2018
Integrated Report“Deepening and Evolving in the Pursuit of Genuine Value”

Embodying Shinka as
we progress toward our ideal
vision of ourselves in 2026*

We must be more considerate of people, towns and the environment.
Consideration involves being more resilient and wiser.
Working in conjunction with our partners and developing our skills,
Tokyu Construction will anticipate the future and alter our consciousness andbehavior to adapt to the challenges of our rapidly changing times.
We will continue to develop and evolve for the creation of genuine value torespond to future challenges.
* “Shinka” is a key word to express our vision of “deepening and evolving in the pursuit of genuine value.”

01 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 02

As a Member of the Tokyu Group

Corporate
Philosophy

Mission Statement
We will help each person realize his or her dream through creating comfortable living
environments that allow peace of mind

Management Policy
Management that rises to the challenge / Management that makes the best use of employees
Management that values customers / Management that is fair and open

Principles of Conduct

VisionDeepening and Evolving
in the Pursuit of Genuine Value
Tokyu Construction

Beauty is the guiding principle and standard of value for Tokyu Group as it meets thechallenges of the future.
For all of us in Tokyu Group, the beauty we aspire to is a universal beauty deeply
impressing anyone who encounters it, regardless of a person’s age or culture. We aim tocreate a beauty in harmony with people, their communities, and the natural environment.
With beauty as our touchstone, Tokyu Group’s goal is to create beautiful living
environments, which reflect our desire to serve our customers by refining our products andservices, raising quality, and promoting good health.
We are making every effort to realize this vision, and moreover, we aspire to play an activerole in creating a more harmonious society, overflowing with kindness and consideration, sothat all people may find genuine happiness and express an individual lifestyle.
Our slogan, “Toward a beautiful age,” expresses the commitment of all of us in Tokyu
Group to continually pursue beauty, and proclaims our determination to lead the way increating beautiful living environments.

• Developing better technology and services, we will pursue new business opportunities
in order to keep our capabilities evolving.
• Continuing a tradition of contributing to society in its role as a general contractor,
Tokyu Construction is dedicated to the pursuit of genuine value.
Please visit our website for details.
CORPORATE PROFILE / Corporate Philosophy and Vision(https://www.tokyu-cnst.co.jp/english/company/vision.html)

Structure
Tokyu Construction’s Business Model

Business philosophy that guides Tokyu Construction andits employees in all activities

VisionMission Statement
We shall strive to create beautiful living environments, in which each person can pursue
individual happiness in a harmonious society.

Genuine value that can be shared by customers,
employees and stakeholders

Management Policy

Through these means, we will fulfill our corporate social responsibilities.

Guidelines for Action
Fulfill your responsibilities. Collaborate to enhance each other’s abilities. Reinvent yourself
with a global awareness.

03 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Our Ideals for FY 2026
following
the 2020 Olympic Games
Deepening and Evolving
in the Pursuit of Genuine Value

Work independently and in collaboration to raise Tokyu Group synergy and establish atrusted and beloved brand.
• Meet current market expectations and develop new ones.
• Manage in harmony with the natural environment.
• Pursue innovative management from a global perspective.
• Value individuality and encourage the best from each employee.

Corporate
Philosophy

Tokyu Construction

Mid-term management plans to realize ourvisionary goal following the 2020 Olympic
Games
Criteria for action and behavior of
employees of Tokyu Construction

Mid-Term Management PlanThree plans (every three years)

Guidelines for Action(specific criteria)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 04

Corporate Data

We hold the following shared vision as we work
together to create and support Tokyu Group.

• Striving to respond to diversifying customer needs and providing the best solutions,
we will enhance the quality of our business.

Corporate GovernanceTokyu Group
Philosophy

Toward a Beautiful Age

Vision and Declaration
Business Overview

Tokyu GroupSloganStory of Value Creation

Independence / Speed / Teamwork / Reliability

Overview of Tokyu Construction

As a member of the Tokyu Group, Tokyu Construction will operate its business in accordance with the Group's complianceguidelines, and will ensure its interests are aligned with the Group's philosophy. We are aware that we share the Tokyu brand, andtake very seriously our responsibility to ensure that every employee acts in accordance with the corporate values of the Group.
Ultimately, we sincerely aim to ensure that all Tokyu Construction's activities reflect positively on the Tokyu Group, its employees,
shareholders and other stakeholders, and contribute to society in a positive way.

Tokyu Construction Corporate Philosophy

CONTENTS
Overview of Tokyu Construction

Message from the Chairman

Business Overview
03

Civil Engineering Business37

Corporate Philosophy

04

Building Construction Business39

Message from the Chairman

06

Shibuya Station South District SHIBUYA STREAM Project 41

Business Overview

07

Real Estate Business

43

Financial and Non-Financial Highlights

09

International Business44

To realize “Our Ideals for 2026—
The Company We Hope to Be in 2026,”
we have adopted a new management
structure.

Corporate Governance

Story of Value Creation
11

Board of Directors

45

Steps toward Value Creation

15

Corporate Governance47

Value Creation Process

17

Risks

50

Identify Materiality

19

CSR

51

Story of Value Creation

Message from the President

Representative Director,
Chairman

Our Ideals for 2026—The Company We Hope to Be in 2026 21
Mid-Term Management Plan (2018–2020): Shinka 2020 25

10-year Main Consolidated Financial and Non-Financial Data 53
Financial Overview

55

Company Profile / Stock Information

59

In September 2015, the United Nations adopted theagenda “Transform our World: the 2030 Agenda for
Sustainable Development” and identified 17 Sustainable
Development Goals (SDGs). To contribute to therealization of these goals, Tokyu Construction has
identified eight material issues (*2) focusing in particularon our business operations and technological strength.

*2 Please refer to Page 19 regarding the eight agenda items
specified as our material issues.

Editorial
PolicyTokyu Construction started issuing our “Integrated Report” in the fiscal year that ended in March 2017 (FYE
Mar. 2017). This report allows us to consolidate our financial and non-financial information to inform ourinvestors on how to contribute to society and the environment by improving our corporate value through ourbusinesses with both a medium- and long-term perspective.
(Issued at the end of August 2018)

Reporting period

April 2017 to March 2018 * Part of the report includes information before and after the fiscal year 2017.

Scope of report

Tokyu Construction Co., Ltd. and its domestic and overseas affiliates

Reference sources International Integrated Reporting Council (IIRC) “International Integrated Reporting Framework”
Ministry of the Environment “Environmental Reporting Guidelines 2012,” GRI “G4 Sustainability Reporting Guidelines”
and Japanese Standards Association “ISO 26000: 2010 Guidance on social responsibility”
The figures shown in this report are calculated based on the accounting standards as of March 2018, which include our projections and/or
forecasts. Please be noted that as they were forecasted based on our available information at the time of the publication, they containsome uncertainties.

New Management Structure
To carry out this plan, Tokyu Construction started a new
management structure by hiring a new president, Toshio Imai,
who held experience in various key positions in Tokyu
Corporation, a core enterprise of the Tokyu Group.
We are determined to work toward the “Our Ideals for2026—The Company We Hope to Be in 2026,” which involves
the creation of a business group based on a vibrant culture, a
corporate group that delivers true value and embraceschange in the operating environment by completing themeasures declared in the mid-term management plan.
I look forward to seeing President Imamura lead thecompany based on his rich management experiences toembody the mid-term plans toward the “Our Ideals for2026—The Company We Hope to Be in 2026.” Hereafter,
Tokyu Construction, centering on the new president, will work
harder to develop our sustainable corporate value by
maximizing synergy effects with the Tokyu Group tostrengthen confidence in the Tokyu brand even more.

My Role as Chairman
Many employees spent more than one year creating thepolicies and strategies to realize “Our Ideals for 2026—The
Company We Hope to Be in 2026.” and the “Mid-Term
Management Plan (2018–2020).” These plans were notimposed on the employees but rather developed by them as
they set their eyes firmly on the future. All that is left now is totake action. As the new chairman and the designated leaderof planning, I will support the new president by doing
whatever is required from now on.
To make Tokyu Construction a sustainable corporation
required by society, we will work together company-wide toincrease our corporate value.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 06

Corporate Data

*1 SDGs: Sustainable Development Goals
https://www.un.org/sustainabledevelopment/sustainable-development-goals/

I assumed the position of representative director andchairman after resigning as representative director andpresident in June 2018.
The origin of Tokyu Construction's business is in urban
development such as Tama Garden City and the towns inareas surrounding Tokyu train lines, such as Shibuya. We
have defined our business area to create a “Safe andComfortable Living Environment.” As one of the Tokyu Group
members, we are involved in not only building construction
but with the life cycle of the town for eternity to create newvalue by considering the whole community from theviewpoints of customers and consumers who use such
facilities.
During the eight years I acted as President I always tried
to carry out the policies I inherited from our former president
who placed “first emphasis on the on-site activities,” and“collaboration with the headquarters,” to improve“problem-solving skills to find and solve problems.” Securingsafety and quality on site is the foundation of theconstruction industry. The goal of Tokyu Construction is tobecome a corporation that embodies this foundation trusted
by our customers and consumers.
The environment surrounding the construction industry isrobust for now. We are concerned however that domestic
demand could undergo a qualitative shift after the Tokyo
Olympic and Paralympic Games in 2020, with the current
spot-revenue model giving way to recurring-revenue model
based on maintenance that includes the reconstruction ofold buildings and infrastructure. There are also challenges
presented by a labor force shortage due to a significant
increase in retirement of an aged workforce, affecting
work-style reform.
To cope with the changing environment and aiming at
sustainable growth, last March, Tokyu Corporation
established the “Mid-Term Management Plan (2018–2020):
Shinka 2020” and the “Our Ideals for 2026—The Company

We Hope to Be in 2026” which is a vision for the final fiscal
year of our three mid-term management plans.

Corporate Governance

Sustainable Development Goals (SDGs*1)

05 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

On the Occasion of Assuming the Post of Chairman

Business Overview

Message from GM, Business Administration Division 33

Corporate Data

Overview of Tokyu Construction

Group Philosophy

Business Overview

We develop infrastructure related to national land formation, including public
works, to maintain people’s safe and secure living, while being conscious ofenvironmental issues.

Business• Railroads, roads, tunnels, bridges, and other construction, reconstruction after
earthquake disasters, etc.

Building
Construction

We are pursuing urban development throughout Japan in areas such as
Tama Garden City and Redevelopment of the area around Shibuya Station inTokyo, which are closely connected to local communities.

Real Estate

Using our core construction business, we acquire real estate and operate arental business. One of the areas we are focusing our strategy on is areas
surrounding station along Tokyu train lines in collaboration with the Tokyu Group.

Business

New Kantec Corporation
Kitami Bldg.*

New administration facilities using
national funds in the tsunami affected
Ofunato area

(FYE Mar. 2018)

Civil Engineering
Building Construction

Hokkaido

Iwate Pref.

Shizuoka Pref.

Yugashima No. 2 Tunnel,
Amagi-Kita Road, FY 2014

Chiba Pref.

1st site CE construction No.10 of
the continuous multi-levelcrossing, Shinkeisei Line
Shin-miiri Tunnel (Uchiura)*
construction funded by Social
Capital Improvement Program,
MLIT
Pool renovation in the Funabashi
Municipal Sports Park
New construction of GLP
Nagareyama I

Shiga Pref.

New government facilities, Koga
City (main framework construction)• Rental business, equivalent exchange business, etc.
Tokyo

Business• Development of railroads and roads, high-rise buildings and factory construction

Businesses• PPP, concession business

73.6%

Civil Engineering
Business

Breakdownof Orders Received• Paprika business

23.8%

Building Construction
Business

Civil Engineering
Businessbillionbillion¥214.5¥73.8

Civil Engineering andBuilding Construction

18.9%

Tokyu
Group

¥62.3

billion

Civil
Engineering
Compositionof work
obtained¥14.4

billionBreakdown ofConstruction Revenue¥236.8billionOverseas Bases andOngoing Projects
Bangladesh

billion

72.2%

27.8%

Other

¥154.9billion

Building
Construction
Compositionof work
obtained

Tokyu
Group

¥59.5

billion

83.2%

16.8%

Other

¥61.4

billion

Civil
Engineering
Composition of
construction
revenue

Tokyu
Group

¥12.4

billion

Myanmar
Yangon Office
GOLDEN TOKYU CONSTRUCTION CO., LTD.

(Local corporation)¥310.7billion* Working titles

Building Construction
Business(FYE Mar. 2018)¥291.3

81.1%

76.2%

Civil Engineering andBuilding Construction(FYE Mar. 2018)

Other

Repair work on Hotel
Nirakanai Iriomotejima
New construction of BeachHouse No.2*

Site No.4 CE (No. 27), 1st term ofcontinuous elevated cross-section,
Keikyu Daishi Line
CE at 395 Obacho Aoba Ward,
Yokohama
Atsugi-Minami Interchange,
Shin-Tomei EXP
Rebuilding of Shisei
Archery/Kyudo Training Hall,
Hiyoshi Campus, Keio University

New construction
planned by Jingu-mae
5-chome, Shibuya Ward*
New construction of PMO
Shibuya
New construction of
Teikyo Univ. Institute ofSports Science &Medicine, Hachioji
CampusFacility construction of
Kyobashi 3-chome
Project*
New construction of
Tokyu Stay Takanawa*

Dhaka OfficeVietnamHanoi OfficeOngoing Projects

Ongoing Projects

72.4%

27.6%

Other

¥171.5billion

Building
Construction

Tokyu
Group

¥65.3

billionComposition of
construction
revenue

Dhaka Urban Transportation Development
Project (MRT)Land development of Uttara Railyard, 6thLine 1st site

ThailandPackage 2, Hanoi Ring Road No. 3
Construction Project (Mai Dich – South ThangLong Sec.)

Bangkok Office
CH. KARNCHANG-TOKYU CONSTRUCTION CO.,LTD. (Local corporation)

Indonesia

Jakarta Office

PT. TOKYU CONSTRUCTION
INDONESIA (Local corporation)
Ongoing Projects

Singapore
Singapore OfficeOngoing Projects New construction of Venus
Drive Nursing Home

Sites CP101 &102, Mass Rapid Transit
System (MRT) in Jakarta

Note: Pie charts show the amount of construction business (alone)

07 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 08

Corporate Data

26.4%

¥76.7

Okinawa Pref.

We are pursuing new areas such as public–private partnerships (PPP),
concession system projects and a paprika project.

OtherbillionKanagawa Pref.

Kyojima Main Sewage
Pipeline construction,
Sumida Ward
Contract work No.1 ofanti-seismic reinforcement inelevated bridge No.1,
Higashi-Fuchu
CE construction in Kaneo
site, Shibuya Station, Tokyo
Metro Ginza Line
Station facility renovation forincreased transportation
capacity on the Oimachi Line
(Hatanodai, Jiyugaoka)
Renovation and other workon Nihonbashi Tax Office(15)

Corporate GovernanceInternational

Using our technologies and know-how, we are pursuing a construction
business in Southeast and South Asia including Thailand, Indonesia,
Vietnam, Bangladesh, Myanmar, and Singapore.

Business Overview

Business• Construction of commercial facilities, hotels, offices, housing, factories, hospitals
and distribution centers, renovation and wooden building construction

Major Domestic
Completed Work

Story of Value Creation

Civil
Engineering

Overview of Tokyu Construction

Tokyu Construction focuses on civil engineering and building construction as ourcore business while working on new pillars of strategical businesses including
real estate and international businesses to increase competitiveness and diversify
profit. We aim to enhance our corporate value in a sustainable manner throughthe development of a stable management foundation.

Financial and Non-Financial Highlights
Non-Financial Highlights (Non-Consolidated)

Orders received

Net sales

CO2 emissions(Millions of yen)

(Millions of yen)(t-CO2)(Fuel oil conversion: �/m2)

400,000

400,000

80,00040

341,992

300,000

303,758

290,647

293,539

299,436

53,35640,000FYE Mar.
2017

0

FYE Mar.
2018

Operating income / Operating income margin
Operating income

FYE Mar.
2014

FYE Mar.
2015

(%)

15

30

0

FYE Mar.
2018

FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

0

FYE Mar.
2018

Construction by-products* generated /Recycling rate

22.8

(%)

96.8

96.1

95.9

98.4

100

99.4

22.2

14.5

49.0
50

6.7

6.1

47.3
40.3

39.5

0.79
0.70

50

41.0

10

7.9

0.40
25

25

3

2.3

2,630

0.73

6

6,009
5,000

0.84

75
0.80

9

10,000

1.20

1.04

20

7.1

FYE Mar.
2018

Accident frequency rate*75

15,000FYE Mar.
2017

Corporate Governance

12

FYE Mar.
2016

Recycling rate

(10,000 t)
100

27.0

21,416
17,211FYE Mar.
2015

24.66

10

The volume of construction by-product generated(%)

18,178FYE Mar.
2017

Operating income margin(Millions of yen)

20,000FYE Mar.
2016

Return on equity (ROE)

25,000FYE Mar.
2014

25.65

Business Overview

FYE Mar.
2016

26.56

51,60220,000100,000

FYE Mar.
2015

25.64

20

67,333

66,11244,397FYE Mar.
2014

25.03

1,607

59,394

0

30

1,754

46,004200,000

100,000(Head office, branch offices, laboratories and factories)

Story of Value Creation

243,618

226,164
200,000

1,841

60,000262,815

Energy consumed

1,820

1,913

61,235

Office69,15368,025

320,711296,393
300,000

Workplaces

Overview of Tokyu Construction

Financial Highlights (Consolidated)

1.2
FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

0

Total capital / Equity ratio

0

FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

Dividends per share / Payout ratio
Total capital

79,175(Millions of yen)

Dividends per share

Equity ratio

80,00054,23832.3

40,000FYE Mar.
2016

FYE Mar.
2017

(%)
3.0

30

30

31

19.9

20

20.0

2,148

30

2,161

2,219

2,249

2,303
2.07

2,000

20.3

Legal
employment
rate

20.5
20

10

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

09 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

FYE Mar.
2018

0

0

2.30

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

1.84

1.0

10

5

FYE Mar.
2014

2.26

2.0%

1,000
10

2.22

2.0

13

20,000FYE Mar.
2018

Female

3,000

20

FYE Mar.
2017

Employment rate for people with disabilities
Male(Persons)

26

FYE Mar.
2016

Number of employees
Payout ratio
40

25

FYE Mar.
2015* The frequency rate is an index that shows the frequency of industrial
accidents that caused injury and/or death per one million total
extended working hours.

(%)

23.9

FYE Mar.
2014* Consumption by-products are generated during construction work.
This includes recycled resources and waste.

