Integrated Report 2021

On October 1, 2021, the Company name will change to EXEO Group, Inc.

Integrated Report2021

Cultivating technologicalcapabilities
Since our founding in 1954, the technological capabilities
that enable us to build high-quality informationand communication infrastructure have beena consistent source of our competitiveness.
With this in mind, we are striving to develop
engineers in the information network
cabling category̶engineers who can
Corporate philosophy

serve as leaders of value creation.
This is the top management priority

Cultivating technological capabilities,
seeking affluence, and contributing to society

at the Kyowa Exeo Group.

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.
The corporate philosophy clearly answers the question: “Why does the Kyowa Exeo Group exist?”
The utmost ground for existence is the Groupʼs 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 by contributing to society through activities
in the pursuit of state-of-the-art technologies.

Contents
Value creation
story

Value creation
strategy

Editorial Policy
Our journey .............................................................. 5
Value creation process .............................................. 7
Financial and non-financial highlights........................ 9

Referenced guidelines● International Integrated Reporting Framework●

Company-Investor Dialogue for Collaborative Value Creation

Message from the President .................................... 112030 Vision, the Medium-Term Management Plan ... 17
Message from Director in charge of Finance............ 25
Strategy by Segment ............................................... 27●(Ministry of Economy, Trade and Industry of Japan)
GRI Sustainability Reporting Standards (Global Reporting Initiative)●

SASB Standards (Sustainability Accounting Standards Board)(International Integrated Reporting Council)

Scope of reporting
Period: April 2020 to March 2021

(includes some information relating to before or after the reporting period)

Scope: Kyowa Exeo and its consolidated subsidiaries

1

Value creation
capabilities

Environment / Society ............................................. 33
Governance ............................................................ 45(in some cases Kyowa Exeo Corporation only)

Notice on forward-looking statements

Data section

Eleven-year major financial data .............................. 57
Analysis of operating results and financial status ..... 59
Consolidated financial statements ........................... 63
Corporate Data ....................................................... 67

EXEO Integrated Report 2021

IssuedAugust 2021 (Next scheduled issue: August 2022)

This corporate report contains forward-looking statements such as future businessperformance outlook of Kyowa Exeo. As these statements are based on the information
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 thiscorporate report is not intended for the purpose of soliciting investment, all users of thisreport 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.

5WorldSkills Competition
Gold medal winners

employees

Held once every two years, theWorldSkills Competition is one of theworldʼ s largest skills competitions, with
contestants from around the worldcompeting in more than 60 occupations.
The Kyowa Exeo Group has had five gold
medalists in the competition to date.
EXEO Integrated Report 2021

2

Contributing to society
Amid mounting concerns about its expected impact, climate change has
become an urgent priority for the international community.
Through the construction and maintenance of solar power plants
and biomass boilers, the Group aims to contribute to increased use ofrenewable energies. In this way, we are working toward
the realization of a carbon-neutral society.

Power generation
capacity of solar panels
installed612

MW

The Group is helping to build a
recycling-oriented society through thedesign, construction, and maintenance of
solar power generation facilities. As of theend of March 2021, the cumulative totalof facilities constructed was 448 locations
across Japan, with an aggregate power
generation capacity of 612 MW.

Seeking aff luence
Education has an enduring power to enrich childrenʼs lives.
We provide learning device packages for schools that
support the GIGA school program. In this way we help
promote education that uses a tailored approach
to foster the creativity of each individual student.

3

EXEO Integrated Report 2021

Elementary and junior highschools that have adopted the“Exeo GIGA School Package”

About

5,000

schools

The Kyowa Exeo Group has introduced its
GIGA school package to approximately
5,000 schools, or approximately one sixthof all public elementary and junior highschools in Japan. By participating in thisinitiative, we are helping to enhance theeducational ICT environment for children.

EXEO Integrated Report 2021

4

Value creation story ｜ Our journey

Value creation story

Value creation strategy

Value creation capabilities

Our heritage and our future:
Delivering value by connecting people

Data section

October 2021
Change the company name to
EXEO Group, Inc.

2018

C-Cube, Seibu Electric Industry,and Nippon Dentsu madeGroup companies

Net sales in FY2020

1998

Entered the network
integration business1986(consolidated)¥573.3

1991

Entered theenvironment businessbillionChanged the company name to
Kyowa Exeo Corporation

1982

Entered the system
integration business

1972

Listed on the First Sectionof the Tokyo Stock Exchange

May 1954
Established Kyowa Densetsu Kaisha, Ltd.

1954
Societaltrends

1960
●

5

1970

1980
Privatization of NTT● Liberalization of
telecommunications●

Rapid economic growth

1990●

Emergence of mobile phones

2000
●
●

Emergence of the Internet
Increasing severity of climate change

2010
●

2020

Internet of Things

1954-

1970s

1980s

1990s

2000s

2010s

Development of a high-quality
telecommunication infrastructure
network across Japan

Full-fledged overseas expansion of
telecommunication infrastructure
construction

Expansion of business domains
following liberalization of
telecommunication businessResponsible for the spread of mobile
communications and the upgrading ofcommunication networks

Expanding business in theenvironmental field to contribute toenvironmental issues

Shift to total ICT
solutions provider

As Japan entered a period of rapid economic
growth, its telecommunication network,
particularly telephones, became an
indispensable aspect of its infrastructure. We
were responsible for the construction of
telecommunication facilities throughout Japan,
contributing to the development of thetelecommunication network.

In addition to construction contracting, webegan to engage in design work. We also
started to receive orders for numerous
projects overseas as well. We established local
offices in locations such as Brazil and the
Middle East, contributing to the developmentof telecommunication infrastructure aroundthe world.

With the liberalization of telecommunication,
the telecommunication industry entered a new
era in which multiple operators competed toprovide better services. We worked to diversify
our business and meet the diverse needs oftelecommunication carriers.

In addition to the widespread use of cell
phones, there was growing demand for highstandard telecommunication networks such as
optical fiber communication and digitalcommunication. With this businessenvironment providing a tailwind, we
strengthened our construction capabilities tohandle large-scale projects.

Amid growing public concern about theenvironment, we expanded our services toprovide integrated construction, operation,and maintenance of waste treatment
facilities and biomass boilers. This enabled us
to take advantage of our technicalcapabilities, cultivated throughtelecommunications construction.

As businesses ramped up their efforts toadapt to the IoT era, characterized by the
spread of smartphones and tablets and theshift to cloud services, we pivoted to becomea total ICT solutions provider.

EXEO Integrated Report 2021

EXEO Integrated Report 2021

6

Value creation story ｜ Value creation process

Value creation story

Providing wide-ranging value tosociety using engineering capabilities
Issues/CapitalBusiness overview

Social issues

Telecommunications Carrier Business

Environmental destruction,
depletion of resources● Aging infrastructure andnatural threats● Depopulation andhollowing-out due to a
declining population●

Changes in industry andsociety
Rapid technologicalinnovation● Change from goods toexperiential services● Changes in social awareness●

Capitals that support ourcapabilities
Number of qualified
employees (total)
Construction/
civil engineering

5,920Electrical/environmental/
communications
engineering

14,963
6,097

IT

Innovative work stylereforms

3.5

Rankedstars
in the Nikkei Smart WorkManagement Survey

Our workplace enables
diverse human resources
actively involved
Selected as Nadeshiko
Brand in 2020 and as
Semi-Nadeshiko Brand in
2021.

Business locations
Japan:

37(15 branches, 22 offices)

Overseas:

3(Singapore, Philippines, andThailand)We provide integrated, high-quality services fromplanning and design to construction, operation, andmaintenance for all communication facilities oftelecommunications carriers throughout Japan. This isbacked by a proven track record and best-in-classtechnical capabilities in the construction of
telecommunications networks, which we havecultivated since our founding. Our advanced technicalcapabilities have garnered accolades both at home andabroad, including five gold medals in the Information
Network Cabling category at the WorldSkills
Competition.

Data section

cultivated over six decades
Enabling an advanced
ICT society

Sales composition
by businessTelecommunications
Carrier Business47%(FY2020)

Continued upgrading of broadband telecommunications
Contributing to building infrastructure that is resilient tonatural disasters● Improving the population coverage of communication areas● Developing next-generation infrastructure inunderpopulated areas(Project on Promoting Advanced Radio Environment
Improvements)●●

Related SDGs

Sales composition
by business
Urban
Infrastructure
Business

26 %(FY2020)

Enabling a convenienturban lifestyle
●

●

●
●
●

Using
Ensures a globally comparable level of landscape bytechnologicalpromoting the undergrounding of overhead power lines
Expanding public investments for building national
capabilities
resilience
Renewal of aging waste disposal plants
to help build
Renewable energy sources, including biomass
Promoting “barrier-free”
a more affluent
society

Related SDGs

System Solutions BusinessWe offer total solutions utilizing ICT in thedevelopment, maintenance and operation cloud-based
enterprise communications network systems andvarious enterprise systems for telecom carriers andcompanies in the finance and manufacturing sectors.

Value creation capabilities

Value provided to society

Urban Infrastructure BusinessWe provide an integrated system from design andconstruction to maintenance, covering communication
infrastructure including cable television and railroad
communication facilities, electricity for office buildings
and data centers as well as a variety of infrastructure
works, including related facilities and urban civilengineering for pole-free facilities. Recently, we havebeen planning and proposing the provision of
eco-technologies that have low environmental impact,
such as solar power generation and biomass plants,
while also offering a full range of services fromconstruction to operation.

Value creation strategy

Sales composition
by business

SystemSolutions Business27%(FY2020)

Realizing a prosperous society
through IoT technologies
Reform of industrial structures through the cloud, IoT, bigdata, etc.
● Promotes the deepening of communication● Solutions for advanced security● Providing the environment for work style reforms andproductivity improvement● Providing an ICT environment for high-quality education●

Related SDGs

Shareholdersʼ Equity to
Total Assets

58.1％
7

EXEO Integrated Report 2021

EXEO Integrated Report 2021

8

Value creation story ｜ Financial and non-financial highlights

Value creation story

Value creation strategy

Value creation capabilities

Data section

Financial

Orders received¥

631.0 billion 13

Net sales

Change year on year

+

¥

％

Orders received (¥Billion)

573.3 billion 9

Operating profit

Change year on year+

Net sales (¥Billion)

631.0

524.5

424.3
317.8

304.2

301.4

300.4

+

273.1

301.3

318.5

300.9

287.4

298.8

¥

％

Operating profit margin (%)

24.1 billion 55

Change year on year+

Profit attributable to owners of parent (¥Billion)

31.7

40.2

31.1

25.6

312.6

18.0

20.7

18.3

18.4

24.1

20.8
14.9
11.3

8.9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

ROE

8.8％ 2.9+

ROE (%)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

ROA

5.2％ 1.6

Change year on year+

Shareholdersʼ equity (¥Billion)

ROA (%)

263.8

266.4

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020¥

pointsTotal assets (¥Billion)

(FY)

285.6

12.2

12.1

217.33 56+

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

¥

％

82 3
+

％

Dividend per share (¥)

Payout Ratio (%)

82
70

416.4

146.2
121.9

150.7

157.8

80

261.3
228.4
181.2

135.3

238.3

243.4

217.33

189.42147.75217.0

109.25200.4

123.83 125.9

145.2450

139.75

74.96

113.1

20

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Non-financial(FY)

Change year on year

2

–

％

15.5

9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

2014

15.7

EXEO Integrated Report 2021

13.8

2015

Ratio of women in managerial positions

1.8％ 0.2

Change year on year

32

38

46

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

2016

2017

Percentage of annual paid leave taken

64.0％ 1.0

Change year on year

points+Industrial waste recycling rate (%)

15.2
14.0

94.4％ 1.3+

CO2 emission (thousand t-CO2)

2013

(FY)

Industrial waste recycling rate

11.7 thousand t-CO 7.5

20122011 2012 2013 2014 2015 2016 2017 2018 2019 2020

22

24

Scope of data collection: Kyowa Exeo Corporation

CO2 emission

16.5

(FY)

Change year on year

390.25

444.9

175.5

15.6

13.7

Dividend per share

Change year on year

Earnings per share (¥)

491.5

17.9

7.8

Earnings per share

Change year on year

points

％

36.6

573.3

423.7

325.0

324.1

36.6 billion 18

Change year on year

Operating profit (¥Billion)

556.3

288.5

¥

％

Profit attributable to owners of parent

Change year on year

pointsRatio of women in managerial positions (%)+

Ratio of women to total new hires (%)

pointsPercentage of annual paid leave taken (%)

14.8

2018

12.6

11.7

2019

2020

(FY)

2013

2014

2015

2016

2017

2018

2019

2020

(FY)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

EXEO Integrated Report 2021

10

Value creation strategy ｜ Message from the President

Value creation story

Value creation strategy

Value creation capabilities

Data section

Guided by our 2030 Vision, we will
embrace bold changes, breaking out of ourmold in our endeavor to create new value.
Our purpose

Using the strength of our on-site engineering capabilities to provide value tosociety in a wide range of fields

Tetsuya Funabashi
President & CEO

Since its establishment in 1954, the Kyowa Exeo Group has helped to solve various social issues
and to enrich peopleʼs lives. Maintaining our core competence in specialized technologies in
the field of information and communications infrastructure, we have expanded our businessdomains to meet the needs of the times, including: electrical infrastructure, civil infrastructure,and environmental infrastructure; network integration; and system integration.
Our Groupʼs greatest strength lies in the advanced technical capabilities that we havecultivated through our experience in many fields. In information and communications networks, we
provide a full range of services throughout Japan, from planning and design to construction,
operation, and maintenance of a wide range of telecommunications equipment. In urban
infrastructure also, we contribute to society in various settings, using the electrical and civilengineering technologies that we have developed through telecommunications construction.
Such settings include railroads, data centers, water supply and sewage systems, and waste
treatment plants. In system solutions, we fully leverage ICT (Information and Communication
Technology) solutions to meet the diverse needs of our customers, in areas such as businessprocess reengineering, information security enhancement, and energy conservation. Using
these diverse technical capabilities, we hope to create even more new value for society in the
future. We will do this by combining our on-site capabilities in physical areas such as
telecommunications, electricity, and civil engineering with our solution capabilities in cyberspace
through ICT.
I believe that another strength of our Group is our corporate culture of never evading
problems. In the process of construction, if we find that the cost or geographical conditions are
difficult, we do not abandon the project, instead holding fast to our commitment to ensurethat we respect the promised deadline. We maintain this firm determination to do our utmost
as we work together with our subsidiaries and subcontractors. The foundation for the growthof our Group is the trust we have earned from our many customers through diligent and sincere
work. Going forward, we will continue to place importance on this positive corporate culture.
Summary of previous medium-term management plan

Achieved expansion in business scale through management integration
Improving quality is our next challenge
Fiscal 2020 was the final year of our previous medium-term management plan, which started infiscal 2016. At the start of the medium-term management plan five years ago, the Groupʼs
consolidated net sales were less than ¥300.0 billion and operating profit was approximately
11

EXEO Integrated Report 2021

EXEO Integrated Report 2021

12

Value creation strategy ｜ Message from the President*1 C-Cube, Seibu ElectricIndustry, and Nippon Dentsu*2 GIGA school program
The Ministry of Education,
Culture, Sports, Science andTechnology (MEXT) is promoting
this program, which provides
one computer per student,
integrating this with access to ahigh-speed, high-capacity
communication network. The
goal is to create an educational
ICT environment that will leave
no child behind, nurturing thequalities and abilities of a diverse
range of children, including thosewith special needs.

Value creation story¥20.0 billion. In fiscal 2018, the third year of the medium-term management plan, the Groupmerged with three west Japan-based companies*1 in the same industry. As a result, we rapidly
expanded the scale of our business, with Group net sales growing to more than ¥400.0 billion.
In light of this expansion in scale, we partially revised the performance targets of themedium-term management plan for fiscal 2019, raising the targets to orders received of¥525.0 billion, net sales of ¥525.0 billion, and operating profit of ¥32.0 billion. When weformulated these targets, they were viewed as quite aggressive. But in fiscal 2020, the Group
achieved orders of ¥631.0 billion, sales of ¥573.3 billion, and operating profit of ¥36.6 billion̶
all far exceeding the targets of the revised medium-term management plan. This was due tothe acceleration of 5G base station development, the progress of the GIGA School Program*2,
and the promotion of digital transformation by companies as they adapted to new ways ofworking.
In this way, throughout the five years of the previous medium-term plan we have beenable to achieve a certain degree of success in terms of expanding quantity. At the same time,
however, we recognize that there are still issues that we must overcome in terms of improving
the quality of Group management. We are focusing in particular on creating further synergies
with the three companies in western Japan to enhance the profitability and earning power of
the Group.
In fiscal 2017, prior to the business integration, our operating profit margin was the highest
in the industry. However, since the profit margins of the three western Japan companies wererelatively low, the profit margin of the entire Group temporarily declined immediately after
the business integration.
Over the following two years, we implemented rationalization and cost reduction efforts
at individual companies as well as group-wide collaboration measures. As a result of these
efforts, we have already improved our profit margin to a certain extent. We believe, however,that by standardizing business processes and pursuing synergies we can further strengthen
the profitability of the entire Group.
Aims of the 2030 Vision

Realizing our vision while helping to solve social issues
The Kyowa Exeo Group recently announced “2030 Vision,” our long-term management strategy.
Since I became vice president three years ago, I felt that there was a need for a management
strategy that would take a medium- to long-term perspective. As mentioned above, we havea good corporate culture that advocates tackling the job at hand with sincerity. However, intodayʼs rapidly changing business environment, the pursuit of sustainable growth requires
awareness of the major trends in society. We must look a little higher and further into the
distance, trying to visualize the Company that we want to be in the future. That is how we
can become a company where employees are inspired to be creative, where young employees
can also feel excited and optimistic about the future. With this in mind, about two years ago,

p.17 “2030 Vision, theMedium-Term
Management Plan”

Outline of the 2030 Vision

SloganMedium-Term Management Plan
(FY2021-FY2025)

Connecting our world ‒ to all our tomorrows

2030

2025
Three challenges toward achieving our vision

2020

13

EXEO Integrated Report 2021

Challenge 1

Innovation to solve issues

Challenge 2

Engineering to solve issues

Challenge 3

ESG management

Value creation strategy

Value creation capabilities

Data section

we began discussing the formulation of a long-term vision within the company, asking ourselves
questions such as what kind of company we want to be in 10 years and what kind of work
we would need to do to achieve that vision. Through a series of discussions with eachdepartment, including young employees from group companies, we determined the visionof the company in 2030, along with strategies and goals to achieve this.
The basic premise of the long-term vision is that the mission and purpose of a company
is to help solve various social issues. We considered from various angles how we can contributeto the many social issues, such as environmental and resource problems, as indicated in the
United Nations SDGs. As a result of that process, we have set four models for the society
we want to pursue for 2030. To achieve these goals, we have clarified the areas in which theGroup can contribute and the services and solutions that we should provide.
The slogan for the overall vision is “Engineering for fusion ̶ Connecting our world to all our tomorrows.” This phrase encapsulates our intention to create a new field ofengineering by fusing, through a platform, our engineering capabilities in the physical spacewith our solution capabilities in the cyber space. Through this approach we will pursue
sustainable growth, creating value that contributes to society.
We have identified three challenges that we need to address to create new value. The
first challenge is to promote innovation. First, we will promote the digital transformation of
our own operations. We will then focus on developing various digital solutions to help solve
our customersʼ problems.
In the future, we aim to build a platform that is optimized for specific issues that customers
face in areas such as data analysis, security, and robotics. We will do this by promoting open
innovation. We will no longer adhere to the principle of self-sufficiency, instead enlisting thehelp of external experts with knowledge and expertise that we do not have in-house. The
second challenge is to solve problems through engineering. We will create new value forsociety in the engineering fields of transportation and mobility, environment, urban space,and infrastructure regeneration through “engineering that connects,” integrating the various
business fields in which we have been involved. The third challenge is to implement ESG
management. We will set KPIs for the environment, society, and governance, as well as specifictargets, promoting systematic, continuous efforts to achieve them.
While preserving our positive corporate culture of working diligently to the end andnot evading problems, we will also take on the challenge of making bold changes. We will
form cross-Group initiatives so that we can break out of our mold and realize our vision for
the future.
Goals of the new medium-term management plan

Pursue higher value-added services in each of our three business domains
From fiscal 2021, we have started a new medium-term management plan (2021-2025)
based on the 2030 Vision. In fiscal 2025, the final year of the plan, we aim to achieve net
sales of ¥630.0 billion, operating profit of ¥47.0 billion (operating profit margin of 7.5%),
ROE of 9.0% or higher, and EPS of ¥280 or higher.
In each of our three businesses of telecommunications carriers, urban infrastructure, andsystem solutions, we will identify the issues and measures that we need to take to overcome
them. We will formulate growth strategies based around the provision of higher value-added
services and implement these in our activities.
In the telecommunications carrier business, our current key theme is responding efficiently
to 5G. Although the number of installed stations is expected to increase going forward dueto the rapid development of 5G infrastructure, the total amount of orders received may notincrease significantly. This is because 5G wireless base stations are expected to become smaller
and the unit cost of construction is expected to decrease. In addition, in light of Japanʼsdeclining birthrate and aging population, acquiring construction personnel is likely to become
even more difficult in the future. To secure a certain level of profit even under suchcircumstances, we will improve the efficiency of the construction process, including the useof digital transformation and promoting multi-skilling among our staff.

p.25 “Strategy by
Segment”

EXEO Integrated Report 2021

14

Value creation strategy ｜ Message from the President*3 BIM/CIM
A system to optimize andenhance not only construction
and maintenance management
but also the full range of
construction work through theapplication of 3D models in theplanning, survey, and design
stages.

