CORPORATE REPORT 2020

Connecting the societies with engineeringIntrodu cti on

Cultivating Technological Capabilities,
Seeking Affluence and Contributing to Society
The corporate philosophy of the KYOWA EXEO Group, which is the basic guideline forour corporate social responsibility, includes cultivating technological capabilities, seeking
affluence and contributing to society.
The corporate philosophy clearly answers the question: “Why does the KYOWA EXEO
Group exist?” The utmost ground for existence is the Group’s technological capabilities.
Throughout its existence, the Group has aimed to be a corporate group that always
anticipates and pursues better technologies at the forefront of leading-edge technologies.
The technological capabilities cultivated through these efforts will help create more
affluent living environments for people. The Group intends to be a valuable enterprise bycontributing to society through activities in the pursuit of state-of-the-art technologies.

1

Corporate Report 2020

About the EXEO Group

Consolidated Financial and Non-financial Highlights
Milestones of the KYOWA EXEO Group
Greetings/Message from the President

3
59Business Activities

The KYOWA EXEO Group’s Medium-Term Management Plan
Business Overview
Special Feature

13
15
21

The KYOWA EXEO Group’s ESG Initiatives
27

The KYOWA EXEO Group’s Corporate Value Creation
Corporate Value Creation Process
SDG Initiatives

CSR Concept
Environmental Initiatives
Social Initiatives

31
33
39

Quality Assurance and Customer Satisfaction Improvement
Organizational Enhancement
Shareholder and Stakeholder Relations
Human Resources Development
Promotion of Diversity and Inclusion

55

Management Systems
Corporate GovernanceCompliance
Risk Management

Board of Directors

62

Corporate Data

Financial Section
Company Overview and Stock Information
Overview of Group Companies

63
69
71

Editorial Policy
Period Coveredby the Report:

From April 1, 2019 to March 31, 2020 (However, in some cases, activities
before and after the coverage period are also included in this report.)

Organizations Covered Companies subject to consolidation of the KYOWA EXEO Group (However, in some cases,by the Report:
KYOWA EXEO CORPORATION’s non-consolidated data are used instead of consolidated data.)
Reference
Guidelines:

GRI “Sustainability Reporting Standards” ISO26000 “Guidance on social
responsibility”

Issuance:

September 2020

Next Issuance Scheduled: August 2021
KYOWA EXEO CORPORATION has been selected for inclusion in the MSCI Japan ESG
Select Leaders Index published by MSCI.

*1: MSCI Inc. (“MSCI”) is a provider of an extensive range of financial services, including the calculation ofstock indexes and portfolio analysis.
*2: The inclusion of KYOWA EXEO CORPORATION in the MSCI Index and the use of MSCI’s logo, trademark, service mark and index name do not constitute MSCI’s or its affiliates’ support, guarantee and/or
promotion of KYOWA EXEO CORPORATION. MSCI indices are MSCI’s exclusive properties. MSCI’s
and MSCI Indices’ names and logos are trademarks and/or service marks of MSCI or its affiliates.

Notice on forward-looking statements
This Corporate Report 2020 contains forward-looking statements such as future business performance outlook of KYOWA EXEO. As these statements are based on theinformation available at the time of the preparation of this report, the actual results
may differ materially from the content described or suggested therein due to various
factors. As this corporate report is not intended for the purpose of soliciting investment, all users of this report are advised to undertake decisions concerning investment
at their own discretion.
The figures stated in units of ¥100 million and ¥1 million are rounded down.

KYOWA EXEO CORPORATION
https://www.exeo.co.jp/en/
29-20, Shibuya 3-chome, Shibuya-ku, Tokyo
150-0002, Japan

Corporate Report 20202

Consoli dated Fi nancia l an d N on -f in an cial H ig h l ig h ts

Financial Information (as of March 31, 2020)

Net Sales

Orders Received¥556.3¥524.5billionProfit Attributable to Owners of Parent¥15.6

billion¥6.8
Dividend

Corporate Report 2020

¥31.1 / 5.9

billionbillionROE¥139.75

5.9 / 3.6%

Shareholders’ Equity
to Total Assets

%

ROA

%

Cash Flows

Operating activities Investing activities

Financing activities¥266.4 / 59.9 ¥17.2 ¥(17.0) ¥4.2

billionbillion

Payout Ratio¥80.0 / 57.2
3

Income Margin

Earnings per Share

Shareholders’Equityes

Capital Stock

Operating Income%

Years Since Foundation

66

years

%

bil ionbil ionNumber of Consolidated Group Companies

88

bil ionNon-financial Information (as of March 31, 2020) *Non-consolidated

Men:

Women:

Hiring Ratio Between Men and Women Average Years of Continuous Employment

Men:

Women:

Men:

Women:

17.6

/14.0

Percentage ofChildcare Leaves
Taken

Percentage of Employees
Who Returned to Workafter Childcare Leaves

3,744 / 267

87 / 13

Ratio of Women in Managerial Positions

Percentage of Annual Paid Leaves Taken

1.6

63

100 / 100

Percentage of Employees with Disabilities

Turnover Ratio in Three Years after Joining
the Company

Number of Employees with IT-relatedExpert Qualifications

2.54

6.0

304

Percentage of Independent Directors
to All Directors

CO2 Emission

Electricity Generated from the Solar Power
Generation Facility Owned by KYOWA EXEO

%

%

33

%

%

%

%

years

years

%

%

6,681

t-CO2

About the EXEO Group

Number of Employees

%

25

GWh

Corporate Report 20204

Mil estones of the KYOWA E X E O G rou p
Since its foundation in 1954 as Kyowa Densetsu Kaisha, Ltd.,KYOWA EXEO has continued to create “linkages” in society.

Corporate History
1954 Established Kyowa Densetsu Kaisha, Ltd.
(headquartered in Shiba-Hamamatsu-cho, Minato-ku, Tokyo)

2001 Merged with Showa Technos

1954 Accredited by Nippon Telegraph and Telephone Public Corp.
(now NTT) in relation to communications lines, communications machinery and radio transmissions for telecommunications facilities

2004 Wako Engineering made a Group company

1963 Listed on the Second Section of the Tokyo Stock Exchange

2004 Daiwa Densetsu made a Group company
2010 Ikeno Tsuuken made a Group company
2015 Wako Engineering and Ikeno Tsuuken merged, Exeo Tech
Corporation established2018 C-Cube, Seibu Electric Industry and Nippon Dentsu madeGroup companies

1963 Expanded overseas and began work on line laying and civilengineering projects in Honduras, in Central America.
1963 Expanded into communications and electric power construction
projects beyond Nippon Telegraph and Telephone Public Corp.

2018 Exeo Global Pte. Ltd. established in Singapore

1972 Listed on the First Section of the Tokyo Stock Exchange
1982 Entered the system integration business1986 Entered the environment business1991 Changed the company name to Kyowa Exeo Corporation
1998 Entered the network integration business1999 New company headquarters building is completed in
Shibuya (Shibuya, Shibuya-ku, Tokyo)

1988
Net Sales¥100.0 Billion

Leap
Period1974
Net Sales¥50.0 Billion

ReformPeriodUnder the trade name of
Kyowa Densetsu Kaisha, Ltd.,Foundation contributed to the development oftelecommunication facilities based on
PeriodCooperation and Harmonization.

5

Corporate Report 2020

Entered other businesses
in pursuit of business expansion

Targets for Fiscal 20202019

Net Sales:

Net Sales

525.0 Billion¥¥524.5 Billion

Operating Income:2006

32.0 Billion¥

Net Sales¥300.0 Billion

New
Foundation

About the EXEO Group,
Focusing Group s strengths
to take total solutions
to a new growth stage

1997
Net Sales¥200.0 Billion

GrowthPeriodMoved toward further developmentin the 21st century

Under the name of
KYOWA EXEO CORPORATION,

broke the mold andcontinually ventured out to address
new challenges

Event sJuly 2019

November 2019

January 2020

March 2020

March 2020

March 2020

Takumi Nemoto, Ministerof Health, Labour andWelfare visited our Central
Technical Training Center.

Toru Ebihara, an employee of KYOWA EXEO,
won a gold medal at the57th National Skills Competition.

Completed the construction of a biomass plant forJapan Racing Association’s
Ritto Training Center.

Completed the replacement of conventional
lighting facilities with
LED for the main roof of
Saitama Super Arena.

Selected as a Nadeshiko
Brand for the first time,in recognition of KYOWA
EXEO’s successful efforts
in encouraging women’s
active participation in theworkplace.

Renewed our corporatewebsiteJuly 2019

August 2019

October 2019

April 2020

April 2020

Acquired Kita Daihyaku
Tsushin Denki, a company
engaged in telecommunication infrastructure business mainly in Hokkaido.

Acquired Sun Planning
Systems, a company
with strengths in BPM,
RPA and health checkup
systems.

Acquired Hikari Progress,
a company specializing in
wiring of optical telecommunication cables mainly
in Okinawa Prefecture.

Set up Crisis Management
Office, a new organizational unit to strengthen
crisis contingency management.

Set up IOWN Promotion Office, a new organizational
unit to promote the development of business and technologies related to realizing IOWN, a next generation
communication infrastructure.

November 2019

July 2019

October 2019

November 2019

Acquired Eiwa Builtech, acompany specializing in
air-conditioning and sanitary facility works mainly
in Fukuoka Prefecture.

Acquired Winner Engineering Pte. Ltd., a Singapore
company specializing in
air-conditioning facility
work.

Acquired CPU, a company specializing indevelopment and sale ofsoftware, such as for 3D
architectural CAD and civilengineering cost estimation systems.

January 2020

April 2020

Social contribution activities
Provided support for
Shuri-jo Castle in Okinawa
Prefecture that had suffered damage from a fire.

Provided financial support
for regions affected by
Typhoons Nos. 15 and 19
of 2019.

Provided relief supplies in
response to the COVID-19
pandemic.

Corporate Report 20206

Milestones of the KYOWA EXEO Group

Events7

July 2019

November 2019

January 2020

Takumi Nemoto, Minister of Health, Labourand Welfare visited our Central TechnicalTraining Center.

Toru Ebihara, an employee of
KYOWA EXEO, won a gold medal at
the 57th National Skills Competition.

Completed the construction of a biomass
plant for Japan Racing Association’s
Ritto Training Center.

On July 5, Takumi Nemoto, Minister of
Health, Labour and Welfare, visited ourCentral Technical Training Center located in
Wako, Saitama Prefecture to see its facilities
and actual training sessions. He also met
Yoshiaki Shimizu, an employee of KYOWA
EXEO who had won a gold medal in theinformation network cabling category at
the 44th World Skills Competition held in Abu
Dhabi, UAE in 2017.

Toru Ebihara, an employee of KYOWA EXEO,
representing Saitama Prefecture, won a gold
medal in the information network cabling
category at the 57th National Skills Competition held between November 1 5 and 1 8 incommemoration of the enthronement of theemperor.
This is the first gold medal our employees
have won in the past three competitions,and 7th in total.

Completed the construction of a biomass
plant for Japan Racing Association’s Ritto
Training Center in Ritto, Shiga Prefecture,and delivered it to Japan Racing Association after implementing a test run and othernecessary procedures.

July 2019

August 2019

October 2019

Acquired Kita Daihyaku Tsushin Denki,
a company engaged in telecommunication
infrastructure business mainly in Hokkaido.

Acquired Sun Planning Systems, a company
with strengths in BPM, RPA and healthcheckup systems.

Acquired Hikari Progress, a company specializing in wiring of optical telecommunication
cables mainly in Okinawa Prefecture.

July 2019

October 2019

November 2019

Acquired Eiwa Builtech, a company specializing in air-conditioning and sanitary facility
works mainly in Fukuoka Prefecture.

Acquired Winner Engineering Pte. Ltd.,a Singapore company specializing in
air-conditioning facility work.

Acquired CPU, a company specializing indevelopment and sale of software, such as for3D architectural CAD and civil engineering
cost estimation systems.

Corporate Report 2020

March 2020

March 2020

Completed the replacement of conventional
lighting facilities with LED for the main roofof Saitama Super Arena.

Selected as a Nadeshiko Brand for the firsttime, in recognition of KYOWA EXEO’s
successful efforts in encouraging women’s
active participation in the workplace.

Renewed our corporate website

Completed the replacement of conventional
lighting facilities with LED for the main roofof Saitama Super Arena.
The state-of-the-art full-color LED lights
can provide a range of lighting modes, suchas colorful lighting expressions and whitecolor illumination.

Selected as the Fiscal 2019 Nadeshiko Brand
under a program jointly run by Ministry of
Economy, Trade and Infrastructure and Tokyo
Stock Exchange to recognize listed companies that have successfully encouraged
women’s active participation in the workplace.
This was our first time to be selected asa Nadeshiko Brand.

Renewed both design and contents of our
website to make it easier for users to readand understand. It has also been designed
to enable easy access from smartphones,
tablets and other devices.

April 2020

April 2020

Set up Crisis Management Office, a new organizational unit tostrengthen crisis contingency management.

Set up IOWN Promotion Office, a new organizational unit topromote the development of business and technologies related torealizing IOWN, a next generation communication infrastructure.

Set up a new organizational unit, Crisis Management Office, in theaim of further strengthening our capability of maintaining facilities,
such as for providing our services, and responding to reputation
risks arising from cyber-attacks or pandemics.

November 2019

About the EXEO Group

March 2020

To help realize by 2030 the Innovative Optical and Wireless Network(IOWN), an initiative led by Nippon Telegraph and Telephone Corporation, set up a new organizational unit IOWN Promotion Office in the
ICT Solutions Headquarters, which focuses on initiatives for developinga smart society following the modern society by creating innovations
beyond conventional ideas together with partnering organizations.

January 2020

April 2020

Social contribution activities

Provided support for Shuri-jo Castle
in Okinawa Prefecture that had
suffered damage from a fire.

Provided financial support forregions affected by Typhoons Nos.
15 and 19 of 2019.

Offered donation to Okinawa Prefecture
to support recovery and reconstruction of
Shuri-jo Castle, a World Heritage and thePrefecture’s historical and cultural icon that
had been damaged by a fire.

Provided Chiba Prefecture with a relief donation to support the people affected by
Typhoons Nos. 15 and 19 of 2019 and tohelp the recovery of affected areas.

Provided relief supplies in responseto the COVID-19 pandemic.
Donated N95 facemasks to the Prefecturesof Tokyo, Osaka and Fukuoka in responseto the shortage of infection prevention supplies at medical institutions coping with
COVID-19.

Corporate Report 2020

8

TO P M E S S AG E

G re e t i n g s

Thank you for your understanding and continuing support
for the overall business operations of the KYOWA EXEO
Group.
I extend my deepest sympathies to those individuals who
have passed away due to the COVID-19 pandemic that began in early 2020. I am also praying for prompt recovery of
those infected with COVID-19. I would like to pay tributeto healthcare workers throughout the world who are coping
and struggling with the ever-changing situations while wishing to see the crisis end as soon as possible.

Since its foundation in 1954, the Group has consistently continued its business activities leveraging its specialized technologies for information and communication infrastructureservices as its core competency. It has provided end-to-end
centralized services relating to the development of information and communication facilities throughout Japan. Following the management integration with three companies inwestern Japan, which was completed on October 1, 2018, theGroup further solidified its strengths—total process, total solutions, and nationwide construction services.
The “exeo” of KYOWA EXEO Group is a Latin wordthat refers to breaking the mold and continually venturing
out to address new challenges. Reaffirming the meaning of
the company name, we will continue to make flexible responses to a changing business environment and provide
total solutions in a wide range of business fields by gathering the strength of the entire Group.
In April 2020, we renewed our website based on the concept “Engineering for Fusion— connecting the societies withengineering.” The new website elaborates the three domainsof our business—telecommunication infrastructure, urban
President & CEO
KYOWA EXEO CORPORATION

infrastructure, and system solutions—from various perspectives. It emphasizes our intension to become a “bridge” toconnect these three domains with cities, people and products
using our engineering and technological capabilities. We area group of companies that pursue and acquire even betterand more advanced technologies in the ever-changing times.
Leveraging such technological capabilities, we will seek toachieve sustainable growth based on CSR-focused management, making social contributions that are appropriate for
new norms in the post-COVID society and thereby becoming a company that is recognized as valuable for society.

9Corporate Report 2020

Contributing to the Sustainable Growth of Society
The KYOWA EXEO Group’s corporate philosophy includes
cultivating technological capabilities, seeking affluence,and contributing to society. Under this philosophy andwith its technological capabilities as a driver for growth,
the Group has grown to be the way it is today. Against the
backdrop of the COVID-19 pandemic worldwide, as solutions are being sought in and outside Japan, I believe ourcapabilities will contribute significantly to help resolve newsocial issues.
The Group will continue to fulfill its social responsibilities
through its businesses, thereby addressing Sustainable
Development Goals (SDGs) adopted by the United Nationsin 2015.

Business Results, Initiatives and Achievements of Fiscal 2019
In regards to the business environment in fiscal 2019, thefirst half saw strong growth continuing from fiscal 2018.
In the second half, however, the consumption tax hike that
impacted the economy was coupled with the COVID-19
pandemic during the end of the fiscal year that brought
the global economy to a halt. The economy thus entered aperiod of significant decline, faced with uncertainties as towhether the pandemic will be contained and when theeconomy will recover.
Under this drastically changing business environment,
however, a range of new initiatives have been launched. In
the telecommunications sector, telecommunication carriers began providing commercial 5G service, announcingthat they will bring forward the planned installation of basestations. IoT, AI and other cutting-edge technologies havebeen disseminated further, various information has been

About the EXEO Groupdigitalized, and digital transformation, including data circulation and utilization, has been accelerated. Furthermore,
the diffusion of cashless payments has progressed in fullscale, stimulated by the reward point programs introducedin conjunction with the consumption tax hike. In the construction sector, on the other hand, though infrastructure
and urban development projects for Tokyo Olympic andParalympic Games had reached their peak, since theOlympic and Paralympic Games had been postponed due
to COVID-19 and also to prevent infection, some of them,especially in metropolitan areas, had been decided to beterminated.
Under these circumstances, the KYOWA EXEO Groupgrew significantly in sales, reflecting its organic growth aswell as the strong growth of its three subsidiaries inwestern Japan following their management integration in
October 2018. The Group’s telecommunication carrierbusiness worked to increase orders and sales by focusing
on the installation of fixed-line and mobile telecommunication networks as well as the redevelopment of the Group
formation with its subsidiaries in western Japan and its existing subsidiaries. Its urban infrastructure and systemsolutions businesses, which are positioned as growthbusinesses, conducted proactive sales activities to winlarge-scale projects, strengthened its SI business basethrough M&As, and worked to expand its global business,
especially in the APAC region.
The cooperative initiatives with the three subsidiaries inwestern Japan have been steadily implemented as well,creating a synergy effect of ¥500 million in consolidated
operating income through acquisition of new orders, improved efficiency of construction with mutual support for
optimal utilization, and reduction of subcontracting costs.
However, the resulting profit was slightly below the

Operation highlight
Orders received (¥Billion)

556.3

Net sales (¥Billion)

525.0

524.5

Operating income (¥Billion)

525.0

32.0
31.7

424.3

423.7
31.1

2018

2019

2020
(plan)

2018

2019

2020
(plan)

2018

2019

2020
(plan)

Corporate Report 2020

10

TO P M E S S AG E

planned figure due to increases in selling, general and administrative expenses, non-operating expenses, etc.
As a result, for fiscal 2019, the KYOWA EXEO Group
recorded orders received of ¥556.3 billion (up 31% year
over year), net sales of ¥524.5 billion (up 24% year overyear), operating income of ¥31.1 billion (down 2% year overyear). Cash flow, which is an indicator of the amount ofcash on hand at the end of the fiscal year, continued toincrease steadily and reached ¥46.0 billion at the end of
fiscal 2019 when compared to ¥15.2 billion at the end of
fiscal 2016.
The KYOWA EXEO Group’s telecommunication carrierbusiness began receiving orders for 5G-related projects
including mobile facilities installation for the pre-service tobe provided at the venue for Rugby World Cup. Its urban
infrastructure business completed large-scale projects
including for solar power generation facilities and data
centers and telecommunication works for airports andhighways in various regions of Japan. Its system solutions
business worked to expand new solutions domains
towards the full-scale dissemination of IoT services, in addition to large-scale projects for system maintenance andoperation as well as telecommunication facility works forinternational airports in the global business domain.
In regards to our subsidiaries, the C-CUBE group’s telecommunication carrier business worked to increase maintenance work, implementing measures to improve
productivity, such as by reviewing its work structure forthe access area. Its urban infrastructure business received
orders for large-scale projects, including those for electricutility conduit works and works for conduit lines for electricity generated from solar power as well as a power-supply facility project for a plant required to renew its
equipment. Its system solutions business completed various projects for companies and government agencies,
including the transition to Windows 10 and installation ofcomputers and other devices and system modifications inconjunction with the consumption tax hike.
The Seibu Electric Industry group’s telecommunication
carrier business worked to grow optical network cabling
and facility maintenance works, having received orders fortransmission line construction works and works to prevent
electromagnetic induction as part of the development of
the high-speed wireless communication environment. Its
urban infrastructure business received orders for electricand mechanical equipment works for new buildings aswell as large-scale solar power generation facility works.
Its system solutions business conducted intelligent transport systems-related works and communication network
installation works for schools and other educational institutions.
The NIPPON DENTSU group’s telecommunication business made steady progress in constructing 4G wirelessbase stations in the NCC sector. Its system solutions business focused on enterprise systems development,

11

Corporate Report 2020

replacement of servers and other devices, installation ofcomputers for educational use, integrating its new solutions business including AI products it developed in-housewith digital marketing activities. Its urban infrastructurebusiness received large-scale orders, including communication equipment works for highways and national roads
and installation of POS systems and other sales devices
for highway service areas.

