Integrated ReportContents
P02

P12

Story of Value Creation

Initiatives for Value Creation

As a Member of the Tokyu Group02

Message from the President

12

History of Tokyu Construction Group04

Financial and Capital Strategies

18

Strengths of Tokyu Construction Group(Source of Value Creation)

06

Value Creation Process

08

Material Issues (Materiality) in“Our Ideals for 2026
— The Company We Hope to Be in 2026”

20

Financial and Non-Financial Highlights

10Tokyu Construction Group’s Ideal Vision of“Our Ideals for 2026
— The Company We Hope to Be in 2026”

22

Mid-Term Management Plan 2018-2020:
Shinka 2020
Urban Solution Business24

At a Glance (Business Overview)

28

Overview by Business

30

Civil Engineering Business

30

Building Construction Business

32

Real Estate Business

34

International Business

36

Special Feature: SHIBUYA SCRAMBLE SQUARE
Phase I (East Wing)
38

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 toconsolidate our financial and non-financial information to inform our investors on how to 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 2018 to March 2019

Scope of report

Tokyu Construction Co., Ltd. and its domestic and overseas affiliates*Part of the report includes information before and after the fiscal year 2018.

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”

P40

P58

Foundation That
Supports Value Creation

Corporate Data

Corporate Governance

40

Board of Directors

44

Risk Management

46

Compliance48

Human Resources

50

Occupational Safety (Health and Safety)

53

Quality Control

54

Consideration for the Environment

55

Social Initiatives

57

10-year Main Consolidated
Financial and Non-Financial Data

58

Financial Overview

60Company Profile

64

Stock Information

65

The figures shown in this report arecalculated based on the accounting standards as of March 2019,
which include our projections and/or forecasts. Please be noted thatas they were forecasted basedon our available information at
the time of the publication, they
contain some uncertainties.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201901

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, theircommunities, 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 and services, raising quality, and promoting good
health. We are making every effort to realize this vision, 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 happiness and 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.

Corporate
Philosophy

Mission Statement

 e will help each person realize his or her dream by creatingW
comfortable living environments that allow peace of mind

Management Policy	Management that rises to the challenge/Management thatmakes the best use of employees/Management that values
customers/Management that is fair and open
Principles of Conduct Independence/Speed/Teamwork/Reliability

Brand Message

Town Value-up Management
The origin of Tokyu Construction lies in urban development such as Tama Garden Cityand the towns in areas surrounding Tokyu train lines. From this perspective, we will be
involved in the life 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 wewill always strive to create new value.

VisionDeepening and Evolving
in the Pursuit of Genuine Value
Tokyu Construction

 triving to respond to diversifying customer needs and providing the best solutions,S
we will enhance the quality 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 is dedicated to the pursuit of genuine value.

02 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019We hold the following shared vision as
we work together to create and support the Tokyu Group.

Mission Statement

 e shall strive to create beautiful living environments, in which each person canWpursue individual happiness in a harmonious society.

Management Policy

 ork independently and in collaboration to raise Tokyu Group synergies andWestablish a trusted and beloved brand.

Story of Value Creation

Tokyu Group
Philosophy

Principles of Conduct

Initiatives for Value Creation

Meet current market expectations and develop new ones.
Manage in harmony with the natural environment.
Pursue innovative management from a global perspective.
		Value individuality and encourage the best from each employee.
				 Through these means, we will fulfill our corporate social responsibilities.

 ulfill your responsibilities. Collaborate to enhance each other’s abilities.
F
Reinvent yourself with a global awareness.

Tokyu Construction’s
Business Model

Corporate
Philosophy
Brand Message

Mission Statement

Town Value-up Management

Management Policy
Principles of Conduct

Vision “Shinka* 2020”

Mid-term Management Plan and
Annual Management Policy

The significance of Tokyu Construction in society

Values that should be maintained whenestablishing a management system for thecontinuous development of Tokyu Construction
The attitude that should be taken when working as
an employee of Tokyu Construction

Type of company we seek tobecome in 2020
Genuine value that can be shared by customers,
employees and stakeholders

An action plan to realize the vision

Criteria for action and behavior of employees of
Tokyu Construction

Corporate Data

Code of Conduct

Foundation That Supports Value Creation

Business philosophy that guides Tokyu
Construction and its employees in all activities(specific criteria)*“Shinka” is a key word to express our vision of “deepening and evolving in the pursuit of genuine value.”

Please visit our website for details.

CORPORATE PROFILE/Corporate Philosophy and Vision (https://www.tokyu-cnst.co.jp/company/vision.html)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201903

History of the Tokyu Construction Group
Despite emerging late as a general contractor, we have gradually built a business foundation driven by Japan’s eraof high economic growth, and have developed 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 construction industries in response
to environmental changes and market needs, and accelerating our endeavors in new business domains.
1946
Tokyo Construction Industry Co., Ltd., was established
1954
Absorbed as the Construction Industry
Department of TOKYU LAND CORPORATION

Social Trends
1964Tokyo Olympics

1989
Consumption tax introduced

1970
Expo ’70 held in
Osaka

1991
Bubble economy burst

1973
Oil crisis

1995
Great Hanshin-Awaji Earthquake

1998
Financial System Reform Act
established2001
September 11 terrorist attacks in US
2002
2002 FIFA World Cup Korea/Japan1959
TOKYU CONSTRUCTION
CO., LTD. founded

Establishment of Business Foundation
Our origin was the development of Tokyu Tama Garden
City. We created a vast area of 5,000 hectares, ranging
from Kajigaya to Chuo-rinkan
1960

Growth of Railway and Urban Civil Engineering
In the civil engineering field, we gained a foothold in the creation and construction ofrailways, expanding to projects outside the Group to include private and government
construction, and improving our technologies in both sectors.
Accumulated vast technologies and know-how related
to subway construction

General Civil Engineering

Land readjustment projectat Nogawa First District

1969

Railway Civil Engineering

Start of Shin-Tamagawa
Line construction
1966

Railway Civil Engineering

Extension of the Denen-toshi Line between
Mizonokuchi and
Nagatsuta

A complicated and difficult project,
where all lines were moved underground following the Metropolitan
Highway No. 3 Plan, and we also
constructed the foundations ofhighway piers, railway tunnels, andcommon grooves

Construction technology that allows for railway lines to beelevated or put underground while trains are still running

1966

Railway Civil Engineering

Multi-level crossing construction from Toyoko
Line Naka-meguro to
Toritsu-daigaku(Tokyu Traveler
Construction Method)

1991

Railway Civil Engineering

Multi-level crossing
construction of Tokyu
Ikegami Line

(The “STRUM Method,”
our representative railway
technology)

Development of Building Technology
Completed very rapid construction to lay the cornerstoneof “Tokyu, the Railway Construction Company”
1961

Railway Civil Engineering

Ito to Shimoda railway
construction(Izukyu opened)

Received many orders forgovernment construction
such as highways related
to the Tokyo Olympics

In the building construction
field, we improved our technical capabilities for building
super high-rise, large span,and large-space structures
through projects in which weparticipated as a joint venture
partner, while taking charge of
construction work associatedwith urban development

Obtained full-scale shielding
technology through water andsewage construction ordered
by local governments

1971

Building Construction

Keikyu Hotel(Hotel Pacific Tokyo)

1972

Building Construction

Narita Hangar, Japan
Airlines

Full-Scale Expansion Overseas
Built hotels, resorts, homes, etc., of Tokyu Group companies andwidely expanded overseas based on the “Pacific Rim Concept”
1984

Overseas

Palau Pacific Resort
1972
1964

General Civil Engineering

Highway No. 4 road
construction(Metropolitan Expressway
Public Corporation)

1967

General Civil Engineering

Tamagawa main line
construction(Bureau of Sewerage Tokyo
Metropolitan Government)

04 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Other

Institute of Technology
As a latecomer, we promoted
research in unique fields suchas acoustics, vibration, and soil
quality

Strengths of Tokyu
Construction

The company was split and a new Tokyu Construction was started in October
2003. We declared our brand message to have been and to be “a company
committed to developing the genuine value of the town.”
2011
Great East Japan Earthquake

Story of Value Creation

2005
Postal Service Privatization Act
established

Teamwork

2013
2020 Tokyo Olympic Games
awarded

2006
Revised Antimonopoly Act
enforced2015
Sustainable Development Goals andParis Agreement adopted

2008
Global financial crisis

2004
Town Value-up Management

Evolution of Urban Development Know-How

In the midst of an unprecedented business crisis,
we completed one difficult
project after another inurban areas

We advance the technology we have cultivated in response to environmental changes andmarket needs, taking on new business domains in addition to our core business2014

Know-howof Urban
Development

Railway Civil Engineering

Restoration work of
Sanriku Railway KitaRias Line

Initiatives for Value Creation

Challenges during
the Recession

TokyuGroup’s Total
Capabilities

We contributed to earthquake reconstruction with
GRS integrated bridges, a
new technology

2010

1999

Building Construction

Building Construction

Development plan of Tamaplaza Station area

Q FRONT

Redevelopment of
Shibuya Station Area

2018

Building Construction

SHIBUYA STREAM
2018

General Civil Engineering

2019
2011

2000

Building Construction

SHIBUYA MARK CITYFoundation That Supports Value Creation

Route246 Shibuya Station East Exit
Pedestrian bridge.
Building Construction

SHIBUYA SCRAMBLE SQUARE Phase I(East Wing)

Railway Civil Engineering

Seismic reinforcementof elevated bridge of
Toyoko Line Gakugeidaigaku Station

Building Construction

Railway Civil Engineering

Tokyo Metro Ginza Line Shibuya Sta.
General Civil EngineeringFirst application of the“Combination Hoop Method” forseismic reinforcement in narrow
spaces. It has now evolved into
the “Combination Panel Method”

Infrastructure of Shibuya Sta. East Exit.
General Civil Engineering

Shibuya Sta. West Exit. underpass
General Civil Engineering

Pedestrian bridges of Shibuya Sta. West Exit.

©東急株式会社

2019
2011

Building Construction

Futako Tamagawa rise

Corporate Data

2001

Other

Integrated business forwork in reconstruction
projects of the areaaround Ofunato Station
Urban development with theConstruction Management
MethodBuilding Construction

CERULEAN TOWER
Bldg.

2017

PPP/Concession
Business
2012

Building Construction

Shibuya Hikarie

2019

Other

Overseas

Jakarta Mass Rapid
Transit ProjectManagement of public seweragesystem, Hamamatsu
Our first domestic project in thewater and sewage field

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201905

Strengths of Tokyu Construction as “a Group”(Value Creation Source)
Throughout the history of Tokyu Construction, we have utilized three strengths cultivated by our Group to contribute towards sustainable society demanded by the times in various regions, including redevelopment of thearea around Shibuya Station.

The construction industry is a labor-intensive industry. Therefore, “teamwork” forms thefoundation of our business and is also a factor we are most aware of, as we had experienced rapid growth while being a latecomer in the construction industry field. It is through“reliability” that our customers choose us as their partner for building the future. We
have built up “reliability” through “teamwork,” which we have always stated as the mostimportant management issue since the establishment of Tokyu Construction. We willcontinue to improve our “teamwork,” which has been passed down from generation to
generation, into “core competencies” as human resources and organizational capabilities.

EpisodeTokyu Construction started with 138 employees, a number that expanded rapidly toover 2,000 in under 10 years. As Tokyu Construction is a grouping of diverse humanresources full of vitality through mid-career employment, we have always placed themost emphasis on “teamwork” in terms of management. In the four guidelines set
forth by our first president, Noboru Goto, when establishing the company, he underlined the importance that, “construction work is done through the teamwork ofvarious people involved. The infinitely repeated efforts, wherein each individual actively works toward the same goal, builds trust from customers
and the community.” In addition, urban development and railway
construction carried out by Tokyu Construction has consequently
strengthened our bonds that go beyond the boundaries of civilengineering and building construction. This DNA is passed
down from one generation to the next. Our culture of collaboration between civil engineering and building construction
has become our unique strength. In our various large-scale
We have refined our human resources
projects so far, including in Shibuya, we have utilized theseand organizational capabilities intostrengths to contribute to urban development.
“core competencies” by utilizing our

Teamwork

unique corporate culture and teamwork, in which civil engineering andbuilding construction have cooperated
with each other as one team since ourestablishment.

Our corporate DNA, which was announced as the “first” of the “fourguidelines” set forth by our first president, Noboru Goto, in 1969, and has
been passed down from one generation to the next since our founding.

06 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Story of Value Creation

During Japan’s rapid economic growth period, Tokyu Construction was responsible for construction business as part of the Tokyu Group’s business development
in Japan and overseas. By responding to local needs and working outside of
the Tokyu Group, we have grown uniquely and worked to achieve mutual
development while feeding that growth back into the Tokyu brand.
The relationships with local communities and our group companies
built through various activities have become a unique asset of theGroup, and have the potential to demonstrate great synergies
in our business activities.

Tokyu Group’s

Total Capabilities
Initiatives for Value Creation

In collaboration with Tokyu Group companies, we have further strengthened
the “Tokyu brand,” which is known forproviding a safe and comfortable living
environment. We make this value one of
our competitive strengths.

Foundation That Supports Value Creation

The origin of our brand message, “Town Value-up Management,” dates back to thedevelopment of Tokyu Tama Garden City, the largest postwar private sector projectthat was started by the Tokyu Group in 1959. As a member of the Group, we laid
the foundation of our business by consistently conducting urban development from site preparation and land readjustment to building, road,and railway construction, in order to turn the vast wilderness of theTama Hills into an ideal planned community. After that, we went
beyond the framework of a construction contractor to consider the value of the entire town from the perspective ofcustomers and residents, having long been involved in the
town’s life cycle, with an emphasis on ease of living andharmony with the environment. Our current urban development know-how accumulated over the span of morethan half a century has evolved in various areas, such asredevelopment of the area around Shibuya Station, andThe origin of Tokyu Construction lies in
has been used for new value creation for sustainable
the urban development of Tama Garden
towns demanded by the times.

Know-How of Urban
Development

Corporate Data

City. For many years, we have provided
know-how to enhance the value of theentire town from the perspective of customers and residents.

A road lined with beautiful trees

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201907

Value Creation Process
Increase capital for further value creation

External Environment

Strengths of
Tokyu
Construction

Changes in
Social Environment• Shrinking working-age
population due todeclining birthrate andaging population• Population concentrating
in urban areas

Teamwork• Increasing awareness of
disaster preparedness causedby more natural disasters

CapitalHow Do We Create Value?

Human
CapitalMission and Vision• Tokyu Group Philosophy• A group of professionals witha high level of awareness ofresident perspectives andurban development• A culture that emphasizes
a strong willingness tocontribute to society and asense of unity• Work-style reform• Evolution of digital technology(AI, IoT, robots, etc.)• Population growth, infrastructure development, andimprovement of living standards in developing countries• Advancement of global
warming

Social and
Relationship
CapitalTokyu
Group’s Total
Capabilities

Changes in theBusiness Environment• Growing need for
productivity improvement(digitalization and modularization of building materials)• Qualitative change indemand from new construction to renovation (increased
demand for maintenanceand repairs caused by aging
infrastructure)[Corporate Philosophy]

MissionStatement• Strong relationship withcustomers

Management
PolicyPrinciples
of Conduct[Vision]Deepening and Evolving in
the Pursuit of Genuine Value
Tokyu Construction
See p. 02 for details• Connections with the
Tokyu Group companies
and areas along Tokyu railways• Collaboration with
regional superior generalcontractors and subcontractors• Increasing labor shortages(decrease in skilledconstruction workers,
rapid aging of society)• Tokyu Construction Corporate Philosophy and Vision

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 andregional superior general contractors[Direction for Strengthening our Value Chain]

Intellectual
Capital
Know-howof Urban
Development

Enhancing
Functionality

ExpandingBusiness
Domains• Urban development ability

Demonstrating
Total Capabilitiesof the GroupSee p. 24 for details• Highly advanced construction technology cultivatedin railway construction

Tokyu Brand
Synergy

Financial
Capital• Stable financial base• High capital efficiency

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
conducted with local communities(Management Base that Supports Value Creation)
Corporate Governance Risk Management Compliance
See p. 40 for details

08 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

See p. 46 for details

See p. 48 for details

Story of Value Creation

Services Provided

Value Provided to Stakeholders
Customers and End Users

Infrastructure
Development
Construction and maintenance of Japanese andoverseas structures,such as railways, roads
and tunnels

Optimal solutions centered on
construction services in
response to customer needs

Shareholders and Investors
Initiatives for Value Creation

Long-term, sustainablecorporate (stock) value
improvement

Employees

Urban Development
Construction and maintenance of domestic andoverseas commercial
facilities, hotels, offices,
houses, etc.

Demonstration of abilities andimprovement in working
environment

Partner Companies

Improving the building
value of profitablereal estate (offices,
commercial facilities,
houses, etc.)

Foundation That Supports Value Creation

Real Estate Rental

Promotion of co-creation withpartner companies andsuppliers, as well as long-termand continuous growth
Local Community
Increase in local value throughconstruction services andurban development

Global Environment

PPP / Concession
Stable operation of urban
infrastructure, including
water and sewage

Energy saving and effective
use of resources in theconstruction process

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

Energy saving throughout thebuilding life cycle09

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

Net sales(Millions of yen)
400,000
341,992(Millions of yen)
400,000
303,758

293,539

299,436

300,000

300,000

200,000

200,000

100,000

100,000

0

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

0

FYE Mar.
2019

Operating income / Operating income margin(Millions of yen)
25,00021,416
18,17820,000331,437

320,711296,393285,476

21,987

262,815FYE Mar.
2015

243,618FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

22.8

22.2

Return on equity (ROE)
(%)
15

(%)
30

27.0

12

17,211FYE Mar.
2019

18.1

20
15,000

7.1

10,000

9
6.7

6

6.1

10

6,009
5,000

2.3

0

FYE Mar.
2015■ Operating income

14.5

6.6

3

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

0

0

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

Operating income margin

Total capital / Equity ratio

Dividends per share / Payout ratio(Millions of yen)
100,000

92,981

(%)
60

(Yen)
40

45

30

30

20

(%)
40

79,17575,00031

66,38044,861
23.2

32.3

31.6

FYE Mar.
2015■ Total capitalFYE Mar.
2016

25

30
20.6

25.2

20.0

20.3

20.5

20

13

25,000

0

23.9

30

26

35.0

54,23850,000FYE Mar.
2019

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

Equity ratio

10 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

15

10

0

0

10

FYE Mar.
2015■ Dividends per share

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

Payout rationFYE Mar.
20190Non-Financial Highlights (Non-Consolidated)
Energy consumed (Head office, branch offices, laboratories and factories)(Fuel oil conversion: ℓ/m2)
40

69,15368,025

1,820

1,913

61,235
1,841

60,00055,92353,356

30

1,658

1,754

40,000

Story of Value Creation

CO2 emissions(t-CO2)80,000

26.56

25.65

24.66

25.33

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
201920

67,333

66,11225.64

59,39451,60254,26520,000010

FYE Mar.
2015

FYE Mar.
2017

FYE Mar.
2018

0

FYE Mar.
2019

Initiatives for Value Creation■ Workplaces

FYE Mar.
2016■ Office

Construction by-products* generated / Recycling rate

Accident frequency rate*(10,000 t)
100

1.20

96.1

99.4

98.4

95.9

(%)
100
94.0

75

75

0.76
0.80

47.3
40.3

41.0

39.5

50

37.6

Foundation That Supports Value Creation

50

0.43
0.40

25

25

0

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019■ Volume of construction by-products generated

Recycling rate

0.17

0

0

FYE Mar.
2015

FYE Mar.
2016

0.20
0.12

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

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
2,523

234

215

193

179

2,537

2,464

2,412

2,340

2.22

248

2.0

2,161

2,219

2,249

2,303

2.30

2.46

1.84

Corporate Data

2,000

2.26

Legal employment rate
2.2%

2,275

1,000

1.0

0

FYE Mar.
2015■ Male■ FemaleFYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

0

FYE Mar.
2015

FYE Mar.
2016

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201911

Message from the President

We will do our utmost
to become a corporategroup that can cope withthe changing businessenvironment by improving
teamwork and enhancing
the problem-solving skillsof each individual.