In the urban infrastructure business, a major theme is the development of new domains.
In terms of area development, we hope to increase electrical work for properties such as officebuildings in the Tokyo metropolitan area and the Kansai region, not only for new construction,
but also for renovation work. We will also consider mergers and acquisitions to expand ourbusiness. In addition, in our specialty area of data centers, our task is to expand orders not
only for electrical work, the most difficult core part, but also for telecommunications equipment,
server racks, and air conditioning equipment within the facility. By using advanced digitaltechnologies such as BIM/CIM*3 and AI to automate design, cost estimation and to reform
work follow-up, we will increase the number of complex orders for one-stop services thatcover the entire building.
In the system solutions business, our theme will focus on generating even higher added
value. The Groupʼs system solutions business originally grew through the development oflarge-scale software on consignment, but it is difficult to increase profitability through thisapproach alone. We need to pivot to a new business model based on co-creation andcollaboration with customers. As well as venturing into higher value-added fields such as
AI, robotics, and drones, we must provide a complete range of services from consulting tosoftware development, hardware installation, maintenance and operation, and data analysis.
With this objective in mind, we launched the Digital Consulting Headquarters last year andhave started activities by gathering members from divisions across our organization.
Global expansion

Tackling new businesses that are feasible only in overseas markets
Alongside implementing the above business strategies, during the five years of this mediumterm management plan we would like to again take on the challenge of expanding our businessoverseas. Our current overseas operations include local subsidiaries in the Philippines, Thailand,
and Singapore, as well as Exeo Global, the operating company we established in Singapore
in 2018 to oversee regional business operations in Asia. We will for the time being continue
to focus on using the experience and technological capabilities we have cultivated in Japanto target the APAC (Asia Pacific) region, while at the same time pursuing market development
through M&A. By 2025, we aim to have grown our top line to the extent that our overseas
business comprises a certain percentage of our portfolio.
In developing overseas business, we aim to actively experiment with businesses thatwould be difficult for us to attempt in Japan. We have already launched, as one of our systemsolution businesses, a new business in Singapore, namely our digital platform business forcustoms clearance, which has captured a certain share of the market. This platform centersaround import- and export-related procedures between government agencies and logistics
providers. It contributes to smooth and paperless international trade by making these procedures
available to users digitally. By tackling overseas the challenges of domains in which we have
yet to gain experience, we aim to broaden the scope of our business. As we strengthen thesecapabilities, we will take the knowledge and expertise we acquire and feed that back to Japanor apply it to other regions.
Strengthening our management base

Focus on continuous improvement of safety and quality as well as enhancing
people development and group management
In our medium-term management plan, we will work to further strengthen our managementbase alongside pursuing our growth strategies for each business segment. We place particularemphasis on safety and quality as the foundation that supports the continuity of our business.
Improving safety and quality is a never-ending challenge. But it is one that we will workrelentlessly in addressing, as we continue to invest in taking our safety and quality to thenext level.
We will also work to strengthen the development of our employees, arguably a companyʼs
15

EXEO Integrated Report 2021

Value creation story

Value creation strategy

Value creation capabilities

most important management resource. Against the backdrop of Japanʼs declining birthrate
and aging population, developing the talent who will take responsibility for the future of theCompany has become a major issue for our Group. Our employees development has to dateemphasized on-the-job training in the workplace, based on a mentoring system. However,to be able to respond to todayʼs rapidly changing business environment, we must accelerate
our employees development through a more systematic approach to our education systemand training programs. With this in mind, this year we established an independent organization
called the Human Resources Development Department, which is separate from the Human
Resources Department. Going forward, the Human Resources Development Department
will collaborate with the staff in charge of training at each department and branch to promotegroup-wide human resources allocation and training plans that emphasize overall optimization
based on the group-wide Career Development Program (CDP). We also intend to promote
flexible personnel exchanges in the future, including overseas personnel.
Strengthening group management is also an important issue toward ensuring sustainablegrowth moving forward. We see two aspects to this. The first aspect is the visualization andstandardization of business processes. We are promoting process standardization throughthe unification of management systems. As a first step, from the summer of 2021, we aretransitioning our process management of fixed-line access construction*4, previously separate
for eastern and western Japan, to a unified nationwide system. We also plan to standardize
the process for mobile construction by the end of this fiscal year. In addition, over the next
few years, we will build an integrated system for core systems, including accounting, tostandardize business processes across the entire Group. The other aspect is sales cooperation.
To build a new system for cooperation, such as mutual support for operations in order-taking
activities and construction, we have started to regularly hold cross-Group meetings. We will
aim to allocate management resources flexibly to maximize the Groupʼs strengths. Throughdynamic personnel exchanges, we hope to change attitudes and foster the perspective of
overall optimization throughout the Group.

Data section

p.36 “Human Capital”.

*4 Access construction
Construction of communicationlines connecting
telecommunications carriersʼ
base facilities with end users.

Message to stakeholders

Combining the Groupʼs strengths and continuing to grow as one
On October 1 of this year, the Group will change its name from Kyowa Exeo to the ExeoGroup. Our company was established in 1954 as Kyowa Densetsu. When we decided 30
years ago to expand into areas other than electrical installation and telecommunications
construction, we added to our company name the Latin word “exeo,” which refers to breaking
out of oneʼs mold and venturing out. This is how we became “Kyowa Exeo.” Over the following
30 years, our group companies grew to more than 100, and we also greatly expanded ourbusiness domains. For us to continue to grow, however, we must recombine the diversified
management resources of the Group and create new value. To achieve this, we must strengthen
our Group management more than ever before.
Our new company name, Exeo Group, expresses our strong desire for every individual
member of the Group to apply their abilities and work together as one team to realize our
future.
To solve social issues ̶ the universal mission of a company̶we will continue to integrate
our engineering capabilities and hardware and software technologies and development
capabilities, as well as advanced technologies including AI. We aim to become a company
that is needed not only in Japan but also in the global society. Thank you to all of our
stakeholders for your continued understanding and support of our Group.
August 2021

President & CEO

EXEO Integrated Report 2021

16

Value creation strategy ｜ 2030 Vision, the Medium-Term Management Plan

Value creation story

Value creation strategy

Connecting engineering technologies tosolve social issues

Value creation capabilities

Data section

2030

Medium-Term Management Plan
(FY2021-FY2025)

Solving social issues is the universal mission of the Kyowa Exeo Group.
Our Group has the ability to use innovation to connect and combine diverse engineering fields.

p.21

We will continue to embrace new challenges, aiming to be a corporate group that is needed bysociety not only in Japan but also worldwide.

2030 Vision

Social issues

Role of the Group

Environmental destruction, depletion of
resources

To realize our vision of society in 2030, we will connect
engineering sites and solutions to create a cycle of innovation.
We will expand into new engineering fields and work to solve
social issues.

Global warming and climate change due toCO2 emissions● The effects of microplastics on ecosystems● The depletion of resources associated witheconomic growth●2025

Innovation cycle

Aging infrastructure and natural threats
Renovation of aging infrastructure
Preparation for frequent natural disasters● Response to the new normal created by the
COVID-19 pandemic●

Connecting our world ‒to all our tomorrows●

Construction
site(Physical space)

Platforms

Solutions(Cyberspace)

Depopulation and hollowing out due to a
declining population
Declining birthrate and aging population,evident decline of the working-age population● Depopulation and aging in rural areas● Hollowing out and the decline of cities●

Three challenges toward achieving our vision

Changes in industry and society
Development of information andcommunications technology, including thechange from 5G to 6G● Changes in everyday life due to AI and robotics● Signs of a new society due to DX (Society 5.0)

Carbon-neutral society

Innovation to solve issues

Challenge 1

2020

Rapid technological innovation

Vision of society in 2030●

Engineering to solve issues

Challenge 2

A smart society where people live healthyand vibrant lives
Global society where diversity is enjoyed

ESG management

Challenge 3

Change from goods to experiential services
Change of services from ownership to use,such as XaaS
● Providing added value through digital services● Changing the business model to create new
businesses

Society without poverty or inequality

●

p.19

2015

p.20

Changes in social awareness
Increasing awareness of human rights,
including LGBTQ rights● Progress in diversity and inclusion● SDGs and ESG as essential indicators●

Image of business portfolio transformation
Systemsolutions

Telecom
carriers

13％
Urban
infrastructure

23％

17

EXEO Integrated Report 2021

64％
Integration of threecompanies in the same
industry in western Japan● Expansion of operations
through M&A activities● Promotion of global
business
●

27％
26％

30%
47％
Entry into the social
infrastructure
renovation business● Expansion of therenewable energy business● Entry into a new phasein global business●

Systemsolutions40%

Telecom
carriers

three segments
Expansion into new businessfields● ESG management to enhance
corporate value● To become a company that
contributes to the achievementof the SDGs●

30%

Sales of theto be 1:1:1

Urban
infrastructure

EXEO Integrated Report 2021

18

Value creation strategy ｜ 2030 Vision, the Medium-Term Management Plan

Value creation story

Three challenges toward achieving 2030 Vision

Innovation to solve issues

Challenge 1●●

Digital transformation at Exeo

Providing solutions

Building a platform

AI

Exeo
digital solution

Exeo
engineering platform

Construction anddevelopment

DesignCloud,
big data

Challenge 2

Maintenance andoperations
5G/IoT

Digitalization

Quality
improvement

Productivity
enhancement

Developing
new businesses

Data analysis

AI, analytics

Security

Robotics

BIM/CIM

VR/AR

Engineering to solve issues

Value creation capabilities

Global society where diversity is enjoyed

The sophistication of resource recycling and energy
Enhancement of renewable energy plants and zero waste gases●●

Workstyle reforms that consider globalization and diversity
Development of communications infrastructure in APAC

A smart society where people live healthyand vibrant lives

Society without poverty or inequality

Smart cities, buildings and homes using advanced communications● Medical, government and social systems for an aging society●●

Cities●

Education solutions for equal opportunities in education
Digitalization of industry to eliminate inequalities in industry

FCV/EV

Transportation
systemAdministrative
systemSmart grids

Smart factories

Renovation of aging
infrastructure

Integrating diverse engineering fields to create new value and solve issues
Drone services

Possible main engineering fields
CitiesEngineering
PeopleInformation
thatconnects

ThingsChallenge 3

Transportation, mobility● Public infrastructure development in response to
the increasing mobility of people and increasingly
complicated logistics● Development of 5G, AI and robotics, including
automated driving and communications
infrastructure
City: data space, offices● Expansion of data centers in response to theincreasing use of cloud services● Urban development including the developmentof smart offices and smart cities

Environment, energy● Promotion of renewable energy as an
initiative mitigating global warming● Promotion of actions for the recycling ofresources
Infrastructure renovation● Response to demand for renovation andreplacement● Response for the renovation and maintenance of aging infrastructure

ESG management
ESG management to enhance corporate value and contribute to the achievement of the SDGs

Solving social
issues throughbusiness

ESG Management

Social issues

Solutions to issues

Environmental destruction, climate change
Depletion of resources, reduction of waste
Aging infrastructure
Declining working-age population“Smarter society”

Renewable energy business
Reuse business
Infrastructure renewal business
Robotics, AI and automation solutions
Infrastructure platform

Management in consideration of a sustainable environment
Promoting workstyle reforms and diversity● Maintaining and enhancing corporate governance●

Data section

Vision of society in 2030

Carbon-neutral society

Promotion of innovation and digital transformation to build a standardized engineering platform

Safety quality

Value creation strategy

Regional areas

5G

Local 5G

Smart grids

Renovation of
aging infrastructure

Mega-solar power
plantsOffshore wind
power

AgriTech

Local 5G

Smart forestry

Smart grids

Healthcare

Online service

Smart house

Wearable

Remote learning

Telework

E-learning

5G$

FinTechOffshore

Urban infrastructure

XaaS

Communications
infrastructure

Trade platform

Neutral hosting

Reuse/Recycle

Global

6G service

Biomass

Resource recycling
systemPrivatelife quality

6G

●

19

EXEO Integrated Report 2021

EXEO Integrated Report 2021

20

Value creation strategy ｜ 2030 Vision, the Medium-Term Management Plan

Value creation story

Value creation strategy

Value creation capabilities

Data section

Medium-Term Management Plan (FY2021-FY2025)

We will spend the next five years building a solid foundation
for realizing our vision for society in 2030.

Strategies in each businessTo achieve our performance targets for fiscal 2025, we will continue to take on the challenge of further expanding our business by accurately
grasping changes in society and the market. We will pursue our vision for each segment with an eye to 2030.
Our aims

Tactical approach

Performance-related achievements and targets
630.0

2018
C-Cube, Seibu Electric Industry,and Nippon Dentsu madeGroup companies

573.3

Net sales

47.0

36.6

¥

630.0

Operatingprofit¥Construction of 5G infrastructure
Improve profitability and productivity

Telecoms
Carriers

FY2025 Results targets

47.0

18.4

Developing new business fields
Urban
Infrastructure Advancing digital transformationin construction

¥

EPS

2016

2017

2018

2019

2020

Targets Net Sales: ¥525.0 Billion
Medium-Term
Operating profit: ¥32.0 Billion (6.6%)
Management Plan
ROE 7.8%(FY2016-FY2020)
EPS ¥189％ or more

SystemSolutions2025 (Target)

280

or moreEvolving intoa solution provider

●

(FY)

Challenges to address

Medium-Term
Management Plan
(FY2021-FY2025)

In the first five years leading up to 2030, we will work to strengthen ourmanagement base. We will do this not only using business strategies to achieve our
performance targets, but also by pursuing the six themes listed on the right.
We will strive to build a stronger foundation through our own ideas, creativity,and ingenuity, as well as through active participation in initiatives to address
important social issues of recent times and related businesses. Of these, humanresources strategy is positioned as a particularly important theme. As we continue
to respond to the work styles of the new era, we will position talent acquisitionand development as a central issue for carrying out new businesses.
In addition, we will aim for sound business growth while always maintaining
awareness of the perspective of overall Group optimization. We will also strive toimprove productivity and create new value through the effective use of digitaltransformation.

EXEO Integrated Report 2021

Focusing on high value-added
business
Expanding recurring business

ESG Goals

Shift to renewable energy
Initiatives toward decarbonization,
reduction of CO2 emissions

Contribution to a resource
recycling-oriented society
Use of environmentally friendly green
products

Strengthening our management base21

Pursuing new technologies,
advancing the DX of customers● Cultivating XaaS engineers● Offshoring, improving development
processes

billionEnvironment

p.23 Medium-Term Management Plan (FY2021-FY2025)

Providing engineering toenhance resiliencep.27 Strategy by Segment

8.8

8.2

Entering the environment andenergy businesses● Strengthening the infrastructure
renovation business● Actively utilizing BIM/CIM, AI, etc.

9.0

217

126

2015

9.0

ROE

280

Becoming a partner thatbuilds optimalcommunications
environments forcustomers●

billion(Operating profit margin 7.5%)
287.4

Developing many skills● Digital transformation, offshoring● Integrating operations●

SocialAdvancementof DX

Environment,
energyGovernanceGroupmanagement

Financialstrategy

Targets for FY2025

Rate of adoption of EVs and other
low-emission vehicles

100％

CO2 emissions

10% reduction from FY2020 level

Final disposal rate of industrial waste 50% reduction from FY2020 level
Green product use rate

65%
Aim for zero

Number of women in management
positions

1.5 times compared to FY2020

Number of female employees

25% increase over FY2020

Percentage of male employees
taking childcare leave

20％

Driving work style reforms

Percentage of paid leave used

80%

Achieving transparent management

Ensure diversity in the Board of
Directors and Board of Statutory
Auditors―

Ensuring strict compliance

Serious violations of laws andregulations

Aim for zero

Serious information security
incidents

Aim for zero

Promotion of Diversity & Inclusion

Ensuring thorough risk management

Related SDGs

Purchase of electricity from renewableenergy sources100％(Target: Company-managed sites)

Serious bodily injury and serious
Ensuring safety and quality in business equipment accidents

Safety,quality,BCP

Humanresources
strategy

KPI

Rate of risk assessment implementation
for cases involving significant business 100％risks
p33. Value creation capabilities
EXEO Integrated Report 2021

22

Value creation strategy ｜ 2030 Vision, the Medium-Term Management Plan

Value creation strategy

Value creation story

Value creation capabilities

Data section

Medium-Term Management Plan (FY2021-FY2025)

Strengthening our management base

Theme

Initiative

Theme

Promotion of safe construction through the use of new technologies(AI, VR/AR, etc.)● Quality improvement through on-site ideas (utilization of intellectual property)● Rapid adaptation to various risks (natural disasters, pandemics, etc.)

Achieving a stable financial
base

Initiative●

Responding to changes
in the business environment

Safety,quality,
BCP

Fostering anorganization/culture that
supports safety and quality

Further penetration of safety and quality-oriented culture (thoroughimplementation of basic operations)● Continuation of the crisis management system (permanent establishment of the
Crisis Management Office)●●Keeping the equity ratio highFinancing mainly through interest-bearing debt, including straight bonds andgreen bonds●

Financialstrategy

Developing the biomass business
Taking on the challenge of building offshore wind power generation facilities● Continue to build renewable energy facilities, including solar power facilities(including solar power plants, solar power + off-grid batteries, electric vehicle
power supplies)

Active investment for
growth●Stable and flexible
shareholder returns●

Focusing on investment in growth areas and on strengthening businesses ̶
Investing in three areas: M&A, innovation and digitalization●

Environment,
energyActive contribution toenvironment-related
business●

Promotion of the use ofrenewable energy●●

Reducing the Companyʼs
CO2 emissions●

Promoting energy-saving
activities●●●

Increasing labor productivity●

Developing a culture where
diverse values are respected●

Responding to new ways ofworking in the new normal
created by the COVID-19
pandemic

EXEO Integrated Report 2021

Introducing net zero energy buildings (ZEB)
Purchase of electricity from renewable energy sources●●●

Flexible and agile Groupmanagement

Shifting to low-emissions vehicles, including electric vehicles (replacing all
general vehicles, including those used in sales activities, by 2025)

Promoting the purchase of green products● Promoting telework and paperless operations●

23

Continuing to pay stable dividends
Continuing flexible stock buybacks

Integrating/dividing subsidiaries based on business domains/areas
Maximizing construction/development capabilities by focusing on fields where
the Group is strong● Shifting resources to flexibly use human resources within the Group●

Enhancing adaptability toenable human resources toadapt to changes in thebusiness environment

Human
resources
strategy●Groupmanagement●

Community-based business development taking advantage of each companyʼspresence● Evaluating the businesses of Group companies in consideration ofcomprehensive optimization● Using the Groupʼs own benchmarks, including safety and security benchmarks●

Synergies utilizing theGroupʼs strengths

Hiring more work-ready human resources
Enhancing online training to cultivate human resources quickly

Hiring the high-level IT personnel necessary for digitalization
Increasing the visibility of labor management and establishing appropriate
working hours

Promoting diversity and inclusion
Personnel exchange throughout the Group, including in global operations

Rebuilding the personnel system in response to new ways of working
Cultivation and assignment of employees according to each individualʼscapabilities and career path

Strengthening themanagement foundation
through digitalization

Automating business processes using ServiceNow and RPA
Expediting management decisions using BI and analytics tools● Enhancing the security of business operations● Increasing productivity through nearshoring and offshoring●●

Advancementof DX
Creating new value throughsolutions

Leveraging BIM and CIM to achieve smart construction
Transforming security into a service to expand earnings● Creating new services by applying business models used in new fields overseas●●

EXEO Integrated Report 2021

24

Value creation strategy ｜ Message from Director in charge of FinanceValue creation strategy

Value creation story

Hideo Higuchi
Director and Managing Operating Officer
General Manager of Accounts &Finance Division

In the new medium-term management plan that started infiscal 2021, we have positioned return on equity (ROE) andearnings per share (EPS) as important indicators alongside
net sales and operating profit as performance targets forthe final year (fiscal 2025). We have set ROE of 9% or higher
and EPS of ¥280 or higher as our performance targets forfiscal 2025.
The main goal of our strategy is to continuously improve
profitability and capital efficiency̶in other words, the earning
power of the Company, which declined after the businessintegration with the three companies in western Japan. A
major key to achieving this is strengthening Groupmanagement. I believe that it is important to control costs
by improving the efficiency of existing businesses, sharing
backyard operations, and digitalizing them. At the sametime, we must mobilize the management resources of eachGroup company, investing these in growth areas. In this way
we can create synergies through multiplication rather thanmere addition.
To improve the ROE of the entire Group, we are placing
particular emphasis on operating profit (amount and ratio)in the performance management of each business division
and Group company. By using operating profit (amountand ratio) by business as an indicator, we will monitor thecurrent situation, the effects of each measure, and thefuture outlook. This will enable us to improve operational
efficiency and construction efficiency, and to reduce
indirect costs. In addition, we will aim to strengthen theearning power of the Group as a whole by creatingsynergies in construction and indirect operations including
system sharing.

