Results for the Six Months Ended
September 30, 2020
(Telephone Conference)

November 2020
URL: https://www.exeo.co.jp/en/ir/

We renewed our website.

Contents
4. Raising Shareholders’ Value

1. Overview of FY20 Interim Results(1) Performance Figures

・・・

2(1) Shareholder Return Policy

・・・ 21(2) Orders Received

・・・

3(2) Plan for shareholder returns for FY20, etc.

・・・ 22(3) Net Sales

・・・

4(4) Operating Income

・・・

5

5. Topics(5) Cash Flow

・・・

7(1) Minami Kanto Branch recognized under
ZEB introduction program・・・ 23(2) Kyowa Exeo's credit ratings revised to A+

・・・ 24

2．Expectations for the Rest of FY20
(1) Performance Figures

・・・

8(2) NTT Group (Access/Network)・・・

9(3) NTT Group (Mobile)・・・ 10(4) NCCs

・・・ 11(5) Urban Infrastructure・・・ 13(6) System-Solutions

・・・ 15(7) Efforts for Mid- to Long-Term Growth・・・ 17(8) Efforts on Work Style Reform under
Pandemic・・・ 19

3．Our M&A Strategy(1) Development Direction by Business Segment

・・・ 20－1－

1. Overview of FY20 Interim Results(1) Performance Figures◆ Sales rose thanks to brisk orders and the completion of a large volume of carrried-overconstruction work. COVID-19 had limited impacts.
◆ Income grew in line with the growth of net sales, despite soaring SG&A expenses due chiefly to
newly consolidated companies.

■ Overview of FY20 interim results (consolidated)
FY 2019
Interim(¥bn)
FY2020InterimFull year
Actual

YOY
C/A

A

B

C

Orders received

285.1

556.3

287.6

101%

Net sales

212.3

524.5

224.8

106%

Gross profit
SG&A expenses
Operating income
Ordinary income
Net income attributableto owners of parent

13.3%

28.1
8.2%

13.0%

13.3%

68.3

30.0

7.1%

17.4
5.1%

8.4%

37.2

18.8

5.9%

10.7
5.0%

3.0%

31.1

11.2

104%

5.4%

30.6

12.2

3.0%

6.2

108%

5.0%

5.8%

10.6

107%

115%

3.3%

15.6

7.4

Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

－2－

119%

1. Overview of FY20 Interim Results(2) Orders Received◆ Urban Infrastructure remained strong despite a temporary decline against
large orders in the previous fiscal year. Favorable orders were also achieved in system solutions.

▲ Access▲ Network▲ Mobile▲ Telecommunications
facilities▲ Electricity supply▲ Urban Civil
engineering▲ Environmental
engineering

ー KDDI
ー SB○ Rakuten

SystemSolutions+14.8

NTT Group NCCs
+5.0
-11.1
Urban
Infrastructure-14.7

Existing Exeo G →Actual（198.3）

(¥bn)
Seibu
Electric
Industry-0.7
C-Cube+0.7

NipponDentsu
+8.5

○ SI
○ NI
○ GlobalThree companies
in western Japan（＋8.5）

Existing Exeo G（-6.0）

Exeo G（192.3） ← Existing
Actual＋2.5

Note: All amounts less than ¥100m are disregarded.

－3－1. Overview of FY20 Interim Results(3) Net Sales◆ While mobile construction and other work was delayed due to COVID-19, the sales performancein urban infrastructure was strong.

▲ Accessー Network▲ Mobile▲ KDDI○ SB○ Rakuten

ー Telecommunications
facilities○ Electricity supply○ Urban Civil
engineering○ Environmental
engineering

SystemSolutions
+1.3

○ SI
NCCs
Urban
NTT Group +0.7 Infrastructure ー NI
+13.5
○ Global-4.3

Existing Exeo G → （140.9）
ActualExisting Exeo G（＋11.2）

＋12.5

(¥bn)

Seibu
Electric
Industry+1.2

NipponDentsu+2.5

C-Cube-2.4

Three companies
in western Japan（＋1.3）

Exeo G（152.1） ← Existing
ActualNote: All amounts less than ¥100m are disregarded.