Outlook for Fiscal 2020
We anticipate that, due to the COVID-19 pandemic, therelative importance of telecommunication infrastructure forteleworking and online conferencing will further increase in
fiscal 2020 and that the market in relation to solutions fordiversified workstyles and lifestyles will expand, leading to
expectations that capital investment in the information andcommunication sector will be solid. The KYOWA EXEO
Group will continue to increase sales through organic
growth as it did in fiscal 2019 and concurrently will seek toimprove its productivity while coping with restrictions
placed on its operations, thereby aiming to mark anotherrecord high.
Concerning our targeted performance for fiscal 2020,
we aim to achieve orders received of ¥525.0 billion (down
6% year over year), net sales of ¥525.0 billion (unchanged
year over year), and operating income of ¥32.0 billion (up
3% year over year).
In the telecommunication carrier business, we will continue to work together with our group companies toincrease and secure orders so as to strengthen our earning capability through creation of synergy effects, while
paying attention to major telecommunication carriers’ capital investment trends.
In the urban infrastructure business, we seek toincrease sales and earning capability by acquiring largescale projects, including 700 MHz television transmissionrelated works and electrical engineering works fordatacenters and other facilities.
In the system solutions business, we will take on challenges in new technologies and domains. Specifically, we
will work on the GIGA school program, a program led by
the Ministry of Education, Culture, Sports, Science andTechnology that provide every child receiving mandatory
education with a computer and develop a high-speed
network environment for them; Service Now ITSMESG and SDGs Initiatives
The largest foundation of the KYOWA EXEO Group’s existence is its technological capabilities. We haveconsistently pursued and acquired more advanced technologies throughout the every-changing times. Helping
solve social issues with the technological capabilities wehave thus accumulated drives us to create value for andwith society and achieve sustainable growth of theGroup. The businesses and CSR/ESG activities theGroup conducts resonate with Sustainable Development
Goals (SDGs) adopted by the United Nations in 2015 andhelp solve many social issues.

https://www.exeo.co.jp/company/sustainability/

Our corporate website introduces the KYOWA EXEO
Group’s initiatives for SDGs and sustainability-oriented activities. It introduces our diverse and attractive businessactivities that prioritize CSR, environmental protection, aculture of safety and quality, our policy of regarding employees as the Group’s primary properties, governance,
disaster recovery and SDGs.
These activities have attracted attention, and KYOWA
EXEO has been selected as the Fiscal 2 0 1 9 Nadeshiko
Brand under a program that recognizes listed companies
that have successfully encouraged women’s active participation in the workplace. In addition, an employee of
KYOWA EXEO won a gold medal in the information network cabling category at the 57th National Skills Competition held in commemoration of the enthronement of theemperor. On top of encouragement of women’s active
participation in the workplace, we will continue to focus
on sustainability management, including diversity andinclusion and human resources development, to realize
an environment where diverse values are respected andachieve sustainable growth.

About the EXEO Group

Development Support Service, which supports the adoption and development of platforms that help change
workstyles through digitalization and increase productivity;and local 5G, which is expected to be adopted in Japan.
We will provide engineering, solution, maintenance andother services for new technologies and domains as represented above. In particular, for Service Now that is
expected to be rolled out globally, we are fostering the development of over a hundred engineers. In October 2019,
we established Digital Consulting Headquarters, an organization in charge of sale of system solutions for these
new technologies and domains. We intend to also share
our knowledge and expertise in workplace innovation,such as a shift to paperless operations, which was led byDigital Transformation Strategic Division which promotes
digital transformation of the KYOWA EXEO Group. In the
global business, we will focus on fostering the development of local personnel while expanding business domains
especially in the APAC region, thereby developing a foundation for growth.
For M&As, as it has been the case in the past, when we
identify a deal from which we can anticipate synergy
effects to be generated, such as solidification andenhancement of the three business segments of theGroup, we will, without hesitation, discuss and adequately
evaluate it among the Group.

Distributing Returns to Shareholders
The KYOWA EXEO Group regards profit distribution toshareholders as an important managerial issue and has abasic policy of ensuring stable dividends, while considering business results, the future business environment andinvestments for ensuring financial strength and businessexpansion.
Regarding dividends, we employ a dividend on equity(DOE) of 3.5% as the benchmark percentage. Accordingly,
the annual dividend per share for fiscal 2019 was ¥80.
For fiscal 2020, based on the 3.5% DOE ratio, we plan
to increase the annual dividend per share by ¥2 and accordingly pay ¥82 (an interim dividend per share of ¥41
and a year-end dividend per share of ¥41).
Our policy concerning share buy-back is to conduct
buy-back flexibly, considering our cash flows and market
situations. For fiscal 2020, we will positively consider possible buy-back while paying attention to the impact of the
COVID-19 pandemic on our business, stock price and cash
flows.
With respect to return on equity (ROE) ratio and earningper share (EPS), we seek to improve them after their fall infiscal 2019 so as to increase profits and capital efficiency.
The COVID-1 9 pandemic has caused unprecedented
economic stagnation and setback. Facing up to this crisis,
we will enforce infection prevention and safety measures
for the employees of the Group and its subcontracting
companies. The KYOWA EXEO Group will work in unity
and make its utmost efforts to provide added value to its
shareholders and to steadily improve its performance forfiscal 2020. Continuous guidance and advice from shareholders would be appreciated.

Corporate Report 2020

12

The K YOWA EXEO Group’s M e diu m -Te rm M an age m e n t Pl an

Medium-Term Management Plan

Focus Group strengths
to take total solutions
to a new growth stage.
The Group developed a new Medium-Term Management Plan from FY2016.
In consideration of the progress of the plan through FY2018 and the integration of three companieson October 1, 2018
(C-Cube, Seibu Electric Industry and Nippon Dentsu), the current Medium-Term Management Plan was partiallyrevised.
To achieve this revised plan, the Group will continue to make full, group-wide efforts to make progress onits business,
establishing a management base that is resilient to changes in the operating environment.
Under this vision, we will push forward our various endeavors based on the following six basic strategies

Basic Policies (Changed)
1. Creation of group synergy with the three integrated companies
2. Acceleration of solution business and expansion of stock business
3. Building of construction formation for the full-scale launch of 5G
4. Development of overseas business with EXEO GLOBAL as a starting point
5. Improvement of productivity through the digitalization of operations and the fostering of highly-skilled IT human resources
6. Increase in shareholder value due to the improvement of capital efficiency

Performance Targets (consolidated)
Achievements and targets (Changed)

Net sales¥525.0 bn

Operating income¥32.0 bn (Operating income margin 6.6%)

ROE

7.8%

EPS

¥189

Business Portfolio
2015
SYSTEM-SOLUTIONS

13%

Telecommunication
Infrastructure

64%¥287.4bn

13

Achievements and targets (Changed)

50%

24%

Expansion of net sales
and business domains throughmanagement integration¥525.0bn

Urban
Infrastructure

Urban
Infrastructure

23%

26%

Corporate Report 2020

Telecommunication
Infrastructure

SYSTEM-SOLUTIONSInitiatives for Medium to Long-term Growth
Further enhance initiatives for expanding the solutions business and provide our own
products bundled with partners’ products to support customers’ digital transformation.
Challenge

IT-related

related

Improved efficiency ofIT operations

Automatize operations with the adoption ofService Now

Implementation of
COVID-19 measures

Realize teleworking using Microsoft Teams

Expand the use of cloudservices

Optimize IT infrastructure and strengthen security

2025 digital cliff Renewalof enterprise systems

Visualize and reform operation process with iGrafx

Transition to smart plants

Develop an optimal network with local 5G, EXBeacon, etc.

Business Activities

Operation-

Solution

Energy saving in buildings, Improve power supply efficiency with DC power
supply and take environmental measuresand environment
Urgent need of disasterprevention measures

Adopt disaster prevention IoT, including for waterlevel monitoring, and install mobile storage batteries*Microsoft, Office 365 and Microsoft Teams are registered trademarks or trademarks of Microsoft Corporation in the U.S. and other countries.

Initiatives for New Technologies and Domains
GIGA school

Service Now

Local 5G

The GIGA school program is afive-year program led by the Ministry of Education, Culture, Sports,
Science and Technology thatprovide every child receiving mandatory education with a computerand develop a high-speed network
environment for them.

Service Now is a U.S. cloudservice company providing an
operational platform that helps
increase companies’ productivity
in the aim of changing people’s
workstyles.

Local 5G is a wireless communication system in which a company
or a local government develops
and utilizes its own network in its
premises based on 5G technology.

Initiatives for Improved Productivity through Digitalization of Operational Processes
Promotion of workplace innovation

Promotion of system innovation

Improve on-site and desktop work processes

Review common and business systems,

Shift from analogue to digital operations

and share the systems among the Group

Improve workplace environment, etc.

Utilize AI, IoT and other new technologies
Develop a foundation for data analysis, etc.

Corporate Report 202014

Busi ness O verview

Tel e co mmu n i c at i on Ca rrierCore business covering all of JapanTo build a safe and secure ICT-based society, broadband services have expanded while technology has become increasingly
diverse and sophisticated. Using its long track record and standout technologies in the development of telecommunications
networks, Kyowa Exeo provides consistently high quality services on a nationwide scale for all types of telecommunications
equipment of telecom carriers, from planning and design to installation, operation and maintenance.

Access Networks fiber optic
cabling installation servic
Fiber optic access construction work is carried out to build fiber
optic networks that link regular homes and businesses with data
centers and social infrastructure such as mobile phone base stations. We contribute to the IoT era with a track record cultivatedsince our founding and world-class installation technologies thathave earned gold medals in five competitions.

Construction of network facilities
Kyowa Exeo designs, installs and maintains the infrastructure required for the networks operated mainly by telecom carrier customers, including servers, routers, switches, optical transmission
equipment and switching equipment. Beyond just physically building facilities, our comprehensive services extend to setting up thesoftware these networks need to run.

Electric Power Equipment
installation engineering service
We design and install facilities to supply electric power to network
equipment, primarily for telecom carriers. We also boast a trackrecord of leveraging our expertise in this area to build electric
power equipment for other customers including data centers, televisions and newspapers, and critical lifelines such as hospitals.

Construction of outdoor Mobile
Communication Base Station
Using highly specialized technologies related to base station construction, Kyowa Exeo provides a suite of services from negotiation and consulting over construction sites such as land andbuildings, to design and installation. We support the infrastructuredevelopment of mobile phone carriers by successfully completing
safe and high-quality work.

15

Corporate Report 2020

Construction of indoor Mobile
Communication Base Station
Kyowa Exeo also provides mobile solutions for large-scale redevelopment projects in urban areas. From high-rise office buildings
to large commercial facilities, subway lines and tunnels, we build
environments that enable comfortable mobile usage even in indoor facilities where it is difficult to receive radio signals from theoutside.

Base station equipment maintenance
We provide stable maintenance services for base stations tomaintain comfortable mobile network environments. In addition
Business Activities

to providing regular base station maintenance, in the event of adisaster we quickly dispatch personnel to sites to restore basestations, working day or night to prevent disruptions to the livesof local residents.

Philippines
MG Exeo Network is involved in the construction and maintenanceof fixed telephone and mobile telephone networks, the construction of mobile phone base stations and radar antennas and theconstruction of incidental facilities for urban infrastructure (railroads, roads). The company contributes to the local community
primarily through the development of mobile and access-oriented
telecommunications infrastructure for major telecom carriers in thePhilippines.

Singapore
In Singapore we contribute to the local community through a widearray of business activities from the installation of electrical andgeneral-purpose equipment for public, residential, commercial andindustrial facilities, to work on air conditioning and integrated facilities for data centers, buildings and other locations.

Orders received (¥Billion)

278.8
211.0

2017/3

198.1

2018/3228.9

2019/32020/3

Net sales (¥Billion)

258.2

2021/3(plan)

241.6
191.6

195.5

2017/3

2018/3

2019/3

268.5

262.5

2020/32021/3(plan)

Corporate Report 202016

Business Overview

U r b a n In fras tr u c t u re

Urban infrastructure business for realizing a society comfortable to live in
We provide an integrated service from constructing and maintaining a range of telecommunication infrastructures andelectric air-conditioning facilities to civil engineering designing and construction. Also, we provide renewable energy-related and other eco-technologies with reduced environmental loads in a comprehensive manner, from planning and proposal
to construction and operations.

CATV cabling installation service
Kyowa Exeo utilizes telecommunications construction technologies developed over many years to offer one-stop service for the various
types of construction that relate to cable television. More specifically, we offer design, installation, maintenance and sales support for everything from transmission line equipment to installing cabling in homes for joint reception facilities and cable TV operators. We also perform
construction work to upgrade facilities to coincide with he launch of new 4K and 8K broadcasts.

Railroad Communication Network
cabling installation service
We build and offer technical support for railroad communications
facilities. Specifically, we build facilities related to railroad communication networks, train radio systems and platform monitoring
systems, and provide sales and technical support.

Construction work to eliminate utility poles
We contribute to disaster resilient urban development through theintroduction of social infrastructure such as common cable ducts
for communications and electrical cabling to eliminate aboveground utility poles. In addition to proficiency with telecommunications equipment, we leverage our many years of experience,
proven track record and knowledge to provide proposals and carryout construction work to eliminate utility poles.

Installation, replacement or renewal of underground utilities with Trenchless Techniques
Using underground excavation technologies developed over many
years, we contribute to the improvement of lifeline facilities such as
water supply and sewerage systems. Even for locations where
roadway excavation is not possible, we build pipes and drains
while developing proposals to significantly reduce environmental
impact such as noise, vibrations and traffic restrictions.

Maintenance work on underground facilities
We apply special construction techniques to existing undergroundstructures and other aging facilities, upgrading them into soundstructures and contributing to updated social infrastructure. Specific activities include everything from tunnel repair and reinforcement work to small work on manholes and other equipment. The
use of W-RCS and other construction techniques shortens work
times and provides eco-friendly construction.

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Corporate Report 2020

Electrical facilities
Kyowa Exeo has been working in this field for more than a halfcentury. From energy-saving solutions to business continuity planning (BCP), we provide highly reliable facilities to meet ourcustomers’ every need.

Data centers
We provide total engineering solutions for general electrical, electric power and communications construction work related to data
centers. Specifically, our worldwide operations include high quality
and stable power supply facilities, advanced security to protect information systems with strict facility access control and surveillance inside and outside facilities, and backbone network facilities
securing communications environments for carriers.
Business Activities

Photovoltaic plants
Kyowa Exeo provides EPC (engineering, procurement and construction)
services for solar power plants, and also proposes and supplies enterprise solar power generating facilities for internal use in companies.
Specific services include support for the introduction of large-scale solar
power generation (mega-solar) utilizing the feed-in tariff scheme, andsupport for the rooftop or proximity installation of in-house solar power
generating equipment for industrial facilities and other buildings withelectric power supply needs. We offer comprehensive solutions that incorporate storage battery utilization and other elements.

Wastes treatment facilities
Leveraging proprietary technologies, we offer the design and construction of waste treatment facilities such as incinerators and recycling sites. Our incineration facilities are known for the priority theyplace on controlling the generation of harmful substances (soot anddust, hydrogen chloride, dioxins, etc.) through stable combustion.
Our recycling facilities crush, sort and compact large or noncombustible waste and recyclable waste to recover valuable materials.

Biomass boilers
We provide construction and maintenance services for various
biomass boilers that play a part in recycling systems. Specifically,
we take materials such as bark that have a high moisture content
and have been traditionally regarded as waste products and enable their utilization as biomass resources. These resources areused to produce steam, supply heated water, perform drying, supply heated water for air conditioning, and to operate high-efficiency
power generation systems.

Orders received (¥Billion)
153.0
123.3
72.7

2017/3

Net sales (¥Billion)

134.6

67.3

2019/3137.7

2020/32021/3(plan)

108.6

84.1

2018/3135.2

2020/32021/3(plan)

2017/3

74.5

2018/3

2019/3

Corporate Report 202018

Business Overview

S y st em S ol u t i on s

System solution businesses utilizing ICT
We offer total solutions utilizing ICT in the development, maintenance and operation cloud-based enterprise communications network systems and various enterprise systems for telecom carriers and companies in the finance andmanufacturing sectors.

Digital transformation (DX)We provide solutions to transform business processes, achieve
optimization and boost productivity to support continually changing value chains and enable learning through analysis from thecustomer perspective based on highly current data.

Next-generation office solutions
Working from a base of cloud services, we provide office environments allowing employees to work in comfort anytime andanywhere.

IT infrastructure and operational
optimization
We leverage the technologies and experience cultivated from designing, installing, operating and maintaining the telecommunications equipment of telecom carriers to provide high-quality services
across Japan.

Operational automation
We promote the automation and streamlining of operations in awide range of scenarios including IT operation, help desk services
and administrative desk work at companies, as well as reporting
during on-site work. These advancements enhance the quality ofservices and optimize costs.

Managed services (available 24/7)
We employ reliable technologies to watch over the IT equipment
and information of customers around the clock.

Cyber-security measures
We provide round-the-clock monitoring of customer assets, lives
and information with the use of reliable technology.

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Corporate Report 2020

Disaster countermeasures
Utilizing the technologies and experience we have cultivated intelecommunications equipment restoration work in conjunction
with telecom carriers in the wake of disasters, we have developed
and provide a range of ICT solutions for emergencies.

Urban infrastructure, environment
Through system solutions, we create a society that is considerableof people and the environment.

Energy conservation, energy optimization
From facility upgrade work based on energy conservation diagnoses to support for the use of subsidies, we help to reduce costs
Business Activities

by saving on energy consumption.

Supporting the operations of public
facilities and local governments
With disaster countermeasures, emergency alert and monitoring
systems and the utilization of systems in normal times, we cover
all of Japan with ICT solutions.

Facility solutions
We provide peace of mind, safety and convenience to hotels,
plants and elderly care facilities.

ThailandIn Thailand and Myanmar, we have developed businesses offering
ICT solutions, telecommunications equipment as well as planning,
sales, design, installation, development, retail and maintenance related to IP and the Internet.

Singapore
DeClout Group operating companies provide services including
planning, sales, installation, development and maintenance for IT
infrastructure using next-generation telecommunications technologies. Working from the Singapore base, coverage extends tovarious countries including Indonesia, Vietnam, Malaysia andCambodia.

Orders received (¥Billion)
124.5

Net sales (¥Billion)
132.2

42.7

2017/3

2018/3

2019/3124.8

2020/32021/3(plan)

73.4

72.0
40.2

120.7

2020/32021/3(plan)

39.7

42.5

2017/3

2018/3

2019/3

Corporate Report 202020

Special
Feature1

Selected as a Nadeshiko Brand
for the first time, in recognition of KYOWA
EXEO’s successful efforts in encouraging
women’s active participation in the workplace
KYOWA EXEO was, on March 3, 2020, selected as the Fiscal 2019
Nadeshiko Brand from among all companies listed on the Tokyo
Stock Exchange, in recognition of its successful efforts in encouraging women’s active participation in the workplace.
This demonstrates the recognition of a range of initiatives we havetaken in line with Diversity & Inclusion Declaration the top management have committed themselves to.
We, however, do not get comfortable with this result of having
been selected as a Nadeshiko Brand; we will continue to develop a
corporate culture of respect for diverse values and seek to realize
true diversity and inclusion, aiming to create new value and realize
sustainable growth.

We will develop from this achievement of having been selected as a Nadeshiko Brand and pursue true diversity and inclusion.
Selected as a Nadeshiko Brand based on multifaceted criteria
KYOWA EXEO was selected as the Fiscal 2019 Nadeshiko Brand under a program to recognize listed companies that have successfully encouraged
women’s active participation in the workplace. Nadeshiko Brands are selected by the Ministry of Economy, Infrastructure and Trade and the Tokyo
Stock Exchange based on multifaceted criteria, which include a Survey on Enterprises Encouraging Women’s Success in the Workplace, a questionnaire survey targeting all listed companies, improvement of ROE and other financial indicators, institutional reforms towards flexible workstyles, status
of initiatives to encourage women’s active participation in the workplace, such as training for promotion of diversity, and status of promotion of women
to managerial and executive positions.
Led by the Ministry of Economy, Infrastructure and Trade and the Tokyo Stock Exchange, the Nadeshiko Brand program began in 2012 to
introduce listed companies that are outstanding in encouraging women’s active participation in the workplace to investors who emphasize
medium to long-term improvement of corporate value, thereby encouraging investments in those companies and accelerating companies’
efforts to encourage women’s success in the workplace. In fiscal 2019, a total of 46 companies were selected from different sectors.

2015: Kurumin mark granted
The Kurumin mark program is a program where certification is granted by Minister of Health, Labour and Welfare to companies that support employees
in balancing work and child care. Companies that formulate a General Employers Action Plan based on the Act on Advancement of Measures to Support
Raising Next-Generation Children, achieve the goals set in the plan, and meet certain standards are certified as companies providing support to child care.

2016: Certified as an Eruboshi company
Based on the Act on Promotion of Women’s Participation and Advancement in the Workplace, the Eruboshi certification is granted by Minister of Health,Labour and Welfare to companies that are outstanding in terms of encouraging women’s participation in the workplace. Companies are selected from theperspective of whether they have in place working environments that encourage women to fully unleash their capabilities, on the basis of the following fivecriteria: hiring, continuous employment, workstyle including work hours, the ratio of women in managerial positions, and diverse career paths.

2018: Selected as one of the Top 100 Telework Pioneers by the Ministry of Internal Affairs and Communications
The Ministry of Internal Affairs and Communications select companies and organizations adopting and utilizing teleworking as Telework Pioneers and, fromamong them, name companies and organizations with adequate track records as Top 100 Telework Pioneers. The program’s certification and evaluation criteria include explicit inclusion of teleworking in work rules and regulations, guidelines and other internal rules, fulfillment of the standards concerning the scope ofteleworking employees and employees that are teleworking and frequency of teleworking, and systems and rules for preventing over work due to teleworking.

21

Corporate Report 2020

Steadily developing a corporate culture towards becoming an advanced company in promoting diversity
from home,” “working from satellite offices,” and “mobile
working”—and relevant labor management methods and relaxing the restrictions on working from home for employees
raising children, providing nursing care, and needing medical
treatment. We have also proactively participated in the Telework Days program led by the government, thereby encouraging our employees to telework. These initiatives have led
to KYOWA EXEO having been selected in November 2018
as one of the Top 100 Telework Pioneers of 2018 by the
Ministry of Internal Affairs and Communications.
The declaration of a state of emergency due to COVID-19
has forced many companies to rush to design teleworking
and working from home systems. We have been able to fully
address this situation only by relaxing the restrictions on
working from home under the existing teleworking system.
Thus having met the social standards of companies encouraging women’s active participation in the workplace, we
are now focusing on initiatives towards becoming among theadvanced companies in promoting diversity. The top-down
institutional reforms and proactive activities for encouraging
women’s active participation in the workplace and steadydevelopment of an adequate corporate culture have led tous having been selected as a Nadeshiko Brand.