Overall, we achieved steady financial performance in fiscal
2020. At the beginning of the fiscal year, we were cautious
in our forecasts for both orders and sales due to the impactof the worsening COVID-19 pandemic. As a result, we wereable to significantly exceed our initial targets, with orders
received of ¥631.0 billion (up 13% year on year) and net
sales of ¥573.3 billion (up 9% year on year), both of whichmarked significant increases from the previous year.
The main factors behind the increases in orders andsales were strong growth in the system solutions businessdue to the GIGA School program promoted by thegovernment, and an increase in optical fiber installation
work in rural areas due to progress in the Advanced
Wireless Environment Development Promotion Project. In
addition, the telecommunications carrier business performed
favorably due to wireless base station construction forvarious telecommunications carrier companies, while theurban infrastructure business benefited due to data
center construction.
With regard to wireless base station construction and
the GIGA School project, customers appreciated the synergies
we generated through our Group-wide efforts, such as thesharing of sales information with major subsidiaries andmutual support for construction operations, which led tostrong order growth.
In terms of profit, operating profit increased 18% to¥36.6 billion. Our operating profit margin improved to 6.4%
from 5.9% in the previous fiscal year, due to the effectof higher revenue, improved construction efficiency
following a review of our Group-wide construction system,
and increased productivity through the promotion ofdigital transformation.

Orders received (¥Billion)

Net sales (¥Billion)

Operating profit (¥Billion)

Operating profit margin (%)

ROE (%)

Earnings per share (¥)

Dividend per share (¥)

800.0

800.0

40.0

10

20

400

100

The role of the Finance Division

The role of the Finance Division, as I see it, is ultimately toprotect the company. I tell my staff that to fulfill this mission
we must be guided each day by three principles as our codeof conduct.
The first is risk analysis and information sharing. The
Finance Division receives a variety of information from day
to day from our business divisions, branch offices, and groupcompanies across the country. We must carefully review thiscontent to understand the movements within the Group andpromptly share information on items that may involve risk.
The second principle is working to reduce costs by improving
operational efficiency and managing funds. Our Accounts& Finance Division is also in charge of managing corporate
pension funds. We contribute to the Groupʼs profits bypracticing optimal fund management. The third principle isto strive for accurate and conservative accounting anddisclosure. I believe that an important role of the Finance
Division is to prevent the loss of trust in the company byensuring that information disclosure is based on the facts.
Fiscal 2020 results

600.0
400.0

556.3

631.0

600.0

550.0

424.3

400.0

524.5

573.3 560.0

30.0

36.6
31.7

37.0

7.5

31.1

5.9

423.7

20.0

6.4

15

8.8

10

10.0

200.0

390.25

300
200

8.3
200.0

We regard the return of profits to our shareholders as oneof the most important management tasks. Our basic policy
is to provide stable dividends on an ongoing basis. We haveintroduced the dividend on equity (DOE) as an indicator
starting with the year-end dividend for fiscal 2015. We
calculate the annual dividend with a target DOE of 3.5%. For
fiscal 2020, we plan to pay an annual dividend of ¥82 pershare, an increase of ¥2 from the previous year. For fiscal
2021, we plan to pay an annual dividend of ¥88 pershare, which will mark the 10th consecutive year of
dividend increases.
Our policy is to implement share repurchases in a flexible
manner while comprehensively taking into account market
trends, cash situation, stock price levels, and other factors.
In fiscal 2020, we conducted a buyback of ¥3.0 billion of
our own shares. We plan to carry out a similar buyback in
fiscal 2021.
The Group will continue to aim for sustainable growthin corporate value and shareholder value. Thank you to all
for your continued understanding and support.

In making investments, we determine the necessity andappropriateness of each project by considering it in thecontext of our long-term vision “Engineering for Fusion Connecting our world - to all our tomorrows,” the key
strategies of our medium-term management plan, which isbased on that vision, as well as our business performance,
capital needs, and financial indicators. In M&A, after
confirming that a target aligns with the right direction for
the Group, we make a comprehensive decision based on

6.6

5

Shareholder returns

Investment strategy

18.3

75

217.65217.33

Payout ratio (%)

80

88

70

40

0

2018 2019 2020 2021
(plan)

25

EXEO Integrated Report 2021

(FY)

0

0

2018 2019 2020 2021
(plan)(FY)

2018 2019 2020 2021
(plan)

(FY)

37.7

100

25

0

0

20

17.9

0

2018 2019 2020 2021
(plan)

(FY)

40.4

50

5.9
0

57.2

60

82

139.75

5

Data section

consideration of a range of perspectives, by weighing thefuture potential of the investment project along with theefficiency and risk of the investment.
We will continue to maintain a capital adequacy ratioof around 55%, using bank loans and corporate bonds topursue M&A of domestic and overseas companies that are
engaged in businesses that have high compatibility with ourGroup. We will make upfront investments in areas that canbecome future business pillars, toward achieving sustainablegrowth for our Group. In terms of global expansion, we willcontinue to invest aggressively in M&A and other activities,
focusing on the high-growth Southeast Asian region.
We will also continue to invest in digital transformation
to reform business processes and value chains through theuse of digital technology and to improve operational efficiency
by promoting innovation. In addition, as part of our ESG
promotion efforts, we will continue to invest in strengthening
businesses that contribute to solving social problems suchas environmental and energy issues, aging society, andregional revitalization.

Financial strategy in the medium-term management plan

We will aim to maximize corporate
value by considering risks andprotecting our financials.

Value creation capabilities

2018 2019 2020 2021
(plan)(FY)

2018 2019 2020 2021
(plan)(FY)

0

2018 2019 2020 2021
(plan)(FY)

2018 2019 2020 2021

(FY)

(plan)

EXEO Integrated Report 2021

26

Value creation strategy ｜ Strategy by Segment

Value creation story

Value creation strategy

Value creation capabilities

Data section

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)

Telecom CarriersBusiness

Becoming a partner that builds optimal communications
environments for customers
Our aims

We provide nationwide services fortelecommunications carrier operators,

Construction of 5G
infrastructure

contributing to the enhancement

Tactical approach
Achieve efficient base station
construction● Build a multi-carrier system●of telecommunications
infrastructure.

Improve
profitability andproductivity

Implement strict standardizationand commonization of operations● Use multi-skilling to increase flexibility

Risks

Opportunities

This business is closely linked to the capital
expenditure of the telecommunications carriers
that are our customers. Its performance istherefore easily affected by government policy
or by the business strategies of each carrier.
Our role as the Group responsible fortelecommunications infrastructure construction
requires us to be competitive. We must respondflexibly to changes in the business environment
through constant optimization and productivity
improvements, including digital transformation.

The full-scale deployment of 5G is expected
to drive further increases in telecommunications
network traffic. Forecasts indicate that this will
elevate the importance not only of mobile
communication networks but also of the
fixed-line communication networks that form
their backbones. This will open up opportunities
for us to demonstrate our technologicalcapabilities in areas such as new installation,
maintenance, and renewal of
telecommunications networks.

Main businesses and their strengths
We provide integrated, high-quality services from planning and design to construction, operation,and maintenance for all communication facilities of telecommunications carriers throughout Japan.
This is backed by a proven track record and best-in-class technical capabilities in the construction of
telecommunications networks, which we have cultivated since our founding. Our advanced technicalcapabilities have garnered accolades both at home and abroad, including five gold medals in the
Information Network Cabling category at the WorldSkills Competition.

Results: In addition to increasing the scale of our NCC*
business through aggressive sales and construction activities,
we achieved productivity improvements by strengthening
collaboration with the three companies in western Japanthat joined the Group during the medium-term management
plan period (C-Cube, Seibu Electric Industry, and Nippon
Dentsu), as well as through continuous improvement andstreamlining of business processes.

Sales composition
by businessTelecom CarriersBusiness

47%(FY2020)*New Common Carrier: A generic term for carriers that provide
telecommunications services using their own equipment, having
entered the market following the 1985 deregulation of
telecommunications in Japan. Refers to telecommunications carriers
other than NTT.

Orders received¥ 307.3billion

Challenges: Issues remain to be addressed to respondpromptly to the rapidly expanding needs of each mobile
carrier (NTT DOCOMO, KDDI, SoftBank, Rakuten). These
include securing sufficient systems in the consultation,
design, and construction processes, as well as standardizing
and streamlining operations.

307.3
278.8
228.9
198.1

Medium-Term Management Plan (FY2021-FY2025)
2017

2018

2019

2020

(FY)

Net sales
Access Networks fiber optic
cabling installation service

Construction of
network facilities

Electric Power Equipment
installation engineering service¥ 269.6billion
268.5 269.6
241.6
195.5

Construction of outdoor Mobile
Communication Base Station

27

EXEO Integrated Report 2021

Construction of indoor Mobile
Communication Base Station

Base station equipment
maintenance

2017

2018

2019

2020

(FY)

●

Digitaltransformation,
offshoring●

Mutual support between fixed andmobile phone teams

AI-based automation of photo
inspection, etc.
● Cost reduction by using overseas locations●

Review of previous medium-term plan

Market risks and opportunities

Developing
many skills

Going forward, rapid transformation is expected in a smart
society where people live healthy and vibrant lives. National
government, local governments, and companies will roll out
various initiatives such as the digitalization of government
services and medical services, and the localized use of 5G
in factories, warehouses, and offices. Digital demand in thehome, for activities such as using social media, is expected
to rise. Such activity is expected to lead to further investment
in base stations for 5G, as a key underlying infrastructure.
However, it is assumed that base stations will become smaller
as they increase in number.
To meet these market needs, we must improve ourefficiency and productivity while continuing to ensure highquality in our construction. In addition, the developmentof advanced information and communication networks iscreating new needs beyond new construction. As networks
become more sophisticated, their maintenance is becoming

Integrating
operations●

Optimal location of construction offices, etc.

increasingly important.
We are therefore promoting the development of thekind of personnel who will enable us to implement many
construction projects on schedule with limited staff. To
manage the increasing volume of construction work and thedifferences between busy and quiet periods, we will eliminate
the system of organizing a separate construction team foreach carrier. We will instead build a system that enables
engineers to handle construction work for all mobile carriers,
while promoting multi-skilling, such as in the integration ofaccess technology and mobile technology.
In addition, there will be a need to remove obsolete
equipment to make effective use of limited installation space.
By taking on all of those processes, we can minimize
operational waste, promote further improvement in operating
efficiency, and enhance our cost structure. We will also
implement a variety of other measures, including:commonization of systems within the group; standardizationof operations in each business process; flexible use ofresources including those of subcontractors; optimal allocationof construction sites according to the annual construction
schedule and progress; and integration of offices that had
been fragmented across multiple locations within the Group.
In addition, we will also embrace new challenges suchas digital transformation, including the automation of photo
inspection using AI, and the offshoring of inspection
operations using overseas locations. In the future, we will
actively participate in the development of edge computing*,
which is expected to become a new business for eachtelecommunications carrier, and in new business opportunities
such as the installation and renewal of storage batteries.
Through these efforts, we aim to make our construction
more efficient and productive, toward our strategic aim of
becoming a partner that builds optimal communications
environments for customers.
*A generic term for technologies that process data at the endpointsof a network through the distribution of processing devices (edgeplatforms) in close physical proximity to users and terminals. By
shortening the distance on the network, it is possible to improve
processing response times and conserve backbone bandwidth.

EXEO Integrated Report 2021

28

Value creation strategy ｜ Strategy by Segment

Value creation story

Value creation strategy

Providing engineering to enhance resilience

We provide services related to

Our aims

telecommunications, electricity,

Tactical approach
Integrate communication, electrical,
civil engineering, and planttechnologies● Pursue orders in multiple fields,such as entire buildings●

Developing
new fields

civil engineering, and theenvironment, contributing to
the realization of a society

Advancing digitaltransformationin constructionin which people can live
comfortably.

Pursue construction innovation
through i-Construction● Improve productivity through offshore
use of design work, etc.
●

Review of previous medium-term plan

Market risks and opportunities
Risks

Opportunities

This business handles a wide range of projects,
from public infrastructure work such as tunnels,
water supply and sewage systems, to electricaland communication equipment work for officebuildings. Customer needs are also diverse.
Ensuring high quality project management
requires securing and training engineers inaccordance with the content of the projectand collaborating with the appropriate
business partners.

The use of renewable energy and therenovation and maintenance of aging public
infrastructure are expected to accelerate,
driven by growing interest in decarbonization
combined with the increasing severity of natural
disasters. We believe that the technology andexperience we have cultivated in a variety offields will give us a competitive edge inmeeting these market needs.

Results: As well as expanding business in areas such as data
centers, urban redevelopment, and mega solar power
generation, we actively took on the challenge of new areas(the earth shuttle method, biomass plants, railway-related
equipment, tunnel lighting, etc.). In doing so, we haveestablished a foothold for further growth in the future.
Challenges: As we expand new business, we face ashortage of highly skilled and experienced personnel.
There is an urgent need to train and secure the necessary
talent. In several large-scale projects, certain major
construction work was unprofitable as issues in project
management remained.

Sales composition
by business
Urban
Infrastructure
Business

26%(FY2020)

Orders received¥ 154.2billion

Main businesses and their strengths
We provide an integrated system from design and construction to maintenance, coveringcommunication infrastructure including cable television and railroad communication facilities,
electricity for office buildings and data centers as well as a variety of infrastructure works,
including related facilities and urban civil engineering for pole-free facilities. Recently, we havebeen planning and proposing the provision of eco-technologies that have low environmental
impact, such as solar power generation and biomass plants, while also offering a full range ofservices from construction to operation.

Medium-Term Management Plan (FY2021-FY2025)

153.0 154.2
123.3
84.1

2017

2018

2019

2020

(FY)

Net sales
Installation, replacement or
renewal of underground utilities Maintenance work on
with Trenchless Techniques
underground facilities¥ 147.9billion
147.9
135.2
108.6

74.5

Telecommunications work foroffice buildings

29

EXEO Integrated Report 2021

Photovoltaic plants

Data section

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)

Urban Infrastructure
Business

Construction work to eliminate
utility poles

Value creation capabilities

Construction and operation ofwaste treatment facilities

2017

2018

2019

2020

(FY)

In the urban infrastructure business, we will develop new
business areas in the following fields: transportation andmobility; environment and energy; urban/data space andoffices; and infrastructure revitalization. We will do this byintegrating our accumulated technological capabilities in thecorresponding engineering fields of telecommunications,electricity, civil engineering, and the environment.
Among these, in the field of environment and energy
in particular, going forward, the pursuit of decarbonization
is expected to drive increased demand for renewable energy
as well as accelerated development. Our group has been
involved in the construction of many solar power generation
facilities,18 of which operate their own solar power
generation equipment. We are planning to participate infurther new businesses in this field. Specifically, we areconsidering projects related to the construction of offshore
wind farms, which are expected to be commercialized invarious parts of Japan in the future. Such projects would
include the landing of submarine power cables or the layingof self-owned power lines on land. In addition, we will actively
engage in the construction of biomass power plants andthe installation of storage batteries and EV chargers.
In the fields of transportation and mobility, urban/dataEntering theenvironment andenergy businesses
Strengthening
the infrastructure
renovation business
Actively utilizing
BIM/CIM, AI, etc.

●

Tackle in-house power sales andoffshore wind power business●Realize business for the renewal andmaintenance of aging infrastructure●

Pursue automation of design andcost estimation and workflow
innovation

space and offices, and infrastructure revitalization, we expectthat not only the construction of new facilities, but also therevitalization of aging equipment will become a major themein the field of public infrastructure. This applies to areas inwhich we are already engaged such as the renovation ofcommunication equipment for highways and railroads, theinstallation of water supply and sewage systems, and therenovation of tunnel lighting.
We also aim to combine the diverse engineering
capabilities of the Group to offer our customers a rangeof services for the entire building. We aim to take on
responsibility for all of the equipment in a building,including communications, electricity, lighting, and air
conditioning. In doing so, we will be able to maximize ourconstruction efficiency, offering further added value
through a one-stop service. We will consider and promotebusiness development that leverages the unique and superior
technological strengths of our Company.
The promotion of digital transformation in construction
is essential for these business developments. We will actively
introduce BIM/CIM (building information modeling/
construction information modeling) and AI, which are
already seeing application in some parts of the constructionindustry. By automating design and cost estimation and byusing offshore resources, we will continue to innovate theconstruction process and create new value.
Since our founding in the telecommunications carrierbusiness, we have cultivated technological capabilities. In
these strengths, there lies the potential for us to play anactive role in various areas of society.
As we look ahead to 2025 and, beyond that, 2030,
we aim to pursue various initiatives and solve social issues
through our business ̶and to provide engineering thatenhances the resilience of society.

EXEO Integrated Report 2021

30

Value creation strategy ｜ Strategy by Segment

Value creation story

Value creation strategy

Value creation capabilities

Data section

Initiatives under the Medium-Term Management Plan (FY2021-FY2025)

System Solutions
Business

Evolving into a solution provider
Tactical approach

Our aims

We support private companies andpublic organizations, offering

Focusing on highvalue-added
business

ICT-based solutions to solve
their problems.

Move away from labor-intensivemodels● Develop strategic applications(AI, robotics, drones, etc.)●

Market risks and opportunities

Co-create and collaborate withcustomers and partners● Develop business in maintenance,
operation and security

Risks

Opportunities

This field is characterized by rapid businesschange and intense competition that leads toservices being selected or eliminated.
Maintaining or expanding our operations
requires us to constantly create new business.
In addition, to remain both competitive andprofitable, we must continually review
business processes and improve productivity
and profitability.

The coronavirus pandemic has accelerated
transformation in society, from mindsets to a
structural level, including reforms in the way
we work. With the government's promotionof digitalization, services utilizing newtechnologies such as AI, robotics, AR/VR, etc.
are being created one after another. As such,business opportunities will continue to open
up, including the growth of edge computing
and cloud businesses.

Results: In addition to expanding our business throughM&A and alliances, we established a new consulting
organization in Japan. This will enable us to provide a
unified response to digitalization needs and to develop
new businesses. Overseas, we have also built a base load
for ICT business.
Challenges: Although the scale of the business in Japan
expanded due to a focus on contract development, profit
margins were below the industry average. Overseas, theimpact of lockdowns due to the pandemic resulted in adelay in a planned improvement of earnings.

Sales composition
by business
SystemSolutions
Business

27%(FY2020)

Orders received¥ 169.5billion

Main businesses and their strengths

Medium-Term Management Plan (FY2021-FY2025)

169.5

We provide a full range of ICT-based solutions for the construction, maintenance, andoperation of various corporate systems, from communication network systems to coresystems for the manufacturing industry, as well as educational and medical applications. We
have a large contingent of internationally minded talent, enabling us to target opportunities
in this field, which is expanding not only in Japan but also globally.

124.5

72.0
42.7

2017

2018

2019

2020

(FY)

Net sales
IT infrastructure andoperational optimization

Operational automation¥ 155.6billion
155.6
120.7

73.4
42.5

31

EXEO Integrated Report 2021●

Cyber-security measures

Business Support System
for Local Governments

2017

2018

2019

2020

(FY)

Technological innovations such as big data, AI, VR, IoT,
and digital twins are prompting fundamental changes inevery business. While some businesses will decline, we areapproaching an era where new services can expand on a
global scale in a short period of time. The promotion ofdigital transformation, which is also a key focus of theJapanese government, has the potential to bring aboutmajor changes in society as a whole. This includes businessprocesses, organizations, cultures, and ways of working,as well as the products, services, and business models
offered by governments and companies.
In our system solutions business, we aim to pivot awayfrom the labor-intensive business centered on contractdevelopment and toward the future expansion of the digitalsolutions field. We will instead aim to acquire more “primeuser” projects, pursuing service-based/high value-added
business in which we provide services directly to end users.
To this end, we will develop strategic applications that utilize
the latest technologies such as AI, robotics, and drones. In
addition, by expanding recurring business such as
maintenance, operation, and security services, we will
provide a full range of services from upstream consulting,hardware/software installation, to maintenance andOffshoring, improving
development processes

Establish package integration business
Discover “killer apps”●

Pursue systematization using cloudcomputing and improved ability torespond to diverse needs related to
management●

Reduce costs using overseas locations
Improve productivity by analyzing ourown development process●

Review of previous medium-term plan

Managed services(available 24/7)●

Cultivating XaaS
engineers

Expandingrecurring business

Digital transformation (DX)

Pursuing newtechnologies, advancing
the DX of customers●

operation. This will allow us to build a continuous
co-creation and collaborative relationship with ourcustomers, while establishing a stable business foundation.
We will establish a package integration business thatprovides the right combination of the services of Group
companies and collaborating partners to match customer
needs. In addition to this, we must also actively work to
discover world-class “killer” applications by always
monitoring for and pursuing new technologies. To thisend, we must secure and train skilled talent. We willplace particular emphasis on training XaaS (“X” as aservice) engineers to improve our ability to respond todiverse needs related to cloud-based systematization andmanagement.
In our global business, which we have been focusing
on for the past several years, we have been using ourSingapore location to expand business mainly in the APAC
region. This includes the reuse business of used PCs andsmartphones, an environmentally friendly business, as well
as new businesses such as cell phone base station
infrastructure sharing and digital trade platforms ̶businesses that are difficult to implement in Japan. We
have also been actively utilizing M&A to build out our
foundation for business. We will continue to monitor themarket environment in Japan for these services, seeking
the right timing for a domestic launch. We will also
make effective use of the overseas bases of our global
business in terms of training young employees andexecutive candidates, as well as reducing costs throughoffshore development.

