Integrated ReportOur Value Creation Story
02 As a Member of the Tokyu Group
04 The History of the Tokyu Construction Group06	The Strengths of the Tokyu Construction Group (Our
Source for Value Creation)
08	Feature Article 1: Tokyo Metro Ginza Line Shibuya Station
Railroad Switching Diversion Project
10 The Value Creation Process
12	Material Issues (Materiality) in Achieving “Our Ideals for2026 — The Company We Hope to Be in 2026”

Contents

14	Tokyu Construction Group’s Vision of “Our Ideals for 2026
— The Company We Hope to Be in 2026”

Value Creation Initiatives
16 A Message from the President
22 Financial and Capital Strategies
24 Financial and Non-financial Highlights
26	Mid-Term Management Plan 2018-2020: Shinka 2020
Urban Solutions Business30	Feature Article 2: Aiming at sustainable corporate
management that can cope with the changing businessenvironment
32 At a Glance (Business Overview)
34 Overview of each Business
34 Civil Engineering Business
36 Building Construction Business
38 Real Estate Business40 International BusinessTOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

The Foundation Supporting Value Creation
42 Corporate Governance
47 External Director Interview
48 Board of Directors
50 Risk Management
52 Compliance
54 Human Resources
58 Occupational Safety (Safety and Health)60 The Environment
64 Quality Control
65 Initiatives to fulfill other social responsibilities

Corporate Data
66 10-year Main Consolidated Financial and Non-financial Data
68 Financial Overview
72 Company Profile
73 Stock Information

About the Cover
We approached 2,800 employees
and asked them to suggest one
Chinese character that they feel
represents a principle they holddear. We then used those characters to create an image of a townthat symbolizes Tokyu Construction– a town built upon the beliefs ofeach and every employee.

0102 OUR VALUE CREATION STORY

As a Member of the Tokyu GroupAs a member of the Tokyu Group, each of us employees of Tokyu Construction will contribute to corporate
activities and society with an awareness of our responsibilities to the Tokyu brand, based on our group philosophy, so that we will be trusted and cherished by customers, investors, and society as a whole.

Tokyu GroupSloganToward a Beautiful Age
Beauty is the guiding principle and standard of value for Tokyu Group as it meets the challenges of the future. For all of us in the 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 to create beauty in harmony with people, their communities, and the natural environment. With beauty as our touchstone, the 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 thisvision, and moreover, we aspire to play an active role in creating a more harmonious society,overflowing with kindness and consideration, so that all people may find genuine happinessand express an individual lifestyle. Our slogan, “Toward a beautiful age,” expresses the commitment of all of us in the Tokyu Group to continually pursue beauty, and proclaims our determination to lead the way in creating beautiful living environments.

Tokyu Group
Philosophy

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

Management Policy

Mission Statement

Principles of Conduct

Work independently and in collaboration toraise Tokyu Group synergies and establish atrusted and beloved brand.
■ Meet current market expectations anddevelop new ones.
■M anage in harmony with the natural environment.
■P ursue innovative management from a
global perspective.
■V alue individuality and encourage the bestfrom each employee.
Through these means, we will fulfill our corporate social responsibilities.

We shall strive to create
beautiful living environments,
in which each person canpursue individual happinessin a harmonious society.

Fulfill your responsibilities.
Collaborate to enhance eachother’s abilities. Reinvent yourself with a global awareness.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Mission Statement	
We will help each person realize his or her dream by creating comfortable

Corporate
Philosophy

living environments that allow peace of mind
The significance of Tokyu Construction in societyManagement 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
Values that should be maintained when establishing a management system for the continuous
development of Tokyu Construction

Principles of Conduct	
Independence/Speed/Teamwork/Reliability
The attitude that should be taken when working as an employee of Tokyu Construction

Town Value-up Management

Brand
Message

The origin of Tokyu Construction lies in urban development such as Tama Garden City and thetowns in areas surrounding Tokyu train lines. From this perspective, we will be involved in thelife cycle of towns over many years, from planning proposals to new construction, renovation,and rebuilding. Accordingly, we will think not in terms of single buildings but of whole towns
from the standpoint of customers and residents, and we will always strive to create new value

Deepening and Evolving in the Pursuit of Genuine Value

VisionTokyu Construction■ Striving to respond to diversifying customer needs and providing the best solutions, we will enhance thequality of our business.
■ 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 isdedicated to the pursuit of genuine value.

Tokyu
Construction’s
Business Model

Corporate
Philosophy

Brand message

Town Value-up Management

Mission Statement
Management Policy
Principles of Conduct

VisionMedium-Term Management Plan and
Annual Management Policy
Code of Conduct(specific criteria)

Please visit our website for details.
CORPORATE PROFILE/Corporate
Philosophy and Vision (https://www.
tokyu-cnst.co.jp/en/company/vision/)03

04 OUR VALUE CREATION STORYThe History of the Tokyu Construction Group
Despite emerging late as a general contractor, we have gradually built a business foundation driven by Japan’s
era of high economic growth, and have grown into a safe and comfortable urban development partner alongside
the development of the Tokyu Group. We will continue to contribute to society as “a general contractor that
continues to embody Shinka,” while advancing the technologies and know-how of the construction industry in
response to environmental changes and market needs, and accelerating our endeavors in new business domains.

1960

1993-2003

1966

Land readjustment projectat Nogawa First District

While the Company was able to complete numerous difficult projects
that would become local landmarks, the recession after the economic
bubble burst led to worsening business conditions, and with an eye
on re-building, Tokyu Construction was given new life as it was split
off as its own company, taking on only those assets needed to dobusiness in the construction industry.

Den-en-toshi Line Extension:
Mizonokuchi Station to
Nagatsuta Station
1971

1984

1999

1969
The “four guidelines” laid out by
Noboru Goto, our first president
The Company grew rapidly, so teamwork
has always been considered of the utmost
importance, and it remains a fundamental
part of our corporate DNA today.

Keikyu Hotel(Hotel Pacific Tokyo)

1959-1992
Our origin was the development of Tokyu Tama Garden City, where
we developed a vast, 5,000-hectare area of land stretching from
Kajigaya Station to Chuo-Rinkan Station. It was there that the Groupestablished its technologies and techniques for building railways,
roads, urban infrastructure, and other civil engineering projects, andfor the construction of super high-rise buildings and large urban
spaces. The Group also aggressively expanded overseas and grew
rapidly in the industry despite emerging late.

Palau Pacific Resort

1991

Q FRONT

2000

Multi-level crossing construction of Tokyu Ikegami LineSHIBUYA MARK CITY(The “STRUM Method,” our representative
railway technology)

TOKYU CONSTRUCTION CO., LTD. Founded

1959
1946	Establishment of Tokyo
Construction Industry Co., Ltd
1954	Absorbed as the Construction
Industry Department of TOKYULAND CORPORATION

1964 Tokyo Olympics

Societal
Highlights

1989	Consumption tax
introduced

Financial System Reform Act passed
1998	

1970 Osaka Expo
1973 Oil Crisis

1991 Economic bubble burst

2002	FIFA World Cup in Japan andSouth Korea

1995	Great Hanshin-Awaji
Earthquake

2001 9/11 terrorist attacks in US

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

2014

2015

05

Strengths of
Tokyu Construction

2001

Teamwork
CERULEAN TOWER
Bldg.

Sanriku Railway Kita-Rias
Line Restoration Project

GLP Zama(Logistics Facility)

2004-

2017

We continue to improve techniques and technologies we havegathered over the years in order to better respond to environmental
changes and market needs. In addition to the construction business, we are expanding into new business domains in which we canharness our strengths, and we continue to contribute to resolving
increasingly diverse issues society and our customers face.

PPP/Concession Business
Management of public sewerage system in
Hamamatsu City Our first water/sewerage
field project in Japan

2019

2020

Tokyu
Group’s Total
Capabilities

2008-2027 (Planned)

Know-howof Urban
Development
Jakarta Mass Rapid
Transit Project

ROOFLAG
Exhibition of Rental Housing
for tomorrow

Redevelopment of the areaaround Shibuya Station(Large-scale wooden construction)

Town Value-up Management※
2004
2005	Postal Service Privatization
Act passed
2006	Revised Antimonopoly Act
enforced2008 Global financial crisis

2011 Tohoku earthquake and tsunami
2013	Tokyo is selected as host of 2020 Olympics
and Paralympics
2015 SDGs adopted; Paris Agreement adopted* The Company was split and a new
Tokyu Construction was started in
October 2003. We declared our brandmessage to have been and to be “acompany contributing to value creation
in towns.

06
06 OUR VALUE CREATION STORYThe Strengths of the
Tokyu Construction Group(Our source for value creation)
The Tokyu Construction Group has cultivated three major
strengths throughout its history and has harnessed themin various areas to contribute to the building of the moresustainable society that we now need, including theredevelopment of the area around Shibuya Station.

Teamwork
The construction industry is very labor intensive, so
teamwork stands at the core of our businesses, and
it is the element we are most conscious of. “Trust” isthe basis on which customers are able to place orders
for expensive items that have not yet been built.
At the Company, we build “trust” through teamwork, which we consider the most important partof management. We have inherited the tradition of
teamwork, and work to make it one of our core competencies, as the capabilities of the human resourcesand organization.

Teamwork

Tokyu Group’s Total
Capabilities
Tokyu Group’s Total
Capabilities

As a part of the construction industry, the Company
stands at the front lines of the Tokyu Group’s businessdevelopment in Japan and overseas. We have encouraged our own growth, raised the value of the Tokyu
brand, and strengthened our connections with local
communities by planting roots in different regions
and responding to the unique needs of each. One of
the Group’s unique assets is having so many Group
companies sharing the same brand identity, which
increases the potential for many different synergetic
business activities.

Know-how of Urban
Development

Know-how of Urban
Development
As a member of the Tokyu Group, we laid the foundation for our businesses by being thoroughly involvedin every aspect of the “urban development” of Tama
Garden City, from development and land readjustment, to the construction of buildings, roads, andrailways. Recently we have broken the boundaries of
the construction contracting industry by considering
the overall value of “towns” from the perspective ofcustomers and residents, remaining involved throughout the entire life cycle of towns with an emphasis on“ease of living” and “being in harmony with the environment.” We have accumulated know-how of “urban
development” over the years, applying and improving
it in the redevelopment of the area around Shibuya
Station and various other areas. Under our brandmessage “Town Value-up Management,” we utilize
our know-how to create new value for the sustainable“towns” required by the times.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

1961

2013

Ito to Shimoda railway construction(Izukyu opened)
Under the attention of the construction industry, thissuper-time-critical project was completed, and theCompany cultivated its technologies and construction
capabilities. This laid the cornerstone of “Tokyu, theRailway Construction Company.”

2019

Railway tracks diversion project to complete theunderground section between Shibuya Station andDaikanyama Station on the Tokyu Toyoko Line
In order to enable cross-operations with Tokyo Metro Fukutoshin Line, construction began on moving the Tokyu Toyoko Line operating railway tracks
underground between Shibuya Station and Daikanyama Station. Approximately 1,200 workers engaged in the work within a limited time span ofroughly three and a half hours after the passing of the last train, completing
work without incident before the arrival of the first train on schedule.

Project to construct the New East Tower in the Shibuya
Station District (SHIBUYA SCRAMBLE SQUARE)
The redevelopment project in the area around Shibuya Station has
been described as so large it only happens once in a century. It
is the largest project the Company has ever undertaken, and we
managed to complete the difficult project through collaboration andcooperation with numerous partners by maximizing the efforts ofeach and every employee.

Tokyu Group activities
There lies great potential for creating new value through theconnections we have with other Tokyu Group companies that wehave built through social contribution activities and businesses
in various areas. The activities undertaken by Tokyu Group
companies and their employees serve to raise the value of the
Tokyu brand, while increased trust in the Tokyu brand has led to acorresponding increase in the corporate value of each company.

2018

2012
Shibuya Hikarie
The leading project in the redevelopment of Shibuya. The super high-rise
was one of our most difficult projects
because it included large gathering
spaces in part of the way up the tower,
including a 2,000-seat theatre and an
exhibition hall.

SHIBUYA STREAM
This large-scale project includes land readjustment,
revetment repair on Shibuya River, and redevelopment of the riverside area. In addition to thetechnical difficulties inherent to this project, close
coordination was needed with a large number ofstakeholders, including local inhabitants, and thosein charge of railways, expressways, rivers, andother construction projects nearby. Through it, wehave contributed to another urban developmentof the Shibuya Station south side area.

2019
SHIBUYA SCRAMBLE SQUAREThis super high-rise has 47 floors above ground and seven floors below and is constructed in a construction area surrounded by both above and underground rail lines and Highway 246, securing thefree flow of pedestrians in one of the most heavily-visited districts in the country. Here we are demonstrating Tokyu Construction’s skill at creating proposals and its construction management abilities.

Integrated business for work in the post-earthquake
reconstruction project of the area around Ofunato Station
This project is contributing to the reconstruction of Ofunato City in Iwate
Prefecture after the damage it suffered during the 2011 Tohoku Earthquake andTsunami. It used a construction management method designed to incorporate
various ways to ensure quick reconstruction. We are promoting efficient town
development using the technical know-how we have as a private company, allwhile we build a trusting relationship with the local people.

2010
Tama-Plaza Station area development plan
Tama-Plaza Station stands at the heart of Tama Garden
City, and through this project we contributed to revitalization of the area and improved value of the area along therail line through improvements to the shopping mall built
on the artificial ground above the station and throughimproved urban functionality of the surrounding area.

2019

2019
1960

2011

Land readjustment project at Nogawa First District

Futako Tamagawa rise

Our origin was the development of Tokyu Tama
Garden City. The Company built this vast area on 5,000
hectares of land located between Kajigaya Station andChuo-Rinkan Station.

This was one of our biggest projects, integrating
civil engineering and construction. The trusses
between the buildings utilize the large-spaceconstruction techniques in which we specialize.

Minami-machida Grandberry Park
This integrated redevelopment project included Minami-machida Grandberry Park Station on
the Tokyu Den-en-toshi Line and an approximately 22-hectare area accommodating shopping
facilities and urban parks. The large site was divided and construction of facilities for various
uses continued with the highest priority placed on maintaining safety for local inhabitants andpedestrians. Under the detailed plan, the steel frame for the large roof on the station was built
during the limited times available between the last train and the first train each day.

07

08 OUR VALUE CREATION STORYFEATURE ARTICLE 1:

Tokyo Metro Ginza Line
Shibuya Station Railroad
Switching Diversion Project
Harnessing Teamwork and ICT-enhanced Construction Capabilities
Shibuya is one of Tokyo’s busiest neighborhoods. It is here that the Company has spent a decade,harnessing the railway construction techniques we have honed over the years and actively utilizing the capabilities of ICT to carry out some of the most cramped and complex improvements tooperating rail lines we have ever carried out. The track diversion work conducted over the New
Year’s holidays involved a total of 5,000 people, all working towards the same goal. On January
3, right on schedule, Shibuya Station was reborn. Realizing this goal required us to use bothadvanced techniques harnessing ICT, and the teamwork we have spent so long cultivating.
A plan drawing
made using BIM/
CIM model andactual construction photographs

During track diversion work (A drawing During track diversion work
made using BIM/CIM model)(An actual photograph)

This project was one part of the land readjustment planfor the area around Shibuya Station, and it involved therelocation of the Tokyo Metro Ginza Line Shibuya Station
platform in the Tokyu Department Store Toyoko Store, toa new location, 130 meters east, above Meiji-dori. In orderto improve usability, the side platforms were replaced with

Completed station building

an island platform, the ticket gates and platform itself werewidened, barrier-free facilities were installed, and so on. With
three track diversions requiring suspended rail operations, it
took more than a decade from the beginning of construction
in 2009 to the end on January 3, 2020, when the new stationbuilding came into service.

Problem-solving abilities honed through our work in improving operating railway lines
Utilizing BIM/CIM as proposed by Tokyu Construction
As the station lies at the heart of Shibuya, one of the Tokyo’sbusiest districts, there was no space to install temporary tracks
or a temporary station building, and it was difficult to work out
the extremely complex steps required to bring the project tocompletion. In addition, when carrying out improvements on
operating railway lines, there needs to be agreement among
the various departments involved in order to proceed with

V O

I

C

construction, from track maintenance to electrical, communications, administration, train operations, and so on. However, wehave previously experienced issues in communicating exactly
how construction would proceed as plans were preparedusing 2D drawings. So, four years before we introduced BIM/
CIM, a means of 3D modeling, and by being able to use thatto create visualizations of the construction status and what

E

From the Work Site Manager
Our Company specializes in railroad track diversion work, and we honed
those abilities in working on the tracks of the Tokyu Line, another Tokyu
Group company, but I think one of our biggest strengths in the future
will come from the fact that we have also conducted such work on thelines of other companies and gained their trust. In addition, the client
was able to see the effect of using BIM/CIM and VR in our proposal
at this time, and it is clear that such tools will be used throughout theconstruction industry in the future. Our Company will provide thisexperience to more of our customers, not only to improve railway facility
usability for the end-users, but also to contribute to overall urban development that results in safer and more comfortable communities.

Nakahiro
Ikeda

Has been engaged in large-scale improvement workon operating railway lines in the Tokyo metropolitan
area since joining the Company in 1997. Has worked
in the planning and implementation of track diversion
projects on operating rail lines, with moving theelevated Tokyu Meguro Line tracks undergroundbetween Meguro and Fudo-mae stations, moving
the Tokyu Toyoko Line tracks underground between
Shibuya and Daikan-yama stations, and so on. His successes in using BIM/CIM and VR during the construction planning and investigation stages and in various
meetings during this project contributed to Tokyu
Construction being honored with the 2019 i-Construction Grand Prize Excellence Award by the Ministry ofLand, Infrastructure, Transport and Tourism.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Construction Overview (Structure Overview)
Project Name: Tokyo Metro Ginza Line Shibuya Station Railway Tracks Diversion
Project Location: Shibuya Ward, Tokyo
Client: Tokyo Metro Co., Ltd.
Participating East Building: Tokyu, Kajima, Shimizu, Tekken
Companies: East Exit, Meiji-dori, shed installation work: Tokyu, Shimizu, Kajima
Konno Hachimangu/tunnel mouth: Tokyu, Taisei
Construction Construction Overview: Relocation of Tokyo Metro Ginza
Overview: Line Shibuya Station located within Tokyu Department
Store Toyoko Store to a location 130 meters away, the newstation building to be placed above Meiji-dori, with a switchfrom side platforms to a two-track widen island platform.
Improvements of barrier-free facilities and reduction of thenumber of piers on Meiji-dori from seven to three.

the completed structures would look like, we could sharethose images and accelerate the decision-making process. In
addition, by importing those images into a VR (virtual reality)
system, it was possible to virtually enter a full-scale depictionof the new station building yet to be completed, and, from thepassenger’s perspective, we could identify in advance issues
with passenger flow, confirmation of signal visibility, and othersuch elements.

Communication and Teamwork among a Total of 5,000 People
To complete this project, a great deal of cooperation andcoordination was required between the various sites, due tothe fact that numerous large-scale redevelopment projects
were underway at the same time around the area, and due tothe limited construction yard space available. When improving
operating railway tracks, particularly when diverting tracks withstation facilities relocated, it is very important for the civil engineering and constructions units to work closely together. Even
more than technology, the key to success is communication.
The civil engineering and construction units have to overcome
the normal barriers that exist between them, and between the
different project sites, by communicating clearly every day. Only
by coming together to collaborate as a single team during the
preparatory stage, they can demonstrate the strength of their
teamwork when the day to divert the tracks finally come.

A total of 5,000 people came together for a six-day period
over the New Year’s holidays to complete the massive task ofmoving the station facilities and diverting the tracks. It is thelargest and difficult project our Company has ever undertaken,
both in terms of volume of material and the amount of work to
be done. The work was intense and unsparing, with a mountainof issues to deal even during the preparatory stages. Thosemany issues were primarily dealt with by younger employees.
For them, the experience of taking on the challenge inducedby the pressure and unique strain of such a difficult project –and their experience in overcoming that challenge so brilliantly– will serve as a foundation for their further personal growth,and by extension, will serve as a cornerstone for our Company’s
technical capabilities in the future.

TOPICS

The implementation of
BIM/CIM during the project
to relocate Tokyo Metro
Ginza Line Shibuya Station

Honored with i-Construction
Grand Prize Excellence Award
The Ministry of Land, Infrastructure, Transport and Tourism
awards its i-Construction Grand Prizes for outstanding
efforts in “i-Construction” – construction projects that aim
to improve site productivity through the use of ICT. Various
elements of this project were praised, and Tokyu Construction was honored with the Excellence Award for 2019.

Ikeda receiving award from Kazuyoshi
Akaba, Minister of Land, Infrastructure,
Transport and Tourism* Building and Construction Information Modeling/
Management (BIM/CIM) involves the introductionof 3D models during the investigation and design
stages of a project, creating a workflow aiming atpreserving production quality and improving productivity in the construction and maintenance stages aswell by utilizing a series of construction production
and management systems containing information onmaterials, strengths and other attributes.

09

10 OUR VALUE CREATION STORY

Value Creation Process

External Environment

Strengths of
Tokyu Construction

CapitalChanges in Social Environment

Human Capital• Advancement of global
warming• Evolution of digital technology(AI, IoT, robots, etc.)• Population growth, infrastructure development, andimprovement of living
standards in developing
countries• Increasing awareness of
disaster preparedness causedby more natural disasters• Shrinking working-age
population due to declining
birthrate and aging population• Population concentrating inurban areas• Work-style reform• Rapid environmental changes
caused by COVID­19• A group of professionals witha high level of awareness ofresident perspectives andurban development

Teamwork

Social and
Relationship Capital• Connections with the Tokyu
Group companies and areas
along Tokyu railways• Strong relationship with customers• Collaboration with regional
superior general contractors
and subcontractors

TokyuGroupʼs Total
Capabilities

Intellectual Capital• Urban development ability• Highly advanced construction
technology cultivated in railway
construction

Changes in the Business Environment• Medium- to long-term
downward trend in domestic
construction demand• Qualitative change in demand
from new construction torenovation (increased demand
for maintenance and repairscaused by aging infrastructure)• A call for national land
resilience (disaster prevention
and disaster reduction)• Increasing labor shortages(decrease in skilled construction workers, rapid aging ofsociety)• Growing need for productivity
improvement (digitalizationand modularization of building
materials)•Changes in customer needs
due to COVID­19• A culture that emphasizes astrong willingness to contributeto society and a sense of unity

Financial Capital• Stable financial base• High capital efficiency

Know-howof Urban
Development

Manufactured Capital• A technology development
demonstration facility to solve theproblems of society and customers

Natural Capital• Air, water, land, minerals,
forests, biodiversity andecosystem healthManagement Base that
Supports Value Creation

Corporate GovernanceSee p. 42 for details

TOKYU CONSTRUCTION CO., LTD. Integrated Report 202011

Increase capital for further value creation

How Do We Create Value?

Services Provided

Customers and End Users

Mission and Vision• Tokyu Group Philosophy• Tokyu Construction Corporate Philosophy and Vision[Corporate Philosophy]

MissionStatement

Management
PolicyPrinciples
of Conduct[Vision]Deepening and Evolving in
the Pursuit of Genuine Value

Infrastructure
Development
Construction, maintenance and infrastructure
asset management ofJapanese and overseas
structures, such as
railways, roads and tunnels

Tokyu Construction
See p. 02 for details

Tokyu Construction Value Chain• Advanced technical and proposal abilities forconstruction business in urban areas• Providing comprehensive solutions that go beyond
the construction contracting business, using
connections with the Tokyu Group and regional
superior general contractors

Value Provided to
Stakeholders

Urban Development
Planning, proposal,
design, construction
and renovation of highvalue-added buildings inJapanese and overseas▶Optimal solutions
centered on
construction services
in response tocustomer needs

Shareholders and Investors▶ Long-term, sustainable corporate(stock) value
improvement

Employees▶A rewarding work environment that allows our
employees to demonstrate
their abilities and grow, anda comfortable work
environment where diverse
human resources can thrive[Direction for Strengthening our Value Chain]

Enhancing
Functionality

ExpandingBusiness
Domains

Demonstrating
Total Capabilitiesof the GroupSee p. 26 for details

Tokyu Brand
SynergyPartner Companies

Real Estate Rental
Improving the building
value and maintenanceof profitable real estate(offices, commercial
facilities, houses, etc.)▶ Promotion of co-creation
with partner companies
and suppliers, as well as
long-term and continuous growth

Local Community

Tokyu Group Brand Power• Identifying true customer needs and providing
value using Group companies’ strengths and areasof expertise• Increasing mutual value among Tokyu Group companies through business and activities conductedwith local communities

PPP / Concession
Stable operation of urban
infrastructure, including waterand sewage▶ Revitalizing and adding
value to the local
community throughconstruction services
and urban development

Global Environment▶ Effective use of resources,
transition to a low carbon
and Energy saving throughconstruction process andbuilding life cycle

Risk Management

Compliance

See p. 50 for details

See p. 52 for details▶ Maintaining and improving
natural capital

Our MaterialIssues12 OUR VALUE CREATION STORY

Material Issues (Materiality) for Realizing“Our Ideals for 2026—The Company
We Hope to Be in 2026”
In formulating “Our Ideals for 2026—The Company We Hope to
Be in 2026” and our mid-term management plans, we put together
a list of the most important long-term social issues for the Tokyu
Construction Group, and identified issues of materiality throughdiscussions with the CSR Committee. To realize “Our Ideals for2026— The Company We Hope to Be in 2026,” we are determined
to deal with these social issues in the Mid-Term Management Plan:
Shinka 2020 through our business activities.

Process of Identifying Materiality
STEP

1

Identifying Social Issues
Among the United Nations’ Sustainable Development Goals (SDGs), we have identified eight goals
related to important social issues to be given priority by our Group.

