Medium-term outlook and growth strategy of each business

Our strategy to help achieve the society we envision in each business domainp.27-32 “Strategy by segment”*6 DSS
Abbreviation for Dynamic
Spectrum Sharing, a technology
for sharing some frequencies
used for 4G with 5G.
*7 Infrastructure sharing
Method by which multiple
telecom carriers reduce costs
while expanding coverage
areas by jointly building andusing base station facilities
such as antennas and steel
towers.
*8 Reskilling
Employees re-learning skills
and knowledge to be able toadapt to newly required tasks
and job types.

As a management strategy from a medium to long-term perspective, we are aspiring towardsustainable growth by steadily implementing our management plan based on 2030 Visionannounced in the spring of 2021. With “Engineering for Fusion: Connecting our world - to all
our tomorrows” as a slogan, 2030 Vision defined our four visions for society in 2030
(carbon-neutral society, a smart society where people live healthy and vibrant lives, global society
where diversity is enjoyed, and society without poverty or inequality) and set out the domains
where our Group should contribute and the services and solutions that we should provide towardachieving these four visions. Through fusion of the diverse engineering and solution capabilities
that we have cultivated until now, our initiatives in each field that will lead to these four visions ofsociety are steadily unfolding.
We expect investment to be continuous in the telecommunications carrier business going
forward, including investment in mobile 5G base stations. However, we anticipate that newtechnologies such as dynamic spectrum sharing (DSS)*6 and infrastructure sharing*7 will result inbase stations that are more compact and shared. To navigate this business environment, we
will seek to make our business operations more efficient by implementing measures for
multi-skilling and multi-carrier in construction, increasing operational efficiency through processvisualization, and reskilling*8 to shift operations flexibly and shift personnel to growth fields. We
will also strive to leverage digital technologies to improve operational productivity, including
the use of AI to calculate process volumes in design and handle construction processes, andutilizing offshore for photograph-based decisions.
In the urban infrastructure business, we will dedicate energy to bolstering the renewableenergy field, which is a growth field. In the offshore wind power business, we are developing andAims and tactical approach in each business segment(Medium-Term Management Plan (FY2021-FY2025))
Our aims
Telecom
carriers

Constructing 5G
infrastructure/Improve
profitability andproductivity

Urban
infrastructure

Systemsolutions21

Exeo Group Integrated Report 2022

Developing new
fields/Advancing
digital transformationin construction

Focusing on highvalue-added business/
Expanding recurringbusiness

Tactical approach
Developing many skills● Digital transformation,
offshoring● Integrating operations

Becoming a partner thatbuilds optimalcommunications
environments forcustomers

Entering the environment andenergy businesses● Strengthening the infrastructure
renovation business● Actively utilizing BIM/CIM, AI, etc.

Providing engineering
to enhance resilience

Pursuing new technologies,
advancing the DX of customers● Developing XaaS engineers● Offshoring, improving
development processes

Evolving into asolution provider

●

●

●

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

training engineers for building self-owned power lines through a business alliance with SWCC
Showa Holdings Co., Ltd., and in biomass gasification power generation we are moving forwardwith construction of a pilot plant in Fukushima Prefecture. We are also vigorously advancing
business that leverages our strengths in the field of solar power generation on agricultural land,
including a business alliance we have begun with Tokyu Land Corporation for pilot facilities. Due
to society’s extraordinarily strong demand in this field, shortages of engineers could potentiallybecome a major source of concern, so we will allocate sufficient resources to securing anddeveloping specialized engineers going forward.
In the system solutions business, we proceeded to shift away from primarily performing
contract development as we had before, toward a higher added value business model. However,compared to large systems integrators there are still major gaps in terms of competitiveness in themarket and profitability. Seeking additional business growth, we will restructure our organizations
including at headquarters and subsidiaries, while also establishing two new companies—Exeo
Digital Solutions, Inc. to handle solutions development, and Exeo System Management, Inc. tohandle services such as operations and maintenance—and evolve into a system that can support
customers working on DX through all layers, from consulting proposals to development,architecture, operations, and maintenance.
In global business, we plan to expand our ambitious efforts with APAC (the Asia Pacific region)
as a hub. Gradually, more of our companies are already transitioning from the upfront investment
phase to the growth phase, including Ascent Solutions which provides IoT solutions, and Guudwhich provides cloud-based customs clearance systems. In February of this year, our Group
company Arco based in Singapore which does business in re-use and maintenance services for IT
devices opened a Japan office within the Company’s Head Office, and they are now entering theJapanese market. Going forward, I would like us to utilize M&A as we work toward expanding
our businesses in locations throughout the world, while also striving to boost profitability at Group
companies and harness Group synergies through better post-merger integration (PMI). Our global
business should ultimately comprise around 10% of the Group’s total earnings by fiscal 2025.

Strengthening our business infrastructure

Supporting growth by strengthening human resources, the environment,
safety, DX, and other non-financial areas
During the five years of the Medium-Term Management Plan, we will be implementing growthstrategies for each business, while also working to strengthen our business infrastructure in theenvironment and energy, as well as in safety, quality, and BCP, and in human resources. With theawareness that sustainability efforts such as ESG in particular are essential in today’s business
management, we established the new Sustainability Promotion Office in April of this year as a
dedicated organization for sustainability, and we also established the Sustainability Committee
to boost our sustainability and governance as we accelerate our efforts.
The portion of business infrastructure that I consider particularly important is humanresources. As Japan’s population ages and the birthrate declines, securing and developing thehuman resources to carry the future will be the most important challenge for our Group as
well. In July of last year, we established the new Human Resource Development Department
to work on more effective human resources strategies. With this department playing a leadingrole, we plan to engage in acquiring and developing human resources who can be ready toswiftly deal with changes in the business environment and changing needs. Additionally,
our side-job system introduced in February of this year eliminates restrictions on our employees
concurrently working side-jobs elsewhere, and we have also begun accepting outside
employees to work with us as a side-job as we actively work to incorporate a variety ofknowledge and skills from outside the Group.
For the environment, we are concentrating on making contributions through our businessactivities including renewable energy business, waste treatment plants, etc., and on reducing thep.41-48 “Human resources strategy”

p.37-40 “Environment & energy”

Exeo Group Integrated Report 2022

22

Message from the President

p.35-36“Safety, quality & BCP”

p.50 “DX implementation”

environmental impact of our businesses through efforts such as switching to renewable-based
electricity for our offices and other buildings, and eco-friendly company vehicles. In December
2021, we also declared our support for the recommendations of the TCFD (Task Force on
Climate-Related Financial Disclosures) and set a greenhouse gas emissions reduction goal for theGroup as a whole in 2030 (Carbon neutral in fiscal 2050 for Scopes 1 & 2). We will be actively
disclosing information according to the TCFD Framework going forward.
As for safety, being a company involved in construction work we consider safety to takeprecedence over all else, and we will continue striving to ensure safety. We will improve on-site
inspections that utilize network cameras at centers established throughout Japan to perform more
intensive and efficient inspections. We will also work toward visualizing safety and engage
in better data-supported management by measuring the frequency and severity ofoccupational accidents.
In addition to these, we also consider advancing digital transformation (DX) to be a key
management priority. Utilization of digital technologies is a topic related to our Group’s entire
business infrastructure and management foundation, so we are establishing a DX Strategy
Department as a specialized organization and leveraging business intelligence (BI) tools and
RPA to visualize and improve the efficiency of the business our company conducts. In fiscal
2022, we will be launching a full-scale overhaul to shift all core systems to the cloud,integrating the networks and security of the Group and constructing efficient, secure in-housesystems to boost productivity and lead to new value creation.
Fostering a culture of innovation and growing Group synergies

Integrating the strengths cultivated by each company to create maximum value
Our Group’s greatest strength lies in the advanced technical capabilities that we have cultivatedthrough our experience in many fields. Our telecom carriers business operates integrated services
from planning and design to construction, operations, and maintenance throughout Japan. Oururban infrastructure business leverages electrical and civil engineering technologies that we havedeveloped through telecommunications construction to build a wide range of social infrastructure.
Our system solutions business fully leverages ICT (Information and Communication Technology)
solutions to meet the diverse needs of our customers. In addition to these broad-ranging andadvanced technological capabilities, I believe that another strength of our Company is thecorporate culture of “never evading problems” which we have fostered. Whenever we areconfronted by various forms of adversity in the process of construction, we do not abandon the
project, instead holding fast to our commitment to ensure that we respect the promised deadline
with firm determination. I think this trust which we have earned from our customers throughsincerity in our work is the very foundation of our Group’s existence.
However, as we carry on this positive corporate culture, it will also be important to foster acompany culture and ethos that values generating innovation in order to pursue further growth
going forward. In recent years we have been actively working to enlist new partners throughM&A and external alliances, while at the same time working internally to offer a combinationof workshops, training, evaluation systems, recognition awards, and other initiatives todevelop human resources who can drive innovation. Through these efforts, we aim to operate incycles that continuously generate new innovation and expand into new fields of engineering.
Additionally, we are working hard to offer even more support to each Group company inorder to generate Group synergies. This includes establishing consulting teams that makeproposals to horizontally roll out products of each Group company, coordinating operations forconstruction in advanced radio business on a nationwide scale, and alliances in sales andconstruction for building highway infrastructure, and many other ways we are working on
measures to strengthen collaboration within the Group.
As a result, we are starting to see tangible results such as an increase in orders for large
projects received primarily in the urban infrastructure business. Synergies are also appearing in
23

Exeo Group Integrated Report 2022

Value creation story

Value creation strategy

Strengthening our business infrastructure

aspects other than business, such as cost savings through joint use of work systems and otherforms of sharing, as well as cross-safety patrols between companies to boost safety awareness,and more.
Last fiscal year we launched a reorganization designed to maximize earnings for the Group.
We started the effort last fiscal year by integrating subsidiaries in our telecom carriers business inthe Hokkaido and Tohoku area. As I mentioned before, we are also raising the competitivenessof our system solutions business by restructuring our businesses, including the main portion of thebusiness itself, with the two core companies playing a central role. Going forward, I want to offer
even more support to Group companies in management-related departments such as humanresources, general affairs, and accounting, in addition to sales and construction functions.

Governance

Data section

p.49 “Group management”

Message to stakeholders

Working together as a Group to “bring benefits to all”
For our consolidated performance in fiscal 2022, we are forecasting ¥600.0 billion in orders
received, ¥600.0 billion in net sales, ¥38.5 billion in operating profit, and ¥25.6 billion in net
income. I am confident that we will also be able to steadily proceed with our growth strategy thisfiscal year in line with 2030 Vision and the Medium-Term Management Plan.
Particularly in the urban infrastructure and system solutions businesses which we arepositioning as growth fields, we are also steadily planting seeds from a medium to long-term
perspective, including upfront investments for expansion in new fields. As a top management
priority, we are working to secure the skills and human resources needed for future businessgrowth and profitability improvement in these businesses.
Under our new Group purpose to “Bring the benefits of connectivity to all,” the Exeo Groupwill strive to continuously improve the value we provide as a Group that contributes to society on
a global level. I hope that our shareholders, investors, and all of our other stakeholders continue
to watch over our growth with a medium to long-term perspective in mind.
August 2022

President & CEO

Exeo Group Integrated Report 2022

24

Message from the CFO

Value creation story

Managing the Groupto maximize business value
through the optimal allocation of capital
Shigeki Hayashi
General Manager of Accounts & Finance Division Operating Officer, CFO

Role of the CFO

I assumed the role of Chief Financial Officer (CFO) in June
2022. From my perspective, the first role of the CFO is toaccurately comprehend the state of finances and give reports
and disclosures in a timely manner, while also playing adefensive role to keep an eye on every corner of the business,
analyze risks, and adequately sound alarms about any mattersthat could potentially damage our financial foundation orbusiness value. On the other hand, as uncertainty in society
and the market increases, I feel it is increasingly important toplay the offensive role of seeing into the future as much as
possible and making forecasts, and at the same time
implement capital policies and investment strategies tomaximize business value.
Half of my approximately 30-year career has been spentin finance departments, and the other half has been in the fieldof global business. I have been involved in everything frombusiness planning and budget control to company mergers
and organizational restructuring, M&A and post-merger
integration (PMI), and more. My aim is to leverage all thatexperience to optimize our business resources and do
everything I can to increase our business value.
Summary of fiscal 2021 performance

In short, fiscal 2021 was a record year performance-wise. We
had ¥594.8 billion in net sales (up 4% year-on-year) and ¥42.3
billion in operating profit (up 16% year-on-year), both of whichwere new record highs, and our operating profit margin also
increased 0.7 percentage points over the previous year. Even
looking at each business field separately, if you exclude thespecial demand related to GIGA Schools, revenues still
increased in all three of our business segments. We were evenable to more than double our sales year-on-year in global
business, which we expect to be a major growth driver going
forward. Also ROE, which is an indicator of capital efficiency,

increased from 8.8% the previous year to 9.4%. EPS, which is a
profitability indicator, increased from ¥217 the previous
year to ¥250. I would say that we got off to a roaring start in
the initial fiscal year of our Medium-Term Management Plan.
Rather than being satisfied with our good performance
this past fiscal year, we will continue working hard in eachbusiness field to achieve the plan.
Change in reporting segments

Starting in fiscal 2022, we changed the categorization of ourreporting segments. Previously the segments had been divided
by corporate group, but we switched to categorization bybusiness domain. Our 2030 Vision, announced in 2021, assertsthat the business fields of telecom carriers, urban infrastructure,and system solutions will be made to comprise equal
proportions of our business. One major aim of thecategorization change is to provide timely disclosures of the
progress toward this objective.
When looking at the sales and operating profit of eachsegment, some people will likely be concerned about therelatively low profit margin in our system solutions business, but
this is the field that has the most potential as a growth drivergoing forward. We conducted an organizational restructuring
in fiscal 2021, including for subsidiaries, and we have now built
a structure that enables streamlined support from consulting
proposals to development, architecture, operations, andmaintenance. Going forward, I predict that we will stabilize
our client base and also greatly improve our businessprofitability by bolstering our operations and maintenanceservices, which is a recurring business, and expanding our
all-in-one solutions. This segment also includes global business.
Since much of our global business remains in the upfront
investment phase and we have actively been conducting M&A,
it has not yet contributed much to profitability. However, ourglobal business crossed into profitability in fiscal 2021, and we

Exeo Group Integrated Report 2022

Strengthening our business infrastructure

expect it to enter a growth phase going forward. We plan toaccelerate sales and profit growth, and in the medium-termgrow our global business to the point that it comprises morethan 10% of the Group’s earnings overall.

Governance

Data section

I will be helping to further strengthen our human resources
through optimal capital allocation, while also sharing values
that emphasize the importance of people with our humanresources and business divisions.
Shareholder returns

Capital allocation policy

Capital allocation is a basic approach to allocating the cash
flow generated through business to fund growth investments
such as capital expenditures and to return it to shareholders.
However, for large investments connected to the future
growth of the company such as investments in M&A, we mustalso utilize borrowings and other outside capital. If we try to
execute M&A at the optimal timing without missing
opportunities, we can also anticipate that our interest-bearing
debt will temporarily increase. We will make investments that
contribute to the Group’s growth by raising funds in a timely
manner as we maintain a proper balance of capital and debt.
At the same time, the first areas of non-financial
investments that we emphasize are digital transformation (DX)and human resources. Companies must be lean and powerfulin order to increase profitability. We have been making acertain level of investments in DX until now, to which wewill continue directing a certain level of capital going forward.
Using digital technology to save labor and improve efficiency
in various business processes will enable us to divert the energyof our employees to more creative work, which will translate
into greater earning power.
Another thing is that regardless of how far DX advances,
it is people who ultimately create value. To improve
employees’ ability to create value, it is essential to hire diverse
human resources and provide each employee with humanresource development and growth opportunities to improvetheir performance. The actual hiring and development of
human resources falls outside the responsibilities of finance, but

We regard the return of profits to our shareholders as one of
the most important challenges for management. With a basic
policy of paying stable, continuous shareholder dividends inlight of our business performance trajectory, financial
standing, future business outlook, and other factors, we pay
out dividends according to a standard DOE (dividends onequity) of 3.5%. Our midterm dividend for fiscal 2021 was¥44 and our year-end dividend was ¥50. Adding the ¥2commemorative dividend (for the change of company name),
we paid out a total of ¥96 per share for the year. This was anincrease of ¥14 on dividends paid the previous year andmarked the 10th consecutive fiscal year of increased
dividends. We plan to continue increasing our dividend to¥102 for the year in fiscal 2022.
We also nimbly execute treasury share buybacks, taking
market trends and the state of our funds into consideration. In
fiscal 2021, we purchased around ¥5.0 billion in treasury shares,
and we expect to purchase an even greater total in fiscal 2022with a current plan to purchase ¥7.0 billion. We will continue
to boost shareholder value and capital efficiency throughtreasury share buybacks going forward.
I also consider it the CFO’s mission to facilitate smoothcommunication with shareholders, investors, and various otherstakeholders. As I continue working to provide timely,
highly transparent information disclosures, I will strive to increase
our business value and also listen attentively to your opinions.

Orders received (¥Billion)

Net sales (¥Billion)

Operating profit (¥Billion)

Operating profit margin (%)

800

800

50

10

600

556.3

631.0

595.3 600.0

600

400

400

200

200

0

524.5

42.3

573.3 594.8 600.0

36.6(plan)

5.9

25(plan)

7.1
6.4

0

2019 2020 2021 2022

(FY)

6.4

5

0

2019 2020 2021 2022

(FY)

38.5

31.1

0

2019 2020 2021 2022

2019 2020 2021 2022

(FY)

(plan)

Earnings per share (¥)

Dividend per share (¥)

Payout ratio (%)

15

300

120

60

10

8.8
5.9

9.4

250.64217.33

200

8.3

96

236.22
80

82

43.2

37.7

0
(FY)

38.3

40

40

100

0

57.2

102

139.7552019 2020 2021 2022

80

(FY)

(plan)

ROE（％）(plan)

25

Value creation strategy

20

0

0

2019 2020 2021 2022
(plan)(FY)

2019 2020 2021 2022
(plan)(FY)

2019 2020 2021 2022

(FY)

(plan)

Exeo Group Integrated Report 2022

26

Strategy by Segment

Value creation story

Telecom carriers
business

Market environment analysis Ministry of Internal Affairs
and Communications 5G
Development Plan

Advancements in DX anddeployment of solutions that utilize * National population coverage rate atend of each fiscal year
5G are expected to drive further
97% 99%95%
increases in telecommunications
network traffic. Infrastructuredevelopment for mobile telecom
carriers is expected to continue
30% rangeover the medium-term and we are
2020
2023
2025
2030 (FY)
forecasting strong demand for(actual)business in achieving a digital society. Source: Created based on Ministry of Internal Affairs

We provide nationwide services fortelecom carriers, contributing to
the enhancement oftelecommunications infrastructure.

and Communications Overview of Infrastructure
Development Plan for a Digital Garden City Nation

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)
Our aims●●

Key achievements in 2021

Construction of 5G infrastructure
Improve profitability andproductivity

Visualized work processes and made them more efficient●Significantly expanded NCC base station construction●

Worked on the Project on Promoting Advanced Radio
Environment Improvements

Summary of fiscal 2021

Leveraging the track record we have established intelecommunications network architecture since our founding
as well as our unsurpassed technological capabilities, ourtelecom carriers business provides high-quality, integrated
services from planning and design to construction,
operations, and maintenance for the telecommunications
facilities of all telecom carriers. In fiscal 2021, we consistently
met robust demand for the infrastructure architecture offacilities such as base stations, including for the 5G networksof each mobile telecom carrier. Construction on the Projecton Promoting Advanced Radio Environment Improvements
to develop regional infrastructure reached its main phase,and we worked on it from multiple Group locations
throughout Japan.
Sales composition
by businessTelecom carriers
business

49%

Net sales¥ 290.5 billion¥ 289.3billion

307.3

290.5

268.5
249.6

Make processes even more efficient●Multi-skilling and multi-carrier in construction●

Reskilling to shift personnel to growth fields

We also worked on measures to strengthen collaboration
as a Group, seeking to maximize earnings. For stronger local
collaboration in both the access and mobile businesses, we
reorganized Group companies in Hokkaido and the Tohoku
area and also built a multi-company system to be able toprovide timely support anywhere in Japan. We have also
continued our measures to increase operational efficiency
and reduce costs, such as standardizing photo inspection
operations, utilizing AI for cost estimation, and shared useof various work systems among multiple companies in theGroup. We also continued working on measures to increasesafety awareness, such as cross-safety patrols among
companies, as we continued to generate Group synergies.

