2023

KONDOTEC REPORT（Year Ended March 31, 2023）

2-2-90 Sakaigawa, Nishi-ku, Osaka
550-0024 Japan
Telephone : +81-6-6582-8441
Website : https://www.kondotec.co.jp

WE ARE KONDOTEC
Value Creation Process/

Business Model/

Materiality /Business Report

TABLE

OF

CONTENTSＷＥ ARE KONDOTEC

MessageThanks to our supporters, KONDOTEC reachedits 70th year in 2023. Since our establishing in
1953, we have aimed to achieve “safe andsecure societies” by contributing to theenhancement of social infrastructure for a variety
of industries while expanding our lineup of
products and merchandise. We have done so
under the spirit enshrined in our corporate
philosophy: "We strive to contribute to thecreation of an affluent society by nurturing our
employees, who would shape the future, and by
conducting corporate activities with innovativeand pioneering way."
This report was designed in order to have more
stakeholders gain a better understanding of ourbusinesses and initiatives that have become
diversified as we have accumulated history.
Toward that end, we have made manyrefinements allowing us to communicate ourbusiness model, materialities, and sustainabilityrelated initiatives in a simple manner, based on
the International Integrated Reporting
Framework, to enhance understanding of ourpast and future growth as a company.
Looking ahead, we will continue to work together
as a Group as a Company that continues to berelied upon in this Age of Change. We greatly
appreciate your continued understanding andsupport.

04

Company Overview

05

History

07

Value Creation Process

09

Business Model

11

Materiality

13

Business Report

WE ARE KONDOTEC

History /KONDOTEC VISION

President and Representative Director

23

Top Message

26

Medium-term Management Plan

27

Growth Strategy

31

Financial Strategies

VISION

Company Overview /KONDOTEC/FINANCIAL DATA

Katsuhiko Kondo
KONDOTEC INC.
Integrated Report 2023

36

Consolidated Financial Highlights

37

Consolidated Financial Performance40

From the Establishment of Corporate Identity(CI) to ESG Basic Policy

41

ESG Basic Policy Outline

FINANCIAL DATA

Message

ESG

45

Provision of Optimal Products and Merchandisefor Environmental Measures

46

Business Activities Paying Attention to theEnvironment

ENVIRONMENTENVIRONMENTWe held discussions within the Company aimed
at creating a full-fledged integrated report andtook up themes such as the setting of SDG
items within our materialities and theenhancement of TCFD recommendations, all ofwhich has led to this year's Integrated Report.
It is our sincere hope that this report, theproduct of considerable trial and error, willserve as a tool that better lets stakeholders gaina deep understanding of our Group overall,including our growth strategies, financial
strategies, and ESG-related initiatives.
Tomoya Ando,
Adviser of Management Headquarters1

KONDOTEC REPORT 2023

Procurement and Provision of High-Value-added
Products, Merchandise and Services

54

Communication with Stakeholders

56

Appropriate Information Disclosure and Security

57

Co-existence with Local Communities

58

Safety Measures and Work Style Reform59

Human resources development and Diversity

GOVERNANCE
61

Corporate Governance

67

Remuneration for Executive members

GOVERNANCE

This year marks the seventh release of ourIntegrated Report, which we launched in 2017.
Behind our decision to create an Integrated
Report was the thought that, when considering
our business model aimed at achieving asustainable society, we wished to havestakeholders better understand our efforts inthe areas of women's advance into society andenvironment-related initiatives within theframework of ESG, which are key factors
indicating corporate value.

Product Liability and Quality Assurance

52

SUPPLEMENT
70

Stock Information

71

Organization Chart

72

KONDOTEC Network

73

Consolidated Financial Statements
KONDOTEC REPORT 2023

SUPPLEMENT

Forward49

SOCIAL

SOCIAL2

WE ARE KONDOTEC
Message/

Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report

KONDOTEC REPORT 2023

2-2-90 Sakaigawa, Nishi-ku, Osaka 550-0024 JapanTokyo Headquarters: 1-9-3 Minami Suna, Koto-ku, Tokyo

Number of
Employees

Consolidated:1,278

Capital stock

2,666 million yen (As of March 31, 2023)

Listed stock market









Major items
handledNetwork

Non-consolidated:754

Tokyo Stock Exchange (Prime Market)
Business areas

FINANCIAL DATAHead office

Katsuhiko Kondo(As of March 31, 2023)

ENVIRONMENT

President andRepresentative
Director

January 1953

Securities code:7438

Manufacturing, procurement and sales of industrial materials primarily inthe retail hardware business
Manufacturing, procurement, and sale of structural steel materials mainly
for steel fabricators
Procurement and sales of electrical equipment for electrical construction
contractors and electronics retailers
Procurement, sale and rentals of temporary scaffolding materials andproviding scaffolding construction services for building contractors andmedium-sized general contractors

SOCIAL

EstablishedWE ARE KONDOTECGroup companies

Sanwa Denzai Co., Ltd.
KONDOTEC INTERNATIONAL (THAILAND) CO.,LTD.
CHUOH GIKEN Co., Ltd.
Nippon Scaffolding Holdings Co., Ltd.
TECBUILD CO., LTD.
TOKAI STEP CO., LTD.
FUKOKU, Ltd.
KURIYAMA ALUMINUM Co., Ltd.
(As of March 31, 2023)

VISIONKONDOTEC INC.

KONDOTEC

Company nameFactories
3

that support infrastructures essential for social
activities by responding to the needs of customers
and expanding products and merchandise
handled. By so doing, we have been supporting
the establishment of an affluent society.

Products (in-house manufactured products)
Turn buckles, braces, scaffolding chains, screws, anchor bolts,
die-forged products, construction materials, machinery and equipment,
aluminum extrusions, etc.
Merchandise (products procured from domestic and foreign
suppliers/OEM products)
Hardware, chains, wire ropes, screws, construction materials, lighting
equipment, panel boards, air-conditioning equipment, eco items, etc.

KONDOTEC INC. 48 operating sites
Sanwa Denzai Co., Ltd. 14 operating sites
KONDOTEC INTERNATIONAL (THAILAND) CO.,LTD.
CHUOH GIKEN Co., Ltd. 2 operating sites
Nippon Scaffolding Holdings Co., Ltd.
TECBUILD CO., LTD. 17 operating sites
TOKAI STEP CO., LTD. 15 operating sites
FUKOKU, Ltd. 5 operating sites
KURIYAMA ALUMINUM Co., Ltd. 2 operating sites
Consolidated:6

GOVERNANCE

Profile of KONDOTEC

The KONDOTEC Group is a manufacturer andwholesale company that maintains in-housefactories and handles approximately 50,000 or
more products and merchandise.
Ever since its establishment, KONDOTEC has
been providing a wide range of basic materials(As of March 31, 2023)

SUPPLEMENTWE AREKONDOTEC

Company Overview

Non-consolidated:4
KONDOTEC REPORT 2023

4

WE ARE KONDOTEC
Message/

Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report

History

Start of consolidation

75 Years of the Companyʼs History
Sapporo Factory
Kanto Factory

75,447 million yen

Anehaʼs The Fabrication Of
Quake-Resistance Incident

105 operating sites

The Great HanshinAwaji Earthquake

The Burst Bubble

FINANCIAL DATA

1,278 members
Kyushu Factory
The Oil Shocks

1968

1972

1973

1978

1983

1988

1988

1989
1989

1994

1999

2001

Established and Gaining ground in Tokyo,“shifting from sea to land”,
Kyushu Factory Opened

From the expansion across Japanand completion of the head officebuilding to the next stage

Reborn KONDOTEC
developed the base to leap toward astock listing

The Company started business from the ashes of thewar, entered into Tokyo, developed large-scale
production systems by opening the Kyushu Factory,
expansion operating sites, and thus strengthened its
business base.

The Company tackled quality improvement atfactories while completing the head officebuilding and expanding merchandise frommetal construction materials to overall
industrial materials. It expanded customers
with the establishment of the New Business
Division as a direct sales department.

1947 Founded Kondo Shoten in Izuo, Taisho-ku,
Osaka1953 Established Kondo Shoten Co., Ltd.
1955 Changed the company name to KONDOIRON WORKS CO., LTD.
1956 Began production of shackles.
1962 Began production of turn buckles.
1965 Began sale of wire ropes.
1966 Opened Kyushu Factory.
1967 Began production of scaffolding chains.

1973 Began manufacturing and sale ofhardware and screws for civilengineering and construction use.
1974 Relocated the head office to Sakaigawa,Nishi-ku, Osaka.
1985 Body of turnbuckle for building was
accredited as JIS No. 1
Established the New Business Division(Structural Steel Sales Division).

The Company made a fresh start by changing thecompany name in preparation for the Heisei era.
Following the development of the product supply
system by establishing factories in Ibaraki and
Hokkaido, it changed the internal system for thelisting. The Company busily tackled emergencies
caused by the Great Hanshin-Awaji Earthquake.
Merchandise saw further increases in responding
to the needs.

Kyushu Factory

5

1973

KONDOTEC REPORT 2023

ShacklesTurn buckles

Wire ropes

Screws1989 Changed the company name to
KONDOTEC INC.
1991 Opened Kanto Factory.
1992 Opened Sapporo Factory.
1995 Listed on the Second Section of the Osaka
Stock Exchange.
1999 Listed on the Second Section of the Tokyo
Stock Exchange.
Opened Kanto Logistics Center.
2000 Started our website.
2001 Started Product Catalogs.

2004
2002

2009

2014

2019

ENVIRONMENT

1947

1963

Present

Business Expansion,
Entering a new stage by M&A
2003 Opened Homecenter Division.
（currently Homecenter Group）
2004 Implemented Yantai Distribution Warehouse basedon a contract concluded with a Chinese logistics
trading company.
2005 Entered into an agency contract with pewag inAustria.
2007 Opened Shiga Factory.
2010 Acquired shares of Sanwa Denzai Co., Ltd. to makethe company a consolidated subsidiary.
2011 Designated as the First Section stock by the Tokyo
Stock Exchange and the Osaka Stock Exchange.
2014 Turned KONDOTEC INTERNATIONAL (THAILAND)
CO., LTD. into a consolidated subsidiary.
Acquired shares of CHUOH GIKEN Co., Ltd. to makethe company a consolidated subsidiary.
Introduced the shareholder incentive plan.
2017 Opened E-commerce Group2019 Purchased the business from Mechatro Engineering
Co., Ltd.
Acquired shares of TECBUILD CO., LTD. to make thecompany a consolidated subsidiary.
2020 Acquired shares of TOKAI STEP CO., LTD. to makethe company a consolidated subsidiary.
2021 Acquired shares of FUKOKU, Ltd. to makethe company a consolidated subsidiary.
Established Nippon Scaffolding Holdings Co., Ltd.
Acquired shares of KURIYAMA ALUMINUM Co., Ltd.
to make the company a consolidated subsidiary.
2022 Shifted to he new Prime Market from the First Section
under the previous Tokyo Stock Exchange structure.
KONDOTEC REPORT 2023

6

SOCIAL

1958

GOVERNANCE1953

SUPPLEMENT

Number of
Employees

The Great East
Japan Earthquake

KONDOTECThe Global
Financial Crisis

2023【Consolidated】
Network（FY 2023）

VISIONThe company has been striving to meet the needs of customers since our founding.
KONDOTEC has been able to grow as a manufacturer and wholesale company precisely because the company has
continued to challenge and create to meet the needs of customers, and because of the support from stakeholders.
We will continue to challenge and create facing various issues in order to contribute to the development of society
going forward.

Net sales

75,447

Shiga Factory- Challenge for Value Creation -（million yen）
WE ARE KONDOTEC

Net salesWE ARE KONDOTEC
Message/

Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report

Value Creation Process

Intellectual

Establishment of R&D Department in Kyushu Factory
Patents, utility model, design registrations, trademark registrations acquired
Establishment of Mechatro Laboratory in Shiga Factory:Utilizing image processing technologies which purchasing business
Design and manufacturing technology to automation machine of CHUOH GIKEN Co., Ltd.

Human capital

Employees: 1,278 people (consolidated)
Holders of internal certified qualification “Lifting equipment advisor” : 63 people(As of March 31, 2023)▶P51 for details

Social capital
Natural capital

Customers: about 26,000 companies (only for KONDOTEC INC., Sanwa Denzai Co., Ltd.)
Subsidiaries: 9 companies, Items handled: about 50,000 items,
Operating sites in Japan: 105 offices(As of March 31, 2023)

capitalCo-existence of Nature and Mankind
Strategies andAllocation of Funds

Opportunities
and RisksBusiness▶P23 for details

Relevant
SectorIndustrial
Materials▶ P15 for details

Electrical
Equipment

Structural
Steel
Materials▶ P17 for details

Electrical
Equipment

Scaffolding
Construction▶ P19 for details

Scaffolding
Construction
Manufacturing of
optimal products

OutputStructural
Steel
Materials

Industrial
Materials

Needs ofcustomers andsociety

We strive to contribute to the creation of anaffluent society by nurturing our employees,
who would shape the future, and by
conducting corporate activities with
innovative and pioneering way.

▶ P13 for details

Activities

Purchase of
optimal merchandise

Corporate Philosophy

Outcome
Products and Merchandise,
Service, Initiative〇Widely provides infrastructurerelated materials required forsocial activities〇Transactions with not only
construction-related industry but
also various industries〇Expansion of the handling ofenvironment-related merchandise〇Provides LED/solar power related
merchandise〇Operating site opening plan
according to the needs
communities〇Selects locations for operating site
to enable co-existence with local
communities〇Inventories in warehouses of each
operating site for quick delivery ofnecessary materials at the time ofdisasters〇Acquisition of ISO14001

Values KONDOTEC
provides to society

Co-existence anddevelopment with local
communities
Recovery/reconstructionof disaster-stricken areas
Contribution to
the environment
Improvement incustomer satisfaction

SDGs mainly related
to our businesses〇Labor and manpower saving efforts
through collaborative creation withGroup companies

Provision of
products andmerchandise

Manufacturing
division▶ P21 for details

GOVERNANCE

capitalKONDOTEC

Number of domestic production factories: 6 place(KONDOTEC INC., CHUOH GIKEN Co., Ltd., KURIYAMA ALUMINUM Co., Ltd.)
Increase in non-current assets for replacement of production facilities in the
manufacturing division: 148 million yen (FY 2023)

FINANCIAL DATA

Manufacturing

ENVIRONMENT

Total cash and deposits: 10,733 million yen (FY 2023)

SOCIAL

Financial
capitalRealization of safe
and secure society

WE ARE KONDOTEC

ImpactVISION

Input〇Procurement and provision ofhigh-value-added products,
merchandise and services〇Meeting on complaints, information
sharing〇Enhancement of catalogues

Outlook▶P23 for details

Reinforcement of management baseInitiatives for SDG targets / Utilization of digital technology(Promotion of DX)
7

KONDOTEC REPORT 2023

〇Employee education
Headquarters

SUPPLEMENT

Earnings〇Safety measures for employees〇Promotion of utilization of digitaltechnology (Promotion of DX)

KONDOTEC REPORT 2023

8

WE ARE KONDOTEC
Message/

Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report

Business Model

Point②

Approx.

20％

Approx.

15％

Approx.

15％

Scaffolding
manufactures/
Partnercompanies
Approx.

10％

Manufacturer
function in net
sales
Approx. 30％* In-housemanufactured
products andOEM products
Point②
Overseasprocurement
includes products
manufactured inlocal OEM factories.

Business Segments ofsales structure(sales contribution ratio)
Industrial Materials

Structural SteelMaterials

50％

26％

Scaffolding
Electrical
Equipment Construction

13％

11％

Point③Customerbreakdown bybusiness segment

Total

Approx. 26,000
customers（2023）⇒

Response to the risks: Derivative transactions,offering of highly value-added merchandise（Expected risks）
Dependence on imported merchandise and FX
fluctuation/china risk/defect liability risk/impact of market
fluctuations for raw materials, etc./product liability
risk/impact of disasters on supply chain■Strength (2): Strength in sales methods
Characteristics

Effects●Development of the quick delivery
system with all operating sites fully
equipped with warehouses●Capture of demand in each area ofJapan through expansion across thecountry●Proposals for products and merchandise
rooted in the region by employees withknowledge of products andmerchandise●Dealing with about 50,000 items ofvarious products and merchandise●Quick delivery of made-to-orderproducts from six factories in Japan●Expand business not only in sales of
products and merchandise but also inthe construction field〇 Realization of the quick delivery system with all

operating sites having inventories〇 Thorough small-lot sales rooted in the region⇒（Expected risks）
Industrial accidents from warehouse operations/insufficient labor force for inventory management/
accidents at the time of delivery

Response to the risks: Holding of the Safety and Health Committee⇒P58, Safety driving initiative⇒P58
Point④

Tradingcompanies

OverseasHome
improvement
center, etc.

HardwarestoresWholesalers

Electronics
retailers

Demanders[Entire infrastructure]
Point⑤9KONDOTEC REPORT 2023

Steelfabricators

Electricalconstruction
contractors

19％

Structural
Steel
Materials

19％

Electrical
Equipment* Scaffolding Construction
is not included.

End-users
Construction & civilengineering
industry, etc.

Industrial
Materials

Building
contractors
Medium-sized
generalcontractors

Point④

We provide direct
sales to some endusers

Point⑤
Demand for
products andmerchandise

Public 21％
Private 79％■Strength (3)Strength in customers

Characteristics

Effects●Sales to various industries/businesses●Diversified small-lot sales(many counter-parties)●Establishment of a sales desk
specialized in targets(Tokyo metropolitan area, railway
environment, home improvement
center, e-commerce, etc.）〇 Not prone to be affected by conditions of particularindustries, by selling to various industries⇒（Expected risks）
Dependence on public investments and private
capital investments/management of many customers/
insufficient staff for marketing and operations/Pricecompetition/Credit risk of customers

Response to the risks: Introduction of the core system, implementation of training to improve marketingand operational abilities⇒P59
Setting credit limits on customers based on the degree of credibility,
executing growth strategies
GOVERNANCE

Point③

The KONDOTEC group has not incurred a deficit for ordinary profit since
establishment to the present (*excluding irregular periods for financial
settlement). In our 70 years of history, we have responded to changes inexternal environments each time, and continued changing the businessportfolio and expanding the merchandise we handle (Our Companyʼs history
and changes in earnings ⇒Ｐ5)
The three strengths described on this page have been nurtured in suchhistory of reforms. With external environments expected to change evenmore rapidly going forward, we will continue to be conscious about whatshould be changed and what should not to reflect them in our management.
Moreover, having decided growth strategies separately for sustainablegrowth going forward, the Company will strive for further development.
(Growth strategies ⇒ P23-）
KONDOTEC REPORT 2023

SUPPLEMENT

Customers

62％

WE ARE KONDOTEC

Point①

Electricalequipment
manufacturers〇 Capable of providing products and merchandise
according to needs by having not only cheap imported
merchandise (procurement) but also high-quality andhighly value-added in-house manufactured products.
〇 Capable of stable supply due to many suppliers, and notdepending on specific suppliers

VISION

Overseasprocurement

Effects●Many various suppliers●Handling not only domestic goods but
also imported ones
●Establishment of in-house factories at
six sites in Japan●Dealing of special orders●Owning of OEM production factories inJapan and abroad●Cultivation/development of new
products and merchandise considering
customer feedback, which can only bedone by a manufacturer and wholesalecompany

KONDOTEC

40％

In-house
Factory

Characteristics

FINANCIAL DATA

Approx.

Point①ENVIRONMENT

Construction & civilengineering-related(Manufacturers, etc.)■Strength (1): Strength in procurement(Consolidated)

Manufacturer function(in-house production and OEM production)
Approx. 30 %SOCIAL

Suppliers

10

WE ARE KONDOTEC
Message/

Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report(2) Business activities paying
attention to the environment

Guidance for Collaborative Value Creation: Guidance for information disclosure and improving quality of dialogue with investors

STEP 2(1) Product liability and quality
assurance

Judgement on the importance of each item

We evaluated the importance of issues identified in STEP 1 with the importance for stakeholders
and the importance for the Company, and selected items of high importance as issues.

STEP 3

Stance for security and safety

Engagement with stakeholders(4) Appropriate information
disclosure and security

VISION

Quality control of products andmerchandise(3) Communication withstakeholders

Stance for information disclosure
Information security measures

SocialWhatʼs SDGs?
(6) Safety measures andwork style reform

SDGs stands for Sustainable Development Goals, which are theglobal long-term goals from 2016 to 2030 for whichinternational agreement was achieved at the United Nations in2015. With 17 goals and 169 targets, they were adopted as
the action plan for the prosperity of mankind and the earth.

Operating site opening plan
Response to disasters andcontributions to them
Risk control for disasters andothersFor employeesʼ health, safety andhygienePolicy on human resources
development

Covering a wide range of problems from hunger and poverty toeconomic disparity, human rights and environmental measures,it advocates realizing a world that “leaves behind no one”
where all people can live with dignity regardless of their socialand economic situations.

(7) Human resources development
Diversityand diversity
Employee benefits

Governance

KONDOTEC REPORT 2023

Management of emissions(material balance)

Provision of better products,
merchandise and services forcustomers(5) Co-existence with local
communities

11

Initiatives for environmental
protection and energy-saving(2) Procurement and provision ofhigh-value-added products,
merchandise and services

Identification of materiality and ESG Basic Policy formulation

At the Board of Directors, we discussed again the order of priority for important items selected
in STEP 2, and based on the result, identified materialities and determined the ESG Basic Policy
while focusing on value creation from the perspective of SDGs based on our corporate
philosophy of “affluent society”.

Products and merchandise
handled by the Company（Presentation of environment
related products andmerchandise)

KONDOTEC

Environment*IIRC: Framework within the International Integrated Reporting Council

Relevant SDGs

FINANCIAL DATA

(1) Provision of optimal
products and merchandisefor environmental measures

Listing our issues

We identified potential items for our issues, and identified issues for each stakeholder
referring to various guidelines (IIRC and Guidance for Collaborative Value Creation*)

Materiality

ENVIRONMENTSTEP １ESG

We will explain in detail in chapters on p.39 andafter what we are doing and the content we will
focus on going forward according to the ESG
Basic Policy.

SOCIAL

Verification of materiality and the process of formulating the ESG Basic Policy

Decision on materiality (key issues) and ESG Basic Policy
We decided on materiality as follows after thethree steps. We will regard this materiality as the
ESG Basic Policy and link it to sustainablecorporate growth by incorporating it in the
management strategy.

