CHUDENKO Report

2021

Integrated Report
Year ended March 31, 2021

Change & Growth For All

Company motto

Corporate philosophy
Corporate mission
As a general equipment engineering
g company, we contribute to the developmentof society through creating value added
dded to everyday life and the businessenvironment for our customers.

Business mindset
1. Obtain trust from customers and shareholders and become the company of choice.
2. Be environmentally friendly while meeting strict quality standards.
3. Improve and enhance technical capability in general.
4. Be mindful of people and promote a working environment that is safe and energetic.
5. Maintain a strong business foundation by securing orders and promoting
efficient management.

Corporate guidelines
1. Establish trust with customers with one’s whole heart, and always be aware of customer
satisfaction and results when taking action.
2. Be responsible and proactive when working, and aim for speedy decision making andaccelerating business processes.
3. Don’t stick to conventional methods; always be flexible and have that spirit of challenge.
4. Stick to social rules and be mindful of common sense in one’s actions.

IInnovative
In
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no
ovva
ati
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Changeh nge and Growth in tthe Chudenko Groupha

Change & Growth For All

Contents
02

Corporate Philosophy

03

Overview of Chudenko

21 Overview of fiscal 2020

31 Environment05

The History of Chudenko

23 Indoor Electrical Work

35 Human resources

07

Financial/Non-Financial Highlights

24 Air-Conditioning Piping Work

37 Health and safety activities

09

Message from President

39 Quality / Coexistence with communities

15

Medium-Term Management Plan

25 Information Communication
Equipment Work

20

Overview of Business30

ESG Initiatives

41 Corporate governance

26 Distribution Line Work

49 Compliance / Risk management

27 Underground Power Line Workfor Power Transmission
and Distribution

51

11-Year Financial Summary (Consolidated)

53

Company profile / Stock information

28 Technology development
29 Group companies

Editorial policy
This integrated report describes the Chudenko Group’s basic
approach to its business activities as a whole, as well as results
and other information pertaining to FYE 3/2021.
Period covered: FYE 3/2021 (April 1, 2020–March 31, 2021)
Note: This includes some activities that took place beyond
the period mentioned.

Scope: Chudenko Corporation and its Group companies

01

CHUDENKO Report 2021

Cautionary note regarding
forward-looking statements
The forward-looking statements pertaining to earnings
forecasts and other matters in this report are based on
information available to and certain assumptions judged
reasonable by the Company at the time of publication, andinclude potential risks and uncertainties. As such, actual
earnings and other outcomes may differ from the content of
this report due to a variety of factors.

CHUDENKO Report 2021

02Overview of Chudenko

As a general equipment engineering company,
we contribute to achieving a sustainable society
Business domains

General Work BusinessElectric Power Business

Main customers: general contractors, manufacturing industry, hotels, hospitals, schools, public agencies, etc.

Main customers: The Chugoku Electric Power Company, Incorporated and Chugoku Electric Power Transmission & Distribution Company, Incorporated

48.7%

Indoor Electrical Work

Breakdown of
net sales (parent)

Underground Power Line Work forPower Transmission and Distribution

18.5%

5.6%

This segment is responsible for the design, construction, andmaintenance of equipment for power transmission and distribution
and for underground power lines at Chugoku Electric Power
Transmission & Distribution Company, Incorporated, as well as
for special high-voltage power-receiving equipment for private use.
With extensive experience and a track record stretching back morethan 50 years, we support the stable supply of electricity.

This segment is responsible for the design, construction andmaintenance of air-conditioning, plumbing, firefighting and otherequipment. We also actively propose renewal plans that utilize
the latest energy-conserving systems to provide customers with
comfortable and efficient business environments.

Information Communication
Equipment Work

19.8%

This segment is responsible for new installations of overhead
distribution lines, replacement of electricity poles and other work.
We deliver a stable supply of electricity to our customers by
combining highly reliable construction techniques with advanced
technology. In the event of a natural disaster, we move swiftly tothe site of the incident to take on the task of restoring lifelines.

This segment is responsible for the design, construction andmaintenance of various kinds of electrical equipment. We also
focus on environmental work such as renewable energy, aiming
to provide optimal electrical equipment that achieves even greater
comfort while conserving more energy.

Air-Conditioning Piping Work

Distribution Line Work

7.4%

This segment is responsible for general work related to thesophisticated information and communication systems that are
essential to modern society. We work to create a richer living
environment and to ensure the safety and security of the community,
using cutting-edge technology to fulfill customer needs.

Business network

Orders received / net sales by region

Centered on the five prefectures of the Chugoku region, we have expanded our business to the Tokyo and Osaka urban areas, as well as overseas.