－4－1. Overview of FY20 Interim Results(4) Operating Income◆ Despite a rise in SG&A expenses due chiefly to newly consolidated companies, the steady sales
rise led to income growth.
(¥bn)
Improved Sales mix
Productivity
-1.4
+0.9

Increase in
SG&A expenses(e.g. new consolidation)-1.4

Up due toincrease in sales+2.0

M&A cost
-0.2

（8.0）

NipponDentsu+0.3

C-Cube-0.4

Three companies
in western Japan（＋0.6）

Existing Exeo G（-0.1）

Existing Exeo G →ActualSeibu
Electric
Industry
+0.7

（7.9）

← Existing Exeo G
Actual＋0.5

Note: All amounts less than ¥100m are disregarded.

－5－1. Overview of FY20 Interim Results<Reference> Trends in Group company profitability◆ Group companies achieved good results. The overall EXEO Group worked together togenerate profits.

■ Trends in operating profits over the past five years (consolidated/non-consolidated)(Ratio of consolidated to
non-consolidated profits)

（2.1）

（1.9）

（1.8）

（2.1）

（2.1）
(¥bn)

Notes: Ratio of consolidated to non-consolidated profits = operating profits from consolidated projects ÷operating profits from non-consolidated projects. All amounts less than ¥100m are disregarded.

－6－1. Overview of FY20 Interim Results(5) Cash Flow
◆ Cash flow is stable. We determine the assignment of financial resources in consideration of
the balance between investment in growth and return to shareholders.
(¥bn)■ Cash flow (consolidated)
FY17

FY18

FY19

Interim

FY20

Full year

InterimCash at beginning of FY

15.2

30.3

41.4

41.4

46.0

Operating activities

24.8

12.7

11.4

17.2

23.1

Investing activities

-4.5

-17.6

-5.2

-17.0

-5.5

Financial activities

-5.1

-4.9

-5.2

4.2

-5.7

0.1

-0.1

46.0

57.7

Increase/decrease of cash
due to share exchange

Cash at end of period

21.0
30.3

41.4

42.4

Note: All amounts less than ¥100m are disregarded.
Note 2: Cash at the beginning of the interim periodof FY20 represents the amount as of April 1, 2020.

－7－

2．Expectations for the Rest of FY20
(1) Performance Figures◆ The highest-ever top line figure is expected through organic growth in urban infrastructure andother segments.
◆ SG&A expenses are expected to rise after an investment in growth. However, we will work to
produce group synergy as we seek to achieve a new record high income.

■ Overview of FY20 interim results (consolidated)
FY 2019
Interim(¥bn)
FY2020
Full year

InterimFull year
ActualYOY

Progress
rate
C/D

Plan

YOY

D

D/B

A

B

C

C/A

Orders received

285.1

556.3

287.6

101%

55%

525.0

94%

Net sales

212.3

524.5

224.8

106%

43%

525.0

100%

13.3%

13.0%

13.3%

Gross profit

28.1
8.2%

SG&A expenses

17.4
5.1%

Operating income

10.7
5.0%

Ordinary income
Net income attributableto owners of parent

10.6
3.0%

6.2

68.3
7.1%

37.2
5.9%

31.1
5.8%

30.6
3.0%

15.6

30.0

13.8%

107%

8.4%

18.8

108%

109%

6.1%

104%

32.0

35%

103%

6.3%

115%

33.0

37%

3.3%

7.4

40.5

46%

5.4%

12.2

106%

7.7%

5.0%

11.2

72.5

41%

108%

4.0%

119%

35%

Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

－8－

21.1

135%

2．Expectations for the Rest of FY20(2) NTT Group (Access/Network)◆ Optical fiber installation works will increase in provincial areas given
the Project on Promoting Advanced Radio Environment Improvements.
◆ An increase in 5G mobile backhaul projects is expected on the core network side.
■ Project on Promoting Advanced Radio Environment
Improvements (a national governmental policy)■ Net sales of NTT Group(fixed-line network, consolidated)

The national government subsidizes the construction of optical fiber networks inprovincial areas. They are required for high speed wireless stations.