GOVERNANCE

by determining the current state of managementfrom the perspective of SDGs, and identifying
materialities in the form of goals to be pursued,
and the challenges faced in doing so, for each
ESG area.

(1) Strengthening of corporate
governanceCorporate governance(2) Thorough compliance

Compliance Basic Policy

SUPPLEMENT

In engaging in corporate activities, we recognizethat management that takes social sustainability
into consideration leads to the sustainablegrowth of the Company. Accordingly, we haveestablished the ESG Basic Policy to fulfill oursocial responsibilities in management activities

WE ARE KONDOTEC

Materiality

KONDOTEC REPORT 2023

12

Message/Company Overview /History /Value Creation Process/

Business Model/

Materiality /Business Report

Business Report

Scaffolding
Construction

90,000■Industrial Materials
With the retail hardware business at the core, we manufacture, procure and sell civil engineeringand construction materials, machinery and equipment. Of the subsidiaries, KONDOTEC
INTERNATIONAL (THAILAND) CO., LTD. , CHUOH GIKEN Co., Ltd. and KURIYAMA ALUMINUM Co.,
Ltd. are included.
Suppliers

9,502

49.8％

Manufacturers, etc. related construction & Civil engineering / Factories /Overseas procurement
19,963

KONDOTEC

Operating income ratio

75,0008,371

37,61012%

Net sales

10%

60,0008%45,000

6%30,0004%

15,0002%

Industrial Materials

0%

0

2023
Trading companies / Overseas / Hardware stores /Wholesalers / Home improvement center, etc.
Customers

2020

2021

2022

2023

2024
(plan)Net sales

35,45937,28233,861

37,61039,293Operatingincome

2,111

2,208

1,995

2,352

2,597

WE ARE KONDOTECElectrical
Equipment

VISION

Structural SteelMaterials

KONDOTEC

Industrial
Materials

Changes in Net Sales (million yen)

FINANCIAL DATA

Percentage of Total Sales
per business segment(million yen)

Existing businesses – Four business segments

Number of customers

Approximately 16,000 companies

Number of new customers*

1,581 customers (As of March 31, 2023)

Net sales of new
customers*

1,129 million yen (As of March 31, 2023)

Characteristics* The number of new customers and of net sales represent the number and net sales of customers exploited thisfiscal year and in the previous fiscal year, and for which actual sales were made this fiscal year
(non-consolidated).

KONDOTEC REPORT 2023

Recovery in economic activity is expected as
COVID-19 infection-related restrictions on
economic and social activities are eased, yet theoutlook remains highly uncertain due to factors
including persistent high crude oil and material
prices. At the same time, there are also
expectations for demand involving renewableenergy and large-scale projects such as
construction related to the Expo 2025 Osaka
Kansai and the Linear Chuo Shinkansen, as well
as for the expansion of infrastructuredevelopment in the ASEAN region. To capture
Risks

・Wide range of products and merchandise handled;
stable performance
・Earnings driver

13

Initiatives Going Forward

・Dependence on public investments andprivate capital investments
Since sales associated with public investments andprivate capital investments account for a considerable
percentage of the segmentʼs sales, stagnation in theconditions of the construction industry and a decline
in demand caused by such conditions may have asignificant impact on the operating performance andfinancial position of the segment.
・Dependence on imported merchandise andFX fluctuation
While having been increasing the procurement ofimported merchandise from overseas, such as China,
for the purpose of selling competitive merchandise,these sources of demand, we will work toincrease sales through the expansion of ecommerce sales, the enhancement ofcompetitive products through the development of
new aluminum products that meet needs forweight reduction, and the development of new
and dormant customers.
By taking these initiatives, we aim to expect net
sales of 39,293 million yen and an operating
income of 2,597 million yen for the year ending
March 31, 2024.

the segment is currently procuring about 90% ofthem from China. Accordingly, there is a possibility
that securing merchandise will become difficult,because the pursuit of business by the suppliers isgreatly influenced by U.S.-China trade friction,changes in statutory regulations in China and others.
In addition, major volatility in the foreign exchange
market may have a significant impact on theoperating performance and financial position of thesegment.
・Price competition
・Impact of market fluctuations for raw materials, etc.
・Impact of communicable diseases on businessactivities
P16 Risks
KONDOTEC REPORT 2023

14

SOCIAL(Subsidiaries)
KONDOTEC INTERNATIONAL (THAILAND) CO., LTD.
CHUOH GIKEN Co., Ltd. 2 operating sites
KURIYAMA ALUMINUM Co., Ltd. 2 operating sites(As of March 31, 2023)

GOVERNANCE

Number of operating sites

2022. Segment profit was 2,352 million yen(+17.9% year on year) due to increased SG&A
expenses associated with an increase inpersonnel costs being absorbed by increased
profit, as well as the passing through ofincreases in manufacturing costs andprocurement prices to selling prices.

SUPPLEMENTKONDOTEC INC. 30 operating sites

Segment sales came to 37,610 million yen(+11.1% year on year) due to passing throughhigher manufacturing costs and procurement
prices to selling prices, in addition to thecontribution to sales by KURIYAMA ALUMINUM
Co., Ltd., which became a consolidated
subsidiary in the fiscal year ended March 31,

ENVIRONMENT

Overview of the Year Ended March 31, 2023
End-users

Value Creation Process/

Business Model/

Materiality /Business Report

Percentage of Total Sales
per business segment(million yen)

Existing businesses – Four business segments

Industrial
Materials

Structural SteelMaterials

Electrical
Equipment

Scaffolding
Construction

90,000We manufacture, procure, and sell structural steel materials for steel fabricators.

9,502

26.5％
Manufacturers, etc. related construction & Civil engineering / Factories /Overseas procurement

19,96337,61012%

Net sales
Operating income ratio

75,0008,371■Structural Steel Materials

Suppliers

Changes in Net Sales (million yen)

10%

60,0008%45,000

6%30,0004%

15,0002%
0%0

KONDOTEC

Customers

2023

Structural Steel Materials

End-users (Steel fabricators)

2020

2021

2022

2023

2024
(plan)Net sales

16,42914,03516,09819,963

20,873Operatingincome

1,718

944

1,304

1,712

1,589

WE ARE KONDOTEC

History /VISION

Company Overview /KONDOTEC/FINANCIAL DATA

Message

Approximately 5,000 companies

Number of new customers*

657 customers (As of March 31, 2023)

Net sales of new
customers*

811 million yen (As of March 31, 2023)

Initiatives Going Forward
Recovery in economic activity is expected as
COVID-19-related restrictions on economic andsocial activities are eased, yet the outlook
remains highly uncertain due to factors including
persistent high crude oil and material prices. At
the same time, there are many areas in which
we have not opened operating sites in thissegment. We will work to increase sales throughactions including the examination of new
operating site openings, expansion of the anchor
Risks

Characteristics

・Operating performance increases/decreases
in connection with the demand for steel frames
・High percentage of in-house manufactured products
・High market share* The number of new customers and of net sales represent the number and net sales of customers exploited thisfiscal year and in the previous fiscal year, and for which actual sales were made this fiscal year.

15

KONDOTEC REPORT 2023

・Price competition
If price competition with competitors continues tointensify in each of the product markets and local
markets to which the segment belongs and it
becomes difficult to maintain fair prices, this may
have a significant impact on the operating
performance and financial position of the segment.
・Impact of market fluctuations for raw materials,
etc.
Procurement prices of main raw materials for the
products and merchandise of the segment tend tofluctuate depending on the global demand & supply
trends of steel materials, copper and aluminum.
Major volatility in the steel materials market may
have a significant impact on the operating
performance and financial position of the segment.

bolt installation business, expansion of sales forhigh-value-added products that meet social
needs, and the development of new and dormant
customers.
By taking these initiatives, we aim to expect net
sales of 20,873 million yen for the year ending
March 31, 2024. For operating income, we
expect 1,589 million yen due to the expected
increase in various costs, such as manufacturingcosts and freightage expenses.
・Impact of communicable diseases on businessactivities
This segment engages in business activities throughoperating sites around the country. In cases of the
spread of communicable diseases withoutestablished cures such as COVID-19, accompanied
by prolonged turmoil in global supply chains, delaysin the progress of property projects, and restraints
on private capital investments, or in cases of events
that affect the continuation of business activities
such as infection among employees or infection
clusters at business sites, significant impacts on thebusiness performance or financial situation of thissegment may arise.
・Dependence on public investments andprivate capital investments
P14 Risks
KONDOTEC REPORT 2023

16

SOCIAL

Number of customers

GOVERNANCE

KONDOTEC INC. 18 operating sites(As of March 31, 2023)

selling prices. Segment profit was 1,712 million
yen (+31.2% year on year) due to increased
SG&A expenses, particularly freight costs andpersonnel expenses, being absorbed byincreased profit, as well as the passing throughof increases in manufacturing costs andprocurement prices to selling prices.

SUPPLEMENT

Number of operating sites

Segment sales were 19,963 million yen (+24.0%
year on year) due to continued strong sales ofsteel frame materials, anchor bolts, braces, etc.
amid recovery in demand for steel framesmaterials, especially for large-scale properties, aswell as the passing through of increases inmanufacturing costs and procurement prices to

ENVIRONMENT

Overview of the Year Ended March 31, 2023

Materiality /Business Report

Percentage of Total Sales
per business segment(million yen)

Existing businesses – Four business segments

Industrial
Materials

Structural SteelMaterials

Electrical
Equipment

Scaffolding
Construction

90,0008,371■Electrical Equipment
We procure and sell electrical equipment to electrical work operators engaged in construction of houses,
buildings, facilities, factories and other structures and to electrical appliance stores. This business ishandled by a consolidated subsidiary, Sanwa Denzai Co., Ltd.

12.6％ 37,610
19,963

KONDOTEC

10%60,0008%45,000

6%30,0004%

15,0002%

2023

Electronics
retailersCustomers

End-users (Electrical construction contractors)

Number of customers

75,0000%

0Electrical Equipment

Number of operating sites

12%

Net sales
Operating income ratio

9,502Electrical equipment manufacturers

Suppliers

Changes in Net Sales (million yen)(Subsidiary)
Sanwa Denzai Co., Ltd. 14 operating sites(As of March 31, 2023)

2020

2021

2022

2023

2024
(plan)Net sales

8,710

8,243

8,610

9,502

9,684

Operatingincome

281

253

233

313

279

Overview of the Year Ended March 31, 2023
Segment sales were 9,502 million yen (+10.4%
year on year) due to sales development alignedwith carbon neutrality, including the shift toinstalling LED lighting in stores and the setting ofprices matched to increases in procurement
prices from manufacturers, in addition torecovery in capital investment and theelimination of merchandise supply delays causedby semiconductor shortages. Segment profit was
313 million yen (+34.2% year on year) due toincreased SG&A expenses being absorbed byincreased profit as well as the passing through ofincreases in procurement prices to selling prices,
thorough negotiations to reduce procurement
prices, the utilization of special pricing, and sales
activities with gross profit margin in mind.

Approximately 5,000 companies
Initiatives Going Forward

Number of new customers*

303 customers (As of March 31, 2023)

Net sales of new
customers*

662 million yen (As of March 31, 2023)

・Handling a wide range of merchandise, fromelectrical equipment to housing equipment
Characteristics

・Securing stable sales volumes
・Dominant store openings mainly in Aichi and Gifu
Prefectures

Recovery in economic activity is expected as
COVID-19-related restrictions on economic andsocial activities are eased, yet the outlook
remains highly uncertain due to factors including
persistent high crude oil and material prices. We
will work to increase sales by undertaking actions
including the development of new and dormant
customers, expansion of the range of goods
handled (including new merchandise), capture ofdemand from end users such as electrical work

operators though strengthening of construction
work functions, entry into new fields such as FA
and equipment engineers, and strengthening ofsynergies with Group companies.
By taking these initiatives, we aim to expect net
sales of 9,684 million yen for the year ending
March 31, 2024. For operating income, we
expect 279 million yen due to the expected
increase in various costs, such as promotion
expenses.

Risks
・Dependence on public investments and private
capital investments (in Tokai area)
P14 Risks

・Price competition
P16 Risks・Impact of market fluctuations
P16 Risks
for raw materials, etc.
・ Impact of communicable diseases on businessactivities
P16 Risks* The number of new customers and of net sales represent the number and net sales of customers exploited thisfiscal year and in the previous fiscal year, and for which actual sales were made this fiscal year.
17

KONDOTEC REPORT 2023

WE ARE KONDOTEC/VISIONBusiness ModelKONDOTEC/FINANCIAL DATA

Value Creation Process

ENVIRONMENT

History /SOCIAL

Company Overview /GOVERNANCE/

KONDOTEC REPORT 2023

18

SUPPLEMENT

Message/Materiality /Business Report

Percentage of Total Sales
per business segment(million yen)

Existing businesses – Four business segments

Industrial
Materials

Structural SteelMaterials

Electrical
Equipment

Scaffolding
Construction

90,0008,371■Scaffolding Construction
We provide scaffolding construction services and procures, sell and rent out temporary scaffolding
materials to building contractors and medium-sized general contractors.

Scaffolding manufactures / Partner companies

12%

Net sales
Operating income ratio

75,00010%

60,0008%45,000

6%30,0004%

15,0002%

9,502

11.1％ 37,610
Suppliers

Changes in Net Sales (million yen)

19,9630

Customers

2023

Scaffolding Construction

End-users (Building contractors / Medium-sized general contractors)

Number of operating sites(Subsidiaries)
Nippon Scaffolding Holdings Co., Ltd.
TECBUILD CO., LTD. 17 operating sites
TOKAI STEP CO., LTD. 15 operating sites
FUKOKU, Ltd. 5 operating sites(As of March 31, 2023)

Number of employees

323 (construction workers: 126)
(As of March 31, 2023)

Capex for scaffolding
materials

205 million yen (As of March 31, 2023)

Book value of scaffolding
materials*

584 million yen (As of March 31, 2023)

2020

Characteristics

・Nationwide business area, with properties covering awide domain from residential to medium-risebuildings and civil engineering projects such as
bridges* Book value of scaffolding materials refer to the balance sheet.
19

KONDOTEC REPORT 2023

2021

2022

2023

Net sales

-

-

7,568

8,371

8,147

Operatingincome

-

-

91

△3

54

Overview of the Year Ended March 31, 2023
While private-sector capital investment is on arecovery trend, construction sales remained
nearly flat due to a decline in demand forresidential properties. Segment sales were 8,371
million yen (+10.6% year on year) due to strong
rental sales and sales of scaffolding materials
amid growth in rental demand associated withincreases in scaffolding material prices andmultiple spot orders. Segment loss was 3 million
yen (against segment profit of 91 million yen in
the previous year) due to increased SG&A
expenses, particularly personnel expenses, inaddition to a decline in gross profit margin due toan increase in the outsourced construction work
ratio.

Initiatives Going Forward
Recovery in economic activity is expected as
COVID-19-related restrictions on economic andsocial activities are eased, yet the outlook
remains highly uncertain due to factors including
persistent high crude oil and material prices. At
the same time, demand for maintenance andrepair construction work associated with theaging of social infrastructure is expected toincrease. To capture these sources of demand,
we will expand our customer base through thedevelopment of new customers while expanding

construction work orders for high-unit-pricemedium-rise buildings and civil engineering
projects, and through increased sales by means
including expansion of material sales and rental
sales that are new areas of our business.
By taking these initiatives, we aim to expect net
sales of 8,147 million yen and an operating
income of 54 million yen for the year ending
March 31, 2024.

Risks

・Dependence on public investments and private
P14 Risks
capital investments

・Addressing the field of maintenance/repair associatedwith aging infrastructure, a field in which demand is
expected

0%2024(plan)TOPICS

GOVERNANCE

KONDOTECWE ARE KONDOTEC

Business Model

VISION/KONDOTEC

Value Creation Process

FINANCIAL DATA

History /ENVIRONMENT

Company Overview /SOCIAL/・ Impact of communicable diseases on business
P16 Risks
activities

Changes to reportable segments

The reportable segments of the Group,
previously "Industrial Materials," "Structural SteelMaterials," and "Electrical Equipment," werechanged to "Industrial Materials," "Structural
Steel Materials," "Electrical Equipment," and"Scaffolding Construction" from the fiscal year
ended March 31, 2023, with scaffolding
construction work that had been included in"Industrial Materials" now categorized as"Scaffolding Construction". This change wasmade for the purpose of promoting
understanding of the Group's business, given theincreasing importance of scaffolding construction
work, which is positioned as a core business in
the Company's Medium-term Management Plan.
KONDOTEC REPORT 2023

20

SUPPLEMENT

MessageMateriality /Business Report■Functions as a manufacturer (Roles of factories)
With a view to promoting a local communityoriented sales structure, the Company, as awholesale company with a manufacturingfunction, maintains four factories in Japan (nonconsolidated) and makes an effort to pay carefulattention to customer feedback in distributing
products.

Changes in Product Profit Ratio(non-consolidated)

The majority of the Companyʼs products are
made-to-order products that require high-level
precision and short-term delivery. This prevents
encroachment from overseas and leads toachieving a high profitability.

Percentage of factory
products to net salesof KONDOTEC(non-consolidated)

Percentage of made-toorder products to factory
products(2023)

60.0％

19.5％

■Local community-oriented structure
The Company maintains four factories in
Hokkaido, Ibaraki, Shiga and Fukuoka (nonconsolidated). All factories manufacture turnbuckle braces and anchor bolts, which are ourcore products. By having these four factories
supply products to our sales network across thecountry, we are able to realize quick delivery andoperate a local community-oriented sales
structure.
Setting our first priority on responding tocustomer needs with speed, we have a
production structure in place that makes thebest of our comprehensively capability that
integrates production and sales.

SapporoFactory(Hokkaido)

KyushuFactory(FukuokaPrefecture)

Kanto
Factory(IbarakiPrefecture)

In terms of deliveries, turn buckle braces andanchor bolts are often long and heavy, incurringhigh transportation costs. Therefore, weestablished four factories spread out acrossJapan to have each factory supply products tothe operating sites in their respective regions foraddressing the need for prompt delivery in orderto reduce costs and risks associated withdelivery and reduce CO2 emissions.

Pursuing the safety of products
The Company is a brace manufacturer that ourfactories has acquired JIS from the production ofturn buckle bodies to turn buckle products.

Moreover, we are actively acquiring ISO(International Organization for Standardization)
certification.
P47, P49

21

KONDOTEC REPORT 2023

Product profit ratio

10,000

30%

8,000

28%

6,000

26%

4,000

24%

2,000

22%

0
2017

2018

2019

2020

2021

2022

2023

2024
(plan)

Product
profit ratio

30.9％

30.6％

31.1％

29.2％

28.1％

27.4％

26.1％

28.3％

Net salesof products

7,940

8,705

9,582

9,416

8,612

9,395

10,745

11,680■Initiative to improve productivity

introduce labor saving solutions and optimize the
manufacturing process, including digitaltransformation of production and process
management and utilization of robotics.
P53■Towards the provision of highly value-added products

Why are KONDOTEC factory products selected?
While there are differences in size and otherspecifications for turn buckle braces, which are
our core products, we take in their demand byusing our sales and marketing capabilities andengaging in made-to-order products at factories
and short-term delivery. Moreover, for turnbuckle braces, we manufacture a majority of thecomponent parts at Company factories, and by
not using outsourced parts, we are expanding
our product lineup in an aim to differentiate fromother companies.

32%

Net sales of products

In April 2019, we newly started operating No. 2
Factory on the premises of our Shiga Factory(Hino-cho, Gamou-gun, Shiga).
To improve productivity, we will actively

Shiga
Factory(ShigaPrefecture)(million yen)

12,000In August 2014, we made CHUOH GIKEN Co.,
Ltd. a consolidated subsidiary. The company isactively developing manufacturing lines in ourfactories. Furthermore, in January 2019, weestablished “Mechatro Laboratory” within ourorganization by purchasing business from
Mechatro Engineering Co., Ltd. The Laboratory
aims to utilize image processing technologies for
manufacturing lines. Furthermore, KURIYAMAALUMINUM Co., Ltd., which became aconsolidated subsidiary in October 2021, isconducting manufacturing development ofaluminum extrusions that are garnering attention
from the construction industry as a lightweightmaterial. We strive to improve productivity of our
products by utilizing the know-how of eachGroup company and provide high value-added
products using excellent technologies.
P50,53

WE ARE KONDOTEC/VISIONBusiness ModelKONDOTEC/

20%
FINANCIAL DATA

Value Creation Process

ENVIRONMENT

History /SOCIAL

Company Overview /Business areas of the group Company manufacturing-related organization

CHUOH
GIKEN
Co., Ltd.

Design and manufacture ofvarious machine devices, laborsaving equipment and transport,
including industrial machineryand electronic parts forautomobiles and household
appliances

Mechatro
Laboratory

Design and manufacturing oflabor-saving, image processing
equipment, various inspection
equipment, and inspection tools

KURIYAMAALUMINUM
Co., Ltd.

Development and manufactureof aluminum extrusions

Image processing
equipment(Mechatro Laboratory)

We propose for thedevelopment image tocustomers and develop
equipment.

Factory of
KURIYAMA ALUMINUM
Co., Ltd.

GOVERNANCE/

Development
and manufacture

Aluminum
extrusions

KONDOTEC REPORT 2023

SUPPLEMENT

Message

22

KONDOTEC VISION
Top Message/

Medium-term Management Plan/

Growth Strategy /Financial Strategies

Top Message

Periphery-strengthening
growth strategies

Organic growth strategies■Making the resolution of social issues our businessAs labor shortages deepen at construction andcivil engineering work sites, workers are aging
and the employment rate of women is rising. The
growing need for lighter materials at these worksites represents new demand that we intend tomeet. Our manufacturing division reviewed
scaffolding chains, the main product we handle,
beginning with the materials used, and achieved
weight reductions of up to 27%. The division also
reduced the number of construction bolts,
bringing the weight of individual boxes to lessthan 20kg.
As another initiative on this theme of weight
reduction, in October 2021 our Company acquired
KURIYAMA ALUMINUM CO., LTD., a manufacturerof aluminum extrusions that can reduce weight.
While many of the products we handle are madeof steel, aluminum offers a number of advantages
including a weight about one-third that of steel,ease of processing, and resistance to rust. In
23

KONDOTEC REPORT 2023

2022, KURIYAMA ALUMINUM began sales of
Alpaca, an aluminum square-shaped pipe for use
as a building material. In these ways, we areundertaking the enhancement of our medium- tolong-term corporate value by broadening thepossibilities for aluminum products in our
mainstay field of construction.
In 2023, we developed HI TEN CONBRACE, alabor-saving product that is easier to install thanconventional angle braces.
The world is now drawing toward wind power
generation as a source of renewable energy.
Offshore wind power generation that makes useof vast sea areas is seen as promising in Japan.
Our company, too, intends to focus on expanding
our business in this field, handling materials foroffshore wind power generation and expanding
our lineup of products and merchandise forrenewable energy facilities.