Domestic

Overseas

68

Malaysia

CHUDENKO (Malaysia) Sdn. Bhd.
RYB Engineering Pte. Ltd.

offices,with the core consistingof nine branch companies
in the Chugoku region.

Tokyo Headquarters
Nagoya Branch
Yokohama Branch
Osaka Headquarters

Kyushu BranchIndonesia

Okinawa Branch

03

CHUDENKO Report 2021

In accordance with our medium-term management plan,
while further strengthening our business basein the Chugoku region, we will move forward to establish
structures to tap urban areas where we expect demand.
Over the past few years net sales in the Chugoku region
have been strong, and are also trending upwards in urban
and other areas. Due in part to the consolidation ofShowa Corporation, fiscal 2020 net sales in urban areas
and overseas increased to more than twice what they
had been three years earlier, showing that the policy isachieving steady gains.

Consolidated net sales

FY2017(Billions of yen)

Urban areas / overseas aspercentage of net sales

FY2020

10% 22%
184.4
168.8
40.7

148.3
Urban area /overseas→ 15.2

153.3

Chugoku region→ 133.0

129.6

144.2

143.7

2017

2018

2019

2020

24.6

23.6

Going forward we will continue to strengthen our basein the Chugoku region while seeking to expand our businessin urban areas.
(FY)

CHUDENKO Report 2021

04

The History of ChudenkoOver a history of more than 75 years,
we have achieved growth as a generalequipment engineering company byrepeatedly transforming ourselves

FY2024 target for
consolidated net sales¥

210.0 bn.

2020 COVID-19 pandemic
1995 Great Hanshin
earthquake

FY2020consolidated net sales

1991 Bursting of the bubble

Corporate emblem and flag are changed (2004)¥184.4 bn.

2011 Tohoku Earthquake
and Tsunami
2008 Lehman Brothers bankruptcy

1944 Company is establishedAt the order of the Ministry of Munitions, 12
companies involved in electrical work and locatedmainly in the five prefectures of the Chugoku region
were integrated into a single electrical work company
with capital of ¥1.5 million. This company, named
Chugoku Electrical Work Co., Ltd., was establishedin 33 Komachi, Hiroshima City.

1973 Oil shock1964 Tokyo Olympics
Ceremony to launch the business

Head office relocates to 6-12, Koamicho,
Naka-ku Hiroshima City (1996)
New ZEB-compliant building for Okayama
Supervising Branch is constructed (2019)1954 High-speed economic growth(Net sales over time)

1944

1950

1960

1970

1980

1970

Listed on the Second Section of the Tokyo
Stock Exchange
Listed on the First Section of the Tokyo
Stock Exchange / First Section of the Osaka
Stock Exchange
Company motto “Magokoro” established

1990

2000

2010

2020

(FY)

Timeline
1944
1949
1950
1956

Chugoku Electrical Work Co., Ltd. is established
Listed on Hiroshima Stock ExchangeTokyo Office (now Tokyo Headquarters) is opened
Succeeds in developing construction method
using vinyl-sheathed vinyl-insulated flat cable (VVF)

1944 -

05

1960
1968
1969

Technician Training Center (now the Training
Center) is opened
Listed on the 2nd Section of the Osaka
Stock Exchange
Listed on Hiroshima Stock Exchange

1972
1980

Our strength is our high level of technical capability

1990
1990
1996

Company name changed to Chudenko Corporation
Marathon Team (now the Chudenko RunningTeam) is established
Head office relocates to 6-12, Koamicho,
Naka-ku Hiroshima City (current location)2000 -

2000
2001
2002

Obtains ISO 9001 certification
Corporate Philosophy establishedObtains ISO 14001 certification

2004
2008
2015

Changes corporate emblem and flag
Exhibits at the Japan Electrical Construction
Association (JECA) Fair for the first time
Opens practical safety training facility

Expanding the business through M&A and establishingoverseas subsidiaries

We use the technical expertise accumulated over more than half a century since the founding of the company to respond toa wide range of needs. Going forward, we will continue to gain the trust of customers with our quality and a high level of technicalcapability that keeps up with the changing times, seeking to maintain our position as a company of choice.

As a forward-looking investment in sustainable growth, we are proceeding to establish structures in urban areas, expand
the business, and pursue M&A. These varied measures have made a significant contribution to consolidated performance, andgoing forward we will continue to invest actively for growth with the aim of ensuring the further development of the Group.

1963

1979

1998

2010

2016

2017

2020

WorldSkills gold medal
award parade

Chudenko wins large orderfor refinery in Saudi Arabia“Multi-functional vehicle
for distribution lines” wins
Shibusawa Prize

CHUDENKO (Malaysia)
Sdn. Bhd. establishedSugiyamakankousetsubi
Co., Ltd. andHayamizudenki Co., Ltd.
become part of GroupRYB Engineering Pte. Ltd.
becomes part of GroupShowa Corporation
becomes part of GroupAt the 12th WorldSkills Competition held in
Dublin, Ireland, Kazunori Kawai represented
Japan in the Electrical Installations event,winning the gold medal.