(¥bn)(full-year plan)■ Illustration of network construction transition
Note: MBH: mobile backhaul
Construction of K/SB/Rakuten’s 5G-MBH

Network
construction

Virtual field, platform update, etc.

docomoNTT

Construction of NTT5G-MBH

Electric power
construction

Non-NTT electric power construction

NTT electric power facility installation work
20年度
FY20

－9－

21年度
FY21

22年度
FY22

23年度
FY23

24年度
FY24

Non-NTT

NTT
25年度
FY25

2．Expectations for the Rest of FY20
(3) NTT Group (Mobile)◆ Construction of wireless base stations will gradually gather momentum with the expansion of 5G
coverage areas.
◆ Collaboration in construction with access operations and ongoing redevelopment ofconstruction teams for all mobile carriers including NCCs
■ Image of NTT DOCOMO Main Processes■ Net sales of NTT Group(our company's assumption)(mobile network, consolidated)
FY20
20年度

19年度
FY19

(¥bn)

FY25
22年度
FY22 ・・・・ 25年度

21年度
FY21

800MHz/1.5GHz/1.7GHz/2GHz
主要& mainGeneration

工程

3.4GHz

3.5GHz/700MHz

process
Frequency

周波数3.7GHz/4.5GHz/28GHz(full-year plan)■ Illustration of NTT DOCOMO’s 5G area development
3.7GHz

28GHz

4.5GHzNote: Population coverage rate
at new frequencies
Population

The millimeter wave
communication
came into service on
Sep. 23.
500 cities including

144 cities－10－

all ordinancedesignated cities

Population
coverage rate70％

coverage rate55％

10,000stations

20,000stations

32,000stations

FY2020

March

June

March

March

Interim

2021

2021

2022

2023

(Source: Created by us based on NTT DoCoMo presentation material.)

2．Expectations for the Rest of FY20
(4) NCCs◆ Orders from SoftBank and Rakuten remain very high from the previous fiscal year.
Sales growth is thus projected.
◆ We work with major subsidiaries to vigorously carry out work for Rakuten all over the country.
■ Trend in network construction by carrier■ Net sales of NCCs (consolidated)

FY21

FY20

FY19

FY22

(¥bn)
10,000 stations at
the end of Mar. 2021

K
D
D
I

4G LTE capacity enhancement

FY2350,000 stations at
the end of Mar. 2022
Population coverage rate90%

Plan to switch to 5G

Pre

Non-standalone

5G(full-year plan)

SB

5G

5G PreServiceStandalone

5G service inDevelopment rate of 5G infrastructure

nationwide operation

maintenance of 50% or more

5G Service

More than 10,000 base stations
in all prefectures

2 years ahead
More than 50,000 base stations
to cover 90% or more of
the population nationwide

No. of active base stations

Rakuten

96% of the

70% of the
Acceleration of plan

March
2020

－11－

June
2020

March
2021

population
coveredin Mar. 2021

population
coveredin July 2021

(Source: Created by Kyowa Exeo on the basis ofpresentation materials from separate carriers)

2．Expectations for the Rest of FY20
<Reference> Investment Trends of Major Telecom Carriers(Source: Figures released by the telecommunications carriers)■ NTT East/West
547.9

549.6

Optical fiber

541.0

522.5

■ NTT DoCoMo
597.1

577.9

593.7

572.8

570.0

FY17

FY18

FY19

FY20
Plan

480.0

156.0

154.0

161.0

150.0

156.0

FY16

FY17

FY18

FY19

FY20
Plan

FY16

Mobile■ SoftBank■ KDDI
519.3

560.8

601.7

615.0

(¥bn)

合計

610.0

320.5

350.1

381.6

369.8

FY18

FY19

400.0

325.0

FY16

FY17

FY18

FY19

FY20
Plan

FY16

－12－

FY17

FY20
Plan

2．Expectations for the Rest of FY20(5) Urban Infrastructure◆ We receive a good deal of orders for large electrical works for data centers and other facilities.
We will aim to continuously win orders.
◆ We will expand business in cable unloading, utility pole elimination and other areas where we havesuperior technological capabilities.
■ Urban Infrastructure net sales (consolidated)■ Strong orders for large data center works
Approx. 20 billion yen(¥bn)