Orders received

278.8

●

269.6

289.3

Strengthening our business infrastructure

Governance

Data section

SWOT analysis
Track record established in telecommunications networkarchitecture since our founding, and unsurpassed
technological capabilities● Integrated services from planning and design toconstruction, operations, and maintenance for thetelecommunications facilities of all telecom carriers● Organizational capabilities to provide the same level of service
anywhere in Japan●S

Strengths

Expansion of mobile base stations due to full-scale
deployment of 5G● Backbone expansion that accompanies increases intelecommunications traffic● Acceleration in construction of new base stations as
infrastructure sharing advances● Research and development on the next generation of mobile
connectivity, 6GW

Operations of subsidiaries and subcontractors must be
further standardized● Standardizing and commonizing workflows of construction
systems for each individual carrier is a challenge●

Weaknesses●

O

Opportunities

T

Threats

Business performance can be easily influenced by thebusiness strategies of telecom carriers and by national
government policy● Investment in base station construction is expected toslow due to 4G frequency bands being switched to 5G(shift to New Radio: NR) and infrastructure sharing●

Vision of society in 2030

Forecast of fiscal 2022 plan

Key plans for 2022●

Value creation strategy

We forecast that the Project on Promoting Advanced Radio
Environment Improvements which drove earnings last fiscal year
will wrap up, and that telecom carriers will curtail investment,
leading to lower revenues and profits. While ongoinginvestment is expected in the medium to long-term, including
for building mobile 5G base stations, we anticipate that newtechnologies such as dynamic spectrum sharing (DSS) andinfrastructure sharing will also result in base stations thatare more compact and shared.
We will strive to improve our technological capabilities tonavigate these movements in the market, and we also strive
to raise our productivity to a new level. From multi-skilling andmulti-carrier in construction to visualizing work processes toimprove efficiency, reskilling to shift personnel into growthfields and more, we will be upgrading our business operations
from multiple angles. We will also continue working to
improve our work processes by leveraging new technologies
and frameworks, such as promoting safe construction throughAI image analysis, and offshoring design and cost estimation.

A smart society where people live healthyand vibrant lives

All-in-one support for digital society
Broadband services are spreading and expanding to every
corner in Japan, while solutions incorporating 5G and othertechnologies are increasingly diversifying and becoming moreadvanced as we transition toward establishing a safe, secure
ICT society.
The Group builds the telecommunications infrastructurethat forms the very foundation of this society. In doing so, weare supporting the creation of a digital society. At the same time,
we are also working with the Ministry of Internal Affairs andCommunications and other agencies on 5G testing, andcomprehensively supporting
the provision of various
services that define thesmart society of the
future, such as digital
government services, remotehealthcare, and MaaS.

Operating profit/
Operating profit margin¥ 23.9 billion

259.7

23.9

Access Networks fiber
optic cabling installation service

Construction of network facilities

Electric Power Equipment
installation engineering service

Construction of outdoor base station

Construction of indoor base station

Base station facility maintenance

21.9

18.2

(FY2021)2019 2020 2021 2022 (FY)(Plan)

27

Exeo Group Integrated Report 2022

2019 2020 2021 2022 (FY)(Plan)

2020

2021

2022
(Plan)(FY)

Exeo Group Integrated Report 2022

28

Strategy by Segment

Value creation story

Urban infrastructurebusiness

Market environment analysis Forecast of Offshore wind

power generation market size

Renewable energy is a focus ofattention as a means to achieve a
decarbonized society. There arehigh expectations for growth in themarket for offshore wind power
generation in particular. Energy
management for maintaining stableenergy supply is also becoming
increasingly important, as “smart
energy” is now a key term in thegrowth of the electricity market.

We provide services related totelecommunications, electricity, civilengineering, and the environment,
contributing to the realization ofa society in which people canlive comfortably.

Key achievements in 2021(¥ billion)

Conducted M&A to grow the renewable energy
business, bolstered our human resources
development system● Developed a new method as successor
to the Earth Shuttle Method

Develop new business fields● Advance digital transformationin construction●

Summary of fiscal 2021

We have positioned the urban infrastructure business as asegment for pursuing business expansion by integrating ourtechnological capabilities in areas such as telecommunication,
electrical, civil engineering, and the environment.
In fiscal 2021, we continued our active efforts to build
large data centers and renovate public infrastructure, while
also launching various initiatives geared toward futurebusiness growth.
Since demand for power transmission infrastructure is
forecasted to grow along with the future spread of renewableenergy, we entered into a business alliance with SWCC
Showa Holdings Co., Ltd. and bolstered our learning anddevelopment system for engineers. Ryosei, Ltd. which has
strength in this field was also added to the Group, and we are
Sales composition
by business

Strengths
397

2020(actual)2025

2030 (FY)

Source: Yano Research Institute, Ltd.,“Survey on the Offshore Wind
Power Generation Market”

Urban
infrastructurebusiness

now exploring ways to grow business synergies—including inhuman resources development—in order to swiftly enter the
power transmission business. Furthermore, we have launchedefforts in new types of business such as building direct current(DC) power supply facilities, and construction of pilot solar
power generation facilities on agricultural land.
We are also taking on high-difficulty construction work in
the field of public infrastructure. These efforts are producing
results, including the notable achievement of receiving anorder for deep subterranean tunnel construction for the Linear
Chuo Shinkansen, Japan’s next-generation bullet train. With
the Group now having added Kidoh Construction Co., Ltd.,
one of the leaders in the pipe jacking industry, we haveestablished an organizational structure to conduct an evenbroader range of business.

¥ 145.7 billion¥ 150.8 billion

153.0

154.2

175.2

145.7

135.2

25%

147.9 150.8

Able to build a variety of construction projects including
telecommunications, electrical, and urban civil engineering
all in one● Possession of cutting-edge civil engineering technologies
including shield tunneling and pipe jacking● Knowledge in plant construction and operations, including
for biomass power generation
Growth of the renewable energy market on the path toachieving a decarbonized society● Deregulation of the power transmission business offers
greater opportunities for entry● Increasing needs to upgrade aging public infrastructure● Construction of large data centers due to growth of thecloud market

O

Opportunities

W●

Not enough engineers to accommodate businessexpansion●

Insufficient track record or name recognition to compete
in the same domain as businesses such as large generalcontractors●

Lack of risk management experience in new domains●

Surging costs of raw materials and longer lead times for
procurement due to pandemics and geopolitical risks●

Entry of foreign-owned business operators into Japanese
domestic markets for energy-related business

Weaknesses

T

Threats

Vision of society in 2030

Forecast of fiscal 2022 plan

Full-scale deployment of our renewable energy
business● Take on high-difficulty civil engineering construction● Bolster hiring & development of engineers

Net sales

Data section

●

2

●

Orders received

Governance

SWOT analysis

S920

Key plans for 2022●

Strengthening our business infrastructure●

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)
Our aims

Value creation strategy

We defined fiscal 2022 as a year in which we would aim tofurther broaden our scope in this business while making
future-oriented investments on the path to achieving the
Medium-Term Management Plan. Over these past few years,
we have grown this business with data center construction as
the centerpiece, but in order to capture further growth going
forward we will be working on developing technical supervisors
for public works, and on obtaining the relevant qualifications.
For the renewable and smart energy markets which are
expected to grow in the future, we are looking to enter thebusiness of installing self-owned power lines for large-scale
offshore wind power generation, which we anticipate around2024. Preparations are steadily progressing. We will also
actively work toward advancing digital transformation (DX) in
construction utilizing BIM/CIM and handling more design
work offshore, as we strive to boost added value while at thesame time improving profitability.
Construction for the reception of TV signals in the 700 MHz
frequency band will be wrapping up and it will be a harsh year
in this business profit-wise, but we will be accelerating our
initiatives geared toward the future.

Carbon-neutral society

Building biomass power plants for local
production, local consumption
We issued green bonds in fiscal 2021, and the funds raised arebeing used for woody biomass-using power plants that are
currently under construction. This business is proceeding in the
town of Furudono in Fukushima Prefecture, and in the city of
Ashikaga in Tochigi Prefecture, and forestry officials near each of
the two locations are cooperating with our efforts. We arebuilding power generation infrastructure that produces locallyfor local consumption using no imported materials, fueled bywood chips made from unused timber materials, common
timber, and pruned branches found in the areas.
While cooperating withlocal government agencies, weare revitalizing local
communities and increasing
their resilience, and at the sametime supporting healthy
reforestation and forest growth.

Rendering of how the woody biomass power
plant currently under construction in Ashikaga,
Tochigi Prefecture will look when completed

Operating profit/
Operating profit margin¥ 12.8 billion
14.6

12.8

168.4

9.8

Construction work to eliminate utility poles

Installation, replacement, or renewal ofunderground utilities with Trenchless Techniques

Maintenance work on underground facilities

Telecommunications work for office buildings

Photovoltaic plants

Construction andoperation of waste treatment facilities(FY2021)2019 2020 2021 2022 (FY)(Plan)

29

Exeo Group Integrated Report 2022

2019 2020 2021 2022 (FY)(Plan)

2020

2021

2022
(Plan)(FY)

Exeo Group Integrated Report 2022

30

Strategy by Segment

Value creation story

System solutions
business

Market environment analysis Domestic cloud market sales
The IT solutions market is growing
along with companies’ efforts toward
digital transformation (DX), withstrong demand for cloud services
such as IaaS and PaaS in particular,
and the data center construction
boom is still ongoing. Initiatives
aimed at achieving a digital society
such as the Japanese government’s
new Digital Agency are also
expected to drive market growth.

In addition to providing ICT-based
solutions in the Japanese market,
we also operate a wide variety ofservices in overseas markets.

forecast by usage application
DX/Data-driven business
Replacements &efficiency improvements
12(¥ trillion)●●

Key achievements in 2021

Focus on high value-added
business

0

2021

2022

2026

(FY)

Source: IDC Japan, “Domestic
Cloud Market Forecast
2022-2026”

Expand recurring business

Summary of fiscal 2021

In the system solutions business, we advanced our transition
away from business centered on contract development, andtoward business to provide integrated services all in one,from consulting to design and architecture, and operations
and maintenance. Multi-company, multi-area sales activities
got off the ground, spearheaded by Digital Consulting
Headquarters which specializes in consulting, and we
successfully expanded cross-sales of Group companies’
specialty products.
At the same time, we also dedicated effort to learningand development for XaaS engineers to bolster ourcapabilities at handling cloud system architecture, which is thefoundation of companies’ efforts in digital transformation(DX). For operations and maintenance work, which is theSales composition
by business

Systemsolutionsbusiness

26%

Orders received

159.0

nucleus of our all-in-one services, we established a newcustomer support center that pools resources in the Group,
while also bolstering our business infrastructure by adding acompany with strength in this field, IT-it Co., Ltd., to theGroup. As a result, we succeeded at capturing new projects
for various cloud services, as well as education projects
including “after-GIGA” to follow up on Japan’s GIGA digitalclassrooms initiative.
Our global business had previously been focused on
upfront investments, but new business steadily grew atcompanies such as Guud, which provides cloud-based
customs clearance systems, and Arco which operates in
the refurbishments business. These companies alsosignificantly improved their profitability.

¥ 154.6 billion

175.2
155.6 154.6

124.5

S

Strengths

Data section

W

Lack of development resources
No appealing in-house developed products● Focus on system architecture, low proportion of recurringbusiness● Lack of brand power in the IT market●●

Weaknesses

O●

Additional increases in DX efforts for increasing productivity●

Rising demand for security against intensifying cyberattacks●

National and local governments going digital●

Creation of services that leverage new technologies suchas AI/XR

T

Threats

Arrivals of new players and services could make existing
services obsolete● Depletion of IT human resources in Japan, andaccompanying spikes in labor costs● Declining profit margin due to competition with major
systems integrators who have a head start●

Vision of society in 2030

Forecast of fiscal 2022 plan

Expand integrated all-in-one services
Further expand global businessNet sales¥ 159.0 billion
169.5

●

Able to engage in all-in-one business operations throughalliances with telecom and various engineering businesses● Group companies that specialize in areas such as
education-related products and IoT devices● Cloud engineers who support development/salesorganizations● Advancements in new business overseas●

Opportunities●●

Governance4

Key plans for 2022

Restructured the organization to strengthen consulting● Established a customer support center to handle
operations and maintenance● Strengthened our global business infrastructure

Strengthening our business infrastructure

SWOT analysis

8

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)
Our aims

Value creation strategy

This fiscal year, the trend toward digital transformation (DX)will likely continue, while government-led efforts to go digitalare expected to gain momentum and further market growthis anticipated. To ensure that we capture these business
opportunities, we would like to reorganize our businesses
with a focus on two companies—Exeo Digital Solutions,
Inc. to handle system development, and Exeo System
Management, Inc. to handle services such as operations andmaintenance, strengthen our service-providing capabilities
and earning power, and establish a solid position as asystems integrator.
Globally, we plan to seek out steady growth in the fieldsof telecommunications and urban infrastructure, and systems
solutions. With significant growth also forecasted in new
businesses such as refurbishments and IoT tracking in addition
to customs clearance systems, we plan to advance synergies
between these and our domestic businesses. We aim to growthis global business to a level that comprises 10% or more of
the Group’s overall earnings in the medium-term.

Global society where diversity is enjoyed

New platform architecture
In our global business which is focused in Southeast Asia, weare boldly taking on new types of business that we do not
conduct in Japan. These include providing and performing
maintenance on cloud-based customs clearance systems andused IT hardware products, and neutral hosting for sharing
telecommunications base stations.
For example, in the neutral hosting business, dhost
supports telecommunications infrastructure as Indonesia’s
second-largest indoor telecommunications sharing provider.
We will help deliver solutions to social issues locally and alsoutilize the knowledge
we gain throughinternational business inour domestic business
operations in the future.
The dhost management team presents their new
brand identity to an audience that includes Japan’sambassador to Indonesia and key Indonesian
government officials

Operating profit/
Operating profit margin¥ 5.5 billion

171.9

6.8

5.5

120.7

Digital transformation (DX)IT infrastructure andoperational optimization

Operational automation

Managed services (available 24/7)

Cyber security measures

Business support system for
local governments

3.6(FY2021)2019 2020 2021 2022 (FY)(Plan)

31

Exeo Group Integrated Report 2022

2019 2020 2021 2022 (FY)(Plan)

2020

2021

2022
(Plan)(FY)

Exeo Group Integrated Report 2022

32

ESG approach

Value creation story

Practicing ESG management
to improve our business value and achieve 2030 Vision
Six topics tostrengthen ourbusiness
infrastructure

Safety,quality,
BCP

Strengthening our business infrastructure

We are proceeding with considerations to determine the issues

Issues anticipated as materiality

on which the Group should focus its efforts (materiality) on thepath to achieving 2030 Vision.

Human
resources
strategy

Environment,
energyAdvancementof DX

For these considerations, we first referred to international
standards such as the GRI Standards, while also consideringvarious megatrends and social issues as well as stakeholders’desires and expectations, and then selected the possible■Reducing greenhousegases, including in
our supply chain■Employee satisfaction■Improving corporate
governancechoices. The chart on the right classifies the possible choicesGroupmanagement

Financialstrategy

Governance

Data section

Status of considerations to determine our materiality

Impact on stakeholders

We are working to strengthen our business infrastructure by pursuing
the six topics listed on the right in our Medium-Term Management
Plan (FY2021-FY2025).
We will strive to build a stronger foundation through our own
ideas, creativity, and ingenuity, as well as through active participation
in initiatives to address important social issues of recent times and thebusinesses related to these issues. Of these, human resources strategy
is positioned as a particularly important topic. As we continue to engage
the work styles of the new era, we will position talent acquisition anddevelopment as a central issue executing new business.
In addition, we will aim for sound business growth while always
maintaining awareness of the perspective of overall Group optimization.
We will also strive to improve productivity and create new value throughthe effective use of digital transformation (DX).

Value creation strategy

along the two axes of impact on our business and impact from

■Respecting humanrights & diversity

the perspectives of stakeholders.
Going forward, we plan to enlist the help of outside■Helping fight climatechange by spreading
renewable energy use■Creating a culture ofsafety & quality■Developing & securing
human resources■Contributing torecycling-oriented
society■Thorough compliance& risk management

experts to verify the consistency of these issues with the business
Impact on our businesschallenges of the Group, and then determine our materiality.
Medium-Term Management Plan (FY2021-FY2025) numerical targets
Challenges to address
Shift to renewable energy

Environment

Initiatives toward
decarbonization,
reduction of CO2 emissions

KPI
Purchase of electricity fromrenewable energy sources―

FY2021
actual49.2%

Targets for
FY2025

Scope of data

Issues anticipated as materiality and the reasons

100%

Company-managed sitesof Exeo Group, Inc.

Environment
Helping fight climate change by
spreading renewable energy use

Rate of adoption of EVs andother low-emission vehicles

91.4%

95.5%

100%

Passenger vehicles of
Exeo Group, Inc.

CO2 emissions (Scope 1 & 2)

86,583t-CO2

79,872t-CO2

10% reduction
from FY2020 level

Consolidated

64.8%

71.4%

65%

Exeo Group, Inc.
Exeo Group, Inc.

Use of eco-friendly green products Green product usage rate

Issue

Contribution to a resource
recycling-oriented society

Final disposal rate ofindustrial waste

5.6%

2.5%

50% reduction
from FY2020 level

Ensuring safety and quality
in business

Serious bodily injury andserious equipment accidents

7

4

Aim for zero

Consolidated

20

22

1.5 times
compared to FY2020

Exeo Group, Inc.

34

40

―

Exeo Group, Inc. andits five major subsidiaries*

307

313

25% increaseover FY2020

Exeo Group, Inc.

509

538

―

Exeo Group, Inc. andits five major subsidiaries*

7.3%

7.5%

20%

Exeo Group, Inc.

64.0%

64.5%

80%

Exeo Group, Inc.

Respecting human rights &diversity
Employee satisfaction

Number of women in
management positions

SocialFY2020actualPromotion of diversity& inclusion

Number of female employees

Percentage of male employees
taking childcare leave
Driving work style reforms

Percentage of paid leave used

61.3%

62.1%

―

Exeo Group, Inc. andits five major subsidiaries*

Achieving transparent
management

Ensured diversity in the Board of
Directors and Board of Statutory
Auditors

―

―

―

―

Ensuring strict compliance

Serious violations of laws
and regulations

0

0

Aim for zero

Consolidated

Serious information
security incidents

00

Aim for zero

Consolidated

Rate of risk assessment
implementation for cases
involving significant business risks

100%

100%

100%

Consolidated

Governance

Ensuring thorough risk
management

Reducing greenhouse gases,
including in our supply chain
Contributing torecycling-oriented society
SocialCreating a culture ofsafety & quality
Developing &securing human resources

GovernanceReason for importance

Related SDGs

are excepted to expand internationally on the path to achieving carbon neutrality
・inNeeds
2050
is essential that we also use more renewable energy in order to achieve carbon
・Itneutrality
in 2050

・Directly links to efficient operations
・Important for helping to reduce CO in customers’ supply chainsconstruction industry is under expectations to reduce its environmental impact
・The
conduct business such as biomass power generation that contributes to・We
recycling-oriented society
2・There is high occupational health and safety risk in our work
・Employees and subcontractors prefer companies with robust safety management
・Our reputation in society will be negatively impacted if a severe accident occurs
capabilities are the source of our competitive strength, and developing
・Technologicalsuperior engineers is essential for continuous growth・Employees need multi-skilling to be able to navigate changes in the business environment
・To maintain and improve our technological capabilities, it is important to build
environments where human resources with various attributes can harness their abilities

maintain and improve our technological capabilities, it is important to create・To
workplaces where technologically skilled employees can work for a long time withpeace of mind

Thorough compliance &risk management

a compliance problem occurs, we would lose our stakeholders’ trust・IfBusiness
continuity could be threatened if measures against risk are insufficient・In any event,compliance and risk issues could have serious repercussions on・business performance

Improving corporate governancefor earning the trust of investors and other stakeholders
・Importanttransparency in governance is also essential for implementing and improving
・Ensuring
ESG management* Five major subsidiaries: C-Cube, Seibu Electric Industry, Nippon Dentsu, Daiwa Densetsu, and Exeo Tech

33

Exeo Group Integrated Report 2022

Exeo Group Integrated Report 2022

34

Safety, quality & BCP

Value creation story

Safety, quality & BCP
Occupational safety and health
Initiatives to promote a safe and quality-oriented culture
Ensuring safety and quality in the construction of informationand communications facilities — the Group’s core competence— is of the utmost importance. Accordingly, the Group has
been promoting initiatives for safety in line with the
management structure shown in the table on the right page,working to achieve goals such as zero deaths and serious
accidents, and zero injuries to third parties.
For each and every employee to fully understand thisimportance and make it a natural part of their actions, we
engaged in a five-phase medium-term plan starting with thecreation of a safe and quality-oriented culture and ending
fiscal 2020 with a return to the basics of this safe and qualityoriented culture.
Our five-year slogan starting in fiscal 2021 is “evolve oursafe and quality-oriented culture,” so that we can further
improve (enhance/develop) the safe and quality-oriented
culture that we have been promoting. Specifically, we are
actively implementing highly effective safety measures
including engineering measures, working toward visualizing
workplaces through the use of network cameras and other
ICT, bolstering patrols that use compound-eye and interactive
verification and dialogue, and implementing measures toform habits of safe behavior by actively uncovering andpublicizing cases of human resources development andrecognition given to foremen and others in charge atworksites. To foster a safe and quality-oriented culture in theGroup, we are also raising the Group-wide base level of safe
behavior by standardizing inspection parameters with major
companies in the Group and mutually re-confirming them ona regular basis.
Financial losses from legal proceedings
There were no financial losses in fiscal 2021 resulting fromlegal proceedings related to accidents or allegations
pertaining to faultiness or safety.
Occurrence of occupational accidents
The number of accidents occurring in 2021 decreased
compared to the previous year, but there was one fatal
accident that occurred at a Group company. We arethoroughly implementing recurrence prevention measures toensure that such an accident does not occur again.
Additionally, the occupational accident rates in Exeo Group,
Inc. in 2021 were 0.41 frequency rate and 0.01 severity rate.
35

Exeo Group Integrated Report 2022

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Occupational safety and health management structureManagerial post

We will continue working with a strong sense ofdetermination to maintain these numbers at low levels.