In 1966, the company wins its first overseas
business in the shape of an order for electricalequipment work in South Korea. It subsequently
receives orders in Pakistan, the Philippines,
and Saudi Arabia, with its young and talented
engineers making significant contributions tothese countries.

The company won the Japan Electric
Association’s prestigious Shibusawa Prizea total of 18 times between its first such win in 1956,
and 2020. This prize is awarded to organizations
for outstanding performance in the field ofelectrical safety.

Our first overseas subsidiary (Group
company) was established in
the Malaysian capital of Kuala
Lumpur.

With the objective of expanding
work and extending services in
the Tokyo Metropolitan region and
the Kyoto, Osaka and Kobe area,
we welcomed to the Group twoelectrical work companies witha high degree of expertise andtechnical capability.

Aiming to expand the business inSoutheast Asia, we executed our
first overseas M&A to add
Singaporean electrical work
company RYB Engineering Pte.
Ltd. to the Group.

With the focus on providing highvalue-added services by cooperating
and complementing with regard to
our marketing activities, etc. in urban
areas and by working together with
our Air-Conditioning Piping Workbusiness, we made Showa
Corporation part of the ChudenkoGroup.

CHUDENKO Report 2021

CHUDENKO Report 2021

06

Financial/Non-Financial Highlights

Financial (consolidated)

Non-financial (parent)

Net sales

Operating profit / Operating margin

184.4

9.4

Net sales (Billions of yen)

5.1%

Operating profit (Billions of yen)
Operating margin (%)

184.4
168.8
147.9

148.3

9.6

9.4

8.5

153.3

Profit attributable to owners of parent / ROE

Capital expenditures / Depreciation

8.1

2.1

3.8

%

ROE (%)

Depreciation (Billions of yen)

Ratio of female hires (%)

4.5
7.8

4.3
2.8

Parent net sales decreased ¥900 million due todeclines in Indoor Electrical Work andAir-Conditioning Piping Work, but consolidated
subsidiaries increased by ¥16.4 billion due tothe consolidation of Showa Corporation andother factors, resulting in consolidated net sales
growing ¥15.5 billion (9.2%) year on year to¥184.4 billion.

Total assets / ROA

276.5

2.9

%

Total assets (Billions of yen)

2019 20202016 2017

267.1

274.9

2018

2019 2020

2016

2017

Free cash flow

Dividend / Dividend payout ratio

15.4

104

218.7

77.6

%

15.4

71.2

218.0

212.0

218.7

9.4

2019

2020

2017

2018

2020

We are focused on securing and nurturing
the next generation of engineers. In addition,
we are working to increase hirings of female
employees.

We have formulated a code of conduct to enable
a workplace environment in which both men andwomen can express their individuality anddemonstrate their ability, and as well as actively
hiring women we are making efforts to advancethe careers of existing female employees.

Percentage of employees withdisabilities

Re-employment for retired employees /Number of re-employments

2.10

84.6

104

%

214

%

Percentage of employees with disabilities (%)

Re-employment for retired employees (%)

Statutory employment rate (%)

Number of re-employments

104

413
2.23

2.20
2.12

81.5

81.1

373
2.30
271

2.20

67.3

77.6

2016

2017

2018

2019

2020

Due to a rise in the value of securities held
causing an increase in the valuation difference
on available-for-sale securities, and otherfactors, net assets grew by ¥6.7 billion (3.2%) to¥218.7 billion. The equity ratio also improved by
1.9 points, to 77.6%.

2016

2017

2018

2019

2020

Net cash provided by operating activities was¥9.1 billion, while net cash provided by investing
activities was ¥6.3 billion, resulting in free cash
flow of ¥15.4 billion.
* Free cash flow = Net cash from operating activities +Net cash from investing activities

2016 2017

214

94.9

2.10

-3.8

80.2

2.00

44.9

CHUDENKO Report 2021

2018

120.7

72

83.9

71.2

-15.4

07

2017

1.6

94.4

75.7

* ROA: Return on Assets

4.5

94

2.9

Total assets increased by ¥1.6 billion (0.6%) year
on year to ¥276.5 billion. As result of the increasein profit attributable to owners of parent, ROA*
improved by 1.1 points to 2.9%.

%

Dividend payout ratio (%)

104
222.3

4.5

Depreciation was flat year on year, at ¥2.8 billion.