40

35,25800

0

FYE Mar.
2018

(Yen)

25.2
20.7

FYE Mar.
2015

40

31.2

23.2
44,861FYE Mar.
2014(%)

66,38060,0000

FYE Mar.
2018

FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

0

0

165

179

193

215

234

FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

0

FYE Mar.
2014

FYE Mar.
2015

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 10

Corporate Data

0

Message from the President

Corporate Data

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 12

Corporate Governance

11 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

One of the reforms we are aiming at is the expansion of
our business area. Looking through the eyes of the market
and customers we can see the great scale of areas we
can be involved in. For example, in the construction
market, demand from 2020 will vary depending on thelocation; if it is a busy place, people, goods and capitalwill flow in and construction demand will arise.
We need the ability to foreseeing every local demand
while grasping trends by paying attention to the big
picture. We have cultivated the viewpoint of urban
development through development in Shibuya and othertowns in areas surrounding Tokyu train lines. If we cancooperate with developers with similar viewpoints, we will
be able to find different venues to make a significant
contribution towards redevelopment and the promotion of
housing rehabilitations. Our final objective is not justbuilding completion. It is important for us to pursue
management after the construction is completed.
For example, in the neighboring areas of Shibuya
Station, where a mega project is continuing, Tokyu
Construction will pay attention not only to the center of theregion but to the surrounding areas such as Daikanyama
and Yutenji, focusing on the demands of small offices andsatellite offices. We will cope with the local needs andchallenges to provide finely tuned solutions to discover
new demands.
The second reform we aim for is to become along-term stable profit company. The main business of
Tokyu Construction is, of course, our construction
business, involving the total lifecycle of buildings. But,
hereafter, we will increase the ratio of businesses relating
to public infrastructure such as the PPP/concession
business and a real estate leasing business thatgenerates stable, long-term profit. We are required toabide by our concept of “Create, Maintain, and Foster”
that is, construct good buildings, maintain them to ensure
long-time use, and change the usage if necessary tomaintain asset values for a long time.

Business Overview

Representative Director,
President

I am Toshio Imamura, who became president in June
2018. The fiscal year 2018 is the first step for us to move
forward toward a new history. We will aim at further
embodying Shinka based on the foundation of trust built
by the new chairman, Mr. Iizuka.
It is expected that the current trends of theconstruction market will stay strong for a while. Even after
the 2020 Tokyo Olympic and Paralympic Games are over,the demand for urban redevelopment in the Tokyo
Metropolitan area and local infrastructure improvement
along with the creation of resilient national land renewal
will continue. Some impacts from the aftermath of 2020
Games, depopulation and so on may also exist.
However, these demands, which include a qualitative
shift with the current spot-revenue model giving way torecurring-revenue model, may be expected to exist
unevenly throughout Japan. Regarding employment andhuman resources, we anticipate various challenges suchas the lack of labor force due to a significant increase inretirement associated with an aged workforce and thereform of working practices.
In order to establish a corporate structure that cancope with the changing environment, with the year 2026
as our target, we have set up the “Mid-Term Management
Plan (2018–2020): Shinka 2020” as the first step to realize
our visionary goal: “a business group that can cope withthe changing environment to embody true value though avital corporate culture.” We will work companywide toproceed with the mid-term management plan. I am
determined to lead the management of the company
along with the new Chairman and the Board of Directors.
Construction companies do contract business, which isdependent on changing economic conditions andenvironment. It is essential to reform our corporate culture
to make a steady and stable profit under any futurechange.

Expanding the Scope of Our Contracting
Business as We Aim for Sustainable
GrowthStory of Value Creation

Upon My Appointment
as President

Overview of Tokyu Construction

With the speed of change now accelerating,
we aim to sustainably enhance corporate value
by embodying Shinka in our personnel
and organization

takes part in it, the project will be successful.” I envisionthat new efforts like these will enlarge the customer
connection.

Becoming a Company that Embodies
Shinka in its Human Resources andOrganization

The greatest challenge for our company is how to allocate
human resources. There are many excellent sincere
employees in Tokyu Construction. However, thepercentage of those in their thirties in the prime of life is
low due to a hiring freeze when the company was
experiencing financial difficulties. In addition, anotherchallenge facing the construction industry is work-stylereform, which has made little progress compared to otherindustries due to overtime work with fewer holidays at our
workplace. The utilization of ICT for work also lags behind.
It is expected that the employment situation will become
worse due to the declining birthrate and the aging
population. The situation could also become more severe
through loss of business due to a lack of humanresources. The implementation of radical measures
including the challenges of securing personnel and theirtraining are the core themes raised in the mid-term
management plan.
The road to solutions is not easy. We are determined tocope with them by classifying the challenges into threegroups: those that can be addressed within a shortperiod, challenges that will be dealt with long term, andthose of both short and long-term spans. Personnel
development is a primary goal that can offer value to ourcustomers. It is important to proceed with multiple levels ofsolutions based on the principle of work-style reform;
namely, the improvement of work-life balance, theCorporate GovernanceCorporate Data

13 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

ProfileJoined Tokyu Corporation after graduation from the Faculty of
Economics, Keio University in 1974.
Assumed the position of director in 2007, and vice president in2014.
Accumulated most experience within the transport business inTokyu Corporation, then engaged in different areas ranging
from management control to the department and the realestate businesses of the Tokyu Group.
While this is his first experience with the construction
business, he regards it as a fresh challenge.

Business Overview

I came to this company to realize another important themeof the “Our Ideals for 2026—The Company We Hope to
Be in 2026"; to maximize synergy effects with the Tokyu
Group. This includes pursuing development and realestate business in the metropolitan area, such as the
project along the Tokyu Railway Line, increasing solidarity
with “One Tokyu Group" and expanding our businesses.
I’m sure our customers seek the “Tokyu Brand” forvalues and a feeling of security and trust: “We feelrelieved if we are using Tokyu,” and “we can trust Tokyu toconstruct and maintain buildings." We should turn ourbrand image and value into a further strength. To achievethis, we must develop a sense of teamwork, improve ourability of making proposals and refine our means ofcreating added value.
Hereafter, we will achieve synergistic effects byencouraging collaboration with group corporations not
only passively but consciously and strategically. Tokyu
Construction, as one of the group members, has many
obligations, and there are still many things to be accomplished. I believe that our efforts to deliver value as part of
the Tokyu Group will improve our corporate value, which
will lead to social contribution.
Viewing the sales ratio, Tokyu Group generally holds
20 % of sales with some yearly variance, while around 80% of sales comes from the customers outside the group.
In particular, there are many customers from privatecompanies that have sales offices not only in the
Metropolitan area but also throughout Japan. Tokyu
Construction will act as a link between these customers
and the Tokyu Group. Tokyu Construction will offer value
by taking advantage of the Synergy of the Tokyu Group
by functioning as a bridge of value co-creation between
the outside customers and the Tokyu Group— “If Tokyu

Along with the employees of the Tokyu Construction
Group, we will do our best to create a more valuablecorporation for our customers and shareholders as well as
all the people included in our partner companies who
support our business.

Story of Value Creation

Maximizing Group Synergy as“One Tokyu”

improvement of operational efficiency through optimum
personnel allocation and the improvement of productivity
making use of mechanized construction and ICT as wellas making commuting time shorter.
In addition, it is vital to change the thought processesof our management and the employees involved. As thetimes change, people’s values also change. Accordingly,
requests made to corporations will also change. Without
being fixed to the previous mind set of construction
business models, every employee needs to acquire
greater business sensitivity and develop new ways ofthinking and conduct.
The company that grows is the company with
employees making progress. In order for people todevelop there is nothing more important than a stableenvironment in a company where they can concentrate on
their work in a relaxed manner and look ahead to their
future. My belief is that if we can increase the number ofpeople who can exercise their abilities in such anenvironment, the company can cope with the changing
environment.

Overview of Tokyu Construction

For example, there is concern over the aging of thebuildings and facilities built during the 1964 Tokyo
Olympic Games. However, due to the limitations of thebudget of the local government, it is difficult to evenpursue renewal construction. It is important to keep oureyes open for such challenges, and to detect and move
as quickly as possible to make use of local funds andknowhow. I believe we, the private sector, should makeevery effort together with the central government, if
required. In addition, what one company can do is limited.
Therefore, it will sometimes be necessary to work incollaboration with various companies to combine ourknowledge and abilities.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 14

Steps toward Value Creation

1959-1995

1996-2003

Our Founding Era, a Time of
Rapid Growth

The Ordeal of Management Restructuring,and Starting from Zero

SocialTrends1964: Tokyo Olympics
1970: Expo ’70 was held in Osaka
1973: The oil crisis
1989: Consumption tax was introduced
1991: The bubble economy burst
1995: The Great Hanshin-Awaji Earthquake

TOPICS

1980

1970

SocialTrends1998: Nagano Olympics
2001: September 11 Attacks
2002: 2002 FIFA World Cup Korea/JapanAs a Best Partner ofValue Creation

After experiencing the severe business environment caused by
our net loss for the term, which was partly due to shrinking
confidence caused by the discovery of bid rigging and thefinancial crisis, etc., we took a steady step toward fiscal
consolidation.

SocialTrends2005: The Postal Service Privatization Act established2008: The financial crisis
2010: Tohoku Shinkansen opened

2000
TOPICS

1990

2010

While enhancing our core contract business as a general contractor, we
aim to develop genuine value and create new business areas for fruitfulresults.

2004
Town Value-up Management
As a new benchmark, we declared our brand concept as “acompany committed to developing the genuine value of thetown.”

1997

2015

Nhat Tan Bridge in
Hanoi (Vietnam)

1998

Nagano Shinkansen, Ninoy AquinoInternational Airport
Ueda Station
Centennial Terminal(Nagano)& Bldg. (Philippines)

2015

Medium-sized wooden housing“Granda Kaminoge” (Tokyo)

2013

Toyoko Line,
Shibuya-Daikanyama
Underground
Diversion (Tokyo)

1999

QFRONT Bldg.
(Tokyo)Separated from Tokyu Land Corporation;

Tokyu Construction Co., Ltd. was founded
Narita 1st Hangar,
Japan Airline(Chiba)With support from Tokyu Group, we worked onreconstruction by responding to true cost-saving andtechnological needs of customers.
SHIBUYA MARKCITY (Tokyo)

2011

GLP Zama(Kanagawa)

2010

TAMAPLAZA TERRACE &TAMAPLAZA STATION(Kanagawa)

2000

1970

2015

Sumida River Rain Water
Trunk Line (Tokyo)

2017—

2011

Futako Tamagawa rise (Tokyo)

PPP / Concession
Business
Management ofpublic sewage
system, Hamamatsu(Shizuoka)

2006

Sanyo Shinkansen, High elevated bridgein Sone-nishi area (Hyogo)

1970s
Established a solid base fora technological leap

Through-service(MM21 Line - Toyoko
Line), Higashi-hakuraku- Yokohama
underground diversion(Kanagawa)

2003

KyusyuShinkansen, Izumi
Station(Kagoshima)

2001

CERULEAN
TOWER Bldg.
(Tokyo)Institute of Technology

2013 —MRT Jakarta (Indonesia)

2004

2007
Shinonome Canal
Multi-level crossing
Court Apartmentsof Mekama Line
(Tokyo)(Meguro – Senzoku
Sta.) (Tokyo)

Redevelopment of
Shibuya Station Area
(Tokyo)2003

Embarked officially on overseas
construction business

TC Holdings Co., Ltd. was established to succeed theconstruction section from the former Tokyu Construction,and changed its company listing to Tokyu Construction
Listed in the First Section of the Tokyo Stock Exchange
Real estate business sector company listing was changed
to TC Properties Co., Ltd.
Palau Pacific Resort

15 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

2007

Unison Square(Tokyo)Tokyu Ikegami Line,
Togoshi-Ginza
Station Platform
Canopy Renovation(Tokyo)2009

Shigira Bayside Suite
ALLAMANDA(Okinawa)©TOKYU CORPORATION• Shibuya Hikarie• SHIBUYA STREAM• SHIBUYASCRAMBLE SQUARE• Ginza Line, Shibuya
Station• Infrastructure of
Shibuya Sta. East Ext.
• Pedestrian bridges of
Shibuya Sta. East Ext.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 16

Corporate Data

1972

2016

2000s
Streamlined Tokyu Construction

Corporate GovernanceTrans-Tokyo Bay
Highway, Aqua Line
(Tokyo)1959

We took part in the Tokyu Group's
project based on the “Pacific Rim
Economic Initiative (later Pacific Ocean
Economic Initiative) for the constructionof hotels, resorts, residential landdevelopment and transportation
facilities of group members.

2020

Town Value-up
Management
Poster

1996

While we experienced sluggish businessdue to the dollar shock in 1971, toenhance technological capabilities weestablished the Institute of Technology.

2011: Great East Japan Earthquake
2011: Kyushu Shinkansen opened
2013: 2020 Tokyo Olympic Games approved

2011—
Becoming a General Contractor that Continues to Embody Shinka

1946: Tokyo Construction Industry Co., Ltd. was established
1954: Merger between Tokyu Land Corporation and thecompany's Construction Industry Department

Our brand message “Town Value-up
Management” originated from thedevelopment of Tokyu Tama Garden
City which was initiated in 1959. It was
the largest post-war private sector
development in Japan.

SocialTrendsTOPICSTOPICS1953
Development of Tama
Garden City started

Establishing our new corporate vision in 2020 as a general contractor that
continues to Embody Shinka, we are pursuing genuine value by enhancing
both our core business and newly targeted businesses.

Business Overview

1950

1960

Faced with a financial crisis due to the company’s large
debts after the economic bubble burst, we started a new
Tokyu Construction through restructuring, corporate break-up
and financial assistance. We restarted our company with thefirm resolution that every employee is a second founder.

Becoming a General Contractor that
Continues to Embody Shinka

2004-2010

Story of Value Creation

We established our business foundation by playing a role in the construction
development of Tama Garden City as a member of the Tokyu Group, which
resulted in expansion of our business throughout Japan and overseas. Afterbuilding up our technological foundation, Tokyu Construction became asemi-major corporation during the period of the bubble economy.

2011—

Overview of Tokyu Construction

For the past 60 years since the foundation of Tokyu Construction, we have worked with the Tokyu Group as a partner of safe
and comfortable urban development projects such as in Tama Garden City and the redevelopment in Shibuya. In spite of a
rapidly changing economic environment, including the burst of Japan’s economic bubble and the financial crisis in 2008, we
have been expanding our business areas starting from Shibuya moving, through the whole country and even expanding to
Asia making use of our accumulated technologies and know-how as a general contractor that continues to embody Shinka.

Our Ideals for 2026—
The Company We Hope
to Be in 2026

Value Creation Process
While valuing the Tokyu Brand and using our know-how and town development technology, Tokyu Construction will help
respective customers realize their dreams by offering a safe and comfortable living environment.
We intend to adapt to and address the daily changes in our society and endeavor to find solutions to the challenges ofsatisfying our customers’ demands. Through our businesses, we will create shared value with society and communities,
which will lead to a sustainable development of our corporate value.

Our Ideals for 2026—The Company
We Hope to Be in 2026 (p.21)

Corporate Philosophy

Humanresources

Management Policy

Management that rises to the challenge / Management that makes the best use of employees
Management that values customers / Management that is fair and open

Society

Principles of Conduct

Independence / Speed
Teamwork / Reliability

Corporate Philosophy (p.04)

Bolstering individual capabilities and making work more
rewarding for each member of the Tokyu Construction Group2

Honing our problem-solving skills to ensure safety, enhance quality,
reduce environmental impacts, boost profitability and lower sales cost

3

Taking on challenges and amassing achievements innew business domains

4

Shoring up our management and financial foundations

Strategic Scenario(opportunities and risks)

Identify Materiality (p.19)

Bolstering
capability

Innovation ofhuman resourcesand organization

Corporate
culturereformBusiness

Obtain real estate rental properties
to stabilize profits
Initiatives in the PPP/Concession
business

Expand paprika
business
Create new
businesses

Expand new business
areas

Enhance domestic
construction business• Enhance problem-solving skills• Establish business partner relations• Focus on renovation, wooden andrailroad construction, etc.
• Seek opportunities for alliances and
M&A with other companies

E /SBusinessdevelopments
in South andSoutheast Asia

Business areas¥150 billion
Enhanceor morecore
Secure risk tolerance
capital against risky
investment assets

High
ROE

10% or more
Create higher ROE
exceedingstockholders’ costs

Toward a Beautiful Age

Tokyu Group Philosophy (p.03)
17 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

©TOKYU CORPORATION

2026

-

Employeeengagement

Improve

Closedfor 4 to5 days /4 weeks

No. of days
work sites
are closed

Closedfor
8 days /4 weeks95%

Customersatisfaction

100%

0.20

Safety index

0.10
or less

23.9 ton-CO2 /¥0.1 billion

Emissionof CO220.0 ton-CO2 /¥0.1 billion

6.7%

Consolidated
operatingprofit ratio

7.0%
or more¥320.7billionConsolidated
sales

¥350
billionor more

22.2%

ROE

10%
or more¥78.9
billionConsolidated
core capital¥150
billionor moreG

Investment plan
Tokyu Group Philosophy

Shareholder

Management and financial baseCompatibility

In Corporation with
the Tokyu Brand

Fiscal Year

2017

S

Evaluation

Diversity

Fiscal Year(2018 - 2026)

Total ¥90 billion

Our Ideals for 2026—The Company We Hope to Be in 2026 (p.23)

Our Ideals for 2026—The Company We Hope to Be in 2026 (p.24)
TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 18

Corporate Data

Internal
environment

Mid-Term Management Plan
(2018–2020)“Shinka 2020” (p.25)

Basic Policy
and Strategic
Scenarioto MeetOur Ideals

Business domains

Material issues of
Tokyu ConstructionGroup

Human resourcesand organization

ESG

Corporate Governance

External
environment

Shinka2020

Work-stylereformCustomers / Society / Partner companies

Material Issues

Mid-Term
Management Plan
(2018 –2020)

Stakeholder

Business Overview

1

Quantitative Targets of Our Ideals for 2026 —The Company We Hope to Be in 2026

Employees

Environment

Corporate
Philosophy

Four Basic Policies

Story of Value Creation

Mission Statement

We will help each person realize his or her dream through creating comfortableliving environments that allow peace of mind.

Identify Materiality (p.19)

Overview of Tokyu Construction

Social Issues to be Addressed

Based on a vibrant culture, a
corporate group that delivers
true value and embraceschange in the operating
environment

Identifying Materiality

To establish Our Ideals for 2026—The Company We Hope to Be in 2026 and mid-term management plans weorganized the important social issues from a long-term perspective for Tokyu Construction Group, and identified themost important issues (Materiality) through a discussion with the CSR Committee. To realize Our Ideals for 2026—The

1

Identifying Social Issues
We have identified eight goals of important social issues to be given priority by our Group among theUnited Nation’s Sustainable Development Goals (SDGs).