Group representative

President

General manager ofoccupational safety andhealth management

General Manager of
Safety and Quality
Management
Headquarters

General manager ofhealth supervision

General Manager of
Human Resources
Department

Occurrence of occupational accidents
Serious injuries*1(number of people)

Deaths15

Third parties

14

13
3

10

1
6

8
5

2

5

3
5

7

8

2
3

2
1

2

2018

2019

0

2017

Light injuries*2

Supervisor of occupational Head of eachorganization
safety and health

1
3

7

3
1

2020

2021

(FY)

occupational safety and health management tasks carried out by each organization
・Managehazards in buildings, equipment, and work areas and implement preventive measures
・Identify
・Improve work conditions and health at facilities
Implement management inspections/on-site inspections and report the results to representatives ofManager of internal audits Safety Center Director ・
the Group

Severity rate

0.8

0.6

0.4

0.2

0

2018

・
・
・
・
・
・
・
・
・
・
・
・
・

History of our safety and quality-oriented culture

Occupational accident rates(Exeo Group, Inc. NTT infrastructure business)

2017

Role

Approve the Group’s occupational safety and health management policies and goals
Give instructions for improving results of implemented priority measures
Supervise safety and health management of the entire company
Formulate occupational safety and health management policies, goals, and priority measuresrelated to the Group’s occupational safety
Roll out priority measures for the Company’s headquarters/branches and major subsidiaries (hereinafterreferred to as “each organization”), and report the results to representatives of the Group
Stay up to date with laws and regulations related to safety and health, the construction industry,
and accidents
Supervise health management and operation
Formulate occupational safety and health management policies, goals, and priority measures for theGroup’s healthRoll out priority measures for each organization and report the results to representatives of the Group
Stay up to date with laws and regulations related to health
Implement priority measures and report the results
Formulate and implement internal measures
Stay up to date with regulations of the local government having jurisdiction over occupational safety
and health

Safety and quality control
Manager of occupational department manager at
each organization
safety and healthGeneral Manager ofGeneral Affairs

Scope of data: Exeo Group, Inc. and its five major consolidated subsidiaries(C-Cube Corporation, Seibu Electric Industry Co., Ltd., Nippon Dentsu Co.,
Ltd., Daiwa Densetsu Corp., and Exeo Tech Corporation)*1 Hospitalized for two weeks or more and 30 or more days of temporary
absence*2 Lost time the following days after the incident

Frequency rate

Applicable job title

2019

2020

2021

(Year)* Figures from Exeo Group, Inc. overall were tabulated in FY2021
Frequency rate was 0.41% and severity rate was 0.01%(1) Human error countermeasures (Aruaru-kun) launched

construction methods and safety measures were incorporated

In 2003, we introduced an information-gathering system called

so that the rules can be more useful in providing worksite“Aruaru-kun” with the aim of predicting and taking

safety guidance.

countermeasures for disasters that may occur in the future, as(4) Ironclad Safety Rules introduced in thewell as raising safety awareness among front-line workers bytelecommunications construction industry

collecting information about near-miss experiences and analyzing“Ironclad Safety Rules” were proposed as a system forthem to obtain more universal hazard information.

“stopping at the first sign of danger” during construction at

This fiscal year, we also plan to combine near-miss data witheffort with our customers and the telecommunications

out warning information tailored to the details of each job.

construction industry.

(2) Exeo Solution Proposal (ESP) System introduced

Breakdown of occupational accidents (8 in total)

customer premises. These were implemented in 2009 as a joint

data from case examples of past accidents to be able to send

At present, we are implementing hazard prediction (kiken

In 2004, we introduced a system called Exeo Solution Proposal

yochi (KY) in Japanese) activities at each work site in advance,

Power lines
to homes 1(ESP) which allows us to actively discover proposals that canand the “Stop & Look” campaign to stop between jobs andchange perspectives without being bound to the way work is

resolve any questions before proceeding.

Dropping ofsuspended loads 1

currently done or tasks currently handled. Around 10,000(5) Safety Operations initiatedproposals regarding improvements, efficiency, safety, and quality

In order to prevent accidents and improve the safety and quality of

8 in total

Crashes/falls 3

FY2021

Power tools 1
Heavy
machinery 1

Slips 1have been submitted annually.

construction work, in 2012, we introduced a red card rule that(3) Ironclad Safety Rules enacted

requires a work team to stop work if a safety deficiency is identified

In 2008, in order to eliminate accidents such as personal andduring construction. In addition to stopping work when safety

equipment accidents, the entire telecommunications construction

deficiencies are identified, in 2016, we formulated a curriculum

industry formulated the “Ironclad Safety Rules” mainly based on

placing further emphasis on educating employees to stop work

lessons learned from past incidents.

andin recurrence prevention the recurrence of any identified safety

The ironclad rules were revised in fiscal 2020, and in

deficiencies, which we then revised as our safety retraining rules., a

January 2022, the use of fall-arrest systems (full harness) for

curriculum was formulated and revised as the safety retraining rules.

high-place work were made mandatory and changes in

Exeo Group Integrated Report 2022

36

Environment & energy

Value creation story

Environment & energy

Upside risks (opportunities)
2.0°C (Transition risks)

Report based on TCFD recommendations
Our approach to the TCFD recommendations
The Group considers environmental problems such as climatechange to be important issues for management to address.
Based on this awareness, we defined practicing ESG
management as one of the challenges in our 2030 Visionannounced in May 2021, and set environmental, social, andgovernance KPIs respectively as well as specific targets in
Medium-Term Management Plan (2021-2025), which we areworking systematically and continuously to achieve. We will
engage in eco-friendly business practices, which include
reducing greenhouse gas emissions, while also working
actively to contribute toward solutions for climate-relatedsocial issues through businesses such as renewable energy.
Additionally, in December 2021 we declared our support
for the recommendations of the TCFD (Task Force on Climaterelated Financial Disclosures) and also joined the TCFD
Consortium. The Group will be making information disclosuresaccording to the TCFD Framework going forward.
Governance
The Group has established the Sustainability Committee
chaired by the President and CEO and has established theSustainability Promotion Office in the General Affairs
Department as a dedicated organization for sustainability,
primarily for taking measures against climate change. The aimsof these actions are to help achieve a sustainable society, andto bolster efforts toward the continued growth of the Group.
Established as an advisory body to the Management Council,
the Sustainability Committee discusses and makes decisions
on the direction of sustainability as part of the Group’sbusiness strategy, while also monitoring and deliberating on
the status of sustainability efforts and deliberating andreporting on these details in the Management Council and
Board of Directors. The Sustainability Promotion Office in the
General Affairs Department operates as the administrative
Sustainability Committee organizational chart

office of the Sustainability Committee, while also playing therole of coordinating sustainability measures with Group
companies, particularly measures against climate change, as
well as setting goals for the Group as a whole and managing
progress toward achieving them.
Strategy: Impacts of climate change risks andopportunities, and how to deal with them
The Group uses scenario analyses* anticipating what theworld will be like in 2030 to ascertain the impact that climatechange will have on business. Based on this, we consider what
measures to take in response and test out our Groupstrategies. In the scenario analyses, we utilize a scenario in
which average temperature increases are kept under 2.0°C
compared to pre-industrial levels (including a 1.5°C scenario)
and a scenario in which decarbonization does not advance(4.0°C scenario).
* Main sources used for scenario analysis
Transition risks: Sustainable Development Scenario (SDS), Net Zero Emissions
by 2050 (NZE), IEA World Energy Outlook (WEO) 2021, Ministry of Economy,
Trade & Industry (METI): “Non-Fossil Fuel Value Trading Market”
Physical risks: Stated Policies Scenario (STEPS) IEA World Energy Outlook(WEO) 2021

Downside risks
2.0°C (Transition risks)Introduction ofcarbon tax• Increase in taxation such as instituting a carbon tax (taxed
according to CO2 emissions from business activities)• Increase in electricity bills and procurement costs for materials andfuel due to surging carbon prices

Emissions controls• Increase in cost to buy credits for CO2 emissions (emissions
quotas) that fail to reduce enough volume• Increase in costs to comply with stronger laws and regulations on
GHG emissions and energy usage

Shifting to
renewable energy(renewable energy
measures)• If renewable energy is not supplied in sufficient volume, unit pricesof electric power surge and renewable energy becomes hard to
procure• Technology investment in renewable energy causes electric
power prices to surge

Obligation to• Increase in costs to comply with expanded obligations todisclose information disclose information related to greenhouse gas emissions
Surging raw• Increased cost of stocking materials made from natural
resourcesmaterials prices
Changing customer
preferences• Preferences shift toward companies that have done more for theenvironment, and declining sales for those who miss this trend
due to business relationships being severed or losing market
share to other companies

Stakeholder
assessments• Company valuation (stock price) falls due to negative
assessments of measures against climate change (fallingbehind in efforts, including failure to meet target ratio ofrenewable energy use, insufficient information disclosures, andfailure to reach CO2 emissions goals), making it harder to raise
funds and secure human resources

4.0°C (Physical risks)

Deliberate, Report

Deliberate, Report

Sustainability Committee
Chair: President & CEO
Office: Sustainability Promotion Officein the General Affairs Department

37

Exeo Group Integrated Report 2022

Products andservices• Expansion of electrical construction business due to increased
demand for renewable energy such as offshore wind power
generation• Expansion of smart grid business due to changes in power
distribution systems (ability to newly enter the power
distribution business)• Expansion of construction and maintenance business due toincreasing needs for rechargeable batteries

Markets• Markets for renovation construction and cloud services due toincreased demand for disaster response and mitigation• Solutions market generated by ICT for measures against
climate change• Markets for the development of infrastructure such as
networks as urban digitalization advances• Market for refurbishments if circular economy measures arebolstered

Resilience• Stronger resilience by switching to telecommuting and otherflexible work styles not dependent on location as a result ofclimate change

Stakeholder
assessments• Decarbonization leads to higher business value, more
opportunities to raise funds from investors and the businessgrowth that entails, creates opportunities to receive orders fromnew clients, and creates opportunities to secure talented
human resources

Key responses
2.0°C
Transition risks• Shift to the use of renewable energy for the electric power usedin business activities• Advancements in energy saving in business activities• Stakeholder communication and information disclosurespertaining to decarbonization efforts

Opportunities• Actively pursue business in renewable energies such as solar
power, offshore wind power generation, and biomass(mutually complementary resources through business
partnerships, expand construction domains through capital
contributions, etc.)(Acute)Intensifying
weather• Better BCP preparedness in the event of a disaster• Obtain pinpoint weather information, evaluate hazard risksof holdings(Chronic)
Highertemperatures• Ensure and improve operating efficiency of worksites by taking
thorough measures against heatstroke and advancing digitaltransformation (DX) of work sites• Secure sufficient construction periods

4.0°C

Risks & opportunities with climate change / key responses

Board of Directors

Management Council

Value creation strategy(Acute)Intensifying
weather• Emerging risk of flood damage to residential buildings,
construction sites, and company-owned power generation
facilities as well as the commensurate increase in damage
insurance premiums, worsening work environments• Supply chain disruptions due to intensified weather,interruptions to procurement and deliveries, lost chances tomake proposals to customers or receive orders from them

(Chronic)
Highertemperatures• Worsening labor shortages in construction due to increased
health risks (heatstroke, etc.) and worsening work
environments at outdoor construction sites• Lower work efficiency, delayed completion of construction, andincreased cost of provisions due to heat stress

Strategy: Business impact, strategy, and resiliencebased on scenario analysis
Among the business and financial impacts in the two scenarios
anticipating circumstances in the year 2030, the Group
believes that the introduction of carbon taxes and damage
to buildings from floodwaters will be particularly importantparameters. For that reason, we are quantifying the financial
impact on the Group of these two parameters in both theunder2.0°C (including 1.5°C) and 4.0°C scenarios.
Financial impact on the Group anticipated in 2030
Risk
categoryKeyparameters
Carbon tax

Transition Electricity
prices derived
fromrenewableenergyMeasurement

Under2°C
scenario

Price (¥1,000/t-CO2)

13.6

Cost increase fromtaxation (¥million)
Price increase(¥/kWh)Increase inprocurement cost(¥million)

4°C
scenario

Strengthening our business infrastructure

0.3

Risk management
We build and operate an organizational structure for risk
management in the Group to be able to identify and evaluate
risks on a Group-wide level. We have formulated the Risk
Management Rules that specify the basic points involved inrisk management and have established risk categories in
addition to the Risk Management Division that handles them.
We have also established the Business Risk Management
Committee as the Group-wide risk manager.
Risks related to climate change are identified andevaluated in the Sustainability Committee and thendeliberated and reported in the Management Council and
Board of Directors. Information is also shared and coordinatedin deliberations on individual matters in the Business Risk
Management Committee, which includes verifying climaterelated risks.
Based on the Risk Management Rules, these are also
integrated into Group-wide processes and matched against
risks that have been assessed and identified in environmental
management systems based on the ISO14001 international
standard, and occupational health and safety management
systems based on the ISO45001 international standard.
Metrics and goals
The Group has defined the following metrics and goals for
managing climate-related risks and opportunities.
Metrics and goals used for managing climate-related risks
and opportunities
Metric Category

GHG
emissions

Scope
1+2

Scope 319

Data section

Going forward, we will strive to improve our quantitative
analysis of physical risks (damage and other problems withbuildings and structures due to flooding and rising sea levels)and opportunities. We will be bolstering our high strategic
resilience from a medium to long-term perspective under bothof these scenarios. While we formulate the appropriate
measures to avoid the risks, we will also seek to capture new
growth opportunities including active efforts toward businessin renewable energy.

―

685

Governance

FY2020 actual(unit: t-CO2)

Goal description

FY of goal

Reduce GHG emissions
total: 86,583 by 42% (vs. FY2020) FY2030
Scope 1: 60,400
Scope 2: 26,183 Carbon neutrality
FY20501,728,553

Reduce GHG emissions
FY2030by 25% (vs. FY2020)(Anticipated preconditions in 2030)• Carbon tax rate: ¥13,650/t-CO2 Reference: Net Zero Emissions by 2050 (NZE)(1.5°C) World Energy Outlook (WEO) 2021
• Greenhouse gas emissions in the Group (Scope 1, 2): Approx. 50,200 t-CO2(42% reduction from FY2020)• Electricity prices derived from renewable energy: ¥0.3/kWh price increase(compared with non-renewable energy electricity prices), the Group’s
usage of electricity derived from renewable energy: Approx. 65,000,000 kWh

Exeo Group Integrated Report 2022

38

Environment & energy

Value creation story

Environmental management
Reducing waste and promoting recycling
We are working to reduce and properly dispose of industrial
waste generated during construction, as well as general waste
generated from offices and other facilities. We are also
working to promote recycling.
We have thorough sorting and management processes
in place to properly dispose of waste materials such as asphalt,
concrete rubble, and electric wire scraps, so that they can bereused and recycled. In addition, ongoing initiatives include
the enhanced use of proper amounts for work materials,
requests for collection of packaging materials to suppliers,
and worker guidance on the necessary steps for recycling via
onsite patrols.

Assessment of environmental impact
We classify the environmental impact of our business activities
into six categories, as shown in the table below. We identify themusing the assessment procedure shown in the diagram below.
Aspects that have a significant positive impact on theenvironment are also assessed using the same procedure.
The findings of this assessment are then reflected into ourbusiness activities.
Types of environmental impact
Depletion ofnatural resources

Consumption of oil, gas, water, electricity, andvarious processing materials

Degradation of
local environment

Vibration, noise, odors, global warming, land
subsidence, etc.

Soil pollution

Underground leaching of chemicals, sewage,
sludge, waste, etc.

Water pollution

Drainage or runoff of chemicals, sewage, sludge,
waste, etc.

Air pollution

Release of suspended solids, dust, and otheremissions into the atmosphere

Increased waste

Industrial waste, general waste

Industrial waste emissions and recycling rate (Exeo Group, Inc.)
Recycling rate (%)

Emissions (t)100,000

88.9

88.9

93.1

94.4

97.5

100
80

75,00085,08750,00042,37338,08036,13340,86860
40

25,000

20

0

0

2017

2018

2019

2020

2021*

* Emissions increased in FY2021 due to land reclamation work accompanying
the construction of large solar power generation facilities.

(FY)

Environmental impact assessment procedure

Our earth shuttle method of horizontal directional drilling enables

Identification of environmental impacts
Assessment of environmental impacts

the laying of submarine pipes of a required diameter to a required
location while protecting the seabed. It is used in applications suchas communications and electric power landing pipes, water supply
pipes, seawater intake pipes, and high-voltage cables for offshore
wind farms. It is ideal for delicate natural habitats such as fishinggrounds and coral reef nature reserves, as well as sites where
waves could damage pipes and cables. Offshore wind power
generation is seen as a promising source of renewable energy inthe future. We consider this method to be a key initiative to

Preparation of a registration table
for significant environmental aspects
Preparation of a list of significant environmental aspects(company-wide version)customers’ wide-ranging needs.

Location

No changePowergeneration

Location

Ishioka Kitafuchu

0.89

Hosaka

1.65

Shinpu1.77

Chiyoda Lake

1.52

Kose

1.33

Tokoji0.88

Minamiboso

3.15

Shonan Technology Center

0.09

Ishido1.42

Asaohara

1.79

Fuchu Technical Center

0.09

Hyogo General Technology Center

0.11

Ishioka General Technology Center

1.28

Kagawa General Technology Center

0.14

Ubaishi

1.53

Exeo Hirao Solar Farm

1.56

Togane Solar Farm

3.18

Matsue Solar Farm

2.82

Formulation of group management system policies

Biomass boilers
We provide construction and maintenance services forvarious biomass boilers that play a part in recycling systems.
Specifically, we take materials such as woody biomass
that have a high moisture content and have been traditionallyregarded as waste products and enable their utilization as
biomass resources. These resources are used to produce
steam, supply heated water, perform drying, supply heatedwater for air conditioning, and to operate high-efficiency
power generation systems.
List of biomass boilers
CustomernameRated heat
Heat output
Units
output
type

Fuel

Power
generation

Privatecompany(Hokkaido)

4,000kW

1

Saturatedsteam(1 MPa)Purchased
miscellaneous
woody biomass―

Hachimantai
City (Iwate)

400kW

1

Warm water

Purchased bark &cutting chips―

Kaneyama
Town(Yamagata)

400kW

1

Warm water

Mainly purchased
cutting chips―

Privatecompany(Tochigi)

1,200kW

1

Warm water

100% cedar barkproduced in-house―

Privatecompany(Tochigi)

4,000kW

1

Saturatedsteam(2 MPa)Use of chips
produced in-house―

Privatecompany
4,000kW(Fukushima)

1

Heat transfer oil(for ORC)
700kW
combined power
generation

Bark, etc.

708kW

Privatecompany(Shiga)2,500kW

2

Saturated steam Use of waste
620kW(1 MPa)generated in-house

Privatecompany(Ibaraki)

3,500kW

2

Saturated steam Use of biomass
860kW(1 MPa)generated in-house

About renewable-based electricity implementation
Since October 2021, we have implemented net renewable-based electricity at 38 business locations in Japan, including at Head Office building, Tokyo
Integrated Engineering Center, and Tohoku Branch. With these implementations, renewable-based electricity now comprises approximately 50% of all

we have implemented net renewable energy with environmental value that can be traced back to its sources. We will further advance these efforts toultimately switch to renewable-based energy for all of the electricity used at business locations managed by our Group companies by fiscal 2025.