Net sales（100 million yen）

1953年

1963年

1973年

1983年

1993年

2003年

2013年

250

2023年

-Further expansion of our existing businessdomainsThe construction market can be broadly separated
into architecture and civil engineering. While ourmain field at present is the architecture field, we
will build a business foundation by which ourbusiness fields strike a good balance between therelatively short-span construction field and thelong-span civil engineering field. Turn buckle
braces and other construction materials, products
mainly handled by our Structural Steel Materials
division, are auxiliary materials, a category said toaccount for about 10% of the steel materials usedin steel-frame buildings. We plan to approachremaining untapped areas to further expand ourdomains of business.
-Creating synergies in scaffolding constructionFor some time, our Company has engaged in salesof temporary scaffolding materials. However, as
new construction demand slackens amid thedeclining birthrate of recent years, we are entering
an era in which aging facilities are used underskilled maintenance. Our focus is on demand for

TOPICS

scaffolding, the first thing needed at such worksites. Our Group companies involved in scaffolding
construction work, brought into the Group through
M&A, have expertise in differing areas, such as
low-rise buildings, medium-to-high-rise buildings,
bridges, and civil engineering. With Nippon
Scaffolding Holdings Co., Ltd., which weestablished in April 2021, at the core, we havebuilt a structure that allows us to cover wideranging areas of scaffolding construction work by
sharing the know-how of the individualcompanies.
-Promotion of DX-

At KONDOTEC, we believe digital technologies
serve as the key element to our everlasting
growth. With our DX Promotion Project Team as

the point of origin, we seek to fuse digitaltechnologies with our know-how in areas such as
development using digital technology and the useof the IoT in manufacturing divisions, to build new
business models closely aligned with ourcustomers.

Promotion of digital transformation(DX)In order to actively promote DX, we establishedthe DX Promotion Project Team and beganconsidering rolling out new businesses in 2019.
As a specific initiative for DX, we introduced
Salesforce in 2021 to internally store and shareknow-how acquired through our sales activities,
which enabled prompt proposal of solutions andresponse tailored to customer needs. In addition
to operating “Tsurikata,” a lifting equipment
inspection site that lets users manage products

ENVIRONMENT

Initiatives Going Forward

SOCIALto drive up prices, and the supply of workers is
also becoming exhausted as job offers increase
rapidly. As the low cost-based strategies of thepast fade away, I believe that a time has come inwhich we need to consider how we can provide
goods and services with high added value. In suchtimes, acting under our corporate philosophy of"We strive to contribute to the creation of anaffluent society by nurturing our employees, who
would shape the future, and by conducting
corporate activities with innovative and pioneering
way," we will work to enhance human capabilities
through investments in employees, make efforts
in the development of new products, provide
products and merchandise that pursue added
value, and enhance our services in themaintenance/repair field, so that we cancontribute to the development of social
infrastructure and grow to become a company
with a powerful presence.

via smartphone, we are advancing the use of the
IoT in manufacturing divisions.
By promoting DX, we hope to deliver attractive
products, merchandise and services to ourcustomers to further promote our brand as thefirst choice for our customers, applying digitaltechnologies to expand revenue earning
opportunities, while also improving businessprocesses and productivity.
KONDOTEC REPORT 2023

24

GOVERNANCE

Our Company celebrated the 75th anniversary of
our founding in 2022. In 2023, we marked the70th anniversary of our establishment sinceorganization into a stock company. I would like toexpress my sincere gratitude to our customers,
suppliers, employees, shareholders, and otherstakeholders for their support. From our start as amanufacturer of metal fittings for ships andrigging, we have expanded our business domains
by selling these products to the construction andcivil engineering industries. In recent years, wehave broadened our activities into fields including
electrical materials, railways, agriculture, forestry,
and indirect materials for factories, always
evolving to meet customers' needs amid changing
times.
Problems emerge in line with those ever-changing
times, even under the recent subsiding of the
COVID-19 pandemic and the ramping up of
economic activity. Depletion of materials continues

500

SUPPLEMENT■Pursuing added value and contributing to the development of social infrastructure

750

・Increasing presence
in foreign markets
・Entering into neighboring industries
・Expanding online businesses , etc.

Organic・Four growth strategies
・Expansion of operating sites
・Response to natural
disasters,etc.

VISION

President and Representative Director
Katsuhiko Kondo

engaged in expanding businesses looking for afurther leap forward without being constrained by
the framework of our organic growth.
Based on our Medium-term Management Plan (P26), we are actively making growth investmentswith capital efficiency in mind and a ROE of 10%
or more as our goal.
Going forward, we will continue improving
sensitivity to the needs of society, while
differentiating ourselves from other companies byimplementing the above growth strategies,
including M&As, aiming for net sales of 100 billion
yen in the 2020s.
100 billion yen

KONDOTEC

Contributing to thedevelopment of social
infrastructure
Becoming a company with apowerful presence

FINANCIAL DATA

Growth strategy
As for growth strategies, the Company hasorganic growth as strategies for existing
businesses and periphery-strengthening growth
those other than the existing businesses.
Organic growth is the strategy that hasestablished KONDOTECʼs earnings to date, while
the Company has developed its businesses withthe strength of responding flexibly to changes of
the time, while broadening the scope of ourbusiness.
Periphery-strengthening growth is the strategy
that is a possible new earnings driver, aiming for afurther leap forward. Under this strategy, we are

WE ARE KONDOTEC■Initiatives for Net Sales of 100 Billion Yen

KONDOTEC VISION
Top Message/

Medium-term Management Plan/

Growth Strategy /Financial Strategies

Medium-term Management Plan
■Recognition of the Business Environment

Solid public investments
・Prevention / mitigation measuresfor natural disasters
・Construction work related to the
Linear Chuo Shinkansen andprojected Shinkansen lines

WE ARE KONDOTEC

Changes in private capital investment
・Stagnation of domestic markets due topopulation decrease and soaring material prices
・Increase in capital investment related to logistics
facilities, data centers, and clean energy

Changes indomestic market

Changes in public investment
・National resilience against for disasters
prevention / mitigation measures for natural
disaster
・Decrease in new construction and increase inmaintenance / repair construction work

Aging social
infrastructure

Changes in working environment and production
form
Working environment and production A declining birth rate ・Increase in capital investment
and aging population
form
related to labor-saving/Technological・Labor-intensive
・Advances in digital technology and diversifying
innovation
lifestyles■Basic Policy

ENVIRONMENT

We will strive for sustainable growth and improvement in long-term corporate value, while responding tochanges in the business environment, by strengthening our management base and promoting growthstrategies through appropriate allocation of funds.
Sustainable growth and improvement in long-term corporate value

during 2020s
Net sales 100 billion yen

ROE 10％ or higher
DOE 4.0％ or higher

Appropriate
allocation of funds
・Capital investment
・Strategic investment
SOCIAL

Reinforcement of
Growth strategy
management base・Organic growth strategies
・Periphery-strengthening ・Initiatives for SDG targets
・Utilization of digital technology
・M&A■Financial Target《Long-term Target》
During 2020s

Net sales(Consolidated)

100 billion yen《Medium-term Target》 We will aim to achieve increase in net sales and income by financial target based on
the existing sales structure

Consolidated
target(million yen)

2023
(Actual)2024(Plan)

2025(Plan)

2026(Plan)Net sales

75,44778,00081,50085,000Operating income

4,355

4,500

4,650

4,800

Ordinary income

4,563

4,700

4,800

5,000

Profit attributable toowners of parent

2,414

2,900

3,000

3,150

*The Medium-term Management Plan adopts the rolling method which responds to changes in the businessenvironment while verifying the outcome and issues every year in an effort to realize the mid-to-long vision.
25

KONDOTEC REPORT 2023

VISION

Robust demand in the private capital
investment
・Capital investment related toinbound demand
・Urban redevelopment projects

KONDOTEC

Changes in the contents ofconstruction investment

FINANCIAL DATA

FutureRobust construction
investment demand

KONDOTEC REPORT 2023

26

GOVERNANCE

Growth strategy of
KONDOTEC

Before the spread of COVID-19

SUPPLEMENTKONDOTECVISION

Before the COVID-19 pandemic hit, capital investment related to inbound demand and urban
redevelopment projects had continued. We expect that there will be changes in the makeup of
construction investment due to the shift to new industrial structures and business models and theincrease of attention to sustainable development with change in social values.

KONDOTEC VISION
Top Message/

Medium-term Management Plan/

Growth Strategy /Financial Strategies

Growth Strategy■Four growth strategies

etc.

(Scaffolding construction
service, rental, etc.)

P30

etc.

■Expansion of operating sites
Risks
If the intensified price competition continues withcompetitors in the local market of each operating
site, it may significantly affect earnings.
* Response to the risks
P10

Strength in sales methods

KONDOTEC not only sells merchandise but also
maintains a structure to enable the undertakingof anchor construction by having construction
managing engineers and acquiring a construction
business license. By becoming involved in theinitial phase of a construction project, we areable to acquire information on necessary
construction materials ahead of others and makeuse of such information on sales activities.
Furthermore, we also issue product catalogs
specific to certain sectors and customers, such as
those on lifting equipment, emergency supplies,④Cultivation of distribution routes

Gunma office■Response to natural disasters

27

KONDOTEC REPORT 2023

2023(Actual)2024(Plan)(manufactured by KURIYAMA ALUMINUM) in2022.
We will continue to develop and cultivate
products and merchandise with even higher
added value in order to offer such products andmerchandise.

AlpacaLS hook③Adoption of flexible sales methods

Existing business strategies (organic growth strategies)

One of merchandise for natural disasters
Tarpaulins (Left)
Flexible container bags (Right)

2022(Actual)

Risks
With many applicable merchandise being imported
ones, securing merchandise may become difficult
due to unexpected events such as changes inoverseas economic situations, including China. In
addition, substantial changes in foreign exchange
markets may significantly affect earnings andfinancial position.
* Response to the risks

P10

We are working to expand our business into new
sectors, such as Home improvement centers andrailroad companies, in addition to the existingsales routes.
We have also established an E-commerce Group
within our organization, making approaches to
new customer base through online sales of abroad selection of the products and merchandise
we handle.
Further, we have in place a sales force dedicatedto the Tokyo metropolitan area to accommodate
bulk purchasing from large trading companies
and headquarters of general construction
companies from which orders have been
increasing in recent years.
Risks

Strength in procurement

・Price competition
If price competition with competitors continues
to intensify in each of the product markets andlocal markets to which the Group belongs and it
becomes difficult to maintain fair prices, this may
have a significant impact on the operating
performance and financial position of thein addition to the general product catalog
containing products and merchandise with highcustomer needs.
ENVIRONMENT

P27

P57

1,558

FINANCIAL DATA

For the purpose of developing new merchandise,joint New Products and Merchandise Committee
meetings are held between the sales division andthe manufacturing division periodically to discuss
requests from customers and proposals for
improvement. As one example, we began selling
products with a focus on weight reduction,
including lightweight forging hooks “LS Hook”(manufactured at our Kyushu Factory) in 2021
and aluminum square-shaped pipes “Alpaca”

Diversificationof way to sell

Expansion ofoperating sites

Our products and merchandise support
recovery/restoration efforts from disasters and are
in demand in the event of abnormal weather
conditions, such as extremely heavy rainfall
everywhere.
All operating sites have inventories and maintain astructure across Japan that enables us to
immediately respond to such urgent demand for
products and merchandise and carry out our
responsibility to supply.

1,810②Offer of new products and merchandise

Response
to natural
disasters
P27

We strive for expansion of operating sites which
maintained a local-community-oriented sales
structure in order to respond quickly to customer
needs.
Recently, we opened the Gunma office of theCompany in April 2022.
We will continue to execute quick deliveries in aneffort to realize customer-focused management.

2,857

2,604

VISIONEntering intoneighboring
industries
P30

2,747

Catalog of lifting equipment

Catalog of emergency supplies

Net sales (million yen)

SOCIAL

Four
growthstrategies
P28

Expanding
onlinebusinesses
P30

Net sales (million yen)
New customers
Cultivating dormant customers

Home improvement centers
Railroads
Tokyo metropolitan area

1,031
812

910

1,054

1,106

939

330

351

353

2022(Actual)2023(Actual)2024(Plan)

GOVERNANCE

Organic

M&A
strategy
P30
Promotion
of DX
P24

Neighbor

KONDOTEC achieves a monthly average of one
new customer per sales representative and a
yearly average of 1,500 new customers as acompany.
In addition, we exploit a yearly average of 10
dormant customers per sales representative andthese activities form the source for 20,000 sales
customers.
P10 Strength in customers

KONDOTEC Group.
・Credit risk of customers
If bad debt expenses arise due to the bankruptcy
of a customer, this may have an impact on
operating performance and financial position of
the KONDOTEC Group.
P10 Strength in customers
KONDOTEC REPORT 2023

28

SUPPLEMENT

Improving corporate value
Capital
PolicyP33①Cultivation of new customers

Increasingpresence inforeign markets
P29

WE ARE KONDOTEC

KONDOTEC is taking the following four initiatives toward expanding orders.

KONDOTEC

Basic structure

KONDOTEC VISION■Increasing presence in foreign markets■M&A strategy
the ratio of net sales from our overseas
business.
Risks
Problems in pursuing business due to
unexpected events may occur, including changes
in political, laws and regulations, as well as
economic turmoil in countries such as China andThailand.
Moreover, a substantial change in foreignexchange markets may affect earnings and thefinancial position of the KONDOTEC group.
P10 Strength in customers

KONDOTEC INC. and overseas expansion
While the planned figure for net sales fromoverseas business in the year ending March 31,
2024 is 416 million yen (total for International
Sales Division and subsidiary in Thailand), ourexport business was active prior to the Plaza
Accord in 1985 and handled exports worth
approximately 2,000 million yen. However, given

the currency crisis in 1997, when Asian currencies
slumped, the export business became difficult and
we shifted from export to import. Subsequently,
we established a dozen OEM plants in China toestablish a structure that is not affected by theyenʼs appreciation and resumed exports around
2006.

Percentage of Net Sales by country
Other countries 0%
Near and Middle East 3%
East Asia / China 13%

36%
ASEAN

12%
11%
1%

Subsidiary in Thailand
Company nameSingapore
Viet Nam（2023）

Malaysia

Pursue M&A with companies that maintainoverseas sites to promote business area
expansion

Bangkok, Thailand

Date established

November 1, 2012

Paid-in capital

102 million baht (approximately 316 million yen)

Business areas

Import, export and local sale of industrial materials, structural steel materials, electricalequipment, etc. in Thailand
Net sales of overseas business(million yen)Pursue M&A with companies that operates
different sales patterns from those of
KONDOTEC, such as retail, catalog-based
selling, and online sales.

Going forward, we will continue endeavoring to
improve medium to long term corporate value
taking into account M&A strategies for growth by
periphery-strengthening, such as entering intoneighboring industries and expanding online
business.
P50, P53
Risks
Although we carefully consider the financial
standing and business plans of targets for M&As
when conducting M&As, a substantial change ineconomic conditions or business circumstances
may result in an impairment loss on fixed assets,or otherwise have a serious impact on theearnings and the financial position of the
KONDOTEC Group.

Wholesale business in theconstruction industry

Wholesale ofconstruction materials
Plastic
construction
materials
Woodenconstruction
materials
Metal
construction
materials
Other
construction
materials

51

62

106

2022
(Actual)2023(Actual)2024(Plan)

Categorization of merchandise(example)

Wholesale of electric
equipment

Security devices

Air-conditioning
equipment

Hot water
supplyequipment

Lighting and hot
water supply
equipment

Wet areaequipment

CHUOH GIKEN Co., Ltd.

Shipbuilding,Transport
Land and sea cargo handling
Fisheries, cultivation, Agriculture
Manufacturing & production facilities
Other

KONDOTEC INC.
Fields other than construction

Shipbuilding, transport, land andsea cargo handling, manufacturing& production facilities, fisheries,
cultivation, agriculture, etc.

Wholesale of pipes andplumbing materials

Energy-saving
equipment

Neighboring industry

Nippon Scaffolding
Holdings Co., Ltd.
TECBUILD CO., LTD.
TOKAI STEP CO., LTD.
FUKOKU, Ltd.
KURIYAMA ALUMINUM
Co., Ltd.
N-PAT Co., Ltd.

Deepening of business
Reinforcement of materials that support
buildings and structures
Improving productivity

Four perspectives

Local subsidiaryin Thailand

130

280

310

International
Sales Division

51

62

106

Expansion ofbusiness area

Total

181

342

416

Full-scale deployment in
ASEAN countries(e.g. Thailand, Indonesia)*Amounts of inter-company transactions are not included.

KONDOTEC REPORT 2023

④Amplifying sales patterns

隣接する業
界

310

280

29

Pursue M&A with companies associatedwith industries other than the constructionindustry and promote business expansion
Actual case: Sanwa Denzai Co., Ltd.
KURIYAMA ALUMINUM
Co., Ltd.

③Expansion of business area

KONDOTEC INTERNATIONAL(THAILAND) CO.,LTD.

130①Neighboring industry

Pursue M&A with material manufacturers,
etc.
Actual case: CHUOH GIKEN Co., Ltd.
TECBUILD CO., LTD.
TOKAI STEP CO., LTD.
FUKOKU, Ltd.

Location

KONDOTEC
INTERNATIONAL(THAILAND)

Four perspectives in pursuing M&A②Deepening the businessIndonesia

24% Thailand

84%

We view that pursuing corporate acquisitions andcapital/business tie-ups is an important strategy
to strengthen our business platform. We actively
review potential acquisition and tie-up
opportunities by analyzing and discussing the
growth potential of the relevant business, while
taking capital cost into consideration. From 2019
to 2021, we have acquired three companies
engaged in the scaffolding construction tostrengthen the maintenance/repair field, aiming
to expand businesses in the maintenance/repair
field, and in 2021 we have acquired KURIYAMAALUMINUM Co., Ltd., which is involved in the
manufacturing and development of aluminum
extrusions in response to the demand for lightweight.

Sanwa Denzai Co., Ltd.

Based on our view that increasing presence inforeign markets where growth is expected willcontribute to enhancing our earnings capability,
we established a subsidiary in Thailand in
November 2012. We executed a capital increasein August 2014, acquired all shares from the two
joint venture companies and substantially madethe company our fully-owned subsidiary.
Currently, we are moving ahead with activities
to expand our business in ASEAN countries withThailand as our base location. Going forward, we
will further strengthen our sales & marketing
capabilities by widening our sales network andreinforcing manpower with a view to increasing

VISION

Toward accelerating the growth of the presentʼs KONDOTEC (Organic) andthe futureʼs KONDOTEC (Periphery-strengthening)

KONDOTEC

Initiatives for enhancing activities in non-existing business（Periphery-strengthening growth strategies）

WE ARE KONDOTEC

Financial Strategies

FINANCIAL DATA

Growth Strategy /ENVIRONMENT/SOCIAL

Medium-term Management Plan

GOVERNANCE/

Amplifying sales patterns

SUPPLEMENTTop Message

Expansion of distribution channels
Entry into the online business
KONDOTEC REPORT 2023

30

KONDOTEC VISION
Top Message/

Medium-term Management Plan/

Growth Strategy /Financial Strategies

Financial Strategies■Improving corporate value and financial strategies

9,000
millionyen

1,453 million yen

Operating CF
13,800
million yen

Strategic
investment

Execution of M&A,
Digital Transformation
investments etc.

3,000
millionyen

No investment

Funds onhand
10,733
million yen

DOE
4.0%
or moreDividends paid:
844 million yen
Acquisition oftreasury stock:
291 million yen(2023)

Investment
for growth

Shareholder
returnDividends
etc.

Continuous increasein dividends
Acquisition of treasury
stock(Figure 2︓ Initiatives based on structural breaking down of ROE)
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠（ Gross profit
margin）
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠（ Total asset
turnover ）𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝐸𝑞𝑢𝑖𝑡𝑦 𝑐𝑎𝑝𝑖𝑡𝑎𝑙（ Financial
leverage ）

31

2026
(Plan)

KONDOTEC REPORT 2023

1. Qualitative approach
Improve net sales by reviewing
strategies
2. Quantitative approach
Increase net sales, improve
profitability
1. Reduction of necessary working
capital
2. Reduction of unnecessary noncurrent assets
1.Capital policy considering optimal
capital structure（Balance between interest-bearing
debts and equity capital）
2.Growth investments while being
conscious of capital costs
3.Reduction of unnecessary non-current
assetsOperatingincome4,800
million yen
ROE10%or moreIn the area of DX investment, our sales division
has adopted Sales Force Automation (SFA) tools
and has demonstrated achievements in rapid
sharing of information, enhanced customer
service, and increased order rate.
Efficient management under a unified GroupWe have begun rebuilding our head officebuilding, with completion planned for the summerof 2025. Although the current building has ahistory of over 50 years, it is undeniably behind
the times in terms of contemporary accessibility
measures and environmental measures. We wantto create a workplace where diverse talent canwork, including people with disabilities, and where
employee engagement is enhanced.

Another key financial indicator is the consolidated
dividend on equity (DOE) ratio, which expresses
the degree of shareholder returns. For the fiscal
year ending March 31, 2024, we have raised ourDOE target from 2.5% or higher to 4.0% or
higher.
Our dividend policy has always been continuous
increase in dividends without reductions. To
further strengthen our return of profit toshareholders by raising our dividend level, we
have raised our target following comprehensive
consideration of medium- to long-term businessperformance and capital efficiency.
As the level of employee participation in theshareholders association is high in our Company,
our DOE-conscious management also looks at theenhancement of employee incentives andshoulders the role of thinking from theperspective of shareholders and boostingawareness of our stock price.
Under the above basic policy, we plan to raise ourdividend forecast for the fiscal year ending March
31, 2024 by 6 yen to 40 yen.
Looking ahead, we will strive for managementwith enhancement of profitability and of
shareholder returns in mind, and with capital
investment, strategic investment, and continuous
increase in dividend at the core of our process of
allocation of funds. Doing so, we seek to be acompany that is held in high regard by our
stakeholders.