Important social issues to be given priority by our Group within the framework of the SDGs
Human
resources

SocietyProvide rewarding workplaces for a diverse workforceFoster human resources who can contribute to society in a sustainable wayContributeto urban development that ensures safe, secure andcomfortable living
Provide optimum construction solutions and create services
Improve efficiency of production processes through technological innovationR educe greenhouse gases and promote resource and energy conservation

Environment

Reduce and recycle construction by-productsD evelop green engineering and create environmentally-friendly designs

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

STEP

2

CSR Committee Deliberation
The CSR Committee consists of the directors, auditors, and the President serving as chairman. The members
have discussed our Group’s social responsibilities in terms of 1) the characteristics of Tokyu Construction, 2)
the characteristics of a general contractor, 3) soundness of management, and 4) social and stakeholder needs.
Comments from participants he development of towns resilient to future natural disasters andT
the improvement of old infrastructure are important missions forthe construction industry.
 e will carry on the tradition of manufacturing, constantlyW
strengthen our problem-solving skills with new ideas and engineering, and continue sustainable development as an enterprise tohelp realize a sustainable society.
 e will contribute to solving global issues such as climate change,W
as a member of the global community.
 he most important issue is finding human resources in a businessTenvironment where the working population is decreasing. We hope
to contribute to a sustainable society by improving the job satisfaction of diverse employees.
 anagement will continue to carry out these missions and enhanceMgovernance through dialogue with stakeholders.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

STEP

3

Identifying Materiality
Based on the results of discussions, we identified material issues to be prioritized by the Group and consideredboth opportunities and risks, which were reflected in four basic policies of our management strategies.
Opportunities

Risks

Basic Policy

Human resources iversification and active
D
participation of workers andrespect for human rights
Improve working environment and job satisfaction

 iversification of individuality
D(consciousness, work style,lifestyle)Address long working hours
and social demands for workstyle reform
Dealing with fewer applicantsfor general contractors

Promote personnel system reform
Promote work-style reformAdvancing woman’s participation in the workplace
Understand and address
employee needs
Increase the number ofqualified workers

 o progress in recruitingN
a diverse workforceDifficulty in securing
time off for a large volume of ordersDifficulty in meetingthe diverse needs of
employees

 evelop a safe, secure andD
comfortable living environment
Establish a society withnational resilience
Pursue the principle ofsafety- first and improve
qualityTransform production
processes to cope withthe declining working-age
populationIncreasingly complex anddiverse social needs andcustomer demand for safety,
quality, environment, productivity and costCommunication difficulties
among generations andproblems regarding thehanding down of skills due
to stress from overwork andlack of mid-career workers intheir 30s
C
 ommoditized market structureof the construction industryC oncern about supply due tolack of skilled workers and lower
productivity, etc. amid continued construction demandImprovement of construction
production system through
IoT, innovation, etc. (promotion of “Shinka” x ICT)
Acceleration of qualitativechange of construction
investment (flow consumption
to stock maintenance modeland environmental needs)C hanging public needs (morediverse order systems, introduction of private-sector initiatives:
PPP/concession business, etc.)
Risk of shrinking future market due to depopulation andweak economic growthIncreased awareness ofglobal environment

Enhance problem-solving skills
Regenerate a culture of safety
Restructure organizationfrom a customer-centeredperspective and understand and address customer needs
Restructure head office
functions (enhance functions
to develop company-wide
optimum measures)Create investment opportunities for the systematic innovation of construction production
Utilize an affiliated renovation business company andrestructure the wooden
construction businessTry to obtain more orders
for PPP/concession businessForm partnerships withother companies and maintain and expand businessscale through M&As
Expand the needs of climate change mitigation andenvironmental improvement
Deployment of environmental technology construction
results and know-how
Develop technologies forpreventing and mitigating
disastersDevelop technologies forrenewing infrastructureL ags in addressing socialand customer needs
Occurrence of industrial
and labor accidents (insafety, quality, etc.)
Insufficient communication within workplaces
due to stress fromoverwork and a lack of
mid-career employees
Delayed measures for
subcontractors
Lack of in-house sourcesof unique innovation
Delays in responding tostock markets
Delays in addressingchanging public needs
Delays in enhancing theconstruction businessand the diversification ofrevenue sources
Delay in the development of environmental
technologies
Increasing risks of
disasters due to climatechangeAppropriate disclosure of
information in response
to climate change is notprogressingS trengthening corporate
structure to diversify revenue
sources in real estate, international and new businesses, etc.
Expanding businesses inthe emerging economies ofSoutheast and South Asia
(acquire ODA projects mainly
in railways and road construction, and high-rise building
construction projects)

 cquire specialized humanA
resources
Increase investment capacity
Continued economic
growth in Southeast andSouth Asian countries

 elays in securingDand training humanresources with highlevels of expertiseLost investment opportunities
Deteriorating real estatemarkets and volatileeconomies in Southeast
and South Asia

Challenges in New
Business Domains

 isk management in conR
struction, real estate, international and new businesses
Enhance sustainable corporate value

 cquire specialized humanA
resources and improve risk
management
Maintain high earning
capacity and enhancefinancial foundations
Communicate our
non-financial value ailure of business riskFmanagement
Dysfunctional compliance mechanisms
Delays in the improvement of business
management and in
recruiting and training
human resourcesLack of engagementwith investors

Enhance Management
and Financial
Foundations

 easures against climate
MchangeRealize an energy-savingsociety
Realize society in harmony
with natureBuild a resource recycling
societyCategory

Society

Environment

 nhance corporate goverE
nanceEnsure complianceEnsure risk management
Governance

Enhance Domestic Construction Business

Material Issues

Innovation of
Human Resources
and Organization

Social Issues

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

1314 OUR VALUE CREATION STORY“Our Ideals for 2026” of the Tokyu Construction Group“Our Ideals for 2026—The Company We Hope to Be in 2026”
We will do our utmost to deliver true value based on a vibrant corporate culture, with the aim of becoming a corporate groupthat can cope with the changing environment. We have the management and financial foundations in place to withstand business risks, and build a highly profitable business portfolio that is not solely reliant on the domestic construction business.

Four Basic Policies
Human Resources
and Organization

Domestic Construction
Business

New BusinessDomains

Management and Financial
Foundations

Bolstering individual
capabilities and making
work more rewarding foreach member of the Tokyu
Construction Group

Honing our problem-solving
skills to ensure safety, enhancequality, reduce environmental
impacts, boost profitability
and lower sales costs

Taking on challenges andamassing achievements innew business domains

Shoring up ourmanagement and financial
foundations

We aim to be a company where
each and every employee canfind meaning in their work, areason for existence, and asense that they are contributing
to society.

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

While maintaining our core
construction business, we will
anticipate the changing times as
we take on challenges and generate achievements in a varietyof business domains

Learning from past mistakes, wewill shore up our management
and financial foundations in
preparation for changes in theoperating environment. At thesame time, we will meet shareholder expectations by steadily
increasing corporate valueCore Competency

Strategies for Realizing Our Vision
Work-stylereformInnovation Evaluationof human
resources andorganization

Corporate
culturereformDiversity

Business domains

Bolstering
capability

Acquire real estate rental properties tostabilize profits
Initiatives in the PPP/concession business

Enhance Domestic
Construction Business
Enhance problem-solving skills
Establish business partner relations
Focus on renovation, wooden construction, railroads, etc.
Seek opportunities for alliances andM&As with other companies

Expand paprika business
Create new businesses

Expand New
Business Domains

Business developments in Southeast
and South Asia

¥150 billion or more
EnhanceSecure risk tolerance
core
against risky
capitalinvestment assets
Compatibility

High
ROE

10% or more
Create higher ROE
exceedingequity capital costs

Business areas

Innovation of Human
Resources and Organization

Enhancing Domestic
Construction Business

Challenges in New
Business Domains

Enhancing Our Management
and Financial Foundations

 he core competency of our
TGroup is our human resources ndeavor to reform conE
struction production system(enhanced productivity anduse of ICT) by improving
problem-solving skills

 romote overseas operationsPin Southeast and South Asia hile reflecting on ourWpast oversights, we aim to
improve corporate governance as well as strengthen
the structure of risk management and our compliancesystemW
 e will improve human resources training to enhance
the capabilities of every
employee as well as reform
our personnel system andwork style nhance relationships asEbusiness partners with clientsand subcontractorsW e will make work highly rewarding by transforming ourcorporate culture in which
employees can fully leverage
their capabilities

 ocus on fields with growingF
demand (renovations, midsized wooden construction,etc.) and advantageous fields(such as railroad construction)A s a result, we will raise ourcore competencies to a levelof capability that other companies cannot easily emulate ggressively pursue opporA
tunities, alliances, and M&As
with other companiesIn real estate business,acquire profitable properties
with stable yields expected tolead to stable profits
 xpand PPP/concession andEpaprika businesses that are
mostly unaffected by theshrinking domestic construction market
 arly preparation ofE
seed-sowing to obtain new
business and create newvalue

 ursue an appropriate sizePof core capital that can
respond to increased risks
due to stronger and wider
investment operations
 y maintaining higher ROE
Bcompared to equity capitalcosts, we will always enhance
corporate value and secureshareholder profits over the
medium to long term

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Quantitative Targets of “Our Ideals for 2026—The Company We Hope to Be in 2026”
We steadily promoted various measures in the "Mid-Term Management Plan (2018-2020): Shinka 2020," which we positioned
as a start to “Our Ideals for 2026—The Company We Hope to Be in 2026," and achieved our key financial KPIs one year
ahead of schedule in fiscal 2019.

Progress of KPIs for the Realization of Goals in Fiscal Year 2019
Our Ideals
Vital
CultureMaximize
True Value

Basic Policy

ESG

Targets

Bolstering individual
capabilities andmaking work more
rewarding for eachmember of the Tokyu
Construction GroupS

Employees

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

E・S

Customers
Society
Partnercompanies

Fiscal Year 2018

Fiscal Year 2019

Fiscal Year 2020

Fiscal Year 2026

Employee engagement
survey (*1)

BB

BB

BBB

A

No. of days worksites
are closed (*2)

Closed for 5 to 6 days/
4 weeks

Closed for 6 to 7 days/
4 weeks

Closed for 7 to 8 days
4 weeks

Closed for 8
days/4 weeks

Customersatisfaction (*3)

95%

97%

100%

100%

Safety index (*4)

0.43

0.09

0.10 or less0.10 or less

KPI

CO2 emissions (*5)

17.2 ton-CO2/¥0.1 billion 18.0 ton-CO2/¥0.1 billion 23.2 ton-CO2/¥0.1 billion 20.0 ton-CO2/¥0.1(down 42%)
(down 39%)
(down 22%)billion (down 32%)
6.6%

6.3%

2.7% or more
(6.3 % before the review)

7.0%¥331.4 billion¥322.1 billion¥244 billion or more(¥312 bilion before the review)¥350 billion
or more

18.1%

15.4%

5% or more
(13 % or more before the review)

10% or more

¥92.6 billion¥101.2 billion¥104 billion or more(¥110 bilion or more before the review)¥150 billion
or moreConsolidated operating
income margin

Taking on challenges
and amassing
achievements in new
business domains

Consolidated sales

Shareholders
Resilience to
the Changing
Environment

ROE

Shoring up ourmanagement andfinancial foundations

G
Consolidated core
capital*1: “Motivation Cloud” engagement rating by Link and Motivation Inc. The survey covers all employees of the entire Tokyu Construction Group, including subsidiaries. “BB” is the fifth highest level on a scale of 11.
*2: Our target covers new worksites of Tokyu Construction (the parent company) starting from FY2018 (excluding the offices in which application is difficult)*3: Rate of customer satisfaction for Tokyu Construction (the parent company) in private sectors (answering “Yes, we are definitely happy to order/Yes, we can also order.”): Average 95% during FY2014-16*4: Safety index of Tokyu Construction (the parent company): (Frequency rate x Strength rate)*5: Specific energy consumption (base unit) per construction sales of our parent company Tokyu Construction (ton-CO2/¥0.1 billion) (The reduction rate is compared to that of FY1990. (29.6 ton-CO2/¥0.1 billion))
The standard value of Tokyu Construction (the parent company) in FY1990 is calculated based on the figures recorded in FY1990 in the “CO2 Emission Survey Report” issued by Nikkenren (Japan Federation ofConstruction Contractors)
CO2 emissions in FY 2018 and FY 2019 are actual values compiled from the previous year

Sales, composition ratio, and operating income margin
Fiscal Year 2018

Fiscal Year 2019

Fiscal Year 2026

Consolidated sales ¥331.4 billion

Consolidated sales ¥322.1 billion

Consolidated sales ¥350 billion or more

4%

62%

19%

5%

8%

56%

24%

Operating
Income Margin

Operating
Income Margin

6.6%

6.3%

52%

22%
Operating
Income Margin

2%

2%

4%

13%

13%

14%

Building construction
Building renewal

7.0%

Wooden building construction

or moreCivil engineering
New business areas

Investment plan
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 ourmanagement foundations, organization, andhuman resources
Amount of total investment
In principle, investment will be made with ourcore capital. We will discuss the optimal way ofraising funds by considering our management
and financial situation, market environment, etc.

Total: ¥90 billion
Domestic construction
business

Civil engineering and building
construction businesses (including
renovations and mid-sized wooden
construction)¥17 billion

New business areas

Real estate, PPP/concession businesses, and other new businesses(paprika business, etc.)¥70 billion

Management foundations,organization and humanresources

Employee training, ICT, etc.

¥3 billion

15

16 INITIATIVES FOR VALUE CREATIONA Message from the President

Envisioning the future ofa sustainable company that
contributes to improving
the global environment andmaking a better world forthe next generation.
Mitsuhiro Terada,
Representative Director, President
Tokyu Construction

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Reflecting on the 2018-2020 Mid-term Management Plan, Shinka 2020
In 2018, the Tokyu Construction Group laid out ourideal vision, “Our Ideals for 2026—The Company We
Hope to Be in 2026”, under the banner of forging a
corporate group that is able to cope with the changing
business environment that embodies true value througha vital corporate culture. At the first step, we formulated“Shinka 2020,” our 2018-2020 Mid-term Management
Plan, and promoted the initiative based on four basic
policies: innovation of human resources and organization, enhancement of the domestic construction business, promoting the diversification of revenue sourcesand enhancement of our management and financial
foundations.
I was appointed as President of Tokyu Construction
on June 1, 2019, and I feel that there are certain expectations from my leadership based on my onsite experience and as an employee going through the corporate
hierarchy. Going forward, we will continue to work overthe medium to long term plan to improve corporate
value by harnessing our corporate culture of cooperation based on teamwork and unity.
Net sales for fiscal 2019, the second year of the Plan,
were lower than our record sales of the previous year,

but we were able to set new records in terms of grossprofit by maintaining high standards and increasing
profits primarily in large-scale construction projects.
We noticed the increased costs for human resources
training and recruitment aiming for future growth, but
in addition to stabilize growth among subsidiaries
responsible for building renewal business, we havebeen steadily adding more initiatives aimed at profit
diversification overseas and in real estate, private-public
partnerships, and so on. We were thereby able to meet
our financial indicator goals laid out for the final yearof the Plan for operating income margin, net sales, andROE a year ahead of schedule.
However, some financial indicators have beenrevised for fiscal 2020, the last year of the Plan, due tothe influences of the decrease in orders received fromthe previous year and the global spread of COVID-19.
Going forward, we will formulate our next management plan based on how many of the current Mid-termManagement Plan’s goals are met, changes in themarket and the business environment due to the spreadof COVID-19, and based on the resolution of societal
issues as laid out in the SDGs, etc.

Tokyu Construction’s onsite capabilities to carry out difficult projects
Demonstrating our technical abilities and project management skills
Fiscal 2019 witnessed our Company’s completion ofseveral large-scale projects. We have fully demonstrated
our technical abilities and project managements skills;
greatly improving our record in construction projects,
through employee growth and knowledge acquisition
as well as achieved great success in meeting our goals
from our Mid-term Management Plan by innovating
human resources and organization and enhancing thedomestic construction business.
Firstly, phase one of the SHIBUYA SCRAMBLE
SQUARE project (the East Tower) was opened in
November 2019, 60th anniversary of our founding, thereby
forming a new landmark that towers about 230 meters
above Shibuya Station, one of the busiest districts inJapan. It was an incredibly difficult project from various

perspectives, not only due to the technical difficulties
posed during its five-year construction, but also from thecoordination with other redevelopment projects closelyintertwined with our own, the requirement to maintainpedestrian flow lines while the building was under construction, and the necessity of keeping the transportation
infrastructure operating both around and under the site.
In addition, the same period also witnessed theopening of Minami-machida Grandberry Park. Thislarge-scale Tokyu Group redevelopment project integrated and upgraded the commercial facilities andurban parks surrounding Den-en-toshi Line Minamimachida Grandberry Park Station. As stations and trains
continued to operate during construction period, asophisticated plan was required for execution and most

SHIBUYA SCRAMBLE SQUARE Tokyo Metro Ginza Line Shibuya Station Railway
Tracks Diversion Project

Minami-machida Grandberry Park17

18 INITIATIVES FOR VALUE CREATIONA Message from the Presidentof the work had to be done in the middle of the night.
Then in January 2020, Ginza Line Shibuya Station wasgiven a new life in order to address the previous issues
of usability. The tracks were diverted and the station was
relocated within the limited time available over the New
Year’s holidays. As the works required long hours and need
to be carried out simultaneously at multiple sites, a total of
5,000 people (including subcontractors) came together asa single team to accomplish the project, hence, the newstation building was able to open on schedule.
All of these projects were tackled as a company, withfull collaboration between the civil engineering andconstruction units and between company branches andheadquarters. They are all truly symbolic achievementsthat demonstrate our Company’s strength: the ability toactively work as a team towards a single goal. We havegained much reputation from these projects; our employees have increased their capabilities by improving theirtechnical skills and completing such difficult work, and
our Company has forged strong bonds with our subcontractors as well. Notwithstanding that, our clients havealso expressed their great appreciation for the work that
we have done for them. I believe all of these shall entitled
us to undertake more projects in the future. Customer
satisfaction is a key performance indicator for our
Company, and its increase from 95% to 97% has vastly
improved our corporate value, and by participating inurban development work promoted by the Tokyu Group,
I believe that we were able to contribute considerably tostrengthening the value of the Tokyu brand.

Safety index improvement achieved ahead of schedule
When I was appointed as President, I believe thatstrengthening our onsite capabilities is an urgent issue
for the Company. In concrete terms, I believe this will
require the pursuit of a safety-first mindset, meetingclient expectations of quality, practicing environmentally-friendly management, improving productivity, andreducing costs. One of these elements, the safety index
has greatly improved from 0.43 to 0.09 in fiscal 2019,
performance is even better than our fiscal 2020 goalof 0.10. I believe that we have achieved good resultsfrom the review of safety management system since

the beginning of the fiscal year to further evolve safety
management; myself and other senior management
were more involved at project sites, studied the Safe
Construction Cycle, improved communication at various
levels and so on. However, we have no end goal when it
comes to safety. We must remain aware of the need todeepen and evolve our efforts day by day, and always
strive to prevent accidents especially during this pandemic-Covid 19 where we have to maintain good communication between all parties.

Transforming awareness to promote work-style reform
Regarding work-style reform, we are promoting various
measures aimed at changing awareness, from reviewing
the personnel system, to implementing organizational
efforts through the establishment of the Work Style Reform
Department in fiscal 2018. We have been putting in a
steady effort to reduce overtime and implement our “4weeks = 8 work site closure days” onsite initiative in order
to limit working hours in a way applicable to the construction industry from April 2024. To promote awareness, wehave further introduced a mechanism by which employees
are offered financial bonuses for successfully reducing
overtime hours and helping employees proactively improvetheir own workplace efficiency without losing motivation.
Naturally, this effort is not designed to simply reduce hours;
productivity must be maintained or improved. Thus far wehave seen that our productivity is improving while overtime
hours and holiday working hours are being reduced andour construction projects are proceeding as planned.

Accelerating the digitalization of the construction production system
In order to improve productivity and efficiency as well as
addressing the labor shortage issue, we have decided
to accelerate the implementation of digital-based onsite
operational innovations, partly also due to the impact of
COVID-19. A variety of ICT tools and systems have beendeveloped in recent years to improve work efficiency on
construction sites. Last year, we have selected a construction
site in Chiba Prefecture to serve as an ICT model site to
conduct a range of construction management experiments
harnessing drones, tablet devices, wearable cameras, digital
signage, etc. to determine the effectiveness of integrated
ICT and IoT systems. Going forward, the results of theseexperiments will be used to proactively develop advanced
technologies to improve work efficiency at a diverse rangeof work sites, including employees from our subcontractors.
Another innovation we have implemented in the production process is the use of BIM/CIM*. The Ministry ofLand, Infrastructure, Transport and Tourism has called BIM/
CIM* “an engine for the productivity revolution,” andour Company has been actively promoting its usage in
improving design and construction work efficiency, and in“i-Construction,” construction production processes harnessing ICT. The BIM/CIM 3D models that we have madefor the Ginza Line Shibuya Station Track Diversion projectTOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

were highly valued and won the i-Construction Grand Prize
Excellence Award from the Ministry of Land, Infrastructure,
Transport and Tourism for that work. In addition, we haveacquired Singapore’s Indochine Engineering Limited, a BIM
facility design company as a 100%-owned subsidiary. In thismanner, we welcomed more highly-skilled BIM engineers
into our Group. This has not only accelerated the use of
BIM in domestic construction projects (with expectations ofincreased productivity), but it has a synergistic effect resulting in improved skills for engineers from both companies
as well as getting international orders through the creationof opportunities for upstream involvement in construction
projects in Vietnam and ASEAN region.

We will further promote growth initiatives in this way toachieve our goal till reaching the top of the industry in DX*
centered on BIM/CIM.
*Building and Construction Information Modeling/Management (BIM/CIM)
involves the introduction of 3D models during the investigation and design
stage of a project, creating a workflow aiming at preserving production quality
and improving productivity in the construction and maintenance stages aswell by utilizing a series of construction production and management systems
containing information on materials, strengths and other attributes.
*Digital Transformation (DX) refers to when companies respond to great changes
in their business environment by harnessing data and digital technologies tooffer innovative products, services, and business models tailored to customer andsocietal needs, and to establish a competitive advantage by transforming theiroperation itself as well as their organization, processes, and corporate culture.

The impact of COVID-19
As described thus far, from the perspective of our ability
to strengthen our onsite capabilities, I believe that wehave been steadily approaching “The Company We
Hope to Be in 2026” though the impact of COVID-19
has changed the business environment completely. In
terms of the short-term impact, the postponement of the
Olympics has had little effect as the majority of construction projects linked to the games are almost completed,but it would be impossible to predict when the pandemic
will be brought under control. Hence, in prioritizing
the goal of halting the spread of the virus and keeping
workers on site and other related people in good health,
we anticipate that the conditions may change such that
construction might be again interrupted.
However, I am paying more attention to potential
medium-term changes in the structure of demandthan to the short-term impact. For example, new capital investment in railways may be postponed with theuse of telecommuting, the reduced demand for officespace in the city center, and lesser passenger numbers

on railways. It is unlikely that the number of inboundtourists will return to normal any time soon, and this has
led to concerns about the impact on hotel and airline
demand too. Hence, our new demand have to include
increased investment in logistics infrastructure to matchthe expansion of the E-commerce market. We can also
envision a steady rise in demand for renewal projects tomake structures more environmentally-friendly. Lastly,
we should also expect increased investment incorporating business stimulus measures to improve disasterprevention and mitigation abilities and maintenance oftransportation infrastructure so as to better cope withnatural disasters caused by abnormal weather events.
Amidst the accelerating social changes caused by
the spread of COVID-19, I believe that as a company,
we must understand and respond to customer demand
while reliably fulfill the mission of the constructionindustry by contributing to disaster prevention andmitigation and social infrastructure maintenance.

We aim to produce both economic
and social value while maintaining
an understanding of the rapidchanges in society andin the construction market.

19

20 INITIATIVES FOR VALUE CREATIONA Message from the President
Formulating a new corporate vision and the next management planThis fiscal year is the final year of the current Mid-termManagement Plan and the final destination of Shinka
2020, our current corporate vision formulated in 2010.
For this reason, our Company is now in the processof drawing up a new corporate vision and designing
our next management plan. In the coming years, it isexpected that many presuppositions inherent to theconstruction market will be drastically transformed, fromthe major market changes caused by the appearance

and spread of COVID-19, to the changes in societal
awareness due to such efforts as the SDGs and ESG.
We must aim to create both economic and social value,and create a vision of the sustainable company so as
to contribute to building a better world for the coming generations. Our three keywords for this effort are
excitement, empathy and acceptance together with theopinions from our younger employees – who will beserving as our next generation.

Promoting environmental consideration as the core of management
Understanding the increase in social awareness throughefforts such as the SDGs and ESG, we have conducted
an extensive review on our environmental policies andannounced to all employees in Jun 2019 that we would
be promoting a stance of environmentally-friendly management. We became more active than usual before
implementing initiatives to reduce our environmental
burden, and added the expansion of our system designed
to promote such efforts to our policy by establishing ourEnvironmental Affairs Department in April 2020.
In early 2016, we carried out ZEB* renovations to
the 25-year old administration and research building at
the Company’s Institute of Technology, and our latest
data shows that we have successfully reduced energy
use – including energy produced – by 78%, one of thehighest rates in Japan. We are now working on collecting and analyzing energy use data etc. to continue
reducing costs and build a system for future use in newproperties. As the number of aging buildings increases,
we believe that ZEB renovations will become the benchmark in the future. While we are designing multiple
new ZEB projects, we are also working hard to draw
up proposals to multiple customers who have alreadyapproached us on the same. We aim to help our customers to reduce environmental impact by proactively
coming up with new proposals that harness our continually increasing experience in designing ZEB projects,
and by continuing to conduct research and development into the relevant technologies. I believe that our
ZEB technologies form the bedrock of value which we
can provide in the environmental field.
In April 2020, we received approval from Science
Based Targets (SBT), an international initiative organization aimed at reducing greenhouse gas emissions.
Hence, we believe that it is important for our employees
to have environmental awareness, we have set a target
for employees engaging in duty based in office premises to pass the Certification Test for Environmental
Specialists (Eco Test) by 2021 while the rest of employees to pass the test by 2026.
The next mid-term management plan will initiate
reform within our current businesses and development of
new areas of business while keeping the environment at
the core.
*ZEB: A (net) Zero Energy Building, for which the annual primary energy consumption and production are aimed to be equal.

I feel that engagement is about
each and every individual meshing
together with the Company likegears, so that both employee andthe Company can grow together.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Focusing on employee engagement
Needless to say, the greatest assets for companies in
the construction industry are the people who worked
for them. That is why we highly respect the abilities andmotivations of every employee, so that each individual
can fully understand the Company’s strategy and goals,
that enable him to voluntarily take the initiative to put his
strengths into use for the company as a whole. I feel thatengagement is about each and every individual meshing
together with the Company like gears, so that both they
employees and the Company can grow together.
We have been conducting a yearly survey on
employee engagement and make a company-wide
announcement after consolidating all our findings.
Thereafter, we will review on the conditions and important issues within each department in the company, andtake effort to resolve such issues. I hope to cultivate animportant corporate culture in which employees arealways strongly aware of the fact that individual growthis interrelated to corporate growth and leaders shallkeep up with their employees and maintain high motivation at all times.
In 2019, we were ranked 7th in high-scoring major
corporations (1st in the construction industry) out of 1,568
companies surveyed in an employee engagement survey
conducted by Link and Motivation Inc.
We believe that the best training ground for employees is on site, that is why I feel that many of our employees have outgrown through working on difficult projects
like SHIBUYA SCRAMBLE SQUARE. We have started ahuman resource development program for the employees of next generation who will be running the company
in the future. Going forward, we will actively schedule
employees for jobs rotation not only within each specificunit, but also to sales units and work sites them to for abroader range of exposure and gaining experience fromdifferent field.