The CSR Committee consists of the directors and auditors of the Board and the President serving aschairman. The members discussed the social responsibilities of our Group in terms of 1) the
characteristics of Tokyu Construction, 2) the characteristics of the general contractor, 3) soundness ofmanagement, and 4) social and stakeholders’ needs.

Comments from the participants

19 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

•Enhance corporate
governance•Ensure compliance•Ensure risk
management

Governance•The development of towns resilient to possible natural disasters in the
future and the improvement of old infrastructure are the importantmissions in the construction industry•We will carry on the tradition of manufacturing, constantly strengthen our
on-site abilities with new ideas and engineering, and continue
sustainable development as an enterprise to help realize a sustainable
society•We will contribute to solving global issues such as climate change as amember of our global society•The most important issue is finding human resources in a businessenvironment where the labor population is decreasing. We hope tocontribute to a sustainable society by improving job satisfaction of morediversified employees•The management will continue to carry out these missions and enhance
governance through dialogue with the stake holders•Difficulties of securingdays-off due to a volume
of contracts and problems
addressing diversified
employee needs•Social needs and customer
demand for safety, quality,
environment, productivity and cost
are magnified and diversified•Communication difficulties among
generations and problems
regarding handing-down skills due
to overwork stress and lack of
mid-level workers in their 30s•Commoditized market structure of
the construction industry•Concern about supply due to lackof skilled workers and lowered
productivity, etc. under continuing
construction demands•Improvement of construction
production system through IoT,
innovation, etc. (Promote “Shinka”
x ICT)•Acceleration of qualitative changeof construction investment (Flowconsumption to stock
maintenance model andenvironmental needs)•Changing public needs(diversified the order system,
introduced private-sector initiative:
PPP/Concession business, etc.)•Risk of shrinking future market due
to depopulation and weakeconomic growth•Increased awareness of global
environment•Enhance problem-solving
skills•Regenerate a culture ofsafety•Restructure organization
along a customer
orientation and address
customer needs•Restructure headquartersfunctions (Enhancefunctions to develop
company-wide optimum
measures)•Create investment
opportunities for thesystematic innovation of
construction production•Utilize a newly affiliatedrenovation businesscompany and restructure
the wooden construction
business•Try to receive more orders
for PPP/Concession
business•Form partnerships withother companies andmaintain and expand
business scale throughM&A•Expand the needs ofclimate change mitigationand environmental
improvement•Lag in addressing socialand customer needs•Occurrence of industrial
and labor accidents (insafety, quality, etc.)•Insufficient communication
within workplaces due tooverwork stress and alack of mid-career
employees•Delayed measures foraffiliate companies•Lack of inhouse sources of
unique innovation•Delay in addressing stock
markets•Delay in addressingchanging public needs•Delay in enhancement ofconstruction business andthe diversification ofrevenue sources•Increasing risks of
disasters due to climatechange•Strengthen the corporate structure
to diversify revenue sources in realestate, global and new business,
etc.
•Expand businesses in emerging
South East and South Asia (ODA
centering on railways and road
construction, and high-risebuilding construction)•Acquire specialized HR•Increase of investment
capacity•Continuance of South Eastand South Asian countries
economic growth•Delay in securing andtraining human resources
with high level of expertise•Lost opportunities ofinvestment•Aggravated real estatemarket and volatileeconomy in South Eastand South Asia

•Risk management in construction,
real estate, global and new
business•Enhance sustainable corporate
value•Acquire specialized HR
and improve risk
management•Maintain high earning
capacity and enhancefinancial foundations•Appeal for non-financial
value•Failure of business risk
management•Delays in the improvementof business management
and in recruiting andhuman resource training•Lack of engagement withinvestors

Respective material issues are reflected in four basic policies of our management strategies (“Our Ideals”)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 20

Corporate Data

2

CSR Committee Deliberation

Environment

STEP•Measures against
climate change•Realize anenergy-saving society•Realize society inharmony with nature•Build a resource
recycling society•Reform the personnel
system•Promote work-style reform•Understand and address
employee needs•Address long working hours andsocial demands for work-stylereform•Dealing with reduction of
applicants for general contractors•Reduce global warming gases and promote resource andenergy conservation•Reduce and recycle construction by-products•Develop green engineering and create environmentally-friendly designs

To help realize the 17 SDGs promoted by the United Nations, after considering potential solutions through our businesses and theexpertise of the Group, we identified eight goals that, when achieved, will help solve issues through our business activities.

Basic Policy

Corporate Governance

Environment

Risk

Business Overview

Society•Contribute to urban development that ensures safe, secure andcomfortable living•Provide optimum construction solutions and create services•Improve efficiency of production processes through technological innovation

Opportunities

Enhance Domestic Construction Business•Provide worthwhile working workplaces for diverse people•Foster human resources who can contribute to society in a sustainable way•Develop a safe,
secure andcomfortable living
environment•Establish a society
with national resilience•Pursue the principle ofsafety first andimprove quality•Innovative change of
production process tocope with a reduced
productive population

Important Issues

Human •Diversified individuals in mind,
resources working practice and lifestyle

SocietyHuman
resources•Diversification andactive participation ofworkers and respectfor human rights•Improved working
environment and job
satisfaction

Category

Story of Value Creation

STEP

Social Issues

Enhance
Management and
Financial Foundations

Process of Identifying Materiality

Based on the results of discussions, we identified important issues to be prioritized by the group andconsidered both the opportunities and risks, which were reflected in four basic policies of ourmanagement strategies.

Challenges in
New BusinessDomains

Mid-Term Management Plan: Shinka 2020.

3

Identifying Materiality

Innovation of
Human Resources
and Organization

Company We Hope to Be in 2026, through our businesses, we are determined to deal with the social issues in the

STEP

Overview of Tokyu Construction

Identifying the Important Issues (Materiality) to Realize “Our Ideals for 2026—
The Company We Hope to Be in 2026”

“Our Ideals for 2026—The Company We Hope to Be in 2026”

We have defined four basic directions for our company by reflecting back on our history to date (including the lessons welearned during our growth period and as a result of management crises), analyzing the issues presented in the current internaland external environments, and considering the requirements of society and our shareholders. From these directions, we haveformulated “Our Ideals for 2026—The Company We Hope to Be in 2026,” looking toward the post-2020 period.
Our ideal vision of ourselves goes beyond our corporate vision as a general contractor that continues to embody Shinka. To
realize this vision, each member of the Tokyo Construction Group will strive to bolster their individual capabilities, make work
more rewarding, and engage in teamwork. Honing problem-solving skills as a result of these efforts, we intend to raise thecapabilities of the construction business in Japan, as well as to take on new challenges and succeed in new business domains.

We have in place the management and financial foundation to take on businessrisks and build a highly profitable business portfolio that does not rely solely on
the domestic construction business

Four
Basic
Policies

Bolstering individual capabilities and making work
more rewarding for each member of the Tokyu
Construction Group
Honing our problem-solving skills to ensure safety,
enhance quality, reduce environmental impact, boost
profitability and lower cost of sales
Taking on challenges and amassing achievements innew business domains

External
Environment• Requests for enhanced governance• Anticipation of ROE increase• Anticipation of ESG management

Market (supply and demand)
Supply• Domestic construction investment is gradually
reducing• Qualitative change from flow consumption to
stock maintenanceCorporate GovernanceFulfill requests and needs of society
and stakeholders

Business Overview

Shoring up our management and financial
foundations

Story of Value Creation

Based on a vibrant culture, we do our utmost to deliver true value and aim to bea corporate group that embraces change in the operating environment.

1
Construction
2 Domestic
Business
3 New Business Domains
Management and4 Financial
Foundations
Human Resources
and Organization

Overview of Tokyu Construction

Based on a vibrant culture, a corporategroup that delivers true value and embraceschange in the operating environment

Background and Purpose of “Our Ideals for 2026—The Company We Hope to Be in 2026”

DemandHuman resources and organization(Strengths / Weaknesses)

Internal
Environment

Strengths

Management and financial base
• Strengthen capital base to address future risks• Capacities and teamwork of employees• Steady increase of problem-solving skills

Weaknesses• Lack of specialized HR to take on challenges
in new domains• Training of future management personnel

Business (Strengths / Weaknesses)
Strengths• Reliability of Tokyu brand• Know-how and engineering of urban development• Priority customer base

Weaknesses• Dependent on domestic construction business• Lacking collective strength within Tokyu
Construction Group
21 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 22

Corporate Data

• Lack of skilled workers• Redress long working hours

Quantitative Targets of “Our Ideals for 2026—The Company We Hope to Be in 2026”

Basic Policies and Strategic Scenario of“Our Ideals for 2026—The Company We Hope to Be in 2026”

KPIs for the Realization of Goals

Four Basic Policies
Human Resources
and Organization

Domestic Construction
Business

Through work, employees findmeaning and their raisond’être, and a sense ofcontribution to society

By continuing to hone ourproblem-solving skills, we strive
to ensure safety, enhance quality,
reduce environmental impact,
boost profitability, and lower costof sales, providing better value tocustomers. In addition, by
preparing for growing needs andshowcasing our strengths, we
aim to achieve growth in theJapanese construction market

3

Taking on challenges andamassing achievements
in new business domains

While maintaining our core
construction business, we will
anticipate the changing times
as we take on challenges andgenerate achievements in avariety of business domains

4

Shoring up ourmanagement andfinancial foundations

Learning from past mistakes,
we will shore up ourmanagement and financial
foundations in preparation forchanges in the operating
environment. At the same time,
we will meet shareholder
expectations by steadily
increasing corporate value

Corporate
culturereform

Evaluation

Diversity

Enhance Domestic
Construction Business

Expand paprika
business
Create new
businesses

Businessdevelopments
in South andSoutheast Asia

¥150 billion
or moreEnhanceSecure risk
corecapital tolerance against
risky investment
assetsCompatibility
10% or more
High
ROE

Challenges in
New Business Domains

Enhancing Our Management
and Financial Foundations• The core competence of ourgroup is our human resources• Endeavor to reform
construction production
system (enhanced
productivity and use of ICT)
by improving problem-solving
skills• Promote overseas operations
in South East and South Asia
• In real estate business, obtainprofitable properties withstable yields expected tosecure stable profits• While reflecting on our pastoversights, we aim to improve
corporate governance as well
as strengthen the structure ofrisk management and ourcompliance system• Expand PPP/Concession andpaprika businesses that areless influenced by theshrinking domestic
construction market• Pursue an appropriate size ofcore capital that can respondto increased risks due tostronger and wider investment
operations• Early preparation ofseed-sowing to obtain new
business and create newvalue• By maintaining higher ROE
compared to the stockholders’capital costs, we will always
secure stockholders’ profits in
mid-term and long-term
periods• As a result, we will raise ourcore competencies to a levelof capability that othercompanies cannot easilyemulate• Focus on fields (renovations,mid-sized wooden
construction, etc.) withincreasing demands andadvantageous fields (such asrailroad construction)• Assertively pursue
opportunities, alliances, andM&A with other companies

23 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Customers
Society

E/S

Partnercompanies

Closed for 4 to
5 days / 4 weeks

Closed for 7 to
8 days / 4 weeks

Closed for
8 days / 4 weeks

Customersatisfaction (*3)

95%

100%

100%

Safety index (*4)

0.20

0.10 or less0.10 or less23.9 ton -CO2 / ¥0.1 billion(19% down)

23.2 ton -CO2 /¥0.1 billion

20.0 ton-CO2 /¥0.1 billion

6.7%

6.3%

7.0% or more (*6)¥320.7 billion¥312 billion¥350 billion
or more (*6)

22.2%

13% or more

10% or more (*6)

¥78.9 billion¥110 billion
or more¥150 billion
or more (*6)

Emission of CO2 (*5)

(FY 2014-16 average)

Consolidated operating
profit ratio
Consolidated sales
ROE

Enhancemanagement andfinancial baseG

Fiscal Year 2026

Measure the percentages of employees whose motivation is high enough to contribute to thecompany and society. At the same time, allow employees to appreciate a corporate culture
where they can exercise not only their abilities, but also realize comfortable working conditions

No. of days work sites
are closed (*2)

Consolidated core
capital(22% down)(32% down)

Investment plan

Sales, composition ratio, and operating profit ratio
Fiscal Year 2017

Enhancing Domestic
Construction Business• We will make work highly
rewarding by transforming ourinternal corporate culture in a
way that allows employees tofully leverage their capabilities

Employees

Employee engagement
survey (*1)

Fiscal Year 2020

Fiscal Year 2026

Consolidated sales¥320.7 billion

New business
areas
4%

Building
construction
61%

Civil
engineering
20%

Consolidated sales¥350 billion or more

New business
areas
8%

Civil
engineering
22%

Operating
Profit Ratio
Woodenbuilding
construction
2%

Building
renewal13%

7.0% or more
Woodenbuilding
construction
4%

Amount of total investment
Building
construction In principle, investment will be made with ourcore capital. We will discuss the optimal way of52%

raising funds by considering our management
and financial situation, market environment, etc.

Operating
Profit Ratio

6.7%

We plan to invest around ¥90 billion for the
coming nine years to realize Our Ideals for2026—the Company We Hope to Be
in 2026 in the fields of domestic construction
and new business areas as well as strengthening
our management base, organization and HR

Total ¥90 billion
Domestic construction business

Civil engineering and construction
businesses (including renovations andmid-sized wooden construction)

New business areas

Real-estate and PPP/Concession
businesses, and other new businesses(paprika business, etc.)

Building
renewal14%

Financial base, Organization and
Human resources
Employee training, ICT, etc.

¥17billion¥70

billion¥3

billionTOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 24

Corporate Data

Create higher
ROE exceeding
stockholders’costs

Innovation of Human Resources
and Organization• Enhance relationships as
business partners with clientsand partner companies

Enhance
problem-solving
skills to pursue
safety, quality,
environmental
issues, productivity
and cost control

S

Fiscal Year 2017

KPI

*1 We introduced a revised version of the employee awareness survey for the employees of our group including major affiliated companies and set up KPI target
values*2 Our target covers new work sites of Tokyu Construction (parent company) starting from FY 2018 (excluding the offices in which application is difficult)*3 Rate of customer satisfaction for Tokyu (parent company) in private sectors (answering “Yes, we are definitely happy to order / Yes, we can also order.”): Average
95% during FY 2014-16*4 Safety index of Tokyu (parent company): √ (Frequency rate x Strength rate)*5 Specific energy consumption (base unit) per construction sales of our parent company Tokyu (ton-Co2 / ¥0.1 billion) (The reduction rate is compared to that of our FY
1990.) The standard value of Tokyu (parent company) in FY 1990 is calculated based on the figures recorded in FY 1990 in the “CO2 Emission Survey Report” issued
by Nikkenren (Japan Federation of Construction Contractors)*6 Target value based on the main scenario

Business areas• We will improve humanresource (HR) training toenhance the capabilities ofevery employee as well asreform our HR system andworking practices

Improve abilities
and job satisfactionof every employee
in the Tokyu
Construction Group

TargetTake onchallenges in new
business areas forfruitful results

Resilienceto theChanging
Environment

Expand New BusinessDomains• Enhance problem-solving skills• Establish business partner relations• Focus on renovation, wooden andrailroad construction, etc.
• Seek opportunities for alliances and
M&A with other companies

Maximize
True Value

ESG

Corporate Governance

Innovation ofhuman resourcesand organization

Business domains

Bolstering
capability

Obtain real estate rental properties
to stabilize profits
Initiatives in the PPP/concession
business

Vital
CultureBasic Policy

Shareholder

Strategies for Realizing Our Vision
Work-stylereformOur Ideals

Business Overview

Core Competence2

Honing our problem-solving skills toensure safety, enhance quality,
reduce environmental impacts, boost
profitability and lower sales cost

Management and
Financial Foundations

Story of Value Creation

1

Bolstering individual capabilities
and making work more
rewarding for each member of
the Tokyu Construction GroupNew BusinessDomains

Overview of Tokyu Construction

We see employees’ efforts to bolster individual capabilities and make work more rewarding as core competencies. By
deploying these core competencies in line with our four basic directions, we will pursue Our Ideals for 2026—The
Company We Hope to Be in 2026 as we move forward with our strategies.

Tokyu Construction has set up indexes such as key performance indicators (KPIs) to link its basic policies and strategic
scenario to realize the “Our Ideals for 2026—The Company We Hope to Be in 2026.” Using this index, the progress towards
our visionary goal can be visualized.

1

Mid-Term Management Plan (2018–2020)

Shinka2020

Transforming Our Human Resources and Organization to
Elicit Employees’ Motivation and Capabilities

The crowning achievement of Shinka 2020, our
mid-term management plan for 2018-2020, ismeant to be our emergence as “a generalcontractor that continues to embody Shinka.” At
launch of “Our Ideals for 2026—The Company We“Development and utilizationof employee capabilities”

Hope to Be in 2026,” which looks toward thepost-2020 period.

Further improve capabilities of every
employee through the enforcement of Human
Resource Development (HRD)

By executing this plan, we will make full use of theenergy of our human resources and organization,
skills and ability to drive business forward.
Simultaneously, we will build the management andfinancial foundations enabling us to respond to any
change in the operating environment.

2026 Our Ideals for 2026—The Company We Hope to Be in 2026

2020

Basic Policies Regarding Our Ideals
1: Bolstering individual capabilities and making work more rewardingfor each member of the Tokyu Construction Group
2: Honing our problem-solving skills to ensure safety, enhancequality, reduce environmental impacts, boost profitability andlower sales cost
3: Taking on challenges and amassing achievements in new
business domains
4: Shoring up our management and financial foundations

Mid-Term Management Plan (2018 –2020)

Deepening and Evolving
in the Pursuit of Genuine
Value

25 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Shinka2020

Basic Policy of Shinka 2020
1: Transforming our human resources and organization to elicit
employees’ motivation and capabilities
2: Reinforcing the domestic construction business through acustomer orientation and problem-solving skills
3: Promoting the diversification of revenue sources by expanding
strategic businesses
4: Shoring up our management and financial foundations in supportof heightened profitability“Promotion of efficiency”

Promote awareness-raising activities
and seek essential operational
efficiency• Strengthen work site support division• Raise awareness of shorter working hours• Use of automation (AI and RPA), etc.

Increase the percentage of
employees who feel ourinternal corporate culture
strikes a balance between
motivating employees tocontribute to our company
and society and establishinga pleasant working
environment

Workstyle“Diversified working
system”
Create a more flexible system anddepend on employees volunteering tobring out their capabilities• Utilize flex-time and tele-working
systems, etc.
• Address diversified needs including childand nursing care, etc.