Mitsuhiro Terada
Representative Director,
President

12New Management Structure

Upon My Appointment as President

In November 2019, our company will celebrate its 60th
Anniversary. Within this period, I have worked for the company for 40 years, including 20 years at construction worksites and division which supervises the field. Due to this experience, I feel strongly about our unique corporate culture,
which includes teamwork in which everyone helps each other,along with an open atmosphere. This was reflected in the“employee engagement survey,” a survey targeting all of ouremployees, which showed our company’s strength to be “asense of unity at the workplace.”
Our company is a part of the Tokyu Group, whose corebusiness is a railway business boasting a strong competitive
advantage in the field of railway construction. For example,
diversion of railway tracks is one of the types of work that otherconstruction companies often struggle to execute. Such unique
technology and know-how are utilized in a variety of contexts.
We have an environment where teamwork can easily befostered, as our civil engineering and building construction
divisions often work together in railway construction. In thediversion of railway tracks, we use the STRUM method*,which combines various technologies, and also requires
excellent teamwork in addition to technological know-how.
Although it is difficult for outsiders to notice this, we consider it to be our great advantage.

Corporate Data

I am strongly aware that the enhancement of problem-solving
skills is an urgent challenge. Our company defines such skills
as “skills to discover and solve problems independently,”
and there is no doubt that human resources are the origin
of “Shinka (true value).” While it is necessary to enhance theproblem-solving skills that can support the competitivenessof our company at every site, including our indirect divisions, I believe, in particular that enhancing problem-solving
skills at work sites, which are construction sites, is an urgent
matter. Our company has identified carrying out safety-first
operations, realization of the quality required by customers, implementation of environment-friendly management,
improvement of productivity, and reduction of costs as thefive elements for enhancing problem-solving skills at worksites, and we will thoroughly strengthen each of these elements in order to make our company more stable.
Furthermore, our company has adopted the concept of“a general contractor that continues to embody Shinka”
as our corporate vision. In this regard, what it means todemonstrate “Shinka,” in terms of deepening and evolving
in the pursuit of true value, is to “deepen” the technology
and know-how that our company has accumulated thus far,while also “evolving” the capabilities of our employees,

Strength is Good Teamwork Where
Members Join Hands

Foundation That Supports Value Creation

Imperativeness to Enhance
Problem-solving Skills at Work Sites

The Characteristics of Our Company

Initiatives for Value Creation

Aspiration and Vision

Story of Value Creation

I was appointed as the new president in June 2019. In fiscal
year 2018, the former president, Mr. Imamura, took the leadin promoting the “Mid-Term Management Plan (2018-2020):
Shinka 2020” and achieved results that far exceeded our initial forecast, in which orders received had been restrained inconsideration of our construction capacity. In particular, we
had achieved all-time highs in net sales, operating income,and ordinary income since the company split in 2003. On
the other hand, we are greatly concerned that we may not
be able to keep up with the times if we are not determined
to intensify our efforts to achieve “Our Ideals for 2026—The
Company We Hope to Be in 2026,” which was formulated
last year, as changes in the business environment are certain
to accelerate following the 2020 Tokyo Olympic Games.
Therefore, in order to proceed with the implementationof our medium- to long-term management strategies ata more rapid pace, Vice Chairman Imamura will focus on
leading these strategies to create a stable cash flow, as
chairman of the Strategy Meeting, while I will take chargeof strengthening our core business, in terms of accelerating
the construction business, as I have much experience working at construction work sites. We will work together andmake balanced efforts to enhance the construction businessand promote our medium- to long- term management
strategies, and I will lead company-wide management, as
the president.

in order to become a corporate group that is capable ofboldly and smoothly adapting to the changes that are
expected in our business environment. To put it more
simply, it means to convert our employees’ experienceand knowledge into “true value.” From this perspective, I
consider my biggest role is to be encouraging the transformation of our human resources and organization, in order
to elicit the motivation and capabilities of our employees,
and lead to the sustainable growth of our company.

In the railway diversion work conducted in 2013 to complete the underground section between Shibuya Station and Daikanyama Station(Tokyu Toyoko Line), approximately 1,200 workers engaged in the workwithin a limited time span of roughly three and a half hours after thepassing of the last train, completing work without incident before thearrival of the first train.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201913

Message from the President

In addition, we have been steadily accumulating achievements in terms of constructing super high-rise buildingsin Shibuya (including SHIBUYA MARK CITY, Cerulean
Tower, Shibuya Hikarie, SHIBUYA STREAM, and SHIBUYASCRAMBLE SQUARE), all of which are landmarks. The areasurrounding Shibuya Station is considered to be one of themost complicated in Japan, not only because of the technology of high-rise buildings, but also due to the intersection of numerous railway lines; an environment surroundedby many different types of infrastructure including theMetropolitan Expressway, national roads and rivers; and it isa place where extremely large numbers of people visit. We
are confident that the construction know-how particularly
in Shibuya that we have cultivated by taking part in a wide
range of projects, such as station renovation work and thedevelopment of underground tunnels, surrounding roads
and plazas, is best of all. As a person who possesses much
experience at these kinds of work sites, I understand the
difficulties inherent in organizing a team and completing alarge project. Accordingly, we aim to become a corporategroup that embodies true value through a vital corporate
culture, by giving consideration to the employees who are
working at the front line.
*STRUM method (Shifting Track Right Upper/Under Method)
This is a construction method in which a new track is prepared directly aboveor under an existing track, without installation of a temporary track during theconstruction process, in order to elevate the track or move it underground.
This method does not require a site for a temporary track system, nor suspension of railway operations, as the work is conducted between the departureof the last train and the arrival of the first train. Due to the requirement thata large number of people must work together in a short period of time, thismethod requires both careful planning and excellent management.

Contribute to Improving the Value of
the Tokyu Brand
Our company has “the Tokyu Brand” as an additional advantage over other general contractors. At present, our sales
ratio of the Tokyo Group is between 10% and 20%. However,
we benefit substantially from the Tokyu brand image withrespect to railway construction and urban development, in
addition to feelings of security and trust toward the brand.
However, our company does not wish to lean too much on
the Tokyu brand, and aims to further increase the brand’svalue by enhancing cohesiveness and demonstrating Groupsynergies as “One Tokyu,” through participation in theabove-mentioned large-scale redevelopment project, railway
constructions, and other projects of Shibuya Station andalong Tokyu train lines, as a member of the Tokyu Group.
Business Environment and Management Strategies

Background of “Our Ideals for 2026—
The Company We Hope to Be in 2026”
There are many redevelopment plans in the domestic construction market, and when infrastructure investment fornational resilience is also considered, demand is unlikely
to fall sharply following the 2020 Tokyo Olympic Games.

14 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

However, the most serious issue is a significant drop in
construction supply capacity, due to a labor shortage
resulting from a large number of retiring senior workers.
In the next decade, the number of construction workers inJapan is expected to decrease by roughly one million. Thisvalue is equal to 20% to 30% of the total number of individuals, which means that we must increase productivity bymore than 20%, and that competition for securing humanresources will be severe.
In addition, considering depopulation, a reduction
in demand for new construction is unavoidable over the
medium to long term, although demand for maintenanceand repair of deteriorating infrastructure will certainly rise. In
other words, our company is strongly required to adapt toa “recurring-revenue” business model, which taps demand
for renovation, maintenance, and repair, in place of thecurrent “spot-revenue” business model, which is based oncontracts for new construction. “Our Ideals for 2026—The
Company We Hope to Be in 2026” is also a management
strategy that aims to realize a corporate group that cancope with such changes in the business environment.

“Our Ideals for 2026—The
Company We Hope to Be in 2026”
A corporate group that can cope with thechanging environment and embodies true
value through a vital corporate culture

Refer topage 20 for
details.

Progress of “Mid-Term Management
Plan (2018-2020): Shinka 2020”“The Mid-Term Management Plan (2018-2020): Shinka
2020” is one of the three steps to realize “Our Ideals for2026—The Company We Hope to Be in 2026.” The plan
progressed steadily in fiscal year 2018, the first year of
the plan.
As for “reinforcing the domestic construction business,”
we restructured our organization based on a customer-centered perspective, in order to more integrally link
sales and construction, and made efforts to strengthen ourcompany’s relationship with customers as their business
partner. In addition, in order to grow our building renovation business, we have consolidated this business in themetropolitan area in to our subsidiary TOKYU RENEWAL
Co., Ltd., and are obtaining positive results.
As for “promoting the diversification of revenue
sources,” the acquisition of profitable real estate has
progressed more rapidly than expected. We also havereceived an order for large-scale railway improvement
work, as an ODA project in Myanmar in the international
business. In the PPP (public-private partnerships)/concession business, we are participating in the sewerage systembusiness in Hamamatsu City and the Sendai Airport management service, and are promoting the creation of local
networks in collaboration with various companies.
As a result of these efforts, both net sales and profit
exceeded our estimates on a consolidated basis, returnon equity remained high at 18%, and further progress wasmade in terms of accumulating core capital.

Story of Value Creation

As for non-financial items, we are engaged in initiatives
to reduce CO2 and waste materials, and will engage in morethorough efforts to increase employee awareness regarding the environment in fiscal year 2019. On the other hand,
work-style reforms at work sites, such as the number of worksite closure days and controlling long working hours, are still
midway. In addition, as we have yet to achieve our targets
for accident frequency, we are working to enhance communication at work sites to prevent disasters.

Direction of Strategies Based on theBusiness Environment

Initiatives for Value Creation
Foundation That Supports Value Creation

Promotion of the Urban Solution BusinessOur unique business model, the “Urban Solution
Business,” more accurately embodies our medium- tolong-term strategy “Our Ideals for 2026—The Company
We Hope to Be in 2026.” In this strategy, we will makeefforts toward reinforcing the necessary solutions throughactive alliances and M&A, in addition to enhancing cooperation with each company of the Tokyu Group, which is
our main advantage, and also construct a comprehensive
value chain that includes collecting information, making
proposals, designing and construction, tenant leasing,maintenance and management, and renovation, in order
to expand income opportunities for our Group.
For example, regions along the Tokyu train lines suchas the Den-en-toshi Line and the Toyoko Line, where the
Tokyu Group has the geographical advantage, have many
medium-scale rental apartments and office buildings, andpotential demand for value improvement in these areas
has risen sharply following the redevelopment of Shibuya.
We expect the demand for small and satellite offices toalso increase in neighboring areas that are just adjacent to
Shibuya. We believe that we can stimulate new demandby providing meticulous solutions, after grasping the
local needs and issues. We hope to establish a uniquebusiness model that is differentiated from those of other

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

We will implement strategies in accordance with the MidTerm Management Plan (2018-2020): Shinka 2020 in fiscal
year 2019, in consideration of major trends in the construction industry, such as a worsening labor shortage, a growing need for improvement in productivity, and expansionof demand for renovation.
As mentioned earlier, the domestic construction market will gradually decline over the medium to long term,and demand is also expected to shift from a spot-revenue
business model to a recurring-revenue business model.
In addition, the aging of workers is more prevalent in
the construction industry than in other industries, and thelabor shortage will intensify with retirement of a large number of workers from the baby boom generation. As this is
a common issue for other industries as well, competition in
recruiting young persons and foreign workers will intensify,
raising the possibility of industrial restructuring originatingfrom the securing of human resources.
To tackle the problem of labor shortage, we expect
advancements in efforts to improve productivity by making
full use of advanced technology. Currently, the entire industry
is taking steps towards efficiency improvements in designand construction work via BIM/CIM, as well as adoption ofi-Construction, which thoroughly utilizes ICT in the construction
production process. In addition, modularization of construction
materials, such as introduction of the PC (precast concrete)
method, which contributes to labor saving, improved quality,
and stable supply, is expanding. As a result of these efforts,
we expect to see the rapid progress of an operational revolution, in which the construction industry is transformed from a
traditional labor-intensive operation requiring manpower, intoa capital-intensive operation that utilizes production factories
and machinery. Our Group is also expanding the acquisitionof authorized precast concrete factory qualifications in orderto improve productivity, and adopting advanced technologies,
such as AI, IoT, and robotics, as well as new construction methods to enhance problem-solving skills at work sites.
In addition, we will make efforts toward adopting a more
active order receiving style by enhancing our proposal-making ability to meet various needs, such as land utilization,
renovation, and improvement of property value, by utilizing
the comprehensive power of the Tokyu Group, which is
our advantage. Furthermore, we plan to secure construction resources from a medium- to long-term perspective,
through reinforcement of cooperation (alliance/M&A) withsuperior general contractors and subcontractors in local
regions, in order to solve the problem of labor shortage.

15

Message from the President

companies, by establishing a construction system that is
capable of handling small- to medium-sized projects ofvarying scales, including demand for renovation, while atthe same time acquiring human resources who possess
know-how that our company does not currently have, suchas tenant leasing.
ESG

Helping Solve Social Issues Throughour Business Operations
As a construction company that is engaged in businessglobally, our company has identified eight SDG goals
that are closely related to our business. We are undertaking initiatives to solve these goals through our business

operations, in order to contribute to the SDGs, which represent common sustainable development goals, worldwide.
The starting point of our company was a construction
project to develop Tama Garden City and extend a railway
into the vicinity. We are a general contractor who has developed buildings and social infrastructure that are directly
linked to the lives of local people, by continuing to work for
urban development as a member of the Tokyu Group, whichruns a local-oriented life industry. A large number of people,
including employees, customers, partner companies, users,
and local residents, are connected to our business, and thescope of our social responsibility is wide in extent.
As for providing satisfactory workplaces for our employees, it is imperative that we improve the situation withrespect to long working hours. Although the standards
regarding overtime work limits for the construction industry provides a five-year grace period, we will increase thepace of our improvement. Through cooperation between

Important social issues to be given priority by our Group within the framework of the SDGs
Human
resources rovide rewarding workplaces for a diverse workforcePFoster human resources who can contribute to society in a sustainable way

SocietyC ontribute to urban development that ensures safe, secure and comfortable living
Provide optimum construction solutions and create services
Improve efficiency of production processes through technological innovation

Environment

 educe greenhouse gases and promote resource and energyR
conservation
Reduce and recycle construction by-products
Develop green engineering and create environmentally-friendly designs

16 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019In order to clarify the management responsibility for eachfiscal year and construct our management structure in a
flexible manner, our company has fixed the term of directors to one year. As for outside directors, they will fulfill astrong checking function to ensure the appropriateness ofbusiness operations, and reflect their expertise regarding
the management of companies in the same and otherindustries, into our company’s management. Furthermore,
starting this year, our company invited for the first time afemale outside director possessing expertise as a lawyer
and work experience in the real estate industry. We expectthat the Board of Directors will be revitalized through an
exchange of diverse opinions on the management issues
our company is facing, and this will make a significant
contribution to the improvement of our company’s corporate value.
Outlook for Fiscal Year 2019

Promoting Initiatives and Medium- to long-Term
Reforms to Achieve the Goals of Fiscal Year 2020
In the short term, earnings are expected to plateau. In fiscal
year 2019, both sales and profit are projected to decreasefor various reasons, including the drop-out of temporary
factors, such as the acquisition of design change projects,
the progress of many low-profit construction projects, a
reduction in profitability resulting from strategic orders
received, and cost escalation. However, in fiscal year 2020,
which is the last year of the Mid-Term Management Plan,
we will focus on acquiring highly profitable orders, in orderto achieve our targets and contribute to the stable growthof our company. In addition, we will do our utmost towardrealizing a corporate group that can cope with the changing
business environment, while reforming our construction
production system and rationalizing our indirect divisions, aswell as developing a business foundation from a mediumto long-term perspective, and securing and training
employees who will realize the sustainable growth of ourcompany. Finally, we kindly ask our stakeholders for theircontinued encouragement and support.

Foundation That Supports Value Creation
Corporate Data

We take steps to enhance the capabilities of every
employee, as we recognize this to be our top priority forhuman resource training. For example, we put a great dealof effort into the education of young engineers, from a
medium- to long-term perspective. This past year, we abolished the conventional practice of assigning newly hired
civil engineers to work sites right away, and establishedan educational system that provides a ten-month training
program. While we desire to assign these staff members towork sites right away due to a current shortage of engineers,
we made this reform to ensure that no variance exists in thequality of our human resources, as they are the employees
who will form the foundation of our company in the future.
In the building construction business, new employees are
assigned to work sites in the first year, as their training
period. These employees are placed in pairs, in order tostimulate growth through friendly rivalry, and receive training through on-site work experience. In addition, we haveestablished a mechanism for incorporating measures to cultivate extensive experience and multifaceted perspectives,
by ensuring a rotation of work by occupational category,such as making employees who are engaged in designingwork experience on-site work for a certain period of time.
Furthermore, we changed the employee satisfaction survey that we had previously conducted into an“employee engagement survey,” as a measure to solve
issues in the organization. This survey is undertaken tomeasure and visualize the level of employee engagement,in terms of “each employee’s willingness to contribute to
our company by appropriately understanding the company’s strategies and targets, and voluntarily demonstrating
his/her abilities,” in order to make improvements in the
future. Through the company-wide results of this survey,
we were able to reconfirm our strengths, such as a highsatisfaction rate for “contribution to society and rewardingwork” and “a sense of unity at the workplace.” As problems at each workplace were also brought to light, westarted a training program to solve these issues. I will also
put forth efforts to improve employee engagement, byReinforcing the Diversity of GovernanceInitiatives for Value Creation

Enhancing the Capabilities ofEvery Employee

actively transmitting messages to elicit the motivation andcapabilities of our employees.
Story of Value Creation

the Work Style Reform Department, which was newly
established in fiscal year 2018, and our business units, wewill strongly promote this initiative.
In addition, as an increasing number of small- andmedium-sized subcontractors have been going out ofbusiness due to the labor shortage in recent years, wehave established a counter that offers consultations
regarding business succession, as part of our efforts toprovide hiring support.
Furthermore, responding to environmental problems
mainly by reducing CO2 and other greenhouse gases, is an
important task, given that our company provides a safe andcomfortable living environment. We believe that such measures also lead to the creation of business opportunities, andwe make efforts toward the development of businesses andtechnologies that contribute to a reduction in environmental
burden, such as ZEB (Zero Energy Building) renovations.

Representative Director,
President

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201917

Financial and Capital Strategies

We will strive to strengthen
our core construction
business, make active growthinvestments to diversify
revenue sources, and reinforce
a financial foundation that cantolerate risks.