EXEO Integrated Report 2021

32

Value creation capabilities ｜ Environment / Society

Value creation story

Environmental management
Basic approach
Living in harmony with the environment is a social
responsibility for companies and a precondition forachieving the SDGs.
The Group resolves social issues through our
telecommunications carrier, urban infrastructure, andsystem solutions businesses. We also maintain an awarenessof the need to maintain harmony with the environment,
and we strive to reduce the environmental impact of ourbusiness 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 Group works to reduce theenvironmental 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 environmentrelated targets and extensively applies them to all the
departments at the Head Office and branches.

Fighting global warming
The Group has been working continuously to practiceenvironmental management by reducing greenhouse gas
emissions. In the 2030 Vision that we formulated this year,
we declared our commitment to ESG management. In our
medium-term management plan, we have set goals for fiscal
2025 of having all our electricity consumption powered byrenewable energy and achieving a 10% reduction in our
CO2 emissions compared to fiscal 2020.
In addition, we will make further efforts to conserve
energy by replacing our fleet of vehicles with low-emission
vehicles and installing solar power generation equipmentin the construction of our company building.

Reducing waste and promoting recycling
We are working to reduce and properly dispose of industrial
waste generated during construction, as well as generalwaste generated from offices and other facilities. We arealso working to promote recycling.
We have thorough sorting and management processes
in place to properly dispose of waste materials such as asphalt,
concrete rubble, and electric wire scraps, so that they canbe reused and recycled. In addition, ongoing initiatives include
the enhanced use of proper amounts for work materials,
requests for collection of packaging materials to suppliers,
Industrial waste emissions and recycling rate（Kyowa Exeo Corporation）
50,000(Ten thousand t-CO2)
2.0
1.5

1.38

1.57

88.4

88.9

88.9

42,37338,08040,00030,000CO2 emissions (Kyowa Exeo Corporation)

Recycling rate (%)

Emissions (t)27,67193.1
36,133

94.4
40,868

1.26

1.0

0

2016

2017

2018

2019

2020

181,986GJElectric power purchased

14,148MWh

Company cars

164 thousand m3

LPG

0.4 thousand m3

Gasoline

914kl

Light oil

176kl

Kerosene

0.5kl

Water resource input 59 thousand m3

33

EXEO Integrated Report 2021

OUTPUT
Electricity generated and sold

24,805MWh

Total greenhouse effect gas emissions 11,726 tons (CO conversion)
2

Solar power generation electricity output 66MWh
City gas(FY)

Environmental compliance
The Kyowa Exeo Group is committed to complying with allenvironmental laws and regulations. Since introducing ourEnvironment-friendly
business activities

Total energy input

Head officeElectric power sourced

6,119 tons (CO2 conversion)

Fuel sourced

2,946 tons (CO2 conversion)

Waste sourced

2,647 tons (CO2 conversion)

Water resource sourced

20

Depletion ofnatural resources

Consumption of oil, gas, water, electricity, andvarious processing materials

Degradation of
local environment

Vibration, noise, odors, global warming, land
subsidence, etc.

Soil pollution

Underground leaching of chemicals, sewage,
sludge, waste, etc.

Water pollution

Drainage or runoff of chemicals, sewage, sludge,
waste, etc.

Air pollution

Release of suspended solids, dust, and otheremissions into the atmosphere

Increased waste

Industrial waste, general waste

0

2017

2018

2019

2020

Minimizing impact to marine and coastal
ecosystems
Our earth shuttle method of horizontal directional drilling
enables the laying of submarine pipes of a required diameterto a required location while protecting the seabed. It is used
in applications such as communication and electric power
landing pipes, water supply pipes, seawater intake pipes,
and high-voltage cables for offshore wind farms. It is idealfor delicate natural habitats such as fishing grounds andcoral reef nature reserves, as well as sites where waves
could damage pipes and cables.
Offshore wind power generation is seen as a promisingsource of renewable energy in the future. We consider thismethod to be a key initiative to addressing the associatedproblem of the impact of submarine cables on biodiversity.

(FY)

Environmental impact assessment procedure

Industrial waste emissions

2,299 tons

Total recycled volume38,569 tons

Total displacement

59 thousand m3(laws, regulations, operations, construction, facilities, equipment)
ChangedNo change

Listing and identification of environmental aspects
Identification of environmental impacts
Assessment of environmental impacts
Preparation of environmental impact assessment table
Identification of significant environmental aspects
Preparation of a registration table
for significant environmental aspects
Preparation of a list of significant environmental aspects(company-wide version)
Formulation of company-wide environmental targets
for achieving the environmental policy

14 tons (CO2 conversion)

Formulation of group management system policies

Waste emissions and recycled volume 40,868 tons
Business offices

Types of environmental impact

Existence of changes

Material balance (FY2020, Kyowa Exeo Corporation)
INPUT

60

10,000

0.5

Monitoring the environmental impact of businessactivities
At the Kyowa Exeo Group, we strive to minimize theenvironmental impact of our business activities bymonitoring and curtailing the amounts of resources andAssessment of environmental impact
We classify the environmental impact of our businessactivities into six categories, as shown in the table below.
We identify them using the assessment procedure shownin the diagram below.
Aspects that have a significant positive impact on theenvironment are also assessed using the same procedure.
The findings of this assessment are then reflected into ourbusiness activities.

80

40

2016

1.17

100

20,0000

1.48

Data section

and guidance on the necessary steps to workers for recycling
via onsite patrols.

environmental management system in 2000, we have had
no violations of laws or regulations relating to waste, air
pollution, wastewater and water intake, soil contamination,or chemical substance management.
energy used.
The material balance for fiscal 2020 was as shown inthe chart below.

Value creation capabilities

Value creation strategy

Approval of the policy by management

How our earth shuttle method of horizontal directional drilling works

Publication of the policy on the website, etc.

EXEO Integrated Report 2021

34

Value creation capabilities ｜ Environment / Society

Value creation story

Environmental business
The Group is committed to working toward a recyclingoriented society. We do this through our activities in thedesign, construction, and maintenance of solar power
generation facilities and biomass boilers for renewable energy
facilities, as well as the construction and operation of water
treatment facilities for domestic and industrial wastewater.
Photovoltaic plants
Kyowa Exeo Group 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 introductionof large-scale solar power generation (mega-solar) utilizing
the feed-in tariff scheme, and support 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 andother elements.
Solar power generation in FY2020 (GWh)
LocationPowergeneration

Ishioka Kitafuchu

0.93

Hosaka

1.63

Shinpu1.72

Chiyoda Lake

1.53

Kose

1.28

Tokoji0.85

Minamiboso

3.05

Shonan Technology Center

0.09

Ishido1.37

Asaohara

1.79

Fuchu Technical Center

0.1

Hyogo General Technology Center

0.14

Ishioka General Technology Center

1.32

Kagawa General Technology Center

0.11

Ubaishi

1.43

Exeo Hirao Solar Farm

1.58

Togane Solar Farm

3.04

Matsue Solar Farm

2.76

LocationPowergeneration

Human Resources
Biomass boilers
We provide construction and maintenance services forvarious biomass boilers that play a part in recycling
systems.
Specifically, we take materials such as woody biomass
that have a high moisture content and have been
traditionally regarded as waste products and enable theirutilization as biomass resources. These resources are used
to produce steam, supply heated water, perform drying,supply heated water for air conditioning, and to operate
high-efficiency power generation systems.
List of biomass boilers
CustomernameRated heat
Heat
Units
outputoutput type

―

Warm
water

Purchased bark
& cutting chips

―

1

Warm
water

Mainly purchased
cutting chips

―

1

Warm
water

100% cedar barkproduced in-house―

Saturated steam Use of chips(2 MPa)produced in-house―1

Hachimantai City,(Iwate)400kW

1Kaneyama Town,(Yamagata)

400kW

Private company
1,200kW(Tochigi)

1

Heat transfer oil(for ORC)

Basic approach and promotion system
Based on the policy of regarding employees as the Groupʼs
primary assets, 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 selfdevelopment, such as incentive programs for acquiring
qualifications and correspondence courses, and are committed
to providing growth opportunities and encouraging employees
to take advantage of them. We have also shifted to online
training as we adapt our training approach to the “newnormal” that has emerged from the pandemic.
With the rapid technological innovation of today, newservices can emerge at a global level in a short span of time.
This gives rise to an urgent need to hire and train personnel
who can immediately and effectively respond to such trends.
Recognizing this, we established a Human Resources
Development Department on July 1, 2021, with the aimof strengthening our ability to adapt our human resources
development approach to changes in the businessenvironment. The Human Resources Development
Department promotes diversity and inclusion measures sothat all employees can play an active role. It also conducts
recruitment, training, and personal development based on
the CDP.

Sustainable growth
Enhanced productivity
and profitability

Revitalization of
the organization

Creating sourcesof growth

Policy regarding employees as the Groupʼs primary assets／ Workstyle reforms
Human resource
development andprofessionalism

Respect forhuman rights

Promotingdiversity

Changing attitudes
toward workstyles /Reforming rules

Private company
2,500kW(Shiga)2

Saturated steam Use of waste
620kW(1 MPa)generated in-house

Fair evaluations and treatment

Private company
3,500kW(Ibaraki)

2

Saturated steam Use of biomass
860kW(1 MPa)generated in-house

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 and achievementof self-established goals. We are increasing the convincingnessof 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.

708kW

At our Minami Kanto branch office, we installed environmentally friendly equipment based on the concept of a sustainable office. Locatedin Yokohama City, Kanagawa Prefecture, the office was completed in 2021.
The new building will reduce energy consumption by 51% compared to a standard building of the same size. This is achieved
through a combination of technologies that improve the building's environmental performance. The windows reduce heat radiationfrom the sun, while the buildingʼs outer surface enables high insulation performance. The air conditioning is controlled using sensors
to detect people movement, thereby improving the efficiency of equipment that uses a large amount of electricity. LED lighting is usedthroughout the interior. An energy management system has also been put in place to visualize,
analyze, and reduce electricity consumption. In addition, the building is equipped with a 50-kW
solar power generation system, giving it a real energy reduction of 75%. This meets the criteria
for conversion to ZEB (Nearly ZEB).
This project has been certified as a net zero energy building (ZEB) introduction project
under the Kanagawa Smart Energy Plan being implemented by Kanagawa Prefecture.
*ZEB: A building in which the amount of energy consumed by the building is substantially reduced through energy
conservation using high-efficiency equipment systems, and in which the energy balance is aimed at “zero” throughpower generation such as solar power generation.

EXEO Integrated Report 2021

In promoting corporate activities, the Kyowa Exeo Group
places great importance on respect for human rights andconducts training to raise and improve human rights
awareness in order to provide a workplace environment inwhich each and every employee can work with vitality. In
addition, through training and other activities to promotecompliance, we show that we do not tolerate any kind of
discriminatory treatment on gender, beliefs, nationality,
status of disability, sexual orientation, gender identity orother basic human rights, and we strongly advocate forrespecting the dignity and individuality of every person.

1

Our sustainable Minami Kanto branch office, was certified as a net zero energy building (ZEB*) project

35

Human resource development

Fair evaluations
and treatment
Bark, etc.

Data section

Unless specifically stated otherwise, the data and initiatives includedin this section are of Kyowa Exeo Corporation.

Privatecompany
4,000kW(Fukushima)

700kW combined
power generation

Value creation capabilities

Respect for human rights

Powergeneration

Saturated steam Purchased miscellaneous(1 MPa)woody biomass

Private company
4,000kW(Hokkaido)

Private company
4,000kW(Tochigi)

Fuel

Value creation strategy

Discussion schedule
April

October

April

June

Goal
discussion

Mid-term
discussion /Self-assessment

Outcomediscussion

Evaluation
feedback

Goal
discussion

New graduate hires
Male

Number hired (persons)
200

19.7

20

152

150

30
100

Percentage of which are women

Female

159
20

15

15.8

12.6

10

95
15

50

139

122

80

5
0

0

2018

2020

2019

2018

(FY)

2019

2020

(FY)

Mid-career hires
Male

Number hired (persons)
50
40

43

3

15

47

42
6

Percentage of which are women (%)

Female

7

14.3

14.9

2019

2020

12

30

9

7.0

Implementation rate of discussions

20

40

36

6

40

FY2018FY2019FY202010

3100.0%

100.0%

100.0%

0

0

2018

2019

2020

(FY)

2018

(FY)

EXEO Integrated Report 2021

36

Value creation capabilities ｜ Environment / Society

Average years of continuous service(Year)

Male

Female

20

17.4
15

17.6

14.0

14.0

17.6
14.0

10

5

0

2018

2019

2020

(FY)

New employee training
The first year of employment is designated as a training
period in which we offer a multifaceted curriculum that
includes induction training, basic Exeo Group training,job-specific technical training, and training for acquiring IT
qualifications, so that employees can strive to acquirecommon sense as members of society, as well as a wide
range of knowledge and basic technical skills as a memberof the company. In addition, each new employee isassigned a tutor, who promotes growth and motivation
through training and follow-ups, as well as advice on
mental health and lifestyle issues. We also provide step-up
training in the second year to review the training andsecure its results.
Technical training
The Companyʼs technical capabilities are the very essence

Value creation storyof our corporate brand. For this reason, we conduct technicaltraining across the country, including at Group companies,
and focus on developing IT personnel and engineers withadvanced 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, specializedskills 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 to strengthencommunication skills with local partner companies and local
employees and to learn how to do business overseas, we
also offer other programs including short-term English
conversation training in the Philippines to acquire businessconversation skills, with a focus on developing global humanresources. By gaining knowledge based on these experiences,and the connection, and know-how acquired throughthis multi-layered training, we aim to contribute to thedevelopment of ICT in Asia. (In fiscal 2020, overseas training
was cancelled due to the coronavirus pandemic.)

Training system
Management training group

Technical training

Time with company

3 months

Step-up training for the second year
OJT training (assignment)
Job-specific training
Optional training
Exeo Group basic training

New hire

37

Induction training

EXEO Integrated Report 2021

4th year training

Evaluator training

Technical training by organization

2nd year

New employee training

10th year training

Self-development training (correspondence courses, certification courses)

4th year

Annual training

Diversity training

10th year

Leadership training

Training for candidates for
manager-level management positions

Mid-level

Training for newly appointed managers

Manager training

Skills developmenttraining

Newly
appointed

20th year

Training for candidates for generalmanager-level management positions

On-site leader training

Officer and executive training

Other training

Training for management positions

Basic sales training

Training by level
30th year

Value creation strategy

Value creation capabilities

Data section

Initiatives at Group companies
We want all employees at our 136 Group companies (103consolidated subsidiaries, 16 non-consolidated subsidiaries,
and 17 affiliates), including those overseas, to be able towork with a sense of fulfillment. Our top priority is to build
a new Team EXEO to enable this. We see this as an essential
step toward developing our human resources for the future,reforming our work styles and increasing diversity.
Based on the Groupʼs common operational measures,in addition to playing the role of a “go-between” for spreading
the excellent initiatives of our Group companies, we willfurther promote the establishment of a strong Team EXEO
that takes on the challenge of new businesses and responds
to changes.

of commuting styles, establishment of an expenses policy
for working from home, etc.). Through these efforts, weare striving to create a work environment where everyone
can work with peace of mind and enthusiasm.

Work style reform

Promoting telework
In July 2018, we made significant revisions to our telework
regulations, allowing employees to make use of work from
home, work at satellite offices and mobile work in more
flexible ways. During the pandemic, we eliminated ourrestrictions on the number of times telecommuting can beused, as well as restrictions on the scope of employees eligible
to use the system. This led to a substantial increase in thenumber of our employees who used telecommuting. We
also started actively taking part in designated teleworkdays since 2018, and have worked to promote this idea
among employees. In recognition of these efforts, inNovember 2018 the company was selected as one of the2018 Top Hundred Telework Pioneers by the Ministry ofInternal Affairs and Communications.

Basic approachWith the aim of proper management of working hours
and making improvements to long working hours, labor
representatives and top management have issued a joint
declaration and are working on reforms to comply withlabor related laws and regulations, promote flexible work
styles, improve operational efficiency across the organization,and maintain and promote physical and mental health byraising employee awareness and implementing specificmeasures. We are also working to realize diverse and flexible
work styles through means such as the establishment of aregional key position system (a system for regionallyassigned employees) and a teleworking system.
Furthermore, we are developing and promoting novel
ways of working that incorporate the new lifestyles and newworking styles recommended by the Japanese government.
We are taking the following measures to promote new ways
of working: (1) review of operations (business inventory,
business evaluation, etc.), (2) improvement of the environment(PC, work environment, etc.), (3) consideration for healthand wellbeing (development of a system for supporting
mental health, etc.), (4) enhancement of systems (review

Boosting productivity through digital transformation
Utilizing an IT infrastructure common across the Kyowa ExeoGroup that includes teleconferencing and MS Teams, we areworking to improve sales capabilities, business efficiency,
quality, safety, and comfort while aiming to boost productivity
in a noticeable way, not only for employees but for ourpartners as well.
*Microsoft, Office 365, and Microsoft Teams are registered trademarks ortrademarks of Microsoft Corporation in the U.S. and other countries.

Telework utilization rate
(%)
100
75

59

50
25

14

0

2019

2020

(FY)

Employees win gold medals at the National Skills Competition Japan
Toru Ebihara, an employee of Kyowa Exeo representing Saitama Prefecture, won a gold
medal at the 58th National Skills Competition Japan held in Aichi Prefecture. The
competition was sponsored by the Ministry of Health, Labour and Welfare and theJapan Vocational Ability Development Association, in cooperation with Aichi Prefecture.
Mr. Ebiharaʼs gold medal, in the information network cabling category, marked his second
consecutive victory, following a gold medal he won in the previous competition. Mr.
Ebihara has been selected to participate in the WorldSkills Competition to be held in
Shanghai in 2022.
Ashu Toba won the bronze medal, while Shogo Mizutani and Raira Chiba each won
Medallions for Excellence.

Toru Ebihara, who won a gold medal at thenational competition.

EXEO Integrated Report 2021

38

Value creation capabilities ｜ Environment / Society

Value creation story

Diversity ＆ Inclusion
Supporting womenʼs career advancement
Kyowa Exeo has formulated an action plan in accordancewith the Act on the Promotion of Female Participation andCareer Advancement in the Workplace, and publishes related
information including numerical targets. We implement
various measures to create career opportunities for womenand to support them in their career development. These
include pursuing our targets for hiring women as well as
creating plans to develop female executives and managers.
As a result of these efforts, the Ministry of Health,
Labor and Welfare has recognized the Kyowa Exeo Group
with its Eruboshi certification, which is awarded tocompanies for outstanding efforts to support the careerdevelopment of women.
We have also received recognition from the Ministryof Economy, Trade and Industry and the Tokyo Stock
Exchange for two consecutive years as a Nadeshiko Brand in
2019 and as a Semi-Nadeshiko Brand in 2020, certifications
that are awarded to listed companies in recognition of
their efforts to support the career advancement of women.