Corporate Data

Based on a vibrant culture, a
corporate group that delivers true
value and embraces change in theoperating environment

Employee
Engagement

Management

Recruiting

Visualize experiences and capabilities of
employees to improve HR allocation andenhance their ability to act strategically

Replenish the increasing number of retirement
workers, supply mid-carrier employees, andenhance recruitment for specialists• Monitor human resources• Make a plan to foster management successors• Carry out job duty changes smoothly if required,etc.

• Hire specialists for strategic businesses and risk
management• Secure industry-ready employees to enhancerevenue in domestic construction business, etc.
• Increase the total number of employees byaround 10 %, etc.

“Appropriate allocation ofhuman resources”

Corporate Governance

Efficiency

Business Overview• Foster human resources for future management in asystematic manner• One-year training of new college graduates (CE Division)• Foster employee awareness through 360-degree
assessment, coaching, etc

and strengthen and expand our problem-solving

Story of Value Creation

Development

the same time, we are handling, this period as the

Overview of Tokyu Construction

Tokyu Construction will become a company where employees can feel job satisfaction. To realize thisvision, we will improve our HR training system to develop the capabilities of every employee and reform ourpersonnel system and work practices to foster a corporate culture where people can fully realize theircapabilities.

“Securing staff throughenhanced recruitment”

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 26

2

Reinforcing the Domestic Construction Businessthrough a Customer Orientation and Problem-Solving Skills

Pursuing Five Elements through Our Problem-Solving Skills
By enhancing problem-solving skills, we pursue five objectives: carry out safety-first operation, realize the quality ofcustomer’s requests and demands, implement environment-friendly management, improve productivity, and reduce
costs. Our goal is to earn our stakeholders’ trust.

Measures corresponding
to the five elements

SafetyReorganization of branches in the Metropolitan
and East Japan areas

Executing sales strategies based ona customer orientation• Strengthen sales and cultivate priority customers
within our strong problem-solving skills• Establish a more trustworthy relationship based on
our construction work that will increase customer
satisfaction• Implement planned training of sales personnel

Company-wide efforts to increaseawareness of safety
Enhance employee training byhelping them acquire qualifications

Cost

Problem-Solving
SkillsFurther use of ICT, BIM and CIM

Environment

Further application of energy-efficientconstruction methods
Secure supply capacity incooperation with affiliates
Plan allocation of human resources

Productivity

Sales

Enhance supporting functions inwork sites
Promote effective use of resources

Business Overview

Prioritize developing productivity
enhancement technology
Use ISO to reduce quality-control
issues and environmental burden

Technology

Renovation BusinessMid-sized Wooden Construction Business

The renovation business was consolidated into ouraffiliate, TOKYU RENEWAL, which leads thedevelopment of the market as a member of our group

Focus on mid-sized wooden construction in anticipationof future growth and increased environmental needs

Construction sales trends
Wooden detached house construction

Creating structures and cultivating human resources
for each priority customer and field• Foresee market trends and promote TD beneficial to customers• Expand customer business through TD of shorter-term
construction• Establish a technical workforce who have a high level ofproposal-making abilities

New
construction
andafter-sales
service

Customer-centered perspective• Enhance relations with key customers and establish them as business partners• Implement reorganization focused on customer logic rather than company logic (both in sales and construction)

Strategy execution, driving force• Implement business strategies and measures, create a specialist organization, strengthen
planning function, and speed up decision-making

System development of renovation and mid-size wooden construction businesses• The Building Renewal Department was consolidated into TOKYU RENEWAL Co., Ltd.
• The detached houses/RF business, a shrinking market, will be made smaller to allocate HR to
the small-and-mid-sized wooden construction business incrementally

27 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

(Millions of yen)

Renovation

6,000

Construction sales

4,000
2,000
0

Planning
anddesignStrategic shift
Mid-sized wooden construction(Millions of yen)

From selectionof contractors
to contract

15,00010,0005,000
0• The Group's renovation—focused management resources wereconsolidated into our affiliate, TOKYU RENEWAL, which will
expand our business in close cooperation with the construction
division• Utilize both our construction technologies in large-scale,difficult projects and planning and design capabilities such as
interior work to obtain a new customer base includingcommercial facilities and hotels

Develop markets thanks to deregulation,
development of mixed structures, etc.

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

• Focus on nursery schools and care-service housing for theelderly. An advantage of wooden construction is that it can beutilized for the expected market expansion• Expand new and mid-career recruitment. Endeavor to solve
technological challenges step-by-step by looking ahead with amedium- to long-term perspective

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 28

Corporate Data

• Foster engineers with experience and qualifications specializedin customer relations, usage, and technology respectively• Motivate employees through training and accelerated
promotion of the younger generation• Utilize ICT positively and train employees to improve productivity

Promoting the development of technologies in
response to customer needs

Demands in detached house
construction are expected todecrease due to the declining
population and fewer families in
the future

Corporate Governance

A trinity providing
value tocustomers

Construction
work

Reorganization

Cost

Story of Value Creation• Civil Project East Japan Branch mainly handles
government and private civil engineering work
• Urban Development Branch mainly handles Tokyu
Group and private railway companies• Building Project Metropolitan Branch mainly handles
major developers• Building Project East Japan Branch mainly handles
government and private construction

Organizational
realignment aimed
at achieving athoroughcustomer
orientation

Quality

Safety Quality Environ- Producment
tivityOverview of Tokyu Construction

Tokyu Construction will reorganize to establish a system based on the customer’s perspective. For theenforcement and expansion of our business ability, we will keep strengthening problem-solving skills, securesafety and quality, decrease environmental burden, improve productivity, and work on cost-reduction.

3

Promoting the Diversification of Revenue Sources
by Expanding Strategic Businesses
PPP / Concession Business

Overview of Tokyu Construction

Tokyu Construction will diversify revenue sources focusing on the improvement of corporate value as wellas the development of overseas operations, real estate business, PPP/Concession business, andagricultural business (paprika business), etc. to prepare for the shrinking market in the future.

Focus on concession contracts of our company’s strengths in the following areas:[Business areas of focus] Waterworks and sewerage system and airport
StrategyOverseas Operations
Promotion of construction in South and Southeast Asia

[Areas of focus] ODA and high-rise building projects
Bangladesh

VietnamGovernance

MyanmarThailand

Strategy

HR and know-how / Governance• Participate in bidding, obtain know-how incooperation with SPCs and train employees• Prepare a guideline of SPC management toclarify our investment criterion anddecision-making process

Sendai International
AirportSingapore

Sewerage system,
Hamamatsu City

Indonesia

New Business (Including Paprika Business)

Acquire real estate to stabilize profits in the future

Stabilize the quality and volume of full-year pepper cultivationand expand market

LargeProfitableprojects(Less difficult)

Strategy

Major developers

Our business areas
Real-estate rental(office buildings, condominiums, etc.)
Control risks to secure higher yields than those ofother competitors

Private or operatingcompanies

Medium-to-small fund,new developers

Projects
requiringdevelopment(More difficult)

FY
2020

• In addition to our major area of real-estatebusiness (equivalent exchange, etc.), we
intend to focus on asset investments as areal-estate rental business• Obtain high-yield projects using our originalvalue-adding measures including “Town
Value-up Management”

Governance• Being aware of risk management, establish
new investment criteria and a monitoring
system
• Reorganize our company structure byrecruiting new staff members and using
their know-how

Step 1
Realize full-year
production

Strategy

Step 2
Expand the sizeof farms• Invest in new farmers to maintain full-year
cultivation and stabilize quality and volume
to achieve market expansion• Create an upgraded business plan byconsidering further market expansion after
the realization of full-year cultivation

HR and know-how / Governance• Aggressively recruit personnel withknowledge and accumulate core know-how
of management and cultivation• Establish investment criteria, set up adecision-making body, and carry out
monitoring

Small and medium sized

29 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 30

Corporate Data

Real Estate Business

J-REIT

Corporate Governance• Focusing on railways and road construction inexisting regions, shift operations to Vietnam,
Bangladesh and other countries• Enhance and enlarge our organizational
structure to obtain high-rise building contracts(for local blue-chip developers and private
construction work for leading Japanesecompanies)

Business Overview• Establish basic policies while identifying andvisualizing indicators for management andrisk control• Prepare a new order-receiving system aswell as risk-check and monitoring processes

Story of Value Creation• Our focus is on waterworks and seweragesystems in anticipation of our company’s
expansion and development through our
know-how in these fields• Another focus is on the airport concession
business in collaboration with Tokyu Group
companies

4

Shoring up Our Management and Financial
Foundations in Support of Heightened Profitability

Business operations of the Tokyu Group include not only the transportation business as a base but also a wide array ofbusiness operations such as real-estate, life service business, hotels and resorts that closely support the livelihood ofpeople.
Tokyu Construction, as a member of the group, takes part in large-sized redevelopment and railway constructions, etc.
in Shibuya and along Tokyu train lines. We are involved in various collaborative projects from the view of “Tokyu Town
Urban Development.”
We will endeavor to create a trusty brand loved by all stakeholders by enhancing collaboration with group companies as
one Tokyu from now on, and by continuing to create new value that caters to the needs of customers and society.

Tokyu Construction’s Role as a Member of
the Tokyu GroupStrengthening
corporate
governance,

Support earning
ability of respective
businesses.

each member based on the four business segments: transportation, real-estate, life service business, andhotel and resort segments. Tokyu Construction is identified as the real-estate business segment.

Ensuring thoroughcomplianceby conducting employee
education and cultivatingawarenessin response to changes in
the operating environment
and the expansion ofstrategic business

Provide railway and bus transport
services supporting the livelihoodof people along with the newdevelopment of airport
management services

Life Service
Business

Real EstateBusiness

Hotel andResortBusiness

Address any possible needs inreal estate by utilizing theaccumulation of know-how
cultivated by the development of
Tokyu Tama Den-en-toshi projectin areas surrounding Tokyu trainlines

We manage hotels and resort
facilities in Japan and abroad toprovide high-quality and refinedservices
We also develop and manage ski
resorts and golf courses
throughout Japan

Enrich Financial Foundation and Ensure Shareholder Returns
Secure investment capacities and enrich financial foundations to enhance risk tolerance

The size of core capital as of end of March 2018 ¥78.9 billion“Shinka 2020” Investment Plan
Domestic construction¥6.0 billion

Strategic business¥16.5 billion

Management foundation,organization and HR¥1.5 billion

Discuss flexible profit return based on
performance under the principle ofstable continuation“Shinka 2020” Dividend Policy
For the development of corporate
value, improve investment tolerance
during the mid-term period andfinancial health to secure risk
tolerance against investments

Target of core capital at the end of FY 2020 ¥110 billion or more

31 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

• Enhance retained profits for investment
aimed at increasing corporate value andfurther improvement of the financial
structure in preparation for mid-to-longterm risks• The target of the consolidated dividend
payout ratio is more than 20%. Perform
flexible profit returns based on
performance including the continuous
dividend payment and share buyback

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 32

Corporate Data

Our business includes all life
service businesses fromshopping, art, entertainment, andsports to energy, nursing care andchild care

Transportation
Business

Corporate GovernanceReinforcing
business risk
managementof end of March 2018). It continues to create new value by combining the diversified business functions ofBusiness Overview

supported by strategic
execution aimed at
appropriate management
and enhanced profitability

Tokyu Group is an enterprise group consisting of 220 companies and eight other incorporated bodies (asStory of Value Creation

Enhancing Our Management Foundation

Overview of Tokyu Construction

We aim to augment profitability through business development and diversify our sources of revenue. At thesame time, learning from past mistakes we will build sound corporate governance structures andframeworks. This system will maintain a record of return of equity (ROE) that exceeds shareholders’ equity
costs to seek for the improvement of corporate value and a strong financial structure that can cope with thechanging environment.

Working with the Tokyu Brand

Message from GM,
Business Administration Division
Investment Strategy

Director, Senior Executive Officer
General Manager, Business Administration Division

Total capital / Equity ratio

Net sales

Total capital(Millions of yen)

(Millions of yen)
400,000
300,000

262,815226,164

320,711 336,000

296,393

54,238100,000

20,0000

FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar.
2014
2015
2016
2017
2018
2019
(Forecast)

44,861

20.7

32.3

10

FYE Mar.
2014

FYE Mar.
2015

FYE Mar.
2016

Dividend per share / Payout ratio

Ordinary income(Millions of yen)

Dividend per share(yen)

25,00022,12819,76820,00013,34015,00010,0005,000

8,024
3,559 2,685

18,83913,691

16,118FYE Mar.
2017

FYE Mar.
2018

13,800

(%)
40

31
30

23.9
19.9

20
5,805

10

FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar.
2014
2015
2016
2017
2018
2019
(Forecast)0

Payout ratio40

20,00030
2035,258

Ordinary income / Net income
Profit attributable to owners of parent company

31.2

25.2

23.2

(%)
40

66,38060,000243,618

40,000033 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

79,17580,000200,000

0

Equity ratio

0

13

26

26

25

20.5
20.0

20.3

30

20.1

20
10

5

FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar. FYE Mar.
2014
2015
2016
2017
2018
2019

0

(Forecast)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 34

Corporate Data

In the “Our Ideals for 2026—The Company We Hope to
Be in 2026” and Mid-Term Management Plan 2018–2020“Shinka 2020,” Tokyu Construction reviewed our financial
strategy by setting up quantitative targets after
establishing the basic policies of enhancing ourmanagement and financial base.
The basic policies state that we need strategies toenhance our businesses and aim at growth. Securing thecore capital that can tolerate possible contingencies will
eliminate our investment risks and maintain financial
strength. In addition, by achieving higher ROE comparedto the shareholders’ capital costs, we can respond to ourshareholders’ mid-and-long term expectations.
We have set up key financial performance indicators(KPIs) as quantitative targets for FY 2026: 7.0% or morein consolidated operating profit, 350 billion yen inconsolidated sales, 10% or more in return of equity(ROE), and 150 billion yen in consolidated core capital.

Corporate GovernanceThe domestic construction market has been continuing
favorably thanks to active construction demands for the2020 Tokyo Olympic and Paralympic Games, solid public
and private investments, and stable construction costs.
Under these conditions, our Group carried out measuressmoothly to improve corporate value based on the“Mid-Term Management Plan (FY 2015–2017).”
Accordingly, our consolidated performance in thisterm resulted in 299.4 billion yen (up 2.0% year on year,
or Y/Y) in orders received and 320.7 billion yen (up31.6% Y/Y) in sales. In addition, our operating profit was
21.4 billion yen (up 24.4% Y/Y), and our recurring profit
was 22.1 billion yen (up 17.5% Y/Y), while profit
attributable to parent company shareholders was 16.1
billion yen (up 17.7% Y/Y).

Financial Strategies

At present, the capital adequacy ratio has exceeded
30%. But compared to the other semi-major generalcontractors of the same class it remains half or one thirdof their level. Our target in FY 2020 is over 110 billion yen,which we identified as inevitable, because we need more
funds for risk tolerance and financing needs that can
respond to new investment strategies.
ROE is at present at a 22% high partly because wehave less core capital. As we are not satisfied with thisvalue, hereafter, considering the mid-to-long term
perspective, the target of ROE will be around 13%
because we feel that it is our responsibility to ensure it
exceeds the shareholder’s equity cost.

Business Overview

Looking Back on the Fiscal Year
Ended March 31, 2018

Financial Base

Story of Value Creation

Masatoshi Shimizu

Overview of Tokyu Construction

Based on our mid- term management plan,we will invest in growth, strengthen our
financial foundations, and exercise thevitality of our human resources andorganization.

As a result of the experiences during our revitalization,
up to now, Tokyu Construction has not been able toinvest and plant seeds in the areas other than our corebusiness because we aggregated our resources
focusing on our core domestic construction to become ahealthy and independent corporation. However, we will
steadily continue investment in other areas aiming at“Our Ideals for 2026—The Company We Hope to Be in
2026.” We plan to invest 90 billion yen in total over nine
years for profit diversification and the development of ourcore business: 17 billion yen for domestic construction,
70 billion yen for new business areas and 3 billion yen forour organization and human resources.
To diversify our profits, while establishing our realestate business as a pillar thanks to our past record inparticular, we will also target the PPP/Concession
business and agricultural business.
To obtain stable profits, we will focus on ourreal-estate rental business. While there are many leading
real-estate companies, we will accelerate our activities tomake a difference by making use of technologies andknow-how of general contractors: for example,
value-added renovation work and the upgrade of thestructures and facilities of old buildings. Using the
network of the Tokyu Group, we will aim at market
expansion.
Regarding the PPP/Concession business andagricultural business, in which we are gradually building
up more business, we will carefully discuss possible
issues and details including risk factors for incremental
expansion.

As for the construction business, we will consider
M&A if required to expand operations in our blank areas(various industries, work projects) and surrounding areas(both up and down stream), as well as to increase ourshare of civil engineering projects.
Our organization and human resources, regarded as
our core competencies, are top agenda items in the
mid-term management plan. We intend to reform work
practices aiming at the compatibility of job satisfaction
and a pleasant working environment by not only
improving treatment, education and training of employees
but also organizing a favorable working environment.
We will flexibly consider investment resources basedon business size and the economic environment by
relying on our core capital as our foundation whileconsidering the acquisition of loan and corporate bonds.

Our Work-style Reform Measures

Corporate Governance

The main asset of general contractors is above all“human resources.” Tokyu Construction requires a higher
level of human resources because we believe that ouremployees' experience, use of technologies andcustomer connections will improve our company’scompetence.

Business Overview

Human Resources Strategy

their interviews.
In term of diversity, Tokyu Construction has 18 foreign
workers from China, Korea and other countries. We havealso exceeded minimum statutory employment rate fordisabled workers. However, we have only one female
manager, so we have not yet achieved the government
target.
We plan to employ around 20 percent of female
workers in our company, including on-site engineers.
Therefore, we must urgently develop a working
environment where they can continue their work. It is
important to address and support them during life stages
such as marriage and childbearing. In addition, the worksites need equipment and facilities for women, which
may be difficult to implement at small sites. We willcontinue discussions to find an optimum solution.
Lastly, regarding corporate governance, we
introduced a stock-based remuneration plan as atransparent and objective payment system to directors toincrease their awareness of contributions aimed at
improving mid-to-long term performance and maximizing
shareholder value. Combined with such efforts, we will
implement various measures to improve the quality of our
executive managers and the function of the Board of
Directors.