Dividend (yen)Free cash flow (Billions of yen)

0.2

2016 2017 2018 2019 2020

2020

Net assets / Equity ratio* ROE: Return on Equity

3.5

1.8

2019

2019

2.3

Capital expenditures declined ¥100 million (5.6%)
year on year to ¥2.1 billion. These disbursements
were centered on maintenance/enhancements
for work locations, as well as upgrades to tools
and office products, with the aim of maintaining
the working environment, ensuring safety, andimproving general technical capabilities.

276.5

2.3

2018

2.8

8.4

2.1

In addition to the increase in operating profit,
the non-recurrence of an impairment loss on
goodwill related to M&A recorded in the previous
fiscal year and other factors led to a year-on-yearincrease of ¥3.3 billion (69.3%) in profit attributableto owners of parent, to ¥8.1 billion. As result of
the increase in profit attributable to owners ofparent, ROE* improved by 1.5 points to 3.8%.

217.0

2.9

2.2

2.9

9.4

2.8

2.7

2.3

Equity ratio (%)

269.8

2.9

Despite intense competition causing lower
profitability when winning orders, a thoroughgoingprogram of efficiency improvements and cost
control resulted in higher gross profit, which,combined with efforts to suppress selling,
general and administrative expenses, generated
a ¥1.1 billion (13.8%) year-on-year increase inoperating profit, to ¥9.4 billion. The operating
margin also improved by 0.2 points, to 5.1%.

Net assets (Billions of yen)

ROA (%)

263.6

2018

%

119

3.8

3.6

4.2

2016 2017

2.8

2.7

2.8

138

133

3.8
3.2

4.7
5.1

132

8.1

6.5

2016 2017 2018 2019 2020%

No. of regular hires

6.1

4.9

9.4

Capital expenditures (Billions of yen)

6.4

5.8

2.8 138

Profit attributable to owners of parent (Billions of yen)

9.2

8.3

Percentage of management roles
occupied by women

No. of regular hires /Ratio of female hires

20182019 2020

In order to maintain stable and sustainabledividend payments, we have adopted the dividendon equity (DOE) approach to dividends. In fiscal
2020, our policy was to aim for a DOE of around
2.7%. A dividend of ¥104 was actually paid,
resulting in a dividend payout ratio of 71.2%.

2017

2018

2019

2020

In order to fulfill our corporate social
responsibilities, we are taking steps to employ
persons with disabilities at a level higher than
the statutory employment rate.

2017

81.5

2018

2019

84.6

2020

For employees who remain eager to work at
Chudenko after retiring, we have establisheda re-employment system that enables a variety
of work styles to suit the work-life balance ofdifferent individuals, and enables them tocontinue to use the knowledge and skills they
have accumulated over many years in ouroperations.

CHUDENKO Report 2021

08

Message from President

Actualizing “Change & Growth”
as One United Group
Akira Sakotani
Representative Director and President

FY2020 performance: income statement (consolidated)

A look back at fiscal 2020 and the recently completed medium-term management plan

FY2019Consolidated performance

Q. How was performance in fiscal 2020?
Also, please provide a summary of
the previous medium-term management plan.
The business environment in fiscal 2020 was characterized
by strong public-sector investment but we were concernedthat the impact of COVID-19, coming on top of labor
shortages and intense competition for orders, would result
in reductions and postponements in private-sector capital
investment. Under these circumstances, the ChudenkoGroup moved forward with various measures such as
expanding its business in urban areas, strengthening its sales
and construction systems, and promoting operational
reforms, in accordance with the medium-term management
plan that ran from fiscal 2018 to fiscal 2020.
As a result, at the consolidated level we managed toachieve higher revenues and higher profits compared tothe previous fiscal year.
Net sales for the Chudenko parent fell ¥900 million
year on year to ¥148.4 billion, due to declines in Indoor
Electrical Work and Air-Conditioning Pipework. However,as result of the consolidation of Showa Corporation andother factors, consolidated net sales rose ¥15.5 billion year
on year to ¥184.4 billion.
Consolidated operating profit was boosted not only by
the increase in sales, but also by thoroughgoing cost

09

CHUDENKO Report 2020
2021

control and efficiency measures that led to improved
productivity, and to a ¥1.1 billion year-on-year increase, to¥9.4 billion.
In addition to the increase in operating profit,
the non-recurrence of an impairment loss on goodwill
related to M&A recorded in the previous fiscal year andother factors led to a year-on-year increase of ¥3.3 billion
in profit attributable to owners of parent, to ¥8.1 billion.
As a result of the above, net sales increased forthe ninth consecutive fiscal year, while operating profit
rose for the second consecutive year, and profit attributableto owners of parent rose for the first time in two years. I think
this shows that we are beginning to see the results ofthe medium-term management plan on which we havebeen working over the past three years.
With regard to the consolidated numerical targets set
in the previous medium-term management plan for
the fiscal year ended March 31, 2021, we achieved ¥184.4
billion in net sales and operating profit of ¥9.4 billion against
targets of ¥165.0 billion and ¥10.0 billion, respectively.
Although operating profit fell short, net sales significantly
exceeded the target, which I feel indicates a certain
degree of success.
Nevertheless, the business environment going
forward is expected to be characterized by even more
intense competition for orders, and for the Group to