Governance under the new management system
During my first year as President in fiscal 2019, I worked
closely with former Vice Chairman Toshio Imamura tofortify our construction business and promote the midand long-term management plan; we have formulated aCompany-wide sales strategy and set up our urban solutions business strategy department. In fiscal 2020, I willbe leading our management throughout the Company
to formulate a new corporate vision and new management plan.
The Board of Directors has been downsized from 11
to 10 members. Three of them are independent external directors, comprising 30%, almost a third of our total
directors. In addition, we have increased diversity on the
Board by appointing our first female external director,

Ms. Kahori Yoshida, who shall continue to provide us
with frank opinions that give us a better understandingof generational differences as well. Notwithstanding
that, we have also requested our external directors toaccompany our project members to attend expert-led
seminars aiming to formulate the new corporate visionand next management plan. We plan to discuss these
efforts at our Board of Directors’ meeting so as to solicit
opinions and advice from them. Our goal is to create a
corporate vision and management plan that other thanemployees and stakeholders to accept and empathizewith the goal, we hope to have feedback from the widearray of public stakeholders as well.

To all stakeholders
It is expected that both sales and profits will decline infiscal 2020 due to the drop in orders received during last
fiscal year and impact of COVID-19. We apologize forany concern caused to our stockholders and investors,
but first and foremost, we must maximize our efforts tomanage the Company with the utmost consideration
given to preventing the spread of COVID-19, and toensuring the health and safety of all employees andother individuals at construction sites, offices and othercorporate locations. We will continue to maintain close
contact with our customers and steadily implement themeasures to strive to recover any lost profits by acquiring design changes and reducing costs in the final fiscal
year of the Mid-term Management Plan.

Lastly, we would like to share that we are currently
working to formulate the next management plan forthe coming decade, taking into account the potential
impacts of COVID-19, SDGs and future changes in theeconomic and social environments. An announcement
will be made after finalization and completion of theplan. We take this opportunity to express our appreciation to all stakeholders for your continued support andencouragement. Thank you.

21

22 INITIATIVES FOR VALUE CREATION

Financial and Capital Strategies
We aim to achieve sustainable growthby promoting investment in order toenhance the construction businessand diversify revenue sources, while
fortifying our financial foundation tobetter endure potential risk.

Masatoshi Shimizu
Director, Senior Managing
Executive Officer,
General Manager, Business
Administration Division

On market environments
When the current Mid-term Management Plan was underreview in 2017, it was expected that demand would decline
due to the completion of construction projects for the 2020
Tokyo Olympics and Paralympics. However, the market
did not undergo any major shrinkage due to unexpectedly
high levels of corporate investment in facilities, and public
investment into disaster prevention and mitigation andother projects.
While market decline due to downturn in demand is
expected to be lower than predicted, the current market isshrinking due to the drop in Olympic-related construction
and changes in the market environment, and competition is heating up among companies in this industry. The
impact of this has been clear since late fiscal 2019, andwhen compared to the previous few years of relatively
strong profits, it feels as if the number of highly profitableprojects is decreasing.

The impact of the spread of COVID-19
The spread of COVID-19 has resulted in an impact greaterthan any construction market environment changes
expected to arise after the Tokyo Olympics and Paralympics.
At Tokyu Construction, workers engaged in inside duty
were the prime target for the shift to telecommuting, and wefurthermore decided for construction sites at work to be shut
down as quickly as possible in order to prevent the spreadof the virus. As a contractor, it was a decision that required
great resolve, but we prioritized the health and safety of all
involved, including employees of our Company and at our

subcontractors. We saw it as a part of our social responsibility
as a company to help reduce the burden on medical facilities
caused by the spread of COVID-19, and after the state of
emergency was declared, we suspended construction withthe understanding of our customers acquired through consultations. Fortunately, the thorough anti-infection measures
implemented in our work sites and the relatively quick end
to the state of emergency meant there was little impact fromdelays in construction projects already underway.
That being said, there were delays seen in new construction for some projects that had not yet been formallydecided. For example, net sales for this fiscal year will
decrease significantly for projects meant to start in April thatwere delayed to the beginning of autumn. However, most of
those projects are predicted to start during the current fiscal
year, so we expect that this year’s decrease will be recovered
after the next fiscal year.
Regarding capital, last fiscal year saw changes in payment
terms for subcontractors, who serve as important partners of
our Company, and saw better cash ratios and shorter billing
periods. As a result, operating cash flow was negative forthe first time in three fiscal years, but sufficient measures
have been taken to ensure there is no shortage of capital,
so there seems to be no need for concern. The Company
will borrow money within the framework of committed credit
lines arranged with partner financial institutions, and flexibly
respond to demands for capital, including for investment
projects expected to expand in the future.

Fiscal 2019 results and progress of the Mid-termManagement Plan
Our Company laid out four basic policies in Shinka 2020,
our 2018-2020 Mid-term Management Plan: innovationof human resources and organization, enhancement of
the domestic construction business, promoting the diversification of revenue sources, and enhancement of ourmanagement and financial foundations. In accordance withthose policies, and in consideration of the post-Olympic/
Paralympic market environment and external factors such as
the spread of COVID-19, we strengthened our relationships
with priority customers and improved our onsite capabilities in our domestic construction business. In real estatebusiness, we worked to stabilize future profits by acquiring
profitable properties, and we worked to improve efficiency
of construction and implement more advanced construction
techniques through the active harnessing of ICT.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

These efforts contributed to our fiscal 2019 consolidated
net sales of ¥322.1 billion (down 2.8% from FY2018), operating income of ¥20.3 billion (down 7.6%), ordinary incomeof ¥22 billion (down 4.2%), and profit attributable to ownersof parent of ¥14.9 billion (down 3.9%). Orders received were
¥215.1 billion (down 24.6%) due to the downturn in overseas
civil engineering work the previous fiscal year, and due toprivate construction projects being delayed to the following
fiscal year.
Two years of the plan’s initiatives have progressedsmoothly, and we met some of our key performance indicators (financial KPIs) a year ahead of schedule by achieving
a consolidated operating income margin of 6.3% (goal of
6.3% for 2020), consolidated net sales of ¥322.1 billion (goalof ¥312 billion for 2020), and an ROE of 15.4% (planned for
13% by 2020). Consolidated equity also increased to ¥101.2
billion (with a 2020 target of ¥110 billion).
We are now reviewing our KPI goals for fiscal 2020 basedon the off-season of completion and start of large-scale construction projects, the spread of COVID-19, and the impactof the increasingly competitive environment.

Efforts to reform the construction production system
The aging of skilled workers, labor shortages, and work-stylereforms to reduce long working hours in the constructionindustry are all contributing to the urgent need to reformthe construction production system, e.g. through improving
productivity by utilizing ICT.
One part of our effort to improve productivity wasachieved through an agreement reached in July to acquire
the stocks of Indochine Engineering Limited (IES), a BIM
design firm headquartered in Singapore. BIM involves theintroduction of 3D models in the investigation and design
stages, and using them at every subsequent stage, from
temporary construction and construction planning, to material and equipment procurement, construction work, andmaintenance after completion. By including attribute information (i.e. materials, strengths, etc.), it allows for a workflow
designed to be used through a series of construction production and management systems, and is expected to be aneffective means of improving quality, reducing construction
time, and reducing labor requirements.
Tokyu Construction established a specialized organization in 2017 for the promotion of BIM, but with theacquisition of IES stock, we aim to increase the numberof engineers highly skilled in BIM techniques, and further
enhance productivity.

Growth investment
In order to meet our stated goal of fulfilling our conceptof “Our ideals for 2026 ― the Company we hope to be in
2026,” we plan to invest ¥24 billion in domestic construction
business, in new business areas, and in our managementfoundation, organization, and personnel by 2020. Over thenine-year period starting in fiscal 2018, our plan is to invest a
total of ¥90 billion.
In the construction business, we are investigating productivity improvements like that achieved through the previously
mentioned stock acquisition of a BIM company, and mergers and acquisitions that complement our value chain. We
have also worked towards expanding into new businessareas through the investment in the acquisition of approximately ¥10 billion in rental income real estate over the twoyears until FY2019. This investment is steadily producing
the expected profits through capitalizing on our Company’s

strengths by increasing building value and other means. In
addition, we are investing in human resource training, theestablishment of internal infrastructure needed to allow for
telecommuting, etc. We are actively investing in growth andin the outside hiring of individuals with expertise in various
fields that gives them the careful judgement needed torespond appropriately in any future economic recession, andare reviewing both risk and opportunity in improving thesystems we have in place.

EquityTo secure the equity required to build a financial foundationthat can withstand the risks inherent to growth investment,
we aim to maintain an ROE of 10% or more, which exceeds
shareholder equity costs, while increasing our consolidated
equity to more than ¥150 billion by fiscal 2026.
Our efforts thus far have resulted in our accumulating
almost the amount of equity planned for the end of March
2020, but the impact of COVID-19 etc. is expected to resultin us being slightly below our end of March 2021 target of¥110 billion.

Shareholder returns
We aim to provide shareholder returns with due consideration given to the balance between increasing retained
earnings for investments aimed at improving corporate
value and improving our financial position to better prepare
for potential medium to long-term risks. Our basic policy is
aimed at providing a consolidated payout ratio of 20% ormore over the three years ending in fiscal 2020.
Fiscal 2019 saw shareholders receive an annual dividendof ¥30 (consolidated payout ratio of 21.6%), and this fiscal
year, while our equity targets will not be reached, the plan
is to again provide shareholders with returns following thatbasic policy.
However, as COVID-19 has continued to spread, we haveseen some major changes in various aspects, including not
only the business environment and how people work, butalso people’s own personal values. We are looking at this as
an opportunity for change as companies are required to put
in the effort to sustainably increase value, and are currently
formulating a new vision and strategy for the coming term.
We require a certain level of increased equity to provide for
growth investment and to enhance our financial foundation
to withstand risk. With that understanding in mind, we will
discuss how to review shareholder returns for the coming
fiscal years, in order to continue to meet the expectations of
our shareholders and investors.

23

24 INITIATIVES FOR VALUE CREATION

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

Net sales(Millions of yen)

(Millions of yen)

400,000

400,000

300,000

303,758

293,539

299,436

285,476

300,000

296,393

320,711331,437 322,170

FYE Mar.
2018

FYE Mar.
2019

243,618
215,109200,000

200,000

100,000

100,000

0

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

0

FYE Mar.
2020

Operating income / Operating income margin
(%)

(%)

25,0001530

20,00018,17821,987

20,315FYE Mar.
2017

27.0
22.8

12

17,21122.2

20

15,0009
7.1

10,000FYE Mar.
2020

Return on equity (ROE)(Millions of yen)

21,416FYE Mar.
2016

6.7

6.6

6.3

6.1

18.1

15.4

6
10
3

5,000
0

FYE Mar.
2016■ Operating income

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

0

0

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

Operating income margin

Total capital / Equity ratio

Dividends per share / Payout ratio(Millions of yen)

(%)

(Yen)

(%)

120,000

80

40

40

60

30

101,703

92,98190,00079,17525

66,38060,00042.9

54,238
32.3

0

31.6

FYE Mar.
2016■ Total capitalFYE Mar.
2017

FYE Mar.
2018

Equity ratio

20

20

10

0

0

35.0

25.2

30,00040

FYE Mar.
2019

FYE Mar.
2020

31

30

20.5

20.6

30

30

26
21.5

20.0

20.3

20

10

FYE Mar.
2016■ Dividends per share

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

Payout rationFYE Mar.
2020

0TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Non-Financial Highlights (Non-Consolidated)
CO2 emissions

Energy consumed (Head office, branch offices, laboratories and factories)(t-CO2)(Fuel oil conversion: ℓ/m2)

30

80,00026.56

69,15368,025

1,820

1,913

60,000

25.65

24.66

25.33

FYE Mar.
2018

FYE Mar. FYE Mar.
2019
2020

23.32

55,92353,356

1,658

1,754

20
40,18040,0002,000

67,333

66,11251,60254,26538,18010

20,0000

FYE Mar.
2016■ Workplaces

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

0

FYE Mar.
2020

FYE Mar.
2016

FYE Mar.
2017■ Office

Construction by-products* generated / Recycling rate
(10,000 t)

(%)

100

100
99.4

98.4

95.9

94.0

Accident frequency rate*
0.60

93.3

75

0.43

75
0.40
47.3

50

50

41.0

39.5

37.6

34.8

0.20

25

0.12

25

0

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020■ Volume of construction by-products generated

Recycling rate

0.20

0.17

0

0

FYE Mar.
2016

FYE Mar.
2017

0.09

FYE Mar.
2018

FYE Mar. FYE Mar.
2019
2020

Safety index: √ (Frequency rate x Strength rate)*Consumption by-products are generated during construction work.
This includes recycled resources and waste.

*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.
The Strength rate is an index that shows the scale of industrial accidents thatcaused workdays lost per thousand total extended working hours.

Number of employees

Employment rate for people with disabilities(Persons)

(%)

3,000

3.0
2,537

2,464

2,412

215

193

2,576

2,523

234

2.22

268

248

2,000

2.26

2.30

2.46

2.52

2.0

Legal employment rate
2.2%
2,219

2,249

2,303

2,275

2,308

1,000

0
■ Male1.0

FYE Mar.
2016■ FemaleFYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

0

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar. FYE Mar.
2019
2020

25

26
26 INITIATIVES FOR VALUE CREATION

Mid-Term Management Plan (2018-2020): Shinka 2020
The Mid-Term Management Plan (2018-2020): Shinka 2020, which was formulated in March 2018, refers
to the final process for actualizing our corporate vision of being “a general contractor that continues toembody Shinka,” which was established in 2011 for the milestone of 2020, as well as the start of efforts toachieve “Our Ideals for 2026—The Company We Hope to Be in 2026.”

Urban Solutions Business
The Urban Solutions Business was developed byputting our plans into practice, while considering
the changes in our business environment from
2020, as well as the strengths of our Group.

Environment Surrounding
the Construction Industry

Labor Shortage

 hanges in the Environment SurroundingC
the Construction Industry

1
Current
situation

While investment in construction remains at a high level,
it is imperative to secure engineers, due to the aging ofskilled construction workers combined with a low numberof young workers.

Outlook

From 2020, many employees of the baby boom generation
will retire. Accordingly, it will be essential to secure engineers and skilled construction workers, in order to maintainour supply capacity.

2
Aging Infrastructure

Current
situation

OutlookPursuit of Productivity

Intensifying labor shortage3

Shrinking demand for
new construction Increasein demand for renovation
The social infrastructure constructed during or after Japan’s
high-growth period is deteriorating, and there is also pressure
to make facilities earthquake-resistant and environmentallyfriendly. Accordingly, the demand for renovation is growing.

From 2020, the proportion of deteriorated social infrastructure
will increase rapidly, and the need for environmentally friendly
facilities will continue to grow. Accordingly, the shift from a
spot-revenue business model to a recurring-revenue businessmodel will accelerate.

Growing need toenhance productivity

Current
situation

The utilization of ICT at construction sites, as well as the
adoption of construction methods to improve productivity, etc., is progressing in order to cope with a current andfuture shortage of skilled workers, etc.

Outlook

From 2020, the modularization of construction materials
and the utilization of ICT at construction sites will progress
rapidly, along with the transformation of construction production systems.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Basic Policy
1: Transforming our human resources and organization to elicit
employee motivation and capabilities
2: Reinforcing the domestic construction business with a customercentered perspective 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

Growth projection for skilled construction workers

Breakdown of construction industry worker by age group

Even after factoring in productivity improvements, it is projected that the domestic construction industry will require between 2.93–3.15 million skilled workers in FY2025. At the sametime, the workforce is expected to decline by roughly 1.3 million workers over the same period, due to the exit from the workforce of a large number of baby boomers, along with otherfactors, raising the possibility of a shortage of between 770,000–990,000 workers.

Compared with other industries, the aging population is having a more pronounced impact
on the construction industry, where workers aged up to 29 comprise roughly 10% of the total
workforce, and workers aged 55 and above comprise more than 30%.

335

(%)
35

(10,000 persons)

341

338

293–315

30

77–99

216

25
20
15

2012

2013

2014

Number ofworkers
requiredin 2025

Number of
employed
workersin 2025

All industries (29 years old or younger)
All industries (55 years old or older)
Construction industry (29 years old or younger)
Construction industry (55 years old or older)10

Number ofadditionallyrequired
workers

5

1999 2000 01

02

03

04

Source: “ Toward Revitalization and Evolution: Long-Term Vision for Construction Industry”
issued by Nikkenren (Japan Federation of Construction Contractors)

05

06

07

08

09

10

11

12

13

14

15

16

17

18

Source: “ Construction Industry Handbook” issued by Nikkenren(Japan Federation of Construction Contractors)

Domestic construction investment

Building renovation demand

Breakdown of infrastructure more than 50 years old

Demand for new construction is expected to peak overthe medium to long term; however, this means that new
construction will enter a gradual downtrend, rather than asharp decline.

Renovation demand is expected to continue expanding,going forward, centered on non-residential construction,with earthquake-resistance and environmental responses,
etc., acting as tailwinds.

The proportion of aging social infrastructure that was originally established after Japan’s period of rapid economic growthis growing at a rapid pace, which is expected to result in afurther expansion of demand for maintenance and repairs.

(Trillion yen)
80

(Trillion yen)
15

Gradual contraction
-4.3%

60

FY03/13

12

+4.0%
?

9

40

11.0
7.8

8.4 8.5

9.0

11.8

12.7 12.6 13.1

9.9

Residential

6200Nonresidential

3

98 00 02 04 06 08 10 12 14 16 18

25

0

09 10 11 12 13 14 15 16 17 18

FY03/23

FY03/33

Roads andbridgesRoughly18% Roughly43% Roughly67%

Tunnels

Roughly20% Roughly34% Roughly50%

River manageRoughly25% Roughly43% Roughly64%
ment facilities
Sewer pipes

Roughly2%

Wharf walls

Roughly8% Roughly32% Roughly58%

Roughly9% Roughly24%

Source: “ Construction Investment Outlook” issued by the
Ministry of Land, Infrastructure, Transport and Tourism

Modularization of construction materials

Adoption of digital solutions
BIM/CIM

i-Construction

Precast concrete construction method

 entralization of three-dimensional information onCbuilding shapes and attributes

 he Ministry of Land, Infrastructure, Transport andTTourism promotes the utilization of ICT in construction
production processes ranging from surveying and measurements to design, construction, and inspections

 anufacture reinforced concrete construction parts at
Ma factory, and join various parts together at construction sites

Facilitates consensus-building between constructionrelated players, and contributes to an improvement in
the efficiency of design and construction work

Basis / Implementation planning
Design / Structure / Facilities

Analysis

Design and Planning

Factory Manufacture

Project PlanningStage
Renovation

Construction

Demolition
Operation / Maintenance

Image of BIM

Construction Planning / Process Control
Cost ManagementImprove productivity at construction sites by leveraging
technology such as drones for measurements and ICT
for construction

 nables a reduction in the required number of on-siteEworkers, a reduction of costs, and a stable supply ofhigh-quality concrete building parts

27

28
28 INITIATIVES FOR VALUE CREATION

Strategic Direction Considering Changes in the Business Environment
We established the medium- to long-term strategic vision that we should pursue, based on three perspectives regarding changes in the business environment.

Urban Solutions Business

Securing construction
resources more actively

Intensifying labor shortage

Tokyu Construction

Strengthening collaborations with

Ⅰ regional superior contractors andSecure construction resources via
collaboration with other companies.

subcontractors

Secure construction resources from a medium- tolong-term perspective, by proceeding with alliancesand M&A

Regional superior general contractors, etc.

Subcontractors network

Receiving orders
more actively

Increase inrenovation demand

Changing from the current
spot-revenue model to arecurring-revenue model

Expansion and diversification of

Ⅱ our business portfolio

Target a business portfolio that is resilient tochanges in the environment, by actively engaging in businesses with a strong recurring-revenue
aspect, such as renovation

Utilization of the comprehensive

Ⅲ strengths of the Tokyu GroupStrengthen our proposal and project origination capabilities to respond to various needs, such as utilizationof land, renovations, and increasing property values

Increase recurring-revenue
business

Customers

Utilize the comprehensive
capabilities of the Tokyu Group.

Tokyu
Construction

Group
cooperation

Tokyu
Group

Construction subcontracting(spot-revenue businesses)

Growing need toenhance productivity

Transformation of construction
production systems

Tokyu Construction

Enhancement of on-site capabilities

Ⅳ through operational reforms

Innovate operations through investment in and early
adoption of cutting-edge technology, from a mediumto long-term perspective, and aim for further improvement of on-site capabilities.

Enhance the sophistication of the construction industry
through early adoption of cutting-edge technology

New construction
methods

IoT
AI

RobotsTOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Mid-Term Management Plan (2018-2020): Shinka 2020

Fleshing out the Urban Solutions Business
Our Original Business Model for Generating Stable Cash Flow
We will aim to shore up the Tokyu Construction Group’s overall earning capacity by not only strengthening Group
company collaboration, but by reinforcing necessary solutions and establishing a comprehensive value chain.
We intend to establish a unique business model unlike other companies by steadily implementing these initiatives.

General picture of the urban solutions business and necessary actions
Tokyu Construction functions

Property
proposals

Project sourcing

Business overview by step
Required actions

T O

Tokyu Group functions

Ensure interactions withcustomers from upstream
Local informationand customer
networks

Proposal capabilities
other than designand construction

Design andconstruction

Tokyu
Construction

Flexible construction
capabilities

In addition to designand construction, makeproposals regarding
property utilization(leasing, etc.)

Secure partners to takeon small-scale projects
that are difficult for Tokyu
Construction to handle

 onsolidate theClocal information ofvarious Tokyu Group
companies

 ake joint proposals
Mwith Tokyu Group
companies orm alliances withF
regional superior contractors and partners,
and engage in M&A

P

I

C

 ire human resourcesHwith property leasing
expertise

Tenant leasing

Maintenance andmanagement

Renovation

Ensure continuous interactions with customers
Tokyu Group

Tokyu Renewal
Tokyu Group

Collect informationon the challenges andneeds of local companies and landowners

 orm alliances withF
local top-tier generalcontractors andengage in M&A

Areas to strengthen going forward nhance on-siteE
capability throughoperational reforms

Construction
capability

Leasing expertise
Leverage the comprehensive capabilities of the
Tokyu Group to support all aspects, throughoperation

 ire human resourcesHwith property leasing
expertise

 trengthen cooperaStion with Tokyu Group
companies

 trengthen cooperaStion within the Tokyu
Group

Handle all aspects
through renovations,and ensure long-term
contact with customers

 ngage in M&A ofE
renovation specialists
and other business
operators
 nhance on-siteE
capability throughoperational reforms

S

Acquisition of the stocks of Singapore-based BIM facility
design company Indochine Engineering Limited
Our Company entered into an agreement on July 7, 2020 to buy 100% of the stocks ofSingapore-based Indochine Engineering Limited (IES below). IES is a corporate grouphandling BIM facility and structure design and it has subsidiaries in Vietnam and Australia.
Even in Japan, the Ministry of Land, Infrastructure, Transport and Tourism has called
BIM/CIM “an engine for the productivity revolution,” and the ministry is promoting its
use. BIM is becoming a prerequisite for construction production systems, and there is a
shortage of BIM engineers in Japan due to the growing demand.
This acquisition has enabled Tokyu Construction to welcome a number of highly
skilled BIM engineers into the Company. We have particularly fortified our strengths in
the upstream design field, which is expected to help expand the subsequent value chain.
Additionally, we expect to achieve greater synergy in the Southeast Asian countries on
which we are focusing.

The President Mitsuhiro Terada signing
the contract remotely with IES founderCarl Stephen Gay

29

30 INITIATIVES FOR VALUE CREATION

Feature Article 2:

Aiming at Sustainable Corporate Management that Can
Cope with the Changing Business Environment

Business continuity under COVID-19
The spread of COVID-19 has caused enormous economic and social damage, but our Company quickly took
steps to ensure the safety of our employees, subcontractors, customers, and local inhabitants by leading theindustry in making the decision to, in principle, suspend construction work and switch to telecommuting.
However, the general principle of construction is that deadlines must be followed, making it difficult tosuspend construction for longer periods of time. For that reason, all of us are working together against thecrisis to devise ways to ensure onsite safety and continue business.

Examples of COVID countermeasures

Installation of acrylic sheets
in meeting spaces

Sale of masks onsite

Mouth shields

Daily morning temperature checks

Ensuring office spaces
are ventilated and office
workers sit far apart

Thorough onsite disinfection

Making meetings remote

Thoroughhandwashing

Following social distancing
guidelines strictlyConstant mask use

Online discussions

Providing information on
infection countermeasures

Voice from onsite
Site Foremen

Yoshida Construction

Takashige Nakano

Ogino Construction

Nobuyoshi Kusano

On site, we wear masks and ensure social distance as much as possible, andwith thermal cameras to check body temperature and disinfectants aroundthe sites, we feel that the best is done to prevent infection. Our supervisor
from Tokyu Construction also prepared a jug of sports drink every morning tofight against heat stroke.
Because of this occasion, the different types of ICT tools are being usedthroughout the work sites, and we think they have been an enormous help invisualizing operations and in communicating.

Site Manager

Nobuyuki Hayashi

Hayashi with a foreman observing social distancing
rules while in discussion

Onsite production is a major factor in construction, and I don’t feel that we(At a work site in Tokyo)
will see any sudden changes in the way we work even with COVID-19. However, I also think that this situation needs to be taken as an opportunity to
streamline operations and make them more efficient even at the work site level. For example, as we prepare to introduce
the working hour limit in 2024, I hope that we can use ICT tools which seem useful and outsource some of operations, andbuild a team that can achieve better results than ever before even with limited resources.
All of the workers have their own families, so I hope we can accept all of these changes and work in a positive way as we
implement as many anti-infection measures as possible.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Our ZEB initiatives: Aiming to be a leading ZEB company
Background behind our ZEB initiatives
In order to combat global warming, there is increasingly need for buildings that have a long-term environmental impact to implement (net) Zero Energy Building (ZEB) protocols, which can reduce energy
consumption significantly. In 2016, the national government set a policy aiming to have the average newly
constructed building include ZEB concepts by 2030.
For this reason, our Company has been putting a particular focus on ZEB renovations to add to our previous efforts to reduce our environmental burden.