Story of Value Creation

Our policy is to maintain a payout ratio of 20% or more.
As mentioned previously, we plan to divide our equity
into investment for growth and internal reserves. Thistarget will be maintained throughout our mid-term
management plan. If, however, we can obtain
unexpected profits and cash flow at an earlier stage,
resulting in meeting the target level of core capital, we
will consider expeditious return to shareholders, including
share repurchasing.

of the Work Style Reform Law and the actions of theJapan Federation of Construction Contractors, we areurging our client corporations to understand the benefitsof trying to achieve a five-day work week even at worksites. This personnel system includes tele-working andflex time systems and an interval system, which allows
employees who work late on one day to arrive at work
late the following day. Not only office workers, but also
employees at work sites can use this system to achieve
work-life balance. In addition, we have a cafeteria plan
which supports employees’ self-development and offers
company benefits through the free use of various funds
to increase their motivation.
To develop human resources, we reviewed career
paths and rotation and upgraded a training program thisfiscal year. In particular, newcomer civil engineers cantake almost a year of training to acquire basic knowledge
as Tokyu Construction employees before being allocatedto a work site. This new program enjoys popularity
on-site as well.
In addition, we have been running a “Young
Generation Project” every year to make use of employee
flexibility and acting power to enhance in-house andexternal communication. They are given a chance todisseminate their performance externally. We feelsatisfied with the results because some applicants havemade impressive comments regarding this project at

Overview of Tokyu Construction

Return to Shareholders

According to surveys focusing on job satisfaction andwork environment among all industries, the constructionindustry is placed very high in terms of employee job
satisfaction, but the work environment remains low. I
recognize that this is due to longer working hours, worksite environments and supporting system issues.
We need to draw out our employees’ motivation andcapabilities by stimulating their desire to contribute tosociety and exercise their capabilities on the job bymaking their work environments more comfortable. Last
year, we reformed our personnel system, which included
a work role and promotion system, along with multilateralcareer paths as a framework. The aim is to establish asystem to help employees self evaluate to enable them toexercise their capabilities in a satisfying way. At present,
we are reviewing our employee engagement survey tomeasure job satisfaction and working conditions. This is
not merely an employee awareness survey. The purposeof the survey is to enable us to view our employees interms of KPIs.
We established the “Work Style Reform Department”
under the Business Administration Division to promotecompany-wide reform. We promoted company-wide
operational improvement trials with a new method for
reducing working hours while at the same time improving
productivity through technological advances including
the adoption of energy-saving methods, mechanization
and IT.

Work Environment, Human Resource
Development, Diversity and GovernanceFirst of all, most of the work sites are closed four days amonth. At present, engineers and technicians can take six
days off every four weeks. In line with the implementation

Themes of Human Resources Strategies
Business Strategy

Organization Strategy• Recruit mid-career personnel, encourage
growth of younger generation and effectively
involve seniors• Develop personnel for sales and construction
work from the customer perspective(customers, application, technologies, solutions)• Human resource allocation and development toenhance strategic businesses (such as
international and PPP businesses)• Enhance customer relations throughreorganization focused on customer logic,
both in sales and construction work
• Enhance functions of planning and risk
management to improve employee abilities
to promote business and execute strategies• Increase operational efficiency byeliminating overlapping functions

Corporate Data

Responding to Changing Work Environment• Upper limit on overtime with a penalty
clause based on the revised Labor
Standards Act• Rapid development of work-style reforms
and concerns about employee outflow• Increased competition in recruitment due toa reduction in the workforce

Human Resource Planning 2018-2026
Predict Current
Personnel Trends

Calculate Required
No. of Personnel

Guideline for Planning In-house
Transfer and Recruitment

Reorganization of Environment

Recruitment Activity

Transfer and Allocation

Development of Human Resources

Personnel Evaluation• Reform our corporate structure
and organizational climate toredress long working hours• Prepare a work environmentthat will lead to improved
operational efficiency and job
satisfaction• Recruit more specialists to
execute strategies• Allocate HR systematicallyto focused areas andrequired operations• Select and train potential
management successors
who can executestrategies• Support HR training topromptly develop workers’
on-site abilities andtransfer job duties
smoothly• Realize a new humanresource system andoperate a convincing andsatisfying system of
personnel evaluation

35 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 36

Civil Engineering Business
Key Endeavors

The Current Reality and the Task Ahead

Completed construction sales

Completed construction gross profit(Millions of yen)(%)

80,00069,84564,6269.9

60,00073,863

12

9.7
9

8.4

6

20,0003

0

FYE Mar. 2016

FYE Mar. 2017

FYE Mar. 2018

3D CAD training for new employees

Solo surveying using ICT

0

Based on our “Our Ideals for 2026—The Company We Hope to Be in 2026” and “Mid-Term Management Plan,” we will endeavor
to strengthen structures in the civil engineering division and increase market competitiveness with a focus on making changes inhuman resourcing and organizational structure as well as ensuring we can better adapt to environmental changes. Our priority
endeavors will focus on three themes: enhancing problem-solving skills to find and solve problems, improving domestic
construction operations, and taking on challenges in new domains. We will strive to develop leaders, improve business
operations, increase productivity using ICT and labor-saving methods, and expand overseas operations.

Enhancingproblem-solving
skills• Safety, quality, environmental friendliness, productivity, and lowered costs from the customer’s perspective• Continuous operational improvement and further increase of productivity• Structures to increase employee satisfaction and 10-month training for new college graduates• Co-creation with partner companies (training technicians, employment support, etc.)

Improving
domestic
construction
operations• Continue select orders (emphasis on acquisition of experience and construction systems useful for the future)• Focus on railways (strength-focused expansion in this area)• Focus on general private and government construction (establish branches across a wider area)

Taking on
challenges in
new domains• Intentionally pursuing collaborative work and mergers and acquisitions• Strategic emphasis on PPP/concessions and CM, etc.
• Enhance and expand overseas operations

New employees learning how toassemble scaffolding

Checking a 3D model using a tablet

Corporate Data

Basic Policies and Key Measures

37 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

The construction industry is facing a serious shortage ofskilled workers and engineers, demanding drastic measures
be taken to ensure future capabilities. In this division, we will
not only seek to secure workers, but also to promoteendeavors such as continuous operational improvement,
use of ICT and labor-saving methods, and work-style reform
in a unified manner to solve this issue by improving
productivity across our entire organization.
Our stance regarding improving operations is based on
the motto “do all things thoroughly” which expresses ourcommitment to being aware of and acting on “doing
absolutely everything we ought to do” in the pursuit of safety
and quality; the fundamental values of civil engineering. We
are already seeing steady results from this commitment.
Furthermore, our focus for ICT and labor-saving methods is
not only on developing and using this technology but also on
developing human resources who can effectively utilize it. In
doing so, we continue to work towards our goal of increased
productivity - including improved systems and waste
reduction.
In addition, our efforts to create a comfortable working
environment include striving to implement work-style reformby reducing overtime, shortening working hours, and closing
construction sites for six days every four weeks.

Major Construction Achievements (Completed in 2017)
Atsugi-Minami Interchange on the
Shin-Tomei Expressway

The 2nd tunnel on the Yugashimasection of the Amagi-Kita Road

Oimachi Line transport capacity
enhancement plan

Approximately 1,213 m of extension work on theinterchange, including construction of bridge
supports. Due to soft ground, major ground
improvement work was required

Tunnel on the Amagi-Kita Road, part of the
Izu-Jukan Expressway, a high-standard arterial
road

Expansion of the platforms at Hatanodai andJiyugaoka stations based on the plan to upgrade
the Tokyu Oimachi Line from a 6-car to a 7-car
line(for NEXCO Nakanihon)(for the MLIT)

Corporate Governance

40,000

While domestic construction demand remains strong, wehave experienced a chronic shortage of engineers in relation
to construction volume, resulting in early assignment of new
employees and an on-the-job approach to human resource
training. However, it is difficult to train new staff on-site when
operations are extremely busy. We are now aware that thisapproach has resulted in new employees taking longer tolearn the basics of their job and has been a burden to
on-site operations. In response, we have created a systemthat provides new employees with 10 months of training at
headquarters.
This training will teach employees to think like a customer
and work in a way that prioritizes safety, quality, processes,
and cost prior to being assigned to an on-site position. As
well as developing staff who can identify issues themselves
and strive to improve on-site operations, we also expect thisprogram will help foster growth towards leadership.
Senior staff will be assisting new employees as training
support staff. Passing on the valuable experiences andknowledge accumulated throughout the history of Tokyu
Construction to the people who will carry our company into
the future will increase business capacity in the civilengineering division. We also expect to see benefits inmotivating senior staff members.

Business Overview

Orders in 2017 increased by 16.9% against the previous year
due to an increase in orders from private and government
domestic agencies as well as from overseas. The profitability
at the time of domestic orders continues to improve acrossall areas. Regarding completed construction sales, while wehave seen a decrease in domestic government projects,
trends remain steady due to an increase in overseas anddomestic projects in the private sector.
Regarding the post-2020 market environment, as there isconcern that shrinking demand will lead to intensifiedcompetition among semi-major and mid-sized generalcontractors, we will need to demonstrate competitive ability
in a way that makes the most of our strengths. Furthermore,
we see the development of human resources as
indispensable for new growth in the civil engineering divisionand recognize that work-style reform, increased productivity,and expansion into new areas of business are also key
issues to address.

Completed construction sales / Completed construction gross profit

Working Together on Various
2 Initiatives
to Increase Productivity

Story of Value Creation

Yushi Tsukui

Director, Senior Executive Officer
General Manager, Civil Engineering Division

Work More Rewarding and Cultivating
1 Making
the Human Resources of the Future

Overview of Tokyu Construction

We aim to expand the potential for new growth byaugmenting the capabilities of new and senior
employees alike, achieving persistent business
improvements, and raising productivity through ICT
and other efforts.

(for Tokyu Corporation)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 38

Building Construction Business
Key Endeavors
Aligning Our Organization along a Customer

Completed construction sales / Completed construction gross profit
Completed construction sales

Completed construction gross profit(Millions of yen)

(%)
13.2

236,898
11.6

221,87011.0

10160,890

5FYE Mar. 2016

FYE Mar. 2017

FYE Mar. 2018

Use of MR*1 Technology On-Site
We are developing a cutting-edge system that uses Microsoft
HoloLens mixed reality goggles to help workers check thearrangement of parts and equipment on-site to actual scale.
Workers can easily check for inconsistencies between theactual site and drawings improving quality and saving
labor. We expect thistechnology to be useful inmaintenance and managementin the future, resulting inincreased convenience forcustomers.
Using Microsoft HoloLens to understanddrawing information

Innovative Construction Simulation Using BIM*2“FLIGHT OF DREAMS,” is a groundbreaking commercial
complex centered around the exhibition of the first Boeing 787.
This was the first construction project to display an aircraft
inside a building and we used BIM construction simulation inorder to build a high-quality building.

0*1 MR : Mixed Reality*2 BIM : Building Information Modeling

Enhanced
operations witha customer
perspective• Enhance upstream sales through organizational integration (proposals, cost planning, design andconstruction, collaboration with architectural design offices)• Training sales and construction personnel to suit customer needs and increasing engineering capabilities

Increased
problem-solving
skills• Continued pursuit of safety, quality, environmentally-friendliness, efficient processes, and lowered costs• Enhanced structures to support work sites (start-up and project-specific support)• Company-wide optimization simulation of intentional orders and staff allocation• Wider use of labor-saving methods

Taking on
challenges in
new domains• Focus on renovations and medium-scale woodwork• Enhance and expand human and technical support of international operations, including business know-how

39 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Corporate Data

Basic Policies and Key Measures
The Building Construction Division is working towards enhanced operations with a customer perspective and increased
problem-solving skills to build a steady customer base as we strive to become a corporate group resilient in the face ofenvironmental change—part of our “Our Ideals for 2026—The Company We Hope to Be in 2026.” In addition to expanding our scopefrom the flow consumption model to the stock maintenance model, we are expanding operations in renovations, medium-scale
woodwork, and promoting international business support; areas in which market growth is forecast for the near future.

Corporate Governance

100,000

0

We actively use ICT not only to add innovation to businessprocesses but also to offer new value to our customers. The
following are two key achievements attained by using ICT:Business Overview

15300,000

200,000

In this division, we aim to become a trusted partner of ourcustomers by striving to think like they do and offer
proposals and services suited to our customers. As aresult, we believe we will be able to ensure we arereceiving orders on a regular basis and with this in mind,
we implemented organizational reforms in April of this yearthat allow us to provide service solutions in a more
integrated manner.
One of these reforms focused on enhancing
organizational integration of sales and construction andupstream sales. We integrated the sales and construction
divisions, which were previously split vertically, and willcontinue to work toward a company-wide focus on
customer satisfaction and optimizing orders and staff
allocation. We will also strive to increase customer
satisfaction through an integrated upstream sales processfrom proposal to cost planning, design and construction,and collaboration with partner companies.
Another way we will do this is by establishing a site
support team. In response to a chronic shortage of on-site
manpower, we dispatch support teams to help withpreparation of drawings, etc. at the start of a construction
project when under-staffing is usually at its worst. We strive
to remain flexible in our response to fluctuating work siteneeds by sending concentrated human resources as
required to increase efficiency and productivity.

Story of Value Creation

Motoyuki Takagi

Thanks to a good market environment in 2017, orders andprofitability at the time of order remained high. While orders
from Tokyu Group companies and domestic government
agencies increased, there was an overall decrease of 2.1%
due to a decline in orders from the domestic private sector.
Completed construction sales increased by 76 billion yen
versus the previous year due to progress in large-scaleconstruction projects. Regarding profit, we achieved ourhighest profit thus far due to settling construction costs andother factors.
We are expecting a harsher market environment
post-2020, so this year, we have implemented organizationalchanges to integrate operations with the aim of establishing acustomer base that is not influenced by economic
fluctuations and price competition. Alongside these changes,
we will further improve productivity by optimizing
construction plans to include staff allocation and actively
implementing labor-saving methods in construction, etc.

of Technology That
2 Development
Offers New Value to Customers

of Sales, Construction, and Other Personnel

Director, Senior Managing Executive Officer
General Manager, Building Construction Division

The Current Reality and the Task Ahead

1 Orientation by Creating an Integrated Team

Overview of Tokyu Construction

By adopting a customer-oriented way of thinking,strengthening our human resources and organization, andleveraging ICT and labor-saving construction methods,
we will create a business foundation capable ofembracing changes in the operating environment.

Major Construction Achievements (Completed in 2017)
Wakayama Local National
Government Building (MLIT)

Rocker Enlisted ClubGLP Nagareyama

Public project involving construction of over
20,000 m2 of government buildings. This project
was rated as a IV on the general building project
difficulty scale - the highest level - but we wereawarded a top score upon completion

Extremely complex construction project thatprioritized US architectural design. Our client
was impressed with our comprehensive use ofcompany technological capabilities

We intentionally made use of labor-saving
methods to improve productivity. In particular, it
was our first attempt at roll matting and we wereable to learn new techniques that we can apply
in future projects(JED)(Nagareyama I Logistics SPC)TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 40

Strengths we discovered through this project

INTERVIEW

Bringing Civil Engineering and Construction together
to Carry Out Complex Jobs

SHIBUYA STREAM
Project
Shibuya Urban Renewal From 2008 SHIBUYA STREAM opened in September 2018,
following on from Shibuya Hikarie in 2012.
We’re using our construction skills totruly make Shibuya the “No.1 must-see
destination in Japan.”

Intricate Process Management and Doing Our
Utmost to Ensure Safety

I oversaw the Shibuya Station South District worksite for this project for over 5 years. This project
felt like a jigsaw puzzle in which civil engineeringand construction pieces were put together one
by one to eventually form a whole.
One of the strengths we gained from thisproject is that we now know the Shibuya area
extremely well. Another is that we are continuing
our work with Tokyu Corporation. We believe thisaccumulated experience and know-how isresulting in sound production that includes
ongoing management such as maintenance andrenovations as well as building construction.

TOPICS

Business Overview

This project involves construction in one of the most population-denseareas of Japan, therefore demanding thorough process management. We
have been careful to maintain close relationships throughout the project as
it involves nearby residents, railroads, expressways, and a river. More thananything, we are doing our utmost to maintain good communication withthe local community by offering informative public events, etc. Thanks tothese efforts we gained much support from the local community and there
have been very few complaints throughout the project. We also posted
three times more safety officers and security guards than usual to do ourutmost to ensure the areas around work sites were safe.

Building Summary• Opened: September 2018
• Owned by: Tokyu Corporation, land owners in town areas
adjacent to the Toyoko Line• Construction site: 3-21-3, Shibuya, Shibuya-ku, Tokyo• Deferred floor space: Approx. 116,000 m2• Number of floors: 35 stories above the ground and 4 stories
underground• Height: Approx. 180 m

Toyohisa Fujihira

Project Manager

Story of Value Creation

This project is unique in that it is a large-scale development project
including both civil engineering and construction work. First, we carried out
land readjustments such as widening roads and replacing bridges, thenbegan simultaneous civil engineering and construction of high-risebuildings and repairs to the Shibuya River revetment, etc. Although thenatures of civil engineering and construction are quite different, these twoprocesses were carried out as one and the insight and know-how weaccumulated through years of experience enabled us to collaboratesmoothly to manage processes and work towards the completion of an
extremely difficult project.

Interview with
the Head of Project

Overview of Tokyu Construction

Highlight
Shibuya Station
South District
Building Construction Division

Women’s-only Rest Area: South Town Station

Tokyu Construction continues to contribute to creating value that will lead Shibuya into the future through construction of landmark buildingssuch as SHIBUYA109 and involvement as a general contractor in Shibuya; taking on a leading role in annual large-scale projects.
1960s −
Shibuya
Redevelopment

1989
Bunkamura

2000
SHIBUYAMARK CITY

2008 −
Major construction around
Shibuya Station

2019
Shibuya Station District East Tower(SHIBUYA SCRAMBLE SQUARE)

2020
Ginza Line Shibuya Station
renovations

2008
1999
QFRONT

2001
Cerulean Tower

2012
Shibuya
Hikarie

2018
Shibuya Station South District(SHIBUYA STREAM)

2027

2020
Tokyo Olympic and Paralympic Games

Creating a new sense of charm in
Shibuya Station South District
The Shibuya Station South District Project aims to gounderground and redevelop the now unused Tokyu
Toyoko Line Shibuya Station platform, track, andsurrounding area. With construction of a new building,
SHIBUYA STREAM, and public and private collaboration
to recreate Shibuya River and its surroundings, the south
side of Shibuya Station is set to become a thriving areathat will attract creative workers after long being
separated by the Metropolitan Expressway No. 3
Shibuya Route and National Route 246.

41 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Corporate Data

1979
SHIBUYA109

2020

2027
Expected to becomplete

As part of our efforts to support the success of our female engineers and technicians
during construction of SHIBUYA STREAM, we set up a top-standard women's-onlyrest area on-site called the “South Town Station.”
Usually on-site rest areas only include basic amenities such as bathrooms andfold-up tables and desks, but as this site was in Shibuya, this facility also included
showers and an area where women could do their makeup so that our female staff
could dress themselves up and head off to enjoy a night out after work.
We want to make the most of our experience on this project and work with ourpartner companies to plan and implement all sorts of improvement proposals to
respond to the many issues the construction industry will continue to face in the future.