Provision of renewable electricity
Generation

Approval of the policy by management

Non-fossil fuelcertificates

Retail electric
providers

Users
Green energy
supply(net renewable energy)(renewable-based energy)

Agent

Offshore
Departure shaft

Exeo Group Integrated Report 2022

Data section

The combination of non-fossil fuel certificates designated for renewable energy with electric power sold by NTT Facilities, Inc., makes this electricity
Formulation of company-wide environmental targets
for achieving the environmental policy

Marine Shuttle illustration

39

Power
generation

Governanceelectricity used throughout the Group and our CO2 emissions have also been significantly reduced.

with small-diameter pipes using the slurry type pipe jacking
method. We dedicate ourselves to creating systems that meet ourSolar power generation in FY2021 (GWh)Strengthening our business infrastructure

Identification of significant environmental aspects

cables on biodiversity.
is capable of extending into underwater areas from long distances

Photovoltaic plants
The Group provides EPC (engineering, procurement, andconstruction) services for solar power plants, and also proposesand supplies enterprise solar power generating facilities forinternal use in companies.
Specific services include support for the introduction oflarge-scale solar power generation (mega-solar) utilizing thefeed-in tariff scheme, and support for the rooftop or proximity
installation of in-house solar power generating equipment forindustrial facilities and other buildings with electric power
supply needs. We offer comprehensive solutions thatincorporate storage battery utilization and other elements.

Preparation of environmental impact assessment tableaddressing the associated problem of the impact of submarine
We also newly developed the Marine Shuttle method which

The Group is committed to working toward a recyclingoriented society. We do this through our activities in thedesign, construction, and maintenance of solar power
generation facilities and biomass boilers for renewable energy
facilities, as well as the construction and operation of water
treatment facilities for domestic and industrial wastewater.

(laws, regulations, operations, construction, facilities, equipment)

Listing and identification of environmental aspects

Minimizing impact to marine and coastal ecosystems

Environmental business

Existence of changes
Changed

Value creation strategy

Publication of the policy on the website, etc.

Power Procurement

Power supply
agreement

Exeo Group Integrated Report 2022

40

Human resources strategy

Human resources strategy

Naoko Furukawa
Operating Officer, General Manager, Human Resources Development Department

Pursuing a human resources strategy to outlast
the age of VUCA
The mission of the Human Resources Development Department
which was newly established in July 2021 is to hire and steadily
develop human resources capable of dealing with rapid
technological innovation and market changes. In this era ofuncertainty and turbulent changes referred to as VUCA*, wemust urgently upgrade our human capital adaptability in order toquickly and successfully expand our business into new domains
globally. Human resources strategy is also positioned as one of
the key elements of the medium-term management plancurrently in progress.
In addition to securing talented young new graduates, thepolicy of our hiring strategy going forward also calls for us toactively pursue mid-career hires. As we increasingly expand into
new domains in pursuit of continuous growth, we will belooking for ways to bolster our ranks of immediate contributors
possessing a diverse range of experience, including IT personnel
who are essential for business in digital transformation (DX).
Working together with the Corporate Communications Office,we will also focus on employer branding in the job market topromote the appeal of Exeo Group, Inc. as a place where diverse
people can thrive.

Better training with a focus on improving
problem-solving skills
For human resource development, we will work closely with the
Human Resources Department while creating a Career
Development Program (CDP) for every job, based on which wewill find ways to improve the knowledge, capabilities, and skillsof each employee. Another thing we value is flexibility to adapt
to changes in the environment.
To build the resilience necessary to survive the age of
VUCA, this fiscal year we are shifting away from the conventionalpassive style of training and bolstering the content by actively
incorporating discussions and interactive communication. This isbased on the approach that the ability to solve problems on yourown is critically important. Aside from that, we are also working
on adding to our diverse curriculum and bolstering the resilienceof our employees, including training on coaching, one-on-one
meetings, cross-industrial socialization, and communication skills.
We are also working on changing our training style toadapt to the “new normal.” Employee learning programs shiftedto online mediums all at once during these past two years of the

Exeo Group Integrated Report 2022

Value creation strategy

Basic approach to human resources

Helping to drive continuous corporate growthby creating a culture where diverse people can thrive

41

Value creation story

Displaying initiatives and data pertaining to Exeo Group, Inc. unless otherwise specified.

COVID-19 pandemic, and we are now able to conduct nearly all
training online. Going forward, we will be seeking out even more
effective and efficient forms of learning through blended
learning which combines the respective strong points of online,
face-to-face, and e-learning.

Aspiring to a company culture where anyone canthriveDiversity and inclusion (D&I) is another important mission of the
Human Resources Development Department. Our Diversity
Promotion Office was established in 2017 and has been working
to foster a corporate culture of mutual acceptance amongpeople with different values, including efforts to support
women’s career advancement, as well as employing more people
with disabilities and from other countries. Our D&I promotion
activities are also conducted with the idea that they can lead toopen innovation, and we have garnered tangible recognition
from society as a result. This includes being rercognized as asuperior company in women’s career advancement with ourselection for three consecutive years as a Nadeshiko Brand in2020 and as a Semi-Nadeshiko Brand in 2021 and 2022.
To expand out overseas business, we are also striving tobolster our ranks of “global personnel” with high-level language
and intercultural communication abilities. As part of these efforts,
we have hired five employees with specialized skills who havePhilippines nationality in April 2022. They are scheduled to be
immediately assigned to worksites after they finish acquiring basic
skills through the technical training they are currently undergoing.
We have also just begun an overseas trainee program in which
employees experience one year of on-the-job training at local
affiliates in other countries.
As work styles become more diverse, we have introduced aside-job system as a means to develop and hire human resources
with the advanced skills, new knowledge, and extensive
experience needed for the ongoing growth of our business.
Concurrently, we have also begun accepting human resources towork with us as a side job. Going forward, we aim to become acompany where people with diverse values are accepting of eachother, and where each individual can harness their own uniquecharacteristics and attributes to the fullest and thrive.
* VUCA: An acronym that stands for volatility, uncertainty, complexity,
and ambiguity, referring to complex, unpredictable times of turbulentchange.

Our employees are invaluable assets. Based on our humanresources philosophy regarding employees as the Group’s
primary asset, we pursue prosperity for both our employees
and the Company through diligent practice of respect forhuman rights, fair evaluations and treatment, human resource
development, and professionalism. Based also on the ideathat it is essential to our future ongoing growth to secure anddevelop talented human resources and create workplaces
where everyone can work with vitality and harness theircapabilities to the fullest, we are implementing work stylereforms to change attitudes toward work styles, reform rules,
and promote diversity.
Sustainable growth
Enhanced productivity
and profitability

Revitalization of
the organization

Creating sourcesof growth

Policy regarding employees as the Groupʼs primary assets／ Workstyle reforms
Respect forhuman rights

Human resource
development andprofessionalism

Fair evaluations
and treatment

Promotingdiversity

Changing attitudes
toward workstyles /Reforming rules

Strengthening our business infrastructure

Governance

Data section

Discussion schedule
April

October

April

June

Goal
discussion

Mid-term
discussion /Self-assessment

Outcomediscussion

Evaluation
feedback

Goal
discussion

Implementation rate of discussions
FY2019FY2020

FY2021100.0%

100.0%

100.0%

Human resource development
Basic approach and promotion system
Based on the policy of regarding employees as the Group’s
primary assets, we provide a variety of training programs suchas new employee training, position-based training, technicaltraining, sales training, and training for selected employees.
Moreover, we also provide support for self-development, suchas incentive programs for acquiring qualifications andcorrespondence courses, and are committed to providing
growth opportunities and encouraging employees to takeadvantage of them.
To adapt to rapid technological innovations and changing
markets, we are also hiring and developing human resources
who are capable of quickly adapting to the businessenvironment.

Respect for human rights
Four hiring & human resources development
policies

In our business activities, we place great importance on
respect for human rights and conduct training to raise andimprove human rights awareness in order to provide a
workplace environment in which each and every employee
can work with vitality. In addition, through training and otheractivities to promote compliance, we show that we do nottolerate any kind of discriminatory treatment on gender,
beliefs, nationality, status of disability, sexual orientation,
gender identity or other basic human rights. We strongly
advocate for respecting the dignity and individuality of every
person.

・Strive to pursue the sustainable growth of the Group by

flexibly hiring human resources according to business
requirements.
Develop human resources as required to expand and shift
our business by improving employee knowledge, capabilities,
and skills systematically and in a timely manner through the
Career Development Program (CDP) and training.
Implement measures for diversity and inclusion to build
work environments that make it easier for diverse humanresources to thrive.
Foster an open, liberated culture and comfortable workplaces
that enable each employee to better harness their capabilities.

・・・

Fair evaluations and treatment
As a system to reward employees for their efforts by fairly
evaluating outcomes, employees hold bi-annual discussions
with their superiors to discuss their progress and achievementof self-established goals. We are helping to ensure theevaluations are convincing by providing feedback on the
results of the evaluations to employees.
In addition, all employees are given an opportunity to talkwith their supervisors once a year about their job satisfaction,
career plans and other matters.

Average years of continuous service(Year)

Male

Female

20

17.6
15

17.9

17.6
14.0

14.0

14.4

10
5
0

2019

2020

2021

(FY)

Exeo Group Integrated Report 2022

42

Human resources strategy

second year to review the training and secure its results.

New graduate hires
Male

Number hired (persons)

Percentage of which are women

Female

200

19.7

20

159

152

150
100

89

50

139

122

Technical training
The Group’s technical capabilities are the very essence of ourcorporate brand. For this reason, we conduct technicaltraining across the country, including at Group companies,
and focus on developing IT personnel, engineers withadvanced and up-to-date technical skills, and leaders who arecapable of maintaining safety at worksites. We strive to have
our employees obtain high-level national qualifications for
professional engineers, advanced professional skills inengineering and CAD skills, cutting-edge skills in ICT fields
such as virtual cloud, network servers, and programming, as
well as technical skills in safety and quality management. We
are also actively working toward acquisitions of high-level
national qualifications and IT qualifications in developing thestrategic engineers and DX personnel needed to execute our
medium-term management plan and 2030 Vision.

15.7

15

20

30

12.6

10

14

5

75

0

0

2019

2021

2020

2019

(FY)

2020

2021

(FY)

Mid-career hires
Male

Number hired (persons)
50
40

14.3

15

40

7

6

Percentage of which are women (%)

Female

47

42

30

14.9

12

4

10.0

9

20

6

36

40

36
10

3

0

0

2019

2020

Value creation story

Displaying initiatives and data pertaining to Exeo Group, Inc. unless otherwise specified.

2021

2019

(FY)

2020

2021

(FY)

Establishing an overseas trainee system
For global business expansion, we revamped the program that
we had continuously conducted since 2015 to send
employees to the Philippines, re-establishing it in fiscal 2022 as
our overseas trainee system. We accept applicants fromamong all employees of the Group companies, and after aprocess that includes interviews, we send them to work atoverseas Group companies for roughly one year. This practicalexperience gained at overseas locations serves as a means toswiftly develop those who will lead the Group’s business andconduct business globally. Based on the experience, personal
networks, and expertise gained as overseas trainees, we aim
to further expand our new business and other initiatives.

New employee training
The first year of employment is designated as a training period
in which we offer a multifaceted curriculum that includes
induction training, basic training for our Group, job-specifictechnical training, and training for acquiring IT qualifications,to supplement employees’ common sense understanding as
members of society and help them strive to acquire a wide
range of knowledge and basic technical skills as members of
the company. In addition, each new employee is assigned atutor, who promotes growth and motivation throughtraining and follow-ups, as well as advice on mental healthand lifestyle issues. We also provide step-up training in theTraining system

43

Middle management

Training system
Through blended learning (group training, online training,and self-study through methods such as e-learning), we haverevamped the learning opportunities that we offer. This has
maximized the learning effects and increased rates of learning
retention and proficiency, leading to faster human resources
development overall.
Initiatives at Group companies
We want all employees at our 144 Group companies (107consolidated subsidiaries, 19 non-consolidated subsidiaries,
and 18 affiliates), including those overseas, to be able to workwith a sense of fulfillment. Our top priority is to build a new
Team Exeo to enable this. We see this as an essential step
toward developing our human resources for the future,reforming our work styles and increasing diversity.
Based on the Group’s common operational measures, inaddition to playing the role of a “go-between” for expanding
the excellent initiatives of our Group companies, we will further
promote the establishment of a strong Team Exeo that takeson the challenge of new businesses and responds to changes.

Work style reform
Basic approachWith the aim of proper management of working hours andrectifying long working hours, labor representatives and top
management have issued a joint declaration and are working
on reforms to comply with labor related laws and regulations,promote flexible work styles, improve operational efficiency
across the organization, and maintain and promote physicaland mental health by raising employee awareness andimplementing specific measures. We are also working torealize diverse and flexible work styles through means such as
the establishment of a regional key position system (a system
for regionally assigned employees) and a teleworking system.
Furthermore, we are developing and promoting novel
ways of working that incorporate the new lifestyles and newworking styles recommended by the Japanese government.
We are taking the following measures to promote new ways

Strengthening our business infrastructure

Governance

Data sectionof working: (1) review of operations (business inventory,
business evaluation, etc.), (2) improvement of the environment(PC, work environment, etc.), (3) consideration for health andwellbeing (development of a system for supporting mental
health, etc.), (4) enhancement of systems (review ofcommuting styles, establishment of an expenses policy forworking from home, etc.). Through these efforts, we are
striving to create a work environment where everyone canwork with peace of mind and enthusiasm.
Boosting productivity through digital transformation
Utilizing IT infrastructure, AI technologies, and other common
tools across the Group including Office 365, we are working to
improve sales capabilities, business efficiency, quality, safety,
and comfort while aiming to boost productivity in a noticeable
way, not only for employees but for our partners as well.
*Microsoft, Office 365, and Microsoft Teams are registered trademarks ortrademarks of Microsoft Corporation in the U.S. and other countries.

Promoting telework
In July 2018, we made significant revisions to our telework
regulations, allowing employees to make use of work from
home, work at satellite offices and mobile work in more
flexible ways. The new external satellite shared office that webegan using in March 2019 has also expanded our available
options for work locations. During the pandemic, we
eliminated our restrictions on the number of times
telecommuting can be used, as well as restrictions on thescope of employees eligible to use the system. This led to a
substantial increase in the number of our employees who used
telecommuting. We will continue working to promote usage
among employees, including active participation in initiatives
such as Telework Days.
Telework utilization rate
In recognition ofthese efforts, in November （％）
100
2018, the company was
75
selected as one of the
59
592018 Top Hundred
50
Telework Pioneers by the 25
14
Ministry of Internal Affairs 0
and Communications.
(FY)
2019
2020
2021

Gold medal in the Information Network Cabling job category at the 59th National Skills
Section manager
candidates

Training for employing people with disabilities/LGBTQ training

Leadership

D&I training

Male supervisor-female subordinate training

Organizational leadership training/Strategic human resources development

One-on-one training
Simplifiedcoaching

On-site leader training(Mid-level )Overseas trainees

BusinessschoolBasic sales training

2nd yeartraining

Technical training

On-site leader training(Newly appointed )New
employeetraining

Section manager
candidate training

Cross-industrial socialization
training for selected employees

Leadership training

Exeo Group Integrated Report 2022

Training for newly
appointed managers

Evaluator training

Manager training

General manager
candidate training

10th year training

Middle manager training

Training for the
newly promoted

DeputymanagerManager

Senior manager training

Individual training

Coaching
training

4th year training

Newly appointed
officer training

HR-related training

Training for those from other companies

Executive

Management training

Generalemployment

General employees

Managers

Rank

Value creation strategy

Competition Japan
Employees of Exeo Group, Inc. representing Saitama Prefecture, Shogo Mizutani won a gold medal,
Asshu Toba won a silver medal, and Emiri Murakami, Sho Watanabe, and Hiroki Murata each won
Fighting Spirit Awards in the “Information Network Cabling” job category at the 59th National Skills

Shogo
MizutaniCompetition Japan held in the Tokyo metropolitan area. The competition was sponsored by the Ministryof Health, Labour and Welfare and the Japan Vocational Ability Development Association, in cooperation
with the Tokyo Metropolitan Government. This was the third consecutive time and ninth overall that we
had a gold medal winner at this national competition. We will continue to strengthen and improve ourtechnical skills, dedicate energy to developing outstanding engineers, and contribute to society.

Asshu
Toba

Exeo Group Integrated Report 2022

44

Human resources strategy

Value creation story

Displaying initiatives and data pertaining to Exeo Group, Inc. unless otherwise specified.

Eruboshi certification, which is awarded to companies foroutstanding efforts to support the career development of
women. We have also received recognition from the Ministryof Economy, Trade and Industry and the Tokyo Stock Exchange
for three consecutive years, as a Nadeshiko Brand in 2020 and
as a Semi-Nadeshiko Brand in 2021 and 2022. Thesecertifications are awarded to listed companies in recognition of
their efforts to support the career advancement of women.

Diversity & Inclusion
Diversity & Inclusion declaration
Diversity means variety. In other words, promoting diversity in an
organization is a strategy to harness the abilities of various humanresources to the fullest. With the aim of quickly and flexibly
meeting the diversifying needs of our customers, expanding ourbusiness, and boosting performance, we are fostering a culture

General employer action plan based on the Act on the Promotion of
Female Participation and Career Advancement in the Workplaceas Team Exeo that promotes mutual acceptance among peopleof diverse values regardless of gender, beliefs, nationality,

As of the end of
March, 2021

disability, sexual orientation, gender identity or other such
attributes, and leads to new value creation free from conventional
norms or stereotypes while continuously growing both asindividuals and as an organization. Diversity promotion does not

Target at the end of
March, 2026

Number of womenin management
positions20

1.5 times (30)

Number of
femaleemployees

307

25％ increase (384)Percentage of male
employees taking
childcare leave

7.3%

20%

aim for any particular goal. We aim for the true meaning ofdiversity and inclusion, to energize organizations with new ideas
derived from diverse feelings and values that enable organizations
to generate innovation.
Tetsuya Funabashi President & CEO

Plan period: April 1, 2021 - March 31, 2026 (5 years)

Supporting women’s career advancement
Exeo Group, Inc. has formulated an action plan in accordancewith the Act on the Promotion of Women’s Participation andAdvancement in the Workplace, and publishes related
information including numerical targets. We are pursuingtargets for the proactive hiring of women, creating plans todevelop female managers, and more.
We select female candidates for executive roles andpromoters for women’s career advancement, and we engage
them through various measures aimed at raising theirawareness. These include training courses and social eventswith female employees of other companies. We are creating
opportunities for female employees to thrive and providingthem with support.
As a result of these efforts, the Ministry of Health, Labourand Welfare recognized Exeo Group, Inc. in 2016 with its

Number and percentage of management positions held by women(People)30

Of which, general manager positions
Of which, manager positions

1.8

20

1.2

11

1.5

2

Exeo Group Integrated Report 2022

14

18

13

32

15

1

3

4

0

2020

2021

(FY)

Exeo Group, Inc.

2.34％

C-Cube Corporation

2.51%

Seibu Electric Industry Co., Ltd.

3.15%

Nippon Dentsu Co., Ltd.

0.82%

Daiwa Dentsu Corporation Co., Ltd.

2.86%

Exeo Tech Corporation

32

Number of retirees who have been rehired
FY2019FY2020

FY2021

218

249

301

Life plan seminars
The Group holds seminars throughout Japan for employees
at the ages of 53 and 54 to help them design their postretirement life with a deeper understanding and awarenessso that they can lead materially, physically, and mentally
healthy lifestyles. We also hold seminars for employees at theage of 58 and 59 to help them deepen their understandingof post-retirement social security and pension fund systems.

53-54 years old(including Group companies)

29

17

1.53%

Rehiring of retirees
In order to make use of the skills and experience gained
over the years by employees who are motivated to work after
retirement, we have a system to rehire retirement-age
employees, a registered employee system to hire retired
employees on a temporary basis, and a system to rehire former
employees who have left the company due to family
circumstances such as family relocation, marriage, childbirth,and nursing care. These systems provide opportunities fordiverse work styles.
These efforts are helping to secure our technologicalcapabilities for the future and ensure that we are able to passon our skills.

Number of rehired
employees

58-59 years old

18

Strengthening our business infrastructure

Governance

Data section

we are actively hiring foreign students who are expected to be
active both in Japan and abroad. In fiscal 2022, we hired two
foreign national new graduates and one mid-career foreign
national. In addition to hiring foreign exchange students, infiscal 2022, we hired five employees with specialized skills who
have Philippines nationality. We will continue to pursue
diversity in our hiring going forward.
Foreign nationals hired by year

* Held in alternating years for each age group
FY2016FY2018FY2020

233

237

307

FY2017FY2019FY2021

105

139

192

FY2018FY2019FY2020

FY2021

New graduate

１

5

0

2

Mid-career

0

0

0

1

Implementation of diversity promotion training
Training is conducted starting from upper levels of thecompany to foster an understanding of the importance ofdiversity promotion as a management strategy and torecognize issues the company faces in doing so. In training
aimed at executives and managers, attendees learn about
management techniques for diverse human resources andapproaches for supporting career development. Thisknowledge is then put into practice in the workplace.
Diversity promotion training (FY2017 - FY2021)
Number ofsessions

Content of training
Diversity promotion training for management level*1

3

Diversity management training for managers

31

Diversity management training for newly appointed managers

3

Training for female leaders

2

Career design training for women

6

Diversity training for new recruits

5

*1*2

LGBTQ training

4

Training to promote understanding of people with disabilities*1

2*1 Including Group companies *2 Overlaps with training for management level

Moving forward, we will expand the scope to include awider range of employees and conduct training that fosters aculture that promotes the mutual acceptance and utilization of adiverse range of values. In addition, as a result of these efforts,
our company received bronze certification in the PRIDE Index
2020 and a silver certification in the 2021 version of this index
established by the organization “work with Pride” to evaluate
workplace initiatives related to LGBTQ and other sexual
minorities. Aside from that, we were awarded the highest
possible rank “Best Workplace for Diversity & Inclusion” by the
D&I Award which recognizes companies making admirable
efforts toward diversity and inclusion.