Leading Japan in reductions
The 25-year-old administration building at our Institute of Technology (located in the city of Sagamihara, Kanagawa
Prefecture) began to be renovated in 2016 to meet ZEB standards, and it received third-party ZEB Ready certification (energy use reduced 50% or more). In fiscal 2019, we achieved 78% energy consumption reduction, one of thelargest reductions in Japan, and we were honored with the Kanagawa Global Environment Award etc.
Currently, we are monitoring and analyzing the data from this effort, further improving each component technology, and we hope to achieve early 100% reduction in the near future and apply the know-how we gain to new
construction projects.
Awards Received•2 019 Kanagawa Global Environment Award (for Kanagawa Smart Energy Plan category), Kanagawa Global
Environmental Conservation Promotion Council, Kanagawa Prefecture•2020 Demand Side Management Prize Promotion Award, Heat Pump & Thermal Storage Technology Center of Japan

Increased customer need for Zero Energy Buildings
With increased public awareness of the environment, recently customers have become more interested in Zero
Energy Buildings. Tokyu Construction harnessed the know-how we gained through renovating our Institute of Technology to design what will become one of the country’s largest university buildings to be ZEB Ready – the Building
A (10,096 m2) at Tokyo City University – and construction began in June 2020. We are also working on ZEB designfor the urban office building that is planned to serve as the new headquarters of Seiki Tokyu Kogyo, with construction due to begin next spring. A number of other new Zero Energy Buildings are currently being designed, and weare continuing to further develop our knowledge base.
This market is expected to further expand in the future and by steadily building up our experience through thistype of work, we will rise to become a leader in the Zero Energy Buildings construction industry, with the ability topresent our customers with better proposals that meet their needs.

Building A, Tokyo City University(as envisioned when complete)

Exterior of the Institute of Technology after
ZEB renovations were complete

new headquarters Seiki Tokyo Kogyou
building (as envisioned when complete)*ZEB: A (net) Zero Energy Building, for which the annual primary energy consumption and production are aimed to be equal.
*For more information on our ZEB efforts, please see page 62, “Zero Energy Building Construction: From the Institute of Technology to new projects.”

3132 INITIATIVES FOR VALUE CREATION

At a Glance (Business Overview)
Our Group focuses on civil engineering and building construction as core businesses. We are also working on new pillars of strategical businesses including real estate and international businesses to increase competitiveness and diversify revenue sources. We
aim to enhance our corporate value in a sustainable manner through the development of a stable management foundation.

We establish national land infrastructure that ensures safety and security inpeople’s daily lives. Furthermore, we areproactively engaged in environment-related fields.
• Railways, roads, tunnels, bridges, andother construction, reconstruction work
after earthquakes, etc.

Tokyu Group

Tokyu Group¥9.1 billion

Civil Engineering
Business¥13.1 billion
14.9%

14.2%

Civil Engineering
Orders Received

Civil Engineering
Construction Sales¥64.6 billion¥88.0 billion

Other

Other

¥55.5 billion
85.8%¥74.9 billion
85.1%

33.4%

29.9%

Orders Received

Construction Sales¥193.3 billion¥295.0 billion

Civil Engineering /Building Construction

Building Construction
Business

Civil Engineering /Building Construction

66.6%

We engage in community-based urban
development throughout Japan, suchas development of Tama Garden City
and redevelopment in Shibuya.

70.1%

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

Tokyu Group

¥14.8 billion
11.5%¥38.5 billion
18.6%

Building
Construction Orders
Received
Other

Building
Construction
Construction Sales¥128.7 billion¥206.9 billion

Other¥113.9 billion
88.5%¥168.4 billion
81.4%* The pie chart represents the amount of construction business (non-consolidated) for the
fiscal year ended March 31, 2020 (including overseas).

Business Domains and Strategies

Real Estate Business

Major Achievements

Investment properties (low difficulty)

We pursue an area strategy in such places as the areas surrounding stations along Tokyu train lines. This is done in cooperation
with Tokyu Group companies, focusing on acquisition of properties and on the rental business by taking advantage of the characteristics of our core construction business.

J-REIT

Major developers

Business domain we focus on: Realestate rental (such as office buildings
and rental apartments)
Private or operatingcompanies

Small- to medium-sizedfunds, new developers

Small and medium scale
Strategies

Ebisu Crossthird

MCC Kanda
Iwamotocho
Building• Focusing on asset investment with the major business domain
being the real estate rental business• Acquiring investment properties with high investment yields
through our unique measures to increase added value, such as
renovation and seismic reinforcement

Development properties (high difficulty)

Large scale

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Major Achievements

Net Sales■Reconstruction Projects of the Area Around Ofunato
Station■Kyushu Shinkansen Hisayama Tunnel (East)■Tokyo Metro Ginza Line Shibuya Station Improvements■Kai-dai 4th Road Bridge, Oimachi Line2

1

Gross Profit/Profit Margin(Millions of yen)

(Millions of yen)

9,892

10,000100,000

88,07880,00064,626

69,84573,863

8,218
8,000

70,381

6,917

60,0006,000

40,0004,000

20,000

2,000

0

0

FYE
FYE
FYE
FYE
FYE
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020

14.1%

5,422

9.3%
9.9%

Net Sales■Phase I of SHIBUYA SCRAMBLE SQUARE (East Tower)■Minami-machida Grandberry Park
■Tokyo Rail Gate WEST
■ROOFLAG Exhibition of Rental Housing for Tomorrow

FYE
FYE
FYE
FYE
FYE
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020

1

Profit Margin

Gross Profit/Profit Margin(Millions of yen)

(Millions of yen)

300,000

30,00027,56824,401

236,898 238,241

221,870

23,42320,00013.2%

160,890

11.9%

11.6%

11.0%

9.8%

10,000100,000

0

24,717

21,266

206,956

200,000

2

9.7%

8.4%

Gross Profit

Major Achievements

7,198

0

FYE
FYE
FYE
FYE
FYE
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020

FYE
FYE
FYE
FYE
FYE
Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019 Mar. 2020

Gross Profit

Profit Margin*Figures above are for Tokyu Construction only (including overseas affiliates) for both Civil Engineering and Building Construction.

International Business

Other Businesses

Making the most of the skills and know-how that we have cultivated, we engage in business in Southeast and South Asian
countries, including Thailand, Singapore, Indonesia, Myanmar,
Vietnam, Bangladesh and Philippines.

We are redoubling our efforts in the PPP/concession business andthe paprika business as new business domains.
• PPP/concession business• Paprika business• Development of railways and roads, construction of high risebuildings and factories

Major Achievements

Major Achievements
New Mitsubishi ElectricConsumer products
plant (MCP10)

Mass rapid transit
project in Jakarta
CP101,CP102

Operation of a public sewage treatment plant (for the Seien area)in Hamamatsu City

33

34 INITIATIVES FOR VALUE CREATION

Overview of Each Business

Civil Engineering BusinessWe are promoting operational improvement through workstyle reform and implementation of ICT, while strengthening problem-solving skills. We will continue to develop
our business to enable it to adapt flexibly to the changing
business environment.

Yushi Tsukui

Director, Managing
Executive Officer
General Manager, Civil
Engineering Division

th Current Reality and the Task Ahead
Through the completion of large-scale construction projects
and vigorous capital investment on the part of private railway
companies, fiscal 2019 saw our division set a new record inconstruction sales and a larger-than-planned number of orders.
Profits were lower than the previous fiscal year, which was atrecord highs, but they were still higher than planned.
In fiscal 2020, we expect to see an impact from COVID-19
on railway projects, our specialty, and other private construction
orders, but we will continue to respond to customer issues in a
reliable way and seek to strengthen those relationships further.
Meanwhile, while there has been a delay in bidding for public
works projects, we expect that there will be less of an impact
there as efforts are underway to fortify the national land infrastructure to prepare for increase in natural disasters. We aim
to improve our proposals on general civil engineering projects(for such clients as government and municipal offices, including the Ministry of Land, Infrastructure, Transport and Tourism,
and the Tokyo Metropolitan Government, as well as Japan
Railway Construction, Transport and Technology Agency andNippon Expressway Company (NEXCO) and gain experience
more quickly, thereby further enhancing profitability. In addition, while some processes will be influenced by travel restrictions, we will continue to work to increase orders for overseas

large-scale construction projects, with a focus on transportation
infrastructure works funded by Japanese ODA.
For work-style reform, we have spent the last two years
running workshops on taking a logical approach to visualize
issues in work sites and standardizing operations, resulting in
improved work efficiency, improved productivity, and shorter
working hours.
Regarding the use of ICT in work sites, we are promoting
the use of iPads and increased harnessing of 3D drawings
among all employees. During the track diversion operation thattook place at Ginza Line Shibuya Station in the end of last year,
we introduced a 4D-CIM system that incorporated the time factor as to the process as well, setting the example for advanced
CIM utilization and winning us the MLIT i-Construction Award.
We will continue to see this as an opportunity to transform ourworkflow significantly, and look into the various ways of utilizing
ICT in the future.
We are also promoting railway infrastructure asset management, development of systems to help protect communities
from the effects of climate change, etc. Going forward, we
will work proactively to place personnel where the demandrequires, make operations remote, and so on, in order to more
flexibly cope with changes in the business environment.

Business Strategies
Business Strategy

Enhancingproblem-solving skills

Plan and Direction• Pursue safety, quality, environmental friendliness,and cost reductions• Improve operational efficiency and productivity• Build a system to increase employee satisfaction• Enhance co-creation with subcontractors

Major Progress in Fiscal 2019•P
 romoted human resource development through annual training for new and current employees• Visualized issues in operational improvement activities and made operations in work sites
efficient and active• Promoted introduction of ICT, particular in the case of 3D and 4D systems that improved efficiency in work sites• Promoted employment support for subcontractors and establishment of a system ensuring twodays off a week
• Acquired ISO 55001 certification, and strengthened the infrastructure asset management system

Enhancing domestic
construction business

Taking on challenges in
new domains• Enrich civil engineering for railways• Built a planning system to meet the broad range of railway operator needs• Enhance general civil engineering• Trained engineers for receiving general civil engineering orders, and promoted a planned
staffing system• Enhance international business• Promoted the shift of engineers from a domestic to an international focus, and increased thenumber of target countries• Enhance the PPP/concession business• Expand business through collaborative work andM&A• Participated in initiatives aimed at water, sewage, airports, and other concessions• Promoted consideration of business alliances in the field of infrastructure maintenance and repair

Reflecting on the Mid-Term Management Plan: Shinka 2020 Thus Far (Until Fiscal Year 2019)
Our operational strategy of focusing on identifying clients andproject types is moving forward smoothly. We have seen an
increase in orders from designated priority customers in thefield of railway construction, and in general civil engineering,
we are accepting orders for mountain tunnel, shield, andcaisson projects. In overseas construction, we have expanded
the number of target countries and works are increasing, aidingin the training of project managers. We have strengthened our
problem-solving skills by improving productivity through theuse of ICT, and due to the success of work-style reform.

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Becoming the first railway general contractor to obtain ISO 55001 certification, and the outlook for Infrastructure Asset Management (IAM)

In April 2020, our Company obtained ISO 55001 certification, theinternational standard for asset management. This was achieved
through our successful formulation of a plan aimed at the survey,
diagnosis, repair, and life extension for railway structures. In the
future, we aim to promote efficient and optimized maintenancemanagement through the use of a database containing information on railway structure construction, surveys, diagnoses, repairs,
and more. In addition, our goal is to work towards the realizationof a sustainable society by expanding the scope of our ISO
certification to fields outside railway structures.

2

Publishing a lecture textbook “The first step in 3D modeling: SketchUp for civil engineers”

We have created our own textbook for civil engineers and run lectures for arange of employees from new hires to senior employees in order to expand theuse of SketchUp, 3D modeling software that allows for intuitive operation. As aresult, SketchUp has been used to plan construction and share information withother related parties on a wide range of worksites, including during the relocation of Tokyo Metro Ginza Line Shibuya Station.
These efforts have resulted in feedback even from outside the Company,
and we have published a textbook to widely spread the word on the merits ofusing 3D models for civil engineers working in the construction industry.
Please visit our website via the link below for more details.
https://www.tokyu-cnst.co.jp/topics/assets/088b23f609e6f145027c3e55a0094013aa2e2b5b.pdf

3

Putting Teshub X in practical use to protect communities from climate change

After the research and development, our Company
has put in practical use Teshub X, an urban waterway
monitoring system designed to protect communities
from sudden, powerful rainstorms. Teshub X is a service which analyzes and provides water level forecasts
up to an hour ahead of time, updating every fiveminutes using precipitation forecasts obtained fromthe latest weather radar data.
During testing, the system was used successfully
to protect heavy machinery from being submerged
after a sudden and powerful rainstorm during riverside work in our Shibuya redevelopment project, and
it is currently being put in practical use as a waterway
monitoring system at SHIBUYA STREAM on the south
side of Shibuya Station.

4

email

revolving lights

Cloud-based
flooding analysis

Cloud

Using high resolution
precipitation nowcastingto acquire precipitation forecasts
every five minutes up to one hourahead of time

Provide risk information

Waterway monitoring through an
online portal

Completion of the Company’s first construction management project – The post-earthquake reconstruction project of the area around Ofunato Station

Our infrastructure development project in Ofunato City, Iwate Prefecture was aimed at helping the city rebuild in the wake of the 2011 Tohoku Earthquake and Tsunami. On our part, it
was run as a construction management (CM) project, and it was completed in August 2019.
It was our first CM project, and required us to integrate design and construction efforts,and harness cost-plus fee contracts, open-book operations, and more. Over the six-yearlong project and with the objective of speeding up the area’s recovery, we were able to help
reduce the burden on local people who had experienced the disaster and create a newneighborhood in which people could continue to live. We are confident that both Ofunato
and its people will continue to grow and achieve the success they so deserve.

3536 INITIATIVES FOR VALUE CREATION

Overview of Each Business

Building Construction
Business
We will enhance our ability to make proposals based on aproper understanding of customer needs, including ZEB,
wooden buildings, and BIM, while switching strategies
according to societal changes and responding with agility.

Tomoya Masuda
Managing Executive Officer
General Manager, Building
Construction Division

the Current Reality and the Task Ahead
Fiscal year 2019 was a transitional period during which majorlarge-scale construction projects approached completion,
including redevelopment in Shibuya. We achieved a high levelof profitability, as profits, mainly from large-scale projects,
improved significantly from our initial forecast and exceeded
our targets in the Mid-Term Management Plan. On the other
hand, a combination of several temporary factors, such as theimpact of the increasingly competitive environment due topost-Olympic and Paralympic uncertainty and delays in thestart of construction on proposed projects, resulted in a low
level of orders received.
In fiscal year 2020, we expect orders received to increasesignificantly due to the large volume of postponed projects
from last fiscal year and large-scale project orders we havebeen preparing to receive for some time. However, becausesome companies, such as those related to inbound travel, havebeen refraining from capital investment owing to the recent
spread of COVID-19, as well as the possibility that revisions ordelays could occur in preparations for redevelopment, including the redevelopment of office buildings, we must constantly
monitor the situation going forward. We will switch strategies in
response to changes that occur and execute them with agility.
Demand for large-scale logistics facilities, one of our company’s areas of expertise, is increasingly growing as e-commercetakes root. We will more actively tackle work in this area, as it
has shown promise in the midst of the COVID-19 pandemic. In
addition, increasing awareness of the risks of climate change is
expected to raise demand for environmentally-friendly smart
buildings. Therefore, besides focusing on design and construction that leverage ZEB and ZEH-M technologies and know-how,
we will also work on further improving our technologies andobtaining orders in the field of hybrid wooden structures andother wooden buildings, led by our newly-established Wooden
Building Promotion Department . We are proceeding to shift
human resources into sales in order to better understand customer needs and enhance our ability to make proposals thatmeet their needs.
Regarding work-style reform and productivity enhancement
in construction work, we will incorporate concrete measuresthat we have been exploring up until now at the work site level,and strive to refine them. One major measure is utilizing BIM.
We are making steady progress in using BIM at the construction stage by providing every work site with an initial BIM
model. Going forward, we will accelerate the implementationof BIM at the design stage, which is essential for smart buildings and other projects, and aim to reform our construction
production system so that we can enhance our ability to makeproposals to customers and further improve productivity.

Business Strategies
Business Strategy

Enhancing operations
with a customer-centeredperspective

Plan and Direction

Major Progress in Fiscal Year 2019

• Enhance upstream sales (proposal-based sales, receiving
design and construction orders)• Enhance technical sales and sales based on customer needs•C oncentrated human resources in corporate sales/large-scale logistics projects• Shifted engineers into sales• Promoted environmentally-friendly designs (efforts in ZEH-M)• Demonstrated productivity improvements using ICT

Increasing on-site
capabilities

Taking on challenges in new
domains• Enhance the support system for labor-saving construction
methods to improve productivity• Provided intensive support during the labor-intensive initial construction
stage via an expert support team• Improve on-site management (safety, quality, environment,
process, and cost)• Investigated constructions that promoted modal shift• Enhance the renovation business (concentration of this business in the subsidiary TOKYU RENEWAL Co., Ltd.)• Support the international business• Enhance support for medium- and large-scale wooden building construction• Jointly researched and developed an inspection system that utilizes AI andimage analysis• Achieved business results that greatly exceeded plans through mutual
cooperation with subsidiaries• Continued support for receiving orders for overseas high-rise buildings• Newly established the Wooden Building Promotion Department to shift
management resources to medium- and large-scale wooden buildings
targeted by the company

Reflecting on the Mid-Term Management Plan: Shinka 2020 Thus Far (Until Fiscal Year 2019)
The competitive environment intensified more than we had
expected, and coupled with the impact of COVID-19, there has
been a temporary decrease in the amount of orders received.
Construction costs have remained largely in line with our
expectations, and we were able to keep profits strong as aresult of efforts to reduce costs by leveraging ICT to expedite

decision-making and optimize work efficiency. With awareness of work-style reform gradually spreading throughout thecompany, we hope to generate further results as we advancetoward the phase where various productivity-enhancing measures can be rolled out company-wide starting this fiscal year.

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Focusing further on logistics facilities

Leveraging the know-how we cultivated through our involvement in large-scale
logistics facilities such as GLP Zama and GLP Nagareyama, we have mostrecently been involved in the construction of Tokyo Rail Gate WEST, the first
property in a series of multi-tenant type large-scale logistics facilities called“Rail Gate” developed by Japan Freight Railway Company (JR Freight). Thisfacility is directly connected to Tokyo Freight Terminal Station, the largest of
JR Freight’s freight stations, making it a highly convenient facility for freightrail transport. In this project, we took advantage of these characteristics of thelocation to engage in environmentally-friendly site management, for example,
by actively using freight rail transport instead of trucks in our plan for bringing
in materials during construction. The demand for large-scale logistics facilities,
one of our company’s areas of expertise, is expected to grow further in the
future as e-commerce takes root. We will further enhance our sales, construction, and design systems and engage more actively in this area.

2

Tokyo Rail Gate WEST

Promoting environmentally-friendly design: Efforts in ZEH-M (Net Zero Energy House Manshon)

ZEH-M is an initialism that stands for “Net Zero Energy House Manshon,” and it refers to apartment buildings that bring the annual balance of primary energy consumption (air conditioning, hot water, lighting,ventilation) by residential dwellings to plus or minus “zero” (or close to zero). We are planning PRIME STYLEKAWASAKI as the first apartment building in Kawasaki City to have obtained ZEH-M Oriented certification.
From the beginning of our plans for this project, we performed simulations to reduce primary energy consumption in both construction and facility-related aspects and incorporated them into the design in order toacquire a BELS 5-star rating and ZEH-M Oriented certification.

PRIME STYLE KAWASAKI

3

Solving customer problems by utilizing BIM

Daito Trust Construction Co., Ltd. ’s “ROOFLAG – Exhibition of Rental
Housing for Tomorrow” (Shinonome, Koto-ku), which opened in June 2020,
was a highly challenging project to build a lattice work roof with a span of
up to 60 meters made up of over 100 giant pieces of cross laminated timber(CLT), resulting in a large, column-free space.
In response to the customer’s request to create “a space with a deepemphasis on wood,” we were able to show them an image of the completed
space before it was constructed using BIM to create a three-dimensionalmodel. In addition, we managed the complex installation of the CLT pieces
during construction by performing various simulations using proprietary ICT
measurement technology based on BIM data. As a result of introducing such
digital technologies, as well as the problem-solving skills of our engineers
who performed the work and collaboration with related departments, we
successfully completed a high-quality building.
We are transforming our workflow by implementing BIM across thecompany, from the design and in-house engineering departments to theconstruction department, to further enhance our proposal capabilities, speed
up decision-making, and improve productivity and quality.
Furthermore, we will leverage the CLT construction expertise that we gained
through this project to further grow our presence in the wood construction sector,
whose market is expected to expand due to the need to reduce CO2 emissions
and from the perspective of the material’s natural warmth.
In addition, we also utilized BIM to complete the FLIGHT OF DREAMS commercial complex construction project at Chubu Centrair International Airport, inwhich we must store and secure the giant aircraft to be displayed in the facility,
a difficult challenge not encountered during general construction work.
*BIM/CIM (Building/Construction Information Modeling, Management) is a workflow that introduces a three-dimensional model at the research and design stages and utilizes it in a series of
construction production and management systems by assigning attribute information (materials,
strength, etc.) during each stage of construction and maintenance management, with the aim of
ensuring quality and improving productivity.

Video: “Taking on the challenge of constructing large-scale
wooden buildings that leverage digital technologies”

Video: “FLIGHT OF DREAMS x Tokyu Construction x BIM”

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38 INITIATIVES FOR VALUE CREATION

Overview of Each Business

Real Estate BusinessWe will promote acquisition of rental properties, with afocus on those that hold significance for us as a construction
company, and build a stable medium- to long-term revenue
base by expanding it as one of our strategical businesses.

Junichi Omuro
Executive Officer
General Manager, Real
Estate Division

the Current Reality and the Task Ahead
The Real Estate Division, newly established in April 2018,
aims to expand the company’s real estate business under our
new investment criteria and management systems. We are
actively acquiring investment properties to own them overthe medium and long term—mainly office buildings, but alsocommercial facilities, rental apartments, and other properties—with the aim of securing profit through real estate
rental. We are also utilizing the characteristics and strengthsof our company, a general contractor and a member of the
Tokyu Group that focuses on Shibuya and areas along the
Tokyu Line, to tackle projects that would be difficult for othercompanies and further boost profitability. For example, byrenovating properties into small offices after performing
aseismic reinforcement and corrective work for legal compliance purposes, we are leveraging synergy with our building
construction business to increase value. Going forward, we

will continue utilizing our company’s characteristics in ourreal estate activities.
As for fiscal year 2019, we newly acquired five investment
properties amid soaring prices and declining yields in thereal estate investment market. On the other hand, as thenumber of properties that we own increases, enhancing oursystem by securing management personnel is becoming apressing issue.
Currently, due to the impact of COVID-19, we are acquiring new properties at a slightly slower pace than in the pastamid a cautious market, and there has been a temporary
increase in tenants leaving our owned properties. In addition, demand for offices is expected to change in the future
as remote working and other work-style reforms accelerate,
but we will respond quickly and flexibly to these changes.

Business Strategies
Business Strategy

Plan and Direction

Major Progress in Fiscal Year 2019

Secure and develop skilled staff in charge of acquiring
investment properties• Hired several mid-career resources who will be immediate assets tothe company and contributed to raising the experience level of theentire division by developing routes other than the company’s preexisting information sources

Develop an information network• Further streamlined the property information-gathering process
in terms of volume, quality, and speed by utilizing the information
network of the Tokyu Group and cementing relations with trust banks,
brokerage firms, and management companies, etc.

Obtaining the know-how toacquire investment properties

Maximize profits from existing investment properties• Implemented renovations for improving the value of each building,such as renovating outdated drainage systems• Maintained a high occupancy rate through enhanced leasing

Streamlining our portfolio• Newly acquired five investment properties

Carry on an appropriate portfolio strategy• Improved the value and functionality of one of these buildings after
acquisition through comprehensive renovations by our company

Reflecting on the Mid-Term Management Plan: Shinka 2020 Thus Far (Until Fiscal Year 2019)
We planned to acquire 10 billion yen of investment properties over three years and have already achieved this target
in the two years leading up to fiscal year 2019. We are also
almost certain to achieve the target profit level for the final

fiscal year in the Mid-Term Management Plan. In fiscal year
2020, we will thoroughly grasp the changes due to theimpact of COVID-19 and aim to continue acquiring investment properties and securing further profits.

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Our company’s investment propertiesOMB KITASANDO(Sendagaya, Shibuya-ku)

Nihonbashi Kayabacho Place(Nihonbashi-kakigaracho, Chuo-ku)

We are working on acquiring prime real estate in Greater SHIBUYA
where multiple, highly distinctive neighborhoods such as Aoyama,
Omotesando, Harajuku, Ebisu, and Daikanyama interconnect, witha focus on Shibuya, the baseof the Tokyu Group. We planto acquire new properties in
the future by deepening ourknowledge of market trends inthis area.
(Acquired in September 2019)

This property boasts easytransportation access to fivestations on five lines, including
Kayabacho, Suitengumae, andNingyocho stations, as well
as excellent visibility along amain road. It is a mid-sized
office building with a total
floor space of over 1,600
square meters, making it thelargest property solely owned
by our company. We acquired
it as a flagship property.
(Acquired in February 2020)

2

Our company’s renovation of rental properties

Higashiazabu Office(Higashiazabu, Minato-ku)
This old property is located three minutes from Akabanebashi
Station and six minutes from Azabu-juban Station. We acquired
the building 56 years and 6 months after it was completed andare currently implementing large-scale renovation work on it.
We aim to increase its product value as an office building andturn it into a property capable of offering stable profitability.
(Acquired in February 2020)(Renovation work scheduled to be completed to welcome
tenants in Fall 2020)

Plans to install infrastructure, renovate the interior, etc.

BeforeAfter

BeforeAfter

Approx. 150 million yen in renovation work
(exterior: outer walls and waterproofing)

Overview of repairs

Earthquake-resistant slit

Floor 2/3
Floor 1
Earthquake-resistant slit

BeforeElevator

Floor 4

Floor 2 Closing of
openings

We plan to install an elevator and perform seismic retrofitting

After
Conception of the finished building3940 INITIATIVES FOR VALUE CREATION

Overview of Each Business

International BusinessWe will leverage our extensive experience to acceleratetransportation infrastructure development projects andhigh-rise building projects while closely monitoring globalchanges as we explore new possibilities.