Business Activities

We have promoted diversity and inclusion as part of ourmanagement strategy that aims to invigorate the organization. The encouragement of women’s active participation in
the workplace is a major initiative under this strategy. Initially,
we focused on fulfillment of social standards concerning
encouragement of women’s active participation in the workplace and workstyle reforms. As early initiatives in thisendeavor, we started to improve work environments to help
employees, both men and women, balance work and childcare and were granted the Kurumin mark in June 2015 by
Minister of Health, Labour and Welfare as a company providing support for child care, and were also granted in April
2016 the highest grade in the Eruboshi program that certifies
companies deemed exceptional in encouraging women’s
active participation in the workplace.
In October 2016, we established within Human Resources
Department a person in charge of promoting diversity, whichin 2017 was reorganized and developed into Diversity Promotion Office, strengthening our organization for promoting
diversity and inclusion in full scale.
Furthermore, in July 2018, we significantly upgraded theteleworking system we had adopted following the occurrenceof the Great East Japan Earthquake, defining three working
styles advocated by Japan Telework Association —“working

Diversity & Inclusion Declaration for having diverse individuals unleash their capabilities to the fullest
The Diversity & Inclusion Declaration, which represents the
top management’s commitment, has three themes of initiatives: cultivating a corporate culture that promotes diversity;
implementing workstyle reforms; and creating and supporting opportunities geared toward the success of a diverse
range of human resources.
Under the theme of cultivating a corporate culture that
promotes diversity, training to promote diversity has been
given since 2017 to executives and managers to raise theirawareness on the need to promote diversity as part of management strategies. Virtually all of the executives and managers have received the training.
Under the theme of implementing workstyle reforms, initiatives are being implemented under the lead of Digital Transformation Strategic Division, including adopting paperlessapplications and developing an attendance management
system for teleworking, in the aim of improving the work-lifebalance and increasing productivity through digital transformation, in addition to promoting teleworking.
In terms of creating and supporting opportunities geared
toward the success of a diverse range of human resources, inaddition to encouraging women’s active participation in theworkplace, from 2019, we have been strengthening programsfor encouraging diverse individuals’ involvement including by
setting up a regional key position system that allows employees raising children or providing nursing care to work in anarea of his/her choice, reviewing the treatment of employees
re-employed after retirement, and improving the system torehire former employees having left the company for suchreasons as childcare and nursing care.

Working Women’s Forum having received high commendation from students
Job-seeking students are also paying attention to our diversity and inclusion initiatives. In particular, women students
have expressed their high interest in diverse workstyles available at KYOWA EXEO. They are interested in knowing
whether the company allows them to work for many years,
return to work after childbirth and childcare, get promoted to
managerial positions, and pursue specialist positions.
KYOWA EXEO is a company attractive to them, enablingthem to select from diverse workstyles. A Working Women’s
Forum, a section in our recruitment webpage, was launchedwith a wish to highlight these characteristics of KYOWA
EXEO and have students hear the voices of women employees
attending the Forum from various positions and generations.
Comments received from the students who have visitedthe webpage are positive: “Diverse workstyles are available,”“I find the company friendly to women,” “I think I can demonstrate my ability,” “The company’s employees sound at hometo each other.” We believe that we were able to receive highcommendation from students for our friendly culture and established systems.
Having been selected as a Nadeshiko Brand was a pleasant achievement but is not an end goal. We will continue to
implement initiatives towards realizing true diversity and inclusion that leads to creation of innovation within our organization and make our utmost efforts to become a company
equivalent to the recognition as a Nadeshiko Brand and leadthe industry in this regard.

Corporate Report 202022

Special Feature

2

Innovations towards sustainable growth
beyond conventional concepts
IOWN Promotion Office established towards realizing a smart society by 2030
Innovative Optical and Wireless Network (IOWN) is a future telecommunication infrastructure that is expected to help realize asmarter world based on cutting-edge technologies. It mainly comprises three elements: All-Photonics Network where optical signals are used end-to-end in communications, not only on the network but in terminal-level processing; Digital Twin Computingthat enables sophisticated and real-time cyber interaction between individuals as well as between things; and Cognitive Foundationthat efficiently allocate a range of ICT resources. IOWN Promotion Office, a new organizational unit set up in April 2020, will
work on demonstration experiments and research concerning advanced technologies needed for realizing IOWN by 2030 with ahigh level of awareness, while cooperating with the NTT Group in its pre-IOWN project, etc.

Participating in IOWN Global Forum
towards realizing the IOWN concept

Kazuhiko Okubo, General Manager,
IOWN Promotion Office, ICT Solutions Headquarters

The internet, smartphones, and other latest technological innovations have drastically changed society. Society is increasingly being informatized and digital transformation is accelerated. Adoption of artificial intelligence (AI), the internetof things (IoT) and other technologies in day-to-day lives is expected to cause our lives to further change and to create
diverse values.
In such society, a huge volume of information will have to be processed, which is anticipated to exceed the capacity
limit of the existing information and telecommunication systems in terms of both transmission and processing. Furthermore, an expected explosive increase of devices connected to the network with the advancement of IoT will not only
cause the burden on network to increase but also lead to a drastic increase in electricity consumption, a major energy
issue on a global scale.
In response, the Innovative Optical and Wireless Network (IOWN) initiative has been proposed. This initiative seeks todevelop an end-to-end network and information processing infrastructure that enable high-speed and large-capacity optical communications and provision of a large volume of computing resources mainly utilizing innovative optical technologies. It thus utilizes cutting-edge technologies to push beyond the limit of conventional infrastructures and pursue
optimized relations between individuals and the whole based on all available information towards an affluent society that
can accept diversity.

IOWN structure envisioned by NTT

23

Corporate Report 2020

For the IOWN initiative, IOWN Global Forum (IOWN GF), an

pre-IOWN project and, in a medium to long term, conductorganization promoting IOWN worldwide, has been estab-demonstration experiments and research concerning ad-lished. IOWN GF is addressing a range of issues society isvanced technologies needed for the development of a futurefacing—such as ever-increasing electricity consumption andcommunication infrastructure, while participating in and mak-data transmission, storage, and processing needs—in terms

ing contributions to IOWN GF.

of both technologies and use cases, in cooperation with

With respect to members of IOWN Promotion Office, we

best-in-class partners from various industries. IOWN GF’s

are assigning selected young employees from a range of or-

Vision 2030 aims to remove obstacles to realizing a smarterganizational units, expecting them to function as key persons

world by developing a new communication infrastructure thattowards 2030 who will lead the creation of innovative futureenables provision of new services leveraging innovative tech-based on sustainable growth of the company. In regards tonologies and fosters sustainability.

the management structure, we pursue a flatter organization

Against this background, KYOWA EXEO set up IOWN Promotion Office in April 2 0 2 0 in the aim of developing a smart

emphasizing respect to individuals’ independence, smooth
information sharing, and prompt decision-making.
IOWN Promotion Office, as part of its raison d’etre, seeks

novations together with partners towards realizing IOWN by

to provide a noble cause for KYOWA EXEO to work exten-

2030. Major missions of IOWN Promotion Office are, in a shortsively on IOWN across its businesses in cooperation with its

term, to advance collaboration with the NTT Group in its

partners.

Business Activities

world following the modern society through unconventional in-

Towards becoming an ICT innovation andengineering company that is capable ofcompeting globally by 2030

Top management

Future leaders

Kazuhiko Okubo, General Manager
Hiroshi Sono, General Manager
Takashi Shimosato, General Manager

Keito Nishimiya, Manager
Atsushi Yamaguchi, Assistant Manager
Tsubasa Onodera

KYOWA EXEO has been involved in consideration of new

The NTT Group is also accelerating its initiatives. The

technologies and use cases from its early stage towards real-

Smart City Project it started with Las Vegas, the United

izing the IOWN concept. We are addressing IOWN’s elements-

States, in September 2018 is expanding in area beyond the

All-Photonics Network; Digital Twin Computing; and Cognitive

Innovation District that has been the project’s initial scope.

Foundation-based on advanced technological capabilities and

The solutions adopted in Las Vegas have been developed

expertise we have accumulated over many years.

based on NTT’s epoch-making cognitive foundation systems

There is a concern about the existing optical fibers reaching its capacity limit by the late 2020s. Research and devel-

and enable ICT resources—from devices, networks toclouds—to be created, managed, and operated remotely.

opment of a new optical fiber are underway towards

KYOWA EXEO is strengthening its cooperation with theovercoming the capacity limit issue by adopting space divi-

NTT Group based on its track record in development of net-sion multiplexing in addition to conventional wavelength divi-work controllers and automation of operations and hopes tosion multiplexing. The development of the new optical fiber

participate in the development of cognitive foundations andwill entail multiplication of cores and modes (types of opticalother elements.

signals). Therefore, commercial adoption of IOWN is antici-

Going forward, we will build cooperative relations withpated to necessitate sophisticated installation, operation,companies from different industries through the IOWN GF

and maintenance skills.

initiative and make positive contributions to society and the

Our technological capabilities including for trouble shooting, fusion splicing of optical fibers, and cabling are expected to be use-world as an ICT innovation and engineering company, flying
high in the future.

ful in these regards, which have been demonstrated, as an
example, in the World Skills Competition where our employees

Initiatives for realizing the IOWN concept

won five gold medals in the information network cabling category.

https://www.ntt.co.jp/journal/2001/JN20200134_h.html

Corporate Report 202024

Special Feature

3

Advancing and strengthening innovation

To serve as a driver for sustainable growth

Yasuo Otsubo, General Manager,
Innovation Promotion Office Director and Managing Operating Officer

The business environment surrounding us is changing, including the slowdown of economic growth along with the declining
population, shrinkage of core businesses, and the need to flexibly respond to the ever-changing times. Thus it is imperative for
us to address these changes strategically. Against this backdrop, we have set up Innovation Promotion Office, a new organizational unit, in the aim of establishing a new organizational operation base for continually creating innovations, fostering thedevelopment of human resources to boldly take on new challenges, and changing our corporate culture. Under this neworganizational structure, we will further strengthen our initiatives for promoting innovations to benefit all stakeholders.

Key points of innovations
To promote innovations, we will concurrently focus on incubation and corporate venturing (strategic collection andidentification of information).
Incubation necessitates self-started initiatives. We set up
a project around the theme proposed and with members
provided by an operating division to formulate strategy andevaluate the business.
For successful corporate venturing, it is imperative to increase venture presence in the community and strengthen
human networks. We are building relationships with major
players including in Silicon Valley to expand our activities.

In selecting and implementing a theme, we seek tostrengthen innovation while leveraging and further enhancing our core competence.
Incubation

Corporate venturing

Innovation theme

Acceleration program

Anticipated customers

Venture capital

Provision of value
to customers

Open innovation
community

Business modelCore competence(Technologies, safety and security, Group-wide capabilities, etc.)

Towards establishing a new organizational operating base
We are implementing the following four approaches to establishing a new organizational operating base to continue
activities for creating innovations:(1) A system to continue searching themes
Establish a channel to collect ideas and seeds for new
businesses as well as a process and a decision-making
body for raising and deciding on themes.
(2) A system to foster the development of human resources
Design an innovation talent pool, clearly positioning it inmembers’ career paths and establishing a process forselection, development, production, and evaluation.

(3) Institutionalization of promotion of innovations
Build explicit knowledge in the EXEO way by documenting the essence of actual themes being considered, using
it as training contents as well.
(4) Designing and establishment of organizational infrastructure
Improve KPIs/KGIs being set for innovation activities;
financial management; and cooperation between corporate functions and operating divisions.

Vision concerning creation of innovations
Conventionally, our business model has been essentiallyorder-driven. However, given the increasing uncertainties,
it is now important to continuously consider new businessmodels. The key to our future growth is to re-acknowledge
and dynamically combine the Group’s strengths to build
businesses in a timely manner.

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Corporate Report 2020

For creating innovations, we wish to realize a situation
where for example many employees including young ones
proactively raise their hands to get involved in new project
promotion or where new business ideas are proposed fromwithin the Group one after another. Furthermore, we seek
to develop a corporate culture that tolerate tries and errors
towards setting a mindset for taking new challenges without fearing failure.

Special Feature

4

Crisis Management Office

Establishment of Crisis Management Office
In the event of a natural disaster or contingency, it isimperative to prioritize the safety of employees and theirfamilies and to flexibly and promptly respond to customers’
requests from their perspectives, with each employee proactively acting and grasping the status of damages.
It is the KYOWA EXEO Group’s responsibility to establish
Group-wide readiness for future actions and formulate abusiness continuity plan in preparation for contingencies,
including large-scale natural disasters.

Business Activities

In response to the increasing new threats—including frequent
occurrences of severer typhoons, natural disasters associatedwith concentrated heavy rainfalls and COVID-19—and to many
international events including major sport events being held inTokyo, it is now more imperative than ever to strengthen the
KYOWA EXEO Group’s crisis management capabilities forsustaining its business. To this end, we set up a new organizational unit, Crisis Management Office, in April 2020 in the aim ofstrengthening our services and maintenance of facilities as wellas our responses to reputation risks associated with possible
cyber-attacks and pandemics.

Strengthening our crisis management
capabilities for sustaining our business and seeking to be a company
that supports social infrastructure

Kunimasa Yamaguchi, General Manager
Hisao Hosoi, Deputy General Manager
Hisako Tsukada, Assistant Manager

To be a company resilient to disasters
Disaster prevention measures are evolving along with theprogress of technologies and diversification of types of natural disasters. Yet, recent typhoons and heavy rains havecaused devastating damages in many regions.
We are reviewing our contingency operations and information exchange methods and clarifying response organizations
and functions by type of natural disasters to enable Groupwide responses and recovery activities and thereby to fulfill
our mission as a company that supports social infrastructure.
In regards to the business continuation program, formulating
an action plan is not an end goal. It is important to establish
readiness for implementing the action plan in normal times,
including by verifying its effectiveness and identifying needed
improvements through drills.

It is imperative to have manuals in place and conduct drills
to ensure every team’s contingency readiness including fortaking specific actions and measures and thereby to enable
them to take prompt initial responses immediately following
the occurrence of a disaster. Awareness and lessons gained
from drills coupled with disaster prevention measures basedon advanced technologies will help boost our agile response
capabilities.
With a sense of mission to serve as a company building
and maintaining social infrastructure, we will continue tolaunch full-scale Group-wide effort as One EXEO Team.

Corporate Report 2020

26

The K YOWA EXEO Group’s C orporate Val u e C re ation

C o rp o rate Val u e Creat ion P rocess

KYOWA EXEO will contribute to the resolution of social
issues through its businesses (technologies) and strive forsustainable growth with society.
The KYOWA EXEO Group’s corporate philosophy includes cultivating technological capabilities, seeking affluence andcontributing to society. Under this philosophy and with its technological capabilities as a driver of growth, the Group hasgrown to be the way it is now, while reflecting the needs of the times. The Group’s technological capabilities now contribute significantly to the resolution of social issues at home and abroad. The KYOWA EXEO Group will continue to address social issues and help solve them through its businesses, thereby achieving sustainable growth with society.

Major social issues:
Global warming
Labor shortage due to the decline
in domestic population
Energy problems
Urban concentration
Japan’s falling birthrate, superaging population
Cyber attacks, etc.

Telecom Carriers

Help realize a highly advanced ICT society through our Telecom
Carriers businessTelecom Carriers BusinessSocial issues to be solved through the Telecom Carriers business:

Continued upgrading of broadband telecommunications(LTE
LTE-Advanced
5G)
Facilitates the operations that address the reception difficulty for the 700MHz band
Expanding the demand for optical fiber access services through 4K and 8K
UHD (ultra-high definition) displays and the Hikari Collaboration

Urban infrastructure

Help realize a society where safety and security are ensured throughour urban infrastructure business
Urban infrastructure businessSocial issues to be solved through the urban infrastructure business:

Medium- to long-term businessenvironment:
Declining fixed-line phones
Labor shortage in the constructionindustry
Social needs toward the Tokyo
Olympics and Paralympics
Transition to the next-generation
wireless technology (5G)
Reinforcement of disastermanagement, etc.

Ensures a globally comparable level of landscape by promoting the undergrounding of overhead power lines
Expanding public investments for building national resilience (e.g., installation of monitoring cameras, refurbishment of highways)
Renewal of aging waste disposal plants
Renewable energy sources, including biomass

System Solutions

Help realize a society that is friendly to the environment and people
through our system solutions business
System Solutions BusinessSocial issues to be solved through the system solutions business:

Reform of industrial structures through the cloud, IoT, big data, etc.
Promotes the deepening of communication
Solutions for advanced security
ODA (Official Development Assistance)-related efforts to address the economic growth of Southeast Asia

Human Resources Are Our Chief Asset
KYOWA EXEO contributes to society through its high technological capabilities, which are underpinned by its excellent human resources.
Therefore, we regard human resources as a chief asset, and set as aprinciple that excellent human resources should be acquired and developed along with a conducive working environment for our employees.

27

Corporate Report 2020

Value offered for society:

Provisionof value to various
stakeholders
Society
Shareholders and investors

Convenient and affluent life
Safe and secure society
Green-rich EarthContribution to technological development
Creation of highly productive employment
opportunities
Support for restoration of disaster-afflicted
areas
More disaster-resilient infrastructure
Enhancement of energy efficiency

Customers

Sustainable
Corporate Value Creation

Employees

The KYOWA EXEO Group’s ESG Initiatives

Important issues for the
KYOWA EXEO Group toachieve sustainable growth

Developing humanresources / developing andhanding down technologies

KYOWA EXEO Group’s

Technological
Capabilities
Human
resources as achief asset

SpecialFeature1

Selected as a Nadeshiko
Brand for the first time

Go to P.21

SpecialFeature2

IOWN Promotion
Office established

Go to P.23

SpecialFeature3

Advancing andstrengthening innovation

Go to P.25

SpecialFeature4

Crisis Management
OfficeGo to P.26

Corporate Report 202028

T h e KYOWA EXEO G ro up’s Co rp orat e Va lue C re ati o n

S DGs In i ti ati ve s

KYOWA EXEO will contribute to the resolution of social issues
through its businesses and strive for sustainable growth with society.
In recent years, the roles to be undertaken by companies for international issues such as the preservation of the global environment and respect for human rights have become increasingly important. Taking such social trends into consideration, we
consider them to be important issues for the KYOWA EXEO Group in terms of the environment, society and governance(ESG). Moreover, bearing in mind the Sustainable Development Goals (SDGs), which were adopted by the United Nationsin 2015, we will perform corporate social responsibility (CSR) through our primary businesses and aim to create value jointlywith society and achieve sustainable growth.

1

Achievement of a safe and secure society through the infrastructure business
Achieve urban development that is safe and secure for everybody, as wellas contributing to building infrastructure that is resilient to natural disasters

Contributing to the improvement of various kinds of infrastructure
Improving information communications infrastructure
We provide consistent quality services from planning and design toconstruction, operation and maintenance for all types of communications equipment and facilities of telecom carriers, throughout the country based on our performance over the years and excellent
technologies.

Promoting “barrier-free”(Closer to communities and people by leveraging our technologicalcapabilities)
We aim to create and help realize an environment where anybody canlive safely by accommodating barrier-free conditions, the norm of thetimes. To help create welfare-based communities, we provide support
from plan proposal and design to manufacturing of equipment, construction and maintenance in aspects of both software and hardware.

Construction of an outdoor mobile phonebase station

Braille guide board with voice guidance inforeign languages

Access engineering-related work

Station guidance chime

Establishing a variety of infrastructure facilities and equipment mainly in Southeast Asia
We engage in the infrastructure facilities business mainly in Southeast Asia. We contribute to creating affluent communities by taking advantage of our sophisticated, Japanesequality technologies.

2

Optical access works (The Philippines)<MG EXEO NETWORK, INC.>

Achievement of an affluent society through the solution businessResolution of social issues and achievement of anaffluent society through IoT technology

Providing the environment for work style reforms
and productivity improvement
Japan now faces various difficult situations such as a reduction in the
productive-age population resulting from the declining birthrate and aging population, the simultaneous pursuit of raising children or taking careof the elderly and work style diversification. To address such difficult circumstances, we provide an environmentthat helps the interested parties tomitigate long working hours and improve operational efficiency.

Responding to food safety and food loss issues
We help hospitals to take risk countermeasures, including notificationon contraindications and allergies, and improve efficiency in handlingfood materials and cooking/catering operations by providing tailoredmenu management focusing on individual hospitalized patients. As forschool lunches, we provide relevant systems that excel in improving
the efficiency of office processing, safety and cost performance.

Office 365 implementation service

Providing an ICT environment for high-quality education
Realizing an ICT environment in the field of education has become an urgent task because the Ministry of Education, Culture, Sports, Science and Technology will introduce computer programming as
a compulsory subject effective from 2020. We provide an environment for everyone to receive affordable, quality ICT education regardless of gender.

29

Corporate Report 2020

NUTRIMATE

Provision of educational
solutions, lesson
assistance for teachers,
lecture on operation of ICT
equipment, etc.

Sustainable Development Goals (SDGs)
The SDGs listed in the 2030 Agenda for Sustainable Development are a set of international development goals from 2016 to 2030. The SDGs consist of 17 goals to realize a sustainable world.

3

Global environment conservation and achievement of a recycling-oriented society
Promotion of recycling and effective utilization of resources;
achievement of a society for the prevention of global warming

Increasing the ratio of renewable energy in theenergy mix
Biomass businessWe conduct field investigations, design and construction of wood biomass boilers to enhance the utilization of wood biomass energy, which
has drawn attention as a renewable source of energy.

Reducing hazardous chemical substances, as well
as mitigating air, water and soil pollution
Focusing attention on “water,” an essential element for our lives, andthe “waste” produced from our lives, we engage in the construction
and operation of water treatment facilities for domestic and industrial
wastewater and waste treatment facilities. Through the business, we
strive to reduce the discharge of hazardous chemical substances, aswell as the pollution of air, water and soil.

Biomass boiler in Hachimantai City

Water treatment plant

Waste treatment facilities operated by Kinoumi
Area Treatment Facilities Association

The KYOWA EXEO Group’s ESG Initiatives

Biomass boiler in Ritto City

Avoiding adverse effects on marine and coastal ecosystems
We have contributed considerably to constructing a social infrastructure of a new era
utilizing our long-cultivated underground civil engineering technology.
An example in this area is the horizontal directional drilling of submarine telecommunications/power cables, which can bypass a long distance of seabed at places such as
fishing grounds and coral reef sanctuaries, preventing damage caused by pipes or cables.
Horizontal Directional Drilling (Earth Shuttle)

4

Achievement of favorable communication with stakeholders
To meet the expectations of stakeholders, favorable communication
will be strengthened to resolve issues

With employees
Promoting diversity and work style reforms
The KYOWA EXEO Group aims to nurture a corporate culture that recognizes diverse values regardless of gender, nationality, or other features, in order to swiftlyand flexibly respond to diversifying customer needs and committing to businessdevelopment and improved performance. Accordingly, it promotes Group-wide diversity as part of its innovation and work style reforms. The Group’s initiatives
along these lines have been recognized or selected by the Ministry of Health, Labour and Welfare and other organizations.

Obtained the Kuruminmark for excellent
childraising support

Certified as an Eruboshi
company (highest grade) foradvanced women’s participation in the workplace

Included in the Top Hundred
Telework Pioneers by the
Ministry of Internal Affairs
and Communications

With society
Providing places for technical training
We provide affordable, quality technical training for everybody
regardless of gender or nationality.

Training center opened in the Philippines and scene of training

Corporate Report 2020

30

CSR Concept

Performing Corporate Social Responsibility (CSR)
through Its Business Activities
The KYOWA EXEO Group’s basic CSR policy is to materialize its corporate philosophy and perform its social responsibility through its daily business activities. The Group seriously addresses promoting corporate governance, compliance andrisk management and works to ensure sincere and highly transparent business operations to contribute to the sustainablegrowth of society.