Gross profit(12.6%)

SG&A expenses
Operating profit(4.9%)

Current profit(6.6%)

Profit attributable to ownersof parent(2.8%)FY2020

168.8
21.2
12.9
8.3
11.1
4.7

Net sales(Billions of yen)

Change

15.5
4.1
2.9
1.1
0.7
3.3

184.4
25.4
15.9
9.4
11.8
8.1

(13.8%)(5.1%)(6.5%)(4.4%)

Year on year

109%
119%
123%
114%
106%
169%

* Figures in ( ) are profit margins

FY2020 performance:
factors driving change in net sales (consolidated)
Breakdown of year-on-year change in net sales (+¥15.5 billion)
Chudenko parent (-¥900 million)
Indoor Electrical

Air-Conditioning
PipingInformation
Communication
Equipment

Distribution Line

Consolidated subsidiaries (+¥16.4 billion)
Power Transmission/
Distribution

Chugoku region
subsidiaries (8)Urban area
subsidiaries (3)Overseassubsidiaries (2)

+19.7

184.4
-1.6

168.8
FY2019net sales

+2.1
+2.6

-2.2

FY2020net sales

+1.1
-1.5

-4.6

CHUDENKO Report 2021

10

Message from President

concontinue
to grow, I believe we must raise competitivenessexpand profits further, and steadily address issues
to esuch as work style reform.
suc

Q. What expectations have you incorporated into
the Medium-Term Management Plan 2024?
Based on these, what initiatives will you be
implementing in fiscal 2021?
The Medium-Term Management Plan 2024 is a four-yearplan that targets the inflection point represented by
the 80th anniversary of the founding of the Company,
which is 2024. Its objective is to generate further growth
for the Chudenko Group, and it has been formulated
based on the verification of the previous medium-term
management plan and on trends in the businessenvironment.
In order for the Group to continue to grow, it is essentialthat we move even more quickly than before to implementchange in response to changes in the environment. While
we have maintained the “Change & Growth” theme, wehave established two sub-themes that show the directionof specific initiatives.
The first of these is “Strengthening sales and construction
systems, and expanding profits.” During the previous
medium-term management plan we implemented initiatives
to strengthen the Chugoku region base, which weresuccessful, and we will continue these and efforts toreinforce structures and expand the business in urban areas.
We will also enhance the structure of the Company andWhat are Sustainable Development Goals (SDGs)?
The SDGs, which were adopted at the UN summit ofSeptember 2015, are international goals that aim to bringabout a more sustainable and better world by 2030, as
described in the “2030 Agenda for Sustainable Development.”
The SDGs consist of 17 goals and 169 targets, andincorporates the pledge that “no one will be left behind.”raise competitiveness so that it is able to secure andexpand profits even in difficult environments.
The second theme is “Promoting DX anddecarbonization.” In order to improve competitivenessand address work style reforms, we will promoteenhanced productivity through digital transformation (DX).
In response to the SDGs and the trend towards carbon

Fiscal 2021 is the start year for the Medium-Term
Management Plan 2024, and after sharing the themes ofthe plan throughout the Chudenko Group, we will all work
together as one to promote the various measures,
achieve our targets for the first year, and put a solid
foundation in place.

neutrality, in addition to working on the decarbonization of
our own company, we will actively engage in initiatives tosupport decarbonization of customer activities, such as
through the internal-consumption solar power purchaseagreement (PPA) business.
As well as sharing these themes throughout theGroup, we will prioritize safety and compliance as wework on the implementation of five core measures.
Next, in terms of capital policy, in order to achievesustainable growth we will implement something in theregion of ¥40.0 billion in growth investments, including
M&A and renewable energy. As for shareholder returns,
we attach great importance to the sustainable and stablepayment of dividends, and thus we are targeting a dividendon equity (DOE) ratio of 2.7%. Having comprehensively
assessed the management environment and other factors,
we will implement share buybacks when necessary.