Shigehiko Shibusawa
Executive Officer
General Manager, International Division

the Current Reality and the Task Ahead
In fiscal year 2019, we completed construction of the mass
rapid transit (MRT) system in Jakarta, which we had beenworking on since 2013 as a major project for our company. We
reached our highest level of profit in recent years, made possible in part by cost reductions achieved by ingenuity at worksites. In addition, over this past year we prepared for futurebusiness expansion by enhancing our structure with the aimof further strengthening our sales force, and by improving ourhuman resource management system. In fiscal year 2020, we
will tackle ODA projects, private sector projects, and high-risebuilding projects under this enhanced structure.
Regarding our ODA projects, the railway improvement
project to upgrade 116 km of the deteriorated national railway
between Yangon and Mandalay in Myanmar is in full swing, andother projects, such as the construction of a road bridge on amajor road connecting central Yangon with the Thilawa Special
Economic Zone and the construction of a highway in Hanoi,
Vietnam, are making smooth progress. We are leveraging ourwealth of experience in the construction of key transportation
infrastructure essential for people’s everyday lives, including
railway construction, and are considering participating in infrastructure development projects in new countries and regions
such as the Philippines and Guam in the near future.

As for our private sector projects, we completed construction of a new road emulsion plant in Myanmar, an essential
facility for the transportation infrastructure business. In addition,
construction of a new waste disposal facility is scheduled to
begin soon in Indonesia. Demand for such facilities is increasing in Asia due to the concentration of the population in urban
centers and changing lifestyles.
As for our high-rise building projects, one of our company’s
strengths in Japan and a new undertaking for us overseas, ourproject team is working together with a client to discuss theconstruction of a high-rise complex facility to be built in central
Jakarta, Indonesia.
Currently, the expanding impact of COVID-19 on the world
economy has further highlighted the importance of developing
social infrastructure in the emerging and developing countries
in which our company operates, where social and economic
damage has been more severe due to their weaker medical systems and economic infrastructures as compared to developed
countries. In addition, because the new ways of life triggeredby this crisis are expected to bring about significant changes inthese countries, we will closely monitor the global changes andexplore new possibilities through collaboration with our national
staff and local partners located in each of these countries.

Business Strategies
Business Strategy

Plan and Direction

Major Progress in Fiscal Year 2019
• Made steady progress on construction of the ring road in Hanoi, Vietnam

Expand our target projects into developmentof roads and other transportation infrastructure,
besides our forte inrailways construction• Made steady progress on construction of the Myanmar Railways Yangon-Mandalay Railway Improvement Project (Section CP103)
and the Bago River Bridge Construction Project (Section 3), for which we have received high evaluations from the operators• Newly established a sales department to strengthen sales

Private sector
projects

Increase the rate ofsuccessful bidding forprivate sector development projects underthe enhanced sales
structure

High-rise building
projects

Select our potential projects in order to enhance
our project portfolio

ODA projects• Obtained preferential negotiation rights in the bid to construct a depot for the Myanmar Railways Yangon-Mandalay
Railway Improvement Project (Section CP105)• Won the Japan Society of Civil Engineers’ 2019 Outstanding Civil Engineering Achievement Award for the Jakarta MRT
Project in Japan• Completed construction of a new road emulsion plant in the Thilawa Special Economic Zone in Myanmar (Japan-owned project)• Completed construction of an elderly care home in Singapore• Planned to start construction of a waste disposal facility in Indonesia, as construction demand is growing in the waste
disposal sector• Started discussions with a client toward the construction of a high-rise complex facility to be built in Jakarta, the capitalof Indonesia, as our company’s first international high-rise building project

Reflecting on the Mid-Term Management Plan: Shinka 2020 Thus Far (Until Fiscal Year 2019)
Following the Jakarta MRT project, we increased our involvement in ODA projects in Myanmar and Vietnam, with a focus
on the railway and road sector, and they are progressing
as planned. Going forward, we will leverage our extensive
experience to increase involvement further, with an eye on
expanding into target countries. In addition, in April 2020,

we established a new sales department to reassess ourtarget areas, build a cooperative system between domestic
departments, the International Division, and customers, andaccelerate our efforts to win future private sector projects,
including high-rise building projects.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

T O P

1

I

41

C S

Hanoi City Ring Road No. 3 Construction Project (Vietnam)

This is an elevated road construction project (JO, ODA project), an area in which ourcompany specializes, in Hanoi, the capital of Vietnam. We began construction in April
2018, completed construction of the main structure in August 2020, and are currently
engaged in additional construction work. Aided by our experience in constructing the
Nhat Tan Bridge (now Vo Nguyen Giap Road), a symbol of Vietnam-Japan friendship andour first project in the country, as well as the teamwork demonstrated by Vietnamese staff
in our company who gathered to work on this project, including those who had been
employed since the construction of this first bridge, we are overcoming various challenges together, such as
adapting to construction method changes and steel bridge construction management, and contributing to
the improvement of traffic conditions and the construction of a highway network in the Vietnamese capital.

2

Construction of a large-scale railway spanning 116 km (Myanmar)

This is an ODA project to improve a section of the existing railway
between Yangon and Taungoo (approx. 267 km) on a major railway
line connecting Myanmar’s largest commercial city of Yangon with
Naypyidaw, the capital, and Mandalay, the second largest commercial
city (approx. 620 km in total). Myanmar’s railways have a long history
dating back to 1877, when the country was under British rule. Because
they have deteriorated considerably in recent years, the rail tracks as wellas the signaling systems and other parts are being upgraded to shorten
travel times and achieve safe operations. Our company has been working on a 116 km-long section of the railway furthest from Yangon sinceNovember 2018 and is making steady progress on construction.

3

Our construction zone

CSR activities in Myanmar

Myanmar has become one of the key bases for our overseas businessactivities, and we have been involved in a wide range of construction
work in the country, from ODA projects to factories for Japanesebusinesses. We would like to introduce some of the CSR activities we
conducted in the country in between these projects over the past year.

Cooperating in the construction of schools
Shwe Taung Development Co., Ltd. , our local partner in Myanmar, hasestablished a foundation to engage in activities to build and donate
supplies to schools in various parts of the country. As the significanceof these activities resonated with us, in July 2019, we donated 30
computer tables to a school newly constructed by the foundationin the outskirts of Yangon during the school’s handover ceremony.
In addition, in January 2020, we contributed via donation a portionof the construction costs of a new school building in the Taungoo
district, located near the work site of the Yangon-Mandalay Railway
Improvement Project in which our company is involved. We responded
to their request for cooperation with the hope that it would contributeto improving the country’s educational environment and standards.

Handover ceremony of the newly-constructed school

Donating rice to COVID-19 patient quarantine facilities
The impact of the spread of COVID-19 is seen as a serious issue
in Myanmar as well. At our Yangon Office, not only did we donate
funds to cover the costs of distributing masks to Yangon General
Hospital in cooperation with Shwe Taung Development Co., Ltd.,
we also donated 1 ton of rice to a designated quarantine facility for
COVID-19 through a health center in the Oktwin district, located in
one of the work sites of the Yangon-Mandalay Railway Improvement
Project. We made this donation not only because of their daily
cooperation in our construction work, but also because we wanted
to be a part of the community facing the disaster together.
Our company has been directly involved in the development ofvarious developing countries, with our base in Southeast Asian countries. In addition to our activities thus far, we will continue to operate
our business while remaining strongly aware of how each of us cancontribute to realizing a sustainable society.

Presenting the donation of funds to Yangon
General Hospital

Rice donated to the quarantine facility

42 FOUNDATION THAT SUPPORTS VALUE CREATION

Corporate Governance
Our Fundamental Approach to Corporate Governance
At Tokyu Construction, we have a Corporate Philosophy
that consists of our mission statement, management
policy, and principles of conduct that describes the typeof company we seek to become. To make this vision a
reality, we are working to contribute to society throughour corporate activities and achieve sustained growthand higher medium to long-term corporate values.
Fostering strong and capable corporate governanceis a key management issue in these efforts, and consequently, we are constantly striving to make improvements that will result in more effective and efficient
corporate governance.
We have also established the Tokyu Construction
Corporate Governance Basic Policy, in which we outline
our stance on corporate governance in general, including our fundamental approach, and relevant standards.

Corporate Governance Policies and Standards:
https://www.tokyu-cnst.co.jp/company/governance/pdf/20200225corporategovernance.pdf

Corporate Governance Structure
Shareholder’s Meeting
Appointment / Dismissal

Accounting
AuditorReportCooperation

Appointment / Dismissal

Board of Corporate Auditor
Auditor’s Office

Audit / Investigation

Audit
ReportCooperation

Internal Control Office

ReportReportAppointment / Dismissal

Appointment / Dismissal

Board of Directors<Advisory Committee of the Board of Directors>
Consultation
ReportNomination /Direction

Appointments and Remunerations Committee
Governance Committee
Direction

Director, PresidentManagement Audit

Supervision

Audit

Internal Audit

Management Committee

Management Meeting

Council of Business Unit Managers(Operational Decision Making)(Execution Management)(Business Unit Monitoring)

Investigator

Monitoring

Head Office Risk Management Council, Orders Received Council
Overseas Orders Council, Real Estate Transaction Council,
Business Investments Council

Business Execution
Divisions
Head Office Divisions

Division Management Committee
Branches and Divisions

Subsidiaries

Executive Officers

Recent Initiatives for Enhancing Corporate Governance
FY 2004
Directors

FY 2010

FY 2015

FY 2016

Directors in the Articles
No more than 20of Incorporation
Independent outside
directors

Audit & Supervisory
Board members in the No more than 5
Audit &
Supervisory Articles of Incorporation
Board
Independent outside
Members Audit & Supervisory
Board members

1

FY 2017

FY 2019

FY 2020

No more than 122

3

3

Female officers

1 (independent outside director)

Remuneration for officers

Introduction of a stock-based remuneration plan

Appointments andRemunerations Committee

Establishment of committee

Governance Committee

Establishment of committee

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Corporate Governance Structure[Board of Directors]
The Board of Directors consists of ten directors (including four outside directors and three independent officers). Directors serve a one-year term to clarify management responsibilities for each fiscal year and to build adynamic management structure. Corporate managers
with extensive knowledge and experience, a lawyer withexpert insights from her profession and work experiencein the real estate industry, and a business manager withexpert insights as a certified public accountant and certified public tax accountant have been invited to serveas outside directors. They provide much-needed perspective in deliberation of agenda items and function as
a powerful check on directors to ensure legality in how
their duties are performed.

Composition of the Board of Directors
Chairman

Outside directors
4 people

Inside directors
7 people

Percentage of outside directors 40%[Executive Officers]
To expedite decision-making in business execution
and strengthen the functions of each unit, the Board of
Directors elects 32 full-time executive officers who, likedirectors, serve one-year terms.
[Establishment of the Management Meeting]
To expedite decision-making concerning importantmanagement policies and issues, the Management
Meeting, focused on representative directors and composed of five directors and three executive officers, isconvened as needed (41 times during FY 2019).
[Audit & Supervisory Board andAudit & Supervisory Board Members]
The Audit & Supervisory Board is composed of fivemembers (all independent officers, including three outside Audit & Supervisory Board members). Working toenhance our operational audit function in line with compliance management, we have invited a lawyer, a former
government agency employee, and a former financial
institution employee to contribute their expert insights
and extensive knowledge and experience as outside
Audit & Supervisory Board members. Each Audit & Supervisory Board member participates in Board of Direc-

tors meetings and other important meetings and checks
over important decision-making documents in order tounderstand the process of decision-making on important issues and monitor business operations related tothe area for which he or she is responsible. Additionally,each member conducts investigations regarding thebusiness operations of relevant units and, if deemednecessary, receives business reports from subsidiaries
and audits the execution of directors’ duties, reporting
the audit results to the directors. Dedicated staff members are also assigned to the Auditor’s Office to support
the Audit & Supervisory Board members’ duties.
[Accounting Auditors]
In FY ended March 2020, our financial audit was carriedout by two certified public accountants, Tomohiro Narita
and Hiroto Inoue, who are both members of Ernst &Young ShinNihon LLC. We also have seven other certified public accountants and 20 other staff involved infinancial auditing as assistants.
[Appointments and Remunerations Committee]
The Appointments and Remunerations Committee is anadvisory body to the Board of Directors regarding theappointment and remuneration of the Board of Directors,
Audit & Supervisory Board members and executive officers. Composed of two inside directors and four outside
directors, and chaired by an independent outside director, the Committee works to ensure the independence,
objectivity, and accountability of the Board of Directors
regarding the appointment and remuneration of its directors. The Committee convened three times in FY 2019.
[Governance Committee]
The Governance Committee is an advisory body to
the Board of Directors on general issues of corporate
governance. Composed of three inside directors, four
outside directors, and three outside Audit & Supervisory
Board members and chaired by an independent outside
director, the Committee works to continuously enhance
the Company’s corporate governance and increase
corporate value by meeting once per year to discuss
future initiatives based on the results of an effectivenessevaluation survey, among other measures.

Compliance with Japan’s Corporate Governance CodeFor details, please visit the following website (Corporate
Profile > Corporate Governance).
* A link to our “Corporate Governance Report” (PDF) is provided on this page.

https://www.tokyu-cnst.co.jp/company/governance/

4344 FOUNDATION THAT SUPPORTS VALUE CREATION

Corporate Governance

Composition of Each Body
Title

(The chairperson of each body is indicated by ◎)Name

Board of Directors

Management
Meeting

Audit &
Supervisory Board

Appointments andRemunerations
Committee

GovernanceCommittee

Representative Director, Chairman

Tsuneo Iizuka

〇

〇

〇

〇

Representative Director, President

Mitsuhiro Terada

◎

◎

〇

〇

Representative Director,
Executive Vice President

Motoyuki Takagi〇〇

Director,
Senior Managing Executive Officer

Masatoshi Shimizu〇〇

Director,
Managing Executive Officer

Yushi Tsukui〇〇

Director

Toshio Imamura〇

Outside director

Yutaka Kubota

〇

◎

◎

Outside director

Masao Tomoe

〇

〇

〇

Outside director

Kahori Yoshida

〇

〇

〇

Outside director

Isao Onda〇〇〇

Full-time Audit &Supervisory Board Member

Satoshi Hashimoto◎

Full-time Audit &Supervisory Board Member

Tadashi Ochiai〇

Outside Audit &Supervisory Board Member

Youichi Saito〇〇

Outside Audit &Supervisory Board Member

Yoshikazu Kato〇〇

Outside Audit &Supervisory Board Member

Kazuo Kitamura〇〇

Vice President Executive Officer

Kazushige Asano〇Managing Executive Officer

Sadao Fukumoto〇

Managing Executive Officer

Tomoya Masuda〇〇

Analysis and Evaluation of the Board of Directors’ EffectivenessAt Tokyu Corporation, our Corporate Governance Basic
Policy stipulates that the Company evaluate whether the
Board of Directors is functioning properly and disclose asummary of the results every year.
In FY 2019, we cooperated with outside consultants
to conduct the evaluation using methods that encouraged each officer to express their individual opinions,such as an anonymous questionnaire about the Board of
Directors’ effectiveness targeted at all directors and Audit& Supervisory Board members in the Board of Directors.
The Governance Committee composed mainly ofoutside officers then evaluated the Board’s effectivenessby discussing the issues that were highlighted by thequestionnaire and confirmed the results with the Boardof Directors.

The results of the questionnaire were generally positive. We were able to confirm that the effectiveness of
our Board of Directors was sufficiently ensured and thatthe issue of “securing diversity” identified in the previous evaluation was clearly improving due to the electionof a female director and other measures. On the other
hand, some opinions emerged in this year’s questionnaire regarding the necessity of measures to deepen
discussions by the Board of Directors, strengthen themonitoring function, further improve the objectivityof the Appointments and Remunerations Committee,
and enhance communication between the officers.
Therefore, we will continue our efforts to increase theBoard’s effectiveness going forward.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Support Systems for Outside Officers
Systems have been set up to communicate and share
information with outside officers. For outside directors, this includes conducting advance briefings on theagenda items of the Board of Directors in considerationof their urgency and importance. For outside auditors,
this includes assigning dedicated staff members to the
Auditor’s Office and conducting advance briefings on
the agenda items of the Board of Directors.

Standards Regarding the Independence of Outside Directors
and Outside Audit & Supervisory Board Members
For details, please visit the following website (Corporate
Profile > Corporate Governance).
*A link to “Corporate Governance Policies and Standards” (PDF) is provided on this page.
https://www.tokyu-cnst.co.jp/company/governance/

Reason for Election as Outside Officer / Board of Directors Meeting Attendance Rate
Attendance Rate

Independent
Officer

Reason for Appointment〇

Board ofDirectors

Audit &
Supervisory
Board

Years in
OfficeMr. Kubota has been reelected as an outside director with the expectation that he will contribute to management of the Company using his
wealth of experience and broad insight in corporate management, as
well as his informed opinions as an expert in the railway and construction
businesses.

14/14 times—

5 years

Mr. Tomoe is the representative director of Tokyu Corporation, a corecompany of the Tokyu Group. He has been reelected as an outside director with the expectation that he will contribute to management of theCompany using his wealth of experience and broad insight in corporate
management, as well as his informed opinions as an expert in overallbusiness administration.

14/14 times—

2 years〇

Ms. Yoshida has been reelected as an outside director with the expectation that she will contribute to management of the Company using her
expert knowledge as a lawyer and her informed opinions based on her
work experience in the real estate industry.

11/11 times—

1 yearIsao Onda〇

Mr. Onda is a certified public accountant and a certified public tax
accountant who possesses expert insight from those professions as well
as a wealth of experience and broad insight in corporate management.
He has been elected as an outside director based on his track record as
an outside Audit & Supervisory Board member who performed his duties
appropriately and provided valuable advice and opinions relevant todecision-making.

14/14 times

6/6 times—

Youichi Saito〇

Mr. Saito has been elected as an outside Audit & Supervisory Board
member with the expectation that he will contribute his expert insight asa lawyer to the Company’s audit function.

14/14 times

6/6 times

4 years

Yoshikazu Kato〇

Mr. Kato has been elected as an outside Audit & Supervisory Board
member with the expectation that he will contribute his broad insight de14/14 times
veloped through his wealth of experience and long career in government
agencies to the Company’s audit function.

6/6 times

2 years〇

Mr. Kitamura has a wealth of experience from working at Chiba Bank,
Ltd. for many years, as well as serving as director and Audit & Supervisory
Board member of Chibayaku Groceries, Inc. He has been elected as an
outside Audit & Supervisory Board member with the expectation that
he will contribute the broad insight he has developed to the Company’s
audit function.

*

—

Name

Yutaka Kubota

Masao Tomoe

Kahori YoshidaKazuo Kitamura

Notes:*

1. The asterisks (*) indicate that information is not available because the officer is a newly elected Audit & Supervisory Board member.
2. Isao Onda served as an Audit & Supervisory Board member of the Company for eight years through June 2020.
3. The attendance rate is for the period from April 2019 through March 2020.

45

46 FOUNDATION THAT SUPPORTS VALUE CREATION

Corporate Governance

Officer Remuneration and Incentive System
Policy for Determining Officer Remuneration
The amount of remuneration for our directors is determinedbased on certain standards stipulated by the Company,
including their position and business performance as wellas employee wage levels. Remuneration consists of basic(monetary) remuneration and stock-based remuneration.
Basic remuneration consists of fixed remunerationaccording to position and variable remuneration. Variable
remuneration is calculated by multiplying the monthly
fixed remuneration of each director by an evaluation-based
allocation factor. The evaluation-based allocation factor
is determined by considering the operating income andother performance evaluations of each unit of which thedirector is in charge, as well as qualitative evaluations.
Stock-based remuneration has been introduced withthe aims of providing an incentive to enhance medium
to long-term corporate values and aligning the economic values of the directors and shareholders. Utilizing
the Board Benefit Trust, points are given each year to
directors according to their positions, excluding outside
directors and nonresidents of Japan. Benefits in the formof shares and cash are paid upon retirement, with one
point equivalent to one share.

Remuneration for Audit & Supervisory Board members
consists of fixed remuneration paid in cash.
The amount of basic remuneration for officers wasapproved by the Shareholders’ Meeting at the 5th Annual
General Meeting of Shareholders held on June 25, 2008,
where it was decided that “the annual amount of ¥360
million or less (including the amount of ¥30 million or lessannually for outside directors and excluding salaries for
those who are company employees)” would be provided
to directors and “the annual amount of ¥96 million or less”
would be provided to Audit & Supervisory Board members.
The amount of stock-based remuneration is the amountrecorded as an expense based on the stock-based
remuneration plan that was approved at the 15th Annual
General Meeting of Shareholders held on June 26, 2018.
Director remuneration is determined by a resolution of the Board of Directors after consulting with the
Appointments and Remunerations Committee, who discusses and makes recommendations on the appropriateness of the amounts calculated as described above.
Audit & Supervisory Board member remuneration
is determined through discussions within the Audit &Supervisory Board.

Remuneration for Directors and Audit & Supervisory Board Members (Millions of yen)
Officer category

Remuneration
amountRemuneration amount by type
Basic remuneration
Fixed

Stock-based
remuneration

Variable(People)Number of
officers

Directors (Outside directors)

271(17)185(17)

62(—)

22(—)

10(3)

Audit & Supervisory Board
members (outside members)

46(14)

46(14)——

5(3)Total (outside officers)

317(32)

232(32)

62(—)

22(—)

15(6)

Notes:

1. As of the end of FY 2020, there are 11 directors (four outside directors) and five Audit & Supervisory Board members (three outside
members).
2. One of the outside directors does not receive remuneration.

Strategic Shareholdings
Policy Regarding Strategic Shareholdings
The Company acquires and holds shares issued by ourpartner companies with the aim of strengthening business
relationships and maintaining good relationships withthem, thereby contributing to the receipt of orders forconstruction work under favorable terms and increasing
the Company’s corporate value.
Meanwhile, with respect to individual shares, each year
we conduct a short-term review using indices for the mostrecent fiscal year to carefully examine whether there aresufficient benefits relative to capital cost, and whether
there are risks that could decrease the share price. We
also conduct a medium to long-term review using indicesfor several fiscal years in the past and future to carefully
examine whether a certain level of profit is obtained fromconstruction projects relative to the holding cost. Basedon the results of these reviews, each year we confirm at
the Board of Directors meeting whether or not there issignificance in holding these shares while comprehensively considering factors such as economic rationale andfuture prospects.
In principle, we proceed to sell and reduce our holdingsof shares that no longer meet their purpose or are no longer recognized as significant based on factors such as thecircumstances of the issuing companies as well as market
trends. In FY 2019, we sold the shares of one listed company.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Outside Director Interview
Kahori Yoshida
Please tell us about your background.
After graduating from university, I worked for a real estatecompany for 11 years in a department related to condominium construction. During this time, I obtained thefirst-class Kenchikushi (architects and building engineers)
license and was responsible for managing construction
sites as the client. A subsequent incident involving a building-structure data falsification scandal made me realize
the necessity of lawyers with a background in architecture,and I changed professions.

How do you perceive our company culture andinitiatives?
People generally imagine the general contracting industry
to be close-minded and focused solely on craftsmanship,
but the culture of everyone at the Company, including
management, is very open and respectful. This is anorganization where people who aim to fulfill their social
responsibility with a broad perspective are connected bya strong sense of trust in each other, and I feel that there
is a powerful atmosphere of co-creation and incorporating
diverse opinions. Although there are still very few womenin this industry, the decision to promote me, as an inexperienced woman, to the position of director demonstrates
their commitment to promoting diversity.
While employee awareness and human resource development is well-developed, on the other hand, I still feelthat their efforts to encourage participation by women
have only begun to yield results. Last fall, the Company
progressed from an awareness of the issue of whether
management’s stance on diversity has been properly communicated within the Company, to holding a round-tablediscussion with female employees. Going forward, I would
like to continue exchanging ideas with women and young
employees so that they will want to aim to become managers and executives.
In addition, the Board of Directors meeting was heldat the Institute of Technology last year, where we saw the
ZEB initiatives to reduce the energy consumption of buildings to zero. I was impressed by the Company’s advanced
environmental engineering and high motivation to solve
environmental problems.
How would you evaluate the effectiveness of our
Board of Directors?
At Board of Directors meetings, officers engage in robust
discussion regardless of their relationship to the Company.
The office offers substantial support to outside direc-

tors as well, providing the materials for deliberation wellin advance so that I am well-prepared to participate in the
Board of Directors meetings. President Terada, the Chairman of the Board, facilitates the meetings in a manner thatencourages straightforward and honest debate, and there
are tense and serious discussions each time. In addition,
discussions have become even more active since last year,
as each agenda item is explained by the executive officer incharge and inside directors participate in deliberation in aflat manner regardless of position or seniority.
On the other hand, I sense that the composition of theBoard of Directors could be improved with the addition ofan expert in the digital sector and other areas necessary
for the Company’s growth. It is important to have a valuable exchange of ideas, not simply increasing the numberof people.
As directors, we must constantly develop ourselves,and officer training and opportunities for expanding ourknowledge are also critical. The other day at a seminarthat invited an outside speaker to help develop a new
vision, in which outside officers also participated, there
was an opportunity to think about concrete practices toencourage innovation. I felt that the sense of urgency weexperienced there was beneficial to subsequent discussions at the Board of Directors meetings.

What role are you expected to perform?
The Company has a lot of talented people and its strengthlies in its proactive approach to learning and openness
to continuous change. Through my position in the Boardof Directors, I would like to contribute to the continued
growth of the Company and its corporate value withthe expertise and experience on the field I possess as
an architect and a lawyer, as well as by actively offering
diverse opinions from the perspective of a woman andsomeone of my age group.

Expectations for Outside Directors
Outside directors have been integral in stimulating the Board of Directors through diverse opinions
based on their expertise and experience. Director Yoshida, who was elected to the Board in 2019,
has contributed her thought-provoking perspective based on her experience in the real estateindustry and insights as a lawyer. Because the construction industry is a largely male-dominatedindustry, we look forward to her unique perspective as a woman and unconventional opinions.