Basic CSR Policy / CSR Promotion Systems
The corporate philosophy of the KYOWA EXEO Group,
which is the basic guideline for our corporate social responsibility, includes cultivating technological capabilities,
seeking affluence and contributing to society, and we work
to make integrity and transparency the fundamental
norms of our management. To achieve this corporate philosophy, we need to have engagement* with the stakeholders of the KYOWA EXEO Group, thereby extracting
issues to be solved to create a better society together. We
recognize that such efforts to achieve our corporate philosophy are indeed efforts toward CSR.

We also think that CSR is something that every member of the staff should put into practice throughout thebusiness process, rather than having a specific division responsible for CSR activities. Therefore, we launched the
CSR Committee chaired by the President and, under theCommittee, assigned a person in charge of CSR to every
department or office and to every Group company to promote CSR activities on a Group-wide basis.
*Engagement: to discuss stakeholders’ concerns, the effects of corporate activities on local communities and other various issues through opportunities created by the company’s
involvement with its stakeholders

CSR Structure of the KYOWA EXEO Group

Corporatephilosophy

Developmentof society

ENGINEERING
SOLUTIONS

Customers

Developmentof the KYOWA
EXEO GroupEngagement withstakeholders

Business partners

SYSTEM
SOLUTIONS

Guidelines for CSR activities

Shareholders and investors

Self-awareness of contribution to society as a company
Promotion of contribution to society and social contribution activities
through business activities
Securing safety and quality
Full information disclosure and communication
Adherence to corporate philosophy and respect for human rights
Environmental protection activities
Creation of workplaces conducive to satisfactory work

Employees

ComplianceCorporate governanceRisk management

Business operations with integrity and transparency as the norm

31

Corporate Report 2020

Group companies

Society/Environment

Continuing to be a Company Trusted by All Stakeholders
While actively striving to ensure information disclosure, the KYOWA EXEO Group will engage in proactive communication
with all our stakeholders to fulfill our corporate social responsibility and create a better society together.

Materiality Identification Process
The KYOWA EXEO Group has engaged in CSR activities centering on the seven core subjects set forth in the ISO26000 guidance on social responsibility. Based on these activities, to achieve further creation of value in cooperation with society and thesustainable growth of the KYOWA EXEO Group, we identified important ESG (environment, society and governance) subjects
and their materiality to the Group and its stakeholders through the process described below. We will continue to promote CSR
activities according to the materiality identified by implementing the PDCA (Plan-Do-Check-Act) cycle.
Extract issues to

1 be solved

Narrow down

2 the issues

Evaluate the issues andidentify materiality from the

3 standpoint of stakeholders

Review and4 approval by theand the GroupCSR Committee

CSR initiatives and issues
重要課題（マテリアリティ）

Addressing climate change

Reduce CO2 emissions (by 1% year over year)
Reduce electricity and gasoline consumption
Improve the adoption rate of environmentally friendly vehicles
Maintenance of EXEO’s forests (national forests)

Green procurement

Target ratio of purchasing green (eco-friendly) products: 65% or more

Promoting environmental
businesses

Utilization of green energy and forest preservation
Construction and operation of solar power generation and wood biomass facilities

Respect for human rights andprinciple that human resources
are our chief asset
Society (S)A businessorganization
harmoniously
coexisting withsociety through its
businesses

Securing safety and quality
Emphasis on return of profitsand communications
Work style reforms(worker-friendly working
environments included)
Contributions to society andlocal communities
Corporate governance

Governance (G)Business operations
with integrity andtransparency as thenorm

SDGs目標The KYOWA EXEO Group’s ESG Initiatives

Environment (E)Preserving the global
environment andestablishinga recycling-oriented
society

対応する

主な取り組みRespect for human rights and utilization of diversified human resources (Reinforcementof efforts to promote diversity)
Achievement of action plan based on the Act on Promotion of Women’s Participation andAdvancement in the Workplace: 424 or more female employees 25% increase in female workers
Active hiring of women: university graduate female hiring ratio of 25% or more
Active hiring of handicapped people, supporting steady employment and ensuring thatthe statutory employment rate is 2.3% or more
Elimination of serious accidents (personal injury and facility accidents) towards achieving
zero accidents
Ensure high awareness of quality and continue education
IR activities for fair and impartial information disclosure
Conducted business results presentations and IR meetings (230 meetings during the year)
Encouraged employees to take paid leave: Annual paid leave taken:
Average of 15.0 days of paid leave taken per person per year
Reduction of working hours based on cross-departmental structure, total annual working
hours of 2,050 hours per person on average
Promotion of social and community contribution activities
Responded to natural disasters by offering recovery and restoration efforts
Cleanup activities for regional communities, forest preservation efforts, and hands-on
learning opportunities for students and foreigners, etc.
Analyzing and evaluating the effectiveness of the Board of Directors
Compliance and updates in response to the Corporate Governance CodeCompliance

Education on and improving the awareness of laws and regulations and the Basic Ethicsof the KYOWA EXEO Group through compliance-promoting activities
Analyzing complaints, feedback, and whistleblowing reports
Analyzing the causes of recent conflicts and the measures taken to address them andspreading the results across the board to prevent the recurrence of such problems

Risk management(increasing information security
included)

Fostering information security literacy to eliminate information leaks
Ensuring information security and strengthening BCP
Enhancement of the internal controls of the Group companies

Fair and impartial transactions

Ensuring compliance with the procurement policy
Held meetings of the Procurement Council

Group governance

Sharing issues with the Group companies’ top executives and establishing opportunities
for dialogue
Corporate Report 202032

Invol vem ent i n the Environ m e n t

While Promoting Resources Recycling and Effective Utilizationof Resources, Developing Environment Preservation Activities
Toward the Prevention of Global Warming and Other Concerns
Environmental Management
The Group works to reduce the environmental impact accompanying business activities, and every employee actswith “what he/she can and he/she should do” in mind.

Basic Stance on Environment Preservation Activities
Coexistence with the global environment is a social responsibility of corporations and is a significant element increating a sustainable society.
The KYOWA EXEO Group engages in business activities as a company that offers customer-satisfying solutions
based on its core IC networking technologies. The Group
therefore pays careful attention to coordination with theenvironment in its business activities and endeavors to reduce the environmental impact that inevitably accompanies such activities.
Utilization of the Environment Management System
In promoting the environmental management system(ISO14001), of which certification has been continuously
obtained since May 2000, the Company works to reduce
the environmental impact on an ongoing basis throughcompanywide environment preservation activities according to the PDCA cycle. The Company identifies predictableenvironmental risks, which are determined depending on
onsite working environments, the location conditions of
the building and other factors, sets up specific environment-related targets and extensively applies them to all
the departments at the Head Office and branches.
Efforts towards Environment Preservation Activities
Environment preservation activities cannot be continued
without a strong awareness regarding the improvement ofenvironmental issues and persistent efforts. Meanwhile,
every employee of the Group is committed to environment
preservation activities with “what he/she can and he/sheshould do” in mind—always taking into account the effectsof business activities on global environment.
Fiscal 2019 Material Balance of the Company (Nonconsolidated)
To make environment-friendly business activities effective
and reduce the accompanying environmental load asmuch as possible, we strive to understand and analyze
the kinds of resources and energy sources that are used
and the environmental load that has been produced.

INPUT
Total energy input

183,468 GJ

Electric power purchased

13,880 MWh

Solar power generation electricity output

59 MWhCity gas

155 km3

LPG

962 kℓLight oil

181 kℓWater resource input

Environment-friendly business activities

Company cars

1 kℓ

65 km3

Head officeBusiness offices

33

Corporate Report 2020

Electricity generated and sold

24,630 MWh

Total greenhouse effect gas emissions 12,675 tons (CO2 conversion)

1 km3

Gasoline

Kerosene

OUTPUT

Electric power sourced

6,330 tons (CO2 conversion)

Fuel sourced

3,052 tons (CO2 conversion)

Waste sourced

3,275 tons (CO2 conversion)

Water resource sourced

17 tons (CO2 conversion)

Waste emissions and recycled volume36,133 tons

Industrial waste emissions

2,507 tons

Total recycled volume

33,627 tons

Total displacement

65 km3

Environmental business
The Company contributes to promoting a recycling-oriented society through involvement in the design, construction
and maintenance of renewable energy facilities, including
solar power generation facilities and biomass boilers.

By effectively recycling waste or appropriately disposingof waste if it is not recyclable, we will continue to contribute to preserving the global environment and a society
where we can live in security.

Western Japan Area

Solar power generation businessSolar power facilities of our own

Electricity generated

25

Solar power facilities of other companies

Panel installation capacity

394

GWh

(Electricity used by 5,320
households per year)

5

(976)

Eastern Japan Area

20

148

(4,344)

MW

246

Wood biomass business
Power generating output (MW)

Thermal output (MW)Output

7

2.5

MW

21

0.8

Energy recovery business

Recycling business

Throughput (ton/day)Throughput (ton/day)

747
451

MW

1.7

154

tons
per day296

The KYOWA EXEO Group’s ESG Initiatives

28

Outputtons
per day25

129

FY2017 Grand Prize for Excellence in Energy Efficiency and Conservation
Offering modern energy service that’s affordable and reliable
The Company and Tepco Customer Service Corporation Limited were awarded the FY2017 Grand Prize for
Excellence in Energy Efficiency and Conservation— Chairman Prize for The Energy Conservation Center,
Japan (ECCJ) in the Product Category & Business Model Category—for the energy-saving service using IoT
provided by electricity retailers.
This prize recognized the TCS’s Energy Management Service, an energy conservation service via controlof air-conditioning equipment, which helps solve common issues when small- to medium-sized businessproprietors introduce energy conservation measures—maintaining comfort, easy on-site operation and less barriers for introduction, as well as the Company’s cloud-type platform technology for energy control, which enabled the TCS’s Energy
Management Service.

Corporate Report 202034

Invo l ve m e n t i n t he E nvironm ent

Initiatives Regarding the Prevention of Global Warming
As for the reduction of power consumption, power-saving
measures for equipment are taken including the conversion of electric appliances to energy-saving type ones andthe enhanced use of inverters for diverse equipment. In
addition, companywide initiatives mainly taken by the responsible person on each floor include setting the energysaving mode for PCs, removing unnecessary lighting
devices, turning off lights during lunchtime hours and setting appropriate temperatures for air conditioners.
Moreover, every employee aggressively promotes electricity-saving activity in his/her daily actions.

Promotion of Recycling and Effective Utilization of Resources
The KYOWA EXEO Group proactively addresses abating
volumes and the appropriate treatment of waste, as wellas promoting its reuse as recycled resources in the pursuitof reduced waste volume and complete recycling. The
waste category covered by this initiative is industrial waste
produced from the construction work of information andcommunication facilities and general waste discharged
from offices.
Asphalt, concrete debris, electric wire trash, etc., areproperly treated via a sorting control for further reuse or
recycling. Moreover, ongoing initiatives include the enhanced use of proper amounts for work materials, requests for collection of packaging materials to suppliers
and guidance on the necessary steps to workers for recycling via onsite patrols.

Initiatives toward Prevention of Global Warming and Preservation of Biodiversity
EXEO’s forests (Mori), which extending
nationwide, are groomed by
employees’ hands
Embracing the opportunity of the Company’s
50th anniversary of its foundation, forest
preservation activity started and the Company
continues to maintain government-owned
forests for up to 60 years.

35

Seizing the opportunity of the 50th anniversary of its foundation, the Company became strongly
conscious of the prevention of global warming and contributing to local communities. Giving its
approval to the maintenance enhancement campaign of forest resources, which was then promoted by the Forestry Agency, the Company entered into a profit-sharing afforestation contract* with the Hokkaido, Tohoku, Kansai, Kyushu, Chugoku and Kyushu regional forest offices
regarding so-called corporate forests. The Company named the forests “EXEO’s forests” andcontinues their maintenance activity, which also serves as an occasion for social assembly andrecreation among employees and their families.
*Profit-sharing afforestation contract: Agreement on the maintenance activities of government-owned forests(natural forests), which are premised on there being no logging.

Kansai Branch

Kyusyu Branch

Tohoku Branch

EXEO’s forests (Mori)
Carried out cleanup activities

EXEO’s forests (Mori)
Carried out environmental conservation activities

Fiscal 2019 EXEO’s forests (Mori)
Carried out conservation activities– Deepening friendship under the autumn leaves –– Protecting our beautiful forests –– Lustrous trees showing signs of winter –On November 16, 47 employees andtheir family members participated in acleanup of the EXEO’s forests in Nishinomiya City, Hyogo Prefecture.
They picked up trash and removed
weeds along the mountain roads, andthen enjoyed a lunch while deepening
friendship. The day was blessed withfine weather and the participants hadenjoyable time while taking in the autumn leaves.
We will continue to carry out these
forest cleanup activities to contribute to
the local community and to promote
friendship among employees.

On October 16, a total of 10 people
took part in environmental conservation
activities in the EXEO’s forests on Mt.
Gankai, which is located in Uto City,
Kumamoto Prefecture.
As in past years, we carried out activities such as cutting vines and cleaning up the mountain trails, and we wereblessed with good, crisp autumn
weather. Everyone who participatedworked very efficiently.
We will continue to proactively engage in environmental conservation activities going forward.

We carried out our annual EXEO’s forests conservation activities on November 2, just as the trees were losing theirleaves to the autumn breeze and you
could feel the richness of autumn in thebeautifully colored Shiroishi Zao area.
A total of 18 participants from EXEO
worked tirelessly until the end of theday, led by a leader for the area towhich they had been assigned to weedout the underbrush, clean up walking
trails, and reconfirm the boundaries.

Corporate Report 2020

Initiatives in response to disasters

Restoration work in Chiba Prefecture
following Typhoon No. 15

Access Engineering Department

Established a new relief route forcommunication infrastructure disrupted bylandslides and achieved early restoration
Typhoon No. 15 hit the Boso Peninsula in Chiba Prefecture
on September 9, 2019 and caused many landslides in themountainous areas. The extensive damage to houses andother parts of the lifeline such as electricity and watersupply caused by landslides and fallen trees is still fresh inpeople’s minds.
Inspections after the disaster revealed that roads were
cut off in many places by landslides and fallen trees, which
also caused extensive damage to communicationequipment. While the Japanese Self-Defense Forces were
working hard to first open the roads and then restore
power, Futtsu City requested that communications be
restored in isolated villages, and KYOWA EXEO was
assigned to the task.

Tokyo
Chiba
Site of the restoration work
Futtsu City

The Ministry of Land, Infrastructure, Transport andTourism explained that it would take a long time to restore
a road that had been damaged by landslides, and it was
decided that a new relief route were to be constructed inorder to achieve early restoration.
However, because there were small-scale landslides
along the new relief route as well, the restoration work
began with the city collecting the soil and restoring theroad, followed by restoration by Tepco and then NTT.
Thanks to the efforts of the Group companies involved in
the construction work as “Team EXEO,” the restoration
work proceeded smoothly, and it was possible to quickly
restore communication infrastructure in the isolated
villages.

The KYOWA EXEO Group’s ESG Initiatives

Downed utility poles and hanging cables due to landslideRoad blockage due to fallen trees

Cable cut by a fallen tree

A comment from Construction Manager Iwabuchi

Studying the new relief route in advance, we were able to respond to the request for early restoration.
The affected area was on high groundwith a mobile phone base station, so we
had to restore the communication lines
as soon as possible. Although the relief
route which we newly considered was
also in poor condition due to damage atseveral locations and we had difficulty in logging work as
the route passed through the mountain forests, we wereable to respond quickly to requests from the government
and mobile phone companies for help.

While we worked on the restoration of damaged areas
including landslides caused by Typhoon No. 15 at this time,some areas were damaged again by the subsequent Typhoon
No. 19. This experience taught us that in consideration of therisk of natural disasters, which have been increasing in recent
years, it is necessary to achieve early restoration by flexibly
making adjustments such as establishing a different routerather than using the same single route to prevent repeateddamage.

Corporate Report 202036

Invo l ve m e n t i n t he E nvironm ent

S o c i al C on t ri bu t i on Act iv it ies
Chugoku
BranchProtecting our beautiful river environment

Participation in the Clean Ota River simultaneous cleanup project

On July 28, the Chugoku Branch participated ina cleanup of the Ota River, a river that represents Hiroshima Prefecture.
With the aim of creating a beautiful river environment, residents of all cities and towns in the
Ota River basin participate in this annual cleanup every July, which is sponsored by Hiroshima
City.
The Chugoku Branch, located near the Ota
River, participates in this event every year, together with people from partner companies.
This year, a total of 55 people joined local residents in picking up empty cans and other trashfrom the river.
Group photo after collecting the trash

Kyoei Densetsu
Kogyo Corp.

Litter around the park picked up by 41 people

Participated in the Osaka Marathon Cleanup Campaign

On November 28, a total of 41 employees from
Kyoei Densetsu Kogyo participated in a cleanup
activity in nearby Nakaoe Park as part of the
Osaka Marathon Cleanup Campaign.
Empty cans and cigarette butts litteredaround the park were picked up to welcome themany people from Japan and abroad who will
be participating in the Osaka Marathon with aclean city.
This year was the eighth time we have participated in this event, and we will continue to takean active role in making Osaka a cleaner city
going forward.
Making a small contribution to a clean city

Daiwa Densetsu
Corporation

Giving back to the areas affected by Typhoon No. 19

Dispatching volunteers to Marumori-machi, Miyagi Prefecture, where employees live

Typhoon No. 19 that occurred on October 12 affected many
areas, particularly on the Pacific side of the Tohoku region.
Because many telecommunication facilities including thoseof NTT East were damaged, Daiwa and Sigmax cooperated
together in restoration work, including temporary measures.
During the weekdays between November 7 and 29, whenvolunteers were scarce, employees of Daiwa, Sigmax, andEXEO Tohoku Branch were dispatched to Marumori-machi
and other disaster-struck areas in Miyagi Prefecture, where
our employees live and receive constant support. We pray forthe earliest possible recovery of the affected areas.

Removing rice straw washed ashore by a flood in front of the volunteer
center37

Corporate Report 2020

Shikoku
BranchBeautifully arranging the huge Zenigata Sunae (coin-shaped sand drawing)

Participation in sand arrangement for Kanei Tsuho (old time coin)

On November 17, Shikoku Branch and Exeo Mobile participated in a sand arrangement event for the Kanei Tsuho sandcoin drawing, Zenigata Sunae, which is a sightseeing spot in
Kan-onji City, Kagawa Prefecture.
The sand drawing measures 122 meters from east to west,
90 meters from north to south and 345 meters in circumference, and it is said to help people live long and healthy lives
with no shortage of money.
Participants including many volunteers from the local community enjoyed the fine weather on the day of the event toenter the area of Kanei Tsuho sand drawing, which is usuallyclosed to the public, and arranged the sand drawing beautifully using shovels and rakes.
Sand arrangement using shovels

TohokuBranchWorking against littering

River basin cleanup in Sendai City

KyushuBranchThe KYOWA EXEO Group’s ESG Initiatives

On September 28, under clear and warm autumn skies before the cold weather of Tohoku region sets in, 15 participants
cleaned up the basin of the Hirose River that runs through thecity of Sendai. This time, we changed from our familiar location to a bush zone, and pushed through the bushes to find a
lot of plastic bottles and other beverage waste in hidden corners. The Tohoku Branch will continue to clean up the river
basin until there is no more trash to pick up, and we will also
raise awareness in the community about not littering on theroad.

Cleaning up a pine forest in the clear autumn weather
Participated in Itoshima Pine Forest Restoration and Conservation Activity
sponsored by the Seibu Electric Industry group for the first time

On November 9, we participated in the Itoshima
Pine Forest Restoration and Conservation Activity sponsored by Seibu Electric Industry in
Itoshima City, Fukuoka Prefecture, together withGroup companies in the Kyushu area.
A total of about 400 people participated inthis event and cleaned up the pine forest in theclear autumn weather. Everyone who participated worked very efficiently.
We will continue to actively engage in environmental protection activities and deepen ourfriendships within the Group through such activities in the future.

Corporate Report 202038

Soci al Init iati ves

Stakeholder Relations

Aiming to be a company that can contribute to society andis trusted by many of its stakeholders, we will contribute to
the realization of a sustainable society by interacting with
our stakeholders through a variety of activities.
Re-examining the Basics of a Safety and Quality-Oriented Culture

Koji Suzuki
General Manager, Safety and Quality Headquarters

To provide our customers with high-quality products swiftly and safely, it isimportant that the entire KYOWA EXEO Group understands the importanceof ensuring safety and quality, and that we carry out construction in a functional manner. We have been working since 2001 to develop construction
services that take safety and quality into account. In 2016, to once again return to the essence of the Group’s safety and quality-oriented culture, we
set our commitment to “return to the basics of a safety and quality-oriented
culture” and are working to create a system that will enable each and every
employee to practice basic actions while understanding the importance ofsafety and quality for the future.

Initiatives for a Safety and Quality-Oriented Culture
Because safety and quality assurance in the constructionof information and telecommunications facilities – theKYOWA EXEO Group’s core competency – is of the utmost importance, we have been working to shift from establishing a safety and quality-oriented culture topenetrating a safety and quality-oriented culture, so thateach and every employee fully understands its importance,
and that this becomes a natural part of their actions. Since

Initiatives
2001“Create a safety and quality-oriented culture” slogan formulated

2003

Started operation of “Aruaru-kun”

2004

Introduced the “EXEO Solution Proposal” system

2007“Promote a safety and quality-oriented culture”
three-year slogan formulated

2008“Ironclad Safety Rules” formulated

2009“Ironclad Safety Rules” extended to thetelecommunications construction industry

2010“Establish a safety and quality-oriented culture”
three-year slogan formulated

2012“Safety Operations” initiated(safety retraining rules)

2013“Penetrate a safety and quality-oriented culture”
three-year slogan formulated

2016“Return to the basics of a safety and quality-oriented
culture” five-year slogan formulated

2018

Third year of five-year plan to “return to the basics of a safety
and quality-oriented culture” with “absolute safety” as slogan

2020

Final fiscal year of the five-year plan
The keyword is “thorough”

1
2

3

2016, we have been promoting the five-year slogan “returnto the basics of a safety and quality-oriented culture,” and4

this fiscal year marks the final year of this initiative.

Safety and quality-oriented
culture promotion poster

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Corporate Report 2020

5

6

1

Human Error Countermeasures(Aruaru-kun)

In 2003, we introduced an information-gathering system called “Aruaru-kun”
with the aim of predicting and taking countermeasures for disasters that may
occur in the future, as well as raising safety awareness among front-line workers, by collecting near-miss experiences and analyzing them to obtain further
universalized hazard information. Workers share information about their own experiences by reporting near-miss incidents during work to all employees, reminding each other to prevent the same human errors from occurring.
In addition, the system was updated in 2017 to make it more convenient,which has led to active registrations.