VISIONKONDOTECFINANCIAL DATA

Capitalinvestment

Equipment
replacement,
relocation andrebuilding of theoperating sites etc.

Management with enhancement of
profitability and shareholder returns in mind
We have set an ROE target of 10% as a targetedfinancial indicator, and have pursued
management with return on invested capital inmind. Accordingly, every fiscal year we conduct a
review of our weighted average cost of capital(WACC). When examining new investments, we
set return on the investment in excess of our
WACC as one of our investment criteria
guidelines.
Due in part to the COVID-19 pandemic andsoaring costs of resources and raw materials, ourmost recent ROE has fallen short of our target.
However, as noted on p. 31, we aim to achieve
our target through capital investments including
the opening of new operating sites and therelocation and expansion of sites for which
capacity has not changed despite a doubling ofsales, as well as through strategic investmentsthat include M&A and promotion of DX in areas
where future growth is expected.
Looking at M&A in particular, since 2019 we havebrought three scaffolding construction workrelated companies into the Group with an eye
toward repair and renovation demand, and havebrought an aluminum product manufacturer into
the Group with an eye toward weight reduction
and recyclability. We continue to conduct studies
of M&A when appropriate, as a pillar of our
growth strategy.

ENVIRONMENT

ActualHe engages in management by which he integrates sales measures and financial strategies througha thorough understanding of the front lines of sales work.

SOCIALPlan(2024 〜2026)

He joined the Company in 1985. He served as Manager of Yokohama Branch in 2006, Executive
Officer, Manager of Delivery Division in 2011, Executive Officer, Manager of Western Japan Sales
Division in 2013, Director, Manager of Western Japan Sales Division in 2016, Director, General
Manager of Sales Headquarters, Manager of Western Japan Sales Division and Manager of Business
Strategy Department in 2019, Executive Director, General Manager of Sales Headquarters, Manager
of Western Japan Sales Division and Manager of Business Strategy Department in 2020 of theCompany before assuming his current position.

P31, P33, P34

The new building will also have the purpose of
consolidating the bases of our Group companies
located in Osaka. Bringing Group companies
together into one place will enable closer
communication and faster decision-making, which
we expect will yield further synergies.
Working together as a Group, we will carry out
efficient and daring strategies and will strive tocontinuously enhance our corporate value.
KONDOTEC REPORT 2023

32

GOVERNANCE(Figure 1 : Kondotecʼs Process of allocation of funds)

Hiroyuki Yada
Senior Executive Director and General Manager of Management Headquarters,
Manager of General Affairs Division and Manager of Business Strategy
Department of the Company

WE ARE KONDOTEC■Message from Director in charge of Finance

Please refer to Figure 1 for the allocation of funds.
We make growth investments while being
conscious of capital costs as well as stableshareholder returns, aiming to maintain highly
efficient capital.
For the improvement of capital efficiency, theCompany places importance on capital costs,
which are targeted at 5.8% for the year ending
March 31, 2024.
As a result of these initiatives, an improvement in
ROE will be required. Accordingly, we aim for an
ROE of 10% or more as the capital efficiency
target, aiming to improve ROE from theperspective of Figure 2, which structurally breaks
down ROE.

SUPPLEMENT

To improve corporate value, the Company
considers it necessary to improve profitability,
improve capital efficiency and optimize finance. In
particular, we place importance on dividend policy
and appropriate allocation of funds to optimize
finance.
In terms of dividend policy, while fully taking into
account both consolidated operating results andthe consolidated dividend payout ratio, we havethe basic policy of distributing dividends toshareholders continuously and increasingly,
targeting a dividend on equity (DOE) ratio of
4.0% or more. The Company has never reduced
dividends since our listing. While we could have
reduced dividends at the time of the Lehman
Shock, since our profit was stable, we decided not
to reduce but to distribute dividends continuously,
using DOE as the indicator.

KONDOTEC VISION
Top Message/

Medium-term Management Plan/

Growth Strategy /Financial Strategies■Capital policy

40yen

are also paying attention to exceed this capitalcost. Meanwhile, the shareholder return target is
set to determine dividends by means of DOE, an
index that takes into account both consolidated
operating results and the dividend payout ratio.
And we have the basic policy of distributing
dividends to shareholders continuously andincreasingly.

Target:

15.0

10.7

Since the initial listing: No decrease in dividends
Plan to increase dividends for the 13th consecutive period

Target:4.0
2.7

Increase in ordinary dividends

4.0％ or more
2.8

2.8

Commemorative dividend

2.8

2.8

10.4

10.0

7.9

7.7

13yen
11yen
10yen

2.0
5yen

5.4
5.0

26yen
24yen
23yen
22yen
20yen
15.5yen
14yen
13.5yen

5.5yen 6yen

0.0
2023

2019

TOPICSIn addition to DOE target, we have a target ROEof 10% or more. As a result of increasing net
assets, which are the bases to determine
dividends by recording above a certain level ofprofits every fiscal year, we will be able to
distribute dividends continuously and increase
them constantly.

Capital cost (Based on actual figures in 2023)

2020

2021

2022

2023

1995

To increase our level of dividends and further
strengthen the return of profits to shareholders,from the fiscal year ending March 31, 2024 wehave raised our consolidated dividend on equity(DOE) ratio target from 2.5% or more to 4.0% or
more, following comprehensive consideration of
medium- to long-term business performance andcapital efficiency. With both capital efficiency andshareholder returns in mind, we will continue
working to enhance our corporate value.

5.8％

Transition of stock price （Yen）
1,400

40,00035,00030,0001,000

25,000800

20,000600

15,000

400
200
0

3,000

■Acquisition of Treasury Stocks
The Company acquires treasury stocks to
implement flexible capital measures in responseto changes in the management environment,
and considers the cancellation of treasury stocks
as necessary to increase shareholdersʼ profit.
Recently, the Company has been acquiring
treasury stock since January 2022 until July
2022.

■Dividend yield
KONDOTEC stock price after stock split(left axis)
Nikkei average stock price(right axis)

1,200

2005

2015

Increase in our DOE target

Trading volume

1,500
0

1995.4 1997.4 1999.4 2001.4 2003.4 2005.4 2007.4 2009.4 2011.4 2013.4 2015.4 2017.4 2019.4 2021.4
KONDOTEC REPORT 2023

10,0005,000
0Calculated based on closing priceon March 31, 2023, 1,002 yen■Shareholder incentive plan
Reward points are awarded, which can beredeemed for food, electronics, travel,
experiences, and more from around 4,000
merchandise from the shareholders-only website
based on the number of points required.
Shareholder benefit criteria
The benefit is intended for shareholders who
hold at least 5 units (500 shares) of thecompanyʼs shares, listed or recorded in theshareholder registry as of the end of Marcheach year.

ENVIRONMENT

2022

Latest acquisition of Treasury Stocks
Acquired numberof shares

859 thousand shares

Acquisition price899 million yen

Acquisition
periodJanuary 4, 2022 throughJuly 7, 2022

Dividend yield

3.4％

Dividend yield including
shareholder incentives

4.0％〜

Number of shares held

Reward points

500 to less than 600

3,000 points

600 to less than 700

4,000 points

700 to less than 800

5,000 points

800 to less than 900

6,000 points

900 to less than 1,000

7,000 points

1,000 or more

10,000 points* 1 point is worth 1 yen.

KONDOTEC REPORT 2023

SOCIAL

2021

GOVERNANCE

2020

SUPPLEMENT

2019

33

34yen
32yen
31yen
29yen

VISION

Ordinary dividend

Actual DOE（％）

10％ or more

(Plan)

KONDOTEC

Actual ROE（％）

Transition in dividends

FINANCIAL DATA

Our capital policy stands on two key
components; capital efficiency target andshareholder return target. We set the capitalefficiency target by using ROE, an index thatreflects the efficiency of capital investment inpursuit of business expansion, in an effort topromote creation of corporate value. Moreover,capital cost based on actual figures in the fiscal
year ended March 31, 2023 is set at 5.8%; we

WE ARE KONDOTEC

Improving corporate value

34

FINANCIAL DATA
Consolidated Financial Highlights / Consolidated Financial Performance

2021

2022

2023

2023

■Results of Operations (million yen and Thousand U.S. dollars)
Ordinary income
Profit attributable to owners ofparentCapital investment
Depreciation※1

KONDOTEC REPORT 2023

¥60,599¥59,562¥66,139¥75,447$565,025

4,023

4,177

3,455

3,810

4,563

34,178

2,748

2,875

1,561

2,284

2,414

18,082

981

917

1,097

1,694

1,453

10,888

404

697

897

1,091

1,134

8,499

4,425

4,916

3,783

5,095

5,482

41,059■Financial Position (million yen and Thousand U.S. dollars)
Total assets¥43,820¥46,335¥49,426¥56,009¥58,163$435,583

Net assets

26,75628,38729,022

32,06633,285249,269

853

1,106

3,875

5,315

4,513

33,798Interest-bearing debt

Cash flows from operating activities¥2,699¥4,385¥4,196¥1,227¥3,961$29,669

Cash flows from investing activities(1,551)(5,205)(2,264)(2,373)(1,389)(10,405)

Cash flows from financing activities
Cash and cash equivalents, end of
year

(915)

(992)

1,060

(22)

(2,025)(15,167)

10,1338,305

11,317

10,164

10,73380,385FINANCIAL DATA■Cash Flows (million yen and Thousand U.S. dollars)Profit attributable to owners ofparent per share
Net assets per share
Dividend per share¥102.65¥107.46¥59.60¥87.26¥94.75$0.70

996.99

1,071.09

1,110.01

1,170.84

1,227.81

9.19

26.00

29.00

31.00

32.00

34.00

0.25

¥21.6

¥22.4

¥22.8

¥22.3

¥21.5

7.0

6.9

5.8

5.8

6.0

4.8

4.7

2.6

3.5

3.2

139.1

134.4

124.4

125.5

132.2
1.9

Ordinary income margin (%)
Profit attributable to owners ofparent margin (%)※2 Total asset turnover (%)※3

Financial leverage (Times)

1.6

1.6

1.7

1.9

※4

ROE (%)

10.7

10.4

5.4

7.7

7.9

※5

ROA (%)

6.6

6.4

3.3

4.3

4.2

※6

Equity ratio (%)

61.0

61.2

58.7

53.7

53.8

DOE (%)

2.7

2.8

2.8

2.8

2.8

200.9

181.1

167.6

157.6

165.3

※7

Current ratio (%)※8

D/E ratio (%)

3.2

3.9

13.4

17.7

14.4

※9

Fixed ratio (%)

47.1

61.5

61.6

71.0

66.4

53.3

55.0

53.1

48.0

49.0

¥1,006¥929¥1,069¥1,017¥1,002

9.8

8.6

17.9

11.7

10.6

Ratio of retained earnings to total
assets (%)

GOVERNANCE

Gross profit margin (%)

SOCIAL■Financial Indicators■Stock Price Index
Stock closing price (Yen)Price earnings ratio (Times)※1 EBITDA = Income before income taxes + Interest expenses +Depreciation + Amortization of goodwill※2 Total asset turnover ＝ Net sales / Total assets of average twoyears※3 Financial leverage ＝ Total assets / (Net assets － Subscription
rights to shares － Non-controlling interests)※4 ROE = Profit attributable to owners of parent / (Net assets –Subscription rights to shares － Non-controlling interests)※5 ROA ＝ Profit attributable to owners of parent / Total assets ofaverage two years※6 Equity ratio ＝ (Net assets － Subscription rights to shares －Non-controlling interests) / Total assets※7 Current ratio = Current assets / Current liabilities※8 D/E ratio = Interest-bearing debt / (Net assets － Subscription
rights to shares － Non-controlling interests)※9 Fixed ratio = Non-current assets / (Net assets － Subscription
rights to shares － Non-controlling interests)

KONDOTEC REPORT 2023

ENVIRONMENT■Per Share Information (Yen and U.S. dollars)

Financial Information

35

EBITDA¥57,828

SUPPLEMENTFINANCIALDATA

Net sales

VISION2020

KONDOTEC

2019

WE ARE KONDOTEC

Consolidated Financial Highlights

36

FINANCIAL DATA
Consolidated Financial Highlights / Consolidated Financial Performance

Consolidated Financial Performance■Net assets

75,447 million yen

4,563 million yen

58,163 million yen

33,285 million yen

14.1 ％ UP

19.8 ％ UP

3.8 ％ UP

3.8 ％ UP75,447
4,023

66,139（million yen）

4,563

58,16356,009

4,177
3,810

59,562

43,8203,455

46,335（million yen）

49,42632,066
26,75628,38733,28529,022

FINANCIAL DATA

57,82860,599（million yen）

KONDOTEC（million yen）

WE ARE KONDOTEC■Total assets■Ordinary income

VISION■Net sales■ Profit attributable to owners of parent

2019

2021

2023

■ Return on Equity (ROE)

2021

2023

■Dividend per share

2019

2021

7.9 ％

34.00 yen

2.8 ％5.7 ％ UP0.2 point UP

2 yen UP

0.0 point UP

2,875

（％）
10.7

2,284

10.4

2,414
7.7

1,561

2019

2021

KONDOTEC REPORT 2023

7.9

（％）

（Yen）

29.00

31.00

32.00

34.00
2.7

26.00

2.8

2.8

2.8

2.8

GOVERNANCE

2,748

2023

■Dividend on Equity ratio (DOE)

2,414 million yen（million yen）

37

2019

ENVIRONMENT

2023

5.4

2023

2019

2021

2023

2019

2021

SOCIAL

2021

2023

2019

2021

2023

KONDOTEC REPORT 2023

38

SUPPLEMENT

2019

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline /ENVIRONMENT/SOCIAL /GOVERNANCE

From the Establishment of Corporate Identity (CI) to ESG Basic Policy

39

KONDOTEC REPORT 2023

Excellent human resources
and progress into the future

The uprising vector expresses excellent human resources whomake progress and grow continuously into the future. It
expresses the movement of their strong aspiration working on
proactive development of new technologies and leading tofurther development.

■Corporate ColorVISIONWE ARE KONDOTEC

This expresses a company that is formed from the balance andharmony between people and technologies. It also expresses
the harmony and trust among employees, between companies
and with surrounding local communities.

ENVIRONMENT

Harmony of people andtechnologies[Deep green]

SOCIAL

Green trees, the color of whose leaves in hills and fields
keep deep green without change through four seasonsand thus has been regarded as a “happy color” sinceancient times. Their leaves of deep green create oxygen
through photosynthesis benefiting the whole world. The
Company has selected “deep green” as its corporate
color because we also strongly wish to be a company
that continues to develop regardless of how society andthe economy change, and which is indispensable forsociety.

GOVERNANCE

コンドーテックの成長戦略

This shape of placing the foot firmly on the ground and aiming
for further ascendance expresses our stance of striving todevelop new technologies to establish our own brand based on
the accumulated technologies and know-how.

Example of CI used (mailed items, seals)
KONDO News・CI special issue(extra edition)

SUPPLEMENT

Environment / Social / Governance

Proactive development of
new technologies

KONDOTEC

This logo uses the first letter of KONDOTEC “K” as the motif, implying the following meaning expressedin the corporate philosophy:

FINANCIAL DATA

■Logo

E

nvironment

ocial

S G

overnance

The company which started as a private concern, changed its
company name in 1989, almost 30 years ago. While it was atime when the concept of ESG has yet to be born, our corporate
identity was established with the wish to “Be a company which
continues to develop regardless of how society and the economy
change, and which is indispensable for society.” The sprit
remains the same today, and is inherited in the ESG Basic Policy.

Company badge worn

KONDOTEC REPORT 2023

40

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline /ENVIRONMENT/SOCIAL /GOVERNANCE

従業員とともに

ESG Basic Policy Outline（１）Initiatives for environmental protectionand energy-saving

Management of factory drainage
Inspect and review the oil separation tub as necessary for appropriate storage anddisposal of used oil in the factory
Implementation of self-inspection on water distribution and land oil by a specializedorganization
Confirmed the figures which met the criteria
Replacement of the transformer at the Kyushu Factory with high-efficiency transformers
Reduce transportation costs and greenhouse gases emissions by deploying 4 factories
across the country
Reduce transportation costs, greenhouse gases emissions and realize quick deliveries witheach operating site having inventories
Participation in environmental conservation activities（Implementation of cool/warm biz,
Implementation of forest preservation activities and cleaning activities, Participation in“Fun to Share” )Adoption of online fax service
Use of plant ink for business reports (shareholder letters）
Reuse of wooden pallets

Management of emissions(material balance)

Quality control of products andmerchandise(1)Product liability and quality assurance

Submission of the regular report to the Ministry of Economy, Trade and Industry every
year
Compliance with JIS, Ministry certifications, and other industry standards
Establishment of the Department to have the audit function, for quality assurance of
in-house manufactured products including standardized products and others
Implementation of quality inspection by various inspection organizations
Establishment of the Quality Management Section in our factories
Sale of highly safe products and merchandise
Improvement of production capacity and product development technologies byutilizing CHUOH GIKEN Co., Ltd. and Mechatro Laboratory
Meeting on complaints, information sharing
Implementation of study groups for customers, education of personnel who can handle
products based on accurate knowledge regardless of inside or outside of the Company
Clear description in catalogues of usage methods, points to note and disposal standards

Stance for security and safety
Introduction of internal training and the lifting equipment advisor system

Social(2)Procurement and provision of high-value-added
products, merchandise and services

Provision of better products,
merchandise and services for customers

Provision of a broad range of products and merchandise aiding in robust infrastructuredevelopment required for social activities (handling about 50,000 items)
Realization of low prices and short delivery times for products and merchandise, including
JIS-certified products
Provision of products and merchandise to diverse industries responding to the times andneeds of customers(Development of new merchandise and merchandise to be imported by the New
Merchandise Committee)
Cultivation of suppliers which offer lower prices (including OEM and imports), scale merits
by purchasing together by a unit of containers
Expansion business in the maintenance/repair field mainly by Nippon Scaffolding Holdings
Co., Ltd., TECBUILD CO., LTD., TOKAI STEP CO. LTD and FUKOKU, Ltd.
Expansion of aluminum product sales via KURIYAMA ALUMINIUM Co., Ltd.
Productivity improvement through exhaustive process management
Production innovation through capital investment in Factories

41

KONDOTEC REPORT 2023

Replacement of equipment(measures against deterioration anddecay)
Strengthening logistics facility functions
CO2 emissions calculation during upstream
and downstream transportation.

VISION

Support of the TCFD, development of more
specific strategy
Promotion of lighting equipment switch
works at operating sites which have notswitched to LED lighting
Purchase of environment-friendly items
for office supplies
Budgeting of expenses for environmental
measures

KONDOTEC

Identify risks and opportunities related to climate change
Implementation of energy-saving measures(switch to LED lighting, achieving 10% cut in power usage)
Installation of solar power generation
Information dissemination on internal and external environment
Acquisition of ISO14001 at Sapporo Factory, Kanto Factory, Shiga Factory andKyushu Factory
Introduction of EVs into our Head Office
Switch to renewable energy sources to supply power to Head Office facilities

FINANCIAL DATA

(2)Business activities paying attention to theenvironment

Expansion of the handling of environment related merchandise
Sale of LED/solar power related merchandise

Participation in environmental
conservation activities in each region
ENVIRONMENT

Environment

Future issues
Utilization of ISO26000
Manufacturing of products with further
due consideration to the environment
New product and merchandise
development for renewable energy
facilities
Increased number of product sales related
to environment

Establishment of specific reduction
plan of greenhouse gases emissions(environmental vision)
Introduction of EMS
Continuous provision of products andmerchandise with high market value
Increase and securing of personnel who
can do marketing of technologies basedon accurate knowledge
Increase in initiatives for labor-saving
and flexible manpower line

SOCIAL

Products and merchandise handled by
the Company（Presentation of environment related
products and merchandise）

Current specific initiatives

Promoting merchandise management
using the “Tsurikata” inspection site forlifting equipment
Increase in the lifting equipment advisor
who passed
Promotion of seminar on lifting
equipment held outside the Company

Development of systems to ensure
quality as well Strengthening of China
Plus One initiatives
Provision of products, merchandise, andservices created with synergies among
KONDOTEC and group companies
Deployment to all factories
KONDOTEC REPORT 2023

42

GOVERNANCE(1)Provision of optimal products andmerchandise for environmental measures

Relevant SDGs

SUPPLEMENT

Materiality

WE ARE KONDOTEC

The figure shows the targets to be achieved and their issues in each ESG area.
In identifying the materiality of the Company, we considered the relationship with 17 SDGs goals to sort out materiality. We will solve the issues of each materiality in management going forward to realize a sustainable society.