Assumed scale of orders received
by KYOWA EXEO alone

Approx. 220
billion yen
Forecast of domestic business operators’ investment
for new construction or expansion of data centers(full-year plan)

FY20

FY21

FY22

■ Our earth shuttle method (arc-shaped drilling)
Arc-shaped drill

Sea water intake pipe

Coral reef
Cable unloading duct line

－13－

2．Expectations for the Rest of FY20
<Reference> Other priority projects in urban infrastructure◆ Continuously expand business fields to help newly construct, maintain, replace key infrastructure
across the country■ Railroad communication
facilities works■ Electrical works for large buildings■ Urban civil engineering works■ Road communication
facilities works■ Construction of large-scalesolar power generation facilities■ Construction of environmental plants－14－

2．Expectations for the Rest of FY20
(6) System-Solutions◆ Continue focusing on the expansion of new solutions such as the cloud◆ Strive to establish business foundations for global operations despite the impact of lockdowns inseveral countries■ System-Solutions net sales (consolidated)(¥bn)■ Solution business strategy
New

Expand solution models

Create new solution models- Promote companywide TF- Lineup of hot solution models(for local 5G technologies and others)- Provide one-stop full layer solutions- Offer solutions to internal cases ofdigital transformation

Create a stock business on
maintenance and operation

Business Domains(full-year plan)- Analytics, AI, xR and others

Creation of business withnew operating systems- Integrate maintenance platforms- New energy, healthcare, agriculture- Offer advanced and diverse managed services

Explore value enhancement

and others

Cultivate new customers

for existing customers- Collaboration between headquarters- Carry out consulting sales activities

in sales activities

Existing- Increase customer value throughusing solution models

cross-selling and upselling- Cultivate channels in collaboration- Assign construction and developmentwith manufacturers and partners

resources flexibly- Implement solutions for linkage- Create value based on group synergy

with overseas group companies- Enlarge alliances for different business issues- Speed up business by exchange of resources

Existing－15－

CustomersNew2．Expectations for the Rest of FY20
<Reference> Our solution model map
COVID-19
control measures

Digitalization ofoperations

Continued
work style reform

Strength in proposals

Strength in technologies

Productivity
enhancement

The 2025
Cliff problem

Nationwide locations

Consulting

Construction and development

Operation and maintenanceInterviews, study on improvement plans,

Product selection, design, standardization,

Monitoring, remote services andproposals and introduction planning

development and construction

on-site maintenanceActions during(1) Discovery of suspected infections(1) Visualization of existing processes

Automation ofbusiness processes andIT operations(2) Construction of remote working environment(2) Design of desirable forms(1) Paper- and seal-free processes(3) Remote conferencing and training(3) Formulation of digitalization policy(2) Introduction of RPA and AI

COVID-19 pandemic

Business process reform(3) Introduction of work flow systems

Business process
outsourcing(1) Monitoring, maintenance and operation(2) Managed services(3) A uniform system across the country

Analog whiteboard

Communication reform(1) Integration of voice and other tools(2) Introduction of cloud PBX(3) Reuse of used smartphones

Optimization ofDisaster control measures

Security measures(1) Monitoring of water levels in reservoirs(1) End point security(2) Multiple rechargers(2) Zero trust security(3) Emergency power sources(3) SOC operations

IT infrastructure(1) Wi-Fi and position sensors(2) Local 5G networks(3) Shift to cloud

VPN congestion avoidance－16－

2．Expectations for the Rest of FY20(7) Efforts for Mid- to Long-Term Growth◆ Efforts for new technologies and areas(examples of new products that we are working on)
GIGA School

Local 5G
We will take part in demonstration trials of remote

The GIGA School Concept, which is led by
the Japanese Ministry of Education, Culture, Sports, Science andTechnology (MEXT), is a plan to provide students in compulsory

medicine and others organized by the Ministry of Internal
Affairs and Communications.
Agriculture