5

In order to prevent accidents and improve the safety and quality of construction
work, in 2012, we introduced an exit rule that requires a work team to stop work
if a safety deficiency is identified during construction. In 2016, placing a further
emphasis on educating employees to prevent the recurrence of safety deficiencies, a curriculum was formulated and revised as a retraining rule. These initiatives have increased the alertness of management and construction workers,
and are steadily proving effective in preventing accidents from occurring.

6
2

Introduction of the EXEO Solution
Proposal (ESP) System

We have introduced the EXEO Solution Proposal (ESP) system with the goal of
helping to propel EXEO solutions forward. We actively seek out proposals that do
not rely on current work practices, but that change our perspective and ideas, aswell as proposals based on new ideas that go beyond the scope of our current
work, and receive more than 10,000 proposals a year regarding improvements,
efficiency, safety and quality enhancements, and more.
In addition, we widely internally publicize excellent proposals out of the ESP
proposals, which are internal improvement proposal activities, and the VE proposals, which are customer improvement proposal activities. While sharing suchproposals within the Company, we hold an annual “ESP/VE proposal presentation
meeting” to further invigorate our improvement proposal activities.

“Ironclad Safety Rules” Formulated

In 2008, in order to eliminate accidents such as personal and equipment accidents, we formulated the “Ironclad Safety Rules” mainly based on lessons
learned from past incidents. We are sharing and raising awareness of the 20 articles, bearing in mind that “everyone must comply without exception.”In this fiscal year, the industry as a whole will begin preparation for revising
the cardinal rules. The revised rules will incorporate the new obligation to havehigh-place workers put on personal fall-arrest systems (full harness) as well aschanges in construction methods and safety measures. We will revise the rules
so that it will be more useful for providing worksite safety guidance.

4

Stopping at the First Sign of Danger

An accident in which a worker was injured when he slipped and fell off a four
meter high wet roof while working led to a proposal for a system of “stopping at
the first sign of danger” during construction at customer premises as an “Ironclad
Safety Rule,” which was implemented in 2009 as a joint effort with our customers and the telecommunications construction industry. At present, we are implementing the “Kicchiri KY / Big Relief” campaign to ensure safety by implementing
hazard prediction (kiken yochi (KY) in Japanese) activities at each work site inadvance, and the “Stop & Look” campaign to stop in between jobs and resolve
any questions before proceeding.

“Thorough” is the Keyword to
Prevent Accidents

As we work to instill the existing measures by steadily implementing them, in fiscal 2020 we will narrow down the list of accidents based on the characteristic
trends of accidents that occurred in the previous fiscal year and implement thorough accident prevention measures for those accidents that have been narrowed
down. Specifically, we will focus efforts on prevention of personal injury accidents in the areas of crashes and falls, tumbles, heavy machinery, coming incontact with buried objects, and third parties involvement, as well as equipment
accidents in the areas of faulty connections, faulty disconnections or withdrawal,
faulty removals, dropped parts, and cable damage. Furthermore, we will work on
preventing information accidents by focusing on the loss of paper information. To
establish and promote accident-prevention measures, it is necessary to raise theawareness of each and every one of our construction workers through a dialogueof questions to ask whether safety really is sufficient and why safety measures
are needed, as well as praise. By doing so, we will work on practicing a cultureof safety and quality, in which individuals voluntarily care for the safety of themselves and others, while also following up with those who have weak or low
safety literacy (awareness and behavior).

The KYOWA EXEO Group’s ESG Initiatives

3

From Post-Measures to Pre-Measures

2020 ESP/VE Proposal Presentation Meeting Held
The ESP/VE proposal presentation meeting was held on June 11,2020. Twelve excellent proposals recommended by departments andoffices out of the fiscal 2019 proposals were presented and judged
by committee members on the basis of their “ideas,” “effectiveness”
and “development,” and selected for awards of excellence and outstanding performance.
The contents of the proposals ranged from improvements in construction processes, quality assurance, and systems, to sales, designs/estimating, and common office systems, which not only
improved operational efficiency and reduced costs, but also resulted
in tools and systems that were beneficial to customers and reduced
accident risks, among other effects.

Note: Photo shows the 2019 presentation meeting

Corporate Report 202040

S o c i a l In i t i at i ves

Proactive information disclosure

Events and seminars

Corporate website renewed

Attended the 24th Disaster Management Expo as an exhibitor

In March 2020, we renewed our corporate website, mak-At the Disaster Management Expo held on February 6 anding it easier for users to view and understand. We refur-

7, 2020 at Pacifico Yokohama, our ICT Solutions Head-bished its design and contents and it is now designed toquarters and Business Solutions Headquarters jointly pre-be comfortably viewed from smartphones and tablets.

sented our products, Survival Power Source, Multi

The website’s top page shows our motto, Engineering

Charger, Disaster and Community Information Distribution

for Fusion-connecting the societies with engineering-,

System for Municipalities, and Disaster Management Sup-

conveying the message that our engineering supports

port System for Municipalities.

connections of cities, people and products through ourthree business domains: telecommunication carriers, urban infrastructure, and system solutions.
Moreover, as part of our sustainability-related activities,
we proactively disclose our initiatives for realizing sustainable business, CSR ideas, environment, social and governance (ESG) initiatives, disaster mitigation measures, andour policy for promoting SDGs and diversity on our corporate website and in the Exeo Report (integrated report).
We also seek to timely provide information for shareholders and investors.

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Corporate Report 2020

Survival Power Source (portable lithium ion battery)
Medium-capacity lithium ion battery that can supply sufficient electricity in emergency (Maximum capacity: 4.4 kWh;maximum power output: 1 kW).
Multi Charger (battery charger used in disastermanagement)
Able to charge ten smartphones simultaneously at, for example, disaster evacuation centers, enabling provision of
charging service when the degree of people concentration ishigh immediately following the occurrence of a disaster.
Information Distribution System for Municipalities
Enables communication of disaster information via a rangeof media such as the municipal government’s disaster management wireless radio communication, smartphone apps
and emails. At ordinary times, it can be used for providing
information on the municipal government’s activities andcommunity information such as garbage collection schedule.
Disaster Management Support System for Municipalities(EXRescue)
A one-stop information sharing tool that supports a wide
range of disaster management operations by aggregatingnecessary information on a map and helping organizations
expedite information exchange.

Attended the 8th International Wind Expo as an exhibitor

Attended the International Modern Hospital Show as an exhibitor

Our Civil Engineering Headquarters attended the Interna-

Our group company Daiwa Densetsu Corporation attend-

tional Wind Expo held between February 26 and 28, 2020

ed the International Modern Hospital Show held at Tokyoat Tokyo Big Site and presented its arc propulsion method,

Big Site between July 17 and 19, 2019 as an exhibitor andEarth Shuttle Method, showing employees’ handmade

presented its food and nutrition service management sys-models and part of equipment used for the Earth Shuttle

tem NUTRIMATE.

Method.
Arc propulsion method: Earth Shuttle Method
Earth Shuttle Method is a propulsion method that securespipe diameters necessary for telecommunication and electricity landing pipes, pipes for high-tension cables for offshore wind power facilities, running water supply pipes, andseawater intake pipes while preserving submarine nature. It
is the most optimal method to be applied in fishing grounds,
nature conservation areas of coral reefs, and areas where
ocean waves could damage pipes and cables.

Food and nutrition service management system: NUTRIMATENUTRIMATE, a management system that provides comprehensive support for food and nutrition service operations at
hospitals and nursing care facilities, including recipe management, menu preparation, ingredient order placement and acceptance, cooking, serving, and various reporting operations.

The KYOWA EXEO Group’s ESG Initiatives

Toru Ebihara, an employee of KYOWA EXEO, wins a gold medal in the information network cabling category
at the 57th National Skills Competition held in commemoration of the enthronement of the emperor
Toru Ebihara, an employee of KYOWA EXEO, won a gold medal in the information network cabling category at the 57th National Skills Competition held
between November 15 and 18, 2019 in Aichi Prefecture. The competition
was jointly hosted by the Ministry of Health, Labour and Welfare, Japan Vocational Ability Development Association, and Aichi Prefecture.
In the information network cabling category, the participants spend approx. eight hours in two days to compete in various cabling tasks—including
trouble shooting, competition on the speed of optical fiber fusion splicing,
cabling inside a hypothetical building—where they must complete each task within a designated timeframe.
Mr. Ebihara fully demonstrated his proficient skills polished through everyday work and the results of rigorous training he had gone through towards this competition despite pressure from competition and other participants’ skills improving every year.

Corporate Report 202042

S o c i a l In i t i at i ves

Group Company Relations
Aiming for a Functionally Effective Team EXEO
In order to maximize the value of the KYOWA EXEO Group, we consider it a
top priority issue to spread the Group’s corporate philosophy, ensure thatGroup companies function efficiently together, and build a Team EXEO thatallows the employees of each company to do their jobs with a sense of fulfillment, and are working on a variety of measures to that end. As part of ourefforts, we are responding to the expansion of new businesses while promoting the reorganization of Group companies to improve quality and efficiency, as well as ensuring financial strength. Going forward, we willcontinue to promote a variety of measures for the entire Group.

Yuichi Koyama
Director and Managing Operating Officer, General Manager, Group Business Development Division

For the Evolving Team EXEO

The Role of Group Companies within Team EXEO

Our top priority issue is to build a new Team EXEO where
all employees of the KYOWA EXEO Group companies,
who contribute to improving the value of the Group on adaily basis, can perform their jobs with a sense of fulfillment.
In addition to taking on new business challenges andresponding to changes in business conditions, we will also
work on new Group issues, such as workstyle reforms anddiversity promotion, as well as promoting the developmentof human resources for the future of Team EXEO.

We have a high level of expertise in our 122 Group companies (88 consolidated subsidiaries, 15 non-consolidated
subsidiaries and 1 9 affiliates), including overseas companies, and we strive to respond to the various needs of ourcustomers with the capabilities of the entire Group while
enhancing the strengths of each company.

Building a Strong Team EXEO
Based on the Group’s common operational measures, inaddition to playing the role of a “go-between” for spreading the excellent initiatives of our Group companies, wewill further promote the establishment of a strong Team
EXEO that takes on the challenge of new businesses andresponds to changes.

Customers

Team EXEO

Services

A newchallenge

KYOWA EXEO
122 Group companies

KYOWA
EXEO
Group
operations

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Corporate Report 2020

Efficiency

Business system unification

System EX

Management
supportFundraising support

CMS

Human resources
development

Personnel exchanges

Training by secondment

Technologicalcapability

Promotion of qualification acquisition

Group SNS

Workplaceenvironment

Promoting diversity

Help desk Utilizing human resources

Financial strengthening support

Workstyle reforms

Shared services

DX

Conferences

Business Partner Relations
Aiming for Further Win-Win Relationships with Our Business Partners
In order for the KYOWA EXEO Group to provide its customers with highquality deliverables (products) without delay, it is essential to work with bothconstruction companies and material procurement companies that delivermaterials in a timely manner. In order to maintain a relationship of trust withcontact persons at our business partner companies and to facilitate smoothbusiness operations, we will provide a forum for delivering information andbusiness proposals, as well as exchanging opinions, with the aim of achieving creative mutual prosperity.
Yoshinori Fujiwara
Operating Officer and General Manager, Procurement Division

Policy Regarding Procurement
Basic Approach to Procurement
Acquisition, repair andretirement of noncurrent assets,
subcontracting contracts,
and procurementof construction materials

Material
manufacturers

Procurement
Council

Leasingcompanies

Purchase at theappropriate priceTransparency in procurement
operations and proper principles
of competition

1 Ensure the quality of fair procurement operations

through fair and equitable trade and compliance(compliance with relevant laws and regulations)

2 C o n d u c t p ro c u re m e n t

Green Procurement Initiatives
We have been promoting the introduction of eco-friendly
vehicles. Since the Great East Japan Earthquake, we havebeen selecting manufacturers with environmental conservation in mind, such as in response to fuel shortages during emergencies and in reducing CO2 emissions.
We will also add eco-friendly vehicles to our lineup of
construction vehicles to further increase the introduction
rate of eco-friendly vehicles.
The KYOWA EXEO Group has been working on green
procurement since 2007 in accordance with the Green
Procurement Guidelines, and is striving to purchase environmentally friendly products that have acquired the EcoMark, GPN listing, the Act on Promoting Green Procurement and other such marks.
In addition, due to the large number of PCs ordered, we
have been recommending the use of environmentallyfriendly PCs since fiscal 2017, and in fiscal 2018, almost
all of our internal PCs became eco-certified models.
Going forward, in addition to PCs, the entire Group willcontinue to actively pursue the purchase of eco-friendly
products.

The KYOWA EXEO Group’s ESG Initiatives

Procurement Policy

3 Conduct logistics and procurement

operations that accurately
respond to customer needs

operations as a support organizationfor engineering departments

Eco-Cars Introduced
Non-eco-cars(Cars)

Eco-cars
1,106 cars

1,200
900

62%

65%

70%
600
300
0

30%

35%

2017

2018

38%

2019

Eco-Products (Office Supplies) Purchased
(%)
80
70
60

62.0

63.0

63.4

2017

2018

2019

55.8

50
40

2016

*Figures do not include PCs.

Corporate Report 202044

S o c i a l In i t i at i ves

Shareholder and Stakeholder Relations
Aiming to Enhance Corporate Value
The KYOWA EXEO Group considers profit distribution to shareholders as animportant managerial issue. To this end, we place a high priority on communication with our shareholders and investors. We strive on a daily basis todeepen their understanding of the Group, so that we gain their trust and beevaluated properly, through events such as open meetings of shareholders
and proactive, easy-to-understand IR activities. Going forward, we will continue to strive for fair, timely and appropriate disclosure of information andengage in honest and highly transparent business operations to further enhance our corporate value.

Koichi Mino
Director and Managing Operating Officer and General Manager, Corporate Planning Division

Shareholders’ Meeting

IR Activities

On June 24, 2020, the Company held its 66th Annual
Shareholders’ Meeting. While this year’s meeting was held
on a smaller scale than in previous years, due in part tothe prevalence of COVID-19, the Company views themeeting as an important forum for communicating with its
shareholders. Accordingly, we are taking the following initiatives.

The Company holds biannual financial results briefings for
institutional investors and securities analysts, as well as
business briefings, on-site briefings, briefings for individual
investors and other such meetings to deepen their understanding of the Company’s business operations and thelevel of technology and on-site capabilities.
On April 1, 2020, we completely renewed our corporatewebsite. We have also further enhanced the contents of
the “Investor Relations” page, which contains a large
amount of IR information such as presentation materials
and monthly orders received. In addition, we have established a contact point for inquiries via our web form, ande-mail IR information to those who wish to receive it.

Initiatives
Holding of meetings while avoiding days on which
there is a high concentration of shareholders’ meetings
Early dispatch of the convocation notice
Disclosure of the convocation notice prior to dispatch
Exercise of voting rights by electromagnetic means
Participation in the voting rights exercise platform
Disclosure of an English-language convocation notice
Introduction of a smartphone-based voting right exercise service

Shareholder Benefits
One of our initiatives to increase the attractiveness of ourshares is our shareholder benefits program.

A meeting with institutional investors from overseas

Shareholder QUO CARD
Holding period of less than three years:
Benefits(for shareholders of
1,000 shares or more)¥1,000 equivalent
Holding period of three years or more:¥2,000 equivalent*Sent once a year in late June after the close of the Company’s shareholders’ meeting.

Earnings Announcement
Web streaming of a financial results briefing

In accordance with the Securities Listing Regulations, weprepare full-year and quarterly summaries of financial results at the Tokyo Stock Exchange, and disclose themfairly, promptly and extensively through TDnet and othermedia.

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Corporate Report 2020

▶Please see our corporate website for

IR information.

https://www.exeo.co.jp/en/ir/

Employee Relations“Policy of Regarding Employees as the Group’s Primary Properties” and “Workstyle Reforms” for Sustainable Growth

Kazunori Yuasa
Operating Officer and General Manager, Human Resources Department

Employees are an invaluable asset. The KYOWA EXEO Group has adopted the“policy of regarding employees as the Group’s primary properties” as its basic philosophy on human resources, and pursues affluence for both its employees andthe company through respect for human rights, fair evaluations and treatment, andbeing thorough in its human resource development and professionalism.
We believe that a workplace environment in which we can secure and develop
excellent human resources and in which everyone can work with enthusiasm todemonstrate their full potential is essential for sustainable growth in the future. Accordingly, we are working on “workstyle reforms,” including changing our attitudes
toward workstyles, reforming rules, and promoting diversity.

Respect for Human Rights

Respect forhuman rights

Revitalizationof the organization

Policy of regarding
employees as the Group’s
primary properties

Creating sourcesof growth

Promotingdiversity

Workstyle reforms
Changing
attitudes toward

Fair evaluations

workstyles /and treatment
Human resource

Hiring Foreign Nationals
In order to promote global business, especially in the Asian
region, and to internationalize and invigorate the company,
we are actively hiring foreign students who are expected
to be active both in Japan and abroad.

Changing Attitudes toward Workstyles / Reforming Rules

Sustainable growth
Enhanced productivity
and profitability

childbirth, and nursing care, and these systems provide
opportunities for diverse work styles. These efforts are
helping to secure our technological capabilities for the future and ensure that we are able to pass on our skills.

The KYOWA EXEO Group’s ESG Initiatives

In promoting corporate activities, the KYOWA EXEO
Group places great importance on respect for humanrights and conducts training to raise and improve humanrights awareness in order to provide a workplace environment in which each and every employee can work with vitality. In addition, through training and other activities topromote compliance, we show that we do not tolerate any
kind of discriminatory treatment on gender, beliefs, nationality, status of disability, sexual orientation or other basic
human rights, and we strongly urge respect for the dignity
and individuality of individuals.

Reforming rules

development andprofessionalism

Reemployment System
In order to make use of the skills and experience gained
over the years by employees who are motivated to work
after retirement, we have a system to rehire retirement-age
employees, a registered employee system to hire retired
employees on a temporary basis, and a system to rehire
former employees who have left the company due to family circumstances such as family relocation, marriage,

With the aim of proper management of working hours andmaking improvements to long working hours, labor representatives and top management have issued a joint declaration and are working on reforms to comply with laborrelated laws and regulations, promote flexible work styles,
improve operational efficiency across the organization, andmaintain and promote physical and mental health such as
by raising employee awareness and implementing specificmeasures. We are also working to realize diverse and flexible work styles through means such as the establishmentof a regional key position system (a system for regional
limited employees) and a teleworking system.
Furthermore, we are developing and promoting novel
ways of working that incorporate the new lifestyles andnew working styles recommended by the Japanese government. Along with the promotion of workstyle reforms
through digital transformation (DX), we are taking the following measures to help teleworking take root: (1) review
of operations (business inventory, business evaluation,etc.), (2) improvement of the environment (PC, work environment, etc.), and (3) enhancement of systems (review ofcommuting styles, safety considerations for employees athigh risk of contracting COVID-19, etc.). Through these efforts, we are striving to create a work environment where
everyone can work with a peace of mind and enthusiasm.
Corporate Report 202046

S o c i a l In i t i at i ves

Characteristics of EXEO’s teleworking system
Scope: Regular employees and contracted employees*For temporary workers, we consult with their dispatching agencies.

T Communications using

Ordinary
workplaceMicrosoft Teams·Online meetings·Online training·Online job interviews

Visualize attendance rate

Mobile working
Process data/information at the work site

Safe remote working environment·During transportation·Job site, customer’s office, and business trip
destination·Waiting time at a station, café, etc.

Working from satellite offices
Work site·Office other than the normal worksite of the employee·Satellite offices under a contract

Customer’s
officeEmployees with reasons suchas childcare, nursing care,
medical treatment or disability
can continue working

Working from home

Go directly to the site and go home directly

Reduced travel timeWorksite·Home

Improved
work-life balance

Business trip
destination

Go directly to the site and go home directly

Reduced travel timeWorksite*Microsoft, Office 365 and Microsoft Teams are registered trademarks or trademarks of Microsoft Corporation in the U.S. and other countries.

Measures for reducing total work hours
As part of our initiatives to achieve a healthy work-life balance, we seek to develop a comfortable work environment
for employees, including by setting the annual targets for
consumption of paid leaves, promoting consecutive leaves
by combining annual paid leaves with long holidays, summer holidays, year-end/new-year holidays, etc., and designating a no-overtime day in each week.
Also, we proactively seek to reduce overtime work by
setting a medium-term target for reducing total work
hours.

Life plan seminars
We hold seminars throughout Japan for employees at theages of 53 and 54 to help them design their post-retirement life with a deeper understanding and awareness sothat they could lead materially, physically, and mentally
healthy life.
We also hold seminars for employees at the age of 58
and 59 to help them deepen their understanding of postretirement social security and pension fund systems.

Total annual working hours
2,133

2,129
2,087

2017

2018

2019

Helping employees maintain and improve physicaland mental healthIn cooperation with KYOWA EXEO’s health insurance association, we seek to help our employees and their family
members manage and improve their health, including byconducting regular health checkups and comprehensive
medical examinations of our employees and campaigns topromote walking among employees and their family members. In regards to mental health, we have a stress checkprogram in place for employees’ self-care. In addition, ourcorporate doctors provide training for line care based on
results of organizational diagnosis.
Furthermore, for employees with many overtime work
hours, our corporate doctors and public health nurses
meet them twice a month each to provide them with physical and mental care.
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Corporate Report 2020

Maintaining good labor-management relations
Mutual trust between labor and management is fundamental to KYOWA EXEO’s business. In the view of
pursuing the company’s growth and maintaining and improving employees’ work conditions, we seek to build
stable labor-management relations through regular discussions between labor and management. We hold regularlabor-management meetings to exchange opinions between labor and management on the business plan andother important issues as well as meetings of a committee
for improved work hours and conditions to execute proactive business operations and achieve healthy growth of thecompany.