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

Review of Fiscal Year 2018

The construction industry’s market environment was
healthy, due to strong demand for construction related to
the 2020 Tokyo Olympic Games and firm capital investment. Construction costs were on an upward trend but inline with our outlook. In these circumstances, the Group’s
gross profit margin dropped due to the worsening of profit
from some projects. However, our Group launched the
Mid-Term Management Plan (2018-2020): Shinka 2020, andincreased completed construction sales through the progress of large-scale construction projects and expandedrenovation projects.
As a result, fiscal 2018 consolidated net sales totaled¥331.4 billion (up 3.3% year on year), operating income
came to 21.9 billion yen (up 2.7% year on year), and ordinary
income was 22.9 billion yen (up 3.6% year on year), marking
a record high since the company split. On the other hand,profit attributable to owners of the parent was 15.5 billion
yen (down 3.8% year on year), due mainly to higher tax
expenses, etc. Orders received came to 285.4 billion yen(down 4.7% year on year) in the wake of large-scale projects
ordered in the previous fiscal year by the Tokyu Group andactivities for receiving orders while we considered our construction capacity.

Progress of the Mid-Term Management Plan

As for the “diversification of revenue sources,” a focus of the
Mid-Term Management Plan, we acquired five investment
properties. While it is expected that demand will change
qualitatively from a spot-revenue to recurring-revenue businessmodel, the renovation business expanded more significantly
than planned. In enhancing our management and financial
foundations, we steadily accumulated consolidated core capital. Furthermore, consolidated operating income margin and

18 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019consolidated net sales exceeded our targets. Accordingly, theplan is progressing smoothly as a whole.

Response to Higher Construction Costs

To cope with the rise in costs for building materials, etc., weare striving to reduce costs through upfront procurement,
proposals for alternative construction methods, etc., andconducting slide negotiations in accordance with contract
conditions and other measures. We judge whether or not
to receive orders based on costs including the increasein personnel expenses for skilled construction workers. In
addition, we will conduct the modulization of construction
materials (the precast concrete construction method) forsaving labor, promote investment in technological development, and establish an organization for intensively
supporting work sites at the time construction starts, whenburdens are significant, to enhance productivity. We revised
the conditions for payment to subcontractors, which areimportant partner companies for operating our business, inthe expectation that manpower-based construction capacity
will become a significant competitive advantage. In addition, we actively offer services for supporting restructuring,
integration, and succession of business, while businesses
are discontinued and the number of new employees isdecreasing due to the aging of employers and a shortage ofsuccessors in the construction industry.

Investment Strategy

Our Group plans to invest a total of about 90 billion yen in
our domestic construction business, new business domains,
management foundation, organizations, and humanresources in the nine years from fiscal year 2018, in order toachieve “Our Ideals for 2026—The Company We Hope to
Be in 2026.” The ongoing Mid-Term Management Plan callsTotal capital / Equity ratio(Millions of yen)
400,000
300,000

262,815

320,711296,393

331,437(Millions of yen)
100,000

92,981
79,175315,000
80,000243,618

60,000200,000

54,238

FY03/15

FY03/16

FY03/17

FY03/18

FY03/190

FY03/20(Forecast)Ordinary income / Net income

31.6

15
FY03/15

19,768

FY03/17

FY03/19

0

36.8

(%)
40

Equity ratio

31

18,83913,340FY03/18(yen)
40

22,932
16,11815,000FY03/16

Dividend per share / Payout ratio

22,12820,00030

13,69130

15,504
12,800
8,700

8,024

20

23.9

25

26

13

20.0

20.3

30

Corporate Data

(Millions of yen)
25,000

30
30

20.5

20

20.6

5,805
10

5,000
0

32.3

25.2

35.0

20,000Total capital

10,00045

44,861

23.2

(%)
75
60

66,38040,000100,000
0

Foundation That Supports Value Creation

Net sales

Shareholder Returns

As for shareholder returns in fiscal year 2018, we decided
to pay a term-end dividend of 20 yen per share and aninterim dividend of 10 yen, for an annual dividend of 30
yen per share (a consolidated payout ratio of 20.6%),
under the basic policy of achieving a consolidated payout
ratio of 20% or over, which was set considering necessary core capital. Earnings are estimated to decline infiscal year 2019, but the annual dividend is to remain at
30 yen. Recognizing that the decline in performance is
temporary and will not significantly affect the formationof a sound financial foundation, which is our goal, we willkeep the dividend amount unchanged from the viewpoint of returning profit to shareholders consistently andcontinuously.
In addition, our equity ratio is already comparable toother companies’ at 35%. Accordingly, we will flexibly
discuss responsive return measures, including the payout
ratio and share buybacks, after securing a core capitalamount of 110 billion yen at the end of fiscal year 2020.

Initiatives for Value Creation

Capital Policy

We have been accumulating core capital steadily due to ourhealthy performance. We aim to increase consolidated core
capital to over 150 billion yen while keeping ROE over 10%
exceeding equity capital costs. This core capital amount is anecessary financial foundation for expanding investment inreal estate for medium- to long-term growth and tolerating
risks accompanying flexible M&As, etc. This amount is comparable to those of other semi-major general contractors.

As for strategically held shares, the significance of
their holdings is examined and confirmed by the Board of
Directors every year, as it checks whether we can receive
sufficient benefits with respect to capital cost. The sharesno longer worth holding will be sold and decreased inprinciple, after considering the situations of issuing companies, market trends, etc. In the examination in the previous fiscal year, it was confirmed that all of the listed shares
we held remained worthwhile, but shares of an unlistedcompany deemed no longer worth holding were sold.

Story of Value Creation

for investment of 6 billion yen in the domestic construction
business, 16.5 billion yen in the strategical businesses (thereal estate business, the PPP/concession business, othernew businesses, etc.), and 1.5 billion yen in our management foundation, organizations, and human resources. As
for the real estate business, we plan to invest a total of 10
billion yen and have already invested 4.4 billion yen, with theprogress rate exceeding the plan. In selecting investment
properties, we set original criteria for improving profitability
through renovation that utilizes the characteristics of theconstruction business and choosing areas while anticipating
demand for the replacement of old buildings with new ones
after assessing risks sufficiently.
As for the PPP/concession business, the management
and operation of public facilities are being entrusted tothe private sector due to a lack of engineers in the public
sector to manage these facilities. In light of this trend, weplan to participate in projects following those of Sendai
Airport and the sewerage system business of Hamamatsu
City, in which we are already engaged. In addition, we will
seize opportunities to invest in value chain development,in order to proceed with the urban solutions business incooperation with each company of the Tokyu Group.

FY03/15

Ordinary income

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20(Forecast)Profit attributable to owners of parent company

010
FY03/15

Dividend per share

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20(Forecast)0

Payout ratio*Graphs above represent the consolidated figures.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201919

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, andidentified issues of materiality through discussions with the CSR Committee. To realize “Our Ideals for 2026—
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 innovation
Reduce greenhouse gases and promote resource and energy conservation

Environment

Reduce and recycle construction by-products
Develop green engineering and create environmentally-friendly designs

To help realize the 17 SDGs promoted by the United Nations, 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) socialand 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.

20 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

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.
Category

Basic Policy ifficulties of securingDdays off due to volume ofcontracts and problems
with addressing diversified employee needs evelop a safe, secure andD
comfortable living environment
Establish a society withnational resilience
Pursue the principle of safety-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 costC ommunication difficulties
among generations and problems regarding the handing
down of skills due to stressfrom overwork and lack of
mid-career workers in their 30s
Commoditized market
structure of the constructionindustry
Concern about supply due
to lack 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)
Changing public needs(more diverse 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

 nhance problem-solvingEskillsRegenerate a culture ofsafetyRestructure organizationfrom a customer-centeredperspective and understandand address customer
needsRestructure head office
functions (enhancefunctions 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 ofclimate change mitigation and environmental
improvement
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Increasing risks of
disasters due to climatechangeS 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

 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
Delays in the improvement of business
management and in
recruiting and training
human resourcesLack of engagementwith investors

Society

Environment

Corporate Data

Enhance Management
and Financial
Foundations

Governance

Challenges in New
Business Domains

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

Foundation That Supports Value Creation

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

Initiatives for Value Creation

Risks

 romote personnel system
P
reformPromote work-style reformUnderstand and address
employee needs
Increase the number ofqualified workers

Story of Value Creation

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

Innovation of
Human Resources
and Organization

Social Issues

Enhance Domestic Construction Business

Material Issues

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

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

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201921

“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 andOrganization

Domestic Construction
Business

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

Core Competency

New Business Domains

Management and Financial
Foundations

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

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 value

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 companies

22 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019I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Quantitative Targets of “Our Ideals for 2026—The Company We Hope to Be in 2026”
In order to complete the Mid-Term Management Plan (2018-2020): Shinka 2020, and achieve “Our Ideals for 2026,” we haveproceeded steadily with various initiatives in fiscal year 2018, including the introduction of an indicator of “employee engagement,” as well as monitoring of our human resource and organizational reforms.
Story of Value Creation

Progress of KPIs for the Realization of Goals in Fiscal Year 2018
Our Ideals
Vital
CultureESG

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 2017

Fiscal Year 2018

Employee engagement
survey (*1)

(Introduced from FY2018)

BB

BBB

A

No. of days worksites
are closed (*2)

Closed for 4 to 5 days/
4 weeks

Closed for 7 to 8 days/
4 weeks

Closed for 7 to 8
days/4 weeks

Closed for 8
days/4 weeks

Customersatisfaction (*3)

95%

95%

100%

100%

Safety index (*4)

0.2

0.43

0.10 or less0.10 or less23.9 ton-CO2/¥0.1 billion

17.2 ton-CO2/¥0.1 billion

CO2 emissions (*5)

23.2 ton-CO2/¥0.1 20.0 ton-CO2/¥0.1
billion (down 22%) billion (down 32%)

(down 19%)(FY2014-16 average)(down 42%)（in FY2017)

6.7%

6.6%

6.3%

7.0%

¥320.7 billion¥331.4 billion¥312 billion¥350 billion
or more

22.2%

18.1%

13% or more

10% or more

¥78.9 billion¥92.6 billion¥110 billion
or more¥150 billion
or moreConsolidated operating
income margin

Taking on challenges
and amassing
achievements in new
business domains

Fiscal Year 2020 Fiscal Year 2026

KPI

Consolidated sales

Shareholders
Resilience to
the Changing
Environment

ROE

Shoring up ourmanagement andfinancial foundations

G
Consolidated core
capital

Initiatives for Value Creation

Maximize
True Value

Basic Policy*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: O ur target covers new worksites of Tokyu Construction (the parent company) starting from FY2018 (excluding the offices in which application is difficult)*3: R ate 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: S
 afety index of Tokyu Construction (the parent company): (Frequency rate x Strength rate)

Foundation That Supports Value Creation*5: S pecific 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)

Sales, composition ratio, and operating income margin
Fiscal Year 2017

Fiscal Year 2018

Fiscal Year 2026

Consolidated sales ¥320.7 billion

Consolidated sales ¥331.4 billion

Consolidated sales ¥350 billion or more

4%

61%

20%

4%
19%

Operating
Income Margin

Operating
Income Margin

6.7%

6.6%

2%

8%

62%

Operating
Income Margin

2%
13%

52%

22%

4%
13%

Building construction

7.0%

Building renewal
Wooden building construction

or moreCivil engineering

14%

New business areas

Investment plan

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.

Corporate Data

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¥3 billion

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201923

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 to embody Shinka,” which
was established in 2011 for the milestone of 2020, as well as the start of efforts to achieve “Our Ideals for 2026—The
Company We Hope to Be in 2026.”

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

Changes in the Environment Surrounding the Construction Industry

1
2
3

Intensifying labor shortage

Environment
Surrounding
the Construction
Industry

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.

Shrinking demand for
new construction
Increase in demand for renovation
Current
situation

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.

Outlook

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 business model will accelerate.

Growing need toenhance productivity

24 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

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
and future 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.

Basic Policy
3: Promoting the diversification of revenue sources by expanding strategic businesses
4: Shoring up our management and financial foundations in support ofheightened profitability

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

Breakdown of construction industry worker by age group
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

(10,000 persons)

341

338

(%)
35

293–315

25

Initiatives for Value Creation

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)

30

77–99

216

Story of Value Creation

Growth projection for skilled construction workers
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.

20
15
2012

2013

2014

Number ofworkers
requiredin 2025

Number of
employed
workersin 2025

Number ofadditionallyrequired
workers

10

1990

92

94

96

98

2000

02

04

06

08

10

12

14

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

Building renovation demand

Breakdown of infrastructure more than 50 years old

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
Residential

9.9

6
20
0

Nonresidential

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

Foundation That Supports Value Creation

Domestic construction investment
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.

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

Adoption of digital solutions

Modularization of construction materials

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

Basis / Implementation planning
Design / Structure / Facilities

Analysis

Design and PlanningI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

Corporate Data acilitates consensus-building between constructionF
related players, and contributes to an improvement in
the efficiency of design and construction work

Factory Manufacture

Project PlanningStage
Renovation

Construction

Demolition
Operation / MaintenanceConstruction Planning / Process Control
Cost Management

Image of BIM

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201925

Mid-Term Management Plan (2018-2020): Shinka 2020
Urban Solutions Business
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.

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

Increase recurring-revenue
business

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

Ⅲ

Customers

Utilize the comprehensive
capabilities of the Tokyu Group.

Utilization of the comprehensive
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

Tokyu
Construction

Group
cooperation

Tokyu
Group

Construction subcontracting(spot-revenue businesses)

Transformation of construction
production systems

Growing need toenhance productivity

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.

26 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

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

New construction
methods

IoT
AI

RobotsFleshing out the Urban Solutions Business
Our Original Business Model for Generating Stable Cash Flow

Story of Value Creation

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
Project sourcing

Tokyu Group functions
Property
proposals

Local informationand customer
networks

Proposal capabilities otherthan design andconstruction

Tokyu
Construction

Flexible construction
capabilities

Maintenance andmanagement

Renovation

Ensure continuous interactions with customers
Tokyu Group

Tokyu Renewal

Secure partners to takeon small-scale projects
that are difficult for
Tokyu Construction tohandle onsolidate theClocal informationof various Tokyu
Group companies

 ake joint proM
posals with Tokyu
Group companies

 orm alliances withF
regional superior
contractors andpartners, andengage in M&A nhance on-siteE
capability throughoperational reforms

Construction
capability

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

 ire humanH
resources withproperty leasing
expertise
 trengthen coopS
eration within the
Tokyu Group trengthen coopS
eration with Tokyu
Group companies

Handle all aspects
through renovations,and ensure longterm contact withcustomers

Engage in M&Aof renovation specialists and otherbusiness operators
 nhance on-siteE
capability throughoperational reforms

Foundation That Supports Value Creation

Required actions

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

 ire humanH
resources withproperty leasing
expertise

Tenant leasing

Tokyu Group

Collect informationon the challenges andneeds of local companies and landowners

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

Areas to strengthen going forward

Initiatives for Value Creation

Business overview by step

Ensure interactions withcustomers from upstream

Design andconstruction

Message from Vice Chairman Imamura

Corporate Data

As the construction arm of the Tokyu Group, Tokyu Construction has grownby engaging in “infrastructure management” as a key player in infrastructure development for railways, buses, and roads in urban development
projects, including the development of Shibuya and Tokyu Tama Garden
City.
Going forward, our Group will carry out work in its “Urban Solutions
Business” to, reinforce necessary solutions, and establish a comprehensive
value chain, by actively promoting alliances and M&A, and utilizing good
relationships with local governments and companies, based on the characteristics of each region, in order to achieve sustainable growth even after
the 2020 Tokyo Olympic Games.
As chairman of the Strategy Meeting established this year, I intend toaccelerate practical operations in the Urban Solutions Business in order togenerate stable medium- and long-term cash flow.

Toshio Imamura

Representative Director,
Vice Chairman

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201927

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.
Orders Received

Civil Engineering
Business

Construction Sales

Tokyu Group
¥14.4 billion

18.6%

Tokyu Group
¥12.7 billion

18.1%

Total

Total

¥77.7

We establish national land infrastructure that ensures safety and security inpeople’s daily lives. Furthermore, weare proactively engaged in environment-related fields.

¥70.3

billionBreakdown ofOrders Received
Civil Engineering• Railways, roads, tunnels, bridges, andother construction, reconstruction work
after earthquakes, etc.

billionOther¥63.3 billion
81.4%

Breakdown ofConstruction Sales
Civil Engineering

22.8%

29.6%

Orders Received

Building
Construction
Business

Construction Sales

Tokyu Group¥20.1 billion

10.9%

Tokyu Group¥56.9 billion

23.9%

Total

¥185.2
Breakdown ofOrders Received
Building
Construction• Construction of commercial facilities,
hotels, offices, housing, factories, hospitals, and distribution centers, renovation
and wooden building construction

Total¥238.2billionWe engage in community-based
urban development throughout
Japan, such as development of Tama
Garden City and redevelopment in
Shibuya.

Other¥57.6 billion
81.9%

billion

Other¥165.1 billion
89.1%

70.4%

Breakdown ofConstruction Sales
Building
Construction

Other¥181.3 billion
76.1%

77.2%

*The pie chart represents the amount of construction business (non-consolidated)
for the fiscal year ended March 31, 2019 (including overseas).

Business Domains and Strategies• Rental business, equivalent exchange business, etc.

Major Achievements

Conversion office“Crescent Hills
Minami Aoyama”
Conversion officePart of “Kojimachi Crystal City West Building”(which is owned under condominium ownership)
Facility name “THE MOCK-UP”

28 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

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• 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)

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 thecharacteristics of our core construction business.

Large scale
Investment properties (low difficulty)

Real Estate BusinessMajor Achievements

Gross Profit/Profit Margin

80,00069,84561,864

9,892(Millions of yen)

73,86370,381

10,00064,6268,000

60,000

6,917

7,198
14.1%

1

6,000

5,002

4,000

8.1%

5,422

40,0009.9%

20,000

0

0

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

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

Gross Profit

Net Sales

Gross Profit/Profit Margin(Millions of yen)

(Millions of yen)

300,000

30,00027,56824,401

236,898 238,241

221,870

Profit Margin

Initiatives for Value Creation

Major Achievements

200,000

9.7%

8.4%

2,000

2

 LIGHT OF DREAMS construction work (Central Japan
F
International Airport Co., Ltd.)New construction work for the Shibuya Station South
District Project (TOKYU CORPORATION)
(Tentative name) Project for constructing a new building
for the Shibuya Ward Office (Mitsui Fudosan ResidentialCo., Ltd.)

Story of Value Creation

 ational Route 45 roadwork in the northern partNof Miyako City (the Ministry of Land, Infrastructure,
Transport and Tourism)
Sumida River rain water trunk line No. 3 (Bureau of
Sewerage, Tokyo Metropolitan Government)Rebuilding work of pedestrian bridges on National Route246 near Shibuya Station’s East Exit (the Ministry of Land,
Infrastructure, Transport and Tourism)

Net Sales(Millions of yen)

23,423
21,266

190,082

20,000160,890

13.2%
11.6%

11.0%

1

9.8%

11,266
10,000100,000

0

0

FYE
FYE
FYE
FYE
FYE
Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018 Mar. 20192

Foundation That Supports Value Creation

5.9%

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

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, and Bangladesh.

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

Major Achievements

Mass Rapid Transit
System in Jakarta

Corporate Data

Major Achievements

Operation of apublic sewage
treatment
plant (for the
Seien area) in
Hamamatsu CityTOKYU CONSTRUCTION CO., LTD. Integrated Report 201929

Overview of Each Business

Civil Engineering
Business
We are enhancing our on-site capabilities byproactively utilizing three-dimensional data.
We will strengthen the civil engineering business by steadily implementing measures toreceive more orders in our focus areas.