Q. What are your specific thoughts on
the promotion of DX?
“DX” is an initiative to utilize data and digital technology totransform organizations, processes, and the operations
themselves, to raise productivity and strengthen
competitiveness. I believe this initiative will be the key toachieving the “Change & Growth” theme described in
Medium-Term Management Plan 2024.
To this end, in January 2021, I set up a DX Promotion
Project with members drawn from across the entire
company. I conceive this to be an initiative whose
investigations will range widely and involve everybody,and whose progress reports, as it moves forward, will beshared with the whole company. Currently, we have

Numerical targets
FY2021

Net sales: ¥189.0 billion
Operating profit: ¥9.7 billion

Medium-Term Management Plan 2024

See page 17

Core measures

Numerical targets

Theme

Consolidated net sales:“Change & Growth”

¥

210.0

billionConsolidated operating profit:

¥

12.0

billion(Operating margin of 5.7%)

1) Expanding orders and strengthening
construction systems
2) Securing and expanding profits, andimproving competitiveness3) Enhancing human resources
development and promoting work
style reforms
4) Improving quality
5) Expanding the business by investingfor growth (M&A, equity stakes, etc.)

FY2021 earnings forecasts (income statement, consolidated)
Consolidated performance

FY2020Net sales
Gross profit(13.8%)

SG&A expenses
Operating profit(5.1%)

Current profit(6.5%)

Profit attributable to owners(4.4%)of parent(Billions of yen)

ChangeFY2021

184.4
25.4
15.9
9.4
11.8
8.1

(13.7%)(5.1%)(6.2%)(3.6%)

189.0
25.8
16.1
9.7
11.7
6.8

4.5
0.3
0.1
0.2
-0.1
-1.3

Year on year

102%
102%
101%
102%
98%
84%

* Figures in ( ) are profit margins

11

CHUDENKO Report 2021

CHUDENKO Report 2021

12

Message from President

conconcluded
the task of understanding the present
situation, and are making efforts to visualize the expected
situ
results of each task identified and to share them withresu
the whole company. While striving to raise the participatory
awareness of all employees, we are working to begin
specific initiatives.
Our aim is to instill in all our employees the motivation
to keep acquiring the latest knowledge, as well as an urgent
sense that if we continue to work in the same way we have

until now we will be overwhelmed by the competition, andto encourage them to contribute to the common wisdomby sharing their problems and goals with each other as
they seek to initiate change. Employees should also be
confident that the various operational reform initiatives
we have implemented in the past, such as the use of IT
equipment and support for building work, have borne fruitin the form of higher productivity, and I would like them tobear this in mind as we take on the challenge of change.

Chudenko has for some time operated its business witha focus on ESG initiatives, such as the reduction ofenvironmental impacts, social contribution activities,
the promotion of full participation by women, andcompliance with Japan’s Corporate Governance Code.
Furthermore, over the past few years corporations haveincreasingly been required to address ESG issues with evengreater care while generating profit and achieving growth.
In order to remain a growing company that is chosen
by customers, I believe that Chudenko must also takea careful approach to ESG. As for the environment,

Q. Finally, what would be your message toinvestors reading this?
With the management environment undergoingsignificant change as a result of factors such as the shift
to digital, intensifying order competition, and the impact
of COVID-19, it will be even more important, for the Groupto continue to grow, to share our problems among the Group
as a whole, and to speedily implement change in response

ESG

Q. Please tell us about your basic approach toenvironmental, social, and governance (ESG)
issues.

cultivate a second pillar to drive growth.
As result of the above-mentioned initiatives, I hope to
not only achieve the earnings targets in the Medium-Term
Management Plan 2024, but also build a foundation
for future growth.

decarbonization initiatives in particular represent a business
opportunity for us, and responding to social and governanceissues is the highest priority, or a prerequisite for operating
the business. Addressing these matters properly is in myopinion a requirement for growth.
Based on the above thoughts, ESG has been positioned
in the Medium-Term Management Plan 2024 as the basisof business operations and a core measure, and the Company
will practice ESG-aware management going forward.

Environmental

to changes in the environment.
From this perspective, executing the Medium-Term
Management Plan 2024 theme of “Change & Growth”
will open the way to the sharing throughout the Group of
the “Change & Growth For All” initiative designed torespond to the expectations of all stakeholders,
including customers, shareholders, and employees, tothe taking on of various transformational challenges, andto the achieving of further growth.
I humbly request your continued support andpatronage as we move forward with this program.
August 2021

Akira Sakotani
Representative Director and President“Change & Growth For All”:
By implementing change and growth
the Chudenko Group will fulfill the expectationsof all stakeholders, including customers,
shareholders, and employees.