Fair Evaluations and Treatment
As a system to reward employees for their efforts by fairly
evaluating outcomes, employees hold bi-annual discussions with their superiors to discuss their progress andachievement of self-established goals. We are increasing
the convincingness of these evaluations through the provision of feedback on the results of the evaluations to employees.
In addition, all employees are given an opportunity totalk with their supervisors once a year about their job satisfaction, career plans and other matters.
Discussion schedule
April

October

April

June

Goal
discussion

Mid-term
discussion /Self-assessment

Outcomediscussion

Evaluation
feedback

Goal
discussion

Human Resource Development and Professionalism

New Employee Training
The first year of employment is designated as a training
period in which we offer a multifaceted curriculum that includes basic training, job-specific technical training, andtraining for acquiring IT qualifications, so that employees
can strive to acquire common sense as members of society, as well as a wide range of knowledge and basic

Technical Training
The Company’s technical capabilities are the very essenceof our corporate brand. For this reason, we conduct technical training across the country, including at Group companies, and focus on developing IT personnel andengineers with advanced and up-to-date technical skills.
Technical training includes both in-house and external lectures. At in-house lectures, we provide safety and quality
training, professional engineer training, and training sessions on actual equipment in a dedicated IT training room.
Meanwhile, at external lectures, employees strive to acquire advanced, specialized skills in various engineering
disciplines and the latest technological skills in the IT field,
such as network servers and programming.
Overseas Training
We have been continuously sending employees to thePhilippines since 2015 with a view to developing our global business for new business expansion. In addition to a
training program of approximately a year designed tostrengthen communication skills with local partner companies and local employees and to learn how to do businessoverseas, we also offer other trainings including short-term
English conversation training in the Philippines to acquirebusiness conversation skills, with a focus on developing
global human resources.
By gaining experience based on the experience, human
network, and know-how acquired through these trainings,
we aim to contribute to the development of ICT in Asia.

The KYOWA EXEO Group’s ESG Initiatives

Based on the policy of regarding employees as theGroup’s primary properties, we provide a variety of training
programs such as new employee training, position-based
training, technical training, sales training, and training for
selected employees. Moreover, we also provide support
for self-development, such as incentive programs for acquiring qualifications and correspondence courses, andare committed to providing growth opportunities and encouraging employees to take advantage of them.

technical skills as a member of the company. In addition,
each new employee is assigned a tutor, who promotes
growth and motivation through training and follow-ups, aswell as advice on mental health and lifestyle issues. We
also provide step-up training in the second year to review
the training and secure its results. In fiscal 2020, we introduced online training at home using an in-house web conference system as a new initiative that also serves as ameasure to prevent the spread of COVID-19.

Overview of Training Facilities
Heiwajima Training Center
We offer a wide range of internal trainings, including new employee training, position-based training, and sales training. Training can be conducted in a variety oflayouts, including school-type training for large groups or group training for small
groups. We also use the latest actual equipment such as routers, switches, servers and PCs to develop advanced IT engineers.
Central Technical Training Center / West Japan Technical Training Center
These training centers focus on the acquiring of those practical skills required in the field, such as lectures on specialized knowledge and training in techniques and skills related to telecommunications infrastructure construction, accident prevention, and safety assurance. The centers are equipped with simulated outdoor facilities such as utility poles, manholes, and wireless towers, aswell as various devices for optical connection training and simulated indoor facilities for in-home construction, to provide a comprehensive program for learning the construction techniques and safety assurance measures required for access works and mobile
telecommunication works. We also provide technical training in improving technology for legacy equipment and adapting to newtechnologies, such as home ICT.
MX Center for Excellence (Philippine Training Center)
In May 2017, we opened a training center on the outskirts of Manila for the purpose of improving theskills of the local technicians of our local subsidiary, MG EXEO NETWORK, INC.
In order to learn technological skills related to FTTH, Wi-Fi, IP networks, data centers and others,
the center is equipped with classroom facilities, mock poles, mock handholes, mock in-home booths,
and other such items, and is designed for newly hired engineers to learn basic operations, as well as
for those with practical experience to acquire advanced maintenance skills, in addition to safety knowledge, work ethics and more. Based on the advanced technology and know-how that the KYOWA
EXEO Group has cultivated in Japan, programs are implemented for the acquisition of all the knowledge and skills necessary for the field of telecommunication works.
Corporate Report 202048

S o c i a l In i t i at i ves

Diversity & Inclusion Declaration“Promoting diversity in an organization means a strategy of utilizing the abilities of a diverse range of human resources to thefullest extent.
With the aim of swiftly and flexibly responding to increasingly diverse customer needs, developing our business andimproving operating results, Team EXEO fosters a culture of mutual acceptance of a wide range of values regardless ofcharacteristics such as gender, beliefs, nationality, disabilities or sexual orientation, leads to new value creation unbound by
conventional thinking or stereotypes, and achieves the sustainable growth of individuals and the organization.”
There are no goals in diversity promotion
We aim to achieve diversity and inclusion in its truest sense, which means invigorating the organization with new ideas
incorporating a wide range of sensibilities and values that enable innovation to be created within the organization.
Tetsuya Funabashi President

取り組みテーマ

49

Corporate Report 2020

Promotion of Diversity and Inclusion

Cultivating a corporate culture that promotes diversity

Implementation of diversity promotion training
Training is conducted starting from upper levels of thedevelopment. This knowledge is then put into practice incompany to foster an understanding of the importance of

the workplace.

diversity promotion as a management strategy and to recognize issues the company faces in its promotion.
In training aimed at executives and managers, attendees learn about management techniques for diverse hu-

Moving forward, we will expand the scope to include awider range of employees and conduct training that fosters a culture that promotes the mutual acceptance andutilization of a diverse range of values.

man resources and approaches for supporting career

The KYOWA EXEO Group’s ESG Initiatives

Corporate Report 202050

S o c i a l In i t i at i ves

Implementing workstyle reforms

Promoting telework
In July 2018 we made significant revisions to our telework
work regulations, allowing employees to make use of workfrom home, work at satellite offices and mobile work inmore flexible ways. We also relaxed restrictions on working from home for employees with a need to balance childrearing, nursing care, medical treatment and so on.
We also began actively taking part in designated telework days since 2018, and have worked to promote utilization on the part of employees. In recognition of these
efforts, in November 2018 the company was selected as
one of the 2 0 1 8 Top Hundred Telework Pioneers by the
Ministry of Internal Affairs and Communications.

Improving work-life balance
We undertake a range of activities designed to shorten to-

day and enforcing weekly no-overtime days. We also en-tal working hours and develop an efficient workplace envi-

courage employees to take consecutive days off, such as

ronment that promotes both mental and physical health.

taking paid leave to coincide with holiday periods in spring,

In terms of daily work practices, we have worked to re-summer, the end of the year and the New Year period.

duce nonessential and nonurgent overtime by ensuringthat meetings are held at the start and end of the work

Boosting productivity through digital transformation

51

Utilizing an IT infrastructure common across the Kyowa

business efficiency, quality, safety and comfort while aim-

Exeo Group that includes teleconferencing and MS

ing to boost productivity in a noticeable way, not only forTeams, we are working to improve sales capabilities,

employees but for our partners as well.

Corporate Report 2020

*Microsoft, Office 365 and Microsoft Teams are registered trademarks ortrademarks of Microsoft Corporation in the U.S. and other countries.

Promotion of Diversity and Inclusion

Creating and supporting opportunities geared toward the success of a diverse range of human resources

Promoting female empowerment
Action Plan
Kyowa Exeo has formulated an action plan in accordancewith the Act on Promotion of Female Participation and Career Advancement in the Workplace, and publishes related
information including numerical targets. We have implemented various initiatives and measures to meet these targets, created opportunities for female employees tosucceed, and provided related support. In addition, in2016 the company received the highest of three grades as
an Eruboshi company, a certification that recognizes

companies demonstrating outstanding performance in the
promotion of female participation.
The company was also selected as a 2019 Nadeshiko
Brand. Jointly run by the Ministry of Economy, Trade andIndustry and the Tokyo Stock Exchange since 2012, thisscheme aims to encourage investment in companies andspeed up related initiatives by publicizing listed companies
who make proactive efforts to promote women’s participation to attract investors looking for medium-to-long-term
growth potential.

The Eruboshi certification mark granted by the
Minister of Health, Labour and Welfare to companies that are outstanding in terms of women’s
participation in the workplace
The KYOWA EXEO Group’s ESG Initiatives

Fiscal 2019 Nadeshiko Brands jointly selected by
the Ministry of Economy, Trade and Industry andTokyo Stock Exchange among listed companies
for their outstanding promotion of women’s participation in the workplace

Supporting the balance between work and home
Action Plan
To ensure that employees can achieve a balance between
work and child-rearing or work and family care regardlessof gender and continue to work and achieve success withpeace of mind for as long as possible, we have established balance support schemes that go beyond statutory
requirements and periodically hold briefing sessions for
employees. Kyowa Exeo has formulated an action planpursuant to the Act on Advancement of Measures to Support Raising Next-Generation Children and has publishedtargets and other relevant information. We actively work toenhance systems and hold briefings to meet these targets
and are committed to developing an environment thatmakes it easy for employees to strike a balance between
their jobs and childcare responsibilities, regardless of gender.
In recognition of these efforts, in 2 0 1 5 we earned theKurumin Mark, an accreditation from the Minster of Health,Labour and Welfare recognizing companies providing support for child care.

Kurumin mark certification by the Minister of
Health, Labour and Welfare

Corporate Report 202052

S o c i a l In i t i at i ves

Promoting the employment of people with disabilities
To ensure that all people can demonstrate their capabilities

to match employees with the right organization. Even after

and aptitude to the fullest extent and lead active lives re-an employee has joined the company we regularly follow

gardless of whether or not they have disabilities, Kyowa

up on the individual and their assigned department andExeo actively pursues the employment of people with dis-make every effort to ensure they are able to succeed in aabilities. All employees of the Diversity Promotion Officereassuring environment. Additionally, we work to create

have completed disabled person occupational and lifestyle

new occupational fields so that persons with all kinds ofcounsellor certification courses, carefully gather informa-disabilities can flourish, and actively work to hire peopletion about desired workplace, occupation, skills and dis-with specialist skills.

ability considerations when employees are hired, and strive
Change in the percentage of employees with disabilities

2.38

1.62

1.78

Breakdown of employee disabilities(as of end of March 2020)

2.54

Language
Mentaldisability

1.94 1.88 2.03 1.97

3%

Vision1%

15%

2.20 2.20

Physicaldisability

Breakdown of
employeedisabilities

2.00 2.00 2.00 2.00 2.00
1.80

51%

Internal
disorder
2012

2013

2014

2015

Actual employment rate

2016

2017

2018

2019

30%

Statutory employment rate

Systems to support a diverse range of human resources
Main systems

53

Details

Paid leave

Leave can be taken in daily, half-daily or hourly increments

Different start and finish
time system

System to change work allocation, monthly flexible working hours system, modified rest period system,
modified weekly days off system

Flexible working hours
systemWithin the scope of total scheduled working hours, working hours that exceed the scheduled working hours
in a single day can be set.

Telework system

Work from home, work from satellite offices and mobile work

Area career path system

Systems limited to regional employees (no out-of-area transfers)

Senior employment
systemSystem for reemployment following mandatory retirement (until the end of the month in which an employee
reaches 65 years of age)
After 65 years of age, employees may be hired as contract employees
A former employees reemployment system to hire former employees who have resigned due to personalreasons such as relocation of a family member due to job transfer, marriage, child-birth and nursing care.

Maiden and regular nameusage system

With the exception of procedures requiring an employee to use their legal name, employees may use theirmaiden or regular name internallyCorporate Report 2020

Promotion of Diversity and Inclusion

Various awards and certifications

Kurumin Mark certification(June, 2015)

On June 25, 2015, the company obtained Kurumin Mark certification. This was particularly in recognition of efforts including the introduction of a telework system and encouraging employees totake paid leave during the period from April 1, 2013 to March 31, 2015.

Eruboshi company (highest grade) certification(April, 2016)

On April 28, 2016, the company received the highest of three grades as an Eruboshi company, acertification that recognizes companies demonstrating outstanding performance in the promotionof female participation.

Selected for inclusion in ESG indices of companies using GPIF

(2017, 2018, 2019)

Selected for Top Hundred Telework Pioneers by Ministryof Internal Affairs and Communications

The KYOWA EXEO Group’s ESG Initiatives

The Government Pension Investment Fund, Japan (GPIF), which possesses the largest pension
assets in the world, began making ESG investments in July 2017. In connection with this development, the company was selected for inclusion in the MSCI Japan ESG Select Leaders Index
and MSCI Japan Empowering Women Index (WIN), which were employed as ESG indices.

(November, 2018)

In recognition of initiatives to revise telework regulations and encourage the use of telework, in
November 2018 the company was selected by the Ministry of Internal Affairs and Communications for the 2018 Top Hundred Telework Pioneers as a company promoting the introduction andutilization of telework.

Rated 3.5 stars in the Nikkei Smart WorkManagement Survey(November, 2019)

In the third Nikkei Smart Work Management Survey, which selects companies leading advancesin productivity improvements through workstyle reforms, the company was rated for 3.5 stars.
The survey, conducted by Nikkei Inc. since 2017, covers listed companies and prominent nonlisted companies across Japan, assessing them on a five-star scale. It defines smart work management as taking steps to maximize the organization’s performance in three areas - diverse andflexible workstyles, new business creation and other innovation, and market development - andincludes corporate governance and other management fundamentals in the evaluation.

Selected as a 2019 Nadeshiko Brand(March, 2020)

On March 3, 2020, the company was selected as a Nadeshiko Brand for the first time. Jointly run
by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange, the scheme selects listed companies excelling the promotion of female participation.

Corporate Report 2020

54

Ma nagem ent Syst ems

Establishing Various Mechanisms to Promote Globally theOverall Group
Corporate GovernanceCorporate governance system and rationale for adopting this system (overview of the corporate governancesystem)We have adopted a board of statutory auditors system.
We have fifteen Directors, including three Outside Directors, and four Statutory Auditors, including two Outside
Statutory Auditors. In fiscal 2019, we held fifteen Board of
Directors meetings and sixteen Board of Statutory Auditors meetings.
We have also adopted an operating officers system toseparate between management decision-making and supervisory function and business execution function toachieve prompt and appropriate decision-making andbusiness execution, while further strengthening our corporate governance.
The Board of Directors, chaired by the Representative
Director and Chairman, makes decisions on important matters and supervises business execution. Operating officers
execute operations based on the Board of Directors’ decisions. Furthermore, we have a Management Council inplace that discusses important business execution matters.

Endeavoring to ensure transparent management by establishing sound management systems and strengthening internal controls
The KYOWA EXEO Group aims to maintain the full trust ofshareholders and all other stakeholders by operating withintegrity and a high standard of transparency. To this end,
we are confident that it is one of the significant management issues to establish and maintain an organizational
structure and management systems through which corporate governance can effectively function. Moreover, it is ourbasic CSR policy to make ongoing improvements tostrengthen corporate governance mechanisms that aresuitably tailored to the Group’s circumstances, including
the assessment of structures for monitoring management
in light of changes in social conditions, laws and other developments.

KYOWA EXEO’s Corporate Governance System
As of July 1, 2020

General meeting of shareholders
Appointment/Dismissal
Consultation

Board of Directors
Directors
Response (12, including one independent officer)

Supervision

Audit
ReportReportAppointment/Dismissal
Determination of the appropriatenessof accounting audits
Board of Corporate Auditors
Statutory auditors(four, including one independent officer)
Report
Audit
ReportReportAudit

President

Independent Auditor

Nomination Committee
Compensation Committee

Appointment/Dismissal

Management Council
Directions,Supervision

ReportConsultation,Directions

Operating officers and organizational heads
Representatives of Group companies
Business and administrative departments and branches
Supervision

ReportInternal audit

Directions

ReportInstructions
Collaboration

Corporate Lawyer

Corporate Report 2020

Compliance Committee
Business Risk Management Committee

CSR Committee

Risk Management Division

55

Internal Control Committee

Information Security Committee

Group companies
Supervision

Response,ReportFurthermore, the Nomination Committee and the Compensation Committee have been set up as the Board of
Directors’ internal committees to further enhance our corporate governance. The Nomination Committee discusses
the selection and appointment of candidates for Directors
and the Compensation Committee discusses the compensation and bonuses for Directors and other matters.
These committees report to the Board of Directors.

Policy concerning the decision-making about compensation for executives and its calculation
Our basic policy concerning the decision-making about
compensation for executives and its calculation is to effectively incentivize executives to contribute to increasing ourcorporate value and improving our short, medium andlong-term performance and to maintain a level for securing
outstanding talent who will drive the business of KYOWA
EXEO as the leading information and communication network company.
Our specific policy concerning the decision-making
about compensation and its calculation is deliberated by
the Compensation Committee, which is comprised of Directors selected by the Board of Directors, and then determined by resolution of the Board of Directors to secure thetransparency and fairness of the decision-making process.
In fiscal 2019, three meetings of the Compensation Committee were held.
Compensation for Directors consists of base compensation, bonuses, and restricted shares. Specifically, they
are determined as follows.
The base compensation is a fixed amount set for eachposition appropriately considering business environment
and industry standards.
The bonuses are basically linked to the fiscal year’s performance of consolidated income and determined bycomprehensively taking into account the business environment and other elements. The bonus calculation approach
intends to get Directors to be responsible for our consolidated performance in its entirety as management teammembers. The targeted consolidated operating income
and consolidated net income for fiscal 2019 were 32.0 billion yen and 21.8 billion yen, respectively. The actual

Effectiveness Evaluation
To enhance the function of the Board of Directors and corporate value, KYOWA EXEO evaluates the effectiveness of
its Board of Directors based on the results of questionnaire
surveys among all Directors and Statutory Auditors, which
are collected and analyzed by an external organization toensure objectivity, as well as discussions at meetings ofthe Board of Directors. It has been confirmed that its
Board of Directors has adequate scale and structure andis appropriately operated to ensure proper decision-making on important management agenda and supervision ofbusiness execution.
Based on the results of the board effectiveness evaluation conducted in fiscal 2018, we reviewed in fiscal 2019the composition of the Board of Directors. Effective June24, 2020, we decreased the number of Directors from fifteen to twelve and increased the number of Independent
Outside Directors from three to four. Furthermore, we took
measures to ensure that Independent Outside Directors
and Independent Outside Statutory Auditors receive sufficient information to facilitate their discussions and judgement at the Board of Directors, including enhancing
preliminary explanations for them, holding meetings to exchange opinions between Independent Outside Directors
and Independent Outside Statutory Auditors, and having
them conduct onsite inspections. The Vector Meeting,which is designed to discuss divisions’ business strategies
in early stages and to align their directions, discussed
eleven topics in fiscal 2019, providing useful perspectives
for considering our business’ future direction.
At the same time, based on the results of the latest
board evaluation, we have been sharing opinions towards
further strengthening our corporate governance, including
considering the necessity of reviewing the agenda items tobe submitted to the Board of Directors, securing time fordiscussion by distributing meeting materials earlier, andfollowing up the progress of business plans. Going forward, based on these results of board evaluation andopinions, the Company’s Board of Directors will fully consider measures for improving its effectiveness and continue to implement initiatives for enhancing its functions.

Corporate Report 2020

The KYOWA EXEO Group’s ESG Initiatives

Development of the internal control system and risk
management system
The KYOWA EXEO Group works to thoroughly adhere tocompliance, manage various risks and properly and efficiently execute business operations. At the same time, toensure the reliability of financial reporting, the Group has
stipulated the Basic Policy on Internal Control Systems inaccordance with the relevant provisions of the Companies
Act and addresses its appropriate and efficient operation.
The Internal Control Committee, based on the Basic
Guideline for Establishing Internal Control Systems, develops systems to ensure compliance with laws and regulations, effective and efficient operations and reliable financial
reporting, and grasps the overall operation status of theinternal control system while conducting its evaluation.
We have enhanced our risk management systems by
establishing the Risk Control Division in June 2014 to integrate compliance-related duties that had been distributed
among more than one department and setting up theBusiness Risk Management Committee in January 2019.

consolidated operating income and consolidated net income were 31.1 billion yen and 15.6 billion yen, respectively.
Restricted shares are allotted to Directors to give themmedium to long-term incentives towards achieving sustainable growth of our corporate value and to have themshare the same value with our shareholders. The stockbased compensation is linked to the degree of achievement of medium and long-term performance targets ofconsolidated income and paid in accordance with the respective positions of Directors. The consolidated performance indicator for the stock-based compensation is
consolidated operating income, which is directly linked tothe achievement of targeted performance and common
value shared with our shareholders.
Compensation for Outside Directors and Statutory Auditors, on the other hand, consists solely of fixed basecompensation, reflecting their independence from theCompany’s business execution.

56

M an age me n t S ys tem s

Messages from Outside Directors

I expect Exeo to pursue group synergy andbecome a company that attracts students fromall over the world.

Naoko Iwasaki
Outside Director(Independent Director)

I have been building my career as a researcher/expert on
ICT-related policies. I was appointed as an outside director of KYOWA EXEO in June 2019. Every time I attend its
board meetings, I feel enthusiasm towards achieving thetargets set in its medium-term business plan and towards
the future stage of growth. Board meetings make very vibrant discussions and issues are shared promptly andequally among the members reflecting the expedited digital transformation.
In response to the outbreak of COVID-19 in 2020, the company quickly set up a risk management office to secure
the safety of employees and customers. It proactively adopted teleworking and online board meetings, which has
triggered workstyle reforms to take place throughout thecompany. The digital transformation implemented gradually since 2 0 1 9 has helped provide a stable work-fromhome environment and secure business continuation andimproved efficiency of business operations. The company’s risk management and digital transformation havebeen very timely and appropriate. What drove these initiatives were the president’s strong leadership and thecompany’s corporate governance that remained effective
during the contingency situations.
Going forward, we must appropriately and promptly solve
outstanding issues and create group-wide synergy,
considering and securing integrity with and equal opportunities for the three companies in western Japan, withwhich we have completed management integration, companies we have capital and business partnerships with,and our overseas subsidiaries. Furthermore, strengthening SDGs and ESG-related activities that our group has
proactively conducted and sharing awareness across the

57

Corporate Report 2020group are important elements for increasing our corporate
value.
I have been proactively working on initiatives towards
achieving SDGs, including hosting seminars at the United
Nations Headquarters in New York. The two major global
issues the UN is particularly focusing on are aging population and environment issues. Corporate activities considering
these issues will concurrently help us develop new businesses and contribute to the international society.
Among all, the social issue we should focus on is disastermitigation given the frequent occurrence of severe natural
disasters in recent years. Disaster mitigation-related service leveraging digital technologies, as part of our social
infrastructure-related business, is one of the company’s
strengths. A possible approach is to utilize the world’s
three major cutting-edge technologies—5G, AI and 8K—
as technologies core to our business strategy.
Our group’s business is sound and we have a family-likeculture. Based on the domestic businesses that havebeen established so far, we now must consider and develop new businesses as Japan is faced with a fallingbirthrate and aging and declining population. We are in atransition period and therefore we face an urgent need to
speedily implement open innovation and strengthen technological capabilities, which are our strengths, and foster
the development of people supporting them. My main job
is teaching at a university as a professor. I hope KYOWA
EXEO will become a company that students from all over
the world want to join when they graduate. I will robustly
fulfill my mission to help increase our group’s corporate
value.

Seek to maintain earnest communications, underthe motto, “Don’t run away, forget, and enjoy!”