Yushi Tsukui
Director, Senior Executive Officer
General Manager, Civil Engineering Division

Current Status and Issues
In the civil engineering business, our company is pursuing abusiness strategy based on three policies in the Mid-Term
Management Plan: “Enhancing on-site capabilities,” “Enhancing
domestic construction business,” and “Taking on challenges in
new domains”. In fiscal year 2018, the first year of the management
plan, profit exceeded our initial estimate thanks to temporary
improvement factors, and we are steadily working on medium-to
long-term measures in order to continuously achieve results.
With the aim of improving operational efficiency and productivity, we are endeavoring to foster greater employee awareness,and facilitate more active communication toward work-stylereform. In particular, we are enhancing our on-site capabilities byproactively utilizing three-dimensional data, which will markedly
improve the capabilities of our employees to remain aware ofconstruction conditions and issues at work sites.
Regarding railway construction in which our company specializes, railway companies continue to vigorously make capital investments, and we are striving to receive orders from these companies
on a stable basis, and to maintain and expand revenue throughBusiness
Strategies
Enhancing on-site
capabilities
Enhancing domestic
construction business

Taking on challenges
in new domains

our efforts towards enhancing on-site capabilities.
Meanwhile, we are focused on mountain tunnels, shields,
caissons, and high elevated bridges in general civil engineering
projects (for such clients as government and municipal offices,
including the Ministry of Land, Infrastructure, Transport andTourism, and the Tokyo Metropolitan Government, as well asJapan Railway Construction, Transport and Technology Agency
and Nippon Expressway Company (NEXCO)). We receive orders
strategically, by not only taking advantage of our experience
regarding related construction projects, but also obtaining theprofessional experience of our civil engineers required for bidding.
Although achieving good results in new business domains
often takes time, we are steadily employing a bold approach.
We believe that the knowledge we have acquired throughthe airport and sewerage system concession businesses canbe of great use in future privatization projects.
We will work steadily on each measure and enhance thecivil engineering business as a whole, while boosting thecapabilities of our human resources and organization.

Plan and Direction

Major Progress in Fiscal Year 2018

• Pursue safety, quality, environmental friendliness, productivity, and cost reductions• Improve operational efficiency andproductivity• Build a system to increase employee satisfaction• Enhance co-creation with subcontractors•P romoted the use of ICT, and enhanced our core operations utilizing three-dimensional data• Improved operational efficiency by adopting logical approaches• Developed human resources through an enriched ten-month-long training program for
new employees• Increased communication with subcontractors, systematically secured our labor force,and provided them recruiting support• Enrich civil engineering for railways• Enhance general civil engineering• Participated in a railway project from the planning phase• Focused on receiving orders for urban civil engineering projects involving shields andcaissons, and large-scale projects for mountain tunnels• Enhance international business• Enhance the PPP/concession business• Expand business through collaborative
work and M&A•E ngaged centrally in a transportation-related infrastructure construction project supported by
Official Development Assistance (ODA) of the Japanese government; increased the numberof workers in order to expand the project’s scale•P articipated centrally in concession projects for waterworks, sewerage systems, and roads as an
operator; cultivated knowledge of project management by taking part in Japan’s first seweragesystem concession project (for the sewage treatment plant for the Seien area of Hamamatsu City)•P romoted the Private Finance Initiative( PFI) Promotion Group to the New Business Development
Department from April 2019, in order to carry out measures at an accelerated pace
• Targeted projects for large-scale updates, maintenance and repair, and inspections, andput together concrete proposals

30 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Topics on Business Strategies
2

3

Improvement of operational
efficiency of employees atwork sites

Start of the Infrastructure
Asset Management (IAM)
Promotion Group

Participation in Japan’s first
sewerage system privatization project as an operator

We have applied a theoretical approachcalled the Theory of Constraints (TOC),
which leads to overall optimization by identifying constraints impeding overall operational flow and eliminating stagnation points
in the operational process, to each work site,
under the support of the Work Style Reform
Department at the head office.
In order to improve operational efficiency, the manager oversees the operational processes in which each subordinate
is engaged through visualization with sticky
notes, determines priorities, and clearly allocates tasks to each staff to ensure that they
are focused on their own duties. In addition,
we also visualize tacit knowledge in order toshare know-how.

We have established a new department that promotes infrastructure asset
management (IAM), with a view toward
the possibility of full-scale entry into
the IAM business. This department will
support the maintenance, management,
and renewal of infrastructure construction
projects such as railways and roads, andapply effective and efficient maintenanceand management technology to society,from a medium- to long-term perspective. As a first step, we have launched“iTOREL,” a system for inspecting andexamining the full cross sections of tunnels, utilizing cutting-edge robot technology and AI-based diagnostic technology.

In April 2018, a special purpose company(SPC) set up by five companies, including
Tokyu Construction, was entrusted with
operation of the sewage treatment plant
for the Seien area in Hamamatsu City forthe next 20 years, which represents the first
sewerage system privatization project inJapan. Our company proactively devotes
ourselves to the PPP/concession businessin the recurring-revenue area, which is
confronted with issues such as aging infrastructure, shrinking financial resources, andshortages of public civil engineers, and inwhich proactive adoption of the vitality ofthe private sector is expected, in an effort
to diversify revenue sources.

Story of Value Creation

1

Initiatives for Value CreationF O C U S

Proactive Use of ICT for the Further Prosperity of Shibuya
model, in which a time axis is also added
to the 3D model, has contributed to swifterconsensus building with the parties involved.
We are making preparations for a projectat the West Exit of Shibuya Station, with theproactive use of UiM in mind. We will steadily
and reliably propel the project forward,
maintaining the project schedule, by grasping
potential construction risks as expeditiously as
possible in cyberspace, which is a digital twinthat reproduces real-world conditions, andapplying the identified risks to the real world.
Our company has been thriving, together

with the development and prosperity of
Shibuya. We will accumulate experiencethrough this redevelopment project, including
the locations of underground pipes, in UiM,
which is a digital twin, in order to pass ourbusiness experience down to the employees
who will be working at our company 50 to 100
years from now. We have been, and will continue to remain open to proactively adopting
new technologies toward the further creationof future prosperity in Shibuya.
*UiM: Urban information Modeling/Management

Corporate Data

A variety of technologies, such as ICT and
Building and Construction Information
Modeling/Management (BIM/CIM), are being
used proactively in the construction industry
through an approach called i-Construction,
led by the Ministry of Land, Infrastructure,
Transport and Tourism. Our company isutilizing these technologies in the Shibuya
redevelopment project.
Conventional methods, which employ only
two-dimensional drawings to share construction plans and related information, are inadequate for the complex project of redeveloping
Shibuya, in which the civil engineering divisionand building construction division must
simultaneously engage in their respective
construction operations in close proximity,
while maintaining city functions in the area.
Accordingly, since 2013, our company has
been engaged in an effort to integrate theBIM of the building construction businessand the CIM of the civil engineering business,and based on a concept called UiM*, wehave rendered the entire city of Shibuya inthree-dimensions, and have been using thisidea to study the redevelopment of Shibuya.
Especially in the projects involving the Tokyo
Metro Ginza Line at the East Exit of Shibuya
Station and SHIBUYA STREAM, construction
planning in 3D space and using the 4D-CIM

Foundation That Supports Value Creation— i-Construction in Urban Civil Engineering

Left: 4D-CIM model at the Tokyo
Metro Ginza Line
Above: UiM model at the West
Exit of Shibuya Station

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201931

Overview of Each Business

Building Construction
Business
By adopting a customer-centered perspective,
strengthening our human resources and organization, and leveraging ICT and labor-saving
construction methods, we will create a business foundation that is capable of coping withthe changing business environment.

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

Current Status and Issues
In preparation for a harsh business environment, fiscal
year 2018 is the first year in which a plan for reorganizing
both sales and construction work was executed, with theaim of constructing a customer base that will not be influenced by economic fluctuations and price competition. In
the beginning, there were challenges that accompanied
the change in the organizational structure. However, we
believe that the new organization was able to achieve asmooth start by addressing these challenges one by one.
Along with the start of the new organization, the measures for achieving “Our Ideals for 2026—The Company
We Hope to Be in 2026” were also implemented.
Although progress rates vary and it will take time forthe effects of some measures to become apparent, they
are progressing smoothly as a whole. For example, thenewly established work site support group, which aims to
improve operational efficiency and quality by allocating
resources and front-loading tasks such as construction

Business
Strategies

plan formulation at the start of on-site construction projects that require significant workloads, has already started
producing results. Currently, efforts are being made to
optimize the flow of business processes from the sales
phase of construction to building completion, and efficiency is being further improved.
Furthermore, in order to strengthen our sales capabilities, the number of sales personnel among constructionengineers has been increased by roughly 50%, and a further increase is planned. Although this is not a measurethat will produce immediate effects, it is hoped that it willlead to a nurturing of sales personnel, in order to meetthe future needs of customers.
In the future, in response to demands for the elimination of long working hours and work-style reform, we willproactively apply BIM and adopt labor-saving construction methods, with the aim of further labor saving.

Plan and Direction

Major Progress in Fiscal Year 2018

Enhanced operations
with a customercentered perspective• Organizational strengthening of upstream
sales through the integration of sales andconstruction• Nurturing human resources and strengthening engineering capabilities in response tocustomer needs• Increase in the ratio of design and construction projects (up approximately
5% year on year)• Increase of projects involving participation of the construction division fromthe sales stage (up approximately 10% year on year)• Proposal for and adoption of our unique TQ-MIX* construction method

Increased on-site
capabilities• Adoption of more labor-saving construction • Labor saving due to front-loading utilization of Building Information
Modeling (BIM)
methods, and strengthening of the support
system to improve productivity• Leveling of on-site operations through the work site support group• Improvement of on-site management (safety, • Sharing of cases of labor-saving construction methods and support for thequality, environment, process, and cost)proactive adoption of such methods

Taking on challenges
in new domains•G reater-than-expected business results in the initial year of business con• Strengthening of the renovation business(concentration of this business in the subsidicentration, thanks to mutual cooperation
ary TOKYU RENEWAL CO., LTD.)• Combination of our Group’s building health monitoring technology andeach company of the Tokyu Group• Focus on the mid-sized wooden construction business• Stimulating demand with the “MOC+” brand (This expresses our Group’s desire tocontribute to the creation of comfortable urban spaces by utilizing timber (moku).)• Expanding support for international business• Support for receiving orders for overseas high-rise buildings*See P.33 “Topics on Business Strategies- 1 ” for details

32 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Topics on Business Strategies23Adoption of our uniqueframing method throughstrengthened upstream sales(TQ-MIX framing method)

Development of a conveying
robot to tackle the labor
shortage issue

Provision of solution services tocope with changes in demand
for the recurring-revenue business model

The “TQ-MIX framing method” is ouroriginal RCS framing method, in whicha framework is constituted by reinforced
concrete pillars and steel beams. By taking
advantage of the strengths of each material,
it is possible to build high-quality, low-costbuildings with long span spaces that display
increased rigidity and reduced horizontal
seismic shaking. Thanks to sales from the
upstream stage, proposals that matchedcustomer needs were adopted, and wehave received orders. This framing method
is expected to be applied to the construction of large-scale warehouse facilities forthe distribution of goods, the demand forwhich is expected to remain strong.

In order to address the worsening labor
shortage problem, we have engaged
in the joint development of a conveying robot for work sites, with the aimof improving operational efficiency byroughly 30%. This robot can flexibly adjust
to the ever-changing environment at aconstruction site, and can easily be usedby skilled on-site construction workers.
We are developing this robot for practicaluse, with specs that allow it to deal withsteps in corridors, and prevent malfunctions even in harsh working environments,
with dust, etc.

In cooperation with the companies of the
Tokyu Group, namely TOKYU RENEWAL
CO., LTD., its communications Inc., and
TOKYU FACILITY SERVICE CO., LTD.,
our company is planning to develop andrelease a new solution service for disasterprevention and business continuity, called“Dr. BC Push.” We provide building
structure assessment services, a variety of
information, and one-stop support for the
management and operation of buildings
in normal circumstances, at times ofearthquakes, and during the subsequent
recovery period. In addition to supporting
business continuity for building owners
and facility managers, we will make efforts
to meet the demand for renovation work.
Comprehensively supporting three stages toenhance security and safety of facilities
Normal circumstances

At times of earthquakes andother natural disasters

During the recovery period

4D-DOCTOR

Understanding of the conditionof the building structure andage-related deterioration

Structural damage
assessment in times ofearthquake disasters

Recovery support for
facilities

iTSCOM TV PUSH

Information around building
such as rainfall, heat stroke
and train service

Disaster-related information ofneighboring local governments

Information on neighboring
local governments, etc.

BC building
management

Building management using
the information above

Evacuation instructions
to tenants using theinformation above

Dr. BC Push

Initiatives for Value Creation

Disaster prevention
and business continuity solution

Story of Value Creation

1(earthquake, heavy rain, landslide, etc.)

Building management
to support business
continuity

F O C U S

Labor saving through promotion of BIM* application at work sites
to improve the efficiency and safety ofthe operations. In addition, it can ensure
the consistency of multiple drawings,
such as architectural design, structural,and equipment plans, and prevent losses
in profit due to operational rework.
Furthermore, it is possible to check thesuitability of work in detail, and build aconsensus with the client and designers inthree dimensions, thereby improving the
speed of decision-making.
In the future, we plan to utilize thequantitative information provided by BIM

Foundation That Supports Value Creation

In order to promote front-loading during
construction work and streamline on-site
operations, we have started distributing a
structural model that supports BIM (“firstmodel”) at each work site, at the startof construction. The distributed modelis utilized at the site as a construction
BIM, and applied to an examination of
the construction plan, etc. Visualizing thework procedure with BIM, and sharing
it with employees and on-site skilledconstruction workers makes it possible toselect the optimal procedure, and helps

to reduce the burden of on-site quantitative calculations, etc., to achieve a further
streamlining of business operations.
*BIM stands for Building Information
Modeling, and is a solution for utilizing
information in a building database produced
by adding data regarding attributes, suchas cost, finishing details, and management
information, to a three-dimensional digitalmodel of a building constructed on a computer during various types of construction
processes, including design, construction,
maintenance, and management.

Front-loading during construction work (on-site distribution of a structural model that supports BIM)
Construction step model
Coordination of steel frameand equipment data

Maintenance andmanagement

Distribution

Corporate Data

Finishing details andRebar Arrangement Details

Shop Drawing (detailed floor plans, building frame
drawings, cross-section plans)

VR and MR

Structural model that supports BIM (“first model”)

Application of “first model” at work sites

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201933

Overview of Each Business

Real EstateBusiness
We will establish a stable medium to longterm revenue base by acquiring rental properties, while utilizing our characteristics andstrengths as a general contractor and expanding it as a strategical business.

Junichi Omuro
General Manager, Real Estate Division

Current Status and Issues
According to the Mid-Term Management Plan thatstarted in April last year, the real estate business
was recognized as one of the strategical businesses
for diversifying revenue sources, the “Real Estate
Division,” which specializes in the rental of real estate,
was established. We aim to expand the real estatebusiness by establishing new investment criteria andmanagement systems.
Last fiscal year, development of the organization’sbases and the staffing system of the new business division was basically completed a good start. While prices
are skyrocketing and yield is declining in the real estate
investment market, we acquired investment properties(five buildings) worth 4.4 billion yen in the first fiscal year,
as we aim to invest 10 billion yen over the three years of
the Mid-Term Management Plan.

Business
Strategies
Obtaining theknow-how toacquire investment
properties

Streamlining ourportfolio

Plan and Direction

The Real Estate Division will actively acquire investment properties, including mainly office buildings,
commercial facilities , and rental apartments, to own
them in the medium and long term. The purpose is tosecure revenue from real estate rental. It is possible
to boost profitability and participate in projects thatare difficult for other companies to join by utilizing thecharacteristics and strengths of our company, a general contractor and a member of the Tokyu Group that
focuses on Shibuya and areas along the Tokyu Line.
For example, in order to rent out our properties, weare proceeding with renovations for aseismic reinforcement and for legal compliance purposes, conversions
into small offices. We will continue such activities bydrawing on our characteristics.

Major Progress in Fiscal Year 2018

Secure and develop skilled staffs
in charge of acquiring investment
properties• Recruited specialized personnel from the Tokyu Group

Develop an information network• Doubled the volume of information on investment property listings, throughthe utilization of the information network of the Tokyu Group, etc.

• Developed a staffing system for recruiting mid-career workers andothers, which made a good start• Streamlined the information-gathering process, through the cementingof relations with trust banks, brokerage firms, management companies
for our existing investment properties, etc.

Maximize profits from existing
investment properties• Implemented renovations for improving the value of each building

Carry on an appropriate portfolio
strategy• Acquired five investment properties

34 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

• Maintained a high occupancy rate through enhanced leasing• Proceeded with renovations that improved the functions and value ofeach buildingTopics for the Division

Our Company’s Investment Properties
We acquire office buildings and commercial facilities to own them in the medium and long term and try to improve their value in order todevelop high-quality spaces.
*The areas we focus on: Shibuya, five wards in central Tokyo, and areas along the Tokyu LineMCC Kanda-iwamoto-cho Bldg.
(five wards in central Tokyo)

Positioning “Shibuya,” which is thebase of the Tokyu Group, as the area
we focus on most, we acquired thisproperty to own it and contributeto the development of the area.
(Acquired in March 2018)

We proceeded with the acquisitionof this kind of office building thatwould be occupied by start-up
firms, and small and medium-sized
real estate whose total floor area
is around 300 tsubo. (Acquired in
March 2019)

Story of Value Creation

Chiyoda Dogenzaka Bldg.
(Shibuya)

Initiatives for Value CreationF O C U S

Our Renovation of Rental Properties
We buy office buildings, conduct aseismic reinforcement and correct them in accordance with the
Building Standards Act by utilizing our strengths as a general contractor. Afterward, we renovate
them to construct small offices and operate the properties to be rented, under the assumptionthat we will hold them in the medium and long term.

IVY WORKS

Portfolio of our investment properties
11%
27%

35%
42%

35%
41%

[Real Estate Transaction Review Board]

38%
12%
Shops

Land

Five wards in central Tokyo
Areas along the Tokyu Line

Shibuya

We review each property after inviting
staff from specialized departments,
including the Corporate Planning
Department, the Legal Department, andthe Finance & Accounting Department,
and real estate experts from outside thecompany. Properties are risky assets that
could affect our business performanceaccording to market conditions. As wewill expand our acquisitions, we review
them every quarter to check the conditions of each one and the outcomes of
the real estate business.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

Offices

Governance in the Real Estate Business

Areas

54%
31%

After

Inner: Rental area ratio
Outer: Rent ratio

27%
47%

Uses

BeforeFoundation That Supports Value Creation

We renovated this building, which is favorably located three minutes on foot from
Sendagaya Station on the JR Chuo-Sobu Line and had been occupied by a design
company, to transform it into an office building for creators. We created a property thatoffers creative lifestyles in an urban center, where the four seasons can be enjoyed.
We built a running station on the
Location: Sendagaya, Shibuya Wardfirst floor. On the rooftop, we conSite area: 315.84 m2
structed a garden for barbecuing. We
Building structure: S
 RC structure, 6 stories
adopted a customization plan for theabove groundoffice sections on the second to sixth
Total floor area: 947.41 m2
floors, so as to offer ideal creative
Building completion: 1974
offices and showrooms.
Acquired in: 201635

Overview of Each Business

International
Business
We shall strengthen our ODA projects andendeavor to construct high-rise buildings as
we fortify our business structure and manage
the risks distinctively to overseas markets.