Mitsuhiro Terada Representative Director, President

47

48 FOUNDATION THAT SUPPORTS VALUE CREATION

Board of Directors(As of June 24, 2020)

1

Tsuneo Iizuka

2

Representative Director, Chairman

Masatoshi Shimizu

5

14

1
4

7

Apr. 1979 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2011 Executive Officer of the Company
Apr. 2016	Senior Executive Officer of the Company
General Manager, Building Construction Division of
the Company
Jun. 2016 Director, Senior Executive Officer of the Company
Apr. 2018	General Manager, Building Construction Division,in charge of Institute of Technology and Wooden Building Construction Division of the Company (to present)
Jun. 2018	Director, Senior Managing Executive Officer of theCompany (to present)
Apr. 2020	
Representative Director, Senior Executive Vice
President of the Company (to present) General
Manager of Business Management, in charge of
Safety & Environment and International Business of
the Company (to present)

6

2

Apr. 1974 Joined TOKYU CORPORATION (“Tokyu”)
Jun. 2007 Director of Tokyu
Jun. 2008 Managing Executive Director of Tokyu
Apr. 2011 Senior Managing Executive Director of 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
Jun. 2019	Representative Director, Vice Chairman of theCompany
Apr. 2020	Director & Chairman of TOKYU COMMUNITY
CORP. (to present)
Director of the Company (to present)

3
10

Toshio Imamura
Director

Apr. 1981 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2015 Executive Officer of the Company
Apr. 2018	Senior Executive Officer of the Company
General Manager, Civil Engineering Division of theCompany (to present)
Jun. 2018	Director, Senior Executive Officer of the Company(to present)

8
5

Yushi Tsukui
Director, Managing Executive Officer

Apr. 1982 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2012 Executive Officer of the Company
Apr. 2017	Senior Executive Officer of the Company
General Manager, Business Administration Divisionof the Company (to present)
Apr. 2020	Director, Senior Managing Executive Officer of theCompany (to present)

Motoyuki Takagi
Representative Director, Executive Vice President

Apr. 1979 Joined TOKYU CONSTRUCTION CO., LTD.
Jun. 2010 Executive Officer of the Company
Apr. 2012 Senior Executive Officer of the Company
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 the Company
Jun. 2019	Representative Director, President of the Company(to present)

Director, Senior Managing Executive Officer

123

Representative Director, President

Apr. 1971 Joined TOKYU CONSTRUCTION CO., LTD.
Oct. 2003 Executive Officer of the Company
Jun. 2004 Senior Executive Officer of the Company
Jun. 2006 Director, Senior Executive Officer of the Company
Apr. 2008	General Manager, Civil Engineering Division of theCompany
Jun. 2009	Representative Director, Senior Managing Executive Officer of the Company
Apr. 2010 Representative Director, President of the Company
Jun. 2018	Representative Director, Chairman of the Company(to present)

4

Mitsuhiro Terada

9

13
6

15

11

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

7

Yutaka Kubota
External Director

8

Masao Tomoe
External Director

9Kahori Yoshida
External Director

Apr. 1970 Joined Sagami Railway Co., Ltd. (“Sagami”)
Jun. 1998 Director of Sagami
May 2000	Representative Director, President of Sotetsu Real
Estate Co., Ltd.
Nov. 2000	Representative Director, President of Sotetsu Home Co., Ltd.
Mar. 2001	Representative Director, President of Sotetsu Real
Estate Sales Co., Ltd.
Jun. 2002	Managing Director of Sagami
Jun. 2011	Representative Director, President of Sotetsu
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 Director of Tokyu
Jul. 2014	Executive General Manager of Human Resources
Headquarters 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)
Sep. 2019	Representative Director & Vice President of Tokyu
Corporation (to present)

Apr. 1996	Joined Recruit Cosmos Co., Ltd.
Sep. 2010 Passed the bar examination
Dec. 2011	Joined Yoshiko Takagi Law Firm (current T&T Partners Law Office) (to present) Registered as Lawyer
Apr. 2012	Member of the Operation Committee for Housing
Dispute Examination Meeting, Daini Tokyo Bar
Association (to present)
Nov. 2018	Special member of the Chuo Construction Project
Dispute Examination Committee, the Ministry of Land,
Infrastructure, Transport, and Tourism (to present)
Jun. 2019 Director of the Company (to present)

10 Isao Onda

11 Satoshi Hashimoto

12 Masashi Ochiai

External Director

Full-time Auditor

Full-time Auditor

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 ResearchInstitute Inc. (to present)
Jun. 2020 Director of the Company (to present)

Apr. 1981 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2010	General Manager, Internal Control Office of theCompany
Apr. 2012 Executive Officer of the Company
Jun. 2016 Full-time Auditor of the Company (to present)

Apr. 1983 Joined Tokyu Construction Co., Ltd.
Jun. 2007	General Manager, Corporate Planning Departmentof the Company
Apr. 2008	General Manager, General Affairs Department of Tokyo
Branch of the Company
Apr. 2010	General Manager, General Affairs Department of
Building Construction Division of the Company
Apr. 2012	General Manager, Finance & Accounting Department
of Business Administration Division of the Company
Apr. 2020	Full-time General Manager, Finance & Accounting
Department of Business Administration Division of
the Company
Jun. 2020 Full-time Auditor of the Company (to present)

13 Youichi Saito

16 Yoshikazu Kato

15 Kazuo Kitamura

Audit & Supervisory Board Member
Oct. 2005 Passed National Bar Examination
Sep. 2007	Completed training of legal apprenticeship andregistered as attorney
Member of Crime Victim Support Center of Daini
Tokyo Bar Association
Sep. 2015	Member of Discipline Committee of Daini Tokyo
Bar Association (to present)
Apr. 2016	Member of Legal Apprenticeship Committee of
Daini Tokyo Bar Association (to present)
Jun. 2016 Auditor of the Company (to present)

Audit & Supervisory Board Member
Apr. 1982	Joined the Science and Technology Agency, Cabinet Office
Jul. 2001	Director of Research Environment and Industrial Cooperation Division, Research Promotion Bureau, Ministry of 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, Research and Development Bureau, MEXT
Apr. 2012	Vice President of Japan Aerospace Exploration Agency
Apr. 2015	Director of Technology Division, Cabinet SatelliteIntelligence Center, Cabinet Intelligence andResearch Office, Cabinet Secretariat
Nov. 2017	Specially Appointed Counselor, Remote Sensing
Technology Center of Japan (to present)
Jun. 2018 Auditor of the Company (to present)

Audit & Supervisory Board Member
Apr. 1980 Joined The Chiba Bank, Ltd.
Jun. 2005 Branch Manager of Sakura Branch, The Chiba Bank, Ltd.
Jun. 2009	General Manager of Operation Planning Division,
The Chiba Bank, Ltd.
Jun. 2010 Auditor of Toho Kogyo Co., Ltd.
Jun. 2012 Director of Chibayaku Groceries, Inc.
Jun. 2014	Managing Executive Director of Chibayaku Groceries, Inc.
Jun. 2015 Auditor of Chibayaku Groceries, Inc.
Jun. 2020 Auditor of the Company (to present)49

50 FOUNDATION THAT SUPPORTS VALUE CREATION

Risk Management
Basic Approach to Risk Management/Risk Management System
The Company has long had a framework in place fordetecting and dealing with risks. In response to changes
in the business environment, we are strengthening risk
management to shore up our management and financial foundations based on the policies in our mid-term
management plan.
Specifically, we hold the Management Meeting andother meetings periodically to grasp social and economic trends and discuss measures in response to major
management risks. With regard to the risks of eachbusiness unit, the management monitors business operations through the Council of Business Unit Managers
and other bodies and provides prompt instructions in
response to major business risks.
We have established a code of conduct and regu-

lations concerning matters such as safety and health,environment, quality, compliance, business continuity
during large-scale disasters, management of personal
information, and information security. We also havea structure in place to prevent risks from occurringand to respond promptly to those risks that havematerialized through the utilization of management
systems. Regarding individual operations such as
construction orders, real estate business transactions,and other business investments, we have establishedthe Head Office Risk Management Council, Orders
Received Council, Overseas Order Council, Real EstateTransaction Review Board, and Business Investments
Review Board as cross-departmental structures forreviewing risks in advance.

Process of Discussing Major Risks/Risk Factors
Before the management discusses measures to betaken in response to major risks, we prepare for the
discussions through a process of developing a sharedlanguage for the Company’s risk models and risk definitions, understanding and evaluating a comprehensive
range of factors that could impact business progressunder the mid-term management plan or hinder environmental, social, and governance (ESG) management,
and identifying major risks. During discussions of majorrisks, we develop measures from a comprehensive andlong-term perspective and flesh out concrete response
measures from a strategic perspective at the Strategy
Meeting and other meetings, as needed.

Risk Factors Considered by the Company
Considering the environment• Responding to climate change problems• Using resources efficiently and managing waste• Conserving biodiversity

1

2

Risk models

Risks definitions

Ensure the comprehensiveness ofrisks covered bydeveloping a sharedlanguage for ourrisk models and risk
definitions

Utilization of human resources• Respecting human rights• Retaining and training/developing employees• Promoting diversity in work styles

Labor safety and health• Ensuring occupational safety• Eliminating long working hours

3

Evaluation criteria

4

Identification of major risks

5

Discussion of response

Quantitatively andqualitatively evaluate
the impact of risks on
management

Identify and prioritize
major risks according
to the evaluation

Securing a competitive edge in the construction business• Ensuring quality• Reforming construction production systems• Supply chain management

Promoting the diversification of revenue sources
Corporate governanceDiscuss measures
for responding tomajor risks from along-term, strategic
perspective

Business ethics (compliance)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Business Continuity Management (BCM)
In preparation for large-scale disasters that may occur
in the future, we formulated a business continuity
plan (BCP) in 2008 and received a certification for“Construction Company Continuity Capacity During
Disasters” from the MLIT Kanto Regional Development
Bureau in 2009. We have renewed this certification every
two years since then.
Our efforts in business continuity management(BCM) include formulating a training plan based on
this BCP, conducting drills and other trainings led by
the emergency response department at headquartersthat include participation by directors, and repeatedly
working to identify and improve issues with the BCP. At
each of the Group’s bases, we maintain a stockpile ofessential items, including food and beverages, power
generators in case of prolonged power outages, andemergency communication equipment, to ensure an
operational environment in the event of various typesof disasters. In addition, as our head office is locatedadjacent to Shibuya Station, one of Japan’s major transportation hubs, we are a part of a council comprising
Shibuya Ward Office staff and local businesses who areresponsible for helping people unable to return homein case of a disaster and regularly participate in drills
run by the Ward and this council to support disaster
response 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, starting with disaster response routes. To
accomplish this, we have entered into agreements to cooperate with national and local government agencies andinfrastructure-related companies in the event of a disaster,and plan to also work together with our subcontractors.
We promoted various measures in response to the
spread of COVID-19, including the sharing of timely
and appropriate information on topics such as infection prevention, the distribution of masks and disinfectants, and the development of a work-from-homesystem. Going forward, we will continue to promote
BCM in the “new normal” era.

Holding a comprehensive BCP drill based on the scenario that an earthquake
occurred directly beneath the Tokyo metropolitan area at 4:00 a.m. (September 2019)

Information Security
We established a Basic Policy on Information Security
in order to protect business-related information assets
from threats such as information leakage incidents

and accidents. In addition, we revised our Information
Security Guidelines in March 2019 and are conducting
e-learning sessions based on these Guidelines.

Basic Policy on Information Security (established on March 31, 2013)
1

In managing information, establish a management system toensure the security of information assets and regularly review
the system while making necessary improvements.

4 emand clear responsibility regarding violations of this Basic
D
Policy, as well as related rules and regulations, based on
employee regulations or contracts.

2

 onduct well-balanced information security measures from allCaspects, including physical, personnel, and IT, and implement
measures to prevent the occurrence of issues such as information leakage while promptly responding to any problems that
may occur.

5

 onduct regular reviews to identify and resolve problems inCorder to ensure that this Basic Policy, as well as related rules
and regulations, are communicated, implemented, and maintained, and that improvements are made continuously.

3

Establish operational systems for promoting information security measures, and clarify the roles and persons in charge.

51

52 FOUNDATION THAT SUPPORTS VALUE CREATION

Compliance
Compliance at Tokyu Group
Compliance management is not simply about preventing corporate scandals; it is an essential part of improving corporate value and remaining the brand of choicefor our customers. Tokyu Group has been actively promoting compliance-related activities since we definedcompliance as one of the basic stances of the Group’s
management in April 2000.

In January 2002, we established the Group’s compliance guidelines to provide basic principles for the
behavior of all Tokyu Group officers and employees inrelation to compliance. Based on these guidelines, eachGroup company strives to promote compliance by conducting its own activities in accordance with its businessstructure and corporate culture.

The Group’s Compliance Guidelines
https://www.tokyu-cnst.co.jp/sustainability/compliance/pdf/20190704compliance.pdf

Basic Approach to Compliance
We consider compliance with corporate ethics and laws
and regulations to be non-negotiable and the most fundamental part of CSR. At the same time, we acknowledge that we must create systems and offer thoroughemployee training in order to completely eliminate
violations caused by lack of knowledge or awareness. In
order to make sure that “always doing what should bedone” is firmly imprinted in Tokyu Construction’s corporate DNA, we have created the Guidelines for Action/

Compliance Code and are working to make themknown to each and every employee through training
and other programs, including e-learning.

Compliance Promotion Structure(1) Compliance Officer
The officer in charge of the Internal Control Office acts
as the compliance officer, and performs the following
roles as the chief officer of “risk management throughcompliance management” at the Company.

Guidelines for Action/Compliance Code
1 Focus on risk management
2 Ensuring safety
3 Sales activities with an understanding of customer needs
4 Provision of high-quality designs and construction work
5 Appropriate responses to various “voices” from customers and neighbors(i)	Formulating the Compliance Code, etc.
(ii)	Establishing the structure for “risk management
through compliance management”(iii)	Reporting the status of compliance measures tothe Board of Directors, etc.

6 Fair and transparent decision-making
7 Protection of company assets
8 Timely, appropriate and fair information disclosure, and public relations activities
9 Prohibition of insider trading
10 Strict compliance with the law and fair transactions(2) Internal Control Office
The Internal Control Office is in charge of promoting
and overseeing “risk management through compliancemanagement” and plays the following roles in promoting compliance.

11 Rejection of relations with antisocial forces
12 Optimal procurement activities
13 Appropriate rule management
14 Appropriate business operations and internal control
15 Respect for intellectual property
16 Appropriate document management
17 Protection of confidential information
18 Ensuring reliability and safety of information systems
19 Ensuring healthy and safe work environments
20 Distinction between private and public matters, moderation of entertainment and gifts
21 Organization of a favorable work environments
22 Responsible business operations and continuous improvements
23 Corporate activities that consider the environmental impact
24 Social contribution activities as a corporate citizen(i)	Spreading knowledge of the Compliance Code,etc., and fostering awareness of compliance(ii)	Implementing surveys on adherence to
the Compliance Code, etc., and making
improvements(iii)	Responding to consultations regarding theCompliance Code, etc., and responding toviolations of the Compliance Code, etc.
(iv)	Planning and implementing training on compliance and risk management(v)	Understanding the state of practice at eachdivision, branch, business unit and subsidiary,etc. (implementing audits)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

(3) The Manager in Charge of Compliance/The
Person Responsible for Compliance
In order to ensure the effectiveness of compliance ineach department, the general manager of each division,
branch, and business unit, and other line managers who
directly report to the President, as well as the presidents
of subsidiaries are appointed as the “managers in chargeof compliance,” and the general manager of the generalaffairs at each division, branch, business unit, etc., thegeneral managers of the Corporate Strategy Division andBusiness Administration Division, and the general managers of the general affairs divisions of subsidiaries areappointed as the “persons responsible for compliance.”
The managers in charge of compliance and persons
responsible for compliance cooperate with the Internal
Control Office in working to develop and improve thecompliance structure in each department while evaluating the state of practice each year and incorporating theresults of the evaluation into the improvement plan for
the following fiscal year.

Education and Training of Employees
To ensure that our officers and employees fully understandthe importance of “risk management through compliancemanagement,” we will continue to conduct awareness-raising and training programs on a sequential and continuous
basis, such as: 1) training for the employees in each department, with the aim of raising their awareness (organized by
the Internal Control Office); 2) personnel training to raiseawareness by including lectures on compliance in level-specific training organized by the Personnel Department, etc.
(organized by the Personnel Department); and 3) morepractical voluntary training at each workplace, centered oncase studies and discussions tailored to the actual situations(organized by each department).
In addition, in order to instill compliance awarenesswithin the Company, we conduct e-learning programs andtraining upon promotion with content that varies according to the position. Recently, cases of bribery of foreign
public officials have been on the rise overseas, and it is nolonger sufficient to focus only on domestic developments.
As such, from FY 2016, we have introduced the Overseas
Compliance Program for our overseas offices, which
includes the publication of the Compliance Code in the language of each country and regulations aimed at preventing
violations such as bribery of foreign officials and participation in cartels.

Whistleblowing System
Based on our Compliance Consultation and Reporting
Regulations, the Company has a whistleblowing system
in place to detect potential compliance violations early-on and promptly rectify the situation internally.
Whistleblowing contact points have been established both internally and externally through a law firm.
Employees (including temporary staff) can consult withand make reports to these contact points via phone,email, writing, or face-to-face meeting (these consultations and reports can be carried out anonymously, and we

protect whistleblowers from disadvantageous treatment).
We encourage employees to consult with theCompliance Consultation and Reporting Desk wheneverthey are unsure of what action to take in terms of compliance or have even the slightest suspicion that there
may be a problem.
In addition, we have established Overseas
Consultation and Reporting Desks at our overseas basesthat offer support in English and the official languagesof each country.

Corruption Prevention
System
The managers in charge of compliance and persons
responsible for compliance cooperate with the Internal
Control Office in working to prevent corruption. Each
year, they evaluate the state of practice and reflect theresults in the improvement plan for the following year.

Basic Policy Regarding Overseas Compliance
Our Group (including the Company and its subsidiaries)
has established the following basic policy with the aimof preventing violations such as the bribery of public
officials and participation in cartels in conducting business abroad. We will promulgate this policy among ourofficers and employees, as well as business partners.

The risk of penalties, including the imposition ofheavy fines on corporations and individuals, is growing
due to tighter international regulations on so-called
competition laws that regulate the bribery of foreign
public officials and acts that distort market competition overseas. In recognition of this, and aiming to
respond to such risks, we have established the Overseas
Compliance Program—which includes a message
from top management and basic policy—and began
implementing it in April 2016. In order to expand thisprogram to our overseas bases, we have continued to
conduct training of local staff. In FY 2019, we conductedcompliance training of 312 staff members.

Basic Policy Regarding Overseas Compliancehttps://www.tokyu-cnst.co.jp/sustainability/foreign_compliance/

53

54 FOUNDATION THAT SUPPORTS VALUE CREATION

Human Resources
The core competence of our Group is our human resources. By simultaneously enhancing human resource development to raise the skills of each employee and promoting personnel system reform and work style reform, weare transforming our internal culture so that our people can make the most of their abilities. We are working on avariety of human resource measures to further enhance our human resources and organizational capabilities and totransform ourselves into a company we can experience the meaning of our work, the significance of our existence,and our contribution to society through our work.

Recruitment
In order to become a company that can respond flexibly to cope with the changing business environment, weare recruiting personnel based on our policy of acquiring autonomous human resources and specialized humanresources to tackle challenges in new fields.

New Graduate Recruitment

Mid-Career Recruitment

We define “autonomous human resources” as people
who 1) are interested in craftsmanship, 2) can work
proactively and with a forward-looking approach, and
3) have the potential to generate results. We are working to acquire such personnel who can support theCompany’s future while accurately communicating the“rigor and rewards of the job” to potential hires.

Besides work-ready personnel with experience in ourcore businesses of civil engineering and building construction, we are also promoting the recruitment of highly
specialized and work-ready personnel in our strategic
businesses—the international business and real estatebusiness—as well as IT personnel who can take charge ofpromoting digital transformation (DX) in the future.

Number of new graduate and mid-career hires for career track positions
FY

2016

Female

2017
20

2018
18

2019
22

(People)

2020
26

Total
21

107

Male

83

93

105

121

104

506

Total

103

111

127

147

125

613

19.4%

16.2%

17.3%

17.7%

16.8%

17.5%

Percentage of female hires*The number of FY 2020 mid-career hires in FY 2020 is the number of actual hires through September

Training
In order to demonstrate “true value” in the constructionindustry, it is critical that we create “(unique) social value”
that “could only be provided by Tokyu Construction,”while continuing to reform our corporate culture to makethis possible. It goes without saying that our humanresources are our source of “true value.” We respect
the diverse values of each individual, and through a fairpersonnel system, we expect our human resources toutilize their diverse attributes in the appropriate roles fortheir abilities. We are also working to enhance our training program in order to enable “evolution (step-up)” byutilizing the individuality of each employee.

Human Resource Development According to Our Master Plan

by proactively setting challenges with high aspirations
and a spirit of independence.” We aim to develop
human resources with a high level of expertise andprofessionalism, pride, passion, ambition and perseverance. By creating a “human resource development
master plan” based on this vision and comprehensively
combining programs such as on-the-job training, grouptraining, self-development support, and career development support according to each individual’s career
stage, we are building an environment in which eachand every employee can realize their full potential andevolve into human resources capable of responding tochanges in the business environment.

In our corporate vision, “an employee of true value” isdefined as “an individual who develops his or her career

FY 2019 Training Results
Number oftraining programs

95

Training hours

4,652 hours

Number ofparticipants

Amount invested
per person

3,985 people¥72,000/year*The number of training programs includes group training, online English conversation, e-learning, and other measures.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Stage of career
Career position

Qualification/
work role andpromotion

C１

C2[Learn]Level ofproblemsolving
skillsPeriod for Practical Understanding/Gaining Knowledge

Main career track

C3

Officer

Professional
Career[Demonstrate][Lead][Passing down]

Period for Contributing to Business PerformanceL ead the Entire
Company•Lead the entire
company from ahigh perspectiveP eriod for Passing
Down to the Next
Generation• Pass down skills,
know-how andpersonal network

Main 1C4Main 2Work Site Main 1[Master]
Period for Broadening Skills and Making Career Decisions

Main 3Work Site Main 2• Understand internal operations• Match self-determination with job duties• Expand influence to others, based on multilateral roles• Know one’s own intentions, motivation and values• Decide on career after the main career track• Improve expertise, change careerSpecific Implementation Measures
CategoryOn-the-job
training

Off-the-job
training

Selection/
recruitment

Selfdevelopment

Careerdevelopment
support

Title

Objective/Content

1

Training instructor system

Young employees assist newly-hired employees, improving together

C1

2

On-the-job training master card

Visualize the state of (civil engineering andconstruction) basic knowledge and skill acquisition

3

Career enhancement sheet

Enhance business performance and presentation skills

4

Training by career level

Acquire the necessary knowledge and skills at
each career level

5

Training by job category

Acquire the necessary knowledge and skills
specific to each job category

6

Female career support training

Training to promote female participation;
training in external negotiations

7

Non-Japanese employee support
training

8

Open recruitment of humanresources for overseas dispatch

Support for language acquisition; support for
initial employment via group discussions andadvisory meetings, etc.
Short to medium-term overseas dispatch ofyoung and mid-career employees interested inworking overseas

9Internal/external study sessions

Self-participatory study sessions/seminars

10

Internal job posting system

Open recruitment system to discover andappoint necessary human resources regardlessof unit of origin

11

Development of human resources
for next-generation management

Selective system for developing humanresources for next-generation management

12

Remote learning

Support for remote learning expenses sharedacross the Tokyu Group13

e-learning

Unlimited access to learning content on
business, computer skills, language, and more

14

Conversational English study
support

Improve English conversational ability throughonline lesson content

15

Qualification acquisition support
program

Support the acquisition of professional qualifications (incentives, financial support, etc.)

16

Periodic transfer

Transfer human resources across branches/units
between the 3rd and 6th year of employment

17

Intra-/Inter-divisional rotation

Timely transfer of human resources to utilize
their expertise and expand duties

18

Career self-declaration system

Promote growth based on one’s own career
plan

19

Second career support

Support career development in anticipation of
a 100-year-life

C2

C3

C4

Main 1Main 2Main 3

OfficerSix months to one year after joining the Company

Administrative personnel: 3rd and 6th year; Civil engineering/building construction personnel: 5th and 6th year

Education and Training Programs for Engineers

Developing Human Resources for Management

In order to raise the technological level of the Company,
we provide various opportunities such as on-the-job training and off-the-job training to improve the skills of ourengineers. In addition, we also actively support employees
in the acquisition of qualifications such as architect andmanagement engineer certifications in order to meet participation criteria in tenders, etc., and enhance our corporate evaluation (business evaluation points).
In the Civil Engineering Division, new employees in
the field of civil engineering take part in a 10-month longtraining program based on a practical curriculum that aims
to cultivate their ability to respond to work site situations
before they are assigned to a work site. In the Building
Construction Division, the first year in which new employees are assigned to a work site is defined as a training
period. During this period, new employees are assigned towork in pairs in order to create an environment where they
can improve by learning from each other. In addition, we
have established a First-class Registered Architects School
within the Company to provide support to employees who
are aiming to acquire this qualification.

In order to improve each of the organizational issues
identified in the Employee Engagement Survey we havebeen conducting since 2018 (see page 56 for details), we
provide management skills training for managers andprovide support for organizational improvement activities.
In addition, the activities of the Shinka Management School,
the Company’s own initiative targeted at inexperienced toveteran employees in various positions, has been ongoingsince 2017. This initiative consists of a series of self-participatory trainings on topics such as finance and organizational
theory with the objective of acquiring thenecessary knowledge
and a higher, broader
perspective for positions
in management andadministration. As of FY
2019, over 10 percent of
employees have alreadyvoluntarily participatedManagement skills training
in this initiative.

55

56 FOUNDATION THAT SUPPORTS VALUE CREATION

Human Resources

Developing Human Resources for
Next-Generation Management
Since FY 2019, we have launched the selective NextGeneration Management Academy for candidates forpromotion to general manager and executive officer
positions. The Academy provides internal and external

training and opportunities for interaction with current
management in order to produce human resources withthe skills and high perspective necessary to fulfill theduties of management. Through this initiative, we arelaying the groundwork for the consistent and appropriate
selection of management personnel.

*Our Action Plan based on the Act on Advancement of Measures to Support Raising Next-Generation Children
https://www.tokyu-cnst.co.jp/sustainability/employees/pdf/action_plan_2020_20200326.pdf

Occupational Safety (Safety and Health)
Employee Engagement
In November 2018, we conducted an “employee engagement survey” for all employees of the Group. The resultsof this survey made it possible to visualize our organizational status, including the strengths and weaknesses ofthe organization across the entire company and in eachdepartment, and the respective organizational issues
were reported to corporate managers as well as generalmanagers, group leaders, work site managers and others
who are responsible for the organization. Since then, we
have been periodically conducting this survey twice ayear and held the management skills training for managers with a view to resolving organizational issues in theirrespective organizations. These efforts have started bearing fruit in the form of improvements in the organizational
condition of multiple organizations.
This initiative was recognized andamong the 1,568 companies conducting the employee engagement
survey by Link and Motivation Inc. in
2019, Tokyu Construction received
the seventh highest engagementscore (based on the engagement

Engagement rating*
FY2018FY2019FY2020 Target

FY2026 Target

BB

BB

BBB

A

*Evaluation using “Motivation Cloud” of Link and Motivation Inc. BB is thefifth rating from the top out of all 11 ratings, BBB is the fourth rating fromthe top and A is the third rating from the top.