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline /ENVIRONMENT/SOCIAL /GOVERNANCE(5)Co-existence with local communities

Operating site opening plan
Response to disasters and contributions tothem
Risk control for disasters and others

Social(6)Safety measures and work style reform
For employeesʼ health, safety and hygiene

Policy on human resources development(7)Human resources development and diversity

Diversity

Employee benefits(1)Strengthening of corporate governanceCorporate governance(2)Thorough compliance

Compliance Basic Policy

Governance43

KONDOTEC REPORT 2023

Maternity leave/childcare leave/support for returning to work, recruitment of qualified
people and foreign students studying in Japan
Creation of track & field club
Employee shareholders association system, Introduction of the restricted stock
remuneration plan
Introduction of GLTD (Group Long Term Disability income indemnity insurance)
Introduction of a system of rented accommodations provided by the Company
Composition of the Board of Directors, with at least one-third Outside Directors
Evaluation of the effectiveness of the Board of Directors
Prevention of the manifestation of potential costs by the development of governancesystemEstablishment of a Nomination and Compensation Committee,
Transition to a Company with an Audit & Supervisory Committee
Implementation of investments being conscious of capital costs
Compliance action guideline, Formulation of a compliance manual, and implementation of
employee education
Thorough checks on anti-social forces before transaction
Information exchange and development of communication system between
police and the companies
Membership in Crime Prevention Association

Consideration of facilitating financial
settlement operations (Disclosure
within 31 days of the closing date)
Enhancement of information disclosure
based on TCFD recommendations
Implementation of specific measuresagainst cyber attacks
Formulation and promotion of operatingsite opening plan according to the needsof communities
Opening of operating sites in prefectures
where there is no baseExamination of the effectiveness of the
Risk Management Manual
Further increasing the consciousness
about safe driving
Decrease in the number of traffic
accidents

Improvement in the acquisition rate ofpaid vacation
Reinforcement of the management
system for employeesʼ working hours
Securing of manpower
Expansion of the employee consultation
centerDecrease in industrial accidents
Introduction of more appropriate
personnel evaluation, and spread of theself declaration system for transfer
request, etc.
Securing and development of experts indigital technologies
Increase in female managers andrecruitment of handicapped persons
Acquisition of Kurumin (next generation
support certification), establishment of aday-care center, and improvement in theratio of taking maternity leave/childcare
leave and returning to work
Acquisition of certification as a leading
company for the participation of womenin the workplace
Development of the awareness about
stock price of the Company through theimplementation of internal IR
Reinforcement based on improvement
proposals
Increase in the ratio of Outside Directors
Improvement in the effectiveness ofinternal audit

Securing of manpower
Simplification of operations

KONDOTEC REPORT 2023

VISION

Preparation of business report in English

KONDOTEC

Information security measures

Enhancement of IR documents in English
Development of personnel who are
fluent in English

FINANCIAL DATAStance for information disclosure

Increase in the IR meetings

ENVIRONMENT(4)Appropriate information disclosure and security

Future issues
Consideration of increase in exposure tovarious media such as newspapers andcommercials

SOCIALEngagement with stakeholders

Current specific initiatives
Participation in IR events for individual investors
Running advertisements in stations to boost name recognition
Implementation of IR meetings with institutional investors
Holding of briefings for institutional investors
Implementation of acquisition of treasury stocks
Preparation of the notice of General meeting of shareholders in English
Preparation of the integrated report in English
Implementation of IR meetings with overseas investors
Adoption of a system allowing the exercise of voting rights over the Internet,or through other electromagnetic means
Use of universal design font for deliveries to shareholders(for easy reading by everyone)
Actively providing information to business partners
Opening of official social media accounts
Upload of disclosure documents on the Company website
Providing information to shareholders, institutional investors and analysts
Disclosure in corporate governance report
Consideration of information disclosure based on TCFD recommendations
Management of customer/shareholder information
Management of employeesʼ personal information
Selection of possible areas to capture demand
Selection of the site for opening operating site paying due consideration to the nuisancefor neighbors
Employment promotion through operating sites across the country
Possible to provide products and merchandise immediately even at the time of local
disasters by having inventories at operating sites across Japan
Introduction of the Risk Management Manual
Transfer of the core system to the data center
Introduction of dual head offices system
Safe driving training for new employees, Introduction of telematics
No accident campaign
Sharing of accident reports, warning for the whole company
Management of driverʼs license information
Bringing the “Traffic accident handling card” when driving company cars
Decision on policy to adopt safety devices for company cars such as automated brakes
Introduction of the drive recorder for company cars
Promotion of safe driving awareness raising activities(formulation and dissemination of the Five Rules for Safe Driving)Work style reform
Reduction of collection by sales staff (promotion of transfer to Densai)
Reduction of internal documents and review of approval authority
Digitalization of salary statement, Adoption of the workflow system / time andattendance management system
Implementation of regular health check-ups and stress checks
Implementation of counter-measures for the infection(introduction of work from home schemes, subsidies for vaccination costs, etc.)
Implementation of counter-measures for heatstroke at factories
Monthly regular safety patrols
Holding of Safety and Health Committee
Implementation of regular training
Award (reward) system for operating sites and individuals according to sales results andPresidentʼs Award etc.
Introduction of one-to-one instructional guidance schemes
Online education freely available to all employees and assistance for expenses to acquire
qualifications
Non-discriminatory hiring policy
Initiatives of diversity and training policy for human resources

GOVERNANCE(3)Communication with stakeholders

Relevant SDGs

SUPPLEMENT

Materiality

WE ARE KONDOTECESG Basic Policy Outline（２）

44

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

Business Activities Paying Attention to the Environment

Since its foundation in 1953, KONDOTEC has created and co-existed with future environmental value andengaged in business activities paying due consideration to the environment for the realization of asustainable society, while contributing to the creation of an affluent society through the enhancement ofsocial infrastructure by providing products and merchandise to various industries over a half century.
１．We will comply with legal regulations and matters agreed on by the Company for the environment
regarding business activities, products and services.
２．We will endeavor to reduce environmental burdens, reduce environmental pollution risks, andprotect biological diversity and ecological systems by saving energy and resources, promoting
recycling, reducing waste, reducing the consumption of chemical substances and engaging ingreen procurement.
３．We will continue to improve our activities by utilizing the environmental management system,
setting environmental targets to achieve the Environmental Policy, conducting evaluations onenvironmental performance, and reviewing them regularly.

Risk management system
In collaboration with all divisions Company-wide, SDGs Promotion Department compile, assess, andidentify risks and opportunities facing the Company in relation to climate change. Climate-related risks
and opportunities that have been assessed and identified are reported to the Board of Directors forfurther supervision.
Main risks and opportunities associated with climate change
Climate-related risks and opportunities currently identified through extensive discussion with each
Company division are outlined in the table below. The corresponding SDG targets are sized according totheir degree of relevance.
Looking ahead, we will delve deeper into ways we can continue to better serve society, including
strengthening current value creation processes, and in the specific ways we tackle issues that come tolight, and tie this back to information disclosure based on TCFD recommendations.
Item

４．We will thoroughly inform all employees of the Environmental Policy and endeavor to conduct
necessary education and enlightenment activities to engage in environment conservation activities.

Provision of Optimal Products and Merchandisefor Environmental Measures

Introduction of acarbon tax

Merchandise using renewable plastics
Transition scenarios

TOPICSECO FRIEND

KONDOTEC also offers recycled PP strapping
merchandise made from plastic collected fromconsumers (left photo), and construction deckplates made from biomass plastics (rightphoto), both of which an Eco Mark certified.

TOPICS

MarketThis is an eco-mark certified oil absorption mat
using recycled materials. It is used for the
disposing of oil at the time of marine pollution
caused by oil spills and at factories which use oil.

Political policy and laws and regulations■Expansion of the handling of environment related merchandise(Presentation of products and merchandise)
Oil hunter

・Increased costs throughthe implementation of acarbon tax on CO₂emissions from businessactivities (mainly the
manufacturing process
and logistics)

Opportunities
・Business expansion
related to renewableenergyDegreeofimpactFuture issues

Corresponding
SDGs

・Bolster procurement capabilities
and production system forincreased demand for products
used in renewable energy
facilities

・Reduction of CO2
emissions andtransportation costs bydeveloping local
suppliers to promotelocal production andconsumption

・Impact on businessperformance by disrupted
supply-demand balance due
to reduced production at・Increased demand forblast furnace companies and low carbon facility
・Reduction of energy
decreased construction
development (wooden
consumption and introduction
demandconstruction , etc.)
of energy-saving facilities andequipment at factories
・Increased
・Increased possibilities
Tightening of
construction/runningfor product ideas and・Strengthen synergies withregulations
costs of energy-saving
development related to Major
Group companies
concerning low
facilities, rising purchasing
eco and environment（promoting sales of solar powercarbon initiatives
pricesthrough a wide range ofgeneration facilities and LED
commercial
channels
lighting, enhanced facility
・Possibility of being
development capacity)eliminated from the market ・Enhanced market value
via disclosure that
if not compliant with・Review changes topromotes
environmental
regulation related toenvironmentally-friendly
measuressupporting low carbon
products and merchandise and・Strengthened regulation on
packaging materials
existing products and・Inspect
low carbon initiatives atmerchandise
partner factories and suppliers
・Fluctuations in purchasing
・Increase in orders due
Promoting theprices and the cost of raw
to an increase in
spread ofmaterials due to sudden
renewable energy
renewable energy
and unexpected changes
facilities
in energy costs

The normalizationof extraordinary・Impact on the supply ofclimate events
raw materials andcausing massive
merchandise due todamage,damages to the supply
including frequent
chain
typhoons andtorrential rainfall

・Increased opportunity
to sell disaster
preparation
merchandise
・Increased demand for
repair an
reinforcement
work on rivers andbanks

・Expand the lineup andinventory of disaster
preparation products andmerchandise

Major

・Expand sales channels for
products and merchandise usedin civil engineering works
・Ensure multiple avenues
for purchasing
・Prepare logistics
simulations and plans for
emergencies
・Utilization of the logistics
network between operating sites

Rising in the
averagetemperature
Chronic

KONDOTEC REPORT 2023

Joints in building materials intentionally create
rust to fix building materials to each otherthrough friction bonding. For this reason,masking tape or other means was used on
surfaces as covering to prevent paint fromcoating the joints. Our development of the
mash-up cover makes this covering possible
without generating tape waste.

Tangible scenarios

45

Risks

Mash up coverAcute

A new concrete release agent based on
petroleum stock. As over 95% of its raw
materials have a biodegradability of
approximately 75% in the OECD 310F test of
biodegradability, it is considered to degrade
rapidly in the natural environment.

VISION

Environmental Policy

KONDOTEC

働ける企業⾵⼟の醸成に取り組んでいきます。

FINANCIAL DATA

シティとワークライフバランスの推進に取り組み、いきいきとして、やりがいをもって働くことの出来るように職場環境を整

ENVIRONMENTなバックグラウンドを持った社員が、各⼈の能⼒を最⼤限発揮

At KONDOTEC, in considering a path for sustainable growth, we do take into account the significant
impact issues associated with climate change will have on future business activities. We are currently
taking steps to recognize the impact our business activities have on the environment by management ofemissions, and other measures.
P48
We view the shift to a low-carbon society as a key opportunity for us, and looking ahead we will look to
pursue information disclosure in line with TCFD recommendations, while implementing measures
addressing climate change.

SOCIAL

えていくことが重要と考えております。そのために、ダイバー

GOVERNANCE

NVIRONMENT

企業理念である豊かな社会づくりに貢献するためには、多様

WE ARE KONDOTEC■ Response to climate change and information disclosure in line with TCFD recommendations

・Reduced productivity due
to heat stroke and otherfactors brought on by
Changes in rainfall
temperature rises
patterns
・Construction delays due
Extreme variability to rainfall and strong
winds, etc.
in weather
patterns

・Increased opportunity
to sell seasonalmerchandise
addressing heatstroke and otherissues・Expansion in our
seasonal merchandise lineup
・Promotion of greenery
on office and factory
premises

SUPPLEMENT

E/

・Setting of break times
and drink times during
periods of risingtemperatures

KONDOTEC REPORT 2023

46

ESG
ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE■Management of emissions（Material balance）
GHG emissions comparison（non-consolidated）

generation(thousand kWh)
Shiga Factory

Kanto Factory

292

310

296

731

679

637

2021

2022

2023

Quick delivery by four-factory structure and inventories at each operating site
We have established factories at four locations inJapan (Hokkaido, Ibaraki, Shiga and Fukuoka),
with made-to-order products such as braces andanchor bolts produced at and shipped from thenearest factory to the customer. Using the fourfactory structure, we reduce environmental
burdens and transportation costs as well asdeliver products quickly.

For products and merchandise which can be
stored as inventories, in addition to inventories
at logistics centers, we keep a certain amount at
warehouses established at individual operatingsites so that we can respond to abrupt demand
while realizing environmental burdens and cost
reduction ,and quick delivery.

Source: "Guidance for Encouraging Japanese Companies to Address International Initiatives on Climate Change"(March 2021 edition)

The following illustrates the overall input-output balance and expenditures and revenues during thecourse from research and development to manufacturing within the business activities of KONDOTEC.
* Actual results of four factories of the Company are used.

Use this code to access informationon the scope of application.

ＩＮＰＵＴ
Raw materials

29,412t

Coating
Material

78.0m3

Electricity

5,519thousand kWhNatural gas

to EVs and renewable energy power sources
have already gotten underway at our Head Officein 2021.

EnergyIrrigation
water

ＯＵＴＰＵＴ

Iron and steel

30m ･N or PJ

LPG

63t

Diesel fuel3.6㎘

Kerosene

13㎘

Water

Production

Iron & steel
products

28,743t

Air emission

CO2

2,484tRecycled
volume2,568tAmount ofoutsourced
disposal

169t

Industrial
waste/byproduct

0.4㎘
4,647m3

Drainage

Water

4,647m3
FY 2023＜ Main expenditure relating to environmental protection ＞
Kanto Factory︓ Disposal expenses of industrial/general waste (3 million yen)
Kyushu Factory︓Introduction of battery-powered forklift trucks (3 units, 3t each) (7 million yen)
Replacement of LED (22 million yen)
Paint thinner recycling equipment (1 million yen)
Sapporo Factory︓Expenses related to acquiring ISO14001 certification (1 million yen)
＜ Main revenues relating to environmental protection ＞
Revenues in business for recycling waste (e.g. steel scraps) generated from major business activities or
recycling used products, etc. (113 million yen)

SUPPLEMENT

As a component of our initiatives to reduce
waste, from the current fiscal year we are
running a trial program to circulate wooden
pallets used in-house.
In the transport of materials from factories andlogistics center to operating sites, we areoperating a model by which wooden pallets,
previously discarded at sites, are gathered atsites and returned to nearby factories or logistics
center for reuse.

(FY 2023)

The GHG Protocol is an international standard for calculating greenhouse gas (GHG) emissions, divided
into Scope 1 to Scope 3 as follows.
Scope1:Direct emissions of greenhouse gases by business operators from fuel combustion, industrial
processes, etc.
Scope2:Indirect emissions associated with the use of electricity, heat, and steam supplied by othercompanies
Scope3:Other indirect emissions (emissions by other parties related to the activities of the reporting
business operator)

Business
activities

TOPICS

2,769

About the GHG Protocol

Heavy oil

Reuse of wooden pallets

Scope2

From the previous fiscal year, our Company has measured CO₂ emissions using a calculation methodcompliant with the international GHG Protocol. We are currently examining CO₂ reduction targets thatare calculated using the GHG Protocol.

Environmental conservation activities
As part of efforts to reduce CO2 emissions,
KONDOTEC has begun plans to replace Company
cars with EVs, and to switch to renewable energy
sources to power Company facilities. Such moves

1,286

Material balance

Acquisition of ISO14001
We obtained ISO14001, international
standards for environmental
management, at all four factories,
engaging in environment-friendly
operations for factories.

(t-CO₂)

Scope1

WE ARE KONDOTEC

power

VISION

Transition of annual

KONDOTEC

Our two factories, Sanwa Denzai Co., Ltd. and
TOKAI STEP CO., LTD. operate the solar power
generation system in our power sales business.
In Electrical Equipment and Structural SteelMaterials segments, we handle materials related
to solar power generation systems and frames
respectively, and focus on sales throughsynergies within the Group.

FINANCIAL DATA

Installation Solar power generation

ENVIRONMENT■Initiatives for Environmental protection and Energy-saving

SOCIAL/

GOVERNANCE

From the Establishment of Corporate Identity (CI) to ESG Basic Policy

47

KONDOTEC REPORT 2023

KONDOTEC REPORT 2023

48

ESG
ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

S

CHUOH GIKEN Co., Ltd.

■Quality Control of products and merchandiseThis company has strengths in design andmanufacturing of various machine devices, laborsaving equipment and transport devices etc.,
realizing labor-saving for the Companyʼs factories.

ISO9001 certification

Use this code to access information on the scope of
application of ISO 9001.

49

KONDOTEC REPORT 2023

design and manufacturing of various
machine devices, labor-saving
equipment and transport devices

Collaboration

This company has strengths in design andmanufacturing of labor-saving, image processing
equipment, various inspection equipment, andinspection tools among others. It is expected to
improve the confirmation quality of factory
products utilizing excellent capabilities for image
inspection technologies (color discrimination
inspection and appearance inspection).

Providehigh-value-added products

Mechatro Laboratory

design and manufacturing of labor-saving,
image processing equipment

Standard certification list for products manufactured in-house
JIS no.

Product name

JIS A 5540

Turnbuckle for building

JIS A 5541

Body of turnbuckle for building

JIS B 1220

Set of anchor bolt for structures

JIS B 2809

Wire ropes-Grips for rope or wire strand

Standardizationbody nameProduct nameScaffolding andConstruction
Equipment
Association of Japan

Suspension chain

Scaffolding andConstruction
Equipment
Association of Japan

Suspension chain clamp

Scaffolding andConstruction
Equipment
Association of Japan

Suspension chain adjuster

Japan Housing andWood Technology
CenterCompound screw bolt nut M20

Response to complaints
In the event that a complaint is raised, we firsthas the sales representative meet with thecustomer and prepare a report. When there is aneed to investigate the cause, if the casepertains to a product manufactured in-house, theQuality Control Section in our factory takes thenecessary steps, while if the case pertains to
procured merchandise, we take steps jointly

CHUOH GIKEN Co., Ltd

Pewag chain sling

ENVIRONMENT

Acquisition of certification of JIS and industry group
Regarding external standards for products
manufactured in-house, we are producing
products in compliance with the standards ofvarious industries, including the acquisition of theJapanese Industrial Standard (JIS) certification(see table on the right). Scaffolding chains wasawarded the first certification from the
Scaffolding and Construction Equipment
Association of Japan.
Regarding products other than those from ourdirectly operated factories (OEM products), ourtechnology service staff or procurement section
staff visits OEM contractors in Japan and abroad
to give technical instruction.
Moreover, our Directors serve as committee
members of industry groups such as theConstruction Turn Buckle Council of Japan andAnchor Bolt Manufacturer Association, etc.,
indicating their responsibility to comply withproduct standards by participating as committee
members.

Break testing machine
in Manufacturing Headquarters

Chain cutter

Mechatro Laboratory(former Mechatro Engineering Co., Ltd.)■Stance for Security and Safety
We believe that by providing knowledge about
handling when we provide products andmerchandise to customers, they can use them moresecurely and safely. For that purpose, we prescribe
the handling methods in the comprehensive
catalogue and pamphlets, etc., issued by theCompany, and clearly describe the matters to noteand the standards for disposal.
Moreover, for our employees to obtain the correctknowledge about products and merchandise, weoffer many opportunities to learn by: conducting
training on our core products of lifting equipment
and temporary construction materials, steel relatedmaterials, and products manufactured in-house,and by holding study groups for new products byinviting suppliers (manufacturers), etc., among
others.

SOCIAL

From the perspective of providing safe, quality
products, all of our factories have achieved
ISO9001. In addition, to further enhance thequality of products we handle, the Quality
Control Section has been established in ourfactory and the section performs strength testingand inspections on a day-to-day basis in an effort
to increase safety of products.
Further, the SDGs Promotion Department, acting
under the direct supervision of the President, isengaged in auditing quality assurance matters.

VISIONAs a wholesale company with a manufacturing function, we strive to provide security and safety tocustomers through the maintenance of the quality of products and merchandise we handle, as well as
the development and improvement of products.
This section presents our quality control system and the education conducted for our employees on theknowledge of products and merchandise regarding safety.

KONDOTEC

Product Liability and Quality Assurance

FINANCIAL DATA

OCIAL

Mechatro Laboratory (former Mechatro
Engineering Co., Ltd.) came under KONDOTEC
INC. by purchasing business in January 2019.
We engage in product development anddevelopment of labor-saving lines by adding thetechnological strengths of Mechatro Laboratory
to CHUOH GIKEN Co., Ltd. which is our groupcompany. Thus far, CHUOH GIKEN Co., Ltd. hasdeveloped brace manufacturing lines in thefactory and automated chain cutters for chain
slings.
We will continue striving to improve theproduction capacity for the Companyʼs products
using synergies with group companies.

WE ARE KONDOTEC

Technical strength through co-creation with group companies

GOVERNANCE/↑Examples of pages on usage method described in the “Lifting
equipment catalogue” issued by the Company

with the supplier. We have a mechanism toshare complaints whereby holding a meeting on
complaints (irregularly held) and cases thatshould be shared on a corporate-wide basis are
addressed to the entire organization by issuing asales report or guidance to draw attention inorder to share information.
Demonstration of assembly at
the temporary construction
materials training

Welding practice at steel
material training

Study group by suppliers

SUPPLEMENT

From the Establishment of Corporate Identity (CI) to ESG Basic Policy

Site visit during Kyushu
factory training

KONDOTEC REPORT 2023

50

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

Procurement and Provision of High-Value-added Products,
Merchandise and Services

Voluntary quality control activities (QC activities)
We engage in quality control activities (QC
activities) at every manufacturing division offactories for the purpose of improving quality
control systems. We strive to develop anunderstanding about quality control throughout
the whole factory by hosting presentations ofactivity results annually, to award divisions whichmake excellent presentations and shareproposals for improvement throughpresentations among others.

Presentations of QC activities in Kyushu Factory

Internally certified qualification “Lifting equipment advisor”
For the purpose of public relations for our
corporate image as a lifting equipment
manufacturer and improvement in employee
knowledge of products and merchandise andabilities to propose and sell, we introduced the“Lifting equipment advisor” system as aninternally certified qualification in 2015.
Employees can be qualified as a “Lifting
equipment advisor” after external safety/hygiene
education, obtaining public qualifications,participating in internal three-day seminars, andpassing the written examination.
By the end of March 2023, 63 employees had

become qualified as lifting equipment advisors,and engage in not only supplying lifting
equipment but also providing their knowledge at
operating sites across Japan.
Moreover, while Technical service staff at
Osaka/Tokyo head offices have been in charge ofseminars on lifting equipment for people outside
the Company, with lifting equipment advisors
coming into existence study groups on lifting
equipment can now be held all over Japan.

TOPICSVISIONequipment.
Moreover, we not only sell products andmerchandise but also proactively disclose
information and provide services on the
Company website.
Along with our online catalog and technicalinformation, we have opened an online
showroom to display new products andmerchandise, drawings, instruction manuals, andusage videos. We will continue to not only sell
products and merchandise but to also provide
high-value-added services, such as disclosing
software to support the selection of wire ropes
according to the weight of lifted loads.