Yasushi Kohara
Outside Director(Independent Director)

At the general meeting of shareholders held in June 2020,
the total number of outside directors and outside statutory
auditors was increased to six, enabling the board to conduct vibrant discussions from broader perspectives thanever. For the board meetings, adequate preliminary explanations about the agenda are given and we can request
additional homework and reports. For important topics,
we can conduct even more in-depth deliberations including at Vector Meetings that are held separately from board
meetings. I feel the PDCA cycle is properly implemented. If
I am allowed to wish more, I might suggest that we consider various meeting formats for exchanging opinionswith more people, such as a camp.
We have been working on many overseas investment projects since last fiscal year. For further growth of EXEO
Group, it is imperative to develop businesses internationally based on capabilities we have accumulated in Japan.
We are still in the planting phase. We must mobilize ourcompany-wide resources to establish a support system
including fostering the development of talent for overseas
businesses, supporting the local onsite work, andstrengthening risk control.

sion of skills, and development of technologies and tools
for improved productivity—I think we can always find solutions in onsite workplaces. Our emphasis on onsite work
has been reinforced through active participation in the National Skills Competition, safety meetings held at every
workplace, and other initiatives and efforts, which are important activities for supporting our corporate culture. I
find these initiatives very encouraging. I will continue tomake proposals from various perspectives including corporate governance and risk management.

The KYOWA EXEO Group’s ESG Initiatives

I was appointed as an outside director of KYOWA EXEO
in June 2018 after working for Toyota Group. In these twoyears, our group has grown to have the capability ofproviding nationwide construction services through the
management integration with the three companies inwestern Japan.

The COVID-19 pandemic has caused the operations of thesociety to change drastically. Dissemination of teleworking
and online conferencing is anticipated to lead to a rapid
increase in demand for the development and enhancement of communication infrastructures. Responding to theneeds of the society and addressing SDGs and ESG-related issues, which are becoming important indicators ofcorporate value evaluation, are our tasks of pressing urgency that we must work on together on a group-widebasis. I will get these points discussed robustly at board
meetings so that they will be fully incorporated into thecompany’s future business strategy.
Our business environment and mindset are expected tochange drastically. While constantly maintaining earnest
communications with stakeholders, I will fulfill my responsibility to contribute to increasing our corporate value anddriving further growth. When facing challenging situations,
I will summon up my spirit under the motto, “Don’t run
away, forget, and enjoy.”With respect to issues we must continuously address—including establishing safe and secure work environment,
securing and fostering the development of talent, succes-

Corporate Report 202058

M an age me n t S ys tem sComplianceIn the KYOWA EXEO Group, everybody on the management team maintains a high standard of ethics—integrity—
when conducting business. Furthermore, individual
directors and employees make principled actions groundedin compliance to fulfill their social responsibility.
EXEO Group Basic Actions Declaration
Based on the EXEO Group Compliance Program, the officers and employees of the Group presuppose compliancewith not only laws and regulations but also corporate ethics, including the spirit underlying those ethics, and practice activities with high social value, thereby contributing tosociety.
Given that a company is part of society, it is a prerequisite for all stakeholders in a company, irrespective of whether officers or employees of the company, to comply withlaws and corporate ethics when carrying out the company’s

Compliance programbusiness operations. Such compliance is also a matter ofcourse for us as individual members of society.
In addition, ensuring such compliance is indispensablefor the company to maintain the trust of society and therealization of the Group’s corporate philosophy of “Contributing to Society.”
In light of the above, we shall prioritize without hesitation laws and regulations and corporate ethics in case weare forced to select either earnings or ethics in our own
activities.
Initiatives to Promote

Measures taken and Description
Whistle-blowing system
Regarding compliance-related concerns, the “Support
Desk” is the contact point for whistleblowers, and the “Lawyer Hot Line” is provided to enable direct consulting orcommunication with corporate lawyers.
All employees of the KYOWA EXEO Group are provided
with “Compliance Cards” to raise their awareness of thecontact point for whistleblowers and guidelines for use.
Compliance training for management executives
More than once a year, we provide compliance training by
inviting lecturers for management executives, including the
Chairman, President, General Managers of the Head Office, Branch Managers and Presidents of the Group companies.

Tools:
Compliance ManualGroup’s corporate philosophy, Basic Actions
Declaration, Basic Guideline for Establishing Internal
Control Systems, matters to be observed and so on

Manuals by risk at each Group company
Compliance training materials, etc.
SystemFollow-up:

Development:

Evaluation oncompliance observance
Monitoring

Compliance planning
Compliance training
Support Desk
Lawyer Hot Line

Compliance promotion and enhancement month
We designate October as the annual Compliance Promotion and Enhancement Month, and carry out various campaign measures, such as displaying posters and holding
meetings, to further establish compliance within theGroup.

Promoting System
Collaboration

Corporate lawyers(Lawyer Hot Line)

Command

Legal Unit,
Risk Control
Division(Support Desk)

Guidance
andcontrol[Departments and Branches]

Advisory
andcollaboration
Guidance

Whistle-blowing system

Corporate Report 2020

(Harassment
Investigation
Committee)

Collaboration

KYOWA EXEO Group
Compliance Officer(President of KYOWA EXEO)

KYOWA EXEO CORPORATION:

59

Compliance
Committee

Group companies

Group Business
Development Division
Responsible Compliance
Promoter
Persons in Charge of
Promoting Compliance
Employees

Management
and control ofthe promoting
systemGuidance andoversight on
the spot andof trading units
Referrals andconsulting

Compliance Officer
at each company(President)

Responsible compliancepromoter at
each company

Employees of eachGroup company

Risk Management
Basic Policy
The KYOWA EXEO Group’s basic policy for risk management is as follows:(1) When setting strategies and business performance targets and practicing efforts to achieve them, we seek integration of strategies and risk management byconsidering risk profiles, risk appetite, risk capacity andrisk tolerance.
(2) By recognizing risks clearly at an earlier stage andpromptly providing as many choices as possible for risk
management, we reduce the possibility of unachieved
business targets, losses, accidents and failures.

Risk Management System

Board of Directors(3) By monitoring risks on a regular basis, we address any
deviation from intended performance swiftly and withconsistency.
(4) With a grasp of our comprehensive and consistent risk
portfolio, we seek optimum allocation of the Group’s
resources.
Risk Management System
The KYOWA EXEO Group sets forth its basic rules on risk
management in the “Risk Management Rules” and sets up
risk categories and corresponding Risk Management Divisions. In addition, the Group established and has been
operating the Business Risk Management Committee as
the Group-wide risk manager to identify and evaluateGroup-level risks.

Board of Statutory Auditors

Supervision

Report<Management>
Management Council

Business Risk Management Committee
Group-wide risk manager

Business Risk Management Committee

As the 1st-tier risk managers, the Business Risk Managers
set forth strategies that are consistent with the KYOWA
EXEO Group’s mission, vision and core values. In addition,
the managers develop concrete action plans and manage
the progress thereof to address risks according to the environments of their organizations and in line with the riskaddressing policies presented by the Support Division
teams.

Support Division (2nd-tier Risk Manager)
As the 2nd-tier risk managers, the Support Division teams
provide guidelines for addressing the category of risks theyInternal Audit Divisionattend to and monitor the appropriateness and effectiveness of measures taken to address risks and the status ofcorrection.
Risk Management Category

Risk Management Category
Management risk

Business Risk Manager (1st-tier Risk Manager)(2nd-tier risk manager)(3rd-tier risk manager)

Business risk

As the Group-wide risk manager, the committee was established to provide the risk management systems required to accomplish strategies and business performancetargets in the process of creating, maintaining and realizing
value and to steadily provide the Group’s stakeholders
with reasonable expectations that risks can be controlled
to a tolerable amount.

Support Division
The Company’s Head Office staff unit

The KYOWA EXEO Group’s ESG Initiatives

Business Risk Managers
Heads of organizational units at the Company’s Head Office,branch managers and presidents of subsidiaries(1st-tier risk manager)<Risk Management Division>

Internal Control Committee

President

Business
environment risk
Management
strategy risk

Business process risk

Disaster risk

Description of the Risk
Risk relating to changes in the
management and businessenvironments
Risk relating to the decision making
concerning management and businessstrategies, etc.
Risk relating to daily business
operations
Risk relating to the occurrence of
natural disasters

Internal Audit Division (3rd-tier Risk Manager)
As the 3rd-tier risk manager, the Internal Audit Division
conducts internal audits of the performance of the Business Risk Managers to identify problems and matters to
be improved, issues recommendations for improvement,
provides the latest information on the matters to be improved and verifies the status of improvement.

Corporate Report 2020

60

M an age me n t S ys tem s

Utilization of the ISO-Compliant Management Systems
From among the business process risks, the Company
utilizes the ISO-compliant management systems to manage the risks relating to quality assurance, environmental
conservation, occupational health and safety and information security. We formulate policies for managing theserisks by using the relevant risk assessment methods givenin the ISO management systems and implement the policies while making ongoing improvements in the effectiveness and appropriateness of business operations.
The Company and major subsidiaries acquired a groupbased ISO certification and are committed to standardize
the management procedures by implementing ISO-compliant management systems in a unified manner acrossthe Group. Taking the opportunity of the ISO quality andenvironment management system updates with the 2015
revisions, we reviewed the management system certification system which focuses on the internal rules in effect tostreamline the process.
ISO Management Systems of which certification has beenacquiredCategory

ApplicableStandards

Date ofRegistration

Quality
Management
SystemJIS Q
9001:2015

February 22, 1999

Environment
Management
System

JIS Q
14001:2015

May 12, 2000

Occupational
Health and Safety
Management
SystemBS-OHSAS
18001:2007

September 19, 2003

Information
Security
Management
System

JIS Q
27001:2014

November 10, 2004

Efforts to Ensure Information Security, etc.
As a necessary part of operating its business, the KYOWA
EXEO Group handles important information, including dataon technologies and customers held by its customers andother parties. With the expansion of networking, as represented by the spread of the cloud service and social networking service (SNS), it is increasingly important toensure the appropriate management of information. Accordingly, we are strengthening our efforts regarding information security and the protection of personal information.

Efforts to ensure information security
The KYOWA EXEO Group has established a system for
managing information security by designating an officer
who assumes the overall responsibility for information security, as well as providing a manager with the chief responsibility and people working on information
management at each business division. The Information
Security Committee decides policies on group security,
discusses measures to prevent the recurrence of any information security accidents, and monitors and evaluates
the status of any improvements in overall security mattersto enhance the Group’s information security on a continuous basis.
Furthermore, the Group also provides all of its employees with information security training and simulation exercises to repel targeted e-mail attacks, while conducting
various kinds of security checkups every year.

Efforts to protect personal information
The Company engages in a broad range of business operations and handles a large amount of personal information in the process of carrying out these operations. In therecognition that appropriately managing such information
is a corporate social responsibility, we are promoting efforts to ensure the protection of private information under
the Privacy Policy.
In response to the implementation of the Amended Act
on the Protection of Personal Information in May 2017, we
reviewed and enhanced our privacy management measures by taking an inventory of personal information held
and reviewing the management of records concerning theprovision and receipt of personal information.
To ensure the continued protection of personal information in an appropriate manner, we have continually updated our certification of the Personal Information Protection
Management System.

For the details of the KYOWA EXEO Privacy
Policy, visit:https://www.exeo.co.jp/en/company/ppolicy.html

61

Corporate Report 2020

Board of Di rectors (a s o f Ju n e 2 4 , 2 0 2 0 )President & CEO

Director and Managing Operating Officer

Director and Managing Operating Officer

Fuminori Kozono

Tetsuya Funabashi

Yasuo Otsubo

Tomohiro Kurosawa

Director and Managing Operating Officer

Director and Managing Operating Officer

Director and Managing Operating Officer

Director and Managing Operating Officer

Yuichi Koyama

Hideo Higuchi

Koichi Mino

Kenji Asano

Director (Independent Director)

Director (Independent Director)

Director (Independent Director)*

Director (Independent Director)

Kazuteru Kanazawa

Yasushi Kohara

Naoko Iwasaki

Tatsushi Mochizuki

Standing Statutory Auditor

Standing Statutory Auditor

Statutory Auditor (Independent Auditor)

Statutory Auditor (Independent Auditor)

Kazuo Sato

Yuki Sakuyama

Tomoko Aramaki

Shinnosuke Yamada

Corporate Report 2020

The KYOWA EXEO Group’s ESG Initiatives

Chairman62

Financi al Secti on

11-Year Major Financial Data
Financial Items
Item

Unit

2010/3

2011/3

2012/3

2013/3

Orders received¥Millions

276,289273,788288,532

317,862

Net sales¥Millions271,230

282,264

273,134

301,319

Business performance

Gross profit¥Millions

31,29530,29926,806

36,113Operating income¥Millions

13,867

12,3908,919

18,046

Selling, general and administrative
expenses¥Millions

17,42817,90817,886

18,067

Ordinary income¥Millions

14,425

13,246

9,178

18,119Profit attributable to owners of parent¥Millions

ー

ー

7,856

11,313

Capital expenditures¥Millions

9,635

4,045

1,964

3,360

Depreciation expenses¥Millions

2,992

3,039

2,947

2,308

¥Millions180,128

196,918

181,291

200,412Financial status
Total assets
Property, plant and equipment¥Millions45,22848,44747,73647,707

Net assets¥Millions

105,307112,232

113,411

122,387

Balance of interest-bearing debt (balanceof loans payable, bonds payable, etc.)¥Millions

18,09521,326

8,178

9,908

Net cash provided by (used in) operating
activities¥Millions

10,989614

16,435

7,160

Net cash provided by (used in) investing
activities¥Millions(10,600)(1,535)(4,523)(2,160)Free cash flow

¥Millions

389

(921)

11,912

4,999

Net cash provided by (used in) financing
activities¥Millions(4,095)(3,650)(17,533)(3,038)Cash and cash equivalents at the end of
period¥Millions

22,22917,634

12,304

14,611

Cash flow status

Per share data
Earnings per share

¥

79.75

75.58

74.96

109.25

Net assets¥

973.13

1,027.98

1,084.44

1,199.86

Cash dividend

¥

20

20

20

22

Payout ratio

%

25.1

26.5

26.7

20.1

Operating income to net sales

%

5.1

4.4

3.3

6.0

Profit attributable to owners of parent to
net sales

%

ー

ー

2.9

3.8

Financial indices

Return on equity (ROE)

%

8.6

7.6

7.2

9.6

Return on assets (ROA)

%

4.7

4.1

4.2

5.9

Shareholders’ equity to total assets

%

55.4

53.9

62.4

60.9

Highest stock price

¥

976

854

863

1,079

Lowest stock price

¥

722

605

675

690

People

7,132

7,729

7,872

7,521

Stock price

Other
Number of employees (EXEO Group consolidated)

63

Corporate Report 20202014/3

2015/3

2016/32017/3

2018/3

2019/32020/3

304,201

301,446

300,438

324,102

325,029424,318

556,321318,513300,912287,437

298,825

312,669

423,727

524,574

38,54335,74035,79538,48043,35458,33768,327

20,734

18,35818,412

20,87325,621

31,716

31,10017,80917,382

17,382

17,607

17,732

26,62037,226

20,602

18,58918,512

21,40926,44833,431

30,66914,91012,264

12,184

13,78917,99340,21915,603

7,372

4,219

13,215

7,139

4,256

3,887

15,855

2,264

2,660

3,001

3,251

3,272

4,725

6,473

217,091

228,422238,301

243,438

261,305

416,483

444,905

50,76752,00559,83062,002

62,664

97,955

107,677

135,687

146,768

151,241

158,280

176,101

267,811

270,109

13,374

8,679

16,29912,825

11,43518,04947,167

9,888

23,167

5,389

15,50424,80012,77017,299(7,477)(2,828)(13,907)(6,027)(4,538)(17,609)(17,085)

2,411

20,338(8,518)9,477

20,262(4,839)

213

(905)

(12,343)313(10,230)(5,137)(4,924)

4,227

16,21324,291

16,037

15,241

30,343

41,46946,012123.83125.90145.24

189.42

390.25139.75

1,482.82

1,569.09

1,668.29

1,842.97

2,343.43

2,395.16

24

32

38

46

50

70

80

16.2

25.8

30.2

31.7

26.4

17.9

57.2

6.5

6.1

6.4

7.0

8.2

7.5

5.9

4.7

4.1

4.2

4.6

5.8

9.5

3.0

11.6

8.7

8.2

8.9

10.8

18.3

5.9

7.1

5.5

5.2

5.7

7.1

11.9

3.6

62.3

64.0

63.3

64.8

66.6

63.4

59.9

1,495

1,494

1,543

1,744

3,075

3,410

3,135

944

1,141

1,096

1,142

1,559

2,309

1,906

7,553

7,988

7,903

8,074

8,331

13,151

13,882

Corporate Report 2020

Corporate Data

147.751,350.05

64

Financial Section

Consolidated Balance Sheets(¥Millions)65

2016/32017/3

2018/3

2019/32020/3ASSETS
Current assets
Cash and deposits
Notes receivable, accounts receivable from completed construction contracts
Short-term investment securities
Costs on uncompleted construction contracts and other
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Noncurrent Assets
Property, plant and equipment
Buildings and structures
Machinery, vehicles, tools, furniture and fixtures
Land
Other property and equipment
Intangible assets
goodwill
Other intangible assets
Investments and other assets
Investment securities
Net defined benefit asset
Other investments and other assets
Allowance for doubtful accounts
Total assets

137,950
16,244
93,05591
21,515
3,355
3,688
(1)
100,350
59,83020,615
4,043
34,370
801
6,477
1,983
4,494
34,043
17,777
13,467
4,161(1,363)
238,301

142,395
15,431
96,08063
24,159
3,733
2,927
(0)
101,04262,002
20,0744,710
36,197
1,021
4,414
1,053
3,360
34,626
17,093
14,5204,228(1,216)
243,438

152,365
26,09592,185
4,499
27,617―1,967(1)108,940
62,66421,003
4,542
36,602
516
3,909
658
3,251
42,365
19,833
17,947
4,819(235)
261,305

241,708
41,805
156,361895
38,401
―
4,403
(158)
174,774
97,95531,603
8,738
55,4032,209
14,762
10,2594,502
62,05637,917
16,2838,341(485)
416,483

264,00947,550166,098
898
42,542―
7,013(94)
180,895
107,677
34,447
11,81858,654
2,757
12,7777,640
5,136
60,44034,721
17,0599,096(436)
444,905

LIABILITIESCurrent liabilities
Notes payable, accounts payable for construction contracts
Short-term loans payable
Income taxes payable
Advances received on uncompleted construction contracts
Provision for bonuses
Provision for directors’ bonuses
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for Loss on dissolved welfare pension fund
Other current liabilities
Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for directors’ retirement benefits
Allowance for investment loss
Net defined benefit liability
Other noncurrent liabilities
Total liabilities

72,241
37,62913,336
2,562
3,255
1,124
138
907
258
76
12,952
14,818
―
2,413
5,557
244
95
4,809
1,697
87,06061,28336,606
826
4,142
3,457
1,242
129
57
507
―
14,31423,87410,000
1,390
5,244
257
206
4,925
1,851
85,15863,16134,802
1,012
5,004
3,574
1,421
126
58
290
―
16,87022,042
10,000
10
4,966
272
42
5,070
1,680
85,204

114,406
59,265
13,069
7,498
5,487
3,744
420
86
344
―
24,48934,265
10,000
4,659
6,965
604
―
9,283
2,753
148,671

118,132
60,037
6,817
7,863
9,762
4,559
478
130
2,610
―
25,872
56,66230,000
8,965
5,681
750
―
8,436
2,828
174,795

NET ASSETS
Shareholders’ Equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

139,922
6,888
7,939
147,004(21,910)
10,821
4,121
28
6,671
241
255
151,241
238,301

147,333
6,888
7,978
156,477(24,011)
10,470
3,566
15
6,888
288
187
158,280
243,438

161,682
6,888
8,098
169,883(23,187)
13,891
5,198
11
8,681
285
242
176,101
261,305

252,870
6,888
47,868204,647(6,534)
11,026
4,603
(65)
6,488
355
3,559
267,811
416,483

255,893
6,888
49,604
211,195(11,795)
10,559
4,210
193
6,156
318
3,337
270,109444,905

Corporate Report 2020

Consolidated Statements of Income(¥Millions)

2017/3298,825
260,344
38,48017,607
20,873
1,936
4
315
111
572
437
―
203
―
290
1,400
49
185
516
45
―
143
―
458
21,409
1,471
1,262
209
―
2,159
2,159
―
―
20,721
7,719
(737)
6,982
13,739(50)
13,7892018/3
312,669
269,315
43,354
17,732
25,621
1,398
4
403
―
401
114
170
―
―
303
571
33
―
57
68
1
169
―
241
26,448
―
―
―
―
―
―
―
―
26,448
8,018
375
8,393
18,054
61
17,993

2019/3423,727
365,389
58,337
26,62031,716
2,468
16
537
―
295
―
―
―
―
1,618
753
48
―
―
―
106
―
135
463
33,431
18,313――18,313126―
126―
51,617
11,943(658)
11,28440,333
113
40,2192020/3
524,574456,247
68,32737,226
31,100
2,076
36
749
―
415
―
―
―
―
875
2,507
208
―
―
―
425
522
411
938
30,669
658
658
―
―
4,473
―
―
4,473
26,854
11,438(240)
11,19815,65653
15,603

Corporate Data

Net sales of completed construction contracts
Cost of sales of completed construction contracts
Gross profit on completed construction contracts
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Reversal of allowance for doubtful accounts
Land and house rent received
Gain on sales of non-current assets
Reversal of allowance for investment loss
Gain on exchange of investment securities
Gain on step acquisitions
Other
Non-operating expenses
Interest expenses
Rent expenses
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss on valuation of investment securities
Foreign exchange losses
Impairment loss
Other
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on abolishment of retirement benefit plan
Gain on bargain purchase
Extraordinary loss
Impairment loss
Goodwill amortization
Goodwill impairment loss
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

2016/3
287,437
251,642
35,795
17,382
18,412
1,438
21
266
441
157
261
―
―
―
289
1,338
57
44
138
―
―
397
―
701
18,512
―
―
―
―
―
―
―
―
18,512
4,203
2,086
6,290
12,22237
12,184

Consolidated Statements of Comprehensive Income(¥Millions)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Comprehensive income
BreakdownComprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

2016/3
12,222

2017/3
13,7392018/318,054

2019/340,3332020/3
15,656(1,035)
(18)
285
(769)
11,452

(554)
(30)
216
(368)
13,370

1,631
(10)
1,793
3,414
21,469(625)(92)(2,193)(2,911)37,421

(394)
265
(332)
(461)
15,195

11,42626

13,438(68)