10
5

6

Percentage of employees with disabilities (As of March 31, 2022)

25

1.0

0.5

2017
2018
2019
Note: As of the end of each fiscal year

45

22

35

20

14
9

0

2.0

17
14

10

1.9

We also provide training to promote deeper understandingof people with disabilities for employees who work with themand for management teams, managers, and others, including
at Group companies.

Number of seminar attendees (the past 3 years)

Change in the number of female assistant managers(People)

30

1.6

1.5
20

Percentage (%)

Promoting the employment of people withdisabilities
To ensure that all people can demonstrate their capabilities
and aptitude to the fullest extent and lead active, fulfilling
lives regardless of whether or not they have disabilities, ExeoGroup, Inc. actively pursues the employment of people withdisabilities. Employees of the Diversity Promotion Office havecompleted disabled person occupational and lifestylecounsellor certification courses, carefully gather information
about desired workplace, occupation, skills, and disability
considerations when employees are hired, and strive to match
employees with the right organization. Even after an employee
has joined the company we regularly follow up on theindividual and their assigned department and make every effort
to ensure they are able to succeed in a reassuring environment.
Additionally, we work to create new occupational fields so that
persons with all kinds of disabilities can flourish while making
active efforts to hire people with specialist skills.

Value creation strategy

0

2017
2018
2019
Note: As of the end of each fiscal year

2020

2021

(FY)

Hiring foreign nationals
In order to promote global business, especially in the Asia
region, and to internationalize and invigorate the company,

Exeo Group Integrated Report 2022

46

Human resources strategy

Value creation story

Displaying initiatives and data pertaining to Exeo Group, Inc. unless otherwise specified.

Work-life balance
Supporting the balance between work and home
To ensure that employees can achieve a balance between workand child-rearing or work and family caregiving, regardless ofgender and continue to work and achieve success with peaceof mind for as long as possible, we have established balance
support schemes that go beyond statutory requirements.
Specifically, we have improved our parenting support systems
such as for payments of allowances for returning to work early,
and in conjunction with health insurance being madeapplicable to fertility treatment in April 2022, we introduced
Special Treatment Leave which can also be used for fertility
treatment, as well as a reduced work hours system forundergoing medical treatments, as we have strived to give
employees what they need to balance work with parenting.
In April 2022, we also formulated an action plan (Seventh
Action Plan) pursuant to the Act on Advancement of Measures
to Support Raising Next-Generation Children and havepublished targets and other relevant information.
We actively work to enhance systems, hold briefings toachieve these targets, and have introduced company-led
childcare facilities. We are committed to developing anenvironment that makes it easy for employees to strike abalance between their jobs and childcare responsibilities,
regardless of gender. In recognition of these
efforts, in 2015 we earned the Kurumin Mark,an accreditation from the Ministry of Health,Labour and Welfare recognizing companies
providing support for childcare.

General Employer Action Plan based on the Act on
Advancement of Measures to Support Raising NextGeneration Children(1) Achieve 20% rate of male employees taking childcare leave(2) Maintain childcare leave usage rate of at least 90% among female employees
Target (3) Effectively communicate guidance about how to use the System for
Balancing Medical Treatment with Work which was newly
established in April 2022, and about the related procedures

Plan period: April 1, 2022 to March 31, 2026 (4 years)

Percentage of employees taking childcare leave
(%)

Male

(%)

10

100

8

7.3

7.5

100

100

100

60

4

0

100

80

6

2

Female

100

40

2.0

2.5

Value creation strategy

Support for balancing work with medical treatment
We have established a new support system for balancing workwith medical treatment so employees can continue working
with vitality even while undergoing treatments. In addition totreatment of diseases, applicable treatments also include
fertility treatment, and we are working to support parents inraising the next generation. Specifically, our support includes
making it possible to receive allocations of special leave ofabsence, take accumulated annual paid leave, and use thereduced work hours system, telework system, and shiftchanges to be able to receive proper treatment. Throughdiverse work styles, we actively support our motivatedemployees in balancing their medical treatments with work sothey can thrive in the workplace.

20

0

0

2017 2018 2019 2020 2021

(FY)

2017 2018 2019 2020 2021

(FY)

Data on childcare leave (April 1, 2021 to March 31, 2022)
Male

FemaleTotal number of employees eligible forchildcare leave

80

6Total number of employees who havetaken childcare leave

6

6

Total number of employees who havereturned to work after childcare leave

6

11

Return to work rate of employees afterchildcare leave

100％

100％

Total number of employees enrolled at theend of 12 months after returning to work*

4

11

Retention rate of employees afterchildcare leave

66.7％

100％

Average number of days of childcare
leave taken

61

334.7

* Total includes employees who returned to work between April 1, 2021,
and March 31, 2022. (Exeo Group, Inc. )Maintaining good labor-management relations
Mutual trust between labor and management is fundamental
to the Group’s business. In the view of pursuing company growthand maintaining and improving employees’ work conditions, weseek to build stable labor-management relations through regular
discussions between labor and management.
We hold regular labor-management meetings to
exchange opinions between both sides on the business planand other important issues to execute proactive business
operations and achieve the healthy growth of the company.
We also hold meetings of a committee for improved work
hours and conditions where we are working to set targets forthe total number of work hours for the year and annual paid
leave to be taken, and on ways to reduce overtime work anddetermining specific measures for having employees take theirannual paid leave.

List of childcare support schemes○：In line with statutory requirements◎：Beyond statutory requirements

Types of Leave
Healthcare system during
pregnancy and after childbirthSpecial childbirth leave

Childcare leave system

Eligible
Statutory
requirements employees○

female◎femalemale○

femalemale
male

Details
checkups, etc. (hospital visits during pregnancy) ・Rest periods during pregnancy
・Medicalvisits following childbirth, etc. ・Relaxation of commuting requirements
・Hospital
・Symptoms, etc. during pregnancy and within one year of childbirth
Female employees: 8 weeks before childbirth and 8 weeks after childbirthMale employees: 5 days
Up to the day before a child’s first birthday

Note 1 For Mom & Dad Childcare Leave Plus, up to one year during the period until the child reaches one year and two months of age
Note 2 When circumstances prescribed separately apply, until the child reaches one year and six months of age (up to the day
the child reaches two years of age at the latest)

In the case of paternal leave, an employee who has taken childcare leave within eight weeks of thebirth of his child is in principle eligible to take one additional period of childcare leave
Two 30-minute sessions per day for a female employee raising an infant less than one year of age(one-hour sessions for twins)
Up to five days per year (or up to ten days for two or more children) up to a cumulative total of 35 days (or up
to 70 days for two or more children) can be taken until the child (ren) reach the third year of elementary school.
Can be taken in half-day or hourly increments (including as intervals between working hours)
Modified start times for employees raising children
Exemption from late night work for employees raising children
Limitations on overtime work for employees raising children
Exemption from non-scheduled work for employees raising children

Special childcare leave◎

femaleSpecial nursing leave◎

femalemale

Shortened working hours forchildcare scheme, etc.

◎

femalemale

Support allowance for early
return after childcare leave
Support for employees returningfrom childcare leave◎

Company-led childcare center◎

A monthly allowance is paid to female employees (company employees) who have made an early return to work within one year
and three months from the month following their return to work until the month in which their child has reached two years of age
female Interviews: From one month before taking leave to one month after returning to work
male Mobile PC loan: From one week before taking leave to one month after returning to work
femalePartnerships with company-led childcare centers across Japan
male

・
・
・
・

47

Exeo Group Integrated Report 2022◎

Governance

Data section

Health and productivity management
Reducing long working hours
As part of our initiatives to achieve a healthy work-life balance,
we seek to develop a comfortable work environment for
employees, including by setting the annual targets for use of
paid leaves, promoting consecutive leaves by combining
annual paid leaves with long holidays, summer holidays,
year-end/new-year holidays, etc., and designating a no
overtime day for each week. Also, we proactively seek toreduce overtime work.
Helping employees maintain and improve physicaland mental healthIn cooperation with Exeo’s health insurance association, we
seek to help our employees and their family members manage
and improve their health by conducting regular healthcheckups and comprehensive medical examinations of ouremployees, as well as campaigns to promote walking among
employees and their family members. In regard to mental
health, we conduct self-care through stress checks, as well as
training by corporate doctors for “line care” in which those
who work with someone who seems abnormal can initiate
the proper assistance- based on results of in-house diagnosis.
Furthermore, for employees with excessive overtime work
hours, our in-house doctors meet each such employee fivetimes a month to provide physical and mental care.
Annual total working hours
FY2017FY2018FY2019FY2020

FY2021

2,133

2,129

2,087

2,099

2,124

Number of days of paid leave/Percentage used
FY2017FY2018FY2019FY2020

13.3

13.3

12.6

12.8

FY2021
12.9

66.5％

66.5％

63.0％

64.0％

64.5％

Systems to support a diverse range of human resources
Main systems
Paid leave
Different start and finish time system
Flexible working hours system
Intervals between work system

Details
Leave can be taken in daily, half-daily, or hourly increments
System to change work allocation, monthly flexible working hours system, modified rest period system,
modified weekly days off system
Within the scope of total scheduled working hours, working hours that exceed the scheduled working
hours in a single day can be set
System to secure rest hours at an interval of at least nine continuous hours between the end of work andthe beginning of the next.

Telework system

Work from home, work from satellite offices, and mobile work

Area career path system

Systems limited to regional employees (no out-of-area transfers)

Senior employment system

Note Available until children reach the third year of elementary school

femaleStrengthening our business infrastructureSide-job system
Maiden name usage system
Housekeeping service

for reemployment following mandatory retirement (until the end of the month in which an
・System
employee reaches 65 years of age)
65 years of age, employees may be hired as contract employees
・Afterformer employees reemployment system to hire former employees who have resigned due to・Apersonalreasons such as relocation of a family member due to job transfer, marriage, child-birth,and nursing care
Employees are able to work outside the company (side-job application system) and we are also accepting
employees to work with us as a side-job.
With the exception of procedures requiring an employee to use their legal name, employees may use
their maiden internallyHousekeeping services are available with employee discounts
Exeo Group Integrated Report 2022

48

Group management & DX implementation

Value creation story

Group management
Implementing M&A
The Group is pursuing a business strategy to further expand its
urban infrastructure and system solutions businesses and growthe net sales of each of its business segments to roughly equallevels by fiscal 2030. The Group is actively conducting M&A tocontribute toward achieving this.
Major companies added to the Group through M&A in
fiscal 2021 are as shown in the table below.

We promote multi-skilling of our engineers, maximum usageof our resources, and community-based business operations
that leverage our presence. Our basic outlook is to organize
our business in a formation suitable for the medium-term
growth for the Group as a whole. Doing so, we consistently
optimize the organization of our Group companies as we aim
to maximize net sales and profit.
In April 2022, we reorganized existing subsidiaries alongwith companies we had acquired through M&A and established
two core companies to accommodate our customers’
diversifying needs in system solutions. One of these companies
is Exeo Digital Solutions, Inc. (integrated with the development
functions of Icom Systech Co., Ltd., and Accresco Co., Ltd.)
which plays a central role in the system development function
along with Exeo Group, Inc. The other is Exeo System
Management, Inc (changed trade name from IT-it Co., Ltd.,
integrated with the operations function of Accresco Co., Ltd.
in July of the same year) which handles system operations andmaintenance along with the customer support business of
Exeo Group, Inc.
In the Hokkaido, Tohoku, Kansai, Chugoku, and Hokuriku
areas, we established new companies through integration ofexisting subsidiaries as shown in the table below.

System solutions
53%
Global portion
33%

Urban
infrastructure45%

Established

Business activities
Systems development

Exeo System Management, Inc.

April 2022

Systems operation and maintenance, call center, help desk

Exeo Engineering Hokkaido, Inc.

August 2021

Exeo Engineering Tohoku, Inc.

August 2021

Exeo Engineering West Japan Co., Ltd.

July 2022

Design, construction, maintenance, and the related information
processing and sales of equipment and other products fortelecommunications, electrical and civil engineering

Major companies added to the Group via M&A in fiscal 2021

49

Business domains
System solutions

Urban infrastructure
System solutions

Business activities
ICT support engineering, network support, contact services(inbound call centers), field services

construction, and management of overhead and underground power
・Design,transmission lines
Designandconstruction for electrical and information & telecommunications
・system projects,
design and sales for electrical and information &telecommunications devices and components

construction and product sales for electric floor heating and・Design,snowmelt systems

Kidoh Global Holdings Co., Ltd.,
Kidoh Construction Co., Ltd.

Urban infrastructure

Underground pipe jacking and burial construction, utility tunnels,
tunneling shields, prestressed concrete (PC) projects, and more

Ascent Solutions Pte. Ltd.

GlobalIoT and blockchain solutions

Koyo Engineering Co., Ltd.

Urban infrastructure

Planning, design, construction, operations and maintenance, and energy
saving-related work for facilities such as production plants, air conditioning,plumbing, and sanitation facilities, and disaster prevention facilities

68 Systems & Project Engineering Pte. Ltd.

GlobalSignals and communications facilities for the Singapore MRT (urban high-speed rail)

Exeo Group Integrated Report 2022

Data sectionengineering platforms.
As we find ways to bolster and expand our initiatives, wewill strive to further improve profitability and provide new
solutions with the Digital Transformation Strategic Division
established in April 2019 playing a central role.

Our own digital transformation

Providing solutions

AI

Cloud,
big data

5G・IoT

Building platforms

Going digital

Improvingproductivity

Improving quality

Developing
new business

Data analysis

AI/analytics

Security

Robotics

BIM/CIM

VR/AR

FY2021

April 2022

Ryosei, Ltd. (previously Ryosei Systems, Ltd.)

Governance

Illustration of solving problems and providing solutions by shifting to DX

Telecommunications
carriers
2%

Exeo Digital Solutions, Inc.

IT-it Co., Ltd.

To integrate the strengths of each Group company and create
new value, we consider it essential to leverage advanced
technologies such as AI and IoT and implement DX to transform
our work and business. Based on the knowledge gained fromdoing so, in the future we aim to provide DX that yields
solutions to our customers’ problems and build optimized

Breakdown of M&A investment by business segment

Companies that were reorganized & integrated since April 2021

Company

Strengthening our business infrastructure

DX implementation

Reorganization of subsidiaries for
medium-term growth

Company

Value creation strategy

Revolutionizing network construction management
work by creating databases out of construction
information and introducing use of tablets
Work at network engineering worksites had conventionallybeen performed using paper documentation. For that reason,
information such as the name of the construction project had
to be repeatedly entered manually when producing
documentation, and construction-related information wasnever committed to data. Work efficiency was also a problem.
Since carrying documents required physical labor, there was ahigh risk of information loss. Reports also had to be broughtback to the worksite office every time since they were
handwritten.
To remedy these and other inefficiencies, we moved
construction-related information into databases and introduced
tablets for all construction crews to carry around. This drastically
improved construction management work by eliminating
inefficiencies such as the workload involved in manual entry,
and by communicating instructions to worksites and producing
work reports in a timely manner, among other improvements.
Major effects of improvements
Reduced time taken to produce
construction documents
Enabled real-time communication of
instructions and reports to worksites
Went paperless, reducing risk of
information loss
Reduced transportation time between
worksites and offices
Construction crew tablet

・
・
・
・

Implementing AI for safety and quality inspections inconstruction of communication facilities
For managing the safety and work quality of communication
facilities construction, the Group has implemented Safety andQuality AI Solution. With AI that contains the knowledge andexpertise of skilled experts, this solution performs AI analysis on
photographs of worksites and construction situations in orderto preemptively prevent accidents while instantaneously
identifying faulty workmanship to avoid having to go back andperform the work again from the beginning.
In addition to using this solution in-house, we are also
providing it to customers in other industry types as acommercial service.
Major effects of improvements

reduce waiting time for verification results
・Can
Prevents inconsistencies in decisions made by individual
・specialists

Illustration of operational efficiency
improvements through AI
Operator

Operator

Take photo ofworksite

Rework,take photo
Send

Send

AI

Real-time
notification

AI

System architecture
Construction
information
database

Desks
Internal LAN

Construction site

Check photo

Recheck

VPN
Construction
crew tablet

Instantaneous decision on whether
rework is needed

Exeo Group Integrated Report 2022

50

Outside directors’ round table discussion

Value creation story

Overseeing the sustainable growth of
the Group from diverse outside perspectives
In fiscal 2020, the number of independent outside directors was increased to four.
With the lively discussions enabled by the varied expertise and experience that each brings to the table,
we are finding ways to improve the effectiveness of the Board of Directors and ensure transparency in decision making.
The four current outside directors had a discussion with each other about their assessments ofour governance and business operations, as well as the current challenges and their outlook for the future.

51

Tatsushi Mochizuki

Naoko Iwasaki

Yasushi Kohara

Keiji Yoshida

Director

Director

Director

Director

Exeo Group Integrated Report 2022

Value creation strategy

The mutual trust to be able to speak
openly with executives
Kohara: Four years have already passed since I became
an outside director, and I really feel that the Board of
Directors here has evolved during that time. Out of the
16 members of the Board of Directors, seven are currently
outside officers. We come from diverse backgrounds,
including those who built their careers at companies andgovernment agencies as well as university professors, CPAs,
and attorneys. Our diversity has also significantly increased
since we now have three female members. As a result, I
believe we are capable of having discussions that incorporatea broad range of perspectives.
Iwasaki: Indeed. Our Board of Directors has also been
forced to hold meetings online over the past two years
due to the COVID-19 pandemic, but we have overcomethat adversity quite smoothly. Information is provided
thoroughly and consistently at the advance briefing
sessions held two to three days before Board of Directors
meetings, and if anything is unclear, we can ask all thequestions we need. As a result, I believe that our meetings
are held with sufficiently deep understanding and thought
about each agenda item.
Mochizuki: Personally, I joined the Board right in the
middle of the pandemic, and as you mentioned I thought
the advance briefing sessions were extremely helpful. For
particularly important agenda items this company has alsoestablished “Vector Meetings” where we outside officers
engage in intensive discussions on these matters before
they are submitted to the Board of Directors. I believe that has
added an extra layer of depth and substance to Board
meetings.
Yoshida: Until two years ago I was actually in the opposite
position of being an inside director at another company.
When I got here, my first impression was utter surprise at
how discussions such as these could take place at a Boardof Directors meeting. At every meeting, we outside officers
freely share our opinions without holding back. When theinside officers disagree about anything, they argue backearnestly without any sort of excessive politeness to try
to help us save face as outsiders. We have establishedrelationships where we can tell each other exactly what
we think.
Kohara: This environment conducive to conversations
has been here since the time I joined. The chair manages
everything well, in a way that elicits everyone’s opinions, andthere might never even be any agenda items that areconcluded without any debate. Because of that, it is also not
uncommon for meetings to run past their scheduled durations.
Mochizuki: We really have a strong inclination to share
information. We also receive guidance and participate inStrengthening our business infrastructure

Governance

Data section

meetings such as briefing sessions for due diligence in
M&A. When we get this type of deeper understanding,we can also have more intensive discussions in the Boardof Directors meetings. I think it is highly meaningful that
we have these opportunities for explanations before Boardof Directors meetings.
Iwasaki: We find ways to share knowledge about manydifferent aspects from inside and outside the company,
and we use that to fine-tune each agenda item. I thinkthat process has really been carefully crafted.
Yoshida: Vector Meetings in particular are a really goodsystem. Thinking back to when I was on the executive side
myself, I would want to hear opinions and impressions frompeople outside the company before submitting anything, andif any course corrections were necessary, I would want tomake them sooner rather than later. It’s excellent that wehave opportunities for those types of discussions.
Kohara: Although it may increase the workload for us
outside directors, I think there are many more opportunities
to be had. Right now I am actually proposing to ouradministrative office that we could further expand on
the Vector Meetings to also have general managers andyounger executive-class personnel participate, and evenhold them offsite where we stay somewhere in training
camp format. In addition to the agenda items we are given,
I also want to create opportunities to present topics fromour own perspectives and discuss them.