FINANCIAL DATA

In addition to providing necessary materials forthe construction of hard infrastructure, theCompany deals with materials forrecovery/reconstruction used at the time ofdisasters and any other items needed atconstruction sites.
After its foundation, the Company sold hardwarefor vessels, and subsequently started dealing
with construction materials during the highgrowth period; we currently provide more than
50,000 products and merchandise. At the New
Merchandise Committee held every other month,sales staff propose to deal with new products
and merchandise based on the needs ofcustomers, generating numerous hot selling
products and merchandise from the adopted
proposals.
At present, we also operate the “Tsurikata”
inspection site for lifting equipment to simplify
the individual management and inspection ofmerchandise centered on cargo handling

KONDOTEC■Provision of Products, Merchandise and Services responding to Changes in the Times
and Needs of Customers

Emergency supplies poster“Tsurikata”
Inspection site for lifting equipment

Adoption of Z-COAT

Our Company had long used PREBIN YELLOW
surface treatment for primary rust prevention on
the hooks with forged rings and the round rings
manufactured at our Kyushu Factory. While thetreatment is low-cost and stands out for its
yellow coloration, it presented considerable
trouble in terms of quality control, including
uneven color and stickiness. The coating is also aClass 2 organic solvent that falls under Category
4 hazardous materials, Class 2 petroleums.
Taking ISO 14001 certification as an opportunity
to make a change, we reviewed surface
treatments and adopted Z-COAT dry zinc alloy
plating in May 2021, addressing all of ourconcerns.
Based on the same principle as shot blasting, ZCOAT blasts target items with iron-zinc alloy
powder at high speed to form a zinc-alloy coating.
This dramatically enhances corrosion resistancethrough sacrificial anti-corrosion action. As no
pickling process is involved, hydrogen
embrittlement is not a concern.
The treatment is also chromium-free, with no
RoHS 10 restricted substances or REACH 233
SVHCs.

ENVIRONMENTIn order for products and merchandise of theCompany to be used safely, we host study
groups across Japan responding to requests fromvarious industry groups including customers.
Technical service staff of the Company(belonging to Tokyo/Osaka head offices) become
lecturers to provide information about safe lifting
operations at study groups. We would like tocontribute to our customersʼ efforts to create
safe environments by letting as many people aspossible understand about safety.

WE ARE KONDOTEC

As a manufacturer and wholesale company, the Company develops and sells products andmerchandise which satisfy customers. This section introduces initiatives of the Company to procure
and provide products, merchandise and services.

SOCIAL

Implementing study groups for customers<Lifting equipment advisor Seminar schedule>
PREBIN YELLOW

51

KONDOTEC REPORT 2023

Lecture at Kyushu factory

Demonstration of actual lifting
operation

Lifting equipment advisor Pass rate

75.9％

(Including those who passed after retaking the test）

TOPICS

Opening of an online showroom

In 2022, we opened an online showroom for new
products and merchandise, drawings, instruction
manuals, and usage videos. In line with therecent digital shift by companies and consumers,
we created the online showroom to provide
additional information on products andmerchandise that we were unable to convey via
our existing website and catalogs, further
enhancing convenience. We invite you to visit
the showroom as we continue to increase andenhance its content.

GOVERNANCE

External seminar・Slinging skill seminar (three days)
・Slinging operator safety/hygiene education(one day)・Wire rope safety inspection standards seminar(one day)

Z-COAT

Online showroom URL
https://www.kondotec.co.jp/showroom/
KONDOTEC REPORT 2023

52

SUPPLEMENTInternal seminar・Lectures, practices, and examination
at Kyushu factory (three days)

ESG/

SOCIAL /GOVERNANCE■Cultivation of Suppliers and Efficient Purchase, Management and Delivery

Furthermore, we can search on our own system
for the status of inventories at logistics center orindividual operating sites. As a result, bygrasping the status of inventories at our own
sites in real time, we can measure the timing forour own sites to purchase inventories as well as
immediately reply to inquiries from customers.
For deliveries, we have a system to deliver tocustomers safely and quickly by employees of
the Company or cooperating companies.

To make bulk purchases of merchandise fromsuppliers, the Company has logistics center at
two bases in Japan (Osaka and Ibaraki) as wellas one base in China. We are reducing the costof purchase by delivering in-demandmerchandise to operating sites using in-housedelivery systems after purchasing them in bulk
from manufacturers in Japan and abroad ,andstoring in logistics center.
Moreover, we always take a stance of reviewing
costs by having established the Delivery Division
to constantly find better suppliers as well as
concluding OEM production contracts with
manufacturers.

We are actively undertaking entry into new fields
in which we expect growth. To expand ourbusiness in the field of maintenance and repair of
aging social infrastructure, we have acquired
three companies engaged in scaffolding
construction (see table below) and establishedNippon Scaffolding Holdings Co., Ltd. as anintermediate holding company to oversee them.
Working around this core, we will expand theareas we handle by sharing the know-how of thecompanies, which differ in their business areas
and the construction properties in which theyspecialize, and will otherwise aim to achievesynergies among them.

At the same time, there is a tendency in theconstruction industry to replace the mainmaterial of iron with aluminum, which is suitablefor weight saving. Therefore, the demand foraluminum is expected to rise. Given thiscondition, KONDOTEC has acquired KURIYAMAALUMINUM Co., Ltd., which is involved in the
manufacturing and development of aluminum
extrusions, in aiming to expand our product andmerchandise line up with new materials.
Going forward, we will continue striving to enter
new fields by utilizing our wide range ofbusiness fields as the KONDOTEC Group.

Group companies assumed the maintenance/repair fieldTECBUILD CO., LTD.

FUKOKU, Ltd.

(Head office)Ota-ku, Tokyo(Business area)
Kanto, Hokuriku, Kansai,
Chugoku, Kyushu(Head office)Fujieda-shi, Shizuoka(Business area)
Kanto, Tokai(Head office)Sendai-shi, Miyagi(Business area)
Tohokulow-rise buildings / Rentalof scaffolding equipment

mid to high-rise buildings/ low-rise buildings

Bridge / mid to high-risebuildings

Specialty

Further, in order to contribute to improvement
the corporate value of the KONDOTEC Group, wework to enhance our earnings capability by
pursuing strategic investment by M&A and othermeans, as well as actively expanding business
investment aimed at growth. At the same time,
we take initiatives to improve capital efficiency.

1.Basic policy
KONDOTEC will make efforts to have all
stakeholders, including shareholders andinvestors, gain a better understanding about our
Company and will disclose important informationon the Company by considering fairness,accuracy and timeliness in order to support
stakeholders make appropriate assessments.
2.Information disclosure standards
KONDOTEC will conduct information disclosure inaccordance with the Financial Instruments andExchange Act and other relevant laws and alsowith the timely disclosure rules set forth by thestock exchange on which the stock of theCompany is listed. KONDOTEC will also actively
disclose information not required to be disclosed
under laws, regulations and rules if suchinformation is judged to be useful forshareholders and investors.

4. Future projections
Future operating performance projections that
the Company releases are based on data
available at the time of making the release.
Actual results may differ considerably fromprojections due to various factors and changes.
5. IR quiet period
In order to prevent leakage of financial results
information and ensure fairness, KONDOTEC
observes a quiet period which runs for a few
weeks up to the release of financial results.
During this quiet period, we will refrain from
responding to comments, questions, etc.
regarding financial results. If, however, we
become aware of the possibility during the quiet
period that operating performance figures will
deviate significantly from the Companyʼsforecasts, we will disclose information as needed.

3.Information disclosure methods
KONDOTEC will disclose information via theTimely Disclosure Network (TDnet) provided by
the stock exchange as well as actively make useof the Companyʼs website in an effort to conduct
fair and speedy information disclosure.

(Intermediate holding company)
Location
Business areas

Aqueduct bridge repair

Nippon Scaffolding Holdings Co., Ltd.

(Head office) Koto-ku, TokyoManagement of subsidiaries that provide scaffolding construction services

Strengthening of collaboration● Expanding businesses further in the maintenance/repair field● Sustainable growth and improvement in medium to long term corporate value■Production Innovation through Capital Investment in Factories
We invest in production facilities based on theannual plan to improve quality and productivity
at factories. In FY2019, we newly established aplant on the premises of Shiga Factory which
realized labor-saving through the introduction ofrobots, aiming to promote work style reform andsolve labor shortages.
At the plant, we strive to improve productivity bychanging the processes undertaken by workers
manually erenow to welding, transportation andassembly by robots. If productivity is improved,
we plan to expand the system horizontally toother plants.

KONDOTEC REPORT 2023

The Companyʼs Medium-term Management Planfrom FY2024 to FY2026 plans to make capital
investments of about 9 billion yen for the
replacement of production equipment andrelocation/rebuilding of bases.

We regard the General Meeting of Shareholders
as an important opportunity to communicate withshareholders, and in order to invigorate theGeneral Meeting of Shareholders we strive to
Setting of the General Meeting of
Shareholders by avoiding concentrated dates

Hino-cho,Gamo-gun, Shiga

Total floorarea

About 4,095㎡

Investment

About 440
million yen

Introduced Robots

The date of General Meeting of Shareholders is set to avoid
the concentrated dates for many other general meetings ofshareholders.

Earlier dispatch of convocation notice

Notice is dispatched 22 days before the Meeting (FY 2023)

Disclosure of convocation notice before
dispatch

Disclosed on the KONDOTEC website 6 days before the*Date of dispatching : June 1, 2023
dispatching (FY2023)

Voting by electromagnetic means

We have adopted a system allowing the exercise of voting
rights over the Internet, or through other electromagnetic
means.

Participation in electronic voting platforms,
and other initiatives to facilitate the exercise
of voting rights by institutional investors

We participate in the electronic voting platform for
institutional investors maintained by ICJ, Inc.

Provision of the Notice of Convocation(Summary) in English

The English version of the Notice of Convocation of theAnnual General Meeting of Shareholders and Reference
Documents for the General Meeting of Shareholders is
published on our website, and the homepage of the Japan
Exchange Group.

Other

For the Company to be fully understood, we visualize thereporting items on power points in the explanation.

Shiga Factory No. 2 Plant
Address

have as many shareholders as possible participate,understand the Company, and secure a sufficientperiod for examining proposals for the Meeting.

Date of disclosure : May 26, 2023

KONDOTEC REPORT 2023

GOVERNANCE

Accommodation construction

SOCIAL■ Invigoration of the General Meeting of Shareholders
Detached housing construction

53

We recognize the importance of having
stakeholders gain an understanding of the
KONDOTEC Group. For this reason, we bear inmind the need to offer careful explanations tostakeholders as well as to ensure fair, accurate
and speedy information disclosure.

SUPPLEMENT

Location

TOKAI STEP CO., LTD.

We offer fair, accurate and speedy information disclosure in an effort to have all stakeholders
deepen their understanding of the KONDOTEC Group.

■IR policy

Logistics center in Japan
Delivery Division(Osaka)■Entry into the new fields

Communication with Stakeholders

WE ARE KONDOTECENVIRONMENTVISION/KONDOTECESG Basic Policy Outline

FINANCIAL DATA/ENVIRONMENT

From the Establishment of Corporate Identity (CI) to ESG Basic Policy

54

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

Appropriate Information Disclosure and Security■IR activities

2(FY 2023)* Including Online

Main themes of dialogue

Disclosure Rules by Tdnet provided by the Tokyo
Stock Exchange, as well as disclose to news
organizations such as relevant press clubs.

Organizational chart
Board of Directors
Submission（2）Even for information not falling under Timely

Disclosure Rules, if information is deemed to widely
affect the judgement of people in society including
stakeholders, we will disclose it by TDnet provided
by the Tokyo Stock Exchange, as well as disclose tonews organizations such as relevant press clubs.

Topics for the fiscal year, business environment,
Medium-term Management Plan, etc.

President

website without delay.

Visitors to our booth(Reporting)General Manager, Management
Headquarters (responsible for(Decision) information management)
Reporting

ReportingNikkei IR/Investment Fair 2022
(held in August 26th through August 27th,
2022)

Individual sections

408

Decision

Instruction for disclosure

Information
disclosure
Tokyo
Stock
Exchange■ IR Information Disclosure on the Company Website

Nomura IR Fair 2023
(held in January 12th through January
31th,2023)

1,736* Online(FY2023)

Hand out in Nomura
IR Fair 2023

Besides timely disclosure materials, the Company
posts the latest IR materials on the Company
website, in addition to financial and earnings
data, stock information, and information on IR

WE ARE KONDOTEC

ReportingManager, General Affairs
Division (Section responsiblefor disclosure = General
Affairs Division)（3）We will upload the disclosed information on our

Actual participation in IR events for individual investorsName

VISION（1）We will disclose the information falling under Timely

13 (total)

Company briefings for analysts“Timely Disclosure Rules”).
Moreover, even for information not falling undervarious laws and regulations and Timely
Disclosure Rules, we disclose information
quickly and fairly if information is deemed towidely affect the judgement of people in society,including stakeholders.

Method of timely disclosure

Frequency

Individual meetings

We have established the “Internal Information
Management Regulations” for appropriate
disclosure of company information, andendeavors to disclose information quickly andfairly in accordance with the Companies Act,
Financial Instruments and Exchange Act, andother laws and regulations, etc., stipulated bystock exchanges (hereinafter referred to as the

ENVIRONMENT

Event

Basic policy on information disclosure

KONDOTEC

Track records of dialogue with institutional investors and analysts■Information Disclosure

FINANCIAL DATAManagement Headquarters and reported to theBoard of Directors as necessary.
Following the revision of market divisions of theTokyo Stock Exchange, KONDOTECʼs stock listinghas moved from the First Section to the Prime
Market as of April 2022. Going forward, we will
strive for continued growth and long-term
corporate value enhancement as well as actively
engage in dialogue with investors as a listedcompany on the Prime Market.

Bearing in mind the need to offer information
disclosure that takes into account fairness,accuracy and timeliness, KONDOTEC organizes
briefings for analysts by the President andindividual meetings, participates actively in IR
events for individual investors, and discloses IRmaterials via the Companyʼs website.
Comments, etc. obtained through dialogue withinstitutional investors and analysts are sharedwith the President and General Manager of

event participation.
With the aim of our website being used by more
people, we will provide timely information whilefurther enhancing the contents.

IwaiCosmo Securities

A(September 2018)

Our IR page was chosen as an “AA Website” in the All Japanese Listed Companiesʼ Website Rankings
2022 hosted by Nikko Investor Relations Co., Ltd., as well as “Excellent Company Silver Award” inGomez IR website ranking 2022 conducted by BroadBand Security, Inc. We received the BronzeAward in the Gomez IR website rankings for six consecutive years through the previous fiscal year.
In this year, we took our first Silver Award.
We will continue to improve our website / IR materials and provide timely and fair information
disclosure to all stakeholders including shareholders.
P56

55

KONDOTEC REPORT 2023

GOVERNANCE

IR Site Awards（Gomez and Nikko Investor Relations）

KONDOTEC■Information Security Measures
We have Computer System Section in thecompany that manages the security situation andthe status, etc., of system operations forbusiness on a daily basis, and reports to theGeneral Manager, Management Headquarters
overseeing the General Affairs Division.

Moreover, we have decided on the internal
regulation “Information System Risk
Management Manual” organizing information
system operations, and review it whenappropriate.
KONDOTEC REPORT 2023

SUPPLEMENTTOPICS

Rating ︓

SOCIAL

Actual coverage

56

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

For
employees

・Thorough dissemination of measuresin advance, during and after adisaster, etc.
・Establishment and dissemination of
the Risk Management Manual

Counter-measures against COVID-19 (examples)
Implementing working from home in rotation
Conducting web conferences in place of business trips
Introduction of special leave for vaccination,etc.

Net sales of disaster-related materials（million yen）
5,461
4,857

5,141

5,132 5,112
4,662

5,289
4,941 4,854

Examples of disaster-related merchandise[Flexible Container bag]
[Tarpaulin, sandbag, etc.][Net, sheet] and others■For Employeesʼ Health, Safety and Hygiene
We are taking the following initiatives to ensure
the safety and health of employees.
Representative matters in need of safetymeasures in conducting business activities include
Category

DetailImplementation of safety
driving training

Upon the increase in traffic accidents involving new
employees who were not accustomed to driving company
cars, we implemented safety driving training at the time of
new employee training, reducing accidents involving young
employees.

Marketing/delivery

Implementation of no
accident campaign

Sending warning notice to all operating sites when an
accident occurs at other sites.
Notifying monthly the cumulative number of accidents at all
operating sites in the past year even if there was noaccident.
For the site which had an accident, installing the safety
driving support device to all company cars.

Marketing/deliveryIntroduction of safety driving
device (Telematics)
Installation of the drive
recorderWhen dangerous driving (sudden braking, speeding, etc.) is
detected by G Sensor/GPS, immediately give a warning
notice by voice guidance to the driver each time while
sending a notifying e-mail of dangerous driving to the head
office.

Factory/
warehouse

Implementation of Safety and
Health Committee
Implementation of safety
patrolHolding a Safety and Health Committee at head office andfactories monthly.
Implementing safety patrols by employees to prevent
industrial accidents.

Marketing/delivery

Examples for use of container bag
It is used in various scene such astransportation and storage of feed, fertilizer,
resin pellets, industrial waste, etc., and as alarge-size sandbag for rubble clearing,decontamination, and recovery work after
disasters.
15/3 16/3 17/3 18/3 19/3 20/3 21/3 22/3 23/3

Relatedmerchandise

Flexible Container bag

Tarpaulin

Net,sheet etc.

Response to “New Stage” Published by Ministry of Land, Infrastructure, Transport and Tourism

The Ministry of Land,
Infrastructure,
Transport and Tourism
recognizes the apparentchange in the way it
rains as a “New Stage”
and recommends taking
disasterprevention/mitigation
measures with a senseof crisis.
To respond to the “NewStage,” we will also
focus on advance
preparations tominimize damage.

Extraordinary climate in recent years
Heavy rains with hourly rainfall exceeding 50mm have increased
across Japan, raining locally, intensively and severely→ Recognized as a “New Stage”
Examples of weather conditions bringing disasters
August 2014 heavy rain

Heavy rainfall in a wide range ofareas from west to eastern Japan(Landslide disaster occurred in
Hiroshima Prefecture)

July 2018 heavy rain

Record-breaking heavy rainfall in awide range of areas across Japan
centered on western Japan

October 2019 Typhoon
No.19

Rain storm centered on eastern
Japan

July 2020 heavy rain

Heavy rainfall in a wide range ofareas centered on Northern Kyushu

To respond to the “New Stage,” we need to mitigate damage toinfrastructures as much as possible and make advance
preparations for early recovery.
57

KONDOTEC REPORT 2023

receiving and shipping operations in warehouses,
marketing activities, delivery of products andmerchandise, and production activities infactories.

Work Style Reform and Work-Life Balance

We aim to create a corporate culture where
employees can have “a fulfilling individual life
and involvement in society,” while promoting
work style reform to enable them to do“worthwhile and high-quality work” efficiently.
In 2014, we conducted training for all
supervisors aiming for more efficient operations
and less overtime work, and have beenpromoting work style reform since then, on thecondition of improved earnings. Since 2017, led
by head office, we have been engaged in reform
for efficient operations by reviewing various
operational rules, decreasing collections by sales
staff, reducing internal documents, andreviewing approving authority.
As an indicator to realize appropriate work-lifebalance, we have established a paid vacationacquisition target for the company, and internallypublish the figures for each section to promote
the acquisition.

FINANCIAL DATAWith the inventories of necessary materials at
the time of disasters at 48 operating sites acrossJapan, we have established a system to deliver
necessary materials immediately even if thedisaster is just local, thereby contributing to thesecurity and safety of local communities.

KONDOTEC■Response to disasters and contribution to them

ENVIRONMENT

We have formulated a Risk Management Manual
to ensure the safety of employees and otherrelevant personnel, prevent the disruption ofimportant operations of the Company, andrecover as quickly as possible after disruptions
when an unexpected event such as a natural
disaster occurs. For accomplishment of important
operations, we transfer of the core system to thedata center and introduce of dual head offices
system at Osaka and Tokyo.

VISION■Risk Control for Disasters and Others

SOCIAL

Because we make deliveries, as for the locationof operating sites, we select places near
expressway ICs, or industrial parks that are
unlikely to affect neighboring residents in termsof noise and traffic.
As for personnel, while several employees frombranch operating sites are transferred at thetime of a new operating site opening, we recruit
several local people to help create employment
in the community.

Paid vacation acquisition target for the company
April 1, 2023 – March 31, 2024
【Target】
Acquisition rate of 70％ or higher－

April 1, 2022 – March 31, 2023
【Target】
Acquisition rate of 70％ or higher【Actual】
81.7%

April 1, 2021 – March 31, 2022
【Target】
Acquisition rate of 70％ or higher【Actual】
75.1%

GOVERNANCE

Currently, we have 48 operating sites (as ofMarch 31, 2023). Among sales activities areas, aprecondition for selecting areas for operating site
openings is that the area should be far away andhave prospects for increased sales. We have
expanded areas for operating site openings by
way of branching out from relatively large-scale
operating sites (branch class).
KONDOTEC makes sure to establish warehouses
to store inventory at operating sites.

April 1, 2020 – March 31, 2021
【Target】
Acquisition rate of 70％ or higher【Actual】
74.5%

April 1, 2019 – March 31, 2020
【Target】
Acquisition rate of 60％ or higher【Actual】
68.8%

KONDOTEC REPORT 2023

58

SUPPLEMENT■Operating site Opening Plan

WE ARE KONDOTEC

Safety Measures and Work Style Reform

Co-existence with Local Communities

ESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE

Human resources development and Diversity■Policy on human resources development

Male-female ratio of new employees with main career track in the last six years and homecountries of international students

Training by experience level

Training for new employees training 6 months after joining the Company and3rd-year training and 10th-year training ,etc.

Enhancement of remuneration and benefits programs（Various award system）
Besides bonuses paid biannually, we have
performance and priority issues to increase
introduced the award (reward) system by site andmotivations and spread priority issues of the whole
individual according to the contribution to sales
company.
Enhancement of online education system and assistance for acquisition of qualifications
We assist the self-development of abilities byendeavor to develop personnel with qualifications by
establishing an online education system in whichassisting tuition and examination fees to promote
any employee can freely take courses. Moreover, we
the acquisition of public qualifications.
As of March 31, 2023（Including contract and part-time employees）
List of qualified personnel

Number of
persons

Qualification

First and Second-class architect

2

Completion of special training on
crane operation300
or moreFirst and Second-class civil engineering works
execution managing engineer

6Completion of sling work skills
training ,etc. *1

500
or moreFirst and Second-class building construction
managing engineer

8Completion of forklift operation
skills training500
or moreClass B Group 4 hazardous materials engineer

67

Certified public accountant

Qualification

Number of
persons

2*1 Total number of persons who completed sling work skills training andsafety and hygiene education for slinging operator■ Diversity - Basic principle

Non-discriminatory hiring policy and Support for diversification of employment formats

59

KONDOTEC REPORT 2023

19 persons

5 persons

13 persons

April-2021

10 persons

10 persons

20 persons

April-2020

11 persons

7 persons18 persons

April-2019

19 persons

4 persons23 persons

BrazilApril-2018

12 persons

6 persons18 persons

Korea

Appointment of a female executive members

as regular employees. In addition, we are expanding
support for the participation of women in theworkplace, and have appointed three female
Directors in order to incorporate diverse values andperspectives into the business management of theCompany.