21,41355

37,35467

15,13758

Corporate Report 202066

Financial Section

Consolidated Statements of Changes in Net Assets(¥Millions)Shareholders’ equity
Capital stock
Balance at the beginning of current period
Total changes of items during the period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Changes of items during the period
Disposal of treasury stock
Changes in Stock exchange
Increase in treasury stock due to increase in consolidated subsidiaries
Sales of shares of consolidated subsidiaries
Total changes of items during the period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Change of scope of consolidation
Merger of a consolidated subsidiary and a non-consolidated subsidiary
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period
Purchase of treasury stock
Disposal of the treasury stock
Changes in Stock exchange
Increase in treasury stock due to increase in consolidated subsidiaries
Acquisition of own shares via trust
Transfer of own shares via trust
Total changes of items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of the treasury stock
Changes in Stock exchange
Increase in treasury stock due to increase in consolidated subsidiaries
Change of scope of consolidation
Change in equity due to additional acquisition of consolidated subsidiary stock
Sales of shares of consolidated subsidiaries
Merger of a consolidated subsidiary and a non-consolidated subsidiary
Acquisition of own shares via trust
Transfer of own shares via trust
Total changes of items during the period
Balance at the end of current period
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Remeasurements of defined benefit plans
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Change of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Subscription rights to shares
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in Stock exchange
Increase in treasury stock due to increase in consolidated subsidiaries
Change of scope of consolidation
Change in equity due to additional acquisition of consolidated subsidiary stock
Sales of shares of consolidated subsidiaries
Merger of a consolidated subsidiary and a non-consolidated subsidiary
Acquisition of own shares via trust
Transfer of own shares via trust
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period

67

Corporate Report 2020

2016/32017/3

2018/3

2019/32020/3

6,888
―
6,888

6,888
―
6,888

6,888
―
6,888

6,888
―
6,888

6,888
―
6,888

6,879

7,939

7,978

8,098

47,868

1,060
―
―
―
1,060
7,939

38
―
―
―
38
7,978

120
―
―
―
120
8,098

123
39,6397―
39,77047,868

1,563
―
(2)
174
1,735
49,604

137,957―

147,00422

156,477―

169,883―

204,647―(3,137)
12,184――
9,047
147,004(4,338)13,789――9,450
156,477(4,588)17,993――
13,405
169,883(5,433)40,219(21)―
34,764
204,647(8,764)
15,603
11
(302)
6,547
211,195(17,029)(21,910)(24,011)(23,187)(6,534)(5,002)
2,057――(2,600)664(4,880)(21,910)(3,002)
167
―
―
―
733
(2,101)(24,011)

(3)
311
―
―
―
515
823
(23,187)(3,015)277
19,862(1,157)―685
16,653(6,534)(5,009)2,167――(3,079)659(5,261)(11,795)

134,696―

139,922
22

147,333―

161,682―

252,870―(3,137)
12,184(5,002)
3,117
―
―
―
―
―
―
(2,600)664
5,226
139,922(4,338)13,789(3,002)
206
―
―
―
―
―
―
―
733
7,388
147,333(4,588)17,993
(3)
431
―
―
―
―
―
―
―
515
14,349161,682(5,433)40,219(3,015)400
59,502(1,157)
(21)
7
―
―
―
685
91,187
252,870(8,764)
15,603(5,009)
3,731
―
―
11
(2)
174
(302)
(3,079)659
3,022
255,893

5,157

4,121

3,566

5,198

4,603

(1,036)(1,036)
4,121

(554)
(554)
3,566

1,631
1,631
5,198

(594)
(594)
4,603

(392)
(392)
4,210

35

28

15

11

(65)

(7)
(7)
28

(12)
(12)
15

(4)
(4)
11

(76)
(76)
(65)

258
258
193

6,386

6,671

6,888

8,681

6,488

285
285
6,671

216
216
6,888

1,793
1,793
8,681

(2,193)(2,193)
6,488

(331)
(331)
6,156

11,57910,821

10,47013,891

11,026(758)(758)
10,821(350)(350)
10,4703,420
3,420
13,891(2,865)(2,865)
11,026(466)(466)
10,559

263

241

288

285

355

(22)
(22)
241

47
47
288

(3)
(3)
285

70
70
355

(36)
(36)
318

229

255

187

242

3,559

26
26
255

(68)
(68)
187

55
55
242

3,317
3,317
3,559

(221)
(221)
3,337

146,768―

151,24122

158,280―

176,101―

267,811―(3,137)
12,184(5,002)
3,117
―
―
―
―
―
―
(2,600)
664
(754)
4,472
151,241(4,338)13,789(3,002)
206
―
―
―
―
―
―
―
733
(371)
7,016
158,280(4,588)17,993
(3)
431
―
―
―
―
―
―
―
515
3,471
17,820176,101(5,433)40,219(3,015)400
59,502(1,157)
(21)
7
―
―
―
685
522
91,710267,811(8,764)
15,603(5,009)
3,731
―
―
11
(2)
174
(302)
(3,079)
659
(724)
2,298
270,109

Consolidated Statements of Cash Flows(¥Millions)

2016/3

2018/3

2019/32020/3

5,389
18,512
2,857
71
―
1,082
―
(514)
75
611
(5,197)(1,339)
(288)
57
(122)
―
(8,419)
487
(423)
2,438
1,006
(2,673)
(0)
―
―
483
8,705
288
(59)
(3,545)(13,907)(10,467)
1,533(2,137)(2,570)10

15,504
20,721
3,251
2,159
―
929
―
(148)
117
(850)
248
(399)
(319)
49
79
―
(3,127)(2,659)965(1,014)204
2,671(1,262)
(203)
(209)
390
21,595318(66)(6,343)(6,027)(5,761)901(2,416)
(443)
1,686

24,80026,448
3,272
0
―
395
―
(980)
179
0
(216)
(694)
(407)
33
(56)
0
3,892
(3,447)2,175(1,802)
118
2,327
0
―
―
285
31,523408(33)(7,098)(4,538)(3,214)352(1,010)(429)
012,77051,617
4,725
135
―
1,201
(18,313)
50
419
28
(106)
(1,231)
(554)
48
(588)
(67)
(28,202)701(1,009)
9,240
198
4,528
―
―
―
364
23,187552(49)(10,920)(17,609)(2,757)698(1,079)(484)
233

17,29926,854
6,473
411
4,473
1,987
(65)
(117)
715
44
2,266
(2,233)
(785)
208
(19)
(480)
(8,581)(3,517)(2,916)408
4,099(1,474)―――436
28,188786(170)(11,505)(17,085)(12,693)810(1,827)(1,587)
4,038

―

―

―

(16,961)(5,083)

―

―

―

―

(128)

(30)
4
(298)
49
313
5,703
―
(708)
2,600
(5,002)
3,008(2,600)664(3,133)
―

(111)
1
44
72
(10,230)(12,306)
9,991(1,227)―(3,002)
153―
733(4,329)
―

(204)
1
1
(35)
(5,137)(100)―(1,093)
―
(3)
308
―
515
(4,581)
―

(358)
3,098
20
(20)
(4,924)4,130―(2,474)
1,260(3,015)339―
685(5,425)
―

(125)
45
(184)
(350)
4,227
(6,821)
19,904(2,609)7,474(5,009)3,620(3,079)659(8,749)
(36)

―

―

―

(96)

(655)

―

―

―

―

287

(218)
(49)
(8,254)24,291

(244)
(42)
(796)
16,037(182)(23)
15,101
15,241(329)(113)(9,877)30,343

(758)
(18)
4,422
41,469

―

―

―

55

5

―

―

―

―

114

―
16,037―
15,241―
30,343

20,94841,469―46,012

Corporate Report 2020

Corporate Data

Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Goodwill impairment loss
Amortization of goodwill
Gain on bargain purchase
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for warranties for completed construction
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in net defined benefit asset (liability)
Interest and dividends income
Interest expenses
Loss (gain) on sales of noncurrent assets
Loss (gain) on sales of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in costs on uncompleted construction contracts and other
Decrease (increase) in other operating assets
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in advances received on uncompleted construction contracts
Increase (decrease) in other operating liabilities
Loss (gain) on sales of investment securities
Gain on exchange of investment securities
Gain on abolishment of retirement benefit plan
Other, net
Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) investing activities
Purchase of property and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Payments for sales of shares of subsidiaries resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Decrease (increase) in time deposits and other
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from issuance of bonds
Repayment of long-term loans payable
Proceeds from long-term loans payable
Purchase of treasury stock
Proceeds from sales of treasury stock
Acquisition of own shares via trust
Transfer of own shares via trust
Cash dividends paid
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
Proceeds from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
Other, net
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change of scope of consolidation
Increase in cash and cash equivalents resulting from merger ofa consolidated subsidiary and a non-consolidated subsidiary
Increase in cash and cash equivalents due to share exchange
Cash and cash equivalents at the end of period

2017/368

Corporate Dat a

Corporate Data
Company Name

KYOWA EXEO CORPORATION

EstablishedMay 17, 1954

Paid-in Capital¥6,888 million (as of April 1, 2019)

Stock ListingFirst Section of the Tokyo Stock Exchange

Representatives

Fuminori Kozono, Cairman
Tetsuya Funabashi, Vice President
Tsutomu Ota, Representative Director

Net Sales¥423.7 billion (consolidated)¥279.0 billion (non-consolidated) (as of March 31, 2019)

Number of
Employees

13,151 (consolidated)
3,804 (non-consolidated) (as of March 31, 2019)

Business Bases
Domestic bases●Head Office●West Japan

Head Office■ Hokkaido Branch■ Tohoku Branch■ Minami Kanto Branch■ Koshin Branch■ Tokai Branch■ Kansai Branch■ Kyoto Branch■ Hyogo Branch■ Hokuriku Branch■ Shikoku Branch■ Chugoku Branch■ Kyushu Branch■ Okinawa Branch（■ Branches/ ■ Offices ）29-20, Shibuya 3-chome, Shibuya-ku, Tokyo
2-10, Uchihonmachi 2-chome, Chuo-ku, Osaka

7-2-20 Minami 21-jo Nishi, Chuo-ku, Sapporo-shi
2-5-1 Omachi, Aoba-ku, Sendai-shi
12-1 Kanagawahoncho, Kanagawa-ku, Yokohama-shi
602-2 Ochiaicho, Kofu-shi
Nishiki SIS Building, 3-10-33 Nishiki, Naka-ku, Nagoya-shi
2-2-10 Uchihonmachi, Chuo-ku, Osaka-shi
539-20 Monzencho, Oikedori Omiya Nishiiru, Nakagyo-Ku, Kyoto-shi
2-1-13 Ekiminamidori, Hyogo-ku, Kobe-shi
Kanazawa Fit Building, 53-1 Futakuchimachi-2, Kanazawa-shi
148-20 Hayashicho, Takamatsu-shi
2-7-11 Ogawachimachi, Nishi-ku, Hiroshima-shi
7-8 Tamagawamachi, Minami-ku, Fukuoka-shi
683-1 Onaga, Nishiharacho, Nakagami-gun

Bases of Five Major Consolidated Subsidiaries●EXEO TECH CORPORATION

4-1-23 Heiwajima, Ota-ku, Tokyo●Daiwa Densetsu Corporation

2-5-1 Omachi, Aoba-ku, Sendai-shi●C-CUBE Corporation

1-5-1 Monzencho, Naka-ku, Nagoya-shi●Seibu Electric Industry Co., Ltd.

3-7-1 Hakataeki-higashi, Hakata-ku, Fukuoka-shi●NIPPON DENTSU CO., LTD.

Office 1-4-16 Ryutsusentaminami, Yahabacho, Shiwa-gun
9-10 Minami 4-bancho, Yamagata-shi■ Fukushima Office 3-2 Donemachi, Taira, Iwaki-shi■ Nagano Office 1-1-12 Kirihara, Nagano-shi■ Ibaraki Office 1486 Kasaharacho, Mito-shi■ Chiba Office 24-9 Shinmachi, Chuo-ku, Chiba-shi■ Saitama Office 5-1-23 Shirahata, Minami-ku, Saitama-shi■ Shizuoka Office 2-26-23 Aoihigashi, Naka-ku, Hamamatsu-shi■ M i e O f f i c e 1-18-1 Edobashi, Tsu-shi■ G i f u O f f i c e 4-3-5 Kitaisshiki, Gifu-shi■ Wakayama Office 54 Juichibancho, Wakayama-shi■ Matsuyama Office 1-15-2 Ichibancho, Matsuyama-shi■ Kochi Office 993-1 Kera, Kochi-shi■ Yamaguchi Office 19-2 Ekiminamimachi, Hofu-shi■ Shimane Office 382 Shinichi, Kisukicho, Unnan-shi■ Kumamoto Office 332 Yoyasumachi, Chuo-ku, Kumamoto-shi■ Kitakyushu Office 1320-13 Otsuka, Maeda, Yahatahigashi-ku, Kitakyushu-shi■ Nagasaki Office 823 Tanakamachi, Nagasaki-shi■ O i t a O f f i c e 5-1 Harushinmachi, Oita-shi■ Minami-Kyushu Office 4-6 Kasugacho, Kagoshima-shi■ Iwate■ Yamagata Office

2-21-1 Isoji, Minato-ku, Osaka-shi

Overseas Bases●Philippines

MG EXEO NETWORK, INC.
12th Floor, DPC Place Bldg.
2322 Pasong Tamo Extension,
1231 Makati City,PHILIPPINES

69

Corporate Report 2020

●Thailand

EXEO ASIA COMPANY LIMITED
246 Times Square Building 15-01, 15-03, Shukumvit Road,
Kloengtoey, Bangkok 10110, Thailand●Singapore

EXEO GLOBAL Pre. Ltd.
80 Robinson Road #02-00 Singapore 068898

Stock Inform ati on(as of March 31, 2020)

Major Shareholders
Fiscal Year-End

March 31AnnualShareholders’MeetingJune 22, 2018

Stock Listing

Tokyo Stock Exchange (First Section)

Ticker Code1951

Number of shares Percentage of total
held (thousand) shares issued (%)

Common Stock

Authorized: 300,000,000 shares
Issued: 117,812,419 shares

Total Numberof Shareholders

22,524

Transfer Agentand Registrar

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

Japan Trustee Services Bank, Ltd.
(Trust Account)

15,227

13.57

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

9,254

8.25

ESOP Association of KYOWA EXEO CORPORATION

3,989

3.56

SUMITOMO LIFE INSURANCE COMPANY

2,296

2.05

Sumitomo Realty & Development Co., Ltd.

2,081

1.86

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

1,934

1.72

BBH FOR MATTHEWS JAPAN FUND

1,889

1.68

JP MORGAN CHASE BANK 385151

1,855

1.65

Japan Trustee Services Bank, Ltd.
(Sumitomo Mitsui Trust Bank, Retirement Benefit Trust Account)

1,834

1.63

Japan Trustee Services Bank, Ltd.
(Trust Account 7)

1,552

1.38

Note: The Company holds 5,623 thousand shares of treasury stock althoughthose shares are not included in the above table.
The percentage of total shares issued is calculated by excluding treasury
stock.

Composition of Shareholders
Treasury stock
4.8%

Financial
institutions
43.4%

Individuals
and others
20.1%

Securities
companies
1.0%

Foreigncompanies
19.7%

Other
corporations
11.0%

Stock Price Range and Trading Volume on the Tokyo Stock Exchange
Stock Price(¥)

Corporate Data

3,400
2,700
2,000
1,300

Trading Volume(Million Shares)

600

20

15

10

5

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3
2015

2016

2017

2018

2019

0

2020

Corporate Report 2020

70

Overvi ew of Group Co m pan ie s

KYOWA EXEO Group Structure
KYOWA EXEO CORPORATION
Five Major Consolidated Subsidiaries

C-CUBE Corporation
Insightful company that employs best people to deliver advanced technology and exciting communication offerings
Since its foundation, C-CUBE Corporation has taken advantage of the latest technology to engage in a broad range of businesses including
telecommunications facilities works, general equipment works and information services.
Given the current transformation among industries toward collaboration between various fields utilizing ICT infrastructure, the entire C-CUBE group willcontinue to take on challenges across the board to be an insightful company that can employ the best people to deliver advanced technology and exciting
communications offerings by addressing business structure reforms.

Seibu Electric Industry Co., Ltd.
Contribute to the society and aspire for further development and growth of our businessWith the Kyushu region as its home turf, Seibu Electric Industry Co., Ltd., engages in various businesses such as the mainstay
information and communications, ICT solution and social infrastructure businesses.
In addition to improving efficiency and productivity, we will make Group-wide efforts to create unprecedented values as wellas propose and offer our customers safe services and products. We will also proactively take on the challenge of cultivating andexpanding business opportunities by performing analysis from various angles.
Furthermore, we will promote Group-wide cooperation to enhance our structure to ensure solid response even underemergencies such as the large-scale disasters beyond expectation experienced in recent years.
As a company engaged in all forms of public infrastructure, we will aspire for further growth and development of our businesswhile building on the dreams, wishes and pride of every employee and contributing to society by leveraging our strength.

NIPPON DENTSU CO., LTD.
Becoming a company that contributes to a society where people can live safely
Since its foundation, NIPPON DENTSU CO., LTD. has contributed to increasing customer satisfaction and creating a society
where people can live safely through the construction of a telecommunications infrastructure and the development of IT solutions.
We are currently operating under a three-group structure, i.e., NTT Business Group, Advanced Technology Group, and IT
Solutions Group, to provide services and solutions to a wide range of customers.
In response to the COVID-19 crisis this year, we have shifted gears to prepare for the new normal by providing and accelerating
solutions incorporating advanced technologies including AI and chatbot to the work style reforms and DX solutions we had beenpromoting.
We hope to offer solutions that support growth in the prospective post-COVID and with-COVID era by taking advantage of ICT.

EXEO TECH CORPORATION
We will aspire to become a core company dedicated to private sector demand, and aim for further growth
EXEO TECH CORPORATION merged with Exeo Network Corporation and FUJI DENSETSU CO., LTD. in July 2019. Under its management philosophy
of “While making swift responses to environmental changes based on the spirit of customer first, we provide support for information andcommunications services through our advanced technical abilities and quality and optimal services, thereby contributing to the realization of an affluent
society,” we will safely and steadily execute works for KYOWA EXEO and make further efforts to increase works received externally. We integrated thehuman resource system last year, and also reviewed the organization in April 2020, as part of our efforts to achieve better collaboration and synergy
effects. We will aim for further growth by taking on the challenges of new businesses such as development of products and businesses utilizing AI andIoT technologies and by maximizing our engineering capacity that will achieve development of communication infrastructure including 5G.

Daiwa Densetsu Corporation
Creating a future full of dreams
Daiwa Densetsu Corporation has worked in the Tohoku region under the management philosophy of “connecting technologies,”“developing hand-in-hand with the region,” and “creating a future,” based on the business foundation of safety, quality, and trust.
We have celebrated the 70th anniversary in 2019, and will flexibly respond to the changes of the times and environment
under the theme of “3S (Speed, Smart, Safety)” for the next hundred years.
The NUTRIMATE hospital food nutrition service management system we developed has about 50% market share among
university hospitals nationwide. We will endeavor towards further development and growth with the region as a company thatmakes contribution to the aging society through extending healthy life expectancy with “food.”

71

Corporate Report 2020

KYOWA EXEO
Five Major Consolidated Subsidiaries
EXEO TECH

Daiwa Densetsu

C-CUBE

Seibu Electric Industry

NIPPON DENTSU

Seibu Electric Industry GroupNIPPON DENTSU GroupKYOWA EXEO GroupC-CUBE GroupAll 51 consolidated subsidiaries

All 17 consolidated subsidiaries

All 5 consolidated subsidiaries

All 10 consolidated subsidiaries

Major business outline of the subsidiaries

Major business outline of the subsidiaries

Major business outline of the subsidiaries

Major business outline of the subsidiaries

Accessengineering

Mobiletelecommunications

Civil
engineering

Accessengineering

Networks

IT

Electricity

Overseas

IT

Electricity

Civil
engineering

Accessengineering

Electricity

Civil
engineering

Accessengineering

Networks

IT

Electricity

15 non-consolidated subsidiaries and 19 affiliates

Overview of Group Companies
Kita Daihyaku Tsushin Denki K.K.
Kita Daihyaku Tsushin Denki K.K., was founded in the year of 1964 Tokyo Olympic Games as a telephone facility works and maintenance company.
Building on its history and trust, the company has responded to various needs of its customers taking advantage of ICT such as audio systems andinformation systems.
In recent years, waves of new ICT innovations including 5G and IoT, described as so-called the fourth industrial revolution, are rapidly emerging.
The company sees this as a significant business opportunity, and is making daily efforts to create unique solutions that support its customers.
It aspires to contribute to the society through its business, and become a vibrant, shining company where everyone involved, including its
customers, management and employees, is fulfilled.

SUN PLANNING SYSTEMS Co., Ltd.

Corporate Data

Since its foundation in 1980, SUN PLANNING SYSTEMS Co., Ltd. has been committed to being a prime vendor, and engaged in client support
business offering one-stop system development service that covers from requirement definition to systems development and operation. It alsooffers business solution services leveraging on the know-how obtained through on-going support of its customers, listening to their problems andproposing new solutions. BPM/RPA and diagnostic systems solution have become the growth engine that supports its strong corporate growth.
Based on its management philosophy of “sincerity,” “challenge,” and “learning,” the company promotes and devotes itself in becoming thebest partner of its customers to contribute to the creation of benefits to the society, customers, employees and shareholders.

CPU Inc.
CPU Inc., was the first in Japan to develop CAD software for construction planning to be used on personal computers (NEC PC-9801) in
1983. Since then, it has become a software development and sales company creating many software that improve business efficiency, with
CAD construction software and civil engineering surveying systems for construction and civil engineering industries as the mainstay products.
More recently, it has been providing regional ICT platform services to local organizations and various institutions such as municipalities andneighborhood associations, offering ICT service proposals, installation and operational support to resolve social issues.
As a member of the EXEO Group and with its pioneering spirit, CPU Inc. will take on the challenge of creating products with ICT to resolve
issues of our customers and the society and providing total solutions.

Winner Engineering Pte. Ltd.
Winner Engineering Pte. Ltd. became a member of the EXEO Group in October 2019 through stock acquisition by EXEO GLOBAL Pte.
Ltd., our headquarters for overseas business.
Since its foundation in 1975, it has been engaged in many air conditioning and hygiene facilities works and electrical works in
Singapore. It was an early adopter of BIM for design and surveying as well as new construction methods such as the PrefabricatedPrefinished Volumetric Construction (PPVC). Its growth was achieved by the business operation that flexibly responded to the changes
in the domestic construction industry and focused on leading-edge trends.
By integrating the company’s air conditioning and hygiene works technologies with the business network and ICT/electrical works
technologies of other Group companies in Singapore (DeClout Group and Leng Aik Engineering), Winner Engineering Pte. Ltd. willcontribute to the development and growth of the overseas business and further business growth of the EXEO Group.

Corporate Report 202072