Shigehiko Shibusawa
Executive Officer
General Manager, International Division

Current Status and Issues
The international business is one of the target businesses
for diversifying sources of revenue in the Mid-Term
Management Plan. We are focusing on ODA projects forthe development of infrastructure which including railways
and roads from the Japanese government in Southeast
and South Asia. We are also expanding our construction
business to non-Japanese private sector companies andshall actively participate in the tendering of high-rise building construction. Currently, we have branch offices in six
countries, namely Thailand, Singapore, Indonesia, Myanmar,
Vietnam, and Bangladesh. We have joint ventures with local
corporations in Thailand, Indonesia, and Myanmar as well.
For ODA projects, we have successfully completed a
depot for Mass Rapid Transit System in Dhaka, the capital city of Bangladesh and development of Mass Rapid
Transit System in Jakarta, the capital of Indonesia for the
first time. We are currently constructing a road on a newly
built bridge and carrying out large scale upgrading ofexisting intercity railways in Myanmar.

Business
Strategies
ODA projects

Private sector
projects

High-rise building
projects

In these ways, we have contributed to the development of social infrastructure in each country with ouradvanced technology. In order to have a continuation of
ODA projects, we dispatched expertise from our engineering section in Japan to strengthen the ODA business structure.
In addition, we shall not limit ourselves to Japanese factory projects but also participate in other building construction projects by engaging local staff and working closelywith local contractors so as to strengthen the bidding
process such as tendering for high-rise building projects.
As for the risks unique to overseas markets, we have fortified our risk management by enhancing head office functions.
In addition to the on-site experience and achievements
accumulated so far, we will facilitate the involvement of
more experienced national staff and expand our businessby leveraging a small number of Japanese employees.

Plan and Direction

Major Progress in Fiscal Year 2018

Beside our forte in railways construction, we shall expand our target projects into development of roads andother transportation infrastructure• First Mass Rapid Transit in Jakarta, and first contracted work by aJapanese contractor in Bangladesh. Both projects were evaluated highly.

Increase the rate of successful bidding
for non-Japanese projects• Local incorporated companies are encouraged to secure more tenders
from non-Japanese companies• Current ongoing ODA projects in Vietnam (construction of an elevatedexpressway in Hanoi) and Myanmar (construction of a road on a bridgeand large-scale upgrades to railroads in Yangon)• To support other Japanese companies, including developers, who havethe intention to expand their business overseas and get established in
the local market

Select our potential projects in order to • In order to embrace the challenge of big scale projects, we collaborate
with influential local partners for business venture and construction
enhance our project portfolio

36 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Topics on Business Strategies
23Construction of an elevated roadfor building of a bridge acrossthe Bago River in Myanmar

Construction of a depot for
railcars in Bangladesh

Construction of a large-scalerailway spanning 116 km in
MyanmarThis is part of a project for building a large
bridge, which will serve as a route forliving and logistics in the Yangon district.
The groundbreaking ceremony was heldin February 2019. Upon completion, it isexpected to relieve traffic congestion,
improve the safety of users, enhance
distribution productivity and contributeto the development of the Myanmar
economy. Prior to this work, we haveconstructed the New Thaketa Bridge inYangon City which was opened in August
2018 as the first ODA project in Myanmar.
With this experience, we have beensuccessfully awarded this project andtherefore created a continuous growing
environment for Japanese and local staff.

This is the first ODA project for constructing a depot for railcars in the
Bangladeshi capital of Dhaka, The main
works consist of three types of soil
and ground improvement works andembankment construction. Despite theterrorist attack in July 2016, we took
strict security measures while providing
high quality and managed to complete
the work successfully in October 2018.
It would not have been possible without
the support from the head office divisions and teamwork from the local staff,
which were rated highly by the client.

Our company was awarded a project toupgrade the existing railway of 116 km(located the farthest from Yangon) between
Yangon and Taungoo (about 267 km) in
October 2018. The This project is part of
Yangon – Mandalay Railway Improvement
Project Phase One (total spanning about
620 km) connecting Myanmar’s largest
commercial city of Yangon with Naypyidaw,
the capital, and Mandalay, the second
largest commercial city.

Story of Value Creation

1

Initiatives for Value Creation

Our construction zone

F O C U S

Construction of Mass Rapid Transit, Jakarta
Foundation That Supports Value Creation

operation, we exercised a high-level ofsafety control, including measures for preventing falling objects, etc.
This project involved a total manpower of about 1,800 people. We havesuccessfully completed the project withsupport from Japanese and local staff bybuilding a trusting relationship despite
differences in cultures and customs.
This not only strengthens the ability ofJapanese staff but deepens their experience for future overseas projects.

Corporate Data

The capital of Indonesia, Jakarta, isdensely populated. The increasing volume of road traffic to the city center has
resulted in severe congestion and pollution and development of a railway network poses an important challenge forthe government. With assistance fromJapan, construction on Indonesia’s firstmass rapid transit system began inNovember 2013 and took about five anda half years. Services started operating inMarch 2019.
In this project, our company was incharge of the CP101 elevated span and
the CP102 span (a total of 5.9 km), including three stations and the railcars depot
with an area of 8 ha. We adopted a construction method that suited the conditions whereby there was no free space
beneath bridges and without blocking
existing roads. In the construction of anelevated prestressed concrete box-girder
bridge, it was technically difficult to build
a steeply curved bridge, in particular witha bending radius of 180 m based on thebalanced cantilever method.
As the construction took place
above expressways and major roads in

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201937

Feature Article

Project to Construct
the New East Tower in
the Shibuya Station District(SHIBUYA SCRAMBLE SQUARE)
The ever-changing area around Shibuya
Station is being redeveloped, reportedly on a once-in-a-century scale. Tokyu
Construction is building another new
landmark in Shibuya following SHIBUYASTREAM, which started operation in
September 2018 —Overview of Work [Building Summary]Project name: P hase I of SHIBUYA SCRAMBLE SQUARE(East Tower)Owned by: TOKYU CORPORATION
East Japan Railway Company
Tokyo Metro Co., Ltd.
C
 onstruction site: 2-24-12, Shibuya, Shibuya-ku, Tokyo
Usage: Offices, shops, observation facilities, parking
spaces, etc.
Total floor area: A pprox. 181,000 m2N umber of floors: 47 stories above ground, 7 undergroundHeight: Approx. 230 m
Scheduled opening: November 1, 2019

Overall Roadmap for Redevelopment Project in Shibuya

Overall Roadmap for Redevelopment Project in Shibuya
Tokyu Construction contributes to creating value that opens up the future of Shibuya by not only engaging in the construction of facilities representing
Shibuya, such as SHIBUYA109, but also serving as a driving force of this ambitious once-in-a-century project, as a “general contractor in Shibuya.”

1960s –
Shibuyaredevelopment

1989
Bunkamura

2000
SHIBUYA MARK
CITY2008 –
Mega project around2019
Shibuya Station
Shibuya Station District East Tower(SHIBUYA SCRAMBLE SQUARE)

2008
1979
SHIBUYA109

1999
QFRONT

2001
Cerulean Tower

2027
Planned completion
2020
Use of a new platform at GinzaLine Shibuya Station to start

2020
2012
Shibuya Hikarie

38 TOKYU CONSTRUCTION CO., LTD. Integrated Report 20192018
Shibuya Station South District(SHIBUYA STREAM)

2027
2020
2020 Tokyo Olympic
and Paralympic GamesVoice

The experience gained through this project will become one of our company’s strong points

What Tokyu Construction, which knows Shibuya
inside and out, has done so far

Our company engages in a number of projects, including
SHIBUYA STREAM and land readjustment at Shibuya Station’s
East Exit. We take advantage of the collective strength of Tokyu
Construction to cooperate beyond the boundary between thecivil engineering division and the building construction divisionby making sure that opportunities are presented to the workers
to coordinate operations and share information. Although suchcooperation is said to be difficult to achieve, we have succeededin facilitating smooth coordination between the divisions due to a
corporate culture where civil engineering and building construction have been united and shaped. The ultimate goal of eachproject has been shared among the workers involved.

Motto of Project Manager
Keep in mind that we are taking on a challenge of developing the area around Shibuya Station. Few other projects inthe world are as difficult.
 ocus on what you should do with tenacity to the fullest
F
once the job is identified. What matters is not the limitsof your abilities but lack of tenacity. (Excerpts from theteachings of Toshio Doko, a Japanese engineer)

Kento Takeuchi

Joined Tokyu Construction in 1989
Mr. Takeuchi was in charge of such duties as discussion and coordination with theclient, procurement, and budget management, even in the bidding stage, as the chiefengineer of the project of Shibuya Hikarie, which was completed in 2012. He has been
participating in the Project to Construct the New East Tower in the Shibuya Station
District (hereinafter referred to as “the project”) by utilizing that experience, even in
the planning phase, and supervised the project as a whole as project manager. The
project is difficult because it requires building an ultra-high-rise structure directly above
Shibuya Station, the home of the Tokyu Group. However, he has been making every
effort to bring success to the project by inspiring the team and himself.

where workers from a number of subcontractors work andplanning a ceremony for raising a ridgepole. The council fosters
teamwork at each work site by cooperating with the prime
contractor while respecting autonomy there.
Third Capability

Management of carrying-in and carrying-out– On-the-dot distribution of items –We are struggling to carry in and out necessary materials andequipment. This is due to multifarious constraints, including limited space, a small number of routes along which items can be
moved, and time limitations that allow us to work only at night.
Therefore, we are striving to be as innovative as possible anduse part of the upper floors as construction yards. We started off
with working on the surroundings. In addition, we have developed and adopted a new system, “DandALL,” which comprehensively manages the schedule of carrying-in and carrying-out
items, in an effort to move the required items in time. Informationon the carrying-in and carrying-out of items is shared in real timewith workers via tablet devices or smartphones that workers
carry with them, significantly cutting down on the “wasted time”
of waiting for items to be carried in. This system will be utilized
continuously, as ICT that improves productivity at work sites.

Foundation That Supports Value Creation

First Capability

Cooperation that transcends the boundary between
civil engineering and building construction

To create the future in Shibuya, Japan’s No.1 must-see destination

Initiatives for Value Creation

Our work environment in the project imposes an array of constraints, because it is being conducted directly above Shibuya
Station. The area receives the most number of visitors of anywhere in Japan and is surrounded by JR train lines, the Tokyo
Metro Ginza Line, and National Route 246 above ground, as
well as the Tokyo Metro Fukutoshin Line and the Tokyu Toyoko
Line on the underground levels. The Shibuya River also flows
through the site. Our company proposed establishing pedestrian pathways within the building, considering that “securing
safe routes for users of Shibuya Station to take during the project” is the most crucial point for propelling the project smoothly
forward. This has elevated the difficulty of the project because
it additionally requires us to ensure the safety of users. Still, we
have successfully brought forward the proposal using our knowhow of “securing routes that users can take” and “carrying out
construction work in a way that does not hinder the operationof railways” that we have cultivated through our experience with
Shibuya Hikarie and other projects. I will introduce three of ourcapabilities required execute this kind of proposal.

Policy of Project Manager
SloganTokyu Construction’s power creates the future
A roughly 230-meter-tall new landmark is being built in Shibuya,fusing a number of people and a multitude of technologies,
such as ICT. The experience obtained through the project will
become capabilities to be utilized in a plethora of worksites,
creating the future of our company.

Corporate Data

Second Capability

Management of construction projects
Over 2,000 skilled construction workers are devoted to projects daily at peak periods. The information and communication technology (ICT) of our company’s original management
system, “TcPass,” controls the entering and leaving of staff.
Furthermore, the “Foreman’s Committee,” which consists of theforemen of subcontractors serving as the personnel in charge ofwork site management, plays a key role to manage the duties ofrespective workers. Duties of the “Supervisor Council” include
serving as the body in charge of managing work at each floor

Story of Value Creation

The project is not just large-scale, but it also requires coordination witha host of other redevelopment projects underway in a complex mannerin the vicinity of Shibuya Station. That means that both the capability ofeach staff to execute their own duties and “team work” are essential.
What I have been bearing in mind as project manager is keeping staff
motivated. With the support of the head office and branch offices, I wasable to create an environment that facilitates communication between
staffs. Nearly 90 engineers from our company have been involved in
the project, many of whom have likely experienced a first-hand feelingof the importance of working on a team. This work experience will
become one of the strengths of our company as the scale of construction projects expands. A majority of our engineers decided to join ourcompany because they want to “engage in large-scale construction
projects that contribute to urban development.” The experience withthis project will bring a positive facet to our young engineers, which I
expect will help them grow as workers who will play pivotal roles in the
future at our company.

Bringing success to this project with teamwork and the execution power of each member!

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201939

Corporate Governance

Our Fundamental Approach to
Corporate Governanceand higher medium- to long-term corporate value. Itis crucial that we foster a strong corporate governancestructure to achieve these goals, hence we are always
striving to make improvements that will result in more
effective and efficient corporate governance.
We have also come up with the “Tokyu Construction
Corporate Governance Basic Policy,” which includes
our fundamental approach to corporate governance, as
well as establishing relevant standards, etc.

At Tokyu Construction, we have a corporate philosophy
based on our mission statement, management policy,
and principles of conduct that describes the type ofcompany we seek to become. To make this vision a
reality, we are working to contribute to society throughour business activities and achieve sustained growth

Corporate Governance Structure
Shareholder’s Meeting
Appointment / Dismissal

Accounting
AuditorReportCooperation

Appointment / Dismissal

Board of Corporate Auditor

Audit / Investigation

Auditor’s Office

Audit
ReportCooperation

Internal Control Office

ReportAppointment / Dismissal

ReportAppointment / Dismissal

Board of Directors
Nomination /Direction<Advisory Committee of the Board of Directors>
Consultation
ReportAppointments 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

Division Management Committee

Head Office Divisions

Branches and Divisions

Subsidiaries

Executive Officers

Recent Initiatives for Enhancing Corporate Governance
FY 2004

Directors

Number of directors
in the Articles ofIncorporation

FY 2010

FY 2015

FY 2016

No more than 20

Independent outside
director

FY 2017

FY 2019

No more than 12
1

Number of corporate
auditors in the Articles No more than 5
Corporate of Incorporation
auditors
Independent outside
auditor2

3

3

Female officers

1 (independent outside director)

Remuneration for officers

Introduction of stock-based remuneration plan

Appointments andRemunerations Committee

Establishment of committee

Governance Committee

Establishment of committee

40 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019Corporate Governance Structure

Chairman

Outside directors
4 people

Inside directors
7 people

Percentage of outside directors 36%[Establishment of Management Meeting]
To discuss and decide on important management
policies and issues, the Management Meeting, composed of seven directors and one executive officer andchaired by the Representative Director, is convened asneeded (51 times during FY 2018).

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

Address of the Code of Corporate Governance
Visit the following website (Company Information/Corporate Governance) for details.
*Linked in the “Corporate Governance Report (PDF)” (Available inJapanese)

Corporate Data

[Audit Committee and Corporate Auditors]
The Audit Committee consists of five corporate auditors (all independent officers including three outside
auditors), with outside auditors possessing expertiseas lawyers and/or certified public accountants, orpossessing extensive knowledge and experience as
former employees of administrative organs, to audit
for compliance in management practices. Each auditor[Appointments and Compensations Committee]
As an advisory body to the Board of Directors regarding the selection and compensation of directors,
auditors and executive officers, the Appointments andCompensations Committee is composed mainly of
independent outside directors to ensure the autonomy,
objectivity and accountability functions of the Board of
Directors regarding the appointment and compensation of company directors.

Foundation That Supports Value Creation[Executive Officers]
To expedite decision making in business operations
and strengthen the functions of each division, theBoard of Directors appoints 31 full-time executive officers who, like directors, serve one-year terms.

[Accounting Auditors]
In FYE March 2019, our financial audit was carried out
by two certified public accountants, Hiroaki Matsuo
and Hiroto Inoue, who are both members of Ernst &Young ShinNihon LLC. We also have six other certified public accountants and 15 other staff involved infinancial auditing.

Initiatives for Value Creation

Composition of the Board of Directors

participates in Board of Directors meetings and otherimportant meetings and checks over important decision-making documents related to the area for which
he or she is responsible in order to understand theprocess of decision making on important issues andmonitor business operations. Additionally, each auditor also conducts investigations into relevant business
operations and, if deemed necessary, receives business
reports from subsidiaries and audits the execution of
directors’ duties, reporting results to the directors.
Dedicated staff members are also assigned to the
Auditor’s Office to support these operations.

Story of Value Creation[Board of Directors]
The Board of Directors consists of eleven members(including four outside directors and three independent officers). Directors serve a one-year term to clarify
management responsibilities for each fiscal year and tobuild a dynamic and responsive management structure.
Outside directors comprising corporate managers withextensive knowledge and experience as well as lawyers
with expertise and work experience in the real estateindustry provide much-needed perspective in deliberation of issues and offer a sound management structure
to ensure directors are carrying out their responsibilities appropriately.

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

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201941

Corporate GovernanceAnalysis and Evaluation of the Boardof Directors’ EffectivenessAt Tokyu Construction, our Corporate Governance
Basic Policy specifies that a report on whether the
Board of Directors is functioning appropriately is evaluated and made public every year.
In FY 2018 in cooperation with outside consultants,
all of the Board’s directors and auditors answered ananonymous questionnaire and were interviewed individually about the effectiveness of their work so that all
members could express their opinions freely.
Regarding the issues that were highlighted by thesurvey, the Governance Committee discussed them,and the Board of Directors reviewed them to test theireffectiveness. The outline is as follows:In general, the evaluation was positive in terms of
the Board’s effectiveness. The issues identified in theprevious evaluation were also found to be consistently
improved. However, since some comments were maderegarding ensuring the diversity of the Board of Directors,
among others, we will continue to endeavor to enhance
the Board’s effectiveness based on this evaluation.

From the standpoint of diversity, Ms. Kahori
Yoshida, who is a female director, was appointed at the
Shareholder’s Meeting held on June 25, 2019.

Support Systems for Outside Officers
For outside directors, a system has been set up to communicate and share information, including conducting
advance briefings on the agenda items of the Board of
Directors, in consideration of their urgency and importance. For outside auditors, a system has been set
up to communicate and share information, including
assigning dedicated staff members to the Audit Officeand conducting advance briefings on the agenda itemsof the Board of Directors.

 tandard for Independence of Outside
S
Directors and Outside Corporate Auditors
Please visit the following website (Company
Information/Corporate Governance).
*Linked in the “Policy and Standards on Corporate Governance, etc.
(PDF)” (Available in Japanese).”https://www.tokyu-cnst.co.jp/company/governance.html

Reason for Appointment of Outside Officers/Board Meeting Attendance Rate (As of FY 2018)
Name

Independent
Officer

Attendance Rate
Reason for Appointment

Board of Directors
Meetings

Audit Committee

Hiroshi Otsuka

Mr. Otsuka has been reelected as an outside director due to his rich management experience and broad insights as corporate manager, as wellas our expectations that he will contribute to the management using his
opinions from the viewpoint of one familiar with the railway business.

15/15 times—

Yutaka Kubota

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

15/15 times—

Masao Tomoe

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

12/12 times—

Kahori Yoshida

Ms. Yoshida has been elected as an outside auditor due to our expectations that she will contribute to the Company’s management using her
opinions based on her expertise as a lawyer and work experience in thereal estate industry.

**

Isao Onda

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

15/15 times

5/5 times

Youichi Saito

Mr. Sato has been elected as an outside auditor due to his expertise as alawyer.

15/15 times

5/5 times

Yoshikazu Kato

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

12/12 times

4/4 times

Note: *indicates that the information is not available since the director has been newly elected.