General employer action plan based on the Act on the Promotion of
Female Participation and Career Advancement in the Workplace
Plan period: April 1, 2016 - March 31, 2021 (5 years)

Number of womenin management
positions
Number of
female workers

Goal

ResultDouble the current
numberAchieved
3.3 times(6 to 20)

25% increase

from current number

Achieved
30.6% increase(333 to 435)

Plan period: April 1, 2021 - March 31, 2026 (5 years)
Goal
Number of womenin management
positions

1.5 times the current number

Number of
female employees

25% increase from current number

Current: 20 → Target: 30

Promoting the employment of people with disabilities
To ensure that all people can demonstrate their capabilities
and aptitude to the fullest extent and lead active, fulfilling
lives regardless of whether or not they have disabilities,
Kyowa Exeo actively pursues the employment of people
with disabilities. All employees of the Diversity Promotion
Office have completed disabled person occupational andlifestyle counsellor certification courses, carefully gather
information about desired workplace, occupation, skills,
and disability considerations when employees are hired,and strive to match employees with the right organization.
Even after an employee has joined the company weregularly follow up on the individual and their assigned
department and make every effort to ensure they are able
to succeed in a reassuring environment. Additionally, we
work to create new occupational fields so that persons
with all kinds of disabilities can flourish, and actively work
to hire people with specialist skills.
Change in the percentage of employees with disabilities

Current: 307 → Target: 384

Actual employment rate (%)

Percentage of male
employees taking
childcare leave

Value creation strategy

Increase to 20％

Statutory employment rate (%)

3.0

Current: 7.3％
2.5
2.0

2.0

2.4

2.5

2.2

2.2

2.0

2.4
2.3

1.5
1.0

Number and percentage of management positions held by women25

Of which, general manager positions
Of which, manager positions

1.8

20

2.0

1.5

1.2

14
9

14

13

7

3

6

2016
2017
2018
Note: As of the end of each fiscal year

2019

2020

2

15

15

17

10
5

0
(FY)

0

2016
2017
2018
Note: As of the end of each fiscal year

Kyowa Exeo received a 3.5 star evaluation in the 4th Nikkei Smart Work Management Survey,
which recognizes leading companies for measures to improve productivity through work stylereforms.
Conducted by Nikkei Inc. since 2017, the survey defines “smart work management” asefforts to maximize organizational performance through three elements: realization of diverseand flexible work styles, systems for creating new businesses, and capabilities in developing
markets. Corporate governance and other foundations for management are also included in
the evaluation, which has five levels.

EXEO Integrated Report 2021

32

18

2019

Recognized as a 3.5 Star Company in the Nikkei Smart Work Management Survey

39

2016

25

1.0

0.5

1

0

29

20

0.8

5

Change in the number of female assistant managers
35

2020

their post-retirement life with a deeper understanding andawareness so that they can lead materially, physically, andmentally healthy lifestyles.
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.
Number of seminar attendees (FY2020)
53-54 years old

374

58-59 years old155

Hiring foreign nationals
In order to promote global business, especially in the Asia
region, and to internationalize and invigorate the company,
we are actively hiring foreign students who are expected tobe active both in Japan and abroad.
Implementation of diversity promotion training
Training is conducted starting from upper levels of thecompany to foster an understanding of the importance ofdiversity promotion as a management strategy and torecognize issues the company faces in its promotion. In
training aimed at executives and managers, attendees learn
about management techniques for diverse human resources
and approaches for supporting career development. Thisknowledge is then put into practice in the workplace.

0(People)

30

1.6

1.5

15
10

Percentage (%)(FY)

Data section

Diversity promotion training (FY2017 - FY2020)

0.5(People)Value creation capabilities

2017

2018

2019

2020

Rehiring of retirees
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, childbirth,and nursing care, and these systems provide opportunities
for diverse work styles.
These efforts are helping to secure our technologicalcapabilities for the future and ensure that we are able topass on our skills.
Number of retirees who have been rehired
Number of rehired
employees

FY2018FY2019FY2020

256

218

249

Life plan seminars
The Kyowa Exeo Group hold seminars throughout Japanfor employees at the ages of 53 and 54 to help them design

Number ofsessions

Content of training(FY)

Diversity promotion training for management level2 sessions

Diversity management training for managers

31 sessions

Diversity management training for newly appointed
managers

2 sessions

Training for female leaders

2 sessions

Career design training for women

6 sessions

Diversity training for new recruits

4 sessions

LGBT training

2 sessions

Moving forward, we will expand the scope to include a wider
range of employees and conduct training that fosters a culturethat promotes the mutual acceptance and utilization of adiverse range of values.
In addition, as a result of these efforts, our company
has received bronze certificationin the PRIDE Index 2020.
Established by the organization“work with Pride,” the index
evaluates workplace initiatives
related to LGBTQ and othersexual minorities.

EXEO Integrated Report 2021

40

Value creation capabilities ｜ Environment / Society

Work-life balance
Supporting the balance between work and home
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 establishedbalance 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 published targets
and other relevant information. We actively work to enhancesystems, hold briefings to meet these targets, and haveintroduced company-led childcare facilities.
We are committed to developing anenvironment that makes it easy for
employees to strike a balance between
their jobs and childcare responsibilities,
General Empolyer Action Plan based on the Act on Advancementof Measures to Support Raising Next-Generation Children
Plan period: April 1, 2017 to March 31, 2022 (5 years)
TargetEffectively disseminate information concerning internal
schemes and procedures related to childcare
Maintain childcare leave usage rate of at least 90%
among female employees

Value creation story

regardless of gender. In recognition of these efforts, in 2015
we earned the Kurumin Mark, an accreditation from the
Ministry of Health, Labour and Welfare recognizing companies
providing support for childcare.
Percentage of employees taking childcare leave
(%)

Male

10

7.3

6

2

100

100

8

4

Female

(%)

100

100

100

100

80
60

2.8

40

2.0

2.5
20

0

0

0

2016 2017 2018 2019 2020 (FY)2016 2017 2018 2019 2020 (FY)

Male

FemaleTotal number of employees eligible forchildcare leave

97

11

Total number of employees who havetaken childcare leave

6

11

Total number of employees who havereturned to work after childcare leave

4

9

Return to work rate of employees afterchildcare leave

100%

100%

Total number of employees enrolled at theend of 12 months after returning to work*

0/0

7/8

Retention rate of employees afterchildcare leave
Average number of days of childcare
leave taken

―
81.9

87.5％
283.5

*Total includes employees who returned to work between April 1, 2019,

List of childcare support schemes◎：Beyond statutory requirements

Types of Leave
Healthcare system during
pregnancy and after childbirth○

femaleSpecial childbirth leave◎

femalemaleChildcare leave system

41

Eligible
Statutory
requirements employees○

femalemale

Maintaining good labor-management relations
Mutual trust between labor and management is fundamental
to the Kyowa Exeo Groupʼs business. In the view of pursuing
the companyʼs growth and maintaining and improving
employees work conditions, we seek to build stable labormanagement relations through regular discussions between
labor and management. We hold regular labor-management
meetings to exchange opinions between labor andmanagement on the business plan and other 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 the company.

Value creation capabilities

Data sectionof our employees and campaigns to promote walking
among employees and their family members.
In regard 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 in-house diagnosis. Furthermore, for employeeswith excessive overtime work hours, our in-house doctors
and public health nurses meet each such employee seventimes a month to provide physical and mental care.
Annual working hours(Hours)
2,500

2,161

2,133

2,129

2,087

2,099

2016

2017

2018

2019

2020

2,000

Data on childcare leave (April 1, 2020 to March 31, 2021)

and March 31, 2020.
○：In line with statutory requirements

Value creation strategy

Details
checkups, etc. (hospital visits during pregnancy) ・Rest periods during pregnancy
・Medicalvisits following childbirth, etc. ・Relaxation of commuting requirements
・Hospital
・Symptoms, etc. during pregnancy and within one year of childbirth
Female employees: 8 weeks before childbirth and 8 weeks after childbirthMale employees: 5 days

Health and productivity management

1,500

Reducing long working 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 useof paid leaves, promoting consecutive leaves by combining
annual paid leaves with long holidays, summer holidays,
year-end/new-year holidays, etc., and designating a noovertime day in each week. Also, we proactively seek toreduce overtime work.

1,000

0

Helping employees maintain and improve physicaland mental healthIn cooperation with Kyowa Exeoʼs health insurance association,
we seek to help our employees and their family members
manage and improve their health by conducting regular
health checkups and comprehensive medical examinations(FY)

Number of days of paid leave/Percentage used
Percentage used (%)

Number of days (days)
15

100

12.6
10

63.0

13.3

13.3

66.5

66.5

12.6

12.8

80

63.0

64.0

60

40
5
20

0

0

2016

2017

2018

2019

2020

(FY)

Systems to support a diverse range of human resources
Main systems

Up to the day before a childʼs first birthday

Note 1 For Mom & Dad Childcare Leave Plus, up to one year during the period until the child reaches one year and two months of age
Note 2 When circumstances prescribed separately apply, until the child reaches one year and six months of age (up to the day
the child reaches two years of age at the latest)

500

Details

Paid leave

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

male

In the case of paternal leave, an employee who has taken childcare leave within eight weeks of thebirth of his child is in principle eligible to take one additional period of childcare leave

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

Two 30-minute sessions per day for a female employee raising an infant less than one year of age(one-hour sessions for twins)

Flexible working hours system

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

Up to five days per year (or up to ten days for two or more children) up to a cumulative total of 35 days (or up
to 70 days for two or more children) can be taken until the child (ren) reach the third year of elementary school.
Can be taken in half-day or hourly increments (including as intervals between working hours)
Modified start times for employees raising children
Exemption from late night work for employees raising children
Limitations on overtime work for employees raising children
Exemption from non-scheduled work for employees raising children(Note) Available until children reach the third year of elementary school

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)

Special childcare leave◎

femaleSpecial nursing leave◎

femalemale

Shortened working hours forchildcare scheme, etc.

◎

femalemale

Support allowance for early
return after childcare leave◎

femaleSupport for employees returningfrom childcare leave◎

female Interviews: From one month before taking leave to one month after returning to work
male Mobile PC loan: From one week before taking leave to one month after returning to work

Maiden name usage system

With the exception of procedures requiring an employee to use their legal name, employees may use
their maiden internally

Company-led childcare center◎femalemaleHousekeeping service

Housekeeping services are available with employee discounts

EXEO Integrated Report 2021

・
・
・
・

Senior employment system

A monthly allowance is paid to female employees (company employees) who have made an early return to work within one year
and three months from the month following their return to work until the month in which their child has reached two years of age

Partnerships with company-led childcare centers across Japanfor reemployment following mandatory retirement (until the end of the month in which an
・System
employee reaches 65 years of age)
65 years of age, employees may be hired as contract employees
・Afterformer employees reemployment system to hire former employees who have resigned due to・Apersonalreasons such as relocation of a family member due to job transfer, marriage, child-birth,and nursing care

EXEO Integrated Report 2021

42

Value creation capabilities ｜ Environment / Society

Value creation story

Value creation strategy

Value creation capabilities

Data section

Occupational safety and healthOccupational safety and health management
Initiatives to promote a safe and quality-oriented culture
Ensuring safety and quality in the construction of informationand communications facilities — the Groupʼs core competence— is of the utmost importance. Accordingly, the Group has
been promoting initiatives for safety in line with the
management structure shown in the table below, working
to achieve goals such as zero deaths and serious accidents,and zero injuries to third parties.
We also strive to ensure each and every employee fully
understands this importance, and that this becomes a naturalpart of their actions, through a five-phase medium-term plan
starting with the creation of a safe and quality-oriented
culture and ending last fiscal year with a return to the basicsof this safe and quality-oriented culture.
Our five-year slogan from fiscal 2021 is “evolve oursafe and quality-oriented culture,” so that we can further
improve (enhance/develop) the safe and quality-oriented
culture that we have been promoting. To do this, we will
make further efforts to not only eradicate accidents, butalso improve quality and provide added value by actively
learning good practices that utilize the ICT of the world
and integrating them with internal rules (a best mix) basedon the high levels of accomplishment involving construction
and maintenance that we have cultivated in our carrierrelated and other businesses. We will also follow a threepillar motto that involves working for the future, working
for others, and prioritizing trust with clients.

Financial losses from legal proceedings
There were no financial losses in fiscal 2020 resulting from
accidents relating to deficiencies or safety, or legal
proceedings relating to allegations.
Occurrence of occupational accidents
Serious injuries*1

Deaths(number of people)

Light injuries*2

Third parties

15

13

13
3

10

9

8
5
6

5

2
3

5

3

0

2016

2017

1
5

7
2
3

2
1

2

2018

2019

7
2020

(FY)

Scope of data: Kyowa Exeo and its five major consolidated subsidiaries(C-Cube, Seibu Electric Industry, Nippon Dentsu, Exeo Tech, and Daiwa
Densetsu)*1 Hospitalized for two weeks or more and 30 or more days of temporary
absence*2 Lost time the following days after the incident

Breakdown of occupational accidents（13 in total）
Inspection port
accidents: 1
Dropping ofsuspendedloads: 2

Crashes/falls: 5

Electric shocks: 1
Rotary tool
accidents: 1
Wheel stop accidents: 1

Slips: 2

Occupational safety and health management structureManagerial post

Applicable job title

Group representative

President

General manager ofoccupational safety andhealth management

General Manager of
Safety and Quality
Management
Headquarters

General manager ofhealth supervision

General Manager of
Human Resources
Department

Supervisor of
occupational safety andhealthHead of eachorganization

Safety and quality control
Manager of occupational department manager at
each organization
safety and healthGeneral Manager ofGeneral Affairs
Manager of internal
Safety Center Director
audits43

EXEO Integrated Report 2021

・
・
・
・
・
・
・
・
・
・
・
・
・

Role

Approve the Groupʼs occupational safety and health management policies and goals
Give instructions for improving results of implemented priority measures
Supervise safety and health management of the entire company
Formulate occupational safety and health management policies, goals, and priority measuresrelated to the Groupʼs occupational safety
Roll out priority measures for the Companyʼs headquarters/branches and major subsidiaries (hereinafterreferred to as “each organization”), and report the results to representatives of the Group
Stay up to date with laws and regulations related to safety and health, the construction industry,
and accidents
Supervise health management and operation
Formulate occupational safety and health management policies, goals, and priority measures for theGroupʼs healthRoll out priority measures for each organization and report the results to representatives of the Group
Stay up to date with laws and regulations related to health
Implement priority measures and report the results
Formulate and implement internal measures
Stay up to date with regulations of the local government having jurisdiction over occupational safety
and healthoccupational safety and health management tasks carried out by each organization
・Managehazards in buildings, equipment, and work areas and implement preventive measures
・Identify
・Improve work conditions and health at facilities
management inspections/on-site inspections and report the results to representatives of・Implement
the Group

History of our safety and quality-oriented culture❶ Human error countermeasures (Aruaru-kun)
In 2003, we introduced an information-gathering systemcalled “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 toobtain further universalized hazard information. Workers
share information about their own experiences by reportingnear-miss incidents during work to all employees, reminding
each other to prevent the same human errors from occurring.
This fiscal year, we also plan to add a function thatenables the sending of warning information tailored to specificwork processes, environments, regional characteristics, etc. toconstruction managers and workers from the database ofnear-miss experiences stored up to date.
❷ Introduction of the ExeoSolution Proposal (ESP) System
We introduced the Exeo Solution Proposal (ESP) system
which allows us to actively discover proposals that canchange perspectives and ideas regardless of employeesʼ
current approach to work or the tasks they handle. Over
10,000 proposals regarding improvements, efficiency, safety,
and quality have been submitted annually.
In addition, we widely and 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
such proposals within the Company, we hold an annual ESP/VE proposal presentation meeting to further invigorate our
improvement proposal activities.
❸ Ironclad Safety Rules
In 2008, in order to eliminate accidents such as personaland equipment accidents, the entire telecommunications
construction industry formulated the “Ironclad Safety Rules”
mainly based on lessons learned from past incidents. It is acollection of work safety expertise that was compiled with
the idea in mind that “everyone must comply without
exception.”
The cardinal rules were revised in fiscal 2020, and in
January 2022, the use of fall-arrest systems (full harness) for
high-place work will be mandatory and changes in construction
methods and safety measures will be incorporated so thatthe rules can be more useful in providing worksite safety
guidance.
❹ The “Stop & Look” campaign for stopping at thefirst 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 toa proposal for a system of “stopping at the first sign ofdanger” 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 byimplementing hazard prediction (kiken yochi (KY) in Japanese)
activities at each work site in advance, and the “Stop & Look”
campaign to stop in between jobs and resolve any questions
before proceeding.
❺ From Post-Measures to Pre-Measures
In order to prevent accidents and improve the safety andquality 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
further emphasis on educating employees to stop work andprevent the recurrence of any identified safety deficiencies,
a curriculum was formulated and revised as the safety
retraining rules. These initiatives have increased the alertnessof management and construction workers, and are steadily
proving effective in preventing accidents from occurring.

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

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

2003

Started operation of “Aruaru-kun” ❶2012“Safety Operations” initiated (safety retraining
rules) ❺2004

Introduced the “EXEO Solution Proposal(ESP)”
system ❷2013“Penetrate a safe and quality-oriented culture”
three-year slogan formulated

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

2016“Return to the basics of a safe and qualityoriented culture” five-year slogan formulated

2008“Ironclad Safety Rules” formulated ❸2018

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

2009“Ironclad Safety Rules” extended to thetelecommunications construction industry ❹2020

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

EXEO Integrated Report 2021

44

Value creation capabilities ｜ GovernanceValue creation story

Value creation strategy

Value creation capabilities

Data section

Board of Directors
Directors

Statutory Auditors
OutsideJun. 2010
Jun. 2014
Aug. 2016
Jun. 2017
Jun. 2018
Jun. 2019

Independent

Tetsuya Funabashi

Koichi Mino

Yasushi Kohara

Yuki Sakuyama

President and CEO

Director and Managing Operating Officer

DirectorStanding Statutory Auditor

Number of the Companyʼs shares held : 16,900
Board of Directors meeting attendance in FY 2020 : 15/15 times

Number of the Companyʼs shares held : 21,200
Board of Directors meeting attendance in FY 2020 : 11/11 times

Number of the Companyʼs shares held : 1,200
Board of Directors meeting attendance in FY 2020 : 15/15 times

Number of the Companyʼs shares held : 16,500
Board of Directors meeting attendance in FY 2020 : 11/11
Board of Statutory Auditors meeting attendance in FY 2020 : 11/11

Senior Vice President, Head of Customer Services, NTT communications
Corporation
Senior Executive Vice President, NTT Communications Corporation
Senior Executive Vice President, Head of Customer Services, NTT
Communications Corporation
Senior Executive Vice President, NTT Communications Corporation
Representative Director and Executive Vice President, KYOWA EXEOCORPORATION
President and CEO (present position)

Jun. 2011
Jul. 2014
Jun. 2015
Jun. 2017
Jun. 2020

Branch Manager of Hokkaido Branch, NIPPON TELEGRAPH AND
TELEPHONE EAST CORPORATION
General Manager of NTT Sales Division, NTT Business Headquarters, KYOWA
EXEO CORPORATION
Operating Officer, General Manager of NTT Business Headquarters, KYOWA
EXEO CORPORATIONManaging Operating Officer, General Manager of NTT Business
Headquarters and NTT Sales Division, NTT Business Headquarters, KYOWA
EXEO CORPORATION
Director and Managing Operating Officer, General Manager of Corporate
Planning Division, KYOWA EXEO CORPORATION (present position)

Jun. 2007
Jun. 2021
Jun. 2015
Jun. 2018

Managing Officer, Toyota Motor Corporation
Representative Director and President, Toyota Tokyo Corolla Co., ltd.
Representative Director and President, Osaka Toyota Motor Co., Ltd.
Outside Director, KYOWA EXEO CORPORATION (present position)

OutsideIndependent

Naoko Iwasaki
Director

Newly appointed

Masato Suwabe
Standing Statutory Auditor
Number of the Companyʼs shares held : 14,300
Board of Directors meeting attendance in FY 2020 : Board of Statutory Auditors meeting attendance in FY 2020 : -Number of the Companyʼs shares held : 0
Board of Directors meeting attendance in FY 2020 : 15/15 times

Jun. 2011
Jun. 2014
Jun. 2015
Jun. 2016
Jul. 2016

Tomohiro Kurosawa

Kenji Asano

Director and Managing Operating Officer

Director and Managing Operating Officer

Number of the Companyʼs shares held : 18,200
Board of Directors meeting attendance in FY 2020 : 15/15 times

Number of the Companyʼs shares held : 4,700
Board of Directors meeting attendance in FY 2020 : 11/11 times

Senior Vice President, Managing Director of Hokkaido Regional Office, NTT DoCoMo, Inc.
Operating Officer, General Manager of Mobile Sales Division, DoCoMo
Business Headquarters, KYOWA WXEO CORPORATIONManaging Operating Officer, General Manager of DoCoMo Business Headquarters, and Mobile
Sales Division, DoCoMo Business Headquarters, KYOWA EXEO CORPORATION
Director and Managing Operating Officer, General Manager of DoCoMo Business Headquarters,and Mobile Sales Division, DoCoMo Business Headquarters, KYOWA EXEO CORPORATION
Director and Managing Operating Officer, General Manager of DoCoMo
Business Headquarters, KYOWA EXEO CORPORATION (present position)