Utilizing the “outside” perspective tooffer fresh realizations
Iwasaki: There are two basic responsibilities of outside
directors that I consider particularly important. The first is
to offer perspective on whether the Board of Directors is
operating in a proper manner, whether the transparencyof management is ensured, and so forth. Our other importantmission is to make suggestions that leverage our individual
expertise. In my own case, I make it a point to provide valuablecomments on topics such as ICT business strategy or global
business trends from my own specialized perspective.
Mochizuki: I also think the “outside perspective” isextremely important. Although I came up through Japan’s
Ministry of Internal Affairs and Communications(previously called the Ministry of Home Affairs), I also
spent about half of my career working at local government
agencies. From their perspective of me as someone fromthe outside who had joined their workplace, I think there
were many times they wondered about me, “You know
nothing about this region, so what can you actuallycontribute?” But quite often, seeing matters objectively froman outside perspective actually helps things to proceed moresmoothly. Based on what I learned from this experience, I also

Exeo Group Integrated Report 2022

52

Outside directors’ round table discussion

try to always maintain objectivity here in the Board of Directors.
Yoshida: Thinking back to when I was in the position of an
inside director, there really were quite a few times when I was
surprised to realize things that people outside the company
had said or pointed out. Of course, I was a tenured veteranwith long years of experience working at that company, butthere are often important realizations to be gained from what
people who have walked an entirely different path in life cantell us. Personally, I hope to be able to give as many of these
fresh perspectives or realizations as possible. Particularly within
the company, I try to pay closer attention to the things thatare taken for granted and to matters in meetings that end up
being quietly brushed aside.
Kohara: Establishing trust with the executive side is importantfor outside directors in fulfilling the supervisory function. We
must leverage our own knowledge and expertise tothoroughly highlight where risk lies and whatever needs to be
pointed out, while at the same time respecting the prideand passion they feel having worked for decades in theirrespective fields. If the executive side is the accelerator, I think
we are considered to play an important role as the brake.
As we maintain this sense of distance and balance, I hope wecan continue on our growth trajectory by skillfully utilizing
both the accelerator and the brake.

Yasushi Kohara Director
With a wealth of management experience in the Toyota Group, Kohara’s
resume includes having served as a managing officer for Toyota Motor
Corporation, and as representative director and president of Osaka Toyota
Motor Co., Ltd. He has been an outside director since 2018.

Thoroughly monitoring the process ofcompany transformation
Kohara: For 2030 Vision and the medium-term management
plan currently in progress, I participated in the formulation
process starting in the draft stages and completed it throughrepeated discussions and corrections in Vector Meetings andBoard of Directors meetings. What I felt throughout thisprocess was the strong desire of upper management to“Change this company!” This desire was most likely behind
our company name change to Exeo Group, Inc. last fall.
Mochizuki: The change of the company name really is
deeply meaningful. The scale of our business increased
significantly the year before I assumed this role (2018) when
53

Exeo Group Integrated Report 2022

Naoko Iwasaki Director
Waseda University professor. Her research topics include the core competenciesof CIOs, digital human resources development, and digital government (national& local e-government). She has been an outside director since 2019.

C-Cube, Seibu Electric Industry, and Nippon Dentsu wereadded to the Group. At the same time, we then faced thechallenges of fostering a sense of unity throughout the Groupand instilling our growth strategy companywide. In that sense,
I think this name change significantly increased the sense ofunity throughout the Group while also communicating ourstrong determination to “drastically change our businessstructure and portfolio together, as a Group!”
Iwasaki: Looking back over these past three years, I also
think this company is undergoing significant change. Our
future vision of being a corporate group with well-balanced
operations in the three segments of telecom carriers, urban
infrastructure, and system solutions is precisely alignedwith the rapid advancement of digitalization, as well as
globalization, aging society, global warming, and otherchanges in the business climate. 2030 Vision and our
medium-term management plan also set out measures withan unprecedented sense of urgency, particularly in areas
such as DX strategy and global expansion.
Yoshida: Throughout the nearly 70-year history of thecompany, I believe it has only ever operated in thetelecommunications construction industry. However, 2030
Vision and the medium-term management plan which weannounced last year clearly set out an entirely new path for thecompany. I can imagine it was probably also groundbreaking
for the Group’s employees. The medium-term plan until now
had generally plotted a growth strategy along the same
trajectory as before, but these five years of the current plan donot. I think this will be a period of major transition in thecompany’s history.
Mochizuki: Telecommunications construction business isalso heavily influenced by major telecom carriers andgovernment policies on telecommunications, and I think in thepast it was largely typical at this company to wait for someone
else to give you work rather than taking the initiative topersonally go out and find work. In order to break that mold,we are attempting to expand into new fields while making
effective use of the technologies and business resources wehave accumulated. However, I think management is struggling
with how well they can share this sense of awarenessValue creation story

Value creation strategy

throughout the Group and generate enough energy topush forward.
Kohara: Since I am also from a manufacturing company
background, I am always conscious of whether PDCA cycles
are being thoroughly practiced. “Plan” and “Do” will be thefocus in this period of actively taking on new challenges totransform the company over the next few years, but activities
that link these to “Check” to soundly evaluate the progress ofthe plan, and “Act” to make improvements, are more
important than anything. We have also expressed our desire
to have the relationship to the medium-term management
plan annotated in agenda items submitted to the Board of
Directors. With that, I hope we will be able to monitor
whether measures are steadily progressing according to
the medium-term plan.

Tatsushi Mochizuki Director
Involved in key positions in local and national government for many years, hehas served in roles including deputy governor of Mie Prefecture, deputy
director-general of the Local Sovereignty Strategy Council at Japan’s Cabinet
Office, and director-general of the Local Administration Bureau of the Ministry ofInternal Affairs and Communications. He has been an outside director since 2020.

Strengthening our business infrastructure

Governance

Data section

to see. I think we will need to visualize what our company does
through corporate branding and other promotional activities.
Iwasaki: From the perspective of human resources, I think that
promoting diversity is also an important topic. Particularly if wewant to expand our business globally, it will be essential to havea company culture where diverse human resources can thrive.
In recent years, our company has been dedicating effort tosupporting women’s career advancement, and women are now
effectively performing many jobs that had previously been
considered for men. In the future, I look forward to the arrivalof our first female inside director. Japan does not have many“rikejo” – women in the sciences – to begin with, but I hopesuitable human resources development efforts will be madeover the long term, from hiring to career development after
joining the company and eventually promotions to director roles.
Yoshida: Going forward, I believe that overhauling andimproving management divisions will also be an important topic.
Over these past few years, we have actively conducted M&A
not only in our existing business domains but also in new
domains to transform our business portfolio. However,post-merger integration (PMI) is critically important inmaximizing the effects of M&A. When bringing aboard
smaller companies in particular, their non-client facing
functions – accounting and finance, legal, HR, and information
systems – must be raised to a fairly high level. I have often beensuggesting to upper management that the management teamsin these areas still have room for improvement, including inhuman resources.

Support new challenges in various fields
Kohara: Two years ago (in 2020) we established a neworganization called the Innovation Promotion Office (changed
to the Innovation Development Unit in July 2022) and havelaunched initiatives to create new business domains. However,I think we must also dedicate even more effort to bolstering
our R&D. Our company’s strength is the high technologicalcapabilities that have been refined over the years at manydifferent work sites. To further build on that strength, I wantto visualize and share technological information throughout
the company and generate synergies by also integrating the
new technologies, knowledge, and expertise acquired throughM&A to deliver technological development that meets theneeds of a new era.
Mochizuki: We will also need to secure human resources tomaintain and improve our technological capability. As Japan’ssociety ages and the birthrate declines, I think we will need tofigure out how to make our company more appealing totalented students in order to hire them. Our business plays animportant role in supporting social infrastructure. However,being a B-to-B company makes that hard for typical consumers

Keiji Yoshida Director
His resume includes serving as representative director and executive vicepresident at JFE Engineering Corporation and as chairman for Japan Water SteelPipe Association among other roles. He has been an outside director since 2021.

Kohara: As we deal with major changes to the businessenvironment surrounding us and also plot our expansion into
new domains, I think we will encounter both opportunities
and predicaments that we have never experienced before.
As you deal with these, please keep in mind the ambitious
mentality expressed by the new company name, along with ahealthy sense of urgency, and turn these into additional growth.
We will be there to thoroughly monitor these efforts fromour “outside perspective” and provide support.

Exeo Group Integrated Report 2022

54

Board of Directors

Value creation story

Value creation strategy

Directors

Strengthening our business infrastructure

GovernanceStatutory Auditors
Newly appointed

Outside Independent

Jun. 2010
Jun. 2014
Aug. 2016
Jun. 2017
Jun. 2018
Jun. 2019

Yasushi Kohara

Yasuo Otsubo

Director and Managing Operating Officer

DirectorStanding Statutory Auditor

Number of the Company’s shares held: 7,500
Board of Directors meeting attendance in FY2021: 15/15 times

Number of the Company’s shares held: 1,700
Board of Directors meeting attendance in FY2021: 15/15 times

Number of the Company’s shares held: 26,600
Board of Directors meeting attendance in FY2021: -/Board of Statutory Auditors meeting attendance in FY2021: -/-Tetsuya Funabashi

Kenji Asano

President and CEO
Number of the Company’s shares held: 24,300
Board of Directors meeting attendance in FY2021: 15/15 times

Senior Vice President, Head of Customer Services, NTT Communications
Corporation
Senior Executive Vice President, NTT Communications Corporation
Senior Executive Vice President, Head of Customer Services, NTT Communications
Corporation
Senior Executive Vice President, NTT Communications Corporation
Representative Director and Executive Vice President, Exeo Group, Inc.
President and CEO, Exeo Group, Inc. (present position)

Jun. 2015
Jun. 2017
Jun. 2019
Jun. 2020
Jun. 2022

Director, General Manager of Tokyo Division, Nippon Telegraph and Telephone
East Corporation
President and Representative Director, NTT Infrastructure Network Corporation
Managing Operating Officer, General Manager of Communication & BusinessNetwork Headquarters, Exeo Group, Inc.
Director and Managing Operating Officer, General Manager of Communication& Business Network Headquarters, Exeo Group, Inc.
President and CEO, Exeo Tech Corporation (present position)

Jun. 2007
Jun. 2011
Jun. 2015
Jun. 2018

Managing Officer, Toyota Motor Corporation
Representative Director and President, Toyota Tokyo Corolla Co., ltd.
Representative Director and President, Osaka Toyota Motor Co., Ltd.
Outside Director, Exeo Group, Inc. (present position)

Outside Independent

Naoko Iwasaki
Director

Jun. 2011
Jul. 2014
Jun. 2015
Jun. 2017
Jun. 2020
Jun. 2022

Koichi Mino

Takafumi Sakaguchi

Director and Executive Operating Officer

Director and Managing Operating Officer

Number of the Company’s shares held: 25,000
Board of Directors meeting attendance in FY2021: 15/15 times

Number of the Company’s shares held: 4,000
Board of Directors meeting attendance in FY2021: 11/11 times

Branch Manager of Hokkaido Branch, Nippon Telegraph and Telephone East
Corporation
General Manager of NTT Sales Division, NTT Business Headquarters, Exeo Group, Inc.
Operating Officer, General Manager of NTT Business Headquarters, Exeo Group, Inc.
Managing Operating Officer, General Manager of NTT Business Headquarters
and NTT Sales Division, NTT Business Headquarters, Exeo Group, Inc.
Director and Managing Operating Officer, General Manager of Corporate Planning
Division, Exeo Group, Inc.
Director and Executive Operating Officer, General Manager of Corporate
Planning Division, Exeo Group, Inc. (present position)

Newly appointed

Noriyuki Watabe

Jun. 2015
Jun. 2016
Jun. 2017
Jun. 2019
Jun. 2020
Jun. 2021
Jun. 2022

Director and Executive Operating Officer
Number of the Company’s shares held: 8,200
Board of Directors meeting attendance in FY2021: -/- times

Sep. 1985
Jun. 2017
Jul. 2017
Jun. 2019

Jun. 2020
Apr. 2022
Jun. 2022

Joined Exeo Group, Inc.
Operating Officer, General Manager of Corporate Sales Department andGeneral Manager of Public Works Sales Department, Electric Division, Electrical& Telecoms Engineering/Environmental Projects Headquarters, Exeo Group, Inc.
Operating Officer, Deputy General Manager of Electric Division, Electrical &Telecoms Engineering/Environmental Projects Headquarters, Exeo Group, Inc.
Managing Operating Officer, General Manager of Electrical & Telecoms
Engineering/Environmental Projects Headquarters and General Manager ofElectric Division, Electrical & Telecoms Engineering/Environmental Projects
Headquarters, Exeo Group, Inc.
Executive Operating Officer, General Manager of Electrical & Telecoms
Engineering/Environmental Projects Headquarters, Exeo Group, Inc.
Executive Operating Officer, General Manager of Electrical, Environment,
and Smart Energy Headquarters, Exeo Group, Inc.
Director and Executive Operating Officer, General Manager of Electrical,
Environment, and Smart Energy Headquarters, Exeo Group, Inc. (present position)

Jul. 2014
Jul. 2017
Jul. 2018
Dec. 2018
Apr. 2019
Jun. 2019

Director and Managing Operating Officer
Number of the Company’s shares held: 16,900
Board of Directors meeting attendance in FY2021: 15/15 times

Jun. 2013

Jun. 2016
Jun. 2017
Jun. 201955

General Manager of Office Users Business Division, Corporate Sales Promotion
Headquarters, Nippon Telegraph and Telephone East Corporation
Senior Vice President, Deputy General Manager of Corporate Sales Promotion
Headquarters and Office Users Business Division, Corporate Sales Promotion
Headquarters, Nippon Telegraph and Telephone East Corporation
Managing and Operating Officer, General Manager of Communication &Business Network Headquarters, Exeo Group, Inc.
Director and Managing and Operating Officer, General Manager of Communication& Business Network Headquarters, Exeo Group, Inc.
Director and Managing and Operating Officer, General Manager of Group
Business Promotion Division, Exeo Group, Inc. (present position)

Exeo Group Integrated Report 2022

Number of the Company’s shares held: 14,900
Board of Directors meeting attendance in FY2021: 11/11
Board of Statutory Auditors meeting attendance in FY2021: 11/11

Outside Independent

Tomoko Aramaki
Apr. 2017
Apr. 2017
Jan. 2019
Jun. 2019
Jun. 2019
Sep. 2019
Apr. 2021

Professor, Institute of e-Government, Waseda University (present position)
President, International Academy of CIO Japan (present position)
Committee Chair, Smart Silver Innovation Committee, APEC (present position)
Outside Director, Exeo Group, Inc. (present position)
Outside Director, ITOCHU Techno-Solutions Corporation (present position)
Member of Policy Evaluation Council, Ministry of Internal Affairs andCommunications (present position)
Expert Advisor, Public Records and Archives Management Commission, Cabinet
Office (present position)

Outside Independent

Tatsushi Mochizuki
Director

Statutory Auditor
Number of the Company’s shares held: 0
Board of Directors meeting attendance in FY2021: 15/15
Board of Statutory Auditors meeting attendance in FY2021: 16/16

Outside Independent

Shinnosuke Yamada
Statutory Auditor
Number of the Company’s shares held: 0
Board of Directors meeting attendance in FY2021: 15/15
Board of Statutory Auditors meeting attendance in FY2021: 16/16

Number of the Company’s shares held: 600
Board of Directors meeting attendance in FY2021: 15/15 times

Outside Independent
Jul. 2006
Oct. 2008

Fumitoshi Imaizumi

Jan. 2010
Sep. 2012

Head of Data Centers, Cloud Services, NTT Communications Corporation
Deputy General Manager of Solution Sales Division and Deputy General Manager
of Solution Promotion Department, ICT Solutions Headquarters, Exeo Group, Inc.
General Manager of Solution Promotion Department and Deputy General
Manager of Solution Sales Division, ICT Solutions Headquarters, Exeo Group, Inc.
Managing Director and President, Exeo Global Pte. Ltd. (present position)
General Manager of Global Business Department, ICT Solutions Headquarters,
Exeo Group, Inc.
Operating Officer, General Manager of Global Business Department, ICT
Solutions Headquarters, Exeo Group, Inc.
Managing Operating Officer, General Manager of Global Business Department,
ICT Solutions Headquarters, Exeo Group, Inc.
Director and Managing Operating Officer, General Manager of Global Business
Department, ICT Solutions Headquarters, Exeo Group, Inc. (present position)

Masato Suwabe
Standing Statutory Auditor

Number of the Company’s shares held: 0
Board of Directors meeting attendance in FY2021: 15/15 times

Director and Managing Operating Officer
Number of the Company’s shares held: 2,500
Board of Directors meeting attendance in FY2021: -/- times

Jun. 2022

Yuichi Koyama

President and Representative Director, NTT Neomeit Corporation
Member of the Board, Nippon Telegraph and Telephone West Corporation,
President and Representative Director, NTT Neomeit Corporation
Member of the Board, Executive Manager, Service Management Department,
Plant Headquarters, Nippon Telegraph and Telephone West Corporation
Member of the Board, Executive Manager, Service Management Department,
Plant Headquarters, Nippon Telegraph and Telephone West Corporation,
President and Representative Director, NTT Fieldtechno Corporation
Managing Operating Officer, Representative of West Japan Head Office,Branch Manager of Kansai Branch, and Deputy General Manager of ICT
Solutions Headquarters, Exeo Group, Inc.
Director and Managing Operating Officer, Representative of West Japan Head
Office, Branch Manager of Kansai Branch, and Deputy General Manager of ICT
Solutions Headquarters, Exeo Group, Inc.
Director and Managing Operating Officer, Representative of West Japan Head
Office, Branch Manager of Kansai Branch, Exeo Group, Inc. (present position)

Newly appointed

Jun. 2021

Jun. 2014

Data section

Sep. 2013
Apr. 2014
Aug. 2019
Jun. 2020

Vice Governor of Mie Prefecture
Deputy Director-General of Minister's Secretariat, Ministry of Internal Affairs andCommunications
Deputy Director-General of Office for the Local Sovereignty Strategy Council at
Cabinet OfficeDirector-General of the Local Administration Bureau, Ministry of Internal Affairs
and Communications
Advisor, Nippon Life Insurance Company
Vice Chairman, Japan Agency for Local Authority Information Systems
Secretary-General, National Association Chairpersons of Town and Village
Assemblies (present position)
Outside Director, Exeo Group, Inc. (present position)

Kimiko Takahashi
Statutory Auditor
Number of the Company’s shares held: 0
Board of Directors meeting attendance in FY2021: 11/11
Board of Statutory Auditors meeting attendance in FY2021: 10/11

Outside Independent

Keiji Yoshida
Director
Number of the Company’s shares held: 800
Board of Directors meeting attendance in FY2021: 11/11 times

Apr. 2013
Apr. 2014
Apr. 2016
May. 2017
Apr. 2020
Jun. 2021

Director and Senior Vice President, Urban Environment Division, JFE Engineering
Corporation
Representative Director and Senior Vice President, Urban Environment Division,
JFE Engineering Corporation
Representative Director and Executive Vice President, JFE Engineering
Corporation
Chairman, Japan Water Steel Pipe Association
Advisor, JFE Engineering Corporation
Director, Exeo Group Inc. (present position)

Exeo Group Integrated Report 2022

56

Corporate governanceValue creation story

Corporate governance

Composition of the Nomination Committee for fiscal 2022
Committee
chairmanfrom a perspective of fairness and impartiality, the execution ofduties by the Board of Directors and audit the business andfinancial conditions of major offices and Group companies.
We have also adopted an operating officers system toseparate the management decision-making and supervisory
function from the business execution function, to achieve
prompt and appropriate decision-making and businessexecution while further strengthening our corporate
governance. The Board of Directors, chaired by the
Representative Director and Chairman, makes decisions onimportant matters and supervises business execution. Operating
officers execute operations based on the Board of Directors’decisions. Furthermore, we have a Management Council inplace that discusses important business execution matters.
Additionally, to further enhance our corporate
governance, we have established a Nomination Committee
and Compensation Committee as internal units of the Boardof Directors. The Nomination Committee deliberates onmatters such as the nomination of candidates for directors anddismissal of directors. The Compensation Committee
deliberates on matters such as remuneration and bonuses for
Directors. Each reports relevant items to the Board of Directors.