See page 31

Social See page 35
Governance See page 41

A message to all stakeholders

Q. Going forward, in what direction do you plan
to steer the management? What do you expectof employees?
Going forward, the business environment will becharacterized not only by labor shortages and intensifying
competition for orders, but also by the uncertainty causedby the impact of COVID-19. However, by steadily
moving forward with the various measures contained in
the recently formulated Medium-Term Management Plan
2024 I believe we can find a path to achieving the fiscal
2024 targets.
The measures in the Medium-Term Management
Plan 2024, were created in response to recent changes
in the environment and reinforce the initiatives implemented
during the previous medium-term management plan, orin some cases incorporate new initiatives. Each of thesemeasures is to change the way we have worked until now,

13

CHUDENKO Report 2021

a transformational initiative, so to speak, and I believe thatspeedily achieving this change requires the promotion ofdigital technology and DX.
What I wish to see in all our employees is an urgent
sense that if we continue to work the way we have until
now the world will leave us behind, and a commitment toacquiring the latest knowledge. In addition, I want them
to be aware that each and every one of them is playing
a leading role in change, and for them to take on thechallenge of transformation. With the Company moving
forward together to steadily implement these initiatives,
we will also raise our competitiveness and enhance its
structures to enable Chudenko to secure and expand
profits even in difficult environments.
Another aim of the Medium-Term Management Plan
2024 is to invest in growth through M&A to strengthen
our core businesses, while at the same time investing in
renewable energy and new businesses in order to

CHUDENKO Report 2021

14

Medium-Term Management Plan

Targeting net sales of ¥210.0 bn.
in fiscal 2024 to mark 80th anniversary of foundingof Chudenko

Attainment vs. numerical targets

Medium-Term Management Plan 2024

Numerical targets (consolidated)“Change & Growth”

210.0
184.4

Sub-themes

184.4

168.8

153.3

Theme

In order for the Group to continue to grow, it isessential that we move even more quickly than
before to implement change in response to changes
in the environment

Review of previous medium-term management plan

148.3

New medium-term management plansales and construction• Strengthening
systems, and expanding profits

5.7
5.1

● Strengthening the Chugoku region base, reinforcing

12.0

structures and expanding the business in urban areas

5.8

4.9

4.2
8.5

8.3

6.4

● Enhancing structures and raising competitiveness to enable

5.1

us to secure and expand profits even in difficult environments• Promoting DX and decarbonization

9.4

2018

2019

2020

(FY)

Core measures

Main results

Securing and expandingordersAt ¥184.4 billion, consolidated net sales significantly exceeded the initial target for the final fiscal yearof ¥165.0 billion, as a result of strengthening the Chugoku region base, reinforcing structures,primarily in urban areas, and expanding the business

Securing and expanding
profits

Consolidated operating profit fell slightly short at ¥9.4 billion, compared to an initial target for
the final fiscal year of ¥10.0 billion, but despite fierce competition for orders we succeeded in improving
profit margins by reducing material procurement costs and promoting frontloading, the effects of which
combined with efficiency gains from operational reforms

Specific measures in the capital policy

Raising productivity throughoperational reforms andimprovements

The streamlining of operations and utilization of IT, such as by putting in place structures for supportingbuilding work and adopting a new cumulative calculation system, have borne fruit in the form of
higher productivity

Nurturing energetic people

We made efforts to improve our construction capabilities by encouraging people to acquire
qualifications, which has resulted not only in steady increases in qualified personnel, but also in thesystematic assignment of younger employees to major projects. We also took steps to encourage fullparticipation by women by raising the percentage of management roles occupied by women,
expanding our hiring of female employees, and other measures

Operating profit (Billions of yen)

During the medium-term management plan that ran fromfiscal 2018 to fiscal 2020, in addition to labor shortages andcompetition for orders, the final phase brought concerns
about the impact of COVID-19. However, as well as
promoting operational reforms under the theme of“Change & Growth,” the Chudenko Group moved ahead
with measures such as strengthening the Chugoku region

Operating margin (%)

base, expanding its business and reinforcing structuresin urban areas, and pursuing M&A.
As a result, although operating profit fell slightly short,net sales significantly exceeded the initial target. In orderfor the Group to continue to grow, we must raise ourcompetitiveness to expand profits further, and steadily
address issues such as work style reforms.

Results of implementing core measures

Improving quality

15

CHUDENKO Report 2021

2024

Complaints are on a downward trend due to the implementation of internal process inspections andother actions, which has contributed to increased customer satisfaction. It has also helped stabilize
the supply of power by enabling quicker restoration work in emergencies(FY)(Plan)Net sales (Billions of yen)

Operating profit (Billions of yen)

Operating margin (%)

The Medium-Term Management Plan 2024 is a four-yearplan that targets the inflection point represented by
the 80th anniversary of the founding of the Company,
which is 2024. Its objective is to generate further growth,and it has been formulated based on a review ofthe previous medium-term management plan and on trends
in the business environment.
The business environment going forward is characterized
by uncertainties that include the intensifying competition
for orders and the impact of COVID-19, but in orderfor the Group to continue to grow it is essential that wemove even more quickly to implement change in responseto changes in the environments. While we have maintained
the “Change & Growth” theme, we have also established
two sub-themes.
The first of these is “Strengthening sales andconstruction systems, and expanding profits.” During
the previous medium-term management plan we
implemented initiatives to strengthen the Chugoku region