Corporate Governance

Overall Roadmap for Redevelopment of Shibuya Station Area Projects

The concept behind SHIBUYA STREAM

Person and river and time go by“Sacred place for creative workers”

This is how we currently envision the project to turn out and this design may be subject to change.

©TOKYU CORPORATIONCREATIVE
WORKERSCreating a work environment perfectfor creatives.

NEW
STREAM

Refining the pedestrian network tocreate a new flow of foot traffic.

UNIQUEENVIRONMENT

Carrying out large-scale projects with anawareness of the need to collaborate

Redesigning Shibuya River to create aunique and attractive city environment.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 42

International Business

By leveraging our characteristics and strengths asa general contractor, we will contribute towardachieving the results of the mid-term management
plan by focusing on the growing real estatebusiness.

As a strategy to diversify revenue sources, wewill work to shift human resources from Japan,
buttress our foundation, and accelerate
growth.
Shigehiko Shibusawa

Junichi Omuro(2) Develop an information network(3) Maximize profits of the existing real estate properties(4) Carry on an appropriate portfolio strategy
In addition to using our strengths, improving know-how,and securing asset management experts, we will invest
human resources into rental business to attain our mid-termplan target by aggressively exchanging information withother real-estate divisions of the group.
In FY 2018, thanks to collaboration with the group, we
have more and more property information coming in whichallowed us to acquire properties in front of the stations
along the Tokyu Railway Line. We are determined tocontinue such operations with our group synergy.

Major Achievements (Recent Properties Obtained)

BeforeCrescent Hills Minami Aoyama (Conversion office)(Obtained in Dec. 2017/ Minami-Aoyama, Minato-ku)

43 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Basic Policies and Key Measures
In FY 2018 we will develop human resources for theirbusiness and language skills as well as cross-culturalcommunication skill through on-site practices to preparethem for transfer overseas. Our business growth will be
accelerated based on this kind of HR development along

Key Endeavors(1) ODA projects: Secure railway and road construction
achievements and expand markets(2) Private sector projects: Expand the rate of
non-Japanese projects(3) High-rise building projects: Select orders andstrengthen our system

Recent Major Construction Projects

After

Sendagaya Oka Sekkei Bldg. (Conversion office)(Purchased in Nov. 2016/Sendagaya, Shibuya-ku)

Activities of the Tokyu Group

Shogetsu Kashima Bldg.
(Purchased in May
2018/Tsunashima-higashi,
Kohoku-ku, Yokohama)

Jakarta MRT System(Indonesia)

New Thaketa Bridge, Yangon City
(Myanmar)Management support for Tokyu Groupof Asia Junior Succor Festival in Singapore

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 44

Corporate Data

We intend to focus on office buildings and commercial
facilities as well as rental apartments. We will aggressively
obtain real estate properties on the premise of long-termholdings.
Using our strength as a general contractor and amember of the Tokyu Group focusing on the business
operations in Shibuya and along the Tokyu Railway Line,
we can enhance profitability and obtain chances topurchase difficult properties over our competitors.

(1) Secure and develop skilled workers to obtain realestate properties

Our international business is one of our strategical pillars
for profit diversification in the mid-term management plan.
Tokyu Construction has opened offices in six cities inSoutheast and South Asia so far. We also created local
corporations in Bangkok, Jakarta, and Yangon to develop
infrastructure such as railways and roads funded by ODA
along with investing in private-sector construction offactories and serviced apartments. We are also constructing high-rise buildings and exporting used railway cars tothese regions from Japan. This is our first challenging
experience to do business with different cultures andcustomers involving new project size, contents, and formsof contracts, etc.
We will need to accumulate further know-how, develop asystem, and establish management and risk controls. Firstof all, we must secure and train expert personnel at theearliest stage in spite of our busy domestic business
responsibilities.

with strengthened corporate governance.
The markets in Southeast and South Asia constantly
offer attractive projects through the construction ofhigh-rise buildings such as offices, condominiums, hotels;
development of large industrial sites, transportation, andlifelines; improvement of schools, hospitals, production
facilities, international airports and ports; and energy
development. We expect to stimulate private-sector
demands by increasing public work projects funded by
ODA. On the other hand, we need to carefully select areas
because each developing area has its own respective
social and economic development stage. We will need tochoose projects where we can exercise our strength byconcentrating on our competitive fields while balancing
ODA infrastructure construction with private-sector
investment.

Corporate Governance

Basic Policies and Key Measures

Key Endeavors

The Current Reality and the Task Ahead

Business Overview

In the domestic real estate market, the “Triple low status
paradigm continues: The investment yield is low, theincreasing rate of office rental fees is low, and the market
distribution against demands is low.” With the maturing of
the market, we anticipate that prices will remain high.
This April Tokyu Construction initiated our mid-term
management plan in which we established the Real Estate
Division situating real estate as one of our strategicalbusinesses for profit diversification. Our aim is to expand
our business through our new investment criteria and the
newly established management system. But the market ishighly competitive and lowered yields will be inevitable. We
feel that our investment must be focused on the lesscompetitive and higher yield areas.

For example, we obtained some properties in FY 2016,
and renovated them for earthquake reinforcement and forlegal compliance to make small offices. On the premise of
mid-and-long term rental business operations we will use
our strengths to continue managing these kinds of rental
offices.

Story of Value Creation

Executive Officer
General Manager, International Division

General Manager, Real Estate Division

The Current Reality and the Task Ahead

Overview of Tokyu Construction

Real Estate BusinessBoard of Directors(As of June 28, 2018)

Overview of Tokyu Construction
Story of Value Creation

Mitsuhiro Terada

Hiroshi Otsuka

Yutaka Kubota

Masao Tomoe

Representative Director,
Chairman

Representative Director,
President

Representative Director,
Senior Executive Vice President

Outside Director

Outside Director

Outside Director

Apr. 1971 Joined Tokyu Construction Co., Ltd.
Oct. 2003 Executive Officer of the Company
Jun. 2004 Senior Executive Officer of theCompany
Jun. 2006 Director, Senior Executive Officer of
the Company
Apr. 2008 General Manager, Civil Engineering
Division of the Company
Jun. 2009 Representative Director, Senior
Managing Executive Officer of theCompany
Apr. 2010 Representative Director, President of
the Company
Jun. 2018 Representative Director, Chairman of
the Company (to present)

Apr. 1974 Joined Tokyu Corporation (“Tokyu”)
Jun. 2007 Director of Tokyu
Jun. 2008 Managing Executive Director of
Tokyu
Apr. 2011 Senior Managing Executive Directorof Tokyu
Apr. 2014 Representative Director & Vice
President of Tokyu
Jun. 2015 Representative Director, Senior
Executive Vice President of Tokyu
Apr. 2018 Counselor of the Company
Jun. 2018 Representative Director, President of
the Company (to present)

Apr. 1979 Joined Tokyu Construction Co., Ltd.
Jun. 2010 Executive Officer of the Company
Apr. 2012 Senior Executive Officer of theCompany
Jun. 2012 Director, Senior Executive Officer of
the Company
Apr. 2013 General Manager, Civil Engineering
Division of the Company
Apr. 2016 Director, Senior Managing Executive
Officer of the Company
Apr. 2018 Representative Director, Senior
Executive Vice President of theCompany (to present)
In charge of overseeing theCompany’s overall business, Safety& Environment Department, andInternational Department of theCompany (to present)

Motoyuki Takagi

Masatoshi Shimizu

Representative Director,
Senior Executive Vice President

Director,
Senior Managing Executive Officer

Director,
Senior Executive Officer

Apr. 1974 Joined Tokyu Construction Co., Ltd.
Jun. 2005 Director, Executive Officer of theCompany
Jun. 2008 Executive Officer of the Company
Apr. 2011 Senior Executive Officer of theCompany
Jun. 2012 Representative Director, Senior
Executive Officer of the Company
Apr. 2013 General Manager, Sales & Marketing
Division of the Company
Apr. 2014 Representative Director, Senior
Managing Executive Officer of theCompany
Apr. 2018 In charge of Sales & Real Estate
Division of the Company (to present)
Jun. 2018 Representative Director, Senior
Executive Vice President of theCompany (to present)

Apr. 1979 Joined Tokyu Construction Co., Ltd.
Apr. 2011 Executive Officer of the Company
Apr. 2016 Senior Executive Officer of theCompany
General Manager, Building
Construction Division of theCompany
Jun. 2016 Director, Senior Executive Officer of
the Company
Apr. 2018 General Manager, Building
Construction Division, in charge ofInstitute of Technology and Wooden
Building Construction Division of theCompany (to present)
Jun. 2018 Director, Senior Managing Executive
Officer of the Company (to present)

45 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Apr. 1982 Joined Tokyu Construction Co., Ltd.
Apr. 2012 Executive Officer of the Company
Apr. 2017 Senior Executive Officer of theCompany
General Manager, Business
Administration Division of theCompany (to present)
Jun. 2017 Director, Senior Executive Officer of
the Company (to present)

Yushi Tsukui
Director, Senior Executive Officer
Apr. 1981 Joined Tokyu Construction Co., Ltd.
Apr. 2013 General Manager, Project
Engineering Department, Civil
Engineering Division of the Company
Apr. 2015 Executive Officer of the Company
General Manager, Osaka Branch of
the Company
Apr. 2018 Senior Executive Officer of theCompany
General Manager, Civil Engineering
Division of the Company (to present)
Jun. 2018 Director, Senior Executive Officer of
the Company (to present)

Apr. 1970 Joined Sagami Railway Co., Ltd.
(“Sagami”)
Jun. 1998 Director of Sagami
May 2000 Representative Director, President ofSotetsu Real Estate Co., Ltd.
Nov. 2000 Representative Director, President ofSotetsu Home Co., Ltd.
Mar. 2001 Representative Director, President ofSotetsu Real Estate Sales Co., Ltd.
Jun. 2002 Managing Director of Sagami
Jun. 2011 Representative Director, President ofSotetsu Construction Co., Ltd.
Jun. 2015 Director of the Company (to present)

Apr. 1976 Joined Tokyu Corporation (“Tokyu”)
Jun. 2007 Director of Tokyu
Apr. 2011 Managing Executive Director of Tokyu
Apr. 2014 Senior Managing Executive Directorof Tokyu
Jul. 2014 Executive General Manager of
Human Resources Headquaters of
Tokyu
Jun. 2015 Director & Senior Managing
Executive Officer of Tokyu
Apr. 2017 Representative Director & Vice
President of Tokyu (to present)
Jun. 2018 Director of the Company (to present)

Atsuyoshi Maeno

Satoshi Hashimoto

Isao Onda

Full-time Auditor

Full-time Auditor

Auditor

Apr. 1980 Joined Tokyu Construction Co., Ltd.
Oct. 2003 General Manager, General Affairs
Department of Nagoya Branch, WideArea Division and Manager, Safety,
Environment & Quality Departmentof the Company
Jan. 2009 Auditor and Head of Secretariat of
the Company
Jun. 2012 Full-time Auditor of the Company (topresent)

Youichi Saito
Auditor
Oct. 2005 Passed National Bar Examination
Sep. 2007 Completed training of legal
apprenticeship and registered as
attorney
Member of Crime Victim Support
Center of Daini Tokyo Bar
Association
Sep. 2015 Member of Discipline Committee of
Daini Tokyo Bar Association (topresent)
Apr. 2016 Member of Legal Apprenticeship
Committee of Daini Tokyo Bar
Association (to present)
Jun. 2016 Auditor of the Company (to present)

Apr. 1981 Joined Tokyu Construction Co., Ltd.
Apr. 2010 General Manager, Internal Control
Office of the Company
Apr. 2012 Executive Officer of the Company
Jun. 2016 Full-time Auditor of the Company (topresent)

Yoshikazu Kato
Auditor
Apr. 1982 Joined the Science and Technology
Agency, Cabinet Office
Jul. 2001 Director of Research Environment
and Industrial Cooperation Division,
Research Promotion Bureau, Ministryof Education, Culture, Sports,
Science and Technology (“MEXT”)
Jul. 2008 Counselor to Director General for
Science, Technology and Innovation
Policy, Cabinet Office
Jul. 2010 Deputy Director-General, Researchand Development Bureau, MEXT
Apr. 2012 Vice President of Japan Aerospace
Exploration Agency
Apr. 2015 Director of Technology Division,
Cabinet Satellite Intelligence Center,
Cabinet Intelligence and Research
Office, Cabinet Secretariat
Nov. 2017 Specially Appointed Counselor,
Remote Sensing Technology Centerof Japan (to present)
Jun. 2018 Auditor of the Company (to present)

Oct. 1973 Passed second stage examination of
CPA examination
Joined EIKO Accounting Corporation
Sep. 1977 Registered as Certified Public
Accountant
Dec. 1977 Registered as Certified Tax
Accountant
Jul. 1990 Partner of Century Audit Corporation(“Century”)
Jun. 1993 Director of Century
Jun. 2002 Executive Director of Ernst & Young
ShinNihon Audit Corporation
Sep. 2008 Executive Director of Ernst & Young
ShinNihon LLC (“EY ShinNihon”)
Sep. 2010 Advisor of EY ShinNihon
Apr. 2011 Representative Director, President &CEO of GTM Research Institute Inc.
Jun. 2012 Auditor of the Company (to present)
Dec. 2015 Representative Director, President of
GTM Research Institute Inc. (topresent)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 46

Corporate Data

Kazushige Asano

Apr. 1958 Joined Keisei Electric Railway Co.,
Ltd. (“Keisei”)
Jun. 1992 Managing Director of Keisei
Jun. 1995 Senior Managing Director of Keisei
Jun. 1996 Representative Director, Senior
Managing Director of Keisei
Jun. 1997 Representative Director, Vice
President of Keisei
Jun. 1998 Representative Director, President of Keisei
Jun. 2004 Representative Director, Chairman of Keisei
Jun. 2008 Advisor of Keisei
Jun. 2010 Director of the Company (to present)
Jun. 2018 Honorary Advisor of Keisei ElectricRail Co., Ltd. (to present)

Corporate GovernanceToshio Imamura

Business Overview

Tsuneo Iizuka

Corporate GovernanceCorporate Governance Structure

AuditorReportBoard of Corporate Auditors
Cooperation

Audit /
Investigation

Auditor’s Office

To expedite decision making in business operations andstrengthen the functions of each division, the Board of
Directors appoints 28 fulltime executive officers who,
like directors, serve one-year terms.

To discuss and decide on important management
policies and issues, the Management Committee,
composed of seven directors and chaired by thepresident, is convened as needed (45 times during FY2017).

[Audit Committee and Auditors]
The Audit Committee consists of five auditors (allindependent appointees including three outside), withoutside auditors possessing expertise as lawyers and/or
certified public accountants, to audit for compliance inmanagement practices. Each auditor participates in
Board of Directors meetings and other important
meetings and checks over important decision-making
documents related to the area for which he or she is
responsible in order to understand the process of[Appointments and Remunerations Committee]
As an advisory organ of the Board of Directors
regarding the selection and payment of directors,
auditors and executive officers, the Appointments andRemunerations Committee is composed mainly of
independent outside directors to ensure the autonomy,
objectivity and accountability functions of the Board of
Directors regarding the appointment and payment ofcompany directors.

[Governance Committee]
As an advisory organ of the Board of Directors on
general issues of corporate governance, theGovernance Committee is composed mainly of outside
directors and auditors. This committee works to ensuresustained improvements in thorough corporate
governance practices, as well as corporate value.

Consultation /ReportNomination /Direction〈Advisory Committee of the Board of Directors〉

Managing Director

Appointments and Remuneration Committee
Governance Committee
Management Audit

Management Meeting(Operational Decision Making)Internal Audit

Management Meeting(Execution Management)

Direction

Investigator

Council of Business Unit Managers(Business Unit Monitoring)

Monitoring

Risk Management Council, Orders Received Review Board,
Overseas Orders Review Board,Real Estate Transaction Review Board,
Business Investment Review Board
Business Execution Division

Division Management Meeting

Headquarters

Branches and Divisions

Subsidiaries

Executive Officers

Internal Audit and Monitoring of Corporate Auditors
To prevent company losses, preserve properties andperform appropriate operational management, theInternal Control Office (nine members) performs aninternal audit based on the fiscal year audit plan. As
well as being reported to the management, the resultsof the internal audit will be utilized by the Board of
Corporate Auditors in close cooperation with auditors.
Each corporate auditor participates in Board of
Directors meetings and other important meetings andchecks over important decision-making documents
related to the area for which he or she is responsible tounderstand the process of decision-making onimportant issues and monitor business operations.
Additionally, each corporate auditor also conducts
investigations into relevant business operations and, if
deemed necessary, receives business reports fromsubsidiaries, audits the work of their directors andreports results to the Board of Directors.
Our corporate auditors work together in close
coordination with the auditors by having regularmeetings to discuss auditing structure, planning andoperational status and if required, exchanging opinions
and information to enhance effectiveness of monitoring
functions.

Directors’ Monitoring of the Business Execution Division (Management Monitor)
The Directors started monitoring of the businessexecution division in 2012. They are required to checkand evaluate the management of each division in orderto “organize a structure and manage it to perform
appropriate business operations” for all branches,business units and domestic and overseas subsidiaries
every year.
Audits are made keeping the following viewpoints inmind: evaluation of compliance activities and control
environments; monitoring of independent audits; andimprovement in business processing. Considering theseviewpoints, corporate auditors interview division
managers and visit work sites to exchange opinions withevery employee to confirm that the policies ofheadquarters, branches and business units areappropriately transmitted and understood.

Address of the Code of Corporate Governance
Visit the following website (Company Information/Corporate Governance) for details.
* Linked in the “Corporate Governance Report (PDF)” (Japanese only)
https://www.tokyu-cnst.co.jp/company/governance.html

47 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 48

Corporate Data

[Management Meeting]

In FYE March 2018, our financial audit was carried out
by two certified public accountants, Hiroaki Matsuo and
Hiroto Inoue, who are both members of Ernst & Young
ShinNihon LLC. We also have six other certified public
accounts and thirteen other staff involved in financial
auditing.

Appointment / Dismissal

Board of Directors

Corporate Governance[Executive Officers][Auditors]

Appointment / Dismissal

Business Overview

The Board of Directors consists of ten members(including three outside directors and two independent
appointees). Directors serve a one-year term to clarify
management responsibilities for each fiscal year and tobuild a dynamic and responsive management structure.
Based on their extensive knowledge and experience,outside directors provide much-needed perspective indeliberation of issues and offer a sound management
structure to ensure directors are carrying out their
responsibilities appropriately.

ReportReportWatching

Corporate Governance Structure
decision making on important issues and monitor
business operations. Additionally, each auditor also
conducts investigations into relevant business
operations and, if deemed necessary, receives
business reports from subsidiaries and audits the workof their directors, reporting results to the Board of
Directors. Dedicated staff members are also assigned
to the Audit Office to support these operations.