42 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Policy for Determining Compensation for Directors

Policy Regarding Strategic Shareholdings

Category

Number of
Officers

Amount(Millions of yen)

Directors (Outside directors)

9 (2)225 (13)

Corporate auditors (Outside auditors)

5 (3)

44 (13)

Total (Outside officers)

14 (5)

269 (26)(Remarks)
1. As of end of FY 2018, we have 10 directors (three outside) and fiveauditors (three outside).
2. One of the outside directors receives no compensation.
3. T he above amount includes the amount of expenses recorded for the
fiscal year under review of ¥16 million, under the stock-based compensation plan for directors (excluding outside directors), which was resolved at the 15th Regular Shareholder’s Meeting held on June 26, 2018.

review, by carefully examining whether a certain levelof profit is obtained from construction relative to theholding cost, using indices for several fiscal years in thepast and future. Based on the results of such reviews,
each year we confirm at the Board meeting whether or
not the significance of such holding has been verified,
while comprehensively taking into account factors suchas economic rationale and future prospects.
With regard to shares for which the objective ofholding is not met and the significance of holding
can no longer be verified, we proceed with the saleof such shares, in principle, in order to reduce theirholdings, after taking into consideration factors suchas the situations at the issuing companies as well as
market trends.
TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

We acquire and hold shares issued by our partner companies with a view toward contributing to improvements in our corporate value, through the receipt oforders for construction work under favorable terms, bystrengthening relationships to maintain good relations
with such companies.
Meanwhile, with respect to individual shares, eachyear we conduct a short-term review using indicesfor the most recent fiscal year, by carefully examining
whether there are sufficient benefits relative to capitalcost, and whether there is a risk of a decrease in theshare price. We also conduct a medium- to long-term

Directors andCorporate Auditors’ Compensation (FY 2018)

Foundation That Supports Value Creation

Strategic Shareholdings

Initiatives for Value Creation

The amount of compensation for our directors is basedon the standards specified in our company including
their position and operational status, as well as employee payment rates, and consists of basic compensation(monetary) and stock-based remuneration.
Basic compensation comprises fixed compensation according to position and variable compensation,
among which variable compensation is calculated bymultiplying the monthly fixed compensation of each director by an evaluation-based allocation coefficient, andother factors. The evaluation-based allocation coefficientis determined by taking into account qualitative assessments of business performance evaluations, such as theoperating income of each division in charge.
Stock-based compensation has been introduced, withthe aim of providing incentives for the enhancementof medium- to long-term corporate value, and aligning
the economic values of the directors and shareholders.
Points are given each year to directors, excluding outside
directors and nonresidents of Japan, according to theirpositions, by utilizing the Board Benefit Trust, and payments in the form of shares and money are made uponretirement, with one point being equivalent to one share.
Remuneration for corporate auditors consists offixed compensation paid in the form of money.
Regarding the resolution of the Shareholder’s Meeting on the amount of basic remuneration for officers, atthe 5th Regular Shareholder’s Meeting held on June 25,
2008, the amount of director compensation was passed
noting that “the annual payment is within ¥360 million(¥30 million for outside directors, excluding employees
concurrently serving as directors) and the annual payment for corporate auditors is within ¥96 million.
The amount of stock-based compensation states
the amount recorded as expenses, based on the stockbased remuneration plan that was resolved at the 15th
Regular Shareholder’s Meeting held on June 26, 2018,
separately from the foregoing. The number of directors
who are eligible for stock-based compensation is seven.
Director compensation is determined by a resolution of the Board meeting after the Appointments andCompensations Committee, which consults with theBoard of Directors, has discussed and reported on theappropriateness of the compensation amount calculated as described above.
Compensation for corporate auditors is decided
through discussions within the Audit Committee.

Story of Value Creation

Compensation and Incentive Systems
for Officers

43Board of Directors (As of June 25, 2019)
1

Tsuneo Iizuka

2

Representative Director, Chairman

3

Representative Director, Vice Chairman

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

Toshio Imamura

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 (to present)

Kazushige Asano

5

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

Motoyuki Takagi

Representative Director, 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)

6

Director, Senior Managing Executive Officer
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)
Jun. 2019	In charge of International Division of the Company(to present)

Mitsuhiro Terada

Masatoshi Shimizu
Director, Senior 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)
Jun. 2017	Director, Senior Executive Officer of the Company(to present)

7

Yushi Tsukui
Director, Senior Executive Officer

6

5

1

4

3

7

2

10

14

9

15

16

8

44 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

13

11

12

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

Hiroshi Otsuka
Outside Director

9

Yutaka Kubota

10 Masao Tomoe

Outside Director

Outside 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)

11 Kahori Yoshida

12 Atsuyoshi Maeno

13 Satoshi Hashimoto

Outside Director

Full-time Auditor

Full-time Auditor

Apr. 1980 Joined TOKYU CONSTRUCTION CO., LTD.
Oct. 2003	General Manager, General Affairs Department of
Nagoya Branch, Wide Area Division and Manager,
Safety, Environment & Quality Department of theCompany
Jan. 2009 Auditor and Head of Secretariat of the Company
Jun. 2012 Full-time Auditor 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)

14 Isao Onda

15 Youichi Saito

16 Yoshikazu Kato
Auditor

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)

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)

Foundation That Supports Value Creation

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)

AuditorInitiatives for Value Creation

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)

Auditor

Story of Value Creation

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

Corporate Data

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201945

Risk Management

Basic Approach to Risk Management/
Risk Management System

We also have a framework in place for preventing
the occurrence of risks and promptly responding torisks that have materialized, primarily by establishingregulations and guidelines pertaining to factors suchas safety and health, the environment, quality, compliance, business continuity during large-scale disasters,
management of personal information and information
security, and through the utilization of management
systems. In addition, regarding individual operations
such as construction orders, real estate transactions
and other business investments, we have establishedthe “Head Office Risk Management Council,” “Orders
Received Council,” “Overseas Orders Council,” “RealEstate Transaction Council” and “Business Investments
Council” as cross-departmental structures for reviewing
risks beforehand.

We have long been engaged in the development of aframework for identifying and responding to risks, andare seeking to strengthen risk management for the
purpose of shoring up our management and financial
foundations, based on the policies under the mid-term
management plan, in order to respond to changes in thebusiness environment.
Specifically, the Management Meeting and othermeetings are held periodically to identify social andeconomic trends, and to discuss measures in response
to major management risks. In addition, with regard
to the risks of each business, management monitors
business operations primarily through the Council of
Business Unit Managers, and provides prompt instructions in response to major business risks.

Flow of Discussion of Major Risks

assessing and evaluating risks comprehensively, andidentifying risks. During the discussions of material
risks, measures are developed from a comprehensive
and long-term perspective, and concrete response
measures are taken from a strategic perspective at theStrategies Meeting and other meetings, as needed.

In preparation for discussions of major management
risks, management discusses measures to be taken in
response to major risks through developing a sharedlanguage for our risk models and risk definitions,

1 Risk models

2 Risk definitions

Develop a shared language for our risk models and risk definitions toensure a comprehensive understanding of risks

3 Evaluation criteria
Quantitatively and qualitatively evaluate the effects on management

4 Identification of major risks

5 Discussion of response

Identify and prioritize major risks
according to the evaluation

Discuss measures to respondto major risks from a long-term,
strategic perspective

46 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Business Continuity Management(BCM)

Story of Value Creation

We established the emergency response department
at the head office in Shibuya,
and conducted training onverifying the safety of individuals and business continuity, along with our Osakaand Nagoya Branches, andsix subcontractors.

Initiatives for Value Creationof infrastructure – especially access to disaster response routes that are essential for search and rescue.
To do so, we have entered into an agreement to work
alongside national and prefectural government agencies and infrastructure companies in the case of a disaster, as well as with our subcontractors.

Foundation That Supports Value Creation

We came up with a business continuity plan (BCP)in 2008, in preparation for large-scale disasters, andreceived a certification for “Construction Company
Continuity Capacity During Disasters” from the MLIT
Kanto Regional Development Bureau in 2009. We haverenewed this certification every two years since.
Our efforts in business continuity include establishing a training plan based on our BCP and having executives participate in training and workshops alongsideother staff. This allows us to notice and review relevant
issues and implement a PDCA cycle, which is thenreflected in our BCP.
In BCM, in order to secure a working environment
for our employees, we are refining internal systems by
distributing emergency supplies, such as food and drinkthat would be required during blackouts and/or phoneline congestion, in line with Tokyo Metropolitan regulations. In addition, as our head office is located opposite
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 are responsible for helping people unable to return home in the caseof a disaster. We regularly participate in emergency drills
run by the Shibuya Ward Office and this council andsupport these efforts as a member of the community.
Furthermore, we intend to fulfill our social responsibilities by doing our utmost to ensure early restoration

BCP training carried out in
September 2018 involving a
scenario of a large earthquake
along the Nankai Trough.

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

and accidents, and to respond to the trust of society
and our clients. 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)
ensure the security of information assets, and regularly review
the system and make improvements as necessary.
2 Conduct balanced information security measures from all as-

pects, 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.

3 Establish operational systems for promoting information secu-

Corporate Data

1 In managing information, establish a management system tority measures, and clarify the roles and persons in charge.
4 Demand clear responsibility, based on the employee regula-tions or contracts regarding violations of this basic policy aswell as related rules and regulations.
5 Conduct regular reviews to identify and resolve problems, inorder to ensure that this basic policy as well as related rules
and regulations are disseminated, implemented and maintained, and that improvements are made continuously.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201947

ComplianceTokyu Group’s Compliance
Compliance management is not only intended to prevent corporate scandals, but is also indispensable for
us to remain as a brand that is preferred by customers, through enhancement of our corporate value. The
Tokyu Group has been proactively promoting compliance-related activities since it made compliance oneof the basic stances of the Group’s management inApril 2000.

Basic Approach to Compliance
We consider compliance with corporate ethics andlaws to be non-negotiable and the most fundamental
part of CSR but realize that we need to create systems
and offer thorough staff training in order to completely
eliminate violations caused by lack of knowledge orawareness. In order to make our understanding of“always doing what should be done” a part of Tokyu

In January 2002, we established the Group’s compliance guidelines as the basic principles of action related
to compliance for all officers and employees of the
Tokyu Group. Based on these guidelines, each Group
company conducts its own activities, in accordance withits business structure and corporate culture, in an effort
to promote compliance.
The Tokyu Group’s Compliance Guidelines (Available in Japanese)
https://www.tokyu-cnst.co.jp/company/pdf/20190704compliance.pdf

Construction’s company culture, we have createdaction guidelines and norms which we seek to imprint
on our staff through the use of training materials,
including online 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(i) F ormulation of Compliance Code, etc.
(ii) E stablishment of structure for “risk management
through compliance management”(iii) Reporting of status to the Board of Directors, etc.

5 Appropriate responses to various “voices” from customers and neighbors
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

48 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019(i) E nsure awareness of Compliance Code, etc.,
and foster awareness on compliance(ii) Implementsurveys on the status of practice
regarding the Compliance Code, etc., and make
improvements(iii) R espond to consultations regarding theCompliance Code, etc., and respond to cases ofviolations of the Compliance Code, etc.
(iv) P lan and implement training on compliance andrisk management(v) M onitor the practice status at each division,
branch, business unit and subsidiary, etc. (implementation of audit)We provide a whistleblowing system, in accordance with
the Compliance Consultation and Reporting Regulations,with the aim of detecting possible compliance violations
early, and internally rectifying them swiftly.
Points of contact for whistleblowing have been established internally, as well as externally through a law
firm. Employees (including temporary staff) can consult
and report via phone, email, document or face-to-facePrevention of Corruption
SystemBasic Policy Regarding Overseas Compliance
Our Group (which includes the Company and its subsidiaries) has established the following basic policy, with a view
toward preventing bribery of public officials, and the like,and other prohibited acts such as cartels, in conducting
business abroad, and will promulgate this policy among ourofficers and employees, as well as business partners.
There is a growing risk of penalties involving huge fines being imposed on corporations and individuals, due to tighterinternational regulations and so-called competition laws that
regulate the bribery of foreign public officials, and the like overseas, as well as acts that distort market competition. Based on
this recognition, we have established the Overseas Compliance Program, which includes a top message and basic policy,
with a view toward responding to such risks, and began its implementation in April 2016. For the purpose of implementing
this program at overseas bases, we conducted training in FY
2018 for 49 national staff members who work locally.
TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

The managers in charge of compliance and persons
responsible for compliance cooperate with the Internal
Control Office in working to prevent corruption, while
evaluating the status of practice regarding prevention
each year, and reflecting the results of each evaluation in
the improvement plan for the following year.

meeting (consultations and reporting can be carried out
anonymously).
We encourage our employees to consult with theCompliance Consultation and Reporting Desk when they
do not know what to do, or feel even slightly that there
may be a problem, on compliance issues.
In addition, at overseas bases, we have set up Overseas Consultation and Reporting Desks that support consultation requests in the official language of each country,
as well as in English.

Foundation That Supports Value Creation

Whistleblowing System

Initiatives for Value Creation

Education and Training of Employees
In order to ensure that our officers and employees fully
understand the importance of “risk management throughcompliance management,” we will gradually and continuously raise awareness and conduct training, such as: (i)training for the employees in each department, with theaim of raising their awareness (organized by the Internal
Control Office); (ii) personnel training to raise awarenessby including lectures on compliance in level-specifictraining organized by the Personnel Department, etc.
(organized by the Personnel Department ) and (iii) morepractical voluntary training at each workplace, centeredon case studies and discussions tailored to the actual
situations (organized by each department).
In addition, in order to ensure that compliance awareness takes root within the Company, we conduct online
learning and training upon promotions, with content
that varies according to position. There has recently
been an increase in the number of cases abroad inwhich the bribery of foreign public officials has been
exposed, and it is not sufficient to pay attention only todomestic developments. As such, from FY 2016, we haveintroduced the overseas compliance program, which
includes publication of the Compliance Code in foreign
languages for overseas offices, and regulations aimed
at preventing violations such as bribery of foreign public
officials and cartels.

Story of Value Creation(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 division at each division, branch, business unit, etc.,
the general managers of the Corporate Strategy Division
and Business Administration Division and the generalmanagers of the general affairs divisions of subsidiaries areappointed as “the person responsible for compliance.”
These 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 status of practice regarding compliance eachyear, and reflecting the results of each evaluation in the
improvement plan for the following year.

49

Human Resources

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

Creating a Favorable Work Environment
Achieving Work-life Balance

People have diverse values regarding work-life balance.
We respect our employees’ right to choose diverse
lifestyles, based on the premise that they will fulfill their
responsibilities and duties as employees. We are striving
to improve our personnel system, primarily by examining
the status of taking child/nursing care leave, using theopinions of those who have taken such leave as a reference, because we consider it essential to establish working
conditions that allow employees to have such a choice.
In addition, we are formulating an action plan toenable employees to fully exercise their abilities, bycreating a comfortable working environment where
they are able to balance work and child rearing.

Our Action Plan Based on Act on Advancement of
Measures to Support Raising Next-Generation Children(Available in Japanese)
https://www.tokyu-cnst.co.jp/csr/human_resources/action_plan.html

Initiatives for Work-style Reform

In April 2018, we newly established the “Work Style
Reform Department.” By cooperating with the Civil
Engineering Division and the Building Construction
Division, we are pushing forward with initiatives aimed
at work-style reforms, such as establishing a five-day
work week at work sites. In July 2018, we introduced aflex-time system, a teleworking system, work intervals
and other systems, not only for office workers but also
for employees at work sites.

Trends in actual number of days work sites are closed (by business of civil engineering/building construction)
As of March 2019
Civil engineering

Closed for 6 days/4 weeks
97%

Building construction

Closed for 6 days/4 weeks
64%

2019 target

2020 target

Closed for 6 days/4 weeks
100%

Closed for 8 days/4 weeks
70% or more
Closed for 8 days/4 weeks
60% or more

2021 target
Closed for 8 days/4 weeks
100%* Excluding work sites to which application is difficult

Employee Engagement

In November 2018, we conducted an “employee
engagement survey” for all employees of the Group.
The results of this survey made it possible to visualize our organizational status, including the strengths
and weaknesses of the organization across the entire
company and in each department, and the respective
organizational issues were reported to corporate managers as well as general managers, group leaders, worksite managers and others who are responsible for theorganization. To resolve organizational issues that can

Engagement Rating*hinder the improvement of employee engagement,
we aim to create an organization that provides both
job satisfaction and a pleasant working environment
for employees, by continuing improvement activities
according to the condition of the organization.

Trends/Strengths of the Entire Tokyu Construction Group■ High level of satisfaction toward contributing tosociety and having rewarding work

■ A large number of employees feel a sense of unity,with shared goals at the workplace
What is employee engagement?

FY 2018

FY 2020 target

FY 2026 target

BB

BBB

A

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

50 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Generally speaking, the term employee engagement refers to “theconcept of mutual trust/contribution between the company and employees, as well as mutual attachment.” However, at Tokyu Construction, employee engagement is defined as “each employee’s willingness
to contribute by proactively demonstrating his or her potential througha proper understanding of the company’s strategies and goals.”Human Resource Development

Story of Value Creation

Human Resource Development
According to the Master Plan

In order to maximize true value in the constructionindustry, it is necessary to create “(unique) social value”
that “only Tokyu Construction can provide,” and continue to implement corporate culture reforms that makesuch value creation possible. Needless to say, humanresources are the source of true value. We respect thediverse values of individuals, and expect our humanresources, who possess various attributes, to play activeroles in appropriate positions, through a fair personnel
system. We are also working to enhance our training
program in order to enable “evolution (step-up),” byutilizing the individuality of each employee.

Initiatives for Value Creation

In our corporate vision, “an employee of true value” isdefined as “an individual who develops his or her careerby proactively setting challenges with high aspirations
and a spirit of independence.” We aim to develop humanresources with a high level of expertise and professionalism, pride, passion, ambition and perseverance. By creating a “human resource development master plan” basedon this vision, and comprehensively combining on-the-job
training and group training, self-development support,
career development support and other programs according to career stage, we are developing an environment inwhich each employee can flower into his or her full potential, and evolve into human resources who can respond tochanges in the operating environment.