Jun. 2015
Jun. 2017
Jun. 2019
Jun. 2020

Director, General Manager of Tokyo Division, NIPPON TELEGRAPH AND
TELEPHONE EAST CORPORATION
President and Representative Director, NTT INFRASTRUCTURE NETWORKCORPORATIONManaging Operating Officer, General Manager of Communication & BusinessNetwork Headquarters, KYOWA EXEO CORPORATION
Director and Managing Operating Officer, General Manager ofCommunication & Business Ntework Headquarters, KYOWA EXEOCORPORATION (present position)

Apr. 2017
Apr. 2017
Jan. 2019
Jun. 2019
Jun. 2019
Sep. 2019
Apr. 2021

OutsideYuichi Koyoma

Takafumi Sakaguchi
Director and Managing Operating Officer

Number of the Companyʼs shares held : 13,700
Board of Directors meeting attendance in FY 2020 : 15/15 times

Number of the Companyʼs shares held : 1,800
Board of Directors meeting attendance in FY 2020 : -Tatsushi Mochizuki
Number of the Companyʼs shares held : 100
Board of Directors meeting attendance in FY 2020 : 11/11 times

Jul. 2006
Oct. 2008
Jan. 2010
Sep. 2012

Jun. 2013
Jun. 2014
Jun. 2016
Jun. 2017
Jun. 2019

General Manager of Office Users Business Division, Corporate Sales Promotion
Headquarters, NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION
Senior Vice President, Deputy General Manager of Corporate Sales Promotion
Headquarters and Office Users Business Division, Corporate Sales Promotion
Headquarters, NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATIONManaging and Operating Officer, General Manager of Communication &Business Network Headquarters, KYOWA EXEO CORPORATION
Director and Managing and Operating Officer, General Manager of Communication& Business Network Headquarters, KYOWA EXEO CORPORATION
Director and Managing and Operating Officer, General Manager of Group
Business Promotion Division, KYOWA EXEO CORPORATION (present position)

Jun. 2015
Jun. 2016
Jun. 2017
Jun. 2019

Jun. 2020

Hideo Higuchi
Director and Managing Operating Officer
Number of the Companyʼs shares held : 21,700
Board of Directors meeting attendance in FY 2020 : 15/15 times

Jun. 2021

President and Representative Director, NTT NEOMEIT CORPORATION
Member of the Board, NIPPON TELEGRAPH AND TELEPHONE WEST
CORPORATION
President and Representative Director, NTT NEOMEIT CORPORATION
Member of the Board, Executive Manager, Service Management
Department, Plant Headquarters, NIPPON TELEGRAPH AND TELEPHONE
WEST CORPORATION
Member of the Board, Executive Manager, Service Management
Department, Plant Headquarters, NIPPON TELEGRAPH AND TELEPHONE
WEST CORPORATION
President and Representative Director, NTT FIELDTECHNO CORPORATIONManaging Operating Officer, Representative of West Japan Head Office,Branch Manager of Kansai Branch, and Deputy General Manager of
ICTSolutions Headquarters, KYOWA EXEO CORPORATION
Director and Managing Operating Officer, Representative of West Japan
Head Office, Branch Manager of Kansai Branch, and Deputy General
Manager of ICTSolutions Headquarters (present position)

Sep. 2013
Apr. 2014
Aug. 2019
Jun. 2020

Jun. 2018
Jun. 201945

Joined KYOWA EXEO CORPORATION
Operating Officer, Branch Manager of Tokai Branch, KYOWA EXEO CORPORATION
Operating Officer, General Manager of Accounts & Finance Division,
KYOWA EXEO CORPORATIONManaging Operating Officer, General Manager of Accounts & Finance
Division, KYOWA EXEO CORPORATION
Director and Managing Operating Officer, General Manager of Accounts &Finance Division, KYOWA EXEO CORPORATION (present position)

EXEO Integrated Report 2021

Vice Governor of Mie Prefecture
Deputy Director-General of Minister's Secretariat, Ministry of Internal
Affairs and Communications
Deputy Director-General of Office for the Local Sovereignty Strategy
Council at Cabinet OfficeDirector-General of the Local Administration Bureau, Ministry of Internal
Affairs and Communications
Advisor, Nippon Life Insurance Company
Vice Chairman, Institute of Scientific Approaches for Fire&Disaster
Secretary-General, National Association Chairpersons of Town and Village
Assemblies (present position)
Outside Director, KYOWA EXEO CORPORATION (present position)

Newly appointed

OutsideIndependent

Statutory Auditor
Number of the Companyʼs shares held : 0
Board of Directors meeting attendance in FY 2020 : 15/15
Board of Statutory Auditors meeting attendance in FY 2020 : 6/16

OutsideIndependent

Shinnosuke Yamada
Statutory Auditor
Number of the Companyʼs shares held : 0
Board of Directors meeting attendance in FY 2020 : 11/11
Board of Statutory Auditors meeting attendance in FY 2020 : 10/11

Newly appointed

OutsideIndependent

Kimiko Takahashi
Statutory Auditor
Number of the Companyʼs shares held : 0
Board of Directors meeting attendance in FY 2020: Board of Statutory Auditors meeting attendance in FY 2020 : -Independent

Keiji Yoshida
Director
Number of the Companyʼs shares held : 0
Board of Directors meeting attendance in FY 2020 : -Apr. 2013
Apr. 2014
Apr. 2016

Apr. 1980
Jun. 2014
Jun. 2015

Independent

Director

Newly appointed

Director and Managing Operating Officer

Professor, Institute of e-Government, Waseda University (present position)
President, International Academy of CIO Japan (present position)
Committee Chair, Smart Silver Innovation Committee, APEC (present
position)
Outside Director, KYOWA EXEO CORPORATION (present position)
Outside Director, ITOCHU Techno-Solutions Corporation (present position)
Member of Policy Evaluation Council, Ministry of Internal Affairs andCommunications (present position)
Expert Advisor, Public Records and Archives Management Commission,
Cabinet Office (present position)

OutsideTomoko Aramaki

May. 2017
Apr. 2020
Jun. 2021

Director and Senior Vice President, Urban Environment Division, JFE
Engineering Corporation
Representative Director and Senior Vice President, Urban Environment
Division, JFE Engineering Corporation
Representative Director and Executive Vice President, Urban Environment
Division, JFE Engineering Corporation
Chairman, Japan Water Steel Pipe Association
Advisor, JFE Enginerring Corporation (present position)
Director, Kyowa Exeo Corporation (present position)

EXEO Integrated Report 2021

46

Value creation capabilities ｜ GovernanceValue creation story

Value creation strategy

Value creation capabilities

Data section

Messages from Outside Directors

Toward a post-pandemic world:
the increased importance of ESG anda global perspective

Looking ahead in an era of population decline
Emphasizing discussion on work stylereform and diversity

Naoko Iwasaki Director

Tatsushi Mochizuki Director

Applying my knowledge as a researcher tomanagement
I am involved in research and teaching at a university,
specializing in ICT management strategy. Amid theaccelerating pace of digital transformation both in the public
and private sectors, a key aspect of my role is fostering ICT
talent. I also conduct interdisciplinary research in cooperation
with APEC and other international organizations, focusing
on identifying trends in the ICT industry in Japan and abroad,trends in advanced technology and innovation, and changes
in the social environment.
As an outside director, I hope to use my expertise in thesefields to aid decision-making and other areas of managementwith advice and recommendations that consider overseas
trends. Year by year, the role of the outside director, as
required by the Corporate Governance Code, grows incomplexity. I see this as an important role given that it serves
to appropriately reflect, from a standpoint independent ofbusiness execution, the opinions of various stakeholders to
the Board of Directors. Another important aspect of corporate
management is incorporating the perspective of diversity.
I hope that an inclusive environment that supports suchvalues will become the norm.
Digital transformation and work style reforms during
a pandemic year
The ICT solutions business has become an increasing topic
on the agenda of the Board of Directors in addition to theexisting telecommunications construction business.
Digitalization is likely to advance further in the post-pandemic
era. I have offered my views on new projects in this area,from the perspective of an ICT management expert.
In addition, during the formulation of Kyowa Exeoʼs
medium-term management plan and 2030 Vision, I was
asked to provide forward-looking recommendations on
issues that the Group as a whole would need to address.
From the perspective of corporate governance, one area towhich I pay close attention is the promotion of diversity and
47

EXEO Integrated Report 2021

inclusion, as well as discussions to advance innovation.
In terms of the management of the Board of Directors,
I believe that the coronavirus pandemic has shown theeffectiveness of our efforts to swiftly promote digitaltransformation and to implement reforms in the way we work.
Detailed explanations are given ahead of board meetings.
Even discussions with employees are conducted smoothly
online. In the case of topics on the agenda of the Board of
Directors and of reports from the officers in charge, there
are lively exchanges of views and effective discussions.
In addition, discussions at recent board meetings haveincluded an awareness of SDGs and ESG, which I feel is asignificant change. As awareness of global environmental andhuman rights issues rises, I believe that ESG will be anotherarea in which Kyowa Exeo will have an increasingly importantrole to play.
Further strengthening governance
The number of global projects has increased in recent years,
and we recognize the need to further strengthen governance.
The same is true in Japan. It will be important for the president
to exercise strong leadership at the top to use synergies
organically among the three subsidiaries in western Japanand the entire group.
Fiscal 2020 was a year defined by the fight against
COVID-19. The transition to a post-pandemic world isalready in motion, with mounting pressure to pursue
innovation toward new lifestyles and business models.
Business competitiveness will derive from speed ̶ in recovery
and in rebuilding.
In Japan, given the declining population, expanding
business to global markets is critical. Amid increasing
uncertainty about the future, we must continue to
implement thorough risk management, strengthen
governance, and be accountable to our stakeholders.
These efforts will lead to further growth. I will support
them by carrying out my responsibilities as an outside
director.

Using local government experience to lead discussions
on new regional projects
I have worked for the Ministry of Internal Affairs andCommunications and six local governments. I have carriedout work related to local government administration andfinances, from creating laws and other systems to working
directly with residents. The work of local governments
encompasses a wide range of areas, including welfare,education, environment, disaster prevention, industrial
promotion, information technology measures, and infrastructuredevelopment. I try to base my contributions at board meetings
on this experience, highlighting the perspectives of residents,
the community, and the government.
For example, at a board meeting in fiscal 2021, an
agenda item was proposed concerning the launch of a new
project in a certain region. The project would bring
employment and tax revenue to the region, while for theCompany, it would be a core part of our future businessaligned to the social issue of a decarbonized society.
I know from firsthand experience working in local
government that local expectations for such projects are very
high, and that it is vital to develop a relationship of trust withthe local community. I therefore strongly requested that the
project be carried out with the full understanding of the local
community, including the administrative authorities.
Step-by-step preparations for the execution of the project
are underway. I am sure that all necessary preparations will
be conducted before execution.
Creating opportunities for site visits, when the pandemic
subsidesThe information provided to outside directors is substantial.
Prior to board meetings, briefing sessions are always held on
the items to be discussed. This enables outside directors andoutside auditors to come to the meeting with backgroundknowledge. There are also vector meetings after board
meetings as appropriate, where specific topics are explainedand discussed. Explanations are also provided concerning

discussions at management meetings and other meetings
where outside directors are not present.
Site visits have been organized several times in the past
but unfortunately, in fiscal 2020, these had to be put on holddue to the pandemic. I hope that once the situation improves,
the Company will actively provide opportunities to visit thesites and hear from the people in charge.
I would also welcome training opportunities such as offsite study sessions or discussions attended by lecturers thatwould enable me to better understand the Companyʼsbusiness and issues.
Becoming a company that attracts strong talent
It goes without saying that the strength of our Group lies in
our advanced technological capabilities.
This strength is in turn supported by people ̶ by thepower of each and every employee. Securing such people isvital. The Group will depend on this going forward, so that it
can further expand its business qualitatively and quantitatively
and increase its corporate value. However, the working-age
population is projected to decline by more than 20% in the
20 years to 2040, as junior baby boomers become elderly. In
other words, acquiring talent will become more and moredifficult with each passing year.
To deal with this risk and to hire candidates who caninherit and develop the Groupʼs technologies, it is importantto create an attractive workplace, especially by thoroughlyreforming work styles and emphasizing diversity. We will
also have to move forward with seeking talent overseas.
I believe that if a company is a place where everyone canwork comfortably and where valuable work can be done,
people will want to work there.
Rapid population decline and major changes in thecomposition of the population are both predictable. If one
fails to take swift action, it will be too late by the time you
realize it. I strongly believe that it is important to make steadyefforts one day at a time. As a member of the Board of
Directors, I want to play a role in accelerating such discussions.

EXEO Integrated Report 2021

48

Value creation capabilities ｜ GovernanceValue creation story

Composition of the Nomination Committee for fiscal 2021

Corporate governance system and initiatives

Committee
chairman

Supervisory Board format, having determined this system
to be the most conducive to ensuring appropriate corporate
governance. Members of the Board of Statutory Auditors
attend meetings of the Board of Directors and otherimportant meetings in accordance with the audit policy andaudit plan. They observe, from a perspective of fairness
and impartiality, the execution of duties by the Board of
Directors and audit the business and financial conditions ofmajor offices and Group companies.

Governance system
Corporate governance system and rationale for adopting
this system
We have adopted a board of statutory auditors system. We
have 11 Directors, including four Outside Directors, andfive Statutory Auditors, including three 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 andsupervisory function and business execution function toachieve prompt and appropriate decision-making andbusiness execution, while further strengthening ourcorporate governance.
The Board of Directors, chaired by the Representative
Director and Chairman, makes decisions on importantmatters and supervises business execution. Operating
officers execute operations based on the Board of Directorsʼ
decisions. Furthermore, we have a Management Council inplace that discusses important business execution matters.
The Company has adopted a Company with Audit andNomination Committee and Compensation Committee
To further enhance our corporate governance, we haveestablished a Nomination Committee and Compensation
Committee as internal units of the Board of Directors. The
Nomination Committee deliberates on matters such as theselection of candidates for Directors. The Compensation
Committee deliberates on matters such as remuneration
and bonuses for Directors. Each reports relevant items to
the Board of Directors.
The composition of the committees for fiscal 2021 isshown in the figure on the right.

Kyowa Exeoʼs corporate governance system (As of June 23, 2021)
General meeting of shareholders

Consultation

Appointment/Dismissal
Audit

Board of Directors
Directors

Response

Supervision

Higuchi

Asano

Kohara Iwasaki Mochizuki Yoshida

Composition of the Compensation Committee for fiscal 2021
Committee
chairman

KoyamaCommittee members

Mino

Sakaguchi Kohara Iwasaki Mochizuki Yoshida(honorifics omitted)

Appointment/Dismissal
Determination of the appropriatenessof accounting audits

Board of Corporate Auditors
Statutory auditors

Report

Audit

ReportEvaluating the effectiveness of the Board of
Directors
To enhance the function of the Board of Directors andcorporate 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 of theBoard of Directors. It has been confirmed that its Board of
Directors has adequate scale and structure and isappropriately operated to ensure proper decision-making

ReportReportReportPresident

Audit

MeasureReportConsultation, Directions

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

2020

2018

Increased the number of outside directors(from 2 to 3)

ReportReportDirections

Risk Management Division

49

EXEO Integrated Report 2021

Report12 in total

1 person

15 in total

1 person

11 in total

1 personAppointed an outside director (1)12 in total

1 person

11 inside

CSR Committee

Internal audit

2014

Compliance Committee
Business Risk Management Committee

FemaleDirectors

3 outside

2015
Internal Control Committee

Information Security Committee

Group companies

on important management agendas and supervision ofbusiness execution.
From June 2020, we reduced the number of directors
from 15 to 12, increasing the number of independent
outside directors from three to four. We took an additional
measure to strengthen governance further by increasing
the number of independent outside statutory auditors by
one from June 2021.
In addition, we continued to distribute Board of Directorsʼ
meeting materials as early as possible, to enhance theexplanations that we provide in advance to independent
outside directors and independent outside statutory
auditors, and to arrange for site visits by independent
outside directors. During the fiscal year under review we also
conducted “vector meetings,” for 15 projects, in which all
business units align their directions by discussing their businessstrategies among other matters at an early stage. Outside
directors and outside statutory auditors actively makecomments from an independent standpoint in discussions
at meetings of the Board of Directors. We see the steadyeffects of these efforts in the strengthening of the effectivenessof the Board of Directors.
On the other hand, based on the results of theeffectiveness evaluation conducted this time, the Board of
Directors shared its view on discussions needed to further
strengthen governance. These included: a need to secure
more time for discussion by reviewing the agenda items to besubmitted to the Board of Directors; sharing information on
new investment projects as early as possible and monitoring

12 inside

Increased the number of outside directors
9 inside(from 1 to 2)
Using a third-party organization, conducted
a questionnaire for evaluating the
2 outside
effectiveness of the Board of Directors

Response, Report

Instructions
Collaboration

Corporate Lawyer

Supervision

Data section

Composition of the Board of Directors

Increased the number of outside directors
8 inside(from 3 to 4)
The majority of the members of theNomination Committee and Compensation 4 outside
Committee are outside members

Management Council
Directions, Supervision

Value creation capabilities

Transition to a stronger governance system

Independent Auditor

Nomination Committee
Compensation Committee

Kurosawa

Committee members

Outside Director

Appointment/Dismissal

Value creation strategy

1 outside2009

Adopted an operating officers system

8 inside

8 in total

0 person

2003

Established Nomination Committee andCompensation Committee

18 inside

18 in total

0 person

EXEO Integrated Report 2021

50

Value creation capabilities ｜ GovernanceValue creation story

the status of investment recovery; and holding sufficient
discussions on initiatives to improve sustainability such as
ESG and SDGs.
Going forward, based on these results of board evaluationand opinions, the Companyʼs Board of Directors will fully
consider measures for improving its effectiveness and continue
to implement initiatives for enhancing its functions.

Use of outside directors and auditors
The Company has four outside directors and three outside
statutory auditors. The functions and roles that outside
directors and outside statutory auditors should carry out inthe corporate governance of the Company are as follows.
Outside directors fulfill the function of supervising andmonitoring the management of the Company from an
independent and neutral standpoint, providing comments
based on their abundant experience and wide-ranging
knowledge. Outside statutory auditors fulfill the managementmonitoring function by auditing from an objective standpoint,
offering a perspective informed by advanced expertise,abundant experience and wide-ranging knowledge.
Regarding the criteria or policies concerning independence
for appointing outside directors or outside statutory auditors,
the Company secures independent directors or auditors inaccordance with Article 436-2 and Article 445-4 of the

Securities Listing Regulations of Tokyo Stock Exchange, Inc. andthe criteria for determining independence stipulated by thesame exchange (“Guidelines for Listing Management, etc.”).

Remuneration of officers
Policy for Determining the Content of Individual
Remuneration, etc. for Directors
Our basic policy concerning the decision-making about
compensation for directors and its calculation is to effectively
incentivize executives to contribute to increasing our corporate
value and improving our short, medium and long-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
including independent directors selected by the Board of
Directors, and then determined by resolution of the Boardof Directors to secure the transparency and fairness of thedecision-making process.
Compensation for Directors consists of basecompensation, bonuses, and restricted shares. Details are
as shown on the page on the right.

Reasons for selection of outside directors and their expertise and experience

Value creation strategy

Value creation capabilities

Data section

Matters concerning resolutions of the General
Meeting of Shareholders regarding remuneration,etc. of directors and statutory auditors

Matters concerning the delegation of responsibility
for determining details of individual remuneration,etc. of directors

It was resolved at the 55th Ordinary General Meeting of
Shareholders, held on June 23, 2009, that the amount ofmonetary remuneration for directors shall not exceed ¥350
million per year (not including employee salaries in the caseof directors who also serve as employees).
The number of directors as of the close of this Ordinary
General Meeting of Shareholders is eight.
In addition, separate from monetary remuneration, it
was resolved at the 65th Ordinary General Meeting of
Shareholders, held on June 21, 2019, that: the annual amountof remuneration for performance-linked restricted stock shallnot exceed ¥50 million and the maximum number of sharesshall not exceed 50,000 shares per year; the annual amountof remuneration for continuous service-linked restricted stock
shall not exceed ¥50 million and the maximum number ofshares shall not exceed 50,000 shares per year. (Outside
directors are not eligble.) The number of directors (excluding
outside directors) as of the close of this Ordinary General
Meeting of Shareholders is 12.
At the 55th Ordinary General Meeting of Shareholders,
held on June 23, 2009, it was resolved that the amount ofmonetary remuneration for statutory auditors shall be within¥80 million per year. The number of statutory auditors as of
the close of this Ordinary General Meeting of Shareholders
is five.

At Kyowa Exeo, Tetsuya Funabashi, President andRepresentative Director, determines the specific amount ofcompensation for each individual director based on theauthority delegated to him by resolution of the Board of
Directors.
Such authority, which governs the determination of theamount of base compensation and bonuses for each director,
was delegated to the President and Representative Director
on the grounds that the President and Representative Director
is the most suitable person to evaluate, in the context of theCompanyʼs overall performance, each of the businesses forwhich directors are responsible.
The Board of Directors has made it a condition of theabove delegation that the Compensation Committee shallconfirm that details such as the amount of base compensationfor each director are appropriate, to ensure that the above
authority may be properly exercised by the President andRepresentative Director. Since the amount of remunerationfor each individual director has been determined through suchconfirmation procedures, the Board of Directors has determinedthe content to be in line with the decision-making policy.
The Compensation Committee, which conducts theabove procedures, met four times during the fiscal year
under review.