Governance system and rationale for adopting
this system
The Company has adopted a Company with Audit andSupervisory Board format, having determined this system to be
the most conducive to ensuring appropriate corporate
governance. Members of the Board of Statutory Auditors attend
meetings of the Board of Directors and other important meetingsin accordance with the audit policy and audit plan. They observe,
Simplified chart of corporate governance system
FormatCompany with Audit andSupervisory Board

Directors

11 (including 4 outside directors)

Auditors

5 (including 3 outside auditors)

Number of Board of Directors meetings
held this fiscal year

15

Number of Board of Statutory Auditors
meetings held this fiscal year

16

Operating Officers System

Yes

Internal units of the Board of Directors

Nomination Committee andCompensation Committee
established

Mino

Directors

Board of Corporate Auditors

Appointment/Dismissal
Determination of the appropriatenessof accounting audits

Statutory auditors

Report

Audit

ReportReportReportReportPresident

Audit

Independent Auditor

Audit

Board of Directors

Supervision

Management Council
ReportConsultation, Directions

Committee
chairman

KoharaOperating officers and organizational heads
Representatives of Group companies
Business and administrative departments and branches
Supervision

ReportInternal Control Committee

WatabeKoyama Imaizumi Iwasaki Mochizuki Yoshida(honorifics omitted)

Evaluating the effectiveness of the Board of
Directors
To enhance the function of the Board of Directors andcorporate value, we evaluate the effectiveness of our Board of
Directors based on the results of questionnaire surveys among
all Directors and Statutory Auditors, which are collected andanalyzed by an external organization to ensure objectivity, as
well as discussions at meetings of the Board of Directors. It has
been confirmed that our Board of Directors has adequate scaleand structure and is appropriately operated to ensure proper
decision-making on important management agendas andGovernance

Data section

supervision of business execution.
We took an additional measure to strengthen governancewhile also increasing our ratio of female officers by adding one
female independent outside statutory auditor from June 2021.
In addition, we continued to distribute Board of Directors’
meeting materials as early as possible, to enhance theexplanations that we provide in advance to independent outside
directors and independent outside statutory auditors, and toarrange for site visits by independent outside directors. During the
fiscal year under review we also conducted “Vector Meetings,”
for 16 projects, in which all business units get on the same pageby discussing their business strategies among other matters at
an early stage. Also, based on our awareness of the need to holdsufficient discussions on initiatives to improve sustainability
such as ESG and the SDGs, we established the Sustainability
Committee in April 2022. We are also working hard to bolster
our sustainability initiatives, including through timely reporting by
the Sustainability Committee to the Board of Directors.
Outside directors and outside statutory auditors actively
make sound comments from an independent standpoint
grounded in sufficient insight in discussions at meetings of theBoard of Directors. We see the undeniable effects of these efforts
in the strengthened effectiveness of the Board of Directors.
Going forward, based on these results of Board of
Directors effectiveness evaluations and opinions, theCompany’s Board of Directors will fully consider measures for
improving its effectiveness and continue to implement
initiatives for enhancing its functions.

Sustainability Committee

ReportDirections

Internal audit

Increased proportion of outside directors

Report11 in total

1 person

12 in total

1 person

15 in total

1 person

11 in total

1 person

12 in total

1 person4 outside

2020

Increased the number of outside directors
8 inside(from 3 to 4)
The majority of the members of theNomination Committee and Compensation 4 outside
Committee are outside members

2018

Increased the number of outside directors(from 2 to 3)

12 inside
3 outside

2015

Increased the number of outside directors
9 inside(from 1 to 2)
Using a third-party organization, conducted
a questionnaire for evaluating the
2 outside
effectiveness of the Board of Directors

2014

Appointed an outside director (1)11 inside

Information Security Committee

Group companies

FemaleDirectors

Composition of the Board of Directors
7 inside2021

Compliance Committee

Instructions
Collaboration

Exeo Group Integrated Report 2022

Committee members

Business Risk Management Committee

Risk Management Division

57

Iwasaki Mochizuki YoshidaOutside Director

Response, Report

Corporate Lawyer

Directions, Supervision

Sakaguchi Kohara

MeasureAppointment/Dismissal

Appointment/Dismissal

Response

Asano

Composition of the Compensation Committee for fiscal 2022

General meeting of shareholders

Consultation

Committee members

Strengthening our business infrastructure

Transition to a stronger governance system

Our corporate governance system (As of June 24, 2022)

Nomination Committee
Compensation Committee

Value creation strategy

1 outside2009

Adopted an operating officers system

8 inside

8 in total

0 person

2003

Established Nomination Committee andCompensation Committee

18 inside

18 in total

0 person

Exeo Group Integrated Report 2022

58

Corporate governanceValue creation story

abundant experience and wide-ranging knowledge. Outside
statutory auditors fulfill the management monitoring function
by auditing from an objective standpoint, offering aperspective informed by advanced expertise, abundant
experience, and wide-ranging knowledge.
Regarding the criteria or policies concerning independence
for appointing outside directors or outside statutory auditors,
the Company secures independent directors and auditorsin accordance with Article 436-2 and Article 445-4 of the
Securities Listing Regulations of Tokyo Stock Exchange, Inc.,and the criteria for determining independence stipulated by thesame exchange (“Guidelines for Listing Management, etc.”).

Use of outside directors and auditors
The Company has four outside directors and three outside
statutory auditors. The functions and roles that outside
directors and outside statutory auditors should carry out in thecorporate governance of the Company are as follows. Outside
directors fulfill the function of supervising and monitoring themanagement of the Company from an independent andneutral standpoint, providing comments based on their
Reasons for selection of outside directors
Having gained deep experience and insight in corporate

Yasushi Kohara
management at the Toyota Group, Mr. Kohara has provided
Appointed in 2018
appropriate advice and recommendations in important●●management decisions of the Company, appropriately(Committee chair) fulfilling his role as an outside director.

Remuneration of officers

Ms. Iwasaki is a leading international researcher and expert on
the use of ICT in international relations, national and local
Naoko Iwasaki
government administration, disaster countermeasures and BCP,
Appointed in 2019 aging society, and women’s career advancement. She has
provided appropriate advice and recommendations in●●important management decisions of the Company,
appropriately fulfilling her role as an outside director.

Policy for Determining the Content of Individual
Remuneration, etc. for Directors
Our basic policy concerning the decision-making about
compensation for directors and its calculation is to effectively
incentivize executives to contribute to increasing our businessvalue and improving our short, medium, and long-term
performance, and to maintain for a standard that enables us tosecure outstanding talent who will drive our business as theleading information and communication network company.
Our specific policy concerning the decision-making about
compensation and its calculation is deliberated by theCompensation Committee, which is comprised of directors
including independent directors selected by the Board of
Directors, and then determined by resolution of the Board of

Mr. Mochizuki has been involved in key positions in central

Tatsushigovernment ministries and local governments for many years.
Mochizuki
With the insight he has accumulated through his career, heAppointed in 2020 has provided appropriate advice and recommendations inimportant management decisions of the Company,●●
appropriately fulfilling his role as an outside director.

Mr. Yoshida has a wealth of experience and insight incorporate management as an officer of JFE Engineering
Keiji Yoshida
Corporation and other companies. He has provided
Appointed in 2021
appropriate advice and recommendations in important●●management decisions of the Company, appropriately
fulfilling his role as an outside director.

● denotes members of Nomination Committee for fiscal 2022
● denotes members of Compensation Committee for fiscal 2022

Directors

Statutory
Auditors

Engineering

Marketing &global business

Finance, legal,
human resources &labor relations

●

●

●

●

●

●

●

Name

Corporate
management & ESG

Innovation & DX

Tetsuya Funabashi●

Koichi Mino●

Noriyuki Watabe●●

Kenji Asano●

Takafumi Sakaguchi●

Fumitoshi Imaizumi●

Yasushi Kohara●

Naoko Iwasaki●

Tatsushi Mochizuki●

Keiji Yoshida●

Yasuo Otsubo●

Masato Suwabe●

Tomoko Aramaki●

Kimiko Takahashi

●
●
●

●

●

●

●

●

●

●

●

●

●
●

●
●

●

●

●

●

●
●

●

●
●
●

Shinnosuke Yamada●●

Note: These are the skills that directors and statutory auditors are particularly expected to have, and this table does not comprehensively indicate their entire skillsets.

59

Exeo Group Integrated Report 2022

Directors to secure the transparency and fairness of thedecision-making process. Compensation for Directors consistsof base compensation, bonuses, and restricted shares. Details
are as shown in the table below.

Governance

Data section¥80 million per year. The number of statutory auditors as of theclose of this Ordinary General Meeting of Shareholders is five.
Matters concerning the delegation of responsibility
for determining details of individual remuneration,etc. of directors

Matters concerning resolutions of the General
Meeting of Shareholders regarding remuneration,etc. of directors and statutory auditors

Tetsuya Funabashi, President and Representative Director,
determines the specific amount of compensation for eachindividual director in the Group based on the authority
delegated to him by resolution of the Board of Directors.
Such authority, which governs the determination of theamount of base compensation and bonuses for each director,
was delegated to the President and Representative Director on
the grounds that the President and Representative Director isthe most suitable person to evaluate, in the context of theCompany’s overall performance, each of the businesses forwhich directors are responsible.
The Board of Directors has made it a condition of theabove delegation that the Compensation Committee shallconfirm that details such as the amount of base compensationfor each director are appropriate, to ensure that the above
authority may be properly exercised by the President andRepresentative Director. Since the amount of remuneration foreach individual director has been determined through suchconfirmation procedures, the Board of Directors has determinedthe content to be in line with the decision-making policy.
The Compensation Committee, which conducts the above
procedures, met three times during the fiscal year under review.

It was resolved at the 55th Ordinary General Meeting of
Shareholders, held on June 23, 2009, that the amount ofmonetary remuneration for directors shall not exceed ¥350
million per year (not including employee salaries in the case of
directors who also serve as employees). The number of directors
as of the close of this Ordinary General Meeting of Shareholders
is eight. In addition, separate from monetary remuneration,
it was resolved at the 65th Ordinary General Meeting of
Shareholders, held on June 21, 2019, that: the annual amountof remuneration for performance-linked restricted stock shallnot exceed ¥50 million and the maximum number of sharesshall not exceed 50,000 shares per year; the annual amount of
remuneration for continuous service-linked restricted stock shallnot exceed ¥50 million and the maximum number of sharesshall not exceed 50,000 shares per year. (Outside directors are
not eligible.) The number of directors (excluding outside
directors) as of the close of this Ordinary General Meetingof Shareholders is 12.
At the 55th Ordinary General Meeting of Shareholders,
held on June 23, 2009, it was resolved that the amount ofmonetary remuneration for statutory auditors shall be within

Total amount of remuneration, etc. for directors and statutory auditors

Skills matrix of directors and statutory auditors

Yuichi Koyoma

Strengthening our business infrastructure

Value creation strategy

Classification of officers
Director(excluding outside directors)

Statutory auditors(excluding outside statutory auditors)
Outside directors
Outside officers
Outside statutory
auditors

Total amount of
remuneration, etc.
(¥ Millions)

Total amount of remuneration, etc. by type (¥ Millions)Monetary remuneration

Non-monetarycompensation

Number of eligible
officers (persons)Base compensation

Bonus

Restricted stock

238

113

85

39

9

40

40

―

―

3

45

45

―

―

5

25

25

―

―

3

Note:
１．Amounts are rounded down to the nearest million yen.
２．The above figures include three directors (including one outside director) and one auditor who retired at the conclusion of the 67th Ordinary General Meetingof Shareholders held on June 23, 2021.
３．Base compensation is aligned with the rank of the position and is fixed at an appropriate level based on consideration of the business environment and market rates.
４．Bonuses are paid to directors (excluding outside directors), and are determined based on a comprehensive consideration of the business environment and other factors,
with the basic principle of linking bonuses to business performance based on consolidated profit for the fiscal year under review. The calculation indices for bonuses areconsolidated operating profit and profit attributable to owners of parent, as directors are responsible, as business operators, for overall consolidated performance. In thefiscal year under review, the target for consolidated operating profit was ¥37.0 billion and the target for profit attributable to owners of parent was ¥24.1 billion. The
actual results were ¥42.3 billion in consolidated operating profit and ¥27.7 billion in profit attributable to owners of parent.
５．As non-monetary remuneration, etc.,13,600 shares of restricted stock have been issued to seven directors (excluding outside directors). Restricted stock consists ofperformance-linked restricted stock and continuous service-linked restricted stock. Performance-linked restricted stock is granted in accordance with the rank of
the employee, based on linkage with the achievement of business results through medium- to long-term consolidated profits, etc., for the purpose of providing
medium- to long-term incentives for the sustainable enhancement of corporate value and promoting the sharing of value with shareholders. The performancelinked index for performance-linked restricted stock is consolidated operating profit. It is directly linked to the achievement of performance targets, providing an
index that promotes the sharing of value with shareholders. With respect to service continuous service-linked restricted stock, the condition for waiving the
restriction on transfer is that the employee continuously serves as a director of the Company or in a certain other position for a certain period of time.
６．Since outside directors and statutory auditors are independent from the execution of business, their remuneration is limited to base compensation.

Exeo Group Integrated Report 2022

60

Corporate governanceValue creation story

Risk management
The Group’s basic policy for risk management is as follows:
Basic Policy(1) When setting strategies and business performance targets
and engaging in efforts to achieve them, we seek integrationof strategies and risk management by considering risk
profiles, risk appetite, risk capacity and risk tolerance.
(2) By recognizing risks clearly at an earlier stage and promptly
providing as many choices as possible for risk management,
we reduce the possibility of unachieved business targets,losses, accidents, and failures.
(3) By monitoring risks on a regular basis, we address any
deviation from intended performance swiftly and withconsistency.
(4) With a grasp of our comprehensive and consistent risk
portfolio, we seek optimum allocation of the Group’s
resources.

Risk management system
The Group sets forth its basic rules on risk management in the“Risk Management Rules” and sets up risk categories andcorresponding Risk Management Divisions. In addition, theGroup established and has been operating the Business Risk
Management Committee as the Group-wide risk manager to
identify and evaluate Group-level risks.
Risk management category
Management
risk

Business risk

Risk management category

Description of the risk

Business
Risk relating to changes in theenvironment risk management and business environments
Management
strategy risk

Business Risk Management Committee
As the Group-wide risk manager, the committee wasestablished to provide the risk management systems required
to accomplish strategies and business performance targets inthe process of creating, maintaining, and realizing value andto steadily provide the Groupʼs stakeholders with reasonable
expectations that risks can be controlled to a tolerable amount.
The standing members of the Committee are the General
Manager of the Corporate Planning Division, the General
Manager of the Group Business Promotion Division, theGeneral Manager of the Accounts & Finance Division, and theGeneral Manager of the Risk Management Division. The
number of meetings held in fiscal 2021 was 12.
Business Risk Manager (1st-tier risk manager)
As the 1st-tier risk managers, the Business Risk Managers set
forth strategies that are consistent with the Exeo Groupʼsmission, vision, and core values. In addition, the managers
develop concrete action plans and manage the progress
thereof to address risks according to the environments of theirorganizations and in line with the risk-addressing policies
presented by the Support Division teams.
Support Division (2nd-tier risk manager)
As the 2nd-tier risk managers, the Support Division teams
provide guidelines for addressing the category of risks theyattend to and monitor the appropriateness and effectivenessof measures taken to address risks and the status of corrections.

Risk relating to the decision-making
concerning management and businessstrategies, etc.

Business process risk

Risk relating to daily business operations

Disaster risk

Risk relating to the occurrence of natural
disasters

Risk management system
Board of Directors
Supervision<Management>

Board of Statutory Auditors
ReportInternal Control Committee

President

Support Division
The Company’s Head Office staff unit

Management Council
Business Risk Management Committee
Group-wide risk manager
Business Risk Managers
Heads of organizational units at theCompany’s Head Office, branchmanagers and presidents of subsidiaries(1st-tier risk manager)

61

Exeo Group Integrated Report 2022

<Risk Management Division>(2nd-tier risk manager)

Internal Audit Division(3rd-tier risk manager)

Value creation strategy

Internal Audit Division (3rd-tier risk manager)
As the 3rd-tier risk manager, the Internal Audit Division
conducts internal audits of the performance of the Business
Risk Managers to identify problems and matters to be
improved, issues recommendations for improvement, provides
the latest information on the matters to be improved, andverifies the status of improvement.
Utilization of the ISO-compliant management systems
The Company acquired ISO certification for quality assurance,
environmental conservation, occupational health and safety
and information security and is committed to implementing
management systems to standardize operations and makethem more efficient.
Utilizing the risk assessment methods of ISO management
systems, we are formulating and implementing our ExeoGroup Management Policies which summarize our policies for
dealing with Group-wide risks as we strive to continuously
improve the effectiveness and appropriateness of ouroperations.
ISO management systems of which certification has beenacquiredCategory

Applicablestandards

Date of registration

Quality Management System

JIS Q
9001:2015

February 22, 1999

Environment Management
System

JIS Q
14001：2015

May 12, 2000

Occupational Health and
Safety Management System

JIS Q
45001：2018

September 19,2003

Information Security
Management System

JIS Q
27001：2014

November 10, 2004

Strengthening our business infrastructure

Governance

Data section

targeted email attacks, and various security checks.
Efforts to protect personal information
The Company engages in a broad range of business
operations and handles a large amount of personal
information in the process of carrying out these operations. In
the recognition that appropriately managing such information
is a corporate social responsibility, we are promoting efforts toensure the protection of private information under the Privacy
Policy.
In response to the Amended Act on the Protection of
Personal Information which took effect in April 2022, we
reviewed and enhanced our privacy management measures byrevising in-house rules, taking an inventory of personal
information held, and reviewing the management of records
concerning the provision and receipt of personal information.
To ensure the continued protection of personal
information in an appropriate manner, we have continually
updated our certification of the Personal Information
Protection Management System.
For the details of
the Exeo Group Privacy Policy, visit:https://www.exeo.co.jp/en/company/ppolicy.html

Information security
In the course of its business operations, the Group handles
important information, such as technical data and customer
data owned by customers. We are working to strengthen our
information security, given the increasingly critical importanceof appropriate information management, amid the spread ofcloud services, social media, and other forms of networks.
In terms of our system, we are improving ourmanagement system by assigning an officer in charge as thechief information security officer, as well as assigning an
information management officer and information manager foreach organization. In addition, under the supervision of theInformation Security Committee, we determine policy for theGroup's efforts, monitor the overall status of the efforts,
consider measures to prevent recurrence in the event of an
accident, conduct training via e-learning systems, evaluate thestatus of improvement, and promote continuous improvement.
Furthermore, the Group conducts information security
training for all employees, mock exercises to respond to

Exeo Group Integrated Report 2022

62

Corporate governanceValue creation story

Compliance
Everybody on our management team maintains a highstandard of ethics when conducting business. Furthermore,individual directors and employees take principled actions
grounded in compliance to fulfill their social responsibility.
Exeo Group Basic Actions Declaration
Based on the Exeo Group Compliance Program, theofficers and employees of the Group presuppose
compliance with not only laws and regulations but also
corporate ethics, including the spirit underlying thoseethics, and engage in activities with high social value,
thereby contributing to society.
Given that a company is part of society, it is aprerequisite for all stakeholders in a company,irrespective of whether they are officers or employeesof the company, to comply with laws and corporate
ethics when carrying out the companyʼs business
operations. Such compliance is also to be expected ofus as individual members of society.
In addition, ensuring such compliance is
indispensable for the company to maintain the trust ofsociety and realize the Groupʼs corporate philosophy of“Contributing to Society.”
In light of the above, we shall without hesitation
prioritize laws, regulations, and corporate ethics in case
we are forced to choose between earnings or ethics inour own activities.

the contact point for whistleblowers and guidelines for use.
To strictly protect the privacy of whistleblowers andensure that users of the system do not suffer any
disadvantageous treatment, we are taking all possible
measures in accordance with the implementation of theamended Whistleblower Protection Act, including formulationof in-house whistleblower protection rules for each company
in the Group as we work to resolve each issue.
Compliance training
We conduct compliance training at least once a year for
management and all employees.
We invite outside instructors to provide training for
management-level employees, including officers such as
representative directors, general managers of the head office,branch managers, and presidents of Group companies. In
fiscal 2021 there were over 130 participants in the training.
We also conduct basic compliance training for all
employees, in addition to raising awareness effectively byincorporating compliance into training by job level andproviding training on the content of each job position.

FY

Topic

2021

Business & human rights

2020

Compliance, management systems

2019

Key points of the Amended Law of Obligations(civil code amendment)

Collaboration

Direction

Risk
Management
Division(Support Desk)Collaboration

Guidance
andcontrol

Exeo Group, Inc.
Departments and Branches

Guidance

Group companies

Whistle-blowing system(Exeo Group, Inc. CEO)Group Compliance Officer

Exeo Group, Inc.

Advisory
andcollaboration(Harassment
Investigation
Committee)

Group Business
Development Division
Responsible Compliance
Promoter

Persons in Charge of
Promoting Compliance
Employees

Management
and control of
the compliancesystemGuidance andoversight ofwork sites and of
trading units

Referrals andconsulting* Supervision and monitoring of the compliance system is carried out by the Board of Directors and Board of Statutory Auditors

63

Exeo Group Integrated Report 2022

Compliance program

Basic policy
In response to the economic, social, legal, and other expectations thatsociety has for each company in the Group, we meet these expectations
and contribute to society by taking principled actions and practicing
compliance in carrying out our work each day.

Compliance questionnaire
surveyEstablish
whistleblowing system
Conduct internal audits,
etc.

Monitoring &discoveryGroup
complianceofficer

Organize reporting &communication systems
Identify compliance risks
Compliance training for
management
Commitment from upper
management, etc.