３ out of １4

VISION

6 persons

8 persons

As of June 23, 2023

Number of employees taking childcare leave
In order for employees and spouses to give birthand raise children with peace of mind, we have
prepared a handbook compiling child-raisingrelated laws and various internal systems so that
employees can freely view and obtain it from theinternal portal site. Furthermore, we present
various systems including a shortened working-time program which can be taken until a child
graduates from primary school, which is longer
than what is legally mandated, and clarify thecontact point for consultation and thus endeavor
to have employees engage in childbirth and childraising with peace of mind.

Those who newly tookchildcare leave during
the period

Return to work rate
after childcare leave
during the period

April 1, 2022
– March 31, 2023

Rate of those currently
on childcare leave whostarted childcare leave
during the period

13 persons

53.8％

46.2%

April 1, 2021
– March 31, 2022

6 persons

100％-

April 1, 2020
– March 31, 2021

7 persons

100％-

April 1, 2019
– March 31, 2020

4 persons100％-

Female

Male

100％

38.1%

Rate of taking childcare leave

KONDOTEC

13 persons

Diversity-related indicators and targets
Based on our recognition of the need to ensure diversity, particularly among the managerial-position
staff who play central roles in management, we have set the following best-effort targets for ratios of
mid-career hires, women, and foreign nationals in managerial positions.
Indicators

To create a platform on which diverse human resources can take leading roles
Establishment of working
Appointment of human
Skills development
environment/structure
resources

In hiring employees, we respect the diverse
characteristics of individuals, including age, genderand nationality. Moreover, with the introduction of
year-round recruitment (for 2008 recruits and after),
we have been hiring employees with various careers,experience, etc. Further, we offer support to athletes
as well as appoint highly motivated contract workers

China

April-2023
April-2022

FINANCIAL DATA

Training for specific fields, advanced management skills training andcandidate training for executive positions ,etc.

Nationality of international students(other than Japan)

ENVIRONMENT

Purpose-specific training

Total

SOCIALand again three years later and ten years later.
Meanwhile, for mid-management-level employees
and next-generation senior managers, we provide
education timely to reinforce management skills andhold senior manager candidate developmenttraining programs according to the number of yearsof employment. Furthermore, we established aninternally authorized “lifting equipment advisor”
qualification, which leads to enhancing employeesʼ
knowledge on products and merchandise.

FemaleRatio of mid-career hires inmanagerial positions
Ratio of women in managerial
positions
Ratio of female managers(excluding managerial
positions)
Number of foreign nationals inmanagerial positions

Actual（As of March 31, 2023）

TargetAchievement
period31.3%

20％-40％March 31, 2025

1.0%

5％ or higher

March 31, 2030

8.9%

15％ or higher

March 31, 2030

1 person

Maintaining of
the status quo or higher

March 31, 2025

（Notes）Number of foreign nationals in managerial positions only, as an indicator for the Group asa whole.
The three items other than number of foreign nationals in managerial positions areindicators for the Company.
KONDOTEC REPORT 2023

60

GOVERNANCE

We carry out educational programs for developing
human resources that shape the future, in
accordance with the Companyʼs corporate
philosophy. We offer new employee training
programs for younger employees, and follow up on
new employees by designating a more experienced
employee of a similar age at the assigned
department to serve as a one-to-one supervisor for
new employees. We then offer training for new
employees six months after they enter the company

Male

SUPPLEMENT

Examples of Training ConductedYear ofemployment

WE ARE KONDOTEC■Diversity Non-discriminatory hiring policy and Support for diversification of employment formats
individuality and values of employees from diverse
backgrounds" and "creation of a working
environment in which all employees can fully
display their capabilities and work with a sense of
purpose" as basic policies.

To contribute to sustainable growth and long-term
enhancement of our corporate value as a “proposaloriented company” that leverages our employees'
diversity by creating a work environment where all
employees can engage in active roles withmotivation, we have set "respect for theESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE■Corporate governance system

Basic concept to Corporate Governance

General meeting of shareholders
Appointment/Dismissal
Audit
AdviceAudit & Supervisory Committee

ReportOutside Executive membersʼ Council

Type of organizational design
Number of directors* excluding directors who are Audit andSupervisory Committee Members(including the number of outside directors)
Number of directors who are Audit andSupervisory Committee Members(including the number of outside directors)
Term of office of directors* excluding directors who are Audit andSupervisory Committee Members

Cooperation

Appointment/Supervision

Representative Director

Cooperation

Dismissal

Company with an Audit & Supervisory Committee

10（2）of proposals

FINANCIAL DATA

Committee

Determination

Board of Directors

Compensation■Corporate governance structure summary table

KONDOTEC

Appointment/Dismissal

Nomination andCorporate Governance

VISIONKONDOTECʼs corporate governance system is shown in the diagram below.
for reinforcing our compliance and internal audit
systems, conducting timely disclosure ofmanagement information, operating results andother pieces of information via our website andother means, and strengthening functions for
speedy decision-making and management
supervision.

Appointment
Compliance & Risk

Internal Audit

Management

Department

Committee4（3）Cooperation
Accounting/Dismissal

Accounting Auditor

audit

ENVIRONMENTKONDOTEC recognizes that strengthening andenhancing corporate governance throughincreasing soundness, transparency andefficiency of management and maximizing
corporate value is one of the most importantmanagement objectives. To realize this objective,
our basic concept of corporate governance calls

WE ARE KONDOTECOVERNANCEInternal audit

1 yearAdoption of executive officer system

Yes

Incentive remuneration

The restricted stock remuneration plan

Accounting Auditor

Deloitte Touche Tohmatsu LLC

Business division

SOCIALG/■Reasons for adopting the current corporate governance system

GOVERNANCE

with specialist knowledge on finance, accounting
and laws, as well as experience in corporate
management at other companies, and carries out
supervision from an objective and fair point ofview.
The Board of Directors holds a regular monthly
meeting as well as an extraordinary meeting
whenever necessary, promotes efficiency ofdecision-making for the execution of importantbusiness activities and reinforcement of thesupervision function.

SUPPLEMENTKONDOTEC believes that putting in place an
Audit & Supervisory Committee and having anaudit system where Directors who are Audit &Supervisory Committee Members supervise
management is effective and hence operates as
a company with an Audit & Supervisory
Committee system.
The Audit & Supervisory Committee comprises
four Directors who are Audit & Supervisory
Committee Members, including one full-time
Director, and three part-time Outside Directors

61

KONDOTEC REPORT 2023

KONDOTEC REPORT 2023

62

ESG

Board of Directors
KONDOTEC holds a meeting of the Board of Directors
at least once a month and complies with the policy ofaddressing all matters provided in the Board of
Directorsʼ Regulations and those corresponding toagenda items to the Board of Directors in making
decisions on important matters.
In addition, the Board of Directors receives reportson the status of business execution of KONDOTEC
and its subsidiaries from each of the respective
directors on a periodic basis and carries out
supervision, etc. on the reasonableness andefficiency of business execution.
KONDOTEC conducts the Board of Directors
assessment questionnaire based on self-assessments
made by all Directors once a year. The Board of
Directors deliberates on and considers the results of
the questionnaire and makes necessary
improvements to secure effectiveness and increase
the quality of the Board of Directors as a whole.
KONDOTEC adopts an executive officer system andExecutive Officers and Directors in charge of business
operations promote speedy business execution.
Outside Directors (excluding Directors who are
Audit & Supervisory Committee Members)
KONDOTEC appoints two Outside Directors (onelawyer, one Director with experience in corporate
management), who supervise management and offer
advice from an objective point of view inconsideration of the corporate business community
on the whole, including laws and regulations, in aneffort to increase the transparency and efficiency of
the Board of Directors.
Audit & Supervisory Committee / Outside
Directors who are Audit & Supervisory
Committee Members
KONDOTEC adopts the Audit & Supervisory
Committee system. The Audit & Supervisory
Committee comprises four members, three of whom
are Outside Directors (one CPA, one attorney-at-law
and one Director with experience in corporate
management). The Audit & Supervisory Committee
members exchange opinions on audit methods andaudit standards from their professional points of viewat the meeting of the Audit & Supervisory Committee,
which is held at least once a month in order toimprove the appropriateness and efficiency of audits.
In this manner, we strive to enhance and reinforce
our audit system.
Furthermore, the Members receive a report on the
results of the accounting audit from the Accounting
Auditor at each financial closing. If needed, Directors
who are Audit & Supervisory Committee Members
accompany the Accounting Auditor in the audit of an
office, exchange information and opinions.
Moreover, Audit & Supervisory Committee Members
receive reports on financial results for every quarter
from internal control sections, as well as reports onother matters related to internal control as necessary.
Internal Audit Department
Our Internal Audit Department is placed as a unit
directly under the President. There are three fulltime staff members to bolster internal audit
operations.
These internal auditors audit the status of63

KONDOTEC REPORT 2023

compliance with laws, regulations and internal rules
and the appropriateness and efficiency of businessprocesses, etc. of each division, provide guidance for
improvement and perform follow-ups.
In addition, they conduct audits to continuously
verify whether the system to ensure the reliability offinancial reporting functions appropriately and makes
corrections where necessary.
Further, internal Audit Department holds reporting
sessions on the findings of internal audits. These areattended by the Representative Director, Directors incharge of content in the reports, and full-time Audit
and Supervisory Committee Members.
Moreover, the Accounting Auditor review reports on
the results of internal audits and the minutes ofdebrief meeting conducted by the Internal Audit
Department. Accounting Auditor and internal audit
sections exchange information and opinions asnecessary, striving to improve the appropriatenessand efficiency of audits through close cooperation.

■Executive members As of June 23, 2023
Title

President andRepresentative
Director

Name

162

Senior Executive
Director

Hiroyuki
Yada

General Manager, Management Headquarters
Manager, General Affairs Division andManager, Business Strategy Department
Director, Nippon Scaffolding Holdings Co., Ltd.
Director, TECBUILD CO., LTD.
Director, TOKAI STEP CO., LTD.
Director, FUKOKU, Ltd.

38

Executive
Director

NoboruHamanoGeneral Manager, Sales Headquarters

22

Director

Kazuyuki
Asakawa

Manager, Eastern Japan Sales Division andManager, Tokyo Branch

19

Director

Kazuhiro
IshinoManager, Western Japan Sales Division
Manager, Development Sales Division andManager, E-commerce Group
Director, Sanwa Denzai Co., Ltd.
Director, CHUOH GIKEN Co., Ltd.
Director, KURIYAMA ALUMINUM Co., Ltd.

16

Director

Tomoyuki
Ejiri

President and Representative Director, Nippon
Scaffolding Holdings Co., Ltd.
Representative Director and Chairman, TOKAI STEP
CO.,LTD.

21

Director

YasushiIshibashi

General Manager, Manufacturing Headquarters andManager, Kyushu Factory

20

SoichiFurutaManager of International Sales Division
Managing Director, KONDOTEC INTERNATIONAL(THAILAND) Co.,LTD.

6

Outside Director

Michiko
Kanai

Attorney-at-law（Oh-Ebashi LPC & Partners partner）
Outside Audit & Supervisory Board Member, Sankyo
Seiko Co., Ltd.
Outside Director, IDEC CORPORATION(Audit and Supervisory Committee Member)
Outside Director, AS ONE CORPORATION

Outside Director

TakashiMaruyama

Director

Outside Executive membersʼ Council
The Outside Executive membersʼ Council comprising
Outside Directors has been established. The Council
meets periodically to promote the exchange of
opinions among outside Executive members.

〇

5

〇

－

Norio
NishidaAudit & Supervisory Board Member, Sanwa Denzai Co.,Ltd.
Audit & Supervisory Board Member, CHUOH GIKEN Co.,Ltd.
Audit & Supervisory Board Member, Nippon Scaffolding
Holdings Co., Ltd.
Audit & Supervisory Board Member, TECBUILD CO.,LTD.
Audit & Supervisory Board Member,
TOKAI STEP CO., LTD.
Audit & Supervisory Board Member, FUKOKU, Ltd.
Audit & Supervisory Board Member,
KURIYAMA ALUMINUM Co., Ltd.

Outside Director(Audit &Supervisory
Committee
Member)Kana
YasudaCertified Public Accountant, Tax Accountant（Yasuda Accounting Firm Representative）
Outside Audit & Supervisory Board Member,
SUGI HOLDINGS Co., Ltd.
Outside Director, GEO HOLDINGS CORPORATION
Outside Director, CHUO SPRING CO., LTD.
Outside Director, The Monogatari Corporation〇

4

Outside Director(Audit &Supervisory
Committee
Member)Taku
TokudaAttorney-at-law（Managing Principal Lawyer, TOKUDALAW OFFICE）〇

3

Outside Director(Audit &Supervisory
Committee
Member)MinakoYamaoka

Outside Director, NICCA CHEMICAL CO., LTD.

〇0

Director(Full-time Audit &Supervisory
Committee
Member)Nomination and Compensation Committee
The Company has established the Nomination andCompensation Committee as a voluntary advisoryorganization, composed of Independent Outside
Directors (excluding Outside Directors who are Audit& Supervisory Committee Members) and thePresident & Representative Director to strengthen
the transparency and objectiveness of the decisionmaking process for appointment and remuneration of
Directors.

Number ofshares held(Thousandshares)Representative Director of Towa Kosan Corp.
Representative Director of Toto Kosan INC.

Compliance & Risk Management Committee
The Compliance & Risk Management Committee is inplace.
The Compliance & Risk Management Committee
promotes the dissemination of awareness to comply
with relevant laws, regulations, corporate ethicalstandards and internal regulations among all
employees and creates a structure to prevent
scandals and other problems by developing plans andmeasures on compliance, including education andguidance for practicing compliance. The Committee
also collects information on various risks surrounding
KONDOTEC and its subsidiaries and analyzes theinformation to develop specific preventive measures.
It also puts in place a structure to minimize theimpact of risks should any such risk becomesapparent, in an effort to reinforce the corporate
platform.

Independent
memberKatsuhiko
Kondo

Accounting Auditor
KONDOTEC has appointed Deloitte Touche Tohmatsu
LLC as the Accounting Auditor and establishes anenvironment in which the Accounting Auditor is able
to perform audits from a fair and unbiased
perspective, by providing the auditor accurate
management information in a timely manner.
The Accounting Auditor receives quarterly briefings
from the internal control sections on the financial
results and standing of the Company, and exchange
opinions on accounting-related matters.

Area of responsibility and important concurrent positions

21

KONDOTEC REPORT 2023

64

WE ARE KONDOTEC

GOVERNANCE

VISION

SOCIAL /KONDOTEC/FINANCIAL DATAENVIRONMENTENVIRONMENT/SOCIALESG Basic Policy Outline

GOVERNANCE/

SUPPLEMENT

From the Establishment of Corporate Identity (CI) to ESG Basic Policy■KONDOTECʼs managing organESG
From the Establishment of Corporate Identity (CI) to ESG Basic Policy/

ESG Basic Policy Outline/

ENVIRONMENT/SOCIAL /GOVERNANCE■Directors and Audit & Supervisory Board Members

Skills Matrix for the Board of Directors and the Audit & Supervisory Committee
PositionManagerial
experience

Sales &
Marketing

Manufacturing &Procurement

○

○

○

Hiroyuki
Yada

○

○

NoboruHamano○Kazuyuki
Asakawa○

Kazuhiro
Ishino○○Name

Katsuhiko
Kondo

Directors

Tomoyuki
Ejiri

○

○

○

YasushiIshibashi

○

○

○

○

○

SoichiFurutaMichiko
Kanai

OutsideTakashiMaruyama

OutsideLegal affairs &Risk Management

○
○

○
○

Norio
NishidaDirectors(Audit &Supervisory
Committee
Members)

Finance &Accounting

Kana
YasudaOutsideTaku
TokudaOutsideMinakoYamaoka

Outside○○○○（Notes）It does not represent all of the expertise and experience possessed by each Director and each Director
who is Audit & Supervisory Committee Member.
65

KONDOTEC REPORT 2023

Michiko Kanai

Attended 12 meetings(100%)―

Takashi Maruyama

Attended 12 meetings(100%)―

Kana Yasuda

Attended 12 meetings(100%)

Attended 17 meetings(100%)

Taku Tokuda

Attended 12 meetings(100%)

Attended 17 meetings(100%)

Minako Yamaoka

Attended 12 meetings(100%)

Attended 17 meetings(100%)

Outside Directors

Outside Director(Audit &Supervisory
Committee
Members)■Descriptions based on the Corporate Governance CodeAnalysis and assessment of effectiveness of
the Board of Directors as a whole

Training policy for Directors

KONDOTEC offers opportunities for Directors to
KONDOTEC makes decisions on importantparticipate in various training programs,
matters at the regular meeting of the Board ofincluding training sessions and lectures byDirectors held every month based on discussions
internal and external instructors, external
by attendees, including Outside Directors who
seminars, and web-based seminars, in an effort
state their opinions. In this way, we make an
to have Executive members gain necessary
effort to heighten the effectiveness of the Board
knowledge and understand/promote duties andof Directors.
responsibilities.
Once a year, we conduct an analysis andassessment of the effectiveness of the Board of
Policy concerning cross-held shares
Directors as a whole.
１．Policy on cross-shareholding
In April 2023, we made an assessment of the
KONDOTEC maintains cross-held shares for
effectiveness of the Board of Directors. We
the purpose of contributing to thediscussed and made considerations on the results
improvement of corporate value in theof the assessment at the meeting of the Board of
medium to long term by maintaining andDirectors in May 2023.
reinforcing relationships with important
１．Period: April 2023 to May 2023
business partners.
２．Method: Anonymous self-assessment by all
KONDOTEC will reduce issues deemed to
Directors(Including Outside Directors)
have insufficient grounds to hold after the
３．Assessment items :verification of cross-held shares.
Structure and operation of the Board
２．Verification on cross-held sharesof Directors, deliberation, governance
Each year, KONDOTECʼs Board of Directors
system, promotion digital transformation,
scrutinizes and verifies the purpose of
initiatives for sustainability, general
holdings, benefits from transactions, etc., ofassessment of the Board of Directors
individual cross-held shares.
As of March 31, 2023, we held 6 issues of
4 ．Summary of results
cross-heldshares worth 39 million yen in
While all executive members have rendered thebook value and 217 million yen in market
evaluation that the effectiveness of the Board ofvalue. These are equivalent to 0.1% andDirectors overall is ensured, we have received
0.7% respectively of net assets of 33,285
comments to the effect that sustainability
million yen, 0.1% and 0.4% respectively of
initiatives should be appropriately discussed andtotal assets of 58,163 million yen.
that Representative Director succession plans
３．Exercise
of voting rights on cross-held sharesshould be appropriately discussed and supervised.
KONDOTEC respects the management
We would like to continue to makepolicies, strategies, etc., of investee
improvements based on these opinions.
companies, judges individual proposals basedon whether shareholding contributes tosustainable growth and medium to long term
corporate value of the Company and investee
companies, and exercises voting rights.
KONDOTEC REPORT 2023

66

WE ARE KONDOTEC

Audit & Supervisory
Committee(17 board meetings)

VISION

Board of Directors(12 board meetings)

KONDOTECName

FINANCIAL DATAKONDOTEC appoints Outside Directors andOutside Directors as Audit & Supervisory
Committee Members who fulfill the requirements
under the Companies Act, and the independence
standards set forth by the Tokyo Stock Exchange.
The former is required to provide advice andproposal for management, and the later isrequired to offer advice for management andperform management audits.
KONDOTEC registers all Outside Directors andOutside Directors who are Audit & Supervisory
Committee Members as independent Executive
members based on the rules of the Tokyo Stock
Exchange with the said exchange.

Position

ENVIRONMENT

The independence standards for Outside
Directors

Status of attendance by Outside Directors/Outside Audit & Supervisory Board Members
71th term (April 1, 2022 to March 31, 2023)

SOCIALbusiness management going forward,
KONDOTEC appoints a female director and audit& supervisory board members.
When in violation of professional duties of
Directors or Directors as Audit & Supervisory
Committee Members, or if deemed not suitablefor Directors or Directors as Audit & Supervisory
Committee Members of the Company due tonegligence of their duties, such individuals aredeliberated on by the Nomination andCompensation Committee, based on whose
report the Board of Directors determines theirtreatment, and in the case of dismissal it should
be resolved by the General Meeting of
Shareholders.

GOVERNANCE

KONDOTEC appoints candidates for Directors(excluding Directors who are Audit & Supervisory
Committee Members) by considering individuals
who fulfill respective statutory requirements,
who are excellent both in terms of personality
and insight, who can carry out their professional
responsibilities, and who are capable of making
accurate and timely decisions and of cooperating
and working with and covering each function anddivision of the Company. Such individuals aredeliberated on by the Nomination andCompensation Committee -- a voluntary advisoryorganization composed of mainly Independent
Outside Directors -- based on whose report theBoard of Directors determines a proposal for the
General Meeting of Shareholders.
KONDOTEC appoints candidates for Directors
who are the Audit & Supervisory Committee
Members by considering individuals who haveexpertise in legal, financial and accounting
matters, who hold knowledge on the businessactivities of the Company, and who maintain
diverse perspectives concerning corporate
management in a comprehensive manner. Suchindividuals are deliberated on by the Nomination
and Compensation Committee, based on whose
report the Board of Directors determines, withprior the consent of the Audit & Supervisory
Committee, a proposal for the General Meeting of
Shareholders.
Further, based on the recognition that diverse
values and points of view are essential in

SUPPLEMENT

Terms of Executive members

ESG/

ENVIRONMENT/SOCIAL /GOVERNANCE■Whistle-blowing system
KONDOTEC has formulated internal regulations
on whistle-blowing and put in place two points ofcontact for whistle-blowing inside and outside
the company. The Companyʼs whistle-blowing
system is such that when whistle-blowing occurs,
the Manager of General Affairs Division, which is
the internal point of contact for whistle-blowing,
reports the matter to the President, General
Manager of Management Headquarters, Outside
Directors and full-time Directors who are Audit &Supervisory Committee Members, requests thatthe responsible department investigates thematter; and proposes and notifies the measure
for response.