Stage of career
Qualification/
work role andpromotion
Level ofproblemsolving
skills

Career position
C1

C2

Main career track

C3

C4

Main 1Main 2Work Site Main 1

Main 3

Officer

Professional
CareerWork Site Main 2[Learn][Master][Demonstrate][Lead][Passing down]

Period for Practical Understanding/Gaining Knowledge

Period for Broadening Skills and Making Career Decisions

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• 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
Category

Off-the-job
training

C2

C3

C4

2 On-the-job Training Master Card

Gain basic knowledge and skills
step-by-step

3 Career Enhancement Sheet

Cultivate awareness of improveYoung employees in C2 and below
ment and independence

4 New Employee Mentor System

Prevent early turnover of new
employees

5 Training by Career Level

Gain basic knowledge and skills
common to each job category

Training to Reinforce Roles of Main

6 Career Track and Officers

Play a role/cultivate awareness7 Training by Job Category

Gain necessary skills/knowledge
for performing duties

8 Training by Theme

Respond to the changing environment and diversity of employees

Selective Training for Management

Foster human resources for the
next generation of management

Cross-Departmental Young Genera-

Corporate reform utilizing the ideas/
motivation of young employees

10 tion Project

Selection/
Overseas Internship Program
recruitment 11

Eliminate psychological resistance to go overseas

12 Overseas Trainee Program

Foster overseas human resources over the medium-term

13 Internal Job Posting System

Identify/appoint the necessary
human resources

14 Remote Education Support

Promote self-development

Support Program for Acquisition of
15 Qualifications

Support early acquisition of
professional qualifications

16 Periodic Transfer System

Provide opportunities to explore
suitability of career

17 Intra-/Inter-divisional Rotations

Broaden duties/gain management perspective

18 Career Planning System

Cultivate/support for a sense ofcareer over the medium-term

19 e-voice System

Support early realization of career development (self-assessment system)

Main 1Main 2Main 3

Officer

Half a year after joining the Company

Selection of mentors among employees in the third year or later since joining the Company

2nd to 5th year
C3 – Main 1

Corporate Data

Careerdevelopment
support

C1

1 Training Instructor System

9 Human Resource Development

Selfdevelopment

Aim
Support for smooth initial introduction

Foundation That Supports Value Creation

On-the-job
training

Name

5th and 6th year
Rotation of young employees
C2 –5 years or more of continuous employment

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201951

Human Resources

Education and Training Programs for Engineers

In order to raise our technical level, we provide various
opportunities, including on-the-job and off-the-job training,
to improve the skills of our engineers. In addition, we also
actively support employees in the acquisition of qualifications such as architects and management engineers, in order
to meet participation requirements in biddings, etc., andenhance corporate evaluation (business evaluation points).
In the Civil Engineering Division, new employees in the civilengineering field take part in a 10-month training program
consisting of a practical curriculum, with the aim of becoming
capable of responding to work site situations before being
assigned to a work site. In the Building Construction Division,
new employees are assigned to work sites in pairs during thefirst-year training period, to create an environment where they
can improve by learning from each other. In addition, in orderto provide support to employees who are aiming to acquire
qualifications, the “First-class Registered Architects School” isprovided within the Company.

Fostering Human Resources for Future Management

In order to improve the organizational issues revealed in
the employee engagement survey conducted from lastyear, we provide management skills training for managers, as well as support for activities toward organizational
improvement. In addition, as our unique initiative, we havebeen running a “Young Generation Project” to make useof the flexible ideas and ability to take action of our young
employees, to enhance in-house and external communication. We also have been continuing the activities of the“Shinka Management School,” where employees in various
positions voluntarily participate to gain the necessary
knowledge in business andmanagement, enhancetheir perspectives andbroaden their horizons.
Management Skills Training
for Managers

Diversity
We strive to create a workplace where diverse humanresources can exercise their full potential, regardless of job
category, generation or gender. We effectively utilize various
viewpoints and values stemming from individual “differences,” in an effort to create an environment where we canrespond swiftly to changing economic conditions and the

Ratio of women in regular/
mid-career recruitment for career-track positions
FY

2016

2017

2018

2019

Number of recruits

103

111

127

129

Number of women

20

18

22

25

19.4%

16.2%

17.3%

19.4%

Ratio of women

Number of Female Managers and Candidates
FY

Manager

2016

Main 2

Manager Main 1(M1)candidate C4 (L)

2017

2018

2

1

4

3

5

15

22

25

*As of the fiscal year-end. The letters in parentheses indicate promotion
under the former personnel system.

Promotion of Health andProductivity Management
We have promoted health improvement initiatives andwork-style reforms with a focus on the health of employees
and their families. We will further strengthen these initiatives
with the intention of remaining an organization that can
52 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

demands of our customers and other stakeholders, and cultivate a corporate culture that thrives on diversity.

Promoting Women’s Success in the Workplace

Based on the results of an assessment of the present conditions and an analysis of issues, in accordance with the
Act on the Promotion of Female Participation and Career
Advancement in the Workplace, we have formulated an
action plan that we should undertake. In accordance with thisplan, we will steadily proceed with the creation of systems andestablishment of working environments in which women canfully demonstrate their abilities in their professional lives.
Our Action Plan Based on the Act on the Promotion of Female
Participation and Career Advancement in the Workplace (Available
in Japanese)
https://www.tokyu-cnst.co.jp/csr/human_resources/action_plan_w.html

Employment of Persons with Disabilities

We continue to employ people with disabilities under thephilosophy of realizing an “inclusive society” where anyone
can participate in society through work.
Employment rate in 2018 2.46%*Has remained above the legal employment rate since 2015.

make each employee’s dreams come true. For this purpose,
we will establish the Health and Productivity Management
Declaration to promote health and productivity management.
Initiatives for Health and Productivity Management (Available
in Japanese)
https://www.tokyu-cnst.co.jp/csr/management/index.html

Occupational Safety (Safety and Health)

Basic Approach to Health and Safety

FY

2014

2015

2016

2017

2018

Safety index

0.76

0.17

0.12

0.20

0.43

*Safety index:

Story of Value Creation

Trend in occurrence of accidents

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, by implementing a PDCA cycle throughthe united efforts of the head office, branches and work sites.

(Frequency rate x Strength rate)

Safety and Health Policies
1 Identifying Risk
We work to prevent accidents, by identifying dangerous andinjurious factors that may be hazardous sources from the standpoint of work-related health and safety.

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 Safety and Health management
systems, and continuously make improvements.
6

Activities Based on Health and Safety
Management Systems

Status of Human Resource
Development and Training

We are also working to ensure safety at worksites, bythoroughly implementing “The Tokyu Construction Ten
Safety Rules.” Please see the following for details.
Our Health and Safety Activities (Available in Japanese)
https://www.tokyu-cnst.co.jp/csr/safety/index.html

Collaboration with Subcontractors

Collaboration with subcontractors is essential for Safety and
Health management at work sites. We carry out a variety ofactivities to eliminate accidents, such as operating a system
to certify superior foremen as Meisters, while collaboratingwith the Accident Prevention Cooperative Association, comprising subcontractors engaged in our construction work.

TOPICS

Evolution of Safety Management
In light of a deterioration in the index, we will review our safety
management system in FY 2019, and implement the following
four items towards the evolution of safety management.

Corporate Data

We have established a Safety and Health training system,and 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. Rather than focusing on classroom lectures,
these lectures feature expanded practical training, with theaim of raising awareness of safety, and incorporate manygroup discussions along with group work called “buzzsessions.” This fiscal year in particular, we are providing
practical training on the themes of “hazard predictions,”“preparation of work plans,” “new risk assessments” and“accident case studies” according to years of employment.

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

Foundation That Supports Value Creation

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 health and safety activities, in an effort to prevent industrial
accidents, while also promoting worker
health and the creation of comfortable
work environments, with the aim ofenhancing health and safety standards.

Initiatives for Value Creation

 etting Priority Implementation Activities
S1) E radication of public accidents, fatal accidents and major accidents
2) Reduction of accidents due to crash and fall3) 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.

S trengthen the safety management system byincreasing top management’s participation
2 R eview the safety construction work cycle
3 S
 trengthen communication
4 C omply with the latest management systems suchas the NEW COHSMS and new risk assessments, asother revisions
1

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201953

Quality Control

Basic Approach to Quality Control
In the construction industry, we regard the end usersof our infrastructure as customers, as well as those
who order construction jobs. Those ordering construction work also want to build a trustworthy relationshipwith locals throughout the duration of the project. At

Tokyu Construction, we want to provide solutions tailored to these kinds of user needs. This is our understanding of customer-oriented business management,
and with this understanding as our foundation, we
are working with subcontractors to improve technicalcapacity and quality.

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 will identify risks that may exert an influence on the assurance of
product quality 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 will explore, clarify and understand such needs
and expectations.

Quality Control System andStatus of Its Operation
After the civil engineering division and the building construction division of the Tokyo Branch eachobtained ISO 9001 certification in March 1997, allbranches 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, since2005, combined external audits with an environmental
management system (EMS) have also been conductedeach year. In October 2017 (partly in February 2018),
both re-certification and transition were approved,

Status of Human Resource
Development and Training
Each year, we periodically conduct training related to QMS
for internal auditors, and encourage acquisition of qualifications. In addition, we provide a mandatory training program for engineers and technicians of the appropriate year,
and also conduct training to enhance 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.
54 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

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 will operate the quality management system, and make continuous improvements.

following our 7th re-certification audit and audit of ourtransition to ISO 9001: 2015.
In addition, on April 1, 2018, we established the
Quality Control Department within the Business
Management Department of the Building Construction
Division. Through establishment of the Quality Control
Department, we will promote the implementation of
the PDCA cycle in quality control, by strengthening
collaboration among the quality control divisions
at our divisions, branches and business divisions.
Furthermore, we will promote the implementation oftraining and job rotations, with the aim of increasing
the awareness of quality control and fostering humanresources who support quality, through collaboration
with the division responsible for training.

We are strongly aware that the enhancement of “theability to find and solve problems on their own” is an urgent
challenge, and we believe that enhancing the capabilities ofeach 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
Division began holding study sessions called “SiteLearning” at each work site, as an initiative to strengthen
on-site capabilities. “Site-Learning” is conducted on-sitethroughout Japan, with monitoring performed by eachbranch, as well as the Building Construction Division, inorder to standardize and improve the contents.

Considering the Environment

The management philosophy of the Tokyu Group is
to “do business in harmony with the natural environment.” We established our “Environmental Charter”
in 1997*. In addition, amid growing interest in SDGs
and ESG investment, companies are being required todemonstrate to investors and customers that their economic activities are sustainable with solid basis. Against
this backdrop, we revised our environmental policies in
April 2019, declaring that, “we will work to prevent contamination and protect the environment, and promote

environment-friendly management in order to realizea ‘sustainable society’ that achieves a harmonious
balance between the environment and the economy.”Taking advantage of this opportunity, we will take ourinitiatives one step further. In order to demonstratethat we are an environment-friendly company, we havedecided to review our structure for the disclosure ofenvironmental information, with the aim of proactively
disclosing information.

Story of Value Creation

Basic Approach to Considering
the Environment

Our Environmental Charter and Environmental Policies(Available in Japanese)

https://www.tokyu-cnst.co.jp/csr/environment/index.html*We introduced the environmental management system (ISO 14001) in 1999, and expanded it to a company-wide integrated management system in 2014.

Environment-Friendly Design

Considering the environment during the designphase is an important process in reducing the envi-

Initiatives for Value Creation

Endeavors as an EnvironmentFriendly Company

ronmental impact in the building management phase.
We endeavor to incorporate environment-friendly design in all of our design projects, by promoting design that takes the global and local environment into
consideration, as a priority initiative in our environmental policies.

TOPICS 1

Foundation That Supports Value Creation

ZEB Renovations
With the aim of reducing CO2 emissions during building use, which account for 86.9%
of CO2 emissions in the supply chain, we carried out ZEB renovations on our Institute ofTechnology, which has stood for 25 years since its completion. As a result, we have currently achieved a 76% energy reduction, which is the highest level in Japan. We will continue to push forward with further improvements, aimed at a 100% energy reduction (Net
Zero), in order to respond to a growing demand for renovation of existing buildings.
*ZEB (Zero Energy Building: A building that reduces energy consumption to nearly zero)Characteristics•E nergy-saving: External heat load reduction (double-skin curtain wall, exterior thermal
insulation of exterior wall, multi-layered glass)• Energy creation: Best mix of CO2-free energy sources (solar power, geothermal heat and hydrogen)* Installed the first hydrogen production, storage and power generation system for a
private business in Japan

TOPICS 2

Green Infrastructure Demonstration Facility
Corporate Data

In March 2018, we established a green infrastructure demonstration facility within our
Institute of Technology, to promote sustainable community development, including
disaster prevention/mitigation and biodiversity conservation through utilizing thefunctions of the natural environment, and are verifying the effectiveness of the facility.
We will proceed with the advancement and improvement of technologies related togreen infrastructure factors based on the collected experimental data, and plan topush forward with proposals for the installation of green infrastructure facilities, which
are expected to see further utilization in urban areas in the future.
*Green Infrastructure: A concept and methodology that proactively incorporates the functions andmechanisms of nature that are useful for humans and environmental conservation in infrastructure(social capital) development and land use.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201955

Considering the Environment

Initiatives for Biodiversity
We added “Biodiversity Conservation” to our environmental policies in July 2010, and implement a variety
of initiatives based on these policies. Regarding biodiversity, we will continue pursuing initiatives such as
biodiversity conservation activities, cooperation with

relevant local communities and the development ofenvironment-friendly technologies.
Our Initiatives for Biodiversity (Available in Japanese)

https://www.tokyu-cnst.co.jp/csr/environment/index.html

TOPICS

Ecological Corridor Simple Evaluation Tool (CSET)
We developed the Ecological Corridor* Simple Evaluation Tool (CSET) under the guidance of Professor Akira
Tanaka of the Landscape Ecosystems Lab, in the Department of Restoration Ecology and Built Environment,
Faculty of Environmental Studies at Tokyo City University, with the aim of developing an ecosystem network
evaluation system that is useful in biodiversity-conscious urban planning. CSET is a tool for the simple assessment of biodiversity potential in urban areas.
We utilize the results of analysis by CSET, mainly in bidding proposals.

Creating a green network*Ecological Corridor: A corridor-like habitat that continuously connects important bases where migratory wildlife can travel.

Status of Environment-related Activities
Environmental target
Activity

Preventionof global
warming

FY 2018 Targets

Reduction of CO2
emissions

Reduction of electric
power consumption

Effective
utilization of
resources

Reduction of amountof waste
Improvement ofsorting rate

Achievement of FY 2018 Targets

Overall 23.7 t-CO2 per 100 million yen

Overall 18.0 t-CO2 per 100 million yen

Civil engineering•Tunnels :134.4 t-CO2 per 100 million yen•Others :36.9 t-CO2 per 100 million yen
Building construction
13.2 t-CO2 per 100 million yen

Civil engineering•Tunnels :121.2 t-CO2 per 100 million yen•Others :29.3 t-CO2 per 100 million yen
Building construction
8.5 t-CO2 per 100 million yen

50.1 kWh per m2

Company-wide 43.0 kWh per m2

Evaluation

Overall 23.4 t-CO2 per 100 million yen◎

Civil engineering 26.2 m3 per 100 million yen Civil engineering 23.37 m3 per 100 million yen
Building construction 0.084 m3 per m2 Building construction 0.079 m3 per m2
Overall 72.87%

Civil engineering 82.8%

Civil engineering 78.51%

Building construction 68.6%

Building construction 71.98%

Civil engineering•Tunnels :133.1 t-CO2 per 100 million yen•Others :36.6 t-CO2 per 100 million yen
Building construction
13.0 t-CO2 per 100 million yen◎

Company-wide 42.57 kWh per m2◎

Civil engineering 26.0 m3 per 100 million yen
Building construction 0.083 m3 per m2(Construction completed in FY 2018)

Overall 70.2%

FY 2019 Targets(Construction completed in FY 2019)

Overall 70.9%○

Civil engineering 83.6%
Building construction 69.3%

Flow of Materials
INPUT>>>
Electric power

2.55 million kWh

City gas

148 thousand m3

Tap water used

18 thousand m3

Office1,658 t-CO2

Construction
Work

54,265 t-CO2

Final disposal

6.0%

22,741 t

Amount recycled

94.0%

354,208 t

CO2 emissions

Electric power 29.17 million kWhConstruction
Work

Diesel oil

14,546 kl

Gasoline

212 klKerosene

203 klTap water used

552 thousand m3

CO2
emissions

Supplychain

Scope 1
Scope 2
Scope 3

5,837,982 t-CO2
33,084 t-CO2
12,633 t-CO2
5,792,266 t-CO2

Emissions in the supply chain are based on estimates for FY 2018

56 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Construction byproducts

Energy consumed

Office>>>OUTPUT
SludgeConcrete mass
Asphalt concrete mass
Wood chips
Scrap metal
Waste paper
Plasterboards
Special controlled industrial waste
Others145,007 t
117,781 t
32,966 t
22,412 t
5,247 t1,435 t6,733 t115 t45,253 t

Amount of construction
byproducts generated

376,949 t

Social Initiatives

3

28 Years of Continuous
Clothing Aid Activities for
AfricaParticipating in Charity
Events to Support Cancer
Patients

Production and Screening of
the Movie “Signpost of
Reconstruction”

Motherland Academy International, a nongovernmental organization made up of mothers who convey the equality and preciousnessof life to children through actions, conducts
aid activities in West Africa. Through this organization, every year since 1991, we havecarried out activities to provide clothing donated by Tokyu Construction Group employees and our subcontractors to regions ofAfrica, where aid does not reach. For 28 years,
through 2018, we have delivered a total ofover 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 10 consecutive years since 2009. Employees, theirfamilies, and subcontractors helped with 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 the operation of
the event, including preparation of drawingsof the venue and setup/removal work on the
day of the event.

We produced a documentary film about restoration work on the North Rias Line of the Sanriku
Railway, which suffered tremendous damage
during the Great East Japan Earthquake in 2011.
This movie documents the struggles and sharedhopes of civil engineers engaged in the restoration work, as they continued contributing toreconstruction after the earthquake, through theresumption of operation of the entire North Rias
Line. We held a screening of the film in February
2019, with the aim of preventing the weatheringof the earthquake traces, and deepening theunderstanding of the work of civil engineersamong the general public. The movie is currently
available on YouTube as well. Our endeavor to increase interest in the civil engineers who supportsocial infrastructure was highly acclaimed, andthe movie won the grand prize at the 2018 Japan
Society of Civil Engineers Film Competition.

Initiatives for Value Creation

2

Story of Value Creation1

Signpost of Reconstruction (YouTube)(Available in Japanese)

https://youtu.be/CoC5qWFTTuo

The 7 Core
Themes of ISO 26000

Key Themes

Main Initiatives

Foundation That Supports Value Creation

Our Key CSR Themes
Activities Being Monitored

Principles of social responsibility
1.Organizational
governanceConsideration of stakeholders

Dialogue with stakeholders
Collaboration with stakeholders

2.Human rights

Efforts in sound management

Securing sound profit
Corporate GovernanceCompliance
Risk Management

Status of activities to strengthen corporate governanceand enhance compliance, business continuity
management training, etc.

3.Labor practices

Efforts in health and safety

Health and safety measures in construction
Working environment improvement measures

Status of activities, HR development, and training basedon health and safety policies and health and safety
management systems, activities to improve working
environment, etc.

4.The environment

Efforts to increase employee
satisfaction in the workplace

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

Status of activities based on HR strategies/
the HR development master plan
Action plans based on Act on Promotion of Women’sParticipation and Advancement in the Workplace, Act on
Advancement of Measures to Support Raising
Next-Generation Children, etc.

5.Fair operating
practices

Efforts to consider the environment

Promotion of environmental conservationin construction
Promotion of environmentally-conscious design
Development of environmentally-friendly technology

Status of activities, HR development, and training
based on the environmental charter, policies andenvironmental management systems (ISO 14000), etc.