Trends and Strengths of the Entire Tokyu Construction Group• High level of satisfaction toward contributing to society andhaving rewarding work
• A large number of employees feel a sense of unity with sharedgoals at the workplace

What is employee engagement?
Generally speaking, the term “employee engagement” refers to“the concept of mutual trust and contribution between the company and employees, as well as mutual attachment.” However, at
Tokyu Construction, employee engagement is defined as “eachemployee’s willingness to contribute by proactively demonstrating
his or her potential through a proper understanding of the company’s strategies and goals.”deviation value) in the major corporation category of theBest Motivation Company Award 2020 for which top 10
companies are selected, which is the highest rank in theconstruction industry.

Human Rights
Human Rights and Improvement of Working Environment
Under the Mission Statement of “we will help each person realize his or her dream by creating comfortableliving environments that allow peace of mind,” we will
strive to be a company that can contribute even more tosociety by addressing increasingly diversifying values andassist in resolving issues and realizing dreams of every
person we meet, including customers. We recognize thatthe processes in all our business activities can directly or
indirectly impact human rights and we respect the humanrights of all the persons involved.
Compliance with Applicable Laws
In addition to respecting regulations applicable in Japan aswell as each country and region where Tokyu Construction
carries out business activities, we will also seek ways tomaximize compliance of basic international human rights
principles if there are discrepancies in internationally recognized human rights and the regulations in each country.
Responsibility for and Enforcement of Respect of Human Rights
The Management Policy of Tokyu Construction is basedon the view that “people” are the most significant management resource. We are striving to cultivate a corporate
culture where people with varied experience, skills andways of thinking collaborate in teams and all officers andemployees respect each other.
• Prohibition on discrimination and harassment
Under the belief that every person has the right to receive
fair treatment and equal opportunities, we prohibit discrimination based on race, nationality, religion, faith, gender,
age, social status, lineage, disability, sexual orientation or
any other factor unrelated to legitimate business interests.
• Efforts for human rights awarenessThe specific initiative in this regard involves promoting
respect for human rights through Tokyu Group’s Compliance
Guidelines and Tokyu Construction’s Compliance Code.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

We are conducting trainings, e-learning and such forthe prevention of sexual harassment, power harassmentand other types of harassment and discrimination. We
have also set up a consultation desk (compliance helpline)
for addressing internal and external harassment alongwith other issues. This desk accepts consultations throughphone calls, emails and other methods.

Diversity
We strive to create a workplace where diverse humanresources can exercise their full potential, regardless ofjob category, generation or gender. We effectively utilize
various viewpoints and values stemming from individual“differences,” in an effort to create an environment where
we can respond swiftly to changing economic conditions
and the demands of our customers and other stakeholders,and cultivate a corporate culture that thrives on diversity.

Based on the results of an assessment of the present conditions and an analysis of issues under the act on promoting women’s success in the workplace, we have formulated
an action plan that we should undertake and set targets
accordingly. (Implementation period: From April 1, 2020 toMarch 31, 2023)• Increase the ratio of women in regular recruitmentby 10% or more by FY2022
15.8% (recruitments in FY2019) → 25.8% (recruitments in
FY2022)• Increase the number of female manager candidates(Main 1) three times by FY2022
5 people → 15 people• Increase the ratio of obtaining childcare leave to thestandard level or above during the implementation
periodFor female employees…increase the ratio to 90% or more
For male employees…increase the ratio to 7% or more(people)

400

200

0

202

219

232

2016

2017

2018

260

278

2019

2020

Number of female C4 manager candidates
FY

2016

2017

2018

(people)

2019

C4

15

22

25

Main 14

3

5

5Main 2—

2

1

1*C4: Highest career position (refer to diagram on career steps)

By carrying out recruitment of women along with regularand mid-career recruitment in line with the plan, we haveincreased the number of women employees by 1.4 times incomparison to four years ago.

Employment persons with disabilities
We continue to employ people with disabilities under thephilosophy of creating an “inclusive society” where anyone
can participate in society through work.

Employment rate as of June 1, 2020 2.51%

Promoting Women’s Success in the Workplace

Trends in the number of female employees

Career training
on Zoom forfemale employees

27*Has continuously remained above the legal employment rate since FY2015.

Promotion of Health and Productivity Management
We formulated the Tokyu Construction Health Declarationin May 2019 and are taking steps for adequate healthchecks, promotion of cancer prevention, promotion ofmental health care and other initiatives. Due to these
efforts for maintaining the health of our employees andtheir family members, we have been certified as a Healthand Productivity Management Organization 2020 (large
enterprise category), by the Ministry of Economy, Tradeand Industry (METI) and the Nippon Kenko Kaigi for beinga corporation working strategically by considering thehealth promotion of employees from the management perspective. We seek to generate vital culture in the company
and strive for sustainable growth ofthe company by continuing to work
for maintaining the health of ouremployees and their families under
our management policy that makes
the best use of employees.

Other initiatives
We hold the Office Visit Day for Kids for our employees’
children with the objective to enable them to understandtheir parent’s workplace, cultivate work values and profession values as well as build a workplace culture of respect
for work-life balance, while deepening parent-child communication. We conduct original initiative not only at thehead office but also at branches across a wider area.
Since FY2014, we have also been holding blood
donation sessions twice a year at our head office. Over60 employees participate proactively each time and theinitiative helps cultivate awareness for social contribution
among the employees in addition to contributing, towhatever extent possible, toward resolving the problem ofshortage of blood for transfusion in light of Japan’s diminishing and aging population.

57

58 FOUNDATION THAT SUPPORTS VALUE CREATION

Occupational Safety (Safety and Health)
Basic Approach to Safety and Health and Accident Frequency
Under the strong leadership of top management, we will
cooperate with all members involved in the construction
business, in order to realize safe, healthy and comfortable
work environments through the united efforts of the head
office, branches and work sites. In FY2019, we improved
our safety index and achieved the target of 0.1 or lessthrough the Evolution of Safety Management strongly
promoted under the leadership of top management.

Trends in occurrence of accidents
FY

2015

2016

2017

2018

2019

Safety index

0.17

0.12

0.20

0.43

0.09

*Safety index: √ (Frequency rate x Strength rate)

Safety and Health Policies
Under the strong leadership of top management, we will cooperate with all members involved in the construction business, in orderto realize safe, healthy and comfortable work environments, by implementing a PDCA cycle through the united efforts of the head
office, branches and work sites.
1 Identifying Risk
We work to prevent accidents, by identifying dangerous andinjurious factors that may be hazardous sources from the standpoint of work-related safety and health.

 etting Priority Implementation Activities
S(1) Eradication of public accidents, fatal accidents and major
accidents(2) Reduction of accidents due to crash and fall(3) Reduction of accidents involving construction machinery andcranes, etc.
(4) Reduction of accidents due to collapse
23 Maintaining and Enhancing Physical and Mental Health
We promote the health of all our employees and those involvedin construction work to create a stress-free workplace.
4 Compliance with Laws and Regulations
We clarify laws and regulations related to industrial safety andhealth and internal regulations and comply therewith.
5 Systems Operation/Improvements
We operate the established Health and Safety management
systems, and continuously make improvements.
6

 e take initiatives regarding all of our employees andWworkers involved in construction work.

Activities Based on Health and Safety Management Systems
Under the Construction Occupational Health and Safety Management Systems (COHSMS)
operated by the Company, our head office, branches and work sites cooperate in implementing a PDCA (Plan – Do – Check – Act) cycle to promote continuous safety and healthactivities, in an effort to prevent industrial accidents, while also promoting worker healthand the creation of comfortable work environments, with the aim of enhancing safety andhealth standards.
We are also working to ensure safety at worksites, by thoroughly implementing The Tokyu
Construction Ten Safety Rules. Refer to the following for details.
Initiatives in Safety and Healthhttps://www.tokyu-cnst.co.jp/sustainability/safety/

COHSMS Certificate

Collaboration with Subcontractors
Collaboration with subcontractors is essential for safety and health management at work sites. We carry out a variety of activities to eliminate accidents,
such as operating a system to certify superior foremen as Meisters, while
collaborating with the Accident Prevention Cooperative Association, comprising subcontractors engaged in our construction work.
We also participate in manager meetings of the Construction Career
Up System Headquarters set up by Japan Federation of Construction
Contractors for discussions on the Construction Career Up System, which
will accumulate a database of work history, qualifications held and otherinformation in the unified construction business system through IC cards
distributed to skilled workers so that we can develop an environment where
they can receive evaluation and compensation commensurate with theirskills and experience, and proactively cooperate in its promotion.

FY2020 Meister certification ceremony

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Evolution of Safety Management
Since FY2019, we have been working toward the Evolutionof Safety Management with the objective to creatinga safer and more comfortable working environment atconstruction sites.
We are particularly focused on strengthening communication at various scenes and stages at work sites, including
more active exchange of opinions between top management and site workers, foreman of subcontractors andpersons responsible for safety and health, by enhancing
safety patrols at work sites by management, a measurethat we have been taking in the past, and setting up a new
body for safety measures.

Evolution of Safety Management

Morning assembly during work site patrols by President Terada

1 Strengthen the safety management system by increasing
top management’s participation
2 Review the safety construction work cycle
3 Strengthen communication
4 C omply with the latest management systems such as the
NEW COHSMS and new risk assessments, as other revisions

Status of Human Resource Development and Training
We have established a Safety and Health training systemand provide mandatory training in the form of lectures on
health and safety management, in which employees aregrouped into eight levels, from new employees to those in
their 28th year, with the view to continue improving healthand safety management capabilities and maintaining thesafety construction work cycle. Rather than focusing onclassroom lectures, these lectures feature expanded practical training, with the aim of raising awareness of safety,
and incorporate many group discussions along with group
work called “buzz sessions.”
We also provide more practical education by adopting

T O

P

I

C

Individual KY during morning assembly at a work sitetrainings, such as training for employees handling asbestos, training for employees handling dust and special
education for persons responsible for handling low voltage electricity or oxygen deficiency and the like,that can help in acquiring qualifications necessary forworksite management.

S

Radio Calisthenics/Exercise Daiba (No. 1 × Diversity)
As part of our initiative for strengthening communication, we
prepared radio calisthenics videos with narration in 12 patterns.
They are in five Japanese dialects – standard dialect, Tsugaru dialect, Nagoya dialect, Osaka dialect and Hakata dialect, and sevenforeign languages – English, two variants of Chinese, Indonesian,Thai. Vietnamese and Burmese. These videos are used in morning assemblies. We will continue to strive for eliminating accidents at construction sites where diverse workers work together.
Radio Calisthenics/Exercise Daiba

https://www.tokyu-cnst.co.jp/archive/radio_calisthenics/

59

60 FOUNDATION THAT SUPPORTS VALUE CREATIONThe Environment
Basic Approach/Policy
Basic Approach to Considering the Environment
To continue one of the management policy of the Tokyu
Group which is to “do business in harmony with the naturalenvironment”, we established our “Environmental Charter”
in 1997*. In addition, amid growing interest in Sustainable
Development Goals (SDGs) and ESG investment, we revised
our environmental policies in April 2019, declaring that,“we will work to prevent contamination and protect theenvironment, and promote environment-friendly management in order to realize a ‘sustainable society’ that achieves

a harmonious balance between the environment and theeconomy.” Taking advantage of this opportunity, we will
accelerate our initiatives. In order to demonstrate that we arean environment-friendly company, we have decided to review
our management structure for the disclosure of environmental
information, with the aim of proactively disclosing information.
Our Environmental Charter and Environmental Policies
https://www.tokyu-cnst.co.jp/csr/environment/index.html

Environmental Management
Management System
1. Central Environment Committee meeting
With the Vice President as the chairman and with the participation of the General Manager (GM) of each division in the head
office, discussions are held twice a year on the feasibility anddirection of initiatives related to major matters on environment
in general. The results are reported to the Board of Directors.
2. Management review of the whole company
With the Vice President as the head and with the participationof the General Manager of each division in the head office,discussions are held twice a year on operational status of,issues in and corrective measures for environment management system of the whole company. The results are reported
to the Central Environment Committee.

External certification of environment management system
In 1999, we introduced the environment management systemand obtained certification (ISO14001). We have maintained
the certification by updating it six times to date and will continue to do so in the future.

and are considering their impact on the environment and thesustainable growth of our company as far as both risks andopportunities are concerned. We have set targets for matterssuch as reduction of CO2 emissions and industrial wastes, which
are particularly important, incorporated them into everyday
work and are implementing improvements within the system of
ISO14001.

Initiatives for improving environment awareness inthe company
In addition to inviting external instructors to hold lectures onlatest information related to the environment and posting
videos on the internal website for spreading education andawareness on environment management so that employees
can watch them anytime, we are also conducting environment-related courses for each level and working on reform andimprovement in awareness. We aim to encourage all employees to appear for the Eco Test and assist office employees topass the test by 2021 and all employees by 2026.

Process of evaluating and managing environmental risk
Climate change is a pressing issue today. Therefore, we havestarted efforts based on SBT by identifying the business risks
and opportunities from the perspectives of transition andphysical features. We have also specified the matters importantto the company with regards to the environment in general

Implementation of lecture related to the environment (December 2019)

Initiative for climate change prevention
Acquired SBT certification for greenhouse gas
reduction targets
To achieve the target of limiting temperature rise below
2°C as agreed upon in the Paris Agreement, we acquired
the SBT certification on April 23, 2020. SBT is an international initiative for reduction of greenhouse gas emissions.
We have set our mid- tolong- term goal well below
2°C and are carrying out activities to achieve this target.

Category

Scope 1&2

Scope 3

(Direct businesses of the Company)

Reference year

(Supply chain domains)

2018

2030

30% less than 2018

30% less than 20182050

100% less than 2018—

Scope 1&2:

Thorough energy-saving operation of heavy machinery, trucks, etc.
Introduction and promotion of energy-saving equipment
Shift from internal-combustion engines to electric power
Introduction of renewable energy-based electric power

Scope 3:
Construction of energy-saving buildings, including ZEB	Research and development of decarbonization technology interms of materials and structures
Promotion of wooden buildings

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Quantitative Information• Short-term environmental targets and performance, evaluation of progress

FY2019 Unit-based Targets and Performance
Purpose

Items

Preventing
climate change

Category

Energy consumed

All office work

kwh/m
m3/100 million
yen
m3/m2
2

Civil works
Construction
Civil works

Ratio of different types of wastes

Target Value
133.1

t-CO2/100
million yen

OtherConstruction
Amount of wastes(excluding blocks of concrete,
blocks of asphalt concrete, sludge)

Effective useof resources

Tunnels

Civil
works

CO2 emission

Unit

FY2020Target Value
131.7

36.6

24.3

◎

36.2

13.0

7.0

◎

12.9

42.67

39.48

〇

26.0

19.4

◎

25.7

0.083

0.068

◎

0.082

83.6

71.7

×

84.5

69.3

73.4

〇

69.9

%

Construction

FY2019Performance Evaluation
100.6◎

List of Waste Amounts, Including Supply Chain
FY2019Category

Subject

Construction

Tokyu Construction

EnergyOfficeconsumed

Item

Fossil fuel

kl

Gas

t

4

Fossil fuel

kl

4

Gas

Construction
EnergyOfficeconsumedt

99
18,254,012

kwh

3,630,487

Readymixed
concretem3

127,012

Reinforcing
bart

12,688Iron framet15,532

Fossil fuel

kl

803

Gas

t

0

Fossil fuel

kl

31

Gas

Subsidiaries

t

0

kwh

1,026,077

kwh

743,442

Readymixed
concretem3

21,169Reinforcing
bar

t

1,732

Iron frametConstruction Electric
power
OfficeMain materials

FY2019FY2018

Scope3
Scope1*2

Scope2

Exceptcategory 11

Wastes (t)Scope3Category 11

Scope1*2

Scope2

Exceptcategory 11

Category 11

525,683169.605,074,300
2,463.35

348,827

375,825

31,73913,4386,377
821.12

16,64628,646557,421167.115,080,677
2,457.18

365,473404,471

13,213kwh

Construction Electric
power
OfficeMain materials

Unit

Amountconsumed/
amountpurchased

FY2018*1
Emission of greenhouse gases (t-CO2)
Lower row shows basic unit (t-CO2/100 million yen)

34,355
11.64

33,08410.67

10,106
3.43

12,633
4.08

487,159
165.12

4,027,210
2230.15

2,194
7.84

57
0.24

859
3.07

331
1.40

11,65241.67

75,172
1,481.82

1,723
Total amount ofwastesScope total

36,54911.32
47,514

10,965
3.39

498,810154.43

4,102,382
2,209.70

4,601,192

33,141
9.94
46,104

12,963
3.89

5,638,099*1 Emissions by subsidiaries in FY2018 have been calculated by multiplying with Tokyu Construction’s net sales ratio. In FY2019, assessment figures for five subsidiaries have been applied.
*2 Emissions at the time of transporting earth dug out at a construction site have been added to Scope 1 as direct business activity (In FY2018, 5,069t-CO2 of emissions during transportation ofearth dug out at a construction site have not been considered).
Calculation of greenhouse gas emissions: To calculate greenhouse gas emissions by the company’s supply chain, the Environment Agency’s Emission Intensity Data (Ver. 3.0) has been applied.
Assessment of on-site emissions: 65% in all, 78% of sales value for civil works and 62% of sales value for construction. Calculated by extrapolating and adding total sales value for one year forcivil works and construction respectively.
Scope 3 Category 11: The Environment Agency’s Emission Intensity Data (Ver. 3.0) 15 Construction (Energy) is applied, the basic unit for energy consumption by purpose of the building isbased on the Survey on Energy Consumption of Buildings 41 (released in May 2019 by The Building Energy Manager’s Association of Japan ), the life of buildings is considered as 30 years forbuilding used as shops, restaurants and factories and 60 years for others for calculation purposes, Tokyo Gas: weighted conversion at 0.714kg/m3

CDP Response
Since 2019, we have been responding to the CDP questionnaire which carries out global surveys
and evaluation of initiatives to prevent climate change. We received a B- rating out of eight
possible rankings from A to D for our first response. We are improving and enhancing matterspointed out in the evaluation and promoting the reduction of greenhouse gas emission.

6162 FOUNDATION THAT SUPPORTS VALUE CREATIONThe Environment

Initiatives for Reducing Environmental Impact from Business Activities
Specific Initiatives at the Construction Site
Greenhouse gases emitted from construction sites aremostly due to the use of heavy machinery and transportation
vehicle. Reducing their use will be necessary for decreasing
environmental burden. As emissions from civil engineeringsites are particularly high, taking measures for the process oftransporting earth dug out from the site and other materials
resulted in significant decrease along with greater effectiveness in safety due to the decline in the number of rounds
made by vehicles. We continue to strive for CO2 reduction toensure that all our employees at construction sites contributeto reducing the impact on the environment.

Stock yard for earth dug
out from foundation pile

Befor
Area for raising the heightof the parking space

Initiative• Appropriate processing of about 1,800m3 of earth dug out during theconstruction of a foundation pile and its use as material to raise theChanged the method for underground transportation of earth dug out
height of the route to the parking space (Image on the left).
due to a 2,330m extension of a tunnel from dump trucks to conveyor• Complete reduction in mud taken out from retention pond by imbelts.
proving the water quality of sludge using microorganisms. (Image on
the right).

Effectiveness

Saved 380kl of fuel, which can be used by 8,640 dump trucks
Reduced CO2 emission by 980t

Saved 26kl of fuel, which can be used by 360 dump trucks
Reduced CO2 emission by 67t

Efforts to reduce environmental impact in urban development and construction lifecycle
Zero Energy Building Construction: From theInstitute of Technology to new construction projects
ZEB renovation of our Institute of Technology was completed
in March 2018. To achieve further energy saving, we enhanced
the natural ventilation system and hot water tank, and reduced
energy consumption by 78% in FY 2019, which is of the bestlevel in Japan in terms of standards. In addition, we have also
introduced advanced technologies such as hydrogen and fuelcells and elemental technology, which is not evaluated by the
Building Energy Efficiency Act. We are aiming for 100% ZEB
renovation through a review of the methods of operation andcorrection of systems while actively using the technology andConsumption and generation of primary energy (GJ/year)

Trends in Energy Used at the Institute of Technology
5,500

PV power generation

Air conditioning

Ventilation

Lighting

Water heating

4,500

Elevator

-78％

3,500
2,500

-45％
-10％

1,500
500
0
-500

Total
consumptionPowergenerated
Total

Reference
value

Plannedvalue

Actual value(FY2018)

Actual value(FY2019)

Reference value

Planned value

Actual value(FY2018)

Actual value(FY2019)

5,126

2,199

1,437

0

153

181

183

2,046
(BEI=0.4)

1,256(Ratio of reference
value=0.24)

1,131(Ratio of reference
value=0.22)

5,126

1,314

knowhow obtained through the verification of their effectiveness. In addition, we will proceed with our proposal of ZEB
renovations for buildings designed by the Company by using
acquired knowhow. We have also opened the Institute ofTechnology to a wide range of external parties as a model of
Zero Energy Building to deepen the understanding of ZEB.
Although it will be ideal if innovative ideas become practicable one after the other for such energy saving buildings,
it is also important to continue carrying out simple improvements. Building A of the Tokyo City University is our first
ZEB project for a new building and its construction began inJune 2020 with the aim to make it a ZEB-ready (50% or moreenergy saving) building by leveraging many of the elemental
technologies that we have improved step-by-step during ZEB
renovation of the Institute of Technology. It will be installedwith enhanced heating insulation, Low-E multilayered glass,successive horizontal eaves and vertical louver wall in thewest from the perspective of reducing energy required andwith high-efficiency air conditioning and ventilation, various
controls such as use of daylight, motion sensor and scheduled lighting, LED lighting in
the whole building as well as
solar power generation as themethod of generating energy

Exteriors of the Institute of Technology
after ZEB renovation

ZEB activities by Tokyu Constructions
https://www.tokyu-cnst.co.jp/technology/1740.html

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

from the perspective of effectively using energy.
We are also incorporating ZEB in many new buildings
including the construction of the new Head Office of Seiki
Tokyu Kogyo Co., Ltd. We will further increase the level of theknowhow acquired from the experience of building new ZEB
structures and strive to contribute to reducing the impact on

global environment while addressing the need for eco-friendly
buildings, for which the market is expected to expand further.
*For more information on our ZEB efforts, please see page 31, “ZEB Initiatives –Toward a leading ZEB enterprise.”Developing Materials for Reducing Environmental Impact
We are working on developing technology for promoting three areas as far as concrete, a major construction material, inconcerned. These areas are reduction of CO2 emissions, reduction of use of natural resources and reduction of wastes.
Name ofTechnology
Developed

Reduction
Reductionof use of Reductionof CO2natural of wastes
emissions
resources

Description of Technology

High-ﬂuidity
concrete

The high-fluidity concrete is normal-strengthin scope and its use can reduce (optimize)
the quantity of cement, which had beenused in excess until now for controlling material separation. Therefore, we can reduce
CO2 emissions from cement manufacturing
by as much as about 35%.
This has been implemented for the firsttime in the construction industry and has
been used on 12 projects, about 7,000m3
until now.
(reinforced concrete, parts that are difficult
to fill, CFT, etc.)●

Low carbon
concrete

By using the fine powder of blast furnaceslag, which is the residue (by-product) ofiron manufacturing, as 70% of the material
in place of cement, we have reduced CO2
emissions during cement manufacturing by
65% or over.
(pile, foundation, etc.)●

Fine
aggregateconcretefrom electric
furnaceoxidizing slag

Fine aggregate concrete of electric
furnace oxidizing slag which is the residue(by-product) produced in the process ofelectric furnace steelmaking can be used
as a replacement of natural aggregates,
resulting in a reduction of the use of natural
aggregates and reduction of waste.
(pile, foundation, upper frame overall, etc.)

Fine aggregate concrete from electric
furnace oxidizing slag for improved
performance

●

●

●

●

High-fluidity concrete forgreater filling

Low carbon concrete for higher chemical
resistance and less cracking due to temperature*Items in parentheses indicate the parts or components are recommended for theireffective balance between the performance of concrete and eco-friendliness. Other
parts or components may also be used.

Conservation of Biodiversity
We have established a green infrastructure demonstration
facility within our Institute of Technology. We have created a waterfront biotope in it by making effective use of
rainwater with the objective to conserve the environment,
starting with biodiversity, and proposing a rich community
space in urban areas. We have been working on accumulating knowhow through experiments since 2018 and, in

2019, the fireflies (Luciola lateralis) we put into the biotope,
spawned in the facility. In June 2020, we saw adult flies
flying around, verifying successful breeding.
This facility aims to promote sustainable community development, including disaster prevention/mitigation utilizing
the functions of the natural environment, and we are working
toward the advancement of elemental technologies in addition
to making gradual improvements based on data collected.

Schematic diagram of green infrastructure
demonstration facility
Pump for circulating rainwater

Breeding of organisms•Using rainwater•Habitat for organisms

Birds (Azure-winged Magpie)

Fireflies born in the facility
Tank for storing rainwater

Returning rainwater to nature

6364 FOUNDATION THAT SUPPORTS VALUE CREATION

Quality Control
Basic Approach to Quality Control
In the construction industry, we regard even theend users of our infrastructure as customers. We
also consider it customer-focused management tocarry out activities aligned with the intentions of
those who order construction jobs with the desire tobuild a trustworthy relationship with locals. At Tokyu
Construction, we want to provide solutions tailored tothese kinds of user needs and we strive to enhance ourunique technologies and maintain and improve quality
along with our subcontractors.

Quality Policies
In order to assure the quality of our products (civil engineering
structures and buildings), with the aim of improving customer
satisfaction, we carry out the following activities when undertaking design, construction supervision and construction work.
1 Initiatives for Risk
We identify risks that may exert an influence on the assurance of productquality and improvement of customer satisfaction and consider the extent of their potential influence in order to respond accordingly.
2 Understanding Needs and Expectations
To meet customer needs and expectations as well as applicable regulatory requirements, we explore, clarify and understand such needs
and expectations.

3 Setting Quality Targets
We set effective quality targets for the following business divisions, forthe purpose of assuring product quality and increasing customer satisfaction, while supporting our management policies.

Civil Engineering Business Division
Building Construction Business Division
The support division for management establishes targets related
to the effective utilization of resources (human resources, information and communication technology and other infrastructure,
employee work environments, know-how, etc.), in order to assist
the business divisions in achieving the above-mentioned targets.
4 System Operations and Improvements
We operate the quality management system and make continuous improvements.