Audit
ReportCooperation

Internal Control Office

Audit[Board of Directors]

Appointment / Dismissal

Story of Value Creation

At Tokyu Construction, we have a business philosophy based on our mission statement, management policy, andprinciples of conduct that describes the type of company we seek to become.
To make this vision a reality, we are working to contribute to society through our business activities and achievesustained growth and higher mid- to long-term corporate value. It is crucial that we foster a strong corporate
governance structure to achieve these goals, hence we are always striving to make improvements that will result in more
effective and efficient corporate governance.
We have also come up with the “Tokyu Construction Corporate Governance Basic Policy,” which includes ourfundamental approach to corporate governance, as well as establishing relevant standards, etc.

Shareholder’s Meeting
Appointment / Dismissal

Overview of Tokyu Construction

Our Fundamental Approach to Corporate GovernanceRisksAnalysis and Evaluation of the Board of Directors’ Effectiveness

Category

Renumeration Amount (Millions of yen)

11 (2)

212 (13)5 (3)40 (14)16 (5)

253 (27)

Compliance(Remarks)
1. As of end of FY 2017, we have eight directors (two outside) and five auditors(three outside).
2. Three directors who retired at the end of the 14th Regular Shareholders’ Meeting
held on June 27, 2017 were paid and are included in the number on the left.
3. At the 5th Regular Shareholders’ Meeting held on June 25, 2008, the amount of
director compensation was passed noting that “the annual payment is under¥360 million (¥30 million for externals, excluding employees concurrently
serving as directors) and the annual payment for corporate auditors is under¥96 million.
4. The amount of compensation for respective directors is based on the standards
specified in our company including their position and operational status, as wellas employee payment rates. It is also decided after the resolution of the Board
meeting based on the consultation and report of the Appointment andRenumerations Committee, which mainly consists of the independent external
directors who make up the advisory committee of the Board of Directors.
Compensation of respective auditors is decided through the discussion within
the Board of Corporate Auditors.

Attendance Rate

Reason for Appointment

HiroshiOtsuka◯Mr. Otsuka has been elected as an outside director due to his rich management
experience and broad insights as corporate manager, as well as our
expectations that he will contribute to the management by offering opinions fromthe perspective of a railway business expert.

14/15 times

─

YutakaKubota◯Mr. Kubota has been elected as an outside director due to his rich management
experience and broad insights as corporate manager, as well as our expectations that
he will contribute to the Company’s management using his opinions from theviewpoint of one familiar with the railway and construction businesses.

15/15 times

─

Mr. Tomoe is the representative director of Tokyu Corporation, a core company of the
Tokyu Group. He has been elected as an outside director due to his rich management
experience and broad insights as corporate manager, as well as our expectations that
he will contribute to the Company’s management using his opinions from theviewpoint of one familiar with the overall knowledge of business administration.

Masao
Tomoe

Board ofBoard ofDirectors Meetings Corporate Auditors

Appointed in June 2018

Isao
Onda

◯

Mr. Onda has been elected as an outside auditor with the expectation that he will
use his expertise as a certified public accountant (CPA) and certified tax
accountant for our auditing work.

15/15 times

5/5 times

Youichi
Saito◯

Mr. Saito has been elected as an outside auditor due to his expertise as a lawyer.

15/15 times

5/5 times

Yoshikazu
Kato◯

Mr. Kato has been elected as an outside auditor due to his rich experience inadministrative agencies and broad insights accumulated throughout his career.

Appointed in June 2018

Business Continuity Management
We came up with a business continuity plan (BCP) in
2008, in preparation for large-scale disasters, andreceived a certification for “Construction Company
Continuity Capacity During Disasters” from the MLIT
Kanto Regional Development Bureau in 2009. We haverenewed this certification every two years since.
Our efforts in business continuity include
establishing a training plan based on our BCP andhaving executives participate in training and workshops
alongside other staff. This allows us to notice and review
relevant issues and implement a PDCA cycle, which isthen reflected in our BCP.
In order to secure a working environment for our
employees, we are refining internal systems by
distributing emergency supplies, such as food and drinkthat would be required during blackouts and/or phoneline congestion, in line with Tokyo Metropolitan
regulations.
As our headquarters is located opposite Shibuya
Station, one of Japan’s major transportation hubs, weare a part of a council comprising Shibuya Ward Office
staff and local businesses who are responsible forhelping people unable to return home in the case of adisaster. We regularly participate in emergency drills run

Compliance poster

by the Shibuya Ward Office and this council andsupport these efforts as a member of the community.
Furthermore, we intend to fulfill our social
responsibilities by doing our utmost to ensure early
restoration of infrastructure - especially access todisaster response routes that are essential for searchand rescue. To do so, we have entered into anagreement to work alongside national and prefectural
government agencies and infrastructure companies in
the case of a disaster, as well as with our partnercompanies.
BCP training carried out in
September 2017 involving asouthern inner-city
earthquake scenario.

As part of BCP training weestablished an emergency
response department at
headquarters. This
department would be
responsible for collating
information regarding thesafety of individuals anddamage to work sites.

Standard for Independence of Outside Directors and Outside Corporate Auditor

Operational Risk, etc.

Please visit the following website (Company Information/Corporate Governance).
* Linked in the “Policy and Standards on Corporate Governance, etc. (PDF) (Japanese only).”

This information can be found on the following websites (Investor Relations/Annual Report):* Link to “15th Annual Report (PDF)” within the page.

https://www.tokyu-cnst.co.jp/company/governance.html
49 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018https://www.tokyu-cnst.co.jp/english/ir/library/security_report.html
TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 50

Corporate Data

Independent
Officer

We consider compliance with corporate ethics and laws to be non-negotiable and the mostfundamental part of CSR but realize that we need to create systems and offer thorough staff
training in order to completely eliminate violations caused by lack of knowledge or awareness.
In order to make our understanding of “always doing what should be done” a part of Tokyu
Construction's company culture, we have created action guidelines and norms which we seek
to imprint on our staff through the use of training materials, including online learning.

Corporate GovernanceReason for Appointment of External Directors / Board Meeting Attendance RateName

We are always working to maintain compliance and manage risks related to factors such as the environment, disasters,
quality and information security through measures including improving department regulations. Also, in order to avoid
risks related to construction orders and real estate transactions, we established the “Headquarters Risk Management
Council,” “Orders Council,” “Overseas Orders Council,” “Real Estate Transactions Committee” and the “Business
Investments Review Board” as cross-departmental structures to review and monitor risks. We discuss and review thestatus of risk management and other factors at the Council of Business Unit Managers, which holds meetings on aregular basis in order to report and discuss all types of operational issues.

Business Overview

Directors(Outside directors)
Corporate auditors(Outside auditors)
Total(Outside members)

Risk Management System

Story of Value Creation

Directors andCorporate Auditors’ Compensationand the Board of Directors reviewed them to test theireffectiveness. The outline is as follows:In general, the evaluation was positive in terms of theboard’s effectiveness. The issues identified regarding
the timing of the Board of Directors’ document
submissions and the contents of their reports in FY
2017 were found to be consistently improved. Some
comments, however, stressed the need for more active
discussion in meetings, which will be addressed
hereafter.

Overview of Tokyu Construction

At Tokyu Construction, our Basic Policy of Corporate
Governance specifies that a report on whether the
Board of Directors is functioning appropriately isevaluated and made public every year.
In FY 2017 in cooperation with outside consultants,
all of the Board's directors and auditors answered ananonymous questionnaire on the effectiveness of theirwork so that all members could express their opinions
freely.
Regarding the issues that were highlighted by thesurvey, the Governance Committee discussed them,

Key CSR Themes and Endeavors

Environment

Environment

Human resources / Social contribution

Completion of ZEB renovations
to increase use of energy-savingbuildings

An urban river monitoring system
to protect construction sites fromcity water damage

An opportunity for young girls to take aninterest in the construction industry andsee women succeeding in the workplace

We carried out ZEB (Zero Energy
Building) renovations on the TechnicalResearch Institute building so it could
act as a model building for our zero net
energy renovations in combination withexternal heat load reduction andenergy-saving devices. Using CO2-free
renewable energy sources, such as
solar power, geothermal heat andexhaust heat, etc., we installed the firsthydrogen production, storage andpower generation system for officebuildings in Japan. We will use this asa model when proposing ZEB
renovations for future buildings.

We developed an urban river monitoring
system which uses data from the Japan
Meteorological Agency in collaboration
with Chuo University and have been
carrying out verification testing since FY
2017. If the estimated river level exceeds
the control value, alerts are sent via
email to relevant construction staff androtary lights installed on-site are
activated to signify danger. This system
will be used for disaster prevention andreduction in response to torrential rainsthat are increasing yearly. We are also
aiming to manage work sites so as torespond properly to rain disasters.

Kensetsu-Komachi Success On-Site
Tours 2017, run by the Japan
Federation of Construction Contractors,
were held on construction sites near
Shibuya Station. The purpose of thisevent was for participants to see
female technicians working vibrantly on
construction sites and offer a variety of“work experiences” to encourage thesefuture leaders to take an interest in theconstruction industry. We are actively
involved in these events as a means ofpromoting women’s success in theworkplace and contributing to society.

Human resources / Workplace satisfaction

Human resources / Workplace satisfaction

The 7 Core Themesof ISO 26000

Key Theme

Main Initiatives

Activities Being Monitored

Principle of social responsibility
1. Organizational
governanceConsideration of stakeholders

Dialogue with stakeholders
Collaboration with stakeholders
Securing sound profit
Corporate GovernanceCompliance
Risk Management

Efforts in sound management

3. Labor practices

Efforts in health and safety

Health and safety measures inconstruction
Work environment improvement
measures

4. The environment

Efforts to increase employee
satisfaction in the workplace

Employment/diversity(women, foreigners, etc.)
Healthy work-life balance
Human resource development/
education and training activities

5. Fair operating
practices

Efforts to consider
the environment

6. Consumer issues

Efforts in improvementof quality

7. Community
involvement anddevelopment

Active involvement in society
and the local community

Encouraging environmental
conservation in construction
Encouraging environmentally-conscious
designDevelopment of environmentally-friendly
technology
Improved construction quality
Development of construction technology
Passing on and improving
construction techniques and skills

Activities, HR development, and training
based on health and safety policies/healthand safety management systems, activities
to improve work environment, etc.
Activities based on HR strategies/the HR
development master plan
Action plans based on laws relating to the
support of women in the workplace anddevelopment of the next generation, etc.
Activities, HR development, and training
based on the environmental
charter/policies and environmental
management systems (ISO 14000), etc.
Activities based on quality policies/quality
management systems (ISO 9000)
HR development and training, etc.
Development based on the guidance ofthe technical committee and thetechnology development roadmap
Social contribution activities, interaction withthe local community in offices and on-site, etc.

ZEB renovations carried out on a 25-year-old
building (Sagamihara, Kanagawa)

Human resources / Social contribution

Basic Approach to Quality Improvement
In the construction industry, we regard the end users of our infrastructure as customers, as well as those who orderconstruction jobs. Those ordering construction work also want to build a good relationship with locals throughout the durationof the project. At Tokyu Construction, we want to provide solutions tailored to these kind of user needs. This is ourunderstanding of customer-orientated business management, and with this understanding as our foundation, we are working
with partner companies to improve technical capacity and construction quality.

Basic Approach to Increasing Employee Satisfaction in the Workplace
The Tokyu Construction corporate vision is summed up in the word “Shinka” which reflects our desire to be a generalcontractor that is always “deepening and evolving in the pursuit of genuine value.” In this vision, we define “an organization oftrue value” to be one where “employees with shared values respect each other and individual work satisfaction unifies theorganization into one that is highly productive.” As well as respecting human rights, enhancing the employment environment
and promoting diversity, we are also working to increase the ability and work satisfaction of each employee in the Tokyu Groupand desire to become a company that helps its employees learn about the meaning of work and their existence and contributeto society through work.

Considering the Environment
The management philosophy of the Tokyu Group is to “do business in harmony with the natural environment.” Tokyu
Construction established the “Environmental Charter” in 1997, which communicates our basic stance on how we will approach
environmental issues. Regardless of whether environmental conservation activities are directly related to our operations or not,we consider consistent implementation of these activities as opportunities arise to be an essential part of “management thattakes the environment into consideration."
51 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

The annual “Tokyu Kids Program” washeld at the Technical ResearchInstitute. This is a hands-on event inwhich parents and children can tour
facilities and experience work
themselves. It aims to familiarize
participants with Tokyu Group
companies and how our operations aredeveloping across a wide range offields that are closely connected totheir lives. The 2017 8th annual
program was attended by 9 pairs
made up of randomly selected 4th to
6th grade elementary school students
and their parents. Participants enjoyedprograms related to construction andcivil engineering.

The 2nd Young Employees'
Projects: Construction andexhibition of a “karakuri” device
In an effort to secure future humanresources, we are encouraging young
employees to be involved in“Cross-Departmental Young
Employees' Special Projects.” To
encourage free thinking and increased
internal and external communication,
several teams are involved in theseprojects every year. This time, so thatviewers could get a feel for the typeand appeal of manufacturing theconstruction industry is responsible for,we constructed and displayed a“karakuri” device (an intricately createdmechanical device) at the work site of
the Shibuya Ward Office, which we are
currently constructing, for a limitedtime.

HR system that encourages a
flexible working style
As part of our work-style reforms, we
introduced a flextime system, atele-working system, and work intervals
across the entire company, including
work sites, as of this year. These
reforms aim to foster improvements in
employee capacity and work
satisfaction, as well as productivity.
In the flextime system, we work to
divide up on-site tasks and use flextime
as a way of improving team work
efficiency and reducing total working
time. Regarding the tele-working
system, on-site and office workers taketurns setting a day on which they will
work remotely. This reduces employees'
commuting time, enables them to havetime to themselves and with theirfamilies, and contributes to a morerelaxed lifestyle both mentally andphysically. Furthermore, work intervals
ensure that employees get a certain
amount of time to rest at home inbetween work shifts. As a rule,commuting time is taken into
consideration and employees are
required to be off work for at least 11
hours before starting work the next day.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 52

Corporate Data

Basic Approach to Health and Safety
At Tokyu Construction, we consider efforts to improve health and safety to be a key CSR theme. We aim to accomplish ourhealth and safety goals by implementing health and safety policies and health and safety management systems. We areworking towards these goals not only on a work site basis but also across the entire company. Efforts include management
team checks, support from head office departments and collaboration with partner construction companies. On work sites, aswell as checking the day's tasks and any dangerous aspects in advance, workers also continuously carry out activities that
increase risk sensitivity, which can easily decline due to familiarity, such as reciting "The Ten Safety Rules" which are acollection of important things staff need to be particularly thorough about.

An opportunity for parents andchildren to learn about the joys
and struggles of work through the“Tokyu Kids Program”

Corporate Governance

Progress in social contribution activities
Increased interest in/understanding of
the construction industry
Interaction with communities in offices
and on-site

Activities targeting enhanced corporate
governance/better compliance, BCM
training etc.

Business Overview

2. Human rights

Dialogue with shareholders and investors
Customer satisfaction and employee
awareness surveys
Exchange of ideas and collaboration withpartner companies

Story of Value Creation

CSR Activities
Overview of Tokyu Construction

CSR10-year Main Consolidated Financial
and Non-Financial Data

For the fiscal year

FYE Mar. 2013

FYE Mar. 2014

FYE Mar. 2015

FYE Mar. 2016

FYE Mar. 2017

FYE Mar. 2018

Orders received

281,272

218,361

205,726

212,410

210,933

290,647

341,992

303,758

293,539

299,436

Net sales

259,507236,655

244,974

227,843

228,570

226,164

262,815

296,393

243,618

320,711

Operating income

4,901

5,282

7,584

1,572

1,154

2,630

6,009

18,17817,211

21,416

Ordinary income

4,607

4,912

7,811

1,884

2,301

3,559

8,024

19,76818,83922,128

Profit or loss attributable to owners of parent(4,121)

1,901

4,087

1,799

(566)

2,685

5,805

13,34013,691

16,118

Total assets

169,761

162,893

146,781

154,442

154,195

169,685

192,226

214,526

204,813

252,682

Total capital

24,55727,93630,28731,39032,48735,25844,861

54,23866,38079,175

Cash flows from operating activities(29,893)

28,301

20,540(11,486)

14,264(9,302)

2,111

39,003(23,545)

16,226

Cash flows from investing activities(416)(2,395)

481

20

(619)

(2,072)(1,525)(334)(1,717)(3,383)

Cash flows from financing activities

31,905(25,107)(9,813)

4,704(8,569)

6,476

(675)

(6,035)(2,788)(6,457)

Cash and cash equivalents at end of year

12,805

13,526

24,663

17,881

23,097

18,215

18,31850,674

22,582

28,865

Net income or loss (Yen)(38.60)

17.81

38.29

16.86

△ 5.31

25.16

54.40

125.00128.30151.05

Total net assets (Yen)229.77261.35283.29293.46

303.61

329.35418.59506.04619.91739.87

Cash dividends (Yen)

0.00
_

6.00

10.00

3.00

5.00

13.00

25.00

26.00

31.00

33.7

26.1

17.8

0.00
_

19.9

23.9

20.0

20.3

20.5

Equity ratio (%)

14.4

17.1

20.6

20.3

21.0

20.7

23.2

25.2

32.3

31.2

ROE (%)(14.8)
_

7.3

14.1

5.8

△ 1.8

Operating Results

Financial Position

Cash Flow

Per Share Data

Payout ratio (%)

Financial Indicators

PER (Times)

15.8

6.5

12.6

_

7.9

14.5

27.0

22.8

22.2

17.4

12.5

7.4

6.8

7.6

Non-Financial Indicators (Non-Consolidated)
Number of employees at end of year (People)

2,434

2,453

2,460

2,446

2,403

2,313

2,340

2,412

2,464

2,537

Gender breakdown (Male / Female) (People)

2,317 / 117

2,304 / 149

2,302 / 158

2,285 / 161

2,231 / 172

2,148 / 165

2,161 / 179

2,219 / 193

2,249 / 215

2,303 / 234

Employment rate for persons with disabilities (%)

1.73

1.79

1.94

1.81

2.16

2.07

1.84

2.22

2.26

2.30

Office

1,383

1,270

1,387

1,060

1,370

1,607

1,841

1,913

1,820

1,754

Workplaces

49,85238,49640,00837,26051,06944,39759,394

66,112

67,33351,602402,477

307,549

350,320

361,347

451,353490,293403,918

473,004

395,309410,245

Recycling rate (%)

92.1

93.5

94.4

93.3

94.7

96.8

96.1

95.9

98.4

99.4

Accident frequency rate

1.09

0.65

0.53

1.07

1.02

1.04

0.84

0.73

0.70

0.79

CO2 emissions(t-CO2)

Construction by-products generated (t)53 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 54

Corporate DataFYE Mar. 2012

Corporate GovernanceFYE Mar. 2011

Business Overview

FYE Mar. 2010

Story of Value CreationFYE Mar. 2009

Overview of Tokyu Construction(Millions of yen)

Financial Overview
Segment Performance

Overview of Business Results(Millions of yen)FYE Mar.
2017

Consolidated

Differencecompared toprevious year

Rate ofchangeFYE Mar. 2018
TOKYU CONSTRUCTION

Subsidiary

312,487

9,891

320,711

77,092

31.6%

Gross profit

30,34435,301657

35,720

5,375

17.7%

Selling, general andadministrative expenses

13,133

13,851443

14,303

1,170

8.9%

Operating income

17,211

21,450214

21,416

4,204

24.4%

Ordinary income

18,83921,514

222

22,128

3,288

17.5%

13,691__

16,118

2,426

17.7%

Regarding completed construction sales, although we saw adecrease in domestic government office construction andoverseas construction projects, sales were ¥244,618 million(up 46.0% from the previous year) due to an increase indomestic private construction projects. Segment profit was¥22,130 million (up 33.1% from the previous year).