Expertise and experience
Reason for appointment

National
and local
Corporate
Globalmanagement government experience
administration

Yasushi
Kohara ●Appointed
in 2018

Having gained deep experience and insight in corporate
management at the Toyota Group, Mr. Kohara has
provided appropriate advice and recommendationsin important management decisions of the Company,
appropriately fulfilling his role as an outside director.

Naoko
Iwasaki ●Appointed
in 2019

Ms. Iwasaki is a leading international researcher andexpert on the use of ICT in international relations,
national and local government administration, disastercountermeasures and BCP, aging society, and womenʼs
career advancement. She has provided appropriate
advice and recommendations in importantmanagement decisions of the Company, appropriately
fulfilling her role as an outside director.

●

Mr. Mochizuki has been involved in key positions
in central government ministries and local
Tatsushigovernments for many years. With the insight heMochizuki ●has accumulated through his career, he has provided
Appointed
appropriate advice and recommendations inin 2020
important management decisions of the Company,
appropriately fulfilling his role as an outside director.

●

Keiji
Yoshida ●Appointed
in 2021

Mr. Yoshida has a wealth of experience and insightin corporate management as an officer of JFE
Engineering Corporation and other companies.

●●● Denotes members of Nomination and Compensation Committees for fiscal 2021

51

EXEO Integrated Report 2021

Human
resources
and labor
relations

ExperienceESG
in different (Environmental,
industries
Social andand diversity Governance)

●

●

●

●

●

●

●

●

●

●

Total amount of remuneration, etc. for directors and statutory auditors

Classification of officers

Total amount of
remuneration,etc.
(¥ Millions)

Total amount of remuneration, etc. by type (¥ Millions)Monetary remuneration

Non-monetary compensation

Base
compensation

Bonus

Restricted stock

Stock option

Number of
eligible officers(persons)

Director(excluding outside directors)

324

151

123

47

2

10

Statutory auditors(excluding outside statutory auditors)

40

40

―

―

―

3

Outside directors

36

36

―

―

―

4

Outside statutory
auditors

15

15

―

―

―

3

Outside officers(Note)
1. Amounts are rounded down to the nearest million yen.
2. The above figures include two directors and two statutory auditors (including one outside statutory auditor) who retired at the conclusion of the 66th Ordinary General Meeting of
Shareholders held on June 24, 2020.
3. The above figures do not include four directors who receive no remuneration.
4. Base compensation is aligned to the rank of the position and is fixed at an appropriate level based on consideration of the business environment and market rates.
5. Bonuses are paid to directors (excluding outside directors), and are determined based on a comprehensive consideration of the business environment and other factors, with the basic
principle of linking bonuses to business performance based on consolidated profit for the fiscal year under review. The calculation indices for bonuses are consolidated operating profit andconsolidated net income, as directors are responsible, as business operators, for overall consolidated performance.
In the fiscal year under review, the target for consolidated operating profit was ¥32.0 billion and the target for consolidated net income was ¥21.1 billion. The actual results were ¥36.6
billion in consolidated operating profit and ¥24.1 billion in consolidated net income.
6. As non-monetary remuneration, etc.,18,000 shares of restricted stock have been issued to eight directors (excluding outside directors). Restricted stock consists of performance-linked
restricted stock and continuous service-linked restricted stock. Performance-linked restricted stock is granted in accordance with the rank of the employee, based on the linkage with theachievement of business results through medium- to long-term consolidated profits, etc., for the purpose of providing medium- to long-term incentives for the sustainable enhancement ofcorporate value and promoting the sharing of value with shareholders. The performance-linked index for performance-linked restricted stock is consolidated operating profit. It is directly
linked to the achievement of performance targets, providing an index that promotes the sharing of value with shareholders. With respect to service continuous service-linked restricted stock,the condition for waiving the restriction on transfer is that the employee continuously serves as a director of the Company or in a certain other position for a certain period of time.
In the above, the amount of remuneration by performance-linked restricted stock and stock options is also included in the total amount of items such as non-monetary remuneration.
However, no new stock options were granted in the current fiscal year.
7. Since outside directors and statutory auditors are independent from the execution of business, their remuneration is limited to base compensation.

EXEO Integrated Report 2021

52

Value creation capabilities ｜ GovernanceRisk management
The Kyowa Exeo Groupʼs basic policy for risk management
is as follows:

Basic Policy(1) When setting strategies and business performance targets
and practicing efforts to achieve them, we seek integrationof strategies and risk management by considering risk
profiles, risk appetite, risk capacity and risk tolerance.
(2) By recognizing risks clearly at an earlier stage and promptly
providing as many choices as possible for risk management,
we reduce the possibility of unachieved business targets,losses, accidents and failures.
(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 Groupʼsresources.

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 theGroup-wide risk manager to identify and evaluate Grouplevel risks.
Risk management category
Management
risk

Business risk

Risk management category

Description of the risk

Business
Risk relating to changes in the management
environment risk and business environments
Management
strategy risk

Risk relating to the decision-making concerning
management and business strategies, etc.

Business process risk

Risk relating to daily business operations

Disaster risk

Risk relating to the occurrence of natural
disasters

risk management system

Board of Directors

Value creation story

Business Risk Management Committee
As the Group-wide risk manager, the committee wasestablished to provide the risk management systems required
to accomplish strategies and business performance targets
in the process of creating, maintaining and realizing value
and to steadily provide the Groupʼs stakeholders withreasonable expectations that risks can be controlled to atolerable amount. The standing members of the Committee
are the General Manager of the Corporate Planning Division,
the General Manager of the Group Business Promotion
Division, the General Manager of the Accounts & Finance
Division, and the General Manager of the Risk Management
Division. The number of meetings held in fiscal 2020 was 15.
Business Risk Manager (1st-tier risk manager)
As the 1st-tier risk managers, the Business Risk Managers
set forth strategies that are consistent with the Kyowa ExeoGroupʼs mission, vision and core values. In addition, themanagers develop concrete action plans and manage theprogress thereof to address risks according to the environmentsof their organizations and in line with the risk addressing
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 theyattend to and monitor the appropriateness and effectivenessof measures taken to address risks and the status ofcorrection.
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 andverifies the status of improvement.

Board of Statutory Auditors

Supervision<Management>

ReportInternal Control Committee

President
Management Council
Business Risk Managers
Heads of organizational units at theCompanyʼs Head Office, branchmanagers and presidents of subsidiaries<Risk Management Division>
Support Division
The Companyʼs Head Office staff unit

Business Risk Management Committee
Group-wide risk manager(2nd-tier risk manager)

Internal Audit Division(3rd-tier risk manager)

Value creation strategy

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 these risks by using therelevant risk assessment methods given in the ISO
management systems and implement the policies while
making ongoing improvements in the effectiveness andappropriateness of business operations.
The Company and major subsidiaries acquired agroupbased ISO certification and are committed tostandardize the management procedures by implementing
ISO-compliant management systems in a unified manner
across the Group. Taking the opportunity of the ISO quality
and environment management system updates with the2015 revisions, we reviewed the management system
certification process which focuses on the internal rules in
effect to streamline the process.
ISO management systems of which certification has beenacquiredCategory

Applicablestandards

Date of registration

Quality Management System

JIS Q
9001:2015

February 22, 1999

Environment Management
System

JIS Q
14001：2015

May 12, 2000

Occupational Health and
Safety Management System

JIS Q
45001：2018

September 19, 2003

Information Security
Management System

JIS Q
27001：2014

November 10, 2004

Value creation capabilities

Data section

Furthermore, the Group conducts information security
training for all employees, mock exercises to respond totargeted email attacks, and various security checks.
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 the recognition that appropriately managing suchinformation is a corporate social responsibility, we arepromoting 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 measuresby taking an inventory of personal information held andreviewing 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/company/ppolicy.html

Information security
In the course of its business operations, Kyowa Exeo Grouphandles important information, such as technical data andcustomer data held by customers. We are working tostrengthen our information security, given the increasingly
critical importance of appropriate information management,
amid the spread of cloud services, social media, and otherforms of networks.
In terms of our system, we are improving ourmanagement system by assigning an officer in charge as thechief information security officer, as well as assigning an
information management officer and information manager
for each organization. In addition, under the supervision of
the Information Security Committee, we determine policy
for the entire Group's efforts, monitor the overall status of
the efforts, consider measures to prevent recurrence in theevent of an accident, evaluate the status of improvement,
and promote continuous improvement.

(1st-tier risk manager)

53

EXEO Integrated Report 2021

EXEO Integrated Report 2021

54

Value creation capabilities ｜ GovernanceValue creation story

ComplianceIn 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 grounded incompliance to fulfill their social responsibility.
Exeo Group Basic Actions Declaration
Based on the Exeo Group Compliance Program, the officers andemployees of the Group presuppose compliance with not
only laws and regulations but also corporate ethics, including
the spirit underlying those ethics, and practice activities withhigh social value, thereby contributing to society.
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 with laws andcorporate ethics when carrying out the companyʼs business
operations. Such compliance is also a matter of course for us
as individual members of society.
In addition, ensuring such compliance is indispensable forthe company to maintain the trust of society and the realizationof the Groupʼs corporate philosophy of “Contributing toSociety.”
In light of the above, we shall prioritize without hesitation
laws and regulations and corporate ethics in case we are forced
to select either earnings or ethics in our own activities.
Compliance program

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
or communication 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.
We strictly protect the privacy of whistleblowers,
taking all possible measures to ensure that users of thesystem do not suffer any disadvantages as we work to
resolve each issue.
Compliance training
We conduct compliance training at least once a year for
management and all employees.
We invite outside instructors to provide training for
management-level employees, including officers such as
representative directors, general managers of the head
office, branch managers, and presidents of Group companies.
Basic compliance training is conducted for all employees.
In addition, we raise awareness effectively byincorporating compliance into training by job level andproviding training on the content of each job position.
Compliance promotion and enhancement month
We have established a compliance promotion andenhancement month to further reinforce compliance.
During this period, we display posters and distribute
email newsletters to employees.

Tools:
Compliance Manual(Groupʼs corporate philosophy, Basic Actions Declaration, Basic
Guideline for Establishing Internal Control Systems, matters tobe observed and so on)
Manuals by risk at each Group company
Compliance training materials, etc.

SystemValue creation strategy

Discussions with shareholders and investors
Shareholdersʼ Meeting
On June 23, 2021, the Company held its 67th Annual
Shareholdersʼ Meeting. Although the scale was reduced
again this year due to social distancing measures during
the pandemic, the Company views the meeting as animportant forum for communicating with its shareholders.
Accordingly, we are taking the following seven initiatives.
1. Holding of meetings while avoiding days on which
there is a high concentration of shareholdersʼ meetings
2. Early dispatch of the convocation notice
3. Disclosure of the convocation notice prior to dispatch
4. Exercise of voting rights by electromagnetic means
5. Participation in the voting rights exercise platform
6. Disclosure of an English-language convocation notice
7. Introduction of a smartphone-based voting right
exercise service

Value creation capabilities

Data section

IR activities
We hold financial results briefings, business briefings, site
tours, and individual investor briefings for shareholders,institutional investors, and securities analysts to promote
understanding of the Company's business and performancetrends. We hold many individual meetings with domestic
institutional investors and securities analysts throughout theyear. For overseas investors in Europe, North America, Asia,and other regions with a high ratio of foreign shareholders,
we arrange a meeting with the president once a year toproactively communicate with them.
In fiscal 2020, while the coronavirus pandemic requiredthat we change all of the above-mentioned briefings andmeetings to online meetings, we conducted IR activities asvigorously as before.

Shareholder benefits
One of our initiatives to increase the attractiveness of ourshares is our shareholder benefits program. Shareholders
of 1,000 shares or more will receive a Quo Card worth¥1,000 or ¥2,000, depending on how long they have held
their shares.
Shareholder benefit system
Holding period of less than three years

Quo card worth ¥1,000

Holding period of three years or more

Quo card worth ¥2,000

Online meetings with overseas investors* Sent once a year in late June after the close of the Companyʼsshareholdersʼ meeting.

Development:

Follow-up:
Evaluation on complianceobservance
Monitoring

Compliance planning
Compliance training
Support Desk
Lawyer Hot Line

Promoting system
Collaboration(Support Desk)Collaboration

Departments and Branches

Legal Unit,
Risk Control
Division

Whistle-blowing system(Harassment
Investigation
Committee)

Group companies

Guidance
andcontrol

Advisory andcollaboration

Compliance
Committee

Guidance

Collaboration(President of Kyowa Exeo)

Kyowa Exeo Group
Compliance Officer

Kyowa Exeo Corporation

Corporate lawyers(Lawyer Hot Line)

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

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

Compliance Officer
at each company(President)

Responsible compliancepromoter at eachcompany

Earnings announcement
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.

Financial results briefing held via Zoom
Please see our corporate website
for IR information.

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

Employees of eachGroup company* Supervision and monitoring of the system is carried out by the Board of Directors and Board of Statutory Auditors

55

EXEO Integrated Report 2021

EXEO Integrated Report 2021

56

Data section ｜ Eleven-year major financial data

Value creation story

Value creation strategy

Value creation capabilities

Data section

Eleven-year major financial data
Unit

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020Orders received¥Millions273,788288,532

317,862304,201

301,446

300,438

324,102

325,029424,318

556,321631,088

Net sales of completed construction
contracts¥Millions282,264

273,134

301,319

318,513300,912287,437

298,825

312,669

423,727

524,574

573,339

Gross profit on completed construction
contracts¥Millions

30,29926,806

36,11338,54335,74035,79538,48043,35458,33768,32775,865

Operating Profit¥Millions

12,3908,919

18,046

20,734

18,35818,412

20,87325,621

31,716

31,10036,623

Selling, general and administrative
expenses¥Millions

17,90817,886

18,067

17,80917,382

17,382

17,607

17,732

26,62037,226

39,241

Ordinary profit¥Millions13,246

9,178

18,11920,602

18,58918,512

21,40926,44833,431

30,66938,186

Profit attributable to owners of parent¥Millions

−

7,856

11,313

14,91012,264

12,184

13,78917,99340,21915,60324,192

Capital expenditures¥Millions

4,045

1,964

3,360

7,372

4,219

13,215

7,139

4,194

3,887

15,855

12,239Depreciation¥Millions

3,039

2,947

2,308

2,264

2,660

3,001

3,251

3,272

4,725

6,473

6,789

Total assets¥Millions196,918

181,291

200,412217,091

228,422238,301

243,438

261,305

416,483

444,905

491,574

Property, plant and equipment¥Millions48,44747,73647,70750,76752,00559,83062,002

62,664

97,955

107,677

57,925

Net assets¥Millions

112,232

113,411

122,387

135,687

146,768

151,241

158,280

176,101

267,811

270,109288,884

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

21,326

8,178

9,908

13,374

8,679

16,29912,825

11,43518,04947,16757,520Item

Operating results

Financial status

Cash flow status
Cash flows from operating activities¥Millions614

16,435

7,160

9,888

23,167

5,389

15,50424,80012,77017,2996,301

Cash flows from investing activities¥Millions(1,535)(4,523)(2,160)(7,477)(2,828)(13,907)(6,027)(4,538)(17,609)(17,085)(9,249)

Free cash flow

¥Millions(921)

11,912

4,999

2,411

20,338(8,518)9,477

20,262(4,839)213(2,948)Cash flows from financing activities¥Millions(3,650)(17,533)(3,038)(905)(12,343)313(10,230)(5,137)(4,924)4,227(1,750)Cash and cash equivalents at end of
period¥Millions

17,634

12,304

14,611

16,21324,291

16,037

15,241

30,343

41,46946,012

41,246

Earnings per share

¥

75.58

74.96

109.25147.75123.83125.90145.24

189.42

390.25139.75217

Net assets¥

1,027.98

1,084.44

1,199.86

1,350.05

1,482.82

1,569.09

1,668.29

1,842.97

2,343.43

2,395.16

2,577

Per share data

Cash dividend

¥

20

20

22

24

32

38

46

50

70

80

82

Payout ratio

%

26.5

26.7

20.1

16.2

25.8

30.2

31.7

26.4

17.9

57.2

37.7

Operating profit margin

%

4.4

3.3

6.0

6.5

6.1

6.4

7.0

8.2

7.5

5.9

6.4

Profit attributable to owners of parent to
net sales

%

−

2.9

3.8

4.7

4.1

4.2

4.6

5.8

9.5

3.0

4.2

Return on equity (ROE)

%

7.6

7.2

9.6

11.6

8.7

8.2

8.9

10.8

18.3

5.9

8.8

Return on assets (ROA)

%

4.1

4.2

5.9

7.1

5.5

5.2

5.7

7.1

11.9

3.6

5.2

Equity ratio

%

53.9

62.4

60.9

62.3

64.0

63.3

64.8

66.6

63.4

59.9

58.1

Highest stock price

¥

854

863

1,079

1,495

1,494

1,543

1,744

3,075

3,410

3,135

3,030

Lowest stock price

¥

605

675

690

944

1,141

1,096

1,142

1,559

2,309

1,906

2,182

People

7,729

7,872

7,521

7,553

7,988

7,903

8,074

8,331

13,151

13,882

14,374

Financial indices

Stock price

Other
Number of consolidated employees

57

EXEO Integrated Report 2021

EXEO Integrated Report 2021

58

Data section ｜ Analysis of operating results and financial status

Value creation story

Value creation strategy

Data section

Value creation capabilities

Analysis of operating results and financial status

Operating results

Although the economy of Japan in the current consolidated
fiscal year (April 1, 2020 to March 31, 2021) initiallyplummeted due to the spread of COVID-19, it slowly started
to recover in the summer, following a gradual return ineconomic activity and the effects of various government andmunicipal policies. However, the future still remains uncertain
after an increase in the number of cases of infection in early
fall and another declared state of emergency.
Despite such a social situation, new IT investments are
rapidly advancing in the information and communications
field that the Company does business in due to newtelecommunications carriers entering the mobile solutions
market, as well as swift progress in the 5G base station
development plans of each company, a demand for new
normal work styles such as telework, and promotion of thedigital transformation of companies. Additionally, while
private capital investment declined in the construction field
due to the impact of COVID-19, public projects and otherinvestments in construction by the government for building
national resilience, along with measures against aging
infrastructure have been steadily increasing.
Under this business environment, construction in theaccess field of the telecommunications carrier business wasstrong in fiscal 2020, which is the final year in the mediumterm business plan (fiscal 2016 to 2020), following an
increase in demand for optical lines as a result of moreteleworking and the Project on Promoting Advanced Radio
Environment in rural areas. There have also been many orders
for the construction of wireless base stations and for theequipment of new telecommunications carriers. The urban
infrastructure and system solutions businesses saw progresswith major projects for the GIGA school program and theconstruction of large-scale data centers, and although theglobal construction field was affected by the lockdowns ineach country, we continued to take on new businesschallenges, working to establish a business foundation for
future growth.
In addition, we worked with our western Japansubsidiaries, which merged in 2018, to strengthen cooperative
relationships through mutual support with cabling in eachbusiness field, and we have started jointly using ordering/process management systems as an effort to create synergy.
Furthermore, we promoted measures for COVID-19
and work style reforms within the Group by implementinga system that allows all Head Office employees to freelychange desks, and we drove digital transformation bystrengthening security to accommodate teleworking andreforming business processes.
As a result of these efforts, net sales of completed
construction contracts increased by ¥48,765 million fromthe previous consolidated fiscal year to ¥573,339 million(up 9.3% year over year). Regarding profits, operating
profit increased by ¥5,523 million from the previous
consolidated fiscal year to ¥36,623 million (up 17.8% year
over year), ordinary profit increased by ¥7,516 million fromthe previous consolidated fiscal year to ¥38,186 million (up24.5% year over year), and profit attributable to owners ofparent increased by ¥8,589 million from the previous
consolidated fiscal year to ¥24,192 million (up 55.0% year
over year). Return on equity (ROE) increased by 2.9
percentage points to 8.8%, and earnings per share (EPS)
increased by ¥77.58 to ¥217.33.
In March 2021, the Company was also jointly selected
as a Semi-Nadeshiko listed enterprise that proactively

encourages womenʼs success in the workplace for the year
ending March 2021 by the Ministry of Economy, Trade andIndustry and Tokyo Stock Exchange Inc. We have been highly
evaluated for our continued efforts since 2016 to promote
diversity as a management strategy aimed at revitalizing theorganization. The impact of the COVID-19 pandemic in thecurrent consolidated fiscal year was limited.