Fishery

Factories

Mobility

Infrastructure

Tourism ande-sports

Disaster control

Crime prevention

Work styles

education with personal computers for studying (one per student),a high-speed network environment, and other measures.
Strong orders following nationwide actions incollaboration with major subsidiaries

Medical care andhealth care

Use inUse onagriculture

construction sites

Service Now

Remote control ofConstruction machinery

Infrastructure

We develop certified engineers and gradually build up
the track record of receiving orders to achieve promotion
to the Premier business partner rank. We are thus
making steady progress. In the future, we will increase
sales channels in a bid to obtain more orders.

monitoring

Smart agriculture

Smart factories

River monitoring

Use in factories

Practical use fordisaster prevention(Source: Ministry of Internal Affairs and Communications: The Radio Use Website)－17－

2．Expectations for the Rest of FY20(7) Efforts for Mid- to Long-Term Growth◆ Push ahead with the business reform through digital transformation (DX) efforts

Digitalization of operations

Automation, simplification and advancement of operations
AI judgment- Reconsideration of common systems andbusiness systems and sharing in the group- Use of AI, IoT and other new technologies- Construction of data analysis foundations
and others

Automation ofoperations

RobotsIndependent developmentof strategic systems

Data-driven
management

Use of smartphones
Electronic
contracts

Settlementof expenses

Use of commerciallyavailable cloud services

Collection of perational data

Incorporation into improvements

Incorporation into

in operations and systems

management strategies

Analysis and use of management data
Use of AI and IoT

Digitalization of back office operations- Simplification of operations- Shift from papers to PDF files- Improvement in desk work processes- Elimination of papers and seals- Intensive use of smartphones and others

Simple applications ->Paperless process

Cloud

General-purpose
Operation A

operations
Inquiry

Approval

Approval

Operation B
Operation C－18－

Proposing
PersonHead of
SectionHead of
Department

2．Expectations for the Rest of FY20(8) Efforts on Work Style Reform under Pandemic◆ Pursue new work styles internally and offer related solutions to customers
Provide remote working solutions matched with problems
and needs of customers

Visualization of
attendance ratio

Communications using
OfficeMicrosoft Teams- Online meetings

Mobile working- Online training■ Processing at the place of- Online interviews

working or on site
- On board the means of transport while in transit- On site, at the customer's premises andSecure remote working environment

at the business trip destination- In a railway station, cafe and elsewhere

Working at satellite offices■ Places of work

during waiting time
Balance between childcare,

Customer’s

nursing care, medical carepremisesand disabilities and work

- Offices other than the worker's regular office- Satellite offices based on contracts with outsiders

EX Home

Improvement in work-life balance
Business trip

Work from homedestination

Direct travel■ Places of work

Curtailment of time for transport

residence- The worker’s－19－

Direct travel

Curtailment of time for transport

Construction
site3. Our M&A Strategy(1) Development Direction by Business Segment
Engineering Solutions（Urban infrastructure）

Engineering Solutions（NTT Group, NCCs）

Expanding areas of power/air conditioning and maintenance、
replacement, civil engineering and renewable energy

Implementation of system enforcement,
maintenance area expansion

・M&A in the power/air conditioning field, where synergy can be generated
・M&A in the facility maintenance, replacement field・ M&A in civil engineering and renewable energy sectors

・ Generation of synergy with each of the companies
merged and previously acquired
・ M&A aiming at enhancing implementation systemand expanding maintenance

2018
ＫＯＨＫＥＮ2018
C-CubeAnticorrosion
coating
2019

2010
Ikeno
Tsukeneiwa-builtech
air conditioning
sanitation

Currently: Exeo Tech
2011
Wako
Engineering

2020(Partial investment)

2011
Daiwa
Densetsu

Sanetsu

Instrumentation

Electricity supply

Winner E
air conditioning
sanitation

2019

DeClout
ＮＩ

2019

KDT

Icom

2014

ＳＩ

AID

2015

ＳＩ

WHERE
ＮＩ

2019

SPS
ＳＩ

Expansion of SI, NI, and global fields
・M&A in the IoT, AI, RPA, and BPM fields
・M&A in the fields of facility construction,
SI, and NI in the ASEAN region