Groupcompliancerisk control
standards

Compliancepromotion
activities

Training topics for management

Compliance system

Compliance
Committee

Compliance initiatives
We have established a common Compliance Improvement
Month throughout the Group to further reinforce compliance.

Recordkeeping

Whistle-blowing system
Regarding compliance-related concerns, the “Support Desk” isthe contact point for whistleblowers, and the “Lawyer Hot
Line” is provided to enable direct consulting or communication
with corporate lawyers. All employees of the Exeo Group areprovided with “Compliance Cards” to raise their awareness ofCorporate lawyers(Lawyer Hot Line)

Value creation strategy

Compliance Officer
at each company(President)

Responsible
compliance promoter
at each company

Employees of eachGroup company

Establish rules for
managing documents
Information security, etc.

Establish rules
Establish a risk
management system
Disseminate
compliance manuals
Conduct training andcomprehension tests
Compliance
Improvement Month,etc.

Discussions with shareholders and investors
Shareholdersʼ Meeting
On June 24, 2022, the Company held its 68th Annual
Shareholders’ Meeting. The scale was reduced for the third
consecutive year due to social distancing measures during the
pandemic.
The Company views the meeting as an important forum
for communicating with its shareholders. Accordingly, in
addition to the first seven features below which were offered
last year, starting this year we are also broadcasting theshareholders’ meeting online (hybrid interactive and virtual
shareholders’ meeting).
1. Holding the meeting on a day that avoids a highconcentration of other shareholders’ meetings
2. Early dispatch of the convocation notice
3. Disclosure of the convocation notice prior to dispatch
4. Exercise of voting rights by electromagnetic means
5. Participation in the voting rights exercise platform
6. Disclosure of an English-language convocation notice
7. Introduction of a smartphone-based voting right exercise
service
8. Broadcasting the shareholders’ meeting online(Hybrid interactive and virtual shareholders’ meeting)Strengthening our business infrastructure

Governance

Data section

Shareholder benefits
One of our initiatives to increase the attractiveness of ourshares is our shareholder benefits program.
Shareholders who hold 1,000 shares or more at the endof March each year will receive a Quo Card worth ¥1,000 if
they have held these shares for less than three years, or ¥2,000
if they have held their shares for three years or longer.
Earnings announcement
We are listed on the Prime Market of the Tokyo Stock
Exchange, and in accordance with the Securities Listing
Regulations we prepare full-year and quarterly summaries offinancial results, and disclose them fairly, promptly, andextensively through TDnet and other media. We also takeproactive measures to publicize our earnings status suchas publishing English-language versions of financial results
information on our website.
IR activities
We hold financial results briefings, business briefings, site
tours, and individual investor briefings for shareholders,institutional investors, and securities analysts to promote
understanding of the Company's business and performancetrends. We hold many individual meetings with domestic
institutional investors and securities analysts throughout theyear. For overseas investors in Europe, North America, Asia,and other regions with a high ratio of foreign shareholders,
we arrange a meeting with the president once a year toproactively communicate with them.
In fiscal 2021, we held all of the above-mentioned
briefings and meetings online again as we did in fiscal 2020
due to the coronavirus pandemic. We will continue to conduct
IR activities energetically while taking all possible precautions
against infections.

Online meetings withoverseas investors

Financial results briefing
held via Zoom
Please see ourcorporate website for IR information.

https://www.exeo.co.jp/en/ir/

Exeo Group Integrated Report 2022

64

Eleven-year major financial data

Value creation story

Value creation strategy

Strengthening our business infrastructure

Governance

Data section

Unit

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

Orders received¥Millions

288,532

317,862304,201

301,446

300,438

324,102

325,029424,318

556,321631,088595,373

Net sales of completed construction
contracts¥Millions273,134

301,319

318,513300,912287,437

298,825

312,669

423,727

524,574

573,339594,840

Gross profit on completed construction
contracts¥Millions

26,806

36,11338,54335,74035,79538,48043,35458,33768,32775,86584,323Operating Profit¥Millions

17,886

18,067

17,80917,382

17,382

17,607

17,732

26,62037,226

39,241

41,942

Selling, general and administrative
expenses¥Millions

8,919

18,046

20,734

18,35818,412

20,87325,621

31,716

31,10036,62342,380Ordinary profit¥Millions

9,178

18,11920,602

18,58918,512

21,40926,44833,431

30,66938,18645,217

Profit attributable to owners of parent¥Millions

7,856

11,313

14,91012,264

12,184

13,78917,99340,21915,60324,192

27,766

Capital expenditures¥Millions

1,964

3,360

7,372

4,219

13,215

7,139

4,194

3,887

15,855

12,23920,802

Depreciation¥Millions

2,947

2,308

2,264

2,660

3,001

3,251

3,272

4,725

6,473

6,789

7,414

Total assets¥Millions

181,291

200,412217,091

228,422238,301

243,438

261,305

416,483

444,905

491,574

535,617

Property, plant and equipment¥Millions

47,73647,70750,76752,00559,83062,002

62,664

97,955

107,677

113,375

126,900

Net assets¥Millions

113,411

122,387

135,687

146,768

151,241

158,280

176,101

267,811

270,109288,884

307,053

9,908

13,374

8,679

16,29912,825

11,43518,04947,16757,52080,619Item

Operating results

Financial status

Balance of interest-bearing debt
¥Millions(balance of loans payable, bonds payable, etc.)

8,178

Cash flow status
Cash flows from operating activities¥Millions

16,435

7,160

9,888

23,167

5,389

15,50424,80012,77017,2996,301

26,406

Cash flows from investing activities¥Millions(4,523)(2,160)(7,477)(2,828)(13,907)(6,027)(4,538)(17,609)(17,085)(9,249)(20,388)

Free cash flow

¥Millions

11,912

4,999

2,411

20,338(8,518)9,477

20,262(4,839)213(2,947)

6,018

Cash flows from financing activities¥Millions(17,533)(3,038)(905)(12,343)313(10,230)(5,137)(4,924)4,227(1,750)5,023

Cash and cash equivalents at end of
period¥Millions12,304

14,611

16,21324,291

16,037

15,241

30,343

41,46946,012

41,24653,727Per share data
Earnings per share

¥

74.96

109.25147.75123.83125.90145.24

189.42

390.25139.75217.33250.64

Net assets¥

1,084.44

1,199.86

1,350.05

1,482.82

1,569.09

1,668.29

1,842.97

2,343.43

2,395.16

2,576.78

2,748.21

Cash dividend

¥

20

22

24

32

38

46

50

70

80

82

96

Payout ratio

%

26.7

20.1

16.2

25.8

30.2

31.7

26.4

17.9

57.2

37.7

38.3

Operating profit margin

%

3.3

6.0

6.5

6.1

6.4

7.0

8.2

7.5

5.9

6.4

7.1

Profit attributable to owners of parent to
net sales

%

2.9

3.8

4.7

4.1

4.2

4.6

5.8

9.5

3.0

4.2

4.7

Return on equity (ROE)

%

7.2

9.6

11.6

8.7

8.2

8.9

10.8

18.3

5.9

8.8

9.4

Return on assets (ROA)

%

4.2

5.9

7.1

5.5

5.2

5.7

7.1

11.9

3.6

5.2

5.3

Equity ratio

%

62.4

60.9

62.3

64.0

63.3

64.8

66.6

63.4

59.9

58.1

56.6

Highest stock price

¥

863

1,079

1,495

1,494

1,543

1,744

3,075

3,410

3,135

3,030

3,065

Lowest stock price

¥

675

690

944

1,141

1,096

1,142

1,559

2,309

1,906

2,182

2,261

People

7,872

7,521

7,553

7,988

7,903

8,074

8,331

13,151

13,882

14,374

15,847

Financial indices

Stock price

Other
Number of consolidated employees

65

Exeo Group Integrated Report 2022

Exeo Group Integrated Report 2022

66

Analysis of operating results and financial status

Operating results

Although the economy of Japan had been expected to recoverin the current consolidated fiscal year (April 1, 2021 to March
31, 2022) along with decreases in COVID-19 infections resulting
from thorough measures to combat the spread of the virus aswell as vaccination efforts. However, the pandemic hasremained rampant due to repeated arrivals of multiple newvariants and recurring outbreaks, and due to concerns aboutrisks arising from Russia’s invasion of Ukraine, we must staysufficiently vigilant about problems such as those resulting fromspikes in the cost of raw materials and breakdowns in supply
chains.
In the information and communications field in which theCompany does business, investments by NCCs in mobile basestations are ongoing, development of information infrastructurethat will form the foundation of digital society is accelerating,
and we anticipate that investments to bridge the digital divide
will continue. In the field of construction, we forecast thatprivate capital investment will show a trend toward recovery,
and for investments in public projects we expect business to bestrong for the renewal and maintenance of aging social
infrastructure such as roads.
Under this business environment we operated our businesswith both caution and flexibility as we strived to prevent the
spread of COVID-19 and established in-house environments
for teleworking and kept them functioning, while taking actions
such as applying as quickly as possible for worksite vaccinations
and carrying out three-dose vaccinations.
In the telecom carriers business, we are making steadyprogress in the Project on Promoting Advanced Radio
Environment Improvements in regional areas, while in the field

Value creation storyof mobile we are working on our nationwide business profile inbuilding base stations including for 5G, and other infrastructure.
In the urban infrastructure business, business was strong inorders received for large projects such as the construction oflarge data centers and the Linear Chuo Shinkansen. In
renewable energy, we pushed forward in construction of woody
biomass power plants while accelerating our human resources
development with the aim of entering the offshore wind power
generation business in the future. In the system solutions
business, we leveraged the opportunities of work style reforms
to deploy solutions related to DX implementation, and also
continued actively selling to customers in the education industry.
In our global business, we were affected by lockdowns in eachcountry primarily in the telecommunications construction field,
but thanks to strong performance in solutions businessincluding for digital trade platforms, profitability still steadily
improved and we were able to advance from establishing abusiness foundation to the growth phase. Moreover, we actively
added subsidiaries with strength in future growth fields in theurban infrastructure and system solutions businesses, with thegoal of further business growth.
As a result of these efforts, net sales increased by ¥21,500
million from the previous consolidated fiscal year to ¥594,840
million (up 3.8% year over year). Regarding profits, operating
profit increased by ¥5,757 million from the previous
consolidated fiscal year to ¥42,380 million (up 15.7% year
over year), ordinary profit increased by ¥7,030 million from theprevious consolidated fiscal year to ¥45,217 million (up 18.4%
year over year), and profit attributable to owners of parent
increased by ¥3,573 million from the previous consolidated
fiscal year to ¥27,766 million (up 14.8% year over year).

Financial status

As of March
31, 2021

491,574

Other current assets

67

Exeo Group Integrated Report 2022

26,433 UP(1,257)
13,525Investments and other assets

As of March
31, 2022

535,617

Total non-current
assets3,566

17,610 UP

519

Year over year

¥44,043 million UP

Analytical chart of liabilities and net assets (¥Millions)

491,574(5,311)
11,247(10,000)
10,000Total liabilities

25,875 UP

11,169Long-term borrowings

5.2

Other liabilities

(2.9)

8,773

18,598486
Remeasurements of defined benefit plans 489
Other net assets(1,405)Retained earnings

2.1

42.3

2,630

Intangible assets

Valuation difference on available-for-sale securities

1.3
Year over year

Fiscal 2021

Total current
assets12,987

Property, plant and equipment

Bonds payable

Amount of impact from revenue recognition standard

12,075

Cash and deposits

Notes receivable, accounts receivablefrom completed construction contracts
Costs on construction contracts in progress

Current portion of bonds payable

Profit increase in system solutions

Data section

Analytical chart of assets (¥Millions)

36.6

Profit decrease in urban infrastructure

Governance

Liabilities increased by ¥25,875 million from the endof the previous consolidated fiscal year to ¥228,564 million(up 12.8% year over year). This was mainly due to increases inshort-term borrowings and long-term borrowings.
Net assets increased by ¥18,168 million from the end of
the previous consolidated fiscal year to ¥307,053 million (up6.3% year over year). This was mainly due to an increase inretained earnings.

Assets increased by ¥44,043 million from the end of theprevious consolidated fiscal year to ¥535,617 million (up9.0% year over year). This was mainly due to an increase in
cash and deposits, notes receivable, accounts receivable fromcompleted construction contracts.

Notes payable, accounts payable
for construction contracts
Short-term borrowings

Profit increase in telecom carriersStrengthening our business infrastructure

Return on equity (ROE) increased by 0.6 percentage points to
9.4%, and earnings per share (EPS) increased by ¥33.31 to¥250.64.
Note that the impact of the COVID-19 pandemic in thecurrent consolidated fiscal year was limited.

As of March
31, 2021

Analytical chart of factors affecting operating profit (¥Billion)

Fiscal 2020

Value creation strategy¥5.7 billion UP（16% UP)As of March
31, 2022

535,617

Total net assets

18,169 UP

Year over year

¥44,043 million UP

Exeo Group Integrated Report 2022

68

Analysis of operating results and financial status

Value creation story

The capital demand of the Group includes ordinary working
capital, as well as real estate capital investment funds for
improving productivity and M&A investment funds for
expanding business. Regarding distribution of returns toshareholders, our basic policy is to actively continue ensuring
stable dividends, and we flexibly conduct share buybacks
while employing a dividend on equity (DOE) of 3.5% as thebenchmark percentage.
The source of the Group’s funding is cash earned throughoperating activities, but when there are shortages, we raise
funds mainly from liabilities while considering how tomaintain a sound financial position. We deal with any
temporary lack of funds through short-term borrowings
from financial institutions, and if long-term demand forinvestment funds or other types of funds arises, we mainly
consider issuing straight bonds or SDG bonds. The fundsof our domestic subsidiaries are centrally managed by theCompany, and we are working to improve the efficiency
of funds within the Group and liquidate them.
As a result of such efforts, cash and cash equivalents(hereinafter referred to as “funds”) at the end of the current
consolidated fiscal year increased by ¥12,480 million from theend of the previous consolidated fiscal year to ¥53,727 million.

Cash flows from investing activities
Funds used in investing activities were ¥20,388 million(¥9,249 million in the previous fiscal year). This was mainly
due to acquisition of property, plant and equipment expenses.

26,406 UP
Analytical chart of Cash flows from investing activities (¥Millions)

Cash flows from financing activities
Funds obtained from financing activities were ¥5,023
million (¥1,750 million used the previous fiscal year). This was
mainly due to increases in short-term borrowings andlong-term borrowings.

Purchase of property, plant and equipment(17,950)

Purchase of intangible assets (2,221)
Purchase of investment securities (1,133)

4,776

Proceeds from sale of investment securities
Other total(3,860)20,388 DOWN
Analytical chart of Cash flows from financing activities (¥Millions)

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents at end of period

Free cash flow

Repayments of long-term borrowings

12,558(5,004)Purchase of treasury shares

53,727(9,446)

Dividends paid(225) Other total

46,012
41,4695,023 UP41,24630,34330,00026,40624,800Capital expenditure status

20,262
17,29912,77010,000

4,227

6,018

6,301

213

0

(4,538)–10,000(1,750)(5,137)(4,924)(4,839)(17,609)–20,000

2017

69

Net increase in short-term borrowings

Proceeds from long-term borrowings

50,00020,000

Data section

Depreciation

10,865(3,724)40,000Governance

44,112 Profit before income taxes
7,414
Decrease in trade receivables
5,361
Increase in costs on construction contracts in progress(12,324)(7,793) Increase in trade payables(11,108) Income taxes paid
745 Other total

Cash flows from operating activities
Funds provided by operating activities were ¥26,406 million(¥6,301 million in the previous fiscal year). This was mainly
due to decreases in trade receivables and trade payables.

Analytical chart of cash flow status(¥Millions)

Strengthening our business infrastructure

Analytical chart of Cash flows from operating activities (¥Millions)

The status of each cash flow is as follows.

Cash flow status

Value creation strategy

Exeo Group Integrated Report 2022

2018

5,023

(2,948)(9,249)(17,085)

2019(20,388)
2020

2021

（FY）

The total amount of capital expenditures in the current
consolidated fiscal year was ¥20,802 million, mainly due toconstruction of branch office and other buildings, andacquisition of telecommunications network equipment.
There was no retirement or sale of important equipmentin the current consolidated fiscal year.
We have formulated a cross-Group utilization plan for the
installation of new equipment based on medium-term usageneeds and trends to promote utilization in a systematic andefficient way. There are no plans to retire any importantequipment.

Changes in capital expenditure(¥Millions)

FY2017FY2018FY2019FY2020

FY2021

4,194

3,887

15,855

12,23920,802

Exeo Group Integrated Report 2022

70

Corporate Data

Value creation story

Value creation strategy

Corporate Data (as of March 31, 2022)

Stock Information (as of March 31, 2022)

Company Name

Exeo Group, Inc.

Shareholding

EstablishedMay 17, 1954

Paid-in Capital¥6,888 million

Fiscal Year-end

March 31

Stock Listing

Listed on Prime Market of Tokyo Stock Exchange

President & CEO

Tetsuya Funabashi

Net Sales¥594.8 billion (consolidated) (fiscal year ended March 31, 2022)

Number of Employees

15,847 (consolidated) (as of March 31, 2022)

Head Office29-20, Shibuya 3-chome, Shibuya-ku, TokyoWest Japan Head Office2-10, Uchihonmachi 2-chome, Chuo-ku, Osaka

Number of Business Offices

Headquarters and branch offices: 15 Sales offices: 22

Consolidated Subsidiaries

107 companies

300,000,000 shares

Issued116,812,419 shares

The Master Trust Bank of Japan, Ltd.

Total Number of
Shareholders

25,559Foreigncompanies
20.8%

Mizuho Bank / Sumitomo Mitsui Banking Corporation / MUFG Bank

17,093

15.48

Custody Bank of Japan, Ltd. (Trust Account)

10,574

9.58

Exeo Group, Inc. Employee Shareholding Association

4,456

4.04

Sumitomo Life Insurance Company

2,296

2.08

Sumitomo Realty & Development Co., Ltd.

2,081

1.89

2,012

1.82

(Mitsui Sumitomo Trust & Banking Co., Ltd. Retirement Benefit
Trust Account)

1,834

1.66

Japan Post Insurance Co., Ltd.

1,695

1.54

1,500

1.36

1,359

1.23

(Trust Account)

SSBTC CLIENT OMNIBUS ACCOUNT

as ofMarch 31,2022

(Standing proxy: The Hongkong and Shanghai Banking
Corporation Limited, Tokyo Branch)

Financial
institutions
40.9%

Custody Bank of Japan, Ltd.

Custody Bank of Japan, Ltd.

Securities
companies
2.3%

Other corporations
8.8%

Group companies (as of July 1, 2022)

Data section

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

Common Stock
AuthorizedTreasury shares
5.5%
Individuals
and others
21.7%

Governance

Major Shareholders

Shareholding structure

Note: Excludes non-consolidated subsidiaries (19 companies) and affiliated companies (18 companies)

Correspondent BanksStrengthening our business infrastructure(Sumitomo Electric Industries, Ltd. Retirement Benefit Trust
Account reentrusted by Sumitomo Mitsui Trust Bank, Limited)

JP Morgan Chase Bank 385781(Standing proxy: Mizuho Bank, Ltd.)

Note: The Company holds 6,424 thousand shares of treasury stock althoughthose shares are not included in the above table.

Major subsidiaries

Stock Price Range and Trading Volume on the Tokyo Stock Exchange
C-Cube Corporation

Seibu ElectricIndustry Co., Ltd.

Nippon Dentsu Co., Ltd.

Daiwa Densetsu
Corporation

Exeo Tech Corporation

Stock Price
(¥)
4,000

Other consolidated subsidiaries
Telcom carriers-related

Urban infrastructure-related

System solutions-related

Shinyei Tsushin
SuncrexExeo Mobile
Exeo Engineering Hokkaido
Exeo Engineering Tohoku
Exeo Engineering West Japan
Just Engineering
Kanac
Denseisha
K.Technos
Hikari Progress

Exeo Infra
Ryosei
Kidoh Construction
Infra Techno
KohkenKoyo Engineering
Iseki Poly-Tech

Exeo Digital Solutions
Exeo System Management
Advanced Information Design
Sun Planning Systems
CPU
KDT
Where

Other subsidiaries

Other subsidiaries

3,000

2,000

1,000

Trading Volume(Million Shares)

20

0

Other subsidiaries
15

Group companies (overseas)
Exeo Global Pte. Ltd.
MG EXEO NETWORK, INC.
Leng Aik Engineering Pte. Ltd.
EXEO ASIA CO., LTD.

DeClout Pte. Ltd.
Aeaqon Pte. Ltd.
vCargo Cloud Pte. Ltd.
dhost Pte. Ltd.

Arco Pte. Ltd.
Ascent Solutions Pte. Ltd.
Winner Engineering Pte. Ltd.

105

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2018

71

Exeo Group Integrated Report 2022

2019

2020

2021

0

2022

Exeo Group Integrated Report 2022

72