Quality Control System and Status of Its Operation
After the civil engineering and the building construction
divisions of the Tokyo Branch each obtained ISO 9001
certification in March 1997, all branches and divisions
throughout Japan obtained certification by October
2000. In April 2004, the Company made a full transition to
a company-wide integrated quality management system(QMS), which was registered in September of the same
year. In addition, since 2005, combined external audits
with an environmental management system (EMS) havealso been conducted each year. In October 2017 (partly in
February 2018), both re-certification and transition wereapproved, following our 7th re-certification audit andaudit of our transition to ISO 9001: 2015. We will ensure
implementation of the following PDCA cycle necessaryfor quality management system in the Civil Engineering

Business Division as well as the Building Construction
Business Division, constantly improve our quality management system and offer products and services thatsatisfy our customers.
品質ＭＳのＰＤＣＡ

ACT

PLAN

マネジメントレビュー ( 指示 )改善の機会

監視・測定・分析・評価● MR 対応計画● 品質目標● 品質マニュアル

品質保証
顧客満足向上の達成

マネジメントレビュー ( 評価 )

顧客満足
要求事項

計画
へ

支援

内部監査

Check

事務支援（総務・事務）

品質方針● 再発防止のための処置● 継続的改善

資源

実施結果

より

施工支援

設計支援

営業支援

・仮設計画
・調達
・検査
・工事監理
・・・他

・設計知識
管理
・・・他

・見積
・技術提案
・・・他

施工

運用

DO
土木構造物・建築物

・アフター含む

支援
設計

要求事項

営業

運用

顧客

品質ＭＳに密接に関連する利害関係者

Status of Human Resource Development and Training
Each year, we periodically conduct training related
to QMS for internal auditors and encourage them toacquire certifications. In addition, we provide a mandatory training program for engineers and techniciansof the appropriate year, and also conduct training toenhance the skills of internal auditors and follow up on
the management system.
We also provide education on the quality management system to employees, contract employees andsubcontractors, as needed, at each division, department
and work site.
We define “enhancing problem-solving skills” as“the ability to find and solve problems on our own” andbelieve that enhancing the capabilities of each individual
leads to the strengthening of our organization, including
maintaining and improving safety and quality, appropriate
processes and pursuing high profit margins. In September
2015, the Building Construction Business Division began
holding study sessions called “Site-Learning” at eachwork site, as an initiative to enhance problem-solving
skills. “Site-Learning” is conducted on-site throughout
Japan, with monitoring performed by each branch, as wellas the Building Construction Business Division, in order tostandardize and improve the contents.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Initiatives to fulfill other social responsibilities
Formulation of our procurement policy
Until now, we have collaborated with subcontractors
and vendors, complied with regulations, and worked for
creating comfortable living environments while reducing
environmental impact and paying attention to respectfor human rights. On the hand, the interest in corporatesocial responsibility has been rising. To address this,we have drawn up a clear procurement policy and will
strengthen our initiatives from the perspective of supply
chain management.

Procurement Policy
Tokyu Construction will contribute to creating sustainable society and community by valuing mutual respect offering equal business
opportunities, thoroughly complying with regulations, and making fair selection based on partnership of mutual development with
subcontractors and other vendors.
Outline1 Securing compliance and fair trade
We will understand the laws and regulations, and we will not conduct
any illegal transaction or unfair trading.
2 Ensuring quality
We will select the best vendor for ensuring that we can provide construction products and offer products and services that can gain ourcustomers’ trust and satisfaction.

 ecuring Safety and CleanlinessS
We will select the best vendor for ensuring that we can provide construction products and offer products and services that are safe and clean for ourcustomers and every person who uses our products and services.
3

4 Consideration for the environment
We will give priority to procuring construction products and services
that give consideration to reducing environmental impact throughmeasures such as controlling the emission of wastes, noises andvibrations, greenhouse gases, pollutants, and dangerous items, andimplement measures for securing proper management conditions.

 espect for human rights and creation of comfortable workR
environment
We will respect human rights and select vendors on the condition of
securing a comfortable work environment where there is no discrimination or harassment due to gender, age, place of birth, nationality, andother factors.
5

6 Thorough information security
We will select vendors on the condition of securing information securityby paying due consideration to the protection of confidential information, personal information and customer information.
7 Refusal of Relationship with Antisocial Forces
We will sever transactional or any other relationship with antisocial forces.
8 Creation of a procurement system
We will create a system for continuously implementing such procurement.

Social Initiatives
29 Years of Continuous Clothing
Aid Activities for Africa

Participating in Charity Events to
Support Cancer Patients

Motherland Academy International, anongovernmental organization made up ofmothers who convey the equality and preciousness of life to children through actions,conducts aid activities in West Africa. Throughthis organization, every year since 1991, we
have carried out activities to provide clothing donated by Tokyu Construction Group
employees and our subcontractors to regionsof Africa, where aid does not reach. For 29
years, through 2019, we have delivered a totalof over 160,000 pieces of clothing to countries
such as the Republic of Mali.

We have sponsored and participated in the
Saitama Relay of “Relay for Life Japan,” acommunity-based charity event that supports
cancer patients and their families, for 11
consecutive years since 2009. Employees,
their families, and subcontractors helpedwith the 24-hour charity walk and fundraising
activities, with the aim of increasing awareness of cancer prevention and conveying the
preciousness of life to the next generation.
We also provide voluntary support for theoperation of the event, including preparationof drawings of the venue and setup/removal
work on the day of the event. (This event has
been suspended in 2020 due to the COVID19 pandemic.)

Participation by Employees andTheir Families in the 17th Meguri
no Mori Tree Planting Festival
NPO Silva and other organizations held a tree
planting event in November 2019 at Meguri
no Mori in Shonan Village Center (Yokosuka
city, Kanagawa), with the objective of enriching hearts with the communication that arises
through greenery. Employees, mainly from our
Wooden Structures Promotion Department,
and their families took part in the event and thenumber of participants from our company was
the highest among all participating organizations. Through this activity, we would liketo increase awareness among our employees
and their families and create opportunities for
self-growth through interactions between our
employees and locals in addition to contributing
to conservation of the environment.

65

66 CORPORATE DATA

10-year Main Consolidated Financial and Non-Financial Data

For the fiscal year

FYE Mar. 2011

FYE Mar. 2012

FYE Mar. 2013

FYE Mar. 2014

Orders received

205,726

212,410

210,933

290,647

Net sales

244,974

227,843

228,570

226,164

Operating income

7,584

1,572

1,154

2,630

Ordinary income

7,811

1,884

2,301

3,559

Profit or loss attributable to owners of parent

4,087

1,799

(566)

2,685

Total assets

146,781

154,442

154,195

169,685

Total capital

30,28731,39032,48735,258Cash flows from operating activities

20,540(11,486)

14,264(9,302)

Cash flows from investing activities

481

20

(619)

(2,072)

Cash flows from financing activities(9,813)

4,704(8,569)6,476

Cash and cash equivalents at end of year

24,663

17,881

23,097

18,215

Net income or loss (Yen)

38.29

16.86

(5.31)

25.16

Total net assets (Yen)283.29293.46

303.61

329.35

Cash dividends (Yen)

10.00

3.00

0.00

5.00

Payout ratio (%)

26.1

17.8

—

19.9

Equity ratio (%)

20.6

20.3

21.0

20.7

ROE (%)

14.1

5.8

(1.8)

7.9

PER (Times)

6.5

12.6

—

17.4

Number of employees at end of year (People)

2,460

2,446

2,403

2,313

Gender breakdown (Male/Female) (People)

2,302 / 158

2,285 / 161

2,231 / 172

2,148 / 165

Employment rate for persons with disabilities (%)

1.94

1.81

2.16

2.07

Office

1,387

1,060

1,370

1,607

Workplaces

40,00837,26051,06944,397350,320

361,347

451,353490,293

Recycling rate (%)

94.4

93.3

94.7

96.8

Accident frequency rate

0.53

1.07

1.02

1.04

Operating Results

Financial Position

Cash Flow

Per Share Data

Financial Indicators

Non-Financial Indicators (Non-Consolidated)

CO2 emissions (t-CO2)

Construction by-products generated (t)*Tokyu Construction has adopted the Partial Amendments to Accounting Standard for Tax Effect Accounting, etc. (“the Standard”) from the start of the current fiscal year,
and the Standard has been retroactively applied to the figures as of March 31, 2018.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

(Millions of yen)FYE Mar. 2015

FYE Mar. 2016

FYE Mar. 2017

FYE Mar. 2018

FYE Mar. 2019

FYE Mar. 2020

341,992

303,758

293,539

299,436

285,476

215,109262,815

296,393

243,618

320,711331,437

322,170

6,009

18,17817,211

21,41621,987

20,315

8,024

19,76818,83922,12822,932

21,9695,805

13,34013,691

16,11815,504

14,903

192,226

214,526

204,813249,756*

264,996

235,897

44,861

54,23866,38079,17592,981

101,703

2,111

39,003(23,545)

16,226

29,694(33,439)(1,525)(334)(1,717)(3,383)(5,786)(7,488)(675)(6,035)(2,788)(6,457)(3,575)

21,604

18,31850,674

22,582

28,86549,14529,54954.40

125.00128.30151.05145.37139.79418.59506.04619.91739.87868.87949.39

13.00

25.00

26.00

31.00

30.00

30.00

23.9

20.0

20.3

20.5

20.6

21.5

23.2

25.2

32.3

31.6*

35.0

42.9

14.5

27.0

22.8

22.2

18.1

15.4

12.5

7.4

6.8

7.6

5.7

4.1

2,340

2,412

2,464

2,537

2,523

2,576

2,161 / 179

2,219 / 193

2,249 / 215

2,303 / 234

2,275 / 248

2,308 / 268

1.84

2.22

2.26

2.30

2.46

2.52

1,841

1,913

1,820

1,754

1,658

2,000

59,394

66,112

67,33351,60254,26542,462403,918

473,004

395,309410,245376,949

348,812

96.1

95.9

98.4

99.4

94.0

93.3

0.84

0.73

0.70

0.79

0.58

0.39

67

68 CORPORATE DATA

Financial Overview
Overview of Business Results and others
Overview of Business Results
The Japanese economy continued to recover moderately in the year ended March 2020 by making continuous improvements in employment and income
environment as corporate incomes remained at a highlevel. However, the economy suffered a severe blow
due to the spread of COVID-19.
In the construction industry, public investments
remained strong in addition to private construction
investment, which was backed by improvement incorporate income and other factors, helping maintaina positive market environment. However, private companies afraid of the impact of the COVID-19 pandemic
saw steps such as reviewing business plans.
Under such circumstances, we followed the basic
policies for our Mid-term Management Plan (20182020): Shinka2020 to strengthen relationships withexcellent customers from a customer-centeredperspective and enhance problem-solving skills in thedomestic construction business, obtain profitable realestate for stable profits in the real estate business,
which is a strategic business, and actively utilize ICT
among other initiatives to offer new value.
As a result, the Group’s business results for FYEMarch 2020 were net sales of ¥322,170 million (down
2.8% from the previous year) due to a decrease in completed construction sales. Regarding profit and loss,
operating income was ¥20,315 million (down 7.6% fromthe previous year). Ordinary income decreased by 4.2%
against the previous year to ¥21,969 million due torecording ¥1,547 million of investment income using theequity method. After considering tax expenses, etc., net
income attributable to owners of the parent was ¥14,903
million (down 3.9% from the previous year).

Full-year results (consolidated)(Millions of yen)FYE Mar. 2020
Tokyu
Construction

Subsidiaries

Consolidated

Differencecompared toprevious year

331,437

296,426

27,034

322,170(9,266)(2.8)

36,07333,087

3,304

36,173100

0.3

Selling, general and administrative
expenses

14,08615,304891

15,858

1,771

12.6

Operating income

21,987

17,782

2,412

20,315(1,671)(7.6)

rdinary income

22,932

18,1402,387

21,969

(963)

(4.2)

Net income attributable to ownersof parent

15,504——

14,903

(600)

(3.9)

Item

FYE
Mar. 2019

Net sales
Gross profit

Full-year results (unconsolidated)
Item
Completed construction sales

Rate of change(%)(Millions of yen)FYE Mar. 2020

FYE
Mar. 2019

Settlement

Differencecompared toprevious year

Ratio

Rate of change(%)

308,623

295,034

100.0(13,588)(4.4)

Civil engineering

70,381

88,07829.9

17,69625.1

Building construction

238,241

206,95670.1(31,285)(13.1)

33,31632,935

11.2

(380

(1.1)

Civil engineering

9,892

8,218

9.3

(1,674)(16.9)
5.5

Completed construction gross profi
Building construction

23,42324,717

11.9

1,294

Real estate business net sales

1,323

1,391

100.0

68

5.2

Real estate business gross profit

54

151

10.9

97

179.7

Net sales

309,946

296,426100.0(13,519)(4.4)

Gross profit

33,37033,087

11.2

(282)

(0.8)

Selling, general and administrative
expenses

13,571

15,304

5.2

1,733

12.8

Operating income

19,79817,7826.0(2,015)(10.2)

Ordinary income

20,084

18,140

6.1(1,944)(9.7)

Net income

14,025

12,190

4.1(1,834)(13.1)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Segment Performance
Construction Business (Civil Engineering)

Real Estate Business etc.

Regarding completed construction sales, although we
saw a decrease in domestic private construction projects, domestic government office construction projects
and overseas construction projects increased, resulting in sales worth ¥88,511 million (up 25.3% from theprevious year). Meanwhile, segment profit was ¥6,914
million (down 13.5% from the previous year).

Regarding net real estate sales, sales amounted to¥2,086 million (up 10.5% from the previous year). As forprofit and loss, a segment loss of ¥152 million (segment loss of ¥304 million in the previous consolidated
fiscal year) was incurred due to the recording of anallowance for loss in the real estate business, etc. inconnection with a review of the revenues and expensesof the long-term, large-scale development business,despite a recording of profit in the rental business, etc.

Construction Business (Building Construction)
Regarding completed construction sales, although we
saw an increase in domestic government office construction projects, sales were ¥231,572 million (down
10.6% from the previous year) due to a decrease indomestic private construction and overseas construction projects. Meanwhile, segment profit was ¥20,511
million (up 1.5% from the previous year), due toincrease in the profitability of construction projects.

Reference data (Tokyu Construction’s unconsolidated performance)
Orders (company-wide)(Millions of yen)FYE Mar. 2020
Company-wide

40,818Domestic public

Differencecompared toprevious year
(9,592)Rate of change(%)

144,924(44,713)(23.6)

General public

120,968(34,060)(22.0)

Tokyu Group companies

23,956(10,653)(30.8)

Overseas

7,571(15,431)(67.1)

193,315(69,738)(26.5)

Orders (civil engineering)(Millions of yen)FYE Mar. 2020
Civil engineering

Domestic public

30,824

Differencecompared toprevious year
2,639

Rate of change
(%)
9.4

6,952
74,058200,000

0

60,000

4,559

17.1

General public

22,001

9,904

81.9

Tokyu Group companies

9,150(5,345)(36.9)

20,0002,629(20,359)(88.6)

064,605(13,160)(16.9)FYE Mar. 2020
Building construction

Domestic public
Domestic private
General public
Tokyu Group companies
Overseas

9,994
113,772
98,966
14,805
4,942
128,709(Millions of yen)

Differencecompared toprevious year
(12,231)(49,273)(43,965)(5,308)4,927)(56,577)

155,028

59,69850,411FYE Mar.
2018

FYE Mar.
2019

40,818FYE Mar.
2020

77,766

5,315
14,48022,98814,49564,6052,629
9,150
22,001Tokyu Group
General public
Domestic
public sector

12,09645,954FYE Mar.
2019

30,824FYE Mar.
2020(Millions of yen)

300,000

Overseas

214,5520

Domestic
public sector

Overseas

76,784FYE Mar.
2018

100,000

7,571
23,956(Millions of yen)

28,185200,000

General public

193,315

120,968

40,000Rate of change(%)(55.0)(30.2)(30.8)(26.4)—(30.5)

150,626

11,03331,151

Orders (building construction)

23,003
34,610100,000
80,000Tokyu Group

263,053

100,000

Domestic private

Overseas

Overseas291,337
300,000(19.0)

Domestic private(Millions of yen)

400,000

1,636
59,578

139,592
13,744FYE Mar.
2018

Tokyu Group

185,287

15
20,114142,932

General public

128,709

4,942
14,80598,96622,225FYE Mar.
2019

9,994

FYE Mar.
2020

Domestic
public sector

69

70 CORPORATE DATA

Financial Overview

Overview of Financial Situation
AssetsTotal CapitalCompared to the end of March 2019, total assets
decreased by ¥29,098 million (down 11.0% from theprevious year) to ¥235,897 million due to a decreaseof ¥3,334 million in incomplete construction expenses
and ¥19,595 million in cash and deposits, as opposed
to an increase of ¥3,627 million in land and ¥2,510 inbuildings and structures.

Shareholders’ equity increased by ¥11,700 million due
to an increase in retained earnings from the additionof ¥14,903 million in net income attributable to owners of the parent, despite paying out ¥3,201 million
in dividends. Accumulated other comprehensive
income decreased by ¥3,118 million, primarily due toa decrease of ¥1,764 million in valuation difference in
granting retirement benefits according to the revised
retirement benefit system. As a result, total capitalwas ¥101,703 million, an increase of ¥8,722 million (up9.4%) compared to the end of March 2019. The equity
ratio was 42.9%, up 7.9 points compared to the end of
March 2019.

Liabilities
While short term debts increased by ¥25,000 million
and construction accounts payable increased by ¥2,099
million, electronic payment obligations decreasedby ¥35,767 million and bills payable, construction
accounts payable and other decreased by ¥34,246
million, bringing our total liabilities to ¥134,193 million,a decrease of ¥37,821 million (down 22.0%) from theend of March 2019.
Consolidated financial position(Millions of yen)

FYE
Mar. 2018

FYE
Mar. 2019

FYE
Mar. 2020

Differencecompared toprevious year

Total assets

249,756

264,996

235,897(29,098)

Total liabilities

170,581

172,014134,193(37,821)

1,721

1,638

26,557

24,919Item

Interest-bearing
liabilities(Short-term debt)

83

80

25,081

25,000(Long-term debt)

1,638

1,557

1,476

(81)

Total capital

79,17592,981

101,7038,722

Equity ratio (%)

31.6

35.0

42.9

7.9P

Equity ratio

(%)

60

42.9
40

31.6

35.0

20

0
FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

Overview of Cash Flows
Cash Flows from Operating Activities

Cash Flows from Investing Activities

Although a total of ¥21,831 million in net income
before taxes and other adjustments, along with adecrease in advance payments and other factors, contributed to an increase in funds, a decrease in accounts
payable and the payment amount of corporate taxes
resulted in a ¥33,439 million decrease in funds (funds
for FYE March 2019 had increased by ¥29,694 million).

Funds decreased by ¥7,488 million (funds decreasedby ¥5,786 million in FYE March 2019) mainly due topayments to acquire tangible and intangible fixed
assets, and purchase of investment securities.

Cash Flows from Financing Activities
Although there was a decrease in funds due to payment of dividends and others, net increase in shortterm debt resulted in a ¥21,604 million increase infunds (FYE March 2019 saw a decrease in funds of¥3,575 million).

As a result, the balance of cash and cash equivalents as of the end of March 2020 decreased by ¥19,595 million fromthe end of the previous fiscal year, to ¥29,549 million (compared to ¥49,145 million for the end of March 2019).

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Consolidated cash flow results(Millions of yen)FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

Cash flows from operating activities

16,226

29,694(33,439)

Cash flows from investing activities(3,383)(5,786)(7,488)Cash flows from financing activities(6,457)(3,575)

21,604

(102)

(52)

(270)

Item

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

6,283

20,279(19,595)

Cash and cash equivalents at end of year

28,86549,14529,549Prospects*Based on statement of accounts (as of August 6, 2020)

The Japanese economy is expected to recover froman extremely severe situations due to the added
impact of various policies as the country graduallyraises its level of social and economic activities while
taking measures to prevent the spread of COVID19. However, there is a need to pay attention to theimpact of the COVID-19 situation in Japan and abroad,the variations in financial markets and other factors.
The domestic construction market is predicted to
face qualitative changes in demand from flow-type
demand centered on new and other constructions
to stock-type demand based on maintenance andrepair as well as intensifying labor shortage due tolarge scale retirement of aged construction workers.

Simultaneously, companies are expected to carry out
structural transformation including resolving the issueof long work hours and implement work-style reforms.
Amid such circumstances, Tokyu Construction Groupwill take appropriate action after assessing the impact of
the spread of COVID-19 and steadily carry out measures,such as customer-oriented management as well as workstyle reforms by securing construction systems and using
ICT in accordance with Mid-term Management Plan
(2018-2020): Shinka2020. On the other hand, we are also
formulating a new long-term corporate vision based on
Sustainable Development Goals, changes in future social
environment and other factors, and strive for sustainableimprovement in the Group’s corporate value.

Annual Consolidated Performance Forecast(April 1, 2020 to March 31, 2021)

Figures in parentheses indicate the results for previous FY.

¥244,000 million (¥322,170 million)

Operating income¥6,800 million (¥20,315 million)

Ordinary income¥7,700 million (¥21,969 million)

Net income attributable to owners of parent company¥5,100 million (¥14,903million)¥47.84 (¥139.79)

Net Sales

Net income per share

Annual Consolidated Performance Forecast(April 1, 2020 to March 31, 2021)

Figures in parentheses indicate the results for previous FY.

¥223,000 million (¥296,426 million)

Operating income¥5,400 million (¥17,782 million)

Ordinary income¥5,700 million (¥18,140 million)

Net income attributable to owners of parent company¥3,800 million (¥12,190million)¥35.64 (¥114.35)

Net Sales

Net income per share

Dividend results/dividend forecast
Dividend paid for FYE March 2018¥31 (Consolidated dividend payout ratio 20.5%)

Dividend paid for FYE March 2019¥30 (Consolidated dividend payout ratio 20.6%)

Dividend paid for FYE March 2020

¥30 (Consolidated dividend payout ratio 21.5%)

Dividend planned for FYE March 2021

¥10 (Consolidated dividend payout ratio 20.9%)71

72 CORPORATE DATA

Company Profile & Stock Information(as of March 31, 2020)

Company NameTOKYU CONSTRUCTION CO., LTD.

Founded on

Tokyo Construction Industry Co., Ltd., was founded on March 12, 1946.(TOKYU CONSTRUCTION CO.,LTD. Founded on November 11, 1959)

Date of Establishment

April 10, 2003

Capital¥16,354.44 million

Head Office

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

Representative

Mitsuhiro Terada, Representative Director, President

Number of employees

2,843 (consolidated), 2,576 (unconsolidated)

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

Main Business

Civil engineering and building construction Investigation, construction plan, geological survey, measurement, design and others for civil engineering and building construction

OfficesHead Office, 13 branches, 11 sales offices and others
Branches
Sapporo Branch, Tohoku Branch (Sendai city), Hokuriku Branch (Niigata city), Chiba Branch, Civil Projects
East Japan Branch (Shibuya, Tokyo), Urban Development Branch (Shibuya, Tokyo), Building Projects Metropolitan Branch (Shibuya, Tokyo), Building Projects East Japan Branch (Shibuya, Tokyo), Nagoya Branch,
Kansai Branch, Hiroshima Branch, Shikoku Branch (Takamatsu city), Kyushu Branch (Fukuoka city)
Laboratories
Institute of Technology (Sagamihara city, Kanagawa)Overseas offices
Singapore, Thailand, Indonesia, Myanmar, Bangladesh, Vietnam, Philippines
Note: Information of offices is as of July 1, 2020.

Group Companies

Token Industry Co., Ltd. (Shibuya, Tokyo)
Tokyu Renewal Co., Ltd. (Shibuya, Tokyo)
Plantaardig Farm Co., Ltd. (Miho-mura, Inashiki-gun, Ibaraki)
Ch. Karnachang-Tokyu Construction Co., Ltd. (Thailand)
Pt. Tokyu Construction Indonesia (Indonesia)
Golden Tokyu Construction Co., Ltd. (Myanmar)

Editorial Policy
Tokyu Construction started issuing its “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 our investors on how we contribute to society and the environment by improving our corporate value
through our businesses with both a medium- and long-term perspective.
Reporting Period
April 2019 to March 2020
*Part of the report includes information before and after the fiscal year 2019

Scope of the Report
Tokyu Construction Co., Ltd. and its domestic and overseas affiliates
Reference sources
International Integrated Reporting Council (IIRC)’s “International Integrated Reporting Framework,” Ministry of Economy, Trade and Industry’s “Guidance for Collaborative Value Creation,”
Ministry of the Environment’s “Environmental Reporting Guidelines 2012,” GRI’s “G4 Sustainability Reporting Guidelines” and Japanese Standards Association’s “ISO 26000: 2010 Guidance on
Social Responsibility”
The figures shown in this report are calculated based on the accounting standards as of March 2019, 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 contain some uncertainties.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2020

Total number of sharesauthorized to be issued

Treasury shares

400,000,000 shares

0.05%

Outstanding stock

106,761,205 shares (Including 60,065 treasury shares)

Individuals andothersNumber of shareholders

34,06515.79%

Listed stock exchangeFirst section of the Tokyo Stock Exchange

Foreigncompanies, etc.

Securities code

1720

17.92%

Shareholder registryadministrator

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan

Other companies

Financial institutions

39.81%

Distribution of
Shareholders
Financial
instruments dealers25.15%

1.28%

Major Shareholders (Top 10)
Name

No. of shares held(Thousands)

Percentage of total
shares issued (%)

TOKYU CORPORATION

15,362

14.40

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

5,198

4.87

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

Japan Trustee Services Bank, Ltd. (Trust Account)

2,938

2.75

MUFG Bank, LTD.

2,550

2.39

Sumitomo Mitsui Trust Bank, Limited

2,110

1.98

KINDEN CORPORATION

1,924

1.80

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

1,861

1.74

Note:

1. Percentage of total shares issued has been calculated after deducting treasury shares (60,065 shares).
2. 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).

Our company has been selected as a constituent stock in the 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.

JPX-NIKKEI 400

JPX- NIKKEI Mid Small

The JPX-Nikkei 400 index is composed of companies
with high appeal for investors, which meet requirementsof global investment standards, such as efficient use ofcapital and investor-focused management perspectives.
Companies are chosen by the Tokyo Stock Exchange andthe Nihon Keizai Shimbun.

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

73

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 : webmaster@tokyu-cnst.co.jp
www.tokyu-cnst.co.jp