The status of operation for whistle-blowing isreported at the Compliance & Risk Management
Committee and the Board of Directors once a
year, and the Board of Directors supervises thestatus of operation.
We also maintain internal regulations and asystem to ensure that whistle-blowers are nottreated unfairly.
The number reported was zero case in FY 2023.
If the cases filed, we dealt with themappropriately by conducting internal
investigations, while paying due consideration to
privacy.

Remuneration for Executive members■Remuneration (April 1, 2022 to March 31, 2023)

Position

Directors (excluding
Audit & Supervisory
Committee Members)
Directors(Audit & Supervisory
Committee Members)

Total amount by type of remuneration(Million yen)Amount ofpayment(Million yen)Baseremuneration

Stock-based
remuneration

Performance-linked
stock-based
remuneration

10 persons

193

22

14

229

4 persons

32

－

－

32

14 persons

225

22

14

262

(2) Policy for determining the amount of fixed
remuneration (monetary remuneration) for
each individual
The fixed remuneration for Directors of theCompany is monthly fixed remuneration that isdetermined based on comprehensive
consideration of the Directorʼs position, duties,
length in office relative to the standards atother companies, the Companyʼs performance,and standards of employee compensation.
(3) Policy for determining the details, amount,and numerical calculation method for
performance-linked remuneration andNon-monetary remuneration(ii) Performance-linked stock-based
remuneration
The Companyʼs performance-linked
remuneration is provided as performancelinked stock-based compensation that reflects
the performance indicators as an incentive
reward to encourage awareness towards
improving business performance each fiscal
year. Shares will be granted at a certain timeeach year based on the achievement of theconsolidated ordinary income target for eachbusiness year.
Restrictions on the transfer of restricted stock
are generally lifted upon retirement from theposition of Director.
(4) Policy for determining the ratio of monetary
remuneration amount and performancelinked remuneration amount to the amount of
remuneration for each Director
The ratio of remuneration composition is basedon the remuneration standard in companies ofsimilar size, industry type and format as theCompany used as a benchmark, in which theweight of stock-based remuneration is higher
for higher ranked positions, while the ratio ofstock-based remuneration to the total
remuneration amount is set to beapproximately 10-15% of the target for
consolidated ordinary income for each fiscal
year as it is achieved.
(5) Matters concerning decisions regarding thecontent of individual Director remuneration
Individual Director remuneration is determinedby resolution of the Board of Directors based on
results of the review by the voluntary
Nomination and Remuneration Committee,
which consists primarily of independent outside
directors, in order to ensure objectivity andtransparency as well as enhance accountability
for the level and appropriateness of
remuneration and the determination process.

VISION
SUPPLEMENT

Total

Number of
persons paid

(1) Basic policy for determining the remunerationof Directors
The Companyʼs basic approach is as follows,which aims to achieve the Medium-termManagement Plan in realizing the management
vision of the Group.
・Continued development of the Group andmedium- to long-term corporate valueenhancement
・Remuneration system that enables a sharedawareness of profit with shareholders
・Ensure objectivity and transparency in theprocess of determining remuneration
Remuneration for Directors comprises fixed
remuneration, stock-based remuneration andperformance-linked stock-based remuneration
offered upon reaching the targets of theMedium-term Management Plan as an incentive
reward. The determination of remuneration foreach Director is based on the appropriate
standard in conjunction with their individual
responsibilities.

(i) Stock-based remuneration
The Company offers Directors with stockbased remuneration that clearly highlights theconnections between business performanceand share value, which not only benefits the
Director as the share price rises, but alsoenables the Director to share the risk withshareholders if the share price falls, in aiming
to encourage Directors to contribute toimproving medium- to long-term performanceand enhance corporate value. The Companyʼsstock-based remuneration is offered inaccordance with position and duties.
Restrictions on the transfer of restricted stock
are generally lifted upon retirement from theposition of Director.

KONDOTEC

The Board of Directors reviewed the Companyʼs
Executive member remuneration system at its
meeting held on February 9, 2021. At themeeting, the policy for determining the details of
remuneration for individual directors was
resolved (excluding Directors serving as
members of the Audit & Supervisory Committee;
hereafter, “Directors”).
In addition, at the Board of Directors meeting, it
was confirmed that the method of determining
the details of remuneration and approved
remuneration of individual Directors for thecurrent fiscal year are consistent with this policy,
while reports from the Nomination andRemuneration Committee was respected, which
was deemed to be in line with the policy ofdetermination.
The policy for determining the details of
remuneration for Directors are as follows.

FINANCIAL DATA

on management, when important feedback
given from an objective viewpoint arises, we
make an effort to report the matter to the Boardof Directors as needed.
In addition, KONDOTEC has put in place its IR
Policy, which defines the quiet period and othermatters, and Internal Information Management
Regulations, which set forth rules oncommunicating important facts and internal
information, and performs accordingly inmanaging information.

KONDOTEC promotes constructive dialogues
with shareholders through holding briefings forindividual investors and financial results briefings,
in addition to the general meeting ofshareholders and participating in IR fairs.
We also appoint the Director who manages theGeneral Affairs Division responsible for IR as the
Director in charge of IR, and share information
with other departments to strengthen
cooperation.
In order to reflect the opinions of shareholders

WE ARE KONDOTEC■Policy for determining the details of remuneration for Executive members

Basic policy concerning constructive dialogues with shareholders

ENVIRONMENTESG Basic Policy Outline

SOCIAL/

GOVERNANCE

From the Establishment of Corporate Identity (CI) to ESG Basic Policy

67

KONDOTEC REPORT 2023

KONDOTEC REPORT 2023

68

SUPPLEMENTKONDOTEC Network /Consolidated Financial Statements

69

KONDOTEC REPORT 2023

As of March 31, 2023

Total number of shares authorized

60,000,000 shares

Total number of shares issued

26,344,400 shares

Shares per unit

100 shares

WE ARE KONDOTEC■Companyʼs stock

Supporting
資料
Materials

3,014

11.8%

BBH FOR FIDELITY LOW－PRICED STOCK FUND
(PRINCIPAL ALL SECTOR SUBPORTFOLIO)

1,595

6.3%

The Master Trust Bank of Japan, Ltd. (trust account)

1,472

5.8%

KONDOTEC employees shareholders association

1,401

5.5%

Osaka Small and Medium Business Investment & Consultation
Co., Ltd.

1,247

4.9%

F-planning INC.

900

3.5%

MUFG Bank, Ltd.

753

3.0%

Toto Kosan INC.

676

2.7%

Masahide Kondo

664

2.6%

Jun Corp.

535

2.1%

*864 thousand shares in treasury stock is not included in the listing of major shareholders above.
Percentage is calculated by excluding treasury stock.

KONDOTEC

Percentage

Towa Kosan Corp.

FINANCIAL DATA

Number of shares held(Thousand shares)

ENVIRONMENT

Name of shareholder

VISION■Major shareholders■Stock distribution by shareholder category

Treasury stock

SOCIALSUPPLEMENT

Stock Information

Financial institutions

864 thousand shares
3.3%(Number of shareholder: 1)

3,747 thousand shares
14.2%(Number of shareholders: 17)

Securities

Individuals, other
10,056 thousand shares
38.2%(Number of shareholders:
6,419)

Foreign companies, etc.
3,029 thousand shares
11.5%(Number of shareholders: 66)

Number ofshareholders
6,670

645
thousand sharescompanies
2.4%(Number of shareholders: 25)

GOVERNANCE

Organization Chart /Other companies

8,001 thousand shares
30.4%(Number of shareholders: 142)
SUPPLEMENT

Stock Information /KONDOTEC REPORT 2023

70

SUPPLEMENT
Stock Information /Organization Chart /KONDOTEC Network /Organization Chart

Consolidated Financial Statements

As of April 1, 2023

KONDOTEC Network

As of June 23, 2023

Business Strategy Department
Internal Audit Department

Internal Audit Section

WE ARE KONDOTEC

SDGs Promotion Department
Sales Promotion Section
Anchor Construction Section
Sapporo Branch
Sendai Branch
Aomori Office
Akita OfficeMorioka Office
Koriyama Office
Eastern Japan Sales DivisionTokyo Branch
Yuki Office

VISION

Chiba Office
Yokohama Branch
Niigata Branch

KONDOTEC

Saitama Office
Hachioji Office
Shizuoka Office
Nagoya Branch
Matsumoto Office
Kanazawa OfficeOsaka Branch
Kyoto OfficeWestern Japan Sales Division

Kobe OfficeTakamatsu Office

FINANCIAL DATA

Hiroshima Branch
Fukuoka Branch
Nagasaki Office
Kumamoto OfficeInternational Sales Division

Kagoshima Office

Homecenter Group

General Ｍeeting of
Shareholders

Development Sales Division

Railroad & Environment Group

Board of Directors

E-commerce Group

Audit & Supervisory
Committee

President &Representative Director

Tohoku Office
Fukushima Office

Sales Headquarters

Kitakanto Branch

ENVIRONMENT

Gunma Office
Kanto Branch

Eastern Japan Structural SteelHigashikanto Office

Sales Division

Kanagawa Office
Nagano Office
Tokai OfficeHamamatsu Office
Chukyo Branch
Keiji OfficeWestern Japan Structural SteelOkayama Office

Sales Division

Sanyo Office
Kitakyushu Office
Kyushu Office

Location ofhead office
Nishi-ku, Nagoya-shi

KONDOTEC INTERNATIONAL（THAILAND）Co., Ltd.

Bangkok, Thailand―

CHUOH GIKEN Co., Ltd.

Inukami-gun, Shiga

2 operating sites
1 factory

Nippon Scaffolding Holdings Co., Ltd.

Koto-ku, Tokyo―TECBUILD CO., LTD.

Ota-ku, Tokyo

17 operating sites

TOKAI STEP CO., LTD.

Fujieda-shi, Shizuoka

15 operating sites

FUKOKU, Ltd.

Izumi-ku, Sendai-shi

5 operating sites

KURIYAMA ALUMINUM Co., Ltd.

Nakamura-ku, Nagoya-shi

2 operating sites
1 factory

General Affairs Section
Delivery Section
Delivery Division

Logistics Section
Kanto Logistics Center
Delivery Section

Sapporo Factory

Manufacturing Section
Delivery Section

Kanto Factory

Quality Control Section
Manufacturing Section

Manufacturing

Delivery Section

Headquarters

Shiga Factory

Manufacturing Section
Mechatro Laboratory
Research & Development
Department

Research & Development Section
Quality Control Section

Kyushu Factory

Network

Sanwa Denzai Co., Ltd.

12 operating sites

SOCIALGroup company name

Hyogo Office

GOVERNANCE

Kansai Branch

Manufacturing Technology Section
Turn buckle Manufacturing Section
Manufacturing
Department

Brace Manufacturing Section
Chain Manufacturing Section
Parts Manufacturing Section
Delivery Section
General Affairs Section

SUPPLEMENT

Delivery Department

General Affairs Section
Management
Headquarters

General Affairs Division

Human Resources Section
Computer System Section
Planning Section

Accounting Division71

KONDOTEC REPORT 2023

Accounting Section
Screening Section

KONDOTEC REPORT 2023

72

SUPPLEMENT
Stock Information /Organization Chart /KONDOTEC Network /Consolidated Financial Statements

Consolidated Financial Statements■Consolidated Balance Sheet(Million yen)(Thousand U.S. dollars)

2023

2023

(Million yen)

2022

Assets(Thousand U.S. dollars)

2023

2023

Liabilities

10,73380,385

Notes and accounts payable – trade

4,346

5,015

37,563

Notes receivable – trade

4,320

3,932

29,449

Electronically recorded obligations – operating

9,114

9,738

72,929Accounts receivable – trade

8,809

10,161

76,099

Short-term loans payable

4,610

3,610

27,035Current portion of long-term borrowings

214

224

1,679

Income taxes payable

814

946

7,091

Provision for bonuses

820

878

6,581

Other

2,062

2,216

16,600Total current liabilities

21,983

22,630169,480

Long-term borrowings

347

512

3,840

Deferred tax liabilities

917

927

6,948

Deferred tax liabilities for land revaluation

178

178

1,338

Provision for stocks payment

17

－

－

Retirement benefit liability

283

316

2,370

659

2,861

3,695

27,673Merchandise and finished goods

5,828

6,446

48,279Work in process

687

770

5,768

Raw materials and supplies

666

915

6,859

1,232

670

5,022

(6)

(12)

(92)

34,63637,402

280,104

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures (net)

3,314

3,664

27,442

Machinery, equipment and vehicles (net)

1,625

1,453

10,885

9,164

9,380

70,250

907

905

6,779

15,011

15,403

115,357

Goodwill

3,876

2,883

21,595

Customer-related assets

1,370

1,286

9,637

Land
Other (net)Total property, plant and equipment
Intangible assets

Other

Non-current liabilities

Other

214

311

2,334

1,959

2,247

16,832

23,942

24,878186,313

Capital stock

2,666

2,666

19,969

Capital surplus

2,434

2,434

18,232Retained earnings

26,90328,472

213,225

Total non-current liabilities
Total liabilities
Net assets
Shareholdersʼ equity

121

116

870

5,368

4,286

32,103

Investment securities

326

331

2,483

Deferred tax assets

287

366

2,744

Retirement benefit asset

141

110

830

Other

244

283

2,119

Revaluation reserve for land

Allowance for doubtful accounts

(6)

(21)

(160)

Foreign currency translation adjustment

Total investments and other assets

993

1,070

8,017

Remeasurements of defined benefit plans

21,373

20,761

155,478

56,00958,163435,583

Total intangible assets
Investments and other assets

Total non-current assets
Total assets

Treasury stock
Total shareholdersʼ equity

(661)

(893)

(6,692)

31,342

32,679244,735

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities

121

124

933

Deferred gains or losses on hedges

53

(11)

(86)

(1,510)(1,510)(11,314)

45

69

518

35

(66)

(500)

(1,255)(1,395)(10,450)

Total accumulated other comprehensive
incomeNon-controlling interests

1,979

2,000

14,984

Total net assets

32,06633,285249,269

56,00958,163435,583

Total liabilities and net assets

SUPPLEMENT* All financial information presented in Japanese yen has been rounded down to the nearest million.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenienceof readers outside Japan and have been made at the rate of exchange at March 31, 2023. U.S. dollar
amounts are rounded down to the nearest thousand.

FINANCIAL DATA88

ENVIRONMENT70

SOCIAL

Contract assets
Electronically recorded monetary claims
operating

KONDOTEC

10,164VISION

Current liabilities

Cash and deposits

GOVERNANCE

Current assets

Other

WE ARE KONDOTEC

2022

73

KONDOTEC REPORT 2023

KONDOTEC REPORT 2023

74

SUPPLEMENTKONDOTEC Network /Consolidated Financial Statements

2022(Thousand U.S. dollars)

2023

2023

2022

Net sales

66,13975,447565,025

ProfitCost of sales

51,40859,194443,301

Other comprehensive income

Gross profit

14,730

16,253

121,723

Selling, general and administrative expenses

11,136

11,898

89,108Operating income

3,594

4,355

32,615Non-operating income
Interest income

3

1

10

Dividends income

6

7

54

Purchase discounts

123

135

1,015

Gain on investments in silent partnerships

39

－

－

Miscellaneous income

71

83

628

245

228

1,709

Total non-operating income
Non-operating expenses
Interest expenses

15

9

67

Miscellaneous loss

14

10

77

Total non-operating expenses

29

19

145

3,810

4,563

34,178Gain on sales of non-current assets

6

18

138

Gain on sale of investment securities

1

－

－

Gain on reversal of share acquisition rights

0

－

－

Total extraordinary income

9

18

138

Ordinary income

Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

2,303(Million yen)(Thousand U.S. dollars)

2023

2023
2,438

18,260

(19)

3

27

23

(64)

(484)

Foreign currency translation adjustment

14

23

178

Remeasurements of defined benefit plans

(57)

(102)

(765)

Total other comprehensive income
Comprehensive income

(39)

(139)

(1,044)

2,263

2,298

17,215

2,244

2,275

17,037

18

23

178

WE ARE KONDOTEC■Consolidated Statement of Comprehensive Income(Million yen)

VISION■Consolidated Income Statement

KONDOTEC

Organization Chart /(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests* All financial information presented in Japanese yen has been rounded down to the nearest million.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenienceof readers outside Japan and have been made at the rate of exchange at March 31, 2023. U.S. dollar
amounts are rounded down to the nearest thousand.

ENVIRONMENT

Extraordinary income

FINANCIAL DATA

Stock Information /

7

0

1

Loss on disposal of non-current assets

10

13

99

Impairment losses

－

611

4,575

Loss on sale of investment securities

0

0

6

Loss on valuation of investment securities
Loss on termination of performance-linked
stock-based compensation plan

9

－

－

120

－

－

Total extraordinary loss

147

625

4,683

Income before income taxes

3,672

3,957

29,634

Income taxes – current

1,339

1,516

11,355

Income taxes – deferred

30

2

18

Total income taxes payable

1,369

1,518

11,374

Profit

2,303

2,438

18,260

18

23

177

2,284

2,414

18,082

Profit attributable to non-controlling interests

SUPPLEMENT

Profit attributable to owners of parent

GOVERNANCE

Loss on sales of non-current assets

SOCIAL

Extraordinary loss

75

KONDOTEC REPORT 2023

KONDOTEC REPORT 2023

76

SUPPLEMENTKONDOTEC Network /Consolidated Financial Statements

Interest and dividends income
Interest expenses

Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities

Loss (gain) on sales of non-current assets
Loss on disposal of non-current assets
Decrease (increase) in notes and accounts
receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable – trade
Increase (decrease) in accrued consumption
taxes
Other
Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from withdrawal of time deposits

Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests

Other
Cash flows from financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

3,957
1,134
611
381
24
－

29,634
8,499
4,575
2,857
182
－

120

－

－

(0)

20

156

64

57

433

(61)

0

2

(90)
(79)

(116)
33

(874)
250

(508)

－

－

(10)
15
(1)
9
0
10

(8)
9
0
－
(18)
13

(65)
67
6
－
(138)
99

(1,227)(1,793)(13,428)(2,031)(949)(7,111)

1,287

1,292

9,678

(197)

412

3,092

(51)
2,372
10
(15)
(1,139)
1,227

284
5,348
8
(8)
(1,386)
3,961

2,133
40,051
65(66)(10,380)
29,669(1,566)
5,372(1,377)－(10,312)－(6,219)－－40(2,373)(12)(1,389)(92)(10,405)

1,500(1,000)(7,488)

300
(294)
(611)
0
(827)
(2)
(86)
(22)

450
(274)
(291)
－
(843)
(2)
(63)
(2,025)3,370(2,056)(2,180)－(6,316)(20)(475)(15,167)

15

22

167

(1,153)

569

4,263

11,317
10,164

10,164
10,73376,12280,385

Senior Executive Director and General Manager of Management Headquarters

Hiroyuki Yada

Please support the KONDOTEC Track & Field Club !
The KONDOTEC Track & Field Club established in 2016, currently has four members.
Your continued support is greatly appreciated.
Athlete employees(From left)

Name
Sara Fujimoto
Mika Yamamoto
Kiho Kuze
Yuki Noshi

Competition
category
HammerThrow
DiscusThrow
JavelinThrow

Personal
best

Pole Vault

3m90

62m59
50m51
59m16

The track & field clubʼs activities and blogs by athletes
URL ▶ https://www.kondotec.co.jp/corporate/track.html

Official SNS accounts

Official Instagram

https://www.instagram.com/kondotec_official/

Official Facebook

https://www.facebook.com/kondotec.official/

Notes on forward-looking statements

This document contains forward-looking statements including operating forecasts and business plans.
Future operating performance projections that the Company releases are based on data available at the timeof making the release. Actual results may differ considerably from projections due to various factors andchanges.

Detailed information on financial results

For details of financial results for the year ended March 31, 2023, please refer to the Annual Securities Report.
URL : https://www.kondotec.co.jp/ir/library/asset_securities.html

Reporting coverage period◆Reporting period︓April 1, 2022 through March 31, 2023
(Activities in April 2023 and thereafter are included in part.)◆Reporting organization︓
KONDOTEC INC. and its group companies◆Accounting standard︓Japanese GAAP

* All financial information presented in Japanese yen has been rounded down to the nearest million.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of exchange at March 31, 2023. U.S. dollar amounts are rounded down
to the nearest thousand.
77

KONDOTEC REPORT 2023

VISION

3,672
1,091
－
315
45
(0)

Thank you very much for reading the “KONDOTEC REPORT”.
This year marks the seventh release of our Integrated Report. The report has features not found in other materials
disclosed by our Company. In addition to rounding out information on our materiality items, the report goes beyond
discussing the history and business of our Company to describe our growth strategies and our responses to climatechange issues and other ESG-related issues, and is structured to convey a sense of our growth potential. The project
members behind creation of the report consisted solely of employees from divisions including our general affairs
section, human resource section, sales section, and SDGs-related sections, without reliance on any outsideorganizations. It is our hope that, by communicating our corporate value as seen from inside and by expressing it as
only our employees can, this report will let stakeholders deepen their understanding of our Company.
Looking ahead, as we engage in corporate activities aimed at achieving a sustainable society, we will aim for an
integrated report that helps people understand our sustainable growth and the appeal of our Company not visible
through performance alone.

KONDOTEC

Decrease (increase) in retirement benefit asset
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for retirement
benefits for directors (and other officers)

2023

FINANCIAL DATA

Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for stocks
payment

2023

ENVIRONMENT

Gain on reversal of share acquisition rights
Loss on termination of performance-linked
stock-based compensation plan(Thousand U.S. dollars)

SOCIAL2022
Cash flows from operating activities
Income before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Share-based compensation expenses(Million yen)

WE ARE KONDOTEC

Editorʼs Note

■Consolidated Statement of Cash Flows

GOVERNANCE

Organization Chart /SUPPLEMENT

Stock Information /KONDOTEC REPORT 2023

78