Financial status

Assets increased by ¥46,669 million from the end of theprevious consolidated fiscal year to ¥491,574 million (up10.5% year over year). This was mainly due to an increase

Analytical chart of assets (¥Millions)

As of March
31, 2020
Cash and deposits(4,765)
Costs on construction contracts in progress

As of March
31, 2021

More SG&A expenses and DX expenses due to new consolidation

Fiscal 2020

59

EXEO Integrated Report 2021

36,623

5,523 UP

(18% UP)Year over year

46,669 UP

14,853
12,692

Total liabilities

10,000(10,000)

27,894 UP

348

15,0992,241
Remeasurements of defined benefit plans
3,509
Other net assets(2,072)Retained earnings

Valuation difference on available-for-sale securities(2,590)Year over year

10,452 UP

444,905

Other liabilities(2,416)

7,352

Analytical chart of liabilities and net assets (¥Millions)

2,500

Worsening of sales mix

Total non-current
assets(2,598)491,574

Bonds payable

1,700

5,698

Investments and other assets

6,349
Reduction of unprofitable projects

36,218 UP

1,401

Intangible assets

Current portion of bonds payable

Improved productivity from more efficient cabling and DX

1,022

Property, plant and equipment

Notes payable, accounts payable
for construction contracts
Short-term borrowings

Increase due to more sales

Total current
assets38,559Other current assets

31,100Fiscal 2019444,905

Notes receivable, accounts
receivable from completed
construction contracts

As of March
31, 2020

Analytical chart of factors affecting operating profit (¥Millions)in notes receivable, accounts receivable from completed
construction contracts.
Liabilities increased by ¥27,894 million from the end of
the previous consolidated fiscal year to ¥202,689 million(up 16.0% year over year). This was mainly due to anincrease in notes payable, accounts payable for construction
contracts, and Short-term borrowings.
Net assets increased by ¥18,775 million from the endof the previous consolidated fiscal year to ¥288,884 million(up 7.0% year over year). This was mainly due to anincrease in retained earnings.

As of March
31, 2021

491,574

Total net assets

18,775 UP

Year over year

46,669 UP

EXEO Integrated Report 2021

60

Data section ｜ Analysis of operating results and financial status

Value creation story

As a result of such efforts, cash and cash equivalents(hereinafter referred to as “funds”) at the end of thecurrent consolidated fiscal year decreased by ¥4,766 million
from the end of the previous consolidated fiscal year to¥41,246 million.
The status of each cash flow is as follows.

Cash flow status

The capital demand of the Group includes ordinary working
capital, as well as real estate capital investment funds for
improving productivity and M&A investment funds for
expanding business. Regarding distribution of returns toshareholders, our basic policy is to actively continue
ensuring stable dividends, and we have flexibly conductedshare buy-back while employing a dividend on equity (DOE)of 3.5% as the benchmark percentage.
The source of the Groupʼs funding comes from cash
earned through operating activities, but when there areshortages, we raise funds mainly from liabilities whileconsidering how to maintain a sound financial position.
We deal with a temporary lack of funds through short-termborrowing from financial institutions, and if long-term
demand for investment funds or other types of funds
arises, we mainly consider issuing straight bonds or SDG
bonds. The funds of our domestic subsidiaries are centrally
managed by the Company, and we are working to improvethe efficiency of funds within the Group and liquidate them.

Cash flows from operating activities
Funds provided by operating activities were ¥6,301 million(¥17,299 million in the previous fiscal year). This was
mainly due to profit before income taxes and payment ofincome taxes.
Cash flows from investing activities
Funds used in investing activities were ¥9,249 million(¥17,085 million in the previous fiscal year). This was mainly
due to acquisition of property, plant and equipment expenses.
Cash flows from financing activities
Funds used in financing activities were ¥1,750 million(¥4,227 million in the previous fiscal year). This was mainly
due to payment of dividends.

Value creation strategy

Data section

Value creation capabilities

Analytical chart of Cash flows from operating activities (¥Millions)

38,665 Profit before income taxes
6,789(37,381) Increase in trade receivables

Depreciation

14,548 Increase in trade payables(16,953) Income taxes paid
631 Other total+6,301Analytical chart of Cash flows from investing activities (¥Millions)Purchase of property, plant and equipment(8,841)

Purchase of intangible assets (1,321)
Purchase of investment securities(1,039)Proceeds from sale of
1,827
investment securities
Other total 127(9,249)Analytical chart of Cash flows from financing activities (¥Millions)

Net increase in short-term borrowings 11,021

Analytical chart of cash flow status(3,207)

Repayments of long-term borrowings

2,129(3,008)Proceeds from long-term borrowings(¥Millions)

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents at end of period

Free cash flow

Purchase of treasury shares(9,044) Dividends paid
Other total 360

50,00046,01240,000(1,750)41,246

41,46930,34330,00024,800Capital expenditure status

20,26220,00015,504

17,29915,241
12,77010,000

9,477
4,227
213

0

–10,000(6,027)(4,538)(5,137)(10,230)

2016

EXEO Integrated Report 2021

2017

(1,750)(2,948)(9,249)(4,924)(4,839)(17,609)–20,000

61

6,301

2018

(17,085)

2019

2020

(FY）

The total amount of capital expenditures in the current
consolidated fiscal year was ¥12,239 million, mainly due toconstruction and rebuilding of branch office buildings, andacquisition of telecommunications network equipment.
There was no retirement or sale of important equipmentin the current consolidated fiscal year.
We have formulated a cross-group utilization plan for
the installation of new equipment based on medium-term
usage needs and trends to promote utilization in asystematic and efficient way. There are no plans to retire
any important equipment.

Changes in capital expenditure(¥Millions)

FY2016FY2017FY2018FY2019FY2020

7,139

4,194

3,887

15,855

12,239EXEO Integrated Report 2021

62

Data section ｜ Consolidated financial statements

Value creation story

Consolidated balance sheets
ASSETS
Current assets
Cash and deposits
Notes receivable, accounts receivable from completed
construction contracts
Securities
Costs on construction contracts in progress
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current Assets
Property, plant and equipment
Buildings and structures
Machinery, vehicles, tools, furniture and fixtures
Land
Other
Intangible assets
Goodwill
Other
Investments and other assets
Investment securities
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total assets
LIABILITIESCurrent liabilities
Notes payable, accounts payable for construction contracts
Short-term borrowings
Current portion of bonds payable
Income taxes payable
Advances received on construction contracts in progress
Provision for bonuses
Provision for bonuses for directors (and other officers)
Provision for warranties for completed construction
Provision for loss on construction contracts
Other
Non-current liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities
Provision for retirement benefits for directors (and other officers)
Allowance for investment loss
Retirement benefit liability
Other
Total liabilities
NET ASSETS
Shareholdersʼ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

63

EXEO Integrated Report 2021(¥Millions)

FY2016FY2017FY2018FY2019FY2020142,395
15,431

152,365
26,095

241,708
41,805

264,00947,550300,227
42,78596,08092,185

156,361

166,098

204,657

63
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
14,520―4,228(1,216)
243,438

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
2,737
2,082
(235)
261,305

895
38,401
―
4,403
(158)
174,774
97,95531,603
8,738
55,4032,209
14,762
10,2594,502
62,05637,917
16,283
4,314
4,026
(485)
416,483898
42,542―
7,013(94)
180,895
107,677
34,447
11,81858,654
2,757
12,7777,640
5,136
60,44034,721
17,059
―
9,096
(436)
444,905910
43,564―
8,388(80)
191,347
113,375
38,394
13,12859,8482,003
10,1795,949
4,229
67,79237,707
21,641
―
8,994
(550)
491,574

61,28336,606
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

156,21274,89019,50910,000
6,766
8,080
4,990
472
148
1,384
29,967
46,47720,000
6,837
8,328
648
―
7,963
2,699
202,689

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

269,805
6,888
49,844
226,294(13,221)
15,848
6,451
(268)
9,665
262
2,968
288,884
491,574

Value creation strategy

Data section

Value creation capabilities

Consolidated statements of income
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 profit
Non-operating income
Interest income
Dividend income
Reversal of allowance for doubtful accounts
Foreign exchange gains
Rental income from land and buildings
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 non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Foreign exchange losses
Impairment loss
Other
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain on abolishment of retirement benefit plan
Gain on bargain purchase
Extraordinary losses
Impairment loss
Goodwill amortization
Goodwill impairment loss
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent(¥Millions)

FY2016FY2017FY2018FY2019FY2020298,825

312,669

423,727

524,574

573,339

260,344

269,315

365,389456,247

497,474

38,48043,35458,33768,32775,865

17,607

17,732

26,62037,226

39,241

20,87325,621

31,716

31,10036,623

1,936

1,398

2,468

2,076

2,861

4

4

16

36

25

315

403

537

749

1,111

111

34

―

―

―

―

―

―

―

483

572

401

295

415

424

437

114

592

―

―

―

170

―

―

―

―

―

346

―

―

203

―

―

―

―

290

269

679

875

815

1,400

571

753

2,507

1,297

49

33

48

208

148

185

105

56

―

―

516

57

4

―

―

45

68

118

―

325

―

1

106

425

―

143

169

―

522

―

―

―

135

411

406

458

136

284

938

418

21,40926,44833,431

30,66938,186

1,471―

18,313

658

478

1,262

―

―

658

478

209

―

―

―

―

―

―

18,313

―

―

2,159

―

126

4,473

―

2,159

―

―

―

―

―

―

126

―

―

―

―

―

4,473

―

20,721

26,44851,617

26,854

38,665

7,719

8,018

11,943

11,43814,261

(737)

375

(658)

(240)

73

6,982

8,393

11,284

11,19814,335

13,73918,05440,333

15,65624,330

(50)

61

113

53

137

13,78917,99340,21915,60324,192

Consolidated statements of comprehensive income
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
BreakdownComprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controllinginterests(¥Millions)

FY2016FY2017FY2018FY2019FY202013,73918,05440,333

15,65624,330

(554)

1,631

(625)

(394)

2,242

(30)

(10)

(92)

265

(466)

216

1,793

(2,193)

(332)

3,510

(368)

3,414

(2,911)

(461)

5,286

13,37021,46937,421

15,19529,617

13,43821,41337,354

15,13729,481

(68)

55

67

58

135

EXEO Integrated Report 2021

64

Data section ｜ Consolidated financial statements

Value creation story

Consolidated statements of changes in equity(¥Millions)

Accumulated other comprehensive income
Valuation
Foreign
Remeasurements
difference on currencyof defined
available-for- translation
benefit planssale securities adjustment

Share
NonTotal net
acquisition controlling
assetsrightsinterests

SharecapitalCapitalsurplusRetainedearnings

6,888

47,868204,647(6,534) 252,870

Dividends of surplus(8,764)(8,764)(8,764)

Profit attributable to ownersof parent

15,603

15,603

15,603(5,009)(5,009)(5,009)

2,167

3,731

3,731

Recieve of treasury shares
via trust(3,079)(3,079)(3,079)Transfer of treasury shares
via trust

659

659

659

11

11

(2)

(2)

(2)

174

174

174

(302)

(302)

Balance at beginning of
periodTreasuryshares

Total

4,603

(65)

6,488

Total

11,026355

3,559

267,811

Changes during period

Purchase of treasury shares

1,563

Disposal of the treasury shares

Change in scope of
consolidation

11

Change in equity due toadditional acquisition of
consolidated subsidiary stock
Sales of shares of
consolidated subsidiaries
Merger between consolidated
subsidiaries andunconsolidated subsidiaries(302)

Net changes of items otherthan shareholdersʼ equity
Total changes during period
Balance at end of period

―
―

1,735

6,547

6,888

49,604

211,195

(392)

258

3,022

(392)

258

(331)

(466)

(36)

(221)

2,298

(11,795) 255,893

4,210

193

6,156

10,559318

3,337

270,109(5,261)

(331)

(466)

(36)

(221)

Fiscal year ended March 31, 2021

Balance at beginning of
period(724)(¥Millions)Shareholdersʼ equity

Accumulated other comprehensive income

SharecapitalCapitalsurplusRetainedearnings

Treasuryshares6,888

49,604

211,195(11,795) 255,893

Total

Valuation
Foreign
Remeasurements
difference on currencyof defined
available-for- translation
benefit planssale securities adjustment
4,210

193

6,156

Total

10,559Share
NonTotal net
acquisition controlling
assetsrightsinterests
318

3,337

270,109

Changes during period
Dividends of surplus(9,093)(9,093)(9,093)

Profit attributable to ownersof parent

24,192

24,192

24,192(3,008)(3,008)(3,008)

327

426

426

―

―

1,255

1,255

―

―

140

140

Sales of shares of
consolidated subsidiaries――

Merger between
consolidated subsidiaries
and unconsolidated
subsidiaries――

Net changes of items otherthan shareholdersʼ equity

―

2,241

(461)

3,509

Purchase of treasury shares

99

Disposal of the treasury shares
Recieve of treasury shares
via trustTransfer of treasury shares
via trust

1,255

Change in scope of
consolidation
Change in equity due toadditional acquisition of
consolidated subsidiary stock

Total changes during period
Balance at end of period

65

EXEO Integrated Report 2021

140

Value creation capabilities

Data section

Consolidated statements of cash flows

Fiscal year ended March 31, 2020
Shareholdersʼ equity

Value creation strategy

5,289

(56)

(369)

4,862

―

239

15,098(1,425)

13,912

2,241

(461)

3,509

5,289

(56)

(369)

18,775

6,888

49,844

226,294(13,221) 269,805

6,451

(268)

9,665

15,848262

2,968

288,884

Cash flows from operating activities
Profit before income taxes
Depreciation
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 in defined benefit asset or liability
Interest and dividend income
Interest expenses
Loss (gain) on sales of non-current assets
Loss (gain) on sales of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in costs on construction contracts in progress
Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in advances received on construction contracts in progress
Increase (decrease) in other liabilities
Gain on exchange of investment securities
Gain on abolishment of retirement benefit plan
Other, net
Sub-totalInterest and dividends income received
Interest paid
Income taxes paid
Cash flows from investing activities
Purchase of property, plant 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 shares of subsidiaries resulting in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting in change in scope of consolidation
Loan advances
Proceeds from collection of loans receivable
Increase (decrease) in time deposits
Other, net
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from issuance of bonds
Repayments of long-term borrowings
Proceeds from long-term borrowings
Purchase of treasury shares
Proceeds from sale of treasury shares
Recieve of treasury shares via trust
Transfer of treasury shares via trust
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries not resulting in change in scope of consolidation
Proceeds from sale of shares of subsidiaries not resulting 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 in scope of consolidation
Increase in cash and cash equivalents resulting from merger of consolidated and non-consolidated subsidiaries
Increase in cash and cash equivalents due to share exchange
Cash and cash equivalents at end of period(¥Millions)

FY2016FY2017FY2018FY2019FY202015,504
20,721
3,251
2,159
―
929
―
(148)
117
(850)
248
(399)
(319)
49
79
(1,262)(3,127)(2,659)965(1,014)
204
2,671
(203)
(209)
390
21,595318(66)(6,343)(6,027)(5,761)901(2,416)
(443)
1,686
―
―
(111)
1
44
72
(10,230)(12,306)
9,991(1,227)―(3,002)
153―
733(4,329)
―
―
―
(244)
(42)
(796)
16,037―――
15,24124,80026,448
3,272
0
―
395
―
(980)
179
0
(216)
(694)
(407)
33
(56)
0
3,892
(3,447)2,175(1,802)
118
2,327
―
―
285
31,523408(33)(7,098)(4,538)(3,214)352(1,010)
(429)
0
―
―
(204)
1
1
(35)
(5,137)(100)―(1,093)
―
(3)
308
―
515
(4,581)
―
―
―
(182)
(23)
15,101
15,241―――
30,343

12,77051,617
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(16,961)
―
(358)
3,098
20
(20)
(4,924)4,130―(2,474)
1,260(3,015)339―
685(5,425)
―
(96)
―
(329)
(113)
(9,877)30,34355―
20,94841,46917,29926,854
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(5,083)
(128)
(125)
45
(184)
(350)
4,227
(6,821)
19,904(2,609)7,474(5,009)3,620(3,079)659(8,749)
(36)
(655)
287
(758)
(18)
4,422
41,4695
114―
46,012

6,301
38,665
6,789
406
―
1,864
(33)
102
406
17
(1,226)(191)(1,137)148
1(473)(37,381)(960)
711
14,548(1,935)
1,529
―
―
429
22,282
1,137(164)(16,953)(9,249)(8,841)90(1,321)(1,039)
1,827
(77)
(20)
(161)
61
(0)
234
(1,750)11,021―(3,207)2,129(3,008)161―
1,255(9,044)
(381)
(105)
―
(570)
(67)
(4,766)46,012―――
41,246EXEO Integrated Report 2021

66

Data section ｜ Corporate Data

Corporate Data (as of March 31, 2021)

Stock Information (as of March 31, 2021)

Company Name

KYOWA EXEO CORPORATION

Shareholding

EstablishedMay 17, 1954
Common Stock

Paid-in Capital¥6,888 million

Fiscal year-end

March 31

Stock listing

Tokyo Stock Exchange (First Section)

President & CEO

Tetsuya Funabashi

Net Sales¥573.3 billion (consolidated) (fiscal year ended March 31, 2021)

Number of Employees

14,374 (consolidated)

Head Office29-20, Shibuya 3-chome, Shibuya-ku, TokyoWest Japan Head Office2-10, Uchihonmachi 2-chome, Chuo-ku, Osaka

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

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

Total Number of
Shareholders

22,524

Individuals and others
24.68%

Headquarters and branch offices: 15 Sales offices: 22

Consolidated subsidiaries

Kyowa Exeo Group (69 companies); C-Cube Group (18 companies);
Seibu Electric Industry Group (6 companies); Nippon Dentsu Group (10 companies)
Note: Excludes non-consolidated subsidiaries (16 companies) andaffiliated companies (17 companies)

Financial
institutions
43.93%

11.68

The Master Trust Bank of Japan, Ltd.

10,641

9.56

ESOP Association of KYOWA EXEO CORPORATION

4,221

3.79

SUMITOMO LIFE INSURANCE COMPANY

2,296

2.06

Sumitomo Realty & Development Co., Ltd.

2,081

1.87

1,834

1.65

1,600

1.44

1,500

1.35

GOVERNMENT OF NORWAY

1,497

1.35

Custody Bank of Japan, Ltd. (Trust Account 7)

1,459

1.31

Custody Bank of Japan, Ltd.

(Mitsui Sumitomo Trust & Banking Co., Ltd. Retirement Benefit Trust
Account)

SSBTC CLIENT OMNIBUS ACCOUNT(Standing proxy: The Hongkong and Shanghai Banking Corporation
Limited, Tokyo Branch)(Sumitomo Electric Industries, Ltd. Retirement Benefit Trust Accountreentrusted by Sumitomo Mitsui Trust Bank, Limited)

Other corporations
9.26%

Securities companies
1.79%

Treasury stock is included in “Individuals and Others”.

Group companies (domestic)

13,000

Custody Bank of Japan, Ltd.

Foreign companies
20.34%

Mizuho Bank / Sumitomo Mitsui Banking Corporation / MUFG Bank

Custody Bank of Japan, Ltd. (Trust Account)(Trust Account)

Shareholding structure

Number of business offices

Correspondent Banks

Major Shareholders(Standing proxy: Citibank, N.A., Tokyo Branch)

Note: The Company holds 6,501 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.

Stock Price Range and Trading Volume on the Tokyo Stock Exchange

Kyowa Exeo

Stock Price(¥)

Major business activities

4,000
3,000
AccessMobileengineering telecommuni
cations

Kyowa Exeo Group
Exeo Tech

Daiwa Densetsu

Network

Civilengineering

ICT

Electricity

Environment

Group companies (overseas)

2,000
1,000

Singapore EXEO GLOBAL Pre. Ltd.
● Philippines MG EXEO NETWORK, INC.
● Thailand EXEO ASIA COMPANY LIMITED

Trading Volume(Million Shares)

●

20

0

15
10

Major business activities

0

C-CubeC-Cube Group
AccessMobileengineering telecommuni
cations

Network

Civilengineering

ICT

Electricity

Environment

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2016

2017

2018

2019

2020

5

2021

Major business activities

Seibu ElectricIndustry Group

Seibu Electric Industry

External evaluation
AccessMobileengineering telecommuni
cations

Network

Civilengineering

ICT

Electricity

Environment

Since 2017, Kyowa Exeo has for four consecutive years been selected as a constituent
stock for the MSCI Japan ESG Select Leaders Index.

Major business activities

Nippon Dentsu
Group

Nippon Dentsu
AccessMobileengineering telecommuni
cations

67

EXEO Integrated Report 2021

Network

Civilengineering

ICT

Electricity

Environment

In fiscal 2020, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock
Exchange (TSE) selected our company as a “Semi-Nadeshiko Brand” as a listed company
that excels in promoting the activities of women. Kyowa Exeo was selected in recognitionof our efforts to promote women to management positions, to support their careerdevelopment, and to create a comfortable working environment.

EXEO Integrated Report 2021

68