System Solutions
－20－

2018
NipponDentsuCompetitors(mainly undertaking
NTT's communication
facility construction)

2011

2018

LAE
2019

2018
Seibu
Electric
Industry

2019

CPU
ＳＩ

4. Raising Shareholders’ Value(1) Shareholder Return Policy◆ Our fundamental policy is to make active and stable dividend payments to all shareholders.
◆ From the FY2018 dividend, DOE was raised to around 3.5% to strengthen shareholder returns■ FY2020 planned annual dividend: 82 yen
FY17

FY18

FY19

FY20 Forecast

DOE 3％

DOE 3.5%(integrated from 2H)

DOE 3.5％

DOE 3.5％

Annual dividends
per share

¥50

¥70

¥80

¥82

Total annual dividends¥4.78 billion¥7.31 billion¥8.97billion¥9.21billion

26.4％※32.9 ％

57.2％

43.4％

Item

Payout ratio*Calculated by subtracting the extraordinary profit (negative goodwill) arising from the management integration.

■ Acquisition of treasury stock
Treasury stock acquisition worth 3 billion yen was carried out to implement flexible
capital policies for increasing shareholder value.

－21－

4. Raising Shareholders’ Value(2) Plan for shareholder returns for FY20, etc.
■ Total shareholder return■ Dividend history (per share)(Total dividends + total acquisition of treasury stock)80¥82(Amount determined asof Nov. 2020)

70

46

Year-end
41 plan

50

Interim
¥41

FY16

FY17

FY18

FY19

FY20 Plan

Plan■ EPS/ROE■ Acquisition of treasury stockNote)EPS and ROE are calculated by subtracting the special profit (negative goodwill)from the management integration.

EPS
189

(Amount determined asof Nov. 2020)

145

10.8%

ROE

212

10.0%

¥189
139

8.9%
7.8%
5.9%
FY16

－22－

FY17

FY18

FY19

FY20 Plan

5. Topix(1) Minami Kanto Branch recognized under ZEB introduction program◆ Ongoing reconstruction of the Minami Kanto Branch was recognized under the net Zero Energy
Building (ZEB) introduction program as part of the Kanagawa Smart Energy Initiative
implemented by the Kanagawa Prefectural Government.
The new building will introduce windows that reduce solar radiation heat, materials with high heat insulation
performance, high efficiency air conditioning control using motion sensors and an energy management system toachieve a 51% reduction in energy consumption compared with that of standard buildings of the same size. It isalso equipped with a photovoltaic power generation system with an output of 50 kW to achieve a real energy
reduction rate of 75%. This means that the building satisfies the criteria for ZEB, precisely for Nearly ZEB.

Name: Kyowa Exeo Corporation Minami Kanto Branch
Location: 12-1 Kanagawa Honcho, Kanagawa-ku,
Yokohama-shi, Kanagawa Prefecture－23－

5. Topix(2) Kyowa Exeo's credit ratings revised to A+◆Our company's credit rating , which has been acquired fromthe Japan Credit Rating Agency (JCR) , has been upgraded to "A +"1. Revision details
Before revision

After revision

Ａ

Ａ＋Rating outlook

Positive

StableBond rating

Ａ

Ａ＋

Long-term issuer rating

2. Date of revision
August 31, 2020
Note: For details about reasons for rating, refer tothe website of Japan Credit Rating Agency, Ltd. at https://www.jcr.co.jp/.

－24－

Disclaimer Regarding Forward-Looking Statements
Management of the Company has made estimates and assumptions
relating to financial forecasts based on information available as of thereporting date. Actual results could differ from those estimates.

3-29-20 Shibuya, Shibuya-ku,
Tokyo 150-0002 JAPANURL: https://www.exeo.co.jp/en/ir/

TEL: (81)3-5778-1073

A variety of IR materials is available for
consultation on our company website.

－25－