6.Consumer issues

Efforts in improvement of quality

Improvement of construction quality
Development of construction technology
Transmission and improvement of construction
techniques and skills

7.Community involvementand development

Active involvement in society
and the local community

Promotion of social contribution activities
Promotion of increased interest andunderstanding of the construction industry
Interaction with communities in offices and on-site

Status of activities based on quality policies andquality management systems (ISO 9000)
Status of HR development and training, etc.
Status of development based on the guidance of theTechnical Committee and the technology
development roadmap

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

Corporate Data

Social contribution activities, interaction withthe local community in offices and on-site, etc.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201957

10-year Main Consolidated Financial and Non-Financial Data

For the fiscal year

FYE Mar. 2010

FYE Mar. 2011

FYE Mar. 2012

FYE Mar. 2013

Orders received

218,361

205,726

212,410

210,933

Net sales

236,655

244,974

227,843

228,570

Operating income

5,282

7,584

1,572

1,154

Ordinary income

4,912

7,811

1,884

2,301

Profit or loss attributable to owners of parent

1,901

4,087

1,799

△566

Total assets

162,893

146,781

154,442

154,195

Total capital

27,93630,28731,39032,487

Cash flows from operating activities

28,301

20,540(11,486)

14,264

Cash flows from investing activities(2,395)

481

20

(619)

Cash flows from financing activities(25,107)(9,813)

4,704(8,569)Cash and cash equivalents at end of year

13,526

24,663

17,881

23,097

Net income or loss (Yen)

17.81

38.29

16.86

(5.31)

Total net assets (Yen)

261.35283.29293.46

303.61

Cash dividends (Yen)

6.00

10.00

3.00

0.00

Payout ratio (%)

33.7

26.1

17.8

—

Equity ratio (%)

17.1

20.6

20.3

21.0

ROE (%)

7.3

14.1

5.8

(1.8)

PER (Times)

15.8

6.5

12.6

—

Number of employees at end of year (People)

2,453

2,460

2,446

2,403

Gender breakdown (Male/Female) (People)

2,304/149

2,302/158

2,285/161

2,231/172

Employment rate for persons with disabilities (%)

1.79

1.94

1.81

2.16

Office

1,270

1,387

1,060

1,370

Workplaces

38,49640,00837,26051,069307,549

350,320

361,347

451,353

Recycling rate (%)

93.5

94.4

93.3

94.7

Accident frequency rate

0.65

0.53

1.07

1.02

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 thecurrent fiscal year, and the Standard has been retroactively applied to the figures as of March 31, 2018.

58 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

(Millions of yen)FYE Mar. 2018

FYE Mar. 2019290,647

341,992

303,758

293,539

299,436

285,476

226,164

262,815

296,393

243,618

320,711331,437

2,630

6,009

18,17817,211

21,41621,987

3,559

8,024

19,76818,83922,12822,932

2,685

5,805

13,34013,691

16,11815,504

169,685

192,226

214,526

204,813249,756*

264,996

35,25844,861

54,23866,38079,17592,981(9,302)

2,111

39,003(23,545)

16,226

29,694(2,072)(1,525)(334)(1,717)(3,383)(5,786)

6,476

(675)

(6,035)(2,788)(6,457)(3,575)

18,215

18,31850,674

22,582

28,86549,145

25.16

54.40

125.00128.30151.05145.37329.35418.59506.04619.91739.87868.87

5.00

13.00

25.00

26.00

31.00

30.00

19.9

23.9

20.0

20.3

20.5

20.6

20.7

23.2

25.2

32.3

31.6*

35.0

7.9

14.5

27.0

22.8

22.2

18.1

17.4

12.5

7.4

6.8

7.6

5.7

2,313

2,340

2,412

2,464

2,537

2,523

2,148/165

2,161/179

2,219/193

2,249/215

2,303/234

2,275/248

2.07

1.84

2.22

2.26

2.30

2.46

1,607

1,841

1,913

1,820

1,754

1,658

44,39759,394

66,112

67,33351,60254,265490,293403,918

473,004

395,309410,245376,949

96.8

96.1

95.9

98.4

99.4

94.0

1.04

0.84

0.73

0.70

0.79

0.32

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate DataFYE Mar. 2017

Foundation That Supports Value CreationFYE Mar. 2016

Initiatives for Value CreationFYE Mar. 2015

Story of Value CreationFYE Mar. 201459

Financial Overview

Overview of Business Results
Overview of Business Results

problem-solving skills,” “promoting the diversification ofrevenue sources by expanding strategic businesses” and“shoring up our management and financial foundations
in support of heightened profitability,” we endeavored toenhance our relationships with clients as business partners, and to improve productivity by utilizing ICT, in orderto further enhance the domestic construction business. In
addition, we strived to obtain profitable real estate in thereal estate business, while endeavoring to receive orders
for ODA projects in the international business.
As a result, the Group’s business results for FYE March
2019 were net sales of ¥331,437 million (up 3.3% from theprevious year) due to an increase in completed construction sales. Regarding profit and loss, operating income was¥21,987 million (up 2.7% from the previous year), mainly due
to an increase in completed construction gross profit and adecrease in selling, general and administrative expenses.
Ordinary income increased by 3.6% against the previous
year to ¥22,932 million due to recording ¥790 million of
investment income using the equity method. After considering tax expenses, etc., profit attributable to owners of theparent was ¥15,504 million (down 3.8% from the previousterm). Net sales, operating income and ordinary income
reached new record-high levels, as in the previous year.

The Japanese economy continued to slowly recover duringFYE March 2019 as capital investment increased and personal consumption showed signs of recovery alongside
improvements in corporate earnings and the employment
and income environment, despite weaknesses in some
exports and production. In the construction industry, themarket environment remained strong, reflecting high construction demand related to the 2020 Tokyo Olympic Gamesand Paralympic Games, as well as steady capital investment.
Under these circumstances, the Group achieved strong
performance in its core businesses, posting increases
in both sales and profits, primarily due to an increase incompleted construction sales as a result of progress oflarge-scale construction work, as well as an increase inrenovation work at subsidiaries, despite factors such asa lower gross profit margin, reflecting a deteriorationin the profitability of some of our construction work. In
addition, under the four basic policies of our “Mid-Term
Management Plan (2018-2020): Shinka 2020,” which isin its first fiscal year, namely “transforming our humanresources and organization to elicit employee motivationand capabilities,” “reinforcing the domestic construction
business through a customer-centric perspective andFull-year results (consolidated)(Millions of yen)FYE Mar. 2019
TOKYU
CONSTRUCTION

Subsidiary

Consolidated

Differencecompared toprevious year

320,711309,946

23,810331,437

10,72535,72033,3702,960

36,073353

1.0Selling, general and administrative expenses

14,303

13,571876

14,086

(217)

(1.5)

Operating income

21,416

19,7982,084

21,987570

2.7

Ordinary income

22,12820,084

2,057

22,932804

3.6

Profit attributable to owners of parent

16,118——15,504

(614)

(3.8)

Item

FYE Mar.
2018

Net sales
Gross profit

Full-year results (unconsolidated)

Rate of change(%)
3.3(Millions of yen)FYE Mar. 2019

Item

FYE Mar.
2018

Settlement

Completed construction sales

Ratio

Differencecompared toprevious year

Rate of change(%)

310,761

308,623100.0(2,138)(0.7)

Civil engineering

73,86370,38122.8(3,481)(4.7)

Building construction

236,898

238,241

77.2

1,343

0.6

34,76733,31610.8(1,450)(4.2)

Completed construction gross profit
Civil engineering

7,198

9,892

14.1

2,694

37.4

Building construction

27,56823,4239.8(4,145)(15.0)

1,725

1,323

100.0

(402)

(23.3)

534

54

4.1

(480)

(89.8)Net sales

312,487

309,946100.0(2,540)(0.8)

Gross profit

35,30133,37010.8(1,931)(5.5)

Selling, general and administrative expenses

13,851

13,571

4.4

(279)

(2.0)

Operating income

21,45019,7986.4(1,651)(7.7)

Ordinary income

21,51420,084

6.5(1,429)(6.6)

Net income

15,555

14,025

4.5(1,530)(9.8)

Real estate sales
Real estate gross profit

60 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Segment Performance
Real Estate Business etc.

Regarding completed construction sales, although we saw
an increase in domestic government office construction
projects, sales decreased by 4.6% to ¥70,652 million due toa decrease in overseas construction and domestic private
construction projects. Meanwhile, segment profit was ¥7,993
million (up 53.3% from the previous year), reflecting an
improvement in the profitability of construction projects.

Regarding net real estate sales, sales amounted to ¥1,888
million (down 5.8% from the previous year). As for profit
and loss, a segment loss of ¥304 million (segment incomeof ¥245 million in the previous consolidated fiscal year) was
incurred due to the recording of an allowance for loss in thereal estate business, etc. in connection with a review of therevenues and expenses of the long-term, large-scale development business, despite a recording of profit in the rental
business, etc.

Construction Business (Building Construction)

Story of Value Creation

Construction Business (Civil Engineering)

Initiatives for Value Creation

Regarding completed construction sales, although we saw adecrease in domestic government office construction projects, sales were ¥258,896 million (up 5.8% from the previousyear) due to an increase in domestic private construction
and overseas construction projects. Segment profit was¥20,200 million (down 8.7% from the previous year), mainly
due to a decline in the completed construction gross profit
margin, reflecting a deterioration in the profitability of someof our construction projects.

Reference data (Tokyu Construction’s performance by area)
Orders (company-wide)(Millions of yen)

50,411

Domestic private

189,638(35,047)

General public

155,028

4,401

2.9

Tokyu Group companies

34,610(39,448)(53.3)

23,003

16,050230.9

FYE Mar. 2019
Company-wide

Overseas263,053(28,283)

Orders (civil engineering)

Rate of change(%)(Millions of yen)

300,000(15.6)(15.6)

200,000

Domestic public

28,185

Domestic private

26,592

1,077

FYE Mar. 2019291,337

6,952 263,053
23,00374,05834,61031,622

198,170

150,626

59,69855,3040(9.7)

Rate of change(%)

Civil engineering(38.7)

80,00060,000

4.2

12,096

1,062

9.6

14,49515

0.1

20,00022,98817,672332.4

77,766982

1.3

Overseas

065,711

5,315
14,48010,4709,920

11,033

Building construction

22,225

8,481

61.7

Domestic private

163,046(36,125)(18.1)

General public

142,932

3,339

2.4

Tokyu Group companies

20,114(39,464)(66.2)

15(1,621)(99.1)

185,287(29,265)(13.6)

Tokyu Group

22,988General public

14,495

Domestic
public sector

12,09645,95428,185FYE Mar. Overseas FYE Mar.
(252)
2017
2018

(Millions of yen)Domestic public

77,76676,78445,573Rate of change(%)

FYE Mar.
2019

FYE Mar.
2019

Corporate DataFYE Mar. 2019

Domestic
public sector(Millions of yen)

General public

Differencecompared toprevious year

General public

50,411FYE Mar. Overseas FYE Mar.
2017 (208)2018

100,000

Tokyu Group companies

Orders (building construction)

155,028

Tokyu Group

100,000

40,000Overseas284,888(Millions of yen)

Differencecompared toprevious year
(17,768)

Overseas

Overseas400,000

Foundation That Supports Value Creation

Domestic public

Differencecompared toprevious year
(9,287)(Millions of yen)Overseas300,000

219,176
200,000

44
21,151Tokyu Group

214,552

1,636 185,287
15
59,578
20,114

188,250
100,000

139,592
9,730

0

FYE Mar.
2017

13,744FYE Mar.
2018

General public
Domestic
public sector

142,932
22,225FYE Mar.
2019

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201961

Financial Overview

Overview of Financial Situation
AssetsTotal CapitalCompared to the end of March 2018, total assets increasedby ¥15,239 million (up 6.1% from the previous year) to¥264,996 million due to a decrease of ¥15,476 million innotes and accounts receivable for trade and completed
construction work, etc., as well as an increase of ¥20,279 million in cash and cash equivalents and an increase of ¥5,204
million in incomplete construction expenses.

Shareholders’ equity increased by ¥12,100 million due
to an increase in retained earnings due to the recordingof ¥15,504 million in profit attributable to owners of theparent, despite paying out ¥3,307 million in dividends.
In addition, accumulated other comprehensive income
increased by ¥1,582 million, primarily due to an increase of¥1,854 million in valuation difference on available-for-salesecurities affected by stock prices. As a result, total capitalwas ¥92,981 million—an increase of ¥13,806 million (up17.4%) compared to the end of March 2018. In addition,
the equity ratio was 35.0%, up 3.4 points compared to theend of March 2018.

Liabilities
While construction accounts payable decreased by ¥1,454
million and accrued corporate taxes decreased by ¥868
million, deposits received increased by ¥1,670 million,
provision for loss on construction contracts increasedby ¥1,466 million, and electronic payment obligations
increased by ¥1,094 million, bringing our total liabilities to¥172,014 million—an increase of ¥1,433 million (up 0.8%)
from the end of March 2018.

Consolidated financial positionFYE Mar. 2017

FYE Mar. 2018

FYE Mar. 2019

Total assets

204,813249,756

264,996

15,239Total liabilities

Item

Equity ratio(Millions of yen)

Differencecompared toprevious year

138,433

170,581

172,0141,433	Interest-bearing
liabilities

4,804

1,721

1,638

(83)

(Short-term debt)

3,082

83

80

(2)

(Long-term debt)

1,721

1,638

1,557

(80)

Total capital

66,38079,17592,98113,806Equity ratio (%)

32.3

31.6

35.0

3.4P

(%)

45

32.3

31.6

FYE Mar.
2017

FYE Mar.
2018

35.0

30

15

0

FYE Mar.
2019

Overview of Cash Flow
Cash Flow from Business Operations

Cash Flow from Investments

Although we experienced decreases in funds, such as
an increase in income taxes paid and an increase incosts on construction contracts in progress, a total of¥22,932 million in net income before taxes and otheradjustments, along with increases in funds such as adecrease in accounts receivable contributed to a ¥29,694
million increase in funds (funds for FYE March 2018 had
increased by ¥16,226 million).

Funds decreased by ¥5,786 million (funds decreased by¥3,383 million in FYE March 2018) mainly due to payments
to acquire tangible and intangible fixed assets, and purchase of shares of subsidiaries and associates.

Cash Flow from Financing
Payment of dividends etc. resulted in a ¥3,575 million
decrease in funds (FYE March 2018 saw a decrease in fundsof ¥6,457 million).

As a result, the balance of cash and cash equivalents as of the end of March 2019 increased by ¥20,279 million from theend of the previous fiscal year, to ¥49,145 million (compared to ¥28,865 million for the end of March 2018).

62 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Consolidated cash flow results
FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

Cash flows from operating activities(23,545)

16,226

29,694

Cash flows from investing activities(1,717)(3,383)(5,786)

Cash flows from financing activities(2,788)(6,457)(3,575)

(40)

(102)

(52)

Net increase (decrease) in cash and cash equivalents(28,091)

6,283

20,279Cash and cash equivalents at end of year

22,582

28,86549,145

Effect of exchange rate changes on cash and cash equivalents

Story of Value Creation

Item(Millions of yen)

Prospects
Breakdown of sales by area

Figures in parentheses indicate rate of change

Completed construction sales¥291,800 million (5.5%)

Civil engineering¥77,400 million (10.0%)

Building construction¥214,400 million (-10.0%)¥1,200 million (-9.3%)¥293,000 million (-5.5%)

Real estate sales
Total

Breakdown of gross profit by area

Figures in parentheses indicate profit margin

Gross profit from completed
construction sales¥24,200 million (8.3%)

Civil engineering¥6,000 million (7.8%)

Building construction¥18,200 million (8.5%)

Real estate gross profit¥700 million (58.3%)¥24,900 million (

8.5%)

Total

Foundation That Supports Value Creation

Dividend results/dividend forecast
Dividend paid for
FYE March 2017¥26 (Consolidated
dividend payout ratio 20.3%)

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 planned for
FYE March 2020

¥30 (Consolidated
dividend payout ratio 36.8%)

Corporate Data

Regarding the outlook for the Japanese economy,
although there are concerns regarding the consumption
tax hike, it is expected that the economy will gradually recover, as corporate earnings as well as employment and income environments continue to improve.
However, we still need to be aware of uncertainty in theoverseas environment.
While the domestic construction market is expected
to continue to perform well due to an increase in government construction investment, there is a concernthat tight supply-demand conditions stemming frommultiple large-scale redevelopment projects, mainly
in major metropolitan areas, will lead to substantiallyhigher construction costs. In addition, it is expectedthat a qualitative change in demand over the mediumto long-term from flow (predominantly construction of
new buildings, etc.) to stock (predominantly maintenance and repairs), combined with increasing numbersof elderly construction workers retiring, will result in aserious human resource shortage. As a result, it is necessary to take actions to eliminate long working hours andrealize work-style reform.
Under these circumstances, the Tokyu Construction
Group aims to grow into a corporate group that cancope with the changing environment, by continuing tosteadily embody measures based on the basic policiesof the “Mid-Term Management Plan (2018-2020): Shinka
2020,” while aiming to grow into a corporate group thatprovides customer-specific comprehensive construction
solutions, mainly through utilization of the Tokyu Group’s
comprehensive strengths, proactive acquisitions ofhuman resources and M&A.
Although we expect a decline in performance in
FYE March 2020 due to temporary factors, in order toimprove performance, we will focus on receiving orders
by further strengthening relationships with our customers, and will also proceed with reforms of our construction production systems, as well as a rationalization of
our administrative divisions.

Initiatives for Value Creation*Based on statement of accounts (as of May 9, 2019)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 201963

Company Profile (June 1, 2019)

Company name

TOKYU CONSTRUCTION CO., LTD.

Founded on

March 12, 1946

Date of establishment

April 10, 2003

Capital¥16,354 Million (as of March 31, 2019)）

Head office

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

Representative

Mitsuhiro Terada

Number of employees

2,523

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

Main services

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

Locations

Head office/13 Branches/12 Sales offices, etc.
[Branch offices]
Sapporo Branch, Tohoku Branch (Sendai-shi), Hokuriku Branch (Niigata-shi), Chiba Branch, Civil Project East Japan Branch (Shibuya-ku, Tokyo), Urban Development Branch (Shibuya-ku, Tokyo), Building
Project Metropolitan Branch (Shibuya-ku, Tokyo), Building Project East Japan Branch (Shibuya-ku,
Tokyo), Nagoya Branch, Osaka Branch, Hiroshima Branch, Shikoku Branch (Takamatsu-shi), Kyushu
Branch (Fukuoka-shi)[Institute]
Institute of Technology (Sagamihara-shi, Kanagawa)[Overseas offices]
Singapore, Thailand, Indonesia, Myanmar, Bangladesh, Vietnam

Affiliated companies

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

WebsiteDetailed information about the Tokyu Construction Group is available on our website.

Corporate Profile

Investor Relations

https://www.tokyu-cnst.co.jp/english/company/index.html

https://www.tokyu-cnst.co.jp/english/ir/index.html

64 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Stock Information (March 31, 2019)

Treasury shares

400,000,000 shares

Outstanding stock

106,761,205 shares (Including 57,629 treasury shares)

Number of shareholders

32,345

Stock Exchange listingFirst section of the Tokyo Stock Exchange

Securities code

1720

Shareholder registryadministrator

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

Financial institutions

0.05%

40.84%

Individuals andothers12.99%
Foreigncompanies, etc.

Story of Value Creation

Total number of sharesauthorized to be issued

Distribution of
Shareholders

20.37%
Other companies

Financial
instruments dealers

24.09%

1.66%

Major Shareholders (Top 10)

TOKYU CORPORATION

15,362

14.40

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

4,732

4.44

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

Japan Trustee Services Bank, Ltd. (Trust Account)

3,177

2.98

SHIMIZU CORPORATION

3,000

2.81

Sumitomo Mitsui Trust Bank, Limited

2,945

2.76

MUFG Bank, LTD.

2,550

2.39

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

2,200

2.06

KINDEN CORPORATION

1,924

1.80

Foundation That Supports Value Creation

Percentage of total
shares issued (%)
Initiatives for Value Creation

No. of shares held(Thousands)

Name(Note) Tokyu Corporation has contributed 7.5 million shares to retirement benefit trust accounts, including 3.52 million shares to the Japan Trustee Services Bank (re-trustee of Sumitomo Mitsui Trust Bank - Tokyu Corporation retirement benefits trust account) and we hold the authority to direct how
voting rights for these shares should be executed.

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.

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

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2019

Corporate Data

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.

65

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