Orders (company-wide)FYE Mar.
2018

Differencecompared toprevious year

Rate ofchange

4,394

7.9%

Domestic public

59,698Domestic private

224,685(5,106)-2.2%

General public

150,626(47,453)-24.0%

Tokyu Group companies

74,05842,436134.2%

Overseas

6,952

7,161

─

291,337

6,448

Completed construction sales

230,736

310,761

Civil engineering

69,84573,863

Ratio

(100)
23.8%

Rate ofchange80,025

34.7%

4,018

5.8%

Building construction

160,890

236,898

76.2%

76,00747.2%

Completed construction gross profit

28,18334,767

11.2%

6,583

23.4%

Civil engineering

6,917

7,198

9.7%

280

4.1%

21,266

27,568

5,569

1,725

Real estate gross profit

1,638

534

Net sales

236,305

Gross profit

6,302

29.6%

(3,844)-69.0%

31.0%(1,103)-67.4%

312,487

100 %

76,181

32.2%

11.6%
(100)

29,82135,301

11.3%

5,480

18.4%

Selling, general andadministrative expenses

12,707

13,851

4.4%

1,144

9.0%

Operating income

17,114

21,450

6.9%

4,335

25.3%

Ordinary income

17,61921,514

6.9%

3,895

22.1%

12,65555 TOKYU CONSTRUCTION CO., LTD. Integrated Report 201815,555

5.0%

2,900

22.9%

Differencecompared toprevious year

Rate ofchangeDomestic public

45,954380

0.8%

Domestic private

25,514

5,123

25.1%

General public

11,033

1,113

11.2%

Tokyu Group companies

14,480

4,009

38.3%

5,315

5,568

─

76,784

11,072

16.9%

Overseas

Orders (building construction)

Building construction

Building construction
Real estate sales

Civil engineering

Settlement

Differencecompared toprevious year

200,000

6,487
25,340190,379

100,000
74,5850

FYE Mar.
2016

284,888

FYE Mar.
2018
Domestic public

13,744

4,013

41.2%

Domestic private

199,171(10,230)-4.9%

General public

139,592(48,657)-25.8%

Tokyu Group companies

59,57838,427

181.7%

Rate ofchange

1,636

1,592

─

214,552(4,623)-2.1%

291,337

6,952

31,622

74,058198,170

59,698(Millions of yen)

50,00025,00069,532
6,394
7,803

Domestic
public sector

FYE Mar.
2018

FYE Mar.
2017

100,000

75,000General public

150,626

55,304overseas(208)

76,78465,711

5,315
14,48010,470

8,104

9,920

11,03347,22945,57345,954

Overseas
Tokyu Group
General public
Domestic
public sector

overseas(252)0

FYE Mar.
2016

FYE Mar.
2018

FYE Mar.
2017(Millions of yen)

(Millions of yen)

Differencecompared toprevious year

Overseas

Tokyu Group
296,792

300,000

Overseas300,000

227,25992
17,536200,000

182,275

Tokyu Group
219,17644
21,151

214,552

1,636
59,578General public
Domestic
public sector

188,250

139,592

100,000

27,3550Overseas

FYE Mar.
2016

9,730

FYE Mar.
2017

13,744FYE Mar.
2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 56

Corporate DataFYE Mar. 2018

FYE Mar.
2017

2.3%

400,000(Millions of yen)FYE Mar.
2018(Millions of yen)

(Millions of yen)

(Millions of yen)Orders (civil engineering)

Full-year results (unconsolidated)

Net income

Construction Business (Building Construction)

Corporate Governance

243,618

Item

Regarding net real estate sales, sales amounted to ¥2,003
million (down 65.9% from the previous year). Segment
income was ¥245 million (down 82.3% from the previousyear).

Company-wide

Net sales

Profit attributableto owners of parent

Regarding completed construction sales, although we saw adecrease in domestic government office construction
projects, sales increased by 5.6% to ¥74,089 million due toan increase in overseas construction and domestic private
construction projects. Segment profit was ¥5,214 million (up10.3% from the previous year).

Reference data (Tokyu Construction's performance by area)

Full-year results (consolidated)
Item

Real Estate Business etc.

Business Overview

The Japanese economy continued to slowly recover duringFYE March 2018 as capital investment and personal
consumption showed signs of recovery alongside
improvements in corporate earnings and the employment
and income environment.
In the construction industry, as well as high construction
demand related to the 2020 Tokyo Olympic Games andParalympic Games, public and private construction
investment remained steady and construction costs stable,
resulting in a strong market environment.
Under these circumstances, the Tokyu Group is working
to increase corporate value in line with the basic policies ofour “Mid-Term Management Plan” (FY 2015-2017): pursuing
safety, quality, efficient processes, and profit by enhancing
problem-solving skills, a commitment to current and future
profit by screening orders, and accelerating efforts toConstruction Business (Civil Engineering)

Story of Value Creation

diversify profit.
As a result, business results for FYE March 2018 were net
sales of ¥320,711 million (up 31.6% from the previous year)
due to an increase in completed construction sales.
Regarding profit and loss, operating income was ¥21,416
million (up 24.4% from the previous year). Ordinary income
increased by 17.5% against the previous year to ¥22,128
million due to recording ¥654 million of investment income
using the equity method. In addition to this, amounts such as
reversal of allowance for doubtful accounts of ¥154 million
and profit from liquidation of a subsidiary of ¥111 million
were recorded as extraordinary profit, as well as loss on
fixed assets of ¥71 million and impairment loss of ¥40
million as extraordinary losses. After considering tax
expenses, etc., profit attributable to owners of parent was¥16,118 million (up 17.7% from the previous term).

Overview of Tokyu Construction

Overview of Business Results

Assets

corporate taxes by ¥3,458 million, bringing our total liabilities
to ¥173,506 million—an increase of ¥35,073 million (up25.3%) from FYE March 2017.

Liabilities
While incomplete construction receipts decreased by ¥5,639
million and short-term loans payable and long-termborrowings decreased by a total of ¥3,082 million,
construction accounts payable and electronic payment
obligations, etc. increased by ¥41,894 million and accrued(Millions of yen)Item

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

Total Capital

Cash flows from operating activities

39,003(23,545)

16,226

Shareholders’ equity increased by ¥12,806 million due to anincrease in retained earnings due to the recording of¥16,118 million in profit attributable to owners of parent,
despite paying out ¥3,308 million in dividends. In addition,
accumulated other comprehensive income decreased by ¥8
million.
As a result, total capital was ¥79,175 million—an increaseof ¥12,795 million (up 19.3%) compared to FYE March 2017.

Cash flows from investing activities(334)(1,717)(3,383)

Cash flows from financing activities(6,035)(2,788)(6,457)

Effect of exchange rate changes oncash and cash equivalents

(277)

(40)

(02)

Net increase (decrease) in cash
and cash equivalents

32,356(28,091)

6,283

Cash and cash equivalents at end of year

50,674

22,582

28,865

Story of Value Creation

Compared to FYE March 2017, total assets increased by¥47,868 million (up 23.4% from the previous year) to¥252,682 million due to a decrease of ¥3,210 million inincomplete construction expenses, as well as an increase of¥33,655 million in notes and accounts receivable for tradeand completed construction work, etc. and ¥6,283 million in
cash and cash equivalents.

Consolidated cash flow results

Prospects(Millions of yen)FYE Mar.
2017

FYE Mar.
2018

Total assets

214,526

204,813

252,682

47,868

Total liabilities

160,288

138,433

173,506

35,073

4,886

4,804

1,721

(3,082)(Short-term debt)

81

3,082

83

(2,999)(Long-term debt)

4,804

1,721

1,638

(83)

Total capital

54,23866,38079,175

12,795Equity ratio

25.2%

32.3%

31.2%

-1.1P

40

30

(%)

32.3

31.2

25.2

20

10

0

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

Overview of Cash Flow
Cash Flow from Investments

Although we saw an increase in accounts receivable and adecrease in incomplete construction receipts, an increase inpurchase liability and ¥22,353 million in net income before
taxes and other adjustments contributed to a ¥16,226 million
increase in funds (funds for FYE March 2017 had decreasedby ¥23,545 million).

Although we recorded revenue from the liquidation of a
subsidiary, funds decreased by ¥3,383 million (funds
decreased by ¥1,717 million in FYE March 2017) due topayments to acquire tangible and intangible fixed assets,
etc.

Cash Flow from Financing
Repayment of long-term borrowings and payment ofdividends etc. resulted in a ¥6,457 million decrease in funds(FYE March 2017 saw a decrease in funds of ¥2,788 million).

As a result, the balance of cash and cash equivalents as of the end of March 2018 increased by ¥6,283 million (up 27.8%) fromthe end of March 2017, to ¥28,865 million (compared to ¥22,582 million for FYE March 2017).

Consolidated profit and loss
Net sales: 336.0 billion yen
Profit attributable to owners of parent: 13.8 billion yen

Breakdown of sales by area
Completed construction sales

315.6 billion yen

1.6%

Civil engineering

79.6 billion yen

7.8%

Building construction

236.0 billion yen-0.4%

1.4 billion yen-18.9%

317.0 billion yen

1.4%

Real estate sales
Total

Breakdown of gross profit by area
Gross profit form completed
construction sales

31.9 billion yen-8.2%

Civil engineering

6.6 billion yen-8.3%

Building construction

253.0 billion yen-8.2%

Real estate gross profit

0.5 billion yen

-6.5%

Total

32.4 billion yen-8.2%

Dividend results/dividend forecast
Performance for
FYE March 2016

25 Yen (Consolidated
dividend payout ratio 20.0%)

Performance for
FYE March 201726 Yen (Consolidated
dividend payout ratio 20.3%)

Performance for
FYE March 201831 Yen (Consolidated
dividend payout ratio 20.5%)

Forecast for
FYE March 201926 Yen (Consolidated
dividend payout ratio 20.1%)

Non-consolidated profit and loss
Net sales: 317.0 billion yen
Gross profit: 32.4 billion yen
Net income: 12.3 billion yen

Dividend forecast
26 yen (Consolidated dividend payout ratio 20.1%)
Interim dividend 10 yen Year-end dividend 16 yen
57 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 58

Corporate Data

Cash Flow from Business Operations

Regarding the outlook of the Japanese economy, it isexpected that the economy will gradually recover as
corporate earnings and employment and income
environments continue to improve, but we still need to beaware of uncertainty in the overseas environment.
The construction industry market is expected to continue
to perform well. However, it is expected that a qualitativechange in demand after the Tokyo Olympic and Paralympic
Games from flow (predominantly construction of newbuildings, etc.) to stock (predominantly maintenance andrepairs), combined with increasing numbers of elderly
workers retiring will result in a variety of issues—particularly
labor shortages.
Tokyu Construction Group aims to build a corporate
structure resistant to these market changes, becoming a“group that can cope with the changing environment tocreate true value within a vital corporate culture” by 2026.
We also came up with our “Mid-Term Management Plan” for2018–2020 and “Shinka 2020” vision as the first steps
towards this goal.
Looking ahead, our entire company plans to move
forward as one with our "Mid-Term Management Plan” inorder to become the company we wish to be.
Our forecasts for FYE March 2019, the first year of our
mid-term plan, are as follows.

Corporate GovernanceFYE Mar.
2016

Differencecompared toprevious year

Interest-bearing liabilities

Equity ratio

Business Overview*Based on statement of accounts (as of May 10, 2018)

Consolidated financial position
Item

Overview of Tokyu Construction

Overview of Financial Situation

Company Profile / Stock Information

TOKYU CONSTRUCTION CO., LTD.

Founded on

March 12, 1946

Date of establishment

April 10, 2003

Capital¥16,354,447,000-

Head office

1-16-14, Shibuya, Shibuya-ku, Tokyo 150-8340

Representative

President Toshio Imamura

Number of employees

2,537

Construction license(TOKU-29) No. 20220 by Minister of Land, Infrastructure, Transport and Tourism

Building lots andbuildings transaction license(3) No. 6474 by Minister of Land, Infrastructure, Transport and Tourism

Main services

Outstanding stock

106,761,205 shares (Including 53,703 treasury shares)

Number of shareholders

34,053

Stock Exchange listing

The first section of the Tokyo Stock Exchange•Foreign
companies,
etc.

Securities code

1720

15.40%

Shareholder
registry administrator

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan•Individuals
and others•Financial
institutions

13.05%

45.76%•Othercompanies•Financial
instruments
dealers

24.14%

1.65%

Major Shareholders (Top 10)
Percentage of
total shares issued (%)

TOKYU CORPORATION

15,362

14.40

Japan Trustee Services Bank, Ltd. (Trust Account)

6,460

6.05

Head office / 13 Branches / 12 Sales offices, etc.

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

4,673

4.38

〈Branch office〉
Sapporo Branch, Tohoku Branch (Sendai-shi), Hokuriku Branch (Niigata-shi), Chiba Branch,
Civil Project East Japan Branch (Shibuya-ku, Tokyo), Urban Development Branch (Shibuya-ku, Tokyo),
Building Project Metropolitan Branch (Shibuya-ku, Tokyo),
Building Project East Japan Branch (Shibuya-ku, Tokyo), Nagoya Branch, Osaka Branch, Hiroshima Branch,
Shikoku Branch (Takamatsu-shi), Kyushu Branch (Fukuoka-shi)

Mizuho Trust & Banking Co., Ltd. TAISEI CORPORATION retirement benefits trust account re-trust trustee
Trust & Custody Services Bank, Ltd.

4,000

3.75

Japan Trustee Services Bank, Ltd.
(Sumitomo Mitsu Trust Bank, Ltd. Re-trust - Tokyu Corporation retirement benefits trust account)

3,520

3.30

SHIMIZU CORPORATION

3,000

2.81

Sumitomo Mitsui Trust Bank, Limited

2,945

2.76

MUFG Bank, LTD.

2,550

2.39

KINDEN CORPORATION

1,924

1.80

The Master Trust Bank of Japan, Ltd. (Tokyu Corporation retirement benefit trust account)

1,760

1.65

Civil Engineering and Building Construction Contracting/
Investigation, Construction Plan, Geological Survey, Measurement, Architectural Design for Civil Engineeringand Building Construction, etc.

〈Overseas office〉
Singapore, Thailand, Indonesia, Myanmar, Bangladesh, Vietnam
Token Industry Co., Ltd. (Shibuya-ku, Tokyo)
Tokyu Renewal Co., Ltd. (Shibuya-ku, Tokyo)
Purantaru farm,Ltd. (Miho-mura, Inashiki-gun, Ibaraki)
CH. KARNCHANG-TOKYU CONSTRUCTION CO., LTD. (Thailand)
PT. TOKYU CONSTRUCTION INDONESIA (Indonesia)
GOLDEN TOKYU CONSTRUCTION CO., LTD. (Myanmar)

We hold financial results briefings in May and November
every year for institutional investors such as analysts and fundmanagers. Approximately 50 institutional investors attend
each time. We also held a work site tour for institutional
investors on urban renewal sites surrounding Shibuya Stationin December. The tour included a successful question andanswer session and resulted in increased interest in the
Shibuya urban renewal project. We also spend time meetingwith each institutional investor individually.
In our basic corporate governance policy announced in
November 2015, we committed to having constructive
conversations with investors. We will continue to actively
engage in dialogue whenever we have the opportunity anduse these conversations to increase our corporate value.

59 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018

Our company has been selected as a JPX-Nikkei Index 400 and
JPX-Nikkei Mid and Small Cap Index brand.
We will continue to work to improve our corporate value and meet the expectations of our investors.

The JPX-Nikkei 400 index is composed of companies withhigh appeal for investors, which meet requirements ofglobal investment standards, such as efficient use ofcapital and investor-focused management perspectives.
Companies are chosen by the Tokyo Stock Exchange andthe Nihon Keizai Shimbun.
Financial results briefing for the fiscal year ended March 2018
(May 25, 2018)

The JPX-Nikkei Mid and Small Cap applies the concept of
the JPX-Nikkei Index 400, which is an index composed ofhighly attractive listed companies, to mid and small cap
equities by selecting companies that focus on capitalefficiency and investor-orientated management, and aim tofoster greater awareness of such issues among corporate
executives. Companies are chosen by the Tokyo Stock
Exchange and the Nihon Keizai Shimbun.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2018 60

Corporate Data

We have a wide variety of opportunities
for dialogue with investors.

(Notes) 1. Tokyu Corporation has contributed 7.5 million shares to retirement benefit trust accounts, including 3.52 million shares to the Japan Trustee
Services Bank (re-trustee of Sumitomo Mitsui Trust Bank - Tokyu Corporation retirement benefits trust account) and 1.76 million sharesto the Master Trust Bank of Japan (Tokyu Corporation retirement benefits trust account), and we hold the authority to direct how voting rights
for these shares should be executed.
2. The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its name to MUFG Bank, Ltd. on April 1, 2018.

Corporate Governance

No. of shares
held (Thousands)

Name〈Institute〉
Institute of Technology (Sagamihara-shi, Kanagawa)Affiliated companies

400,000,000 sharesBusiness Overview

Locations

Distribution of Shareholders

Total number of sharesauthorized to be issued

Story of Value Creation

Company name

Overview of Tokyu Construction(As of March 31, 2018)

Corporate Communication Group,
Corporate Planning Department, Corporate Strategy Division
1-16-14 Shibuya, Shibuya-ku, Tokyo 150-8340, Japan
TEL : +81-3-5466-5008 FAX : +81-3-5466-5069
E-mail : csr@tokyu-cnst.co.jp
www.tokyu-cnst.co.jp