Net sales (Billions of yen)

2020

● Promoting higher productivity through DX● Response to SDGs and carbon neutrality

2017

9.4

Investments for sustainable growth
We will implement something in the region of ¥40.0 billion
in investments for sustainable growth, which will include
business expansion and securing and nurturing personnel.
● M&A in core businesses and businesses peripheral to the core
● Nurturing human resources / work style reforms● Decarbonizing our own company● Promoting environmental businesses to support decarbonization● Investing in promising future businesses

base, which were successful, and we will continue theseand efforts to reinforce structures and expand the businessin urban areas. We will also enhance the structure of
the Company and raise competitiveness so that it is able tosecure and expand profits even in difficult environments.
The second theme is “Promoting DX anddecarbonization.” In order to improve competitiveness andaddress work style reforms, we will promote enhanced
productivity through DX. In response to the SDGs andthe trend towards carbon neutrality, in addition to working
on the decarbonization of our own company, we will
promote initiatives for decarbonization of customer
activities, such as the internal-consumption solar powerpurchase agreement (PPA) business.
As well as sharing these themes with all Group
employees, we will work as one to undertake the various
measures, striving to achieve earnings targets andincrease corporate value, and create a link to the 2030
“Long-Term Vision” that we will formulate going forward.

Shareholder returns
We attach great importance to sustainable and stablepayment of dividends, and thus we are targeting a dividendon equity (DOE) ratio of 2.7%. Having comprehensively
assessed the management environment and other factors,
we will also implement share buybacks when necessary.
FY2021 forecast
Dividend per share: ¥104
CHUDENKO Report 2021

16

Medium-Term Management Plan

Comment from General Manager

Basis for corporate management● Instilling and practicing a “safety first” attitude andpromoting health management● Instilling compliance and establishing changes in awarenessCore measures

1
Takakazu Higashioka● Strengthening sales to expand orders

Expanding orders
and strengthening
construction
systems

General Manager, Planning Division

By strengthening and enhancing ourdesign and proposal capabilities wewill work to expand orders for factory
work and underground power line
work, while boosting cooperation
with partner companies to further
reinforce our construction systems.

• Maintain and expand our sales in the Chugoku region(head office and local offices working together to expand factory work, renewal work, and contracted work)• In urban areas, strengthen and expand large projects and projects in which we are involved in the design stage• Net Zero Energy Building (ZEB) proposals, boosting Energy Service Company (ESCO) business initiatives, strengthening participationin Private Finance Initiative (PFI) business● Strengthen and enhance our design capability through the use of analysis of actual data and BIM, etc.
● Strengthening and enhancing construction systems● Cooperating more closely with group companies

A sustainably developing corporategroup in which each and every
employee can feel the growthGroup net sales have increased steadily since
fiscal 2012, and I believe that in order to maintainthe pace of this growth we must respond tochange with flexibility and agility, continuing
to transform ourselves and undertake newchallenges.
For this reason, we have carried over thetheme of “Change & Growth” from the previous
medium-term management plan while
supplementing measures such as expandingorders, strengthening construction systems,
promoting DX, and taking on decarbonization,with two new sub-themes to facilitate faster
responses. Core measures include newinvestments for growth (M&A, equity stakes,etc.) to expand the business. We are of course
seeking to grow in the core businesses andperipheral fields, but also considering expansion
in environmental businesses and investments,
as well as considering new business domains.
We will also link these measures to the SDGs,
and move forward together as a group to rollout initiatives.
The target year for the new medium-term
management plan is 2024, which is both the 80th
anniversary of the founding of the Company,
and an inflection point for the formulation of
the “Long-Term Vision” that will reach its
culmination around 2030. I am convinced thatmoving steadily forward with these measuresand the changes they involve so as to ensurethat we achieve the medium-term plan will leadto sustainable future growth for the Group.
For Chudenko, which sees itself as generalengineering companies, people are the mostimportant thing of all. With that in mind, weshall not spare the expense, time, or effort
required to secure and nurture personnel.
Currently, the age structure of our Company issuch that young employees aged 30 or below
account for 30% of the total. We are doing ourutmost to create a group of people in which
every employee engages in a variety ofoperations to learn and experience growth forthemselves, takes pride and satisfaction in theirwork, and is excited to develop the business.

17

CHUDENKO Report 2021

2
3
4
5

Securing andexpanding profits,
and improving
competitivenessWe seek to secure and expand
profits and improve competitivenessby raising construction efficiency
through better site management,
reducing costs across the company
and group as a whole, and improving
productivity through the promotionof DX.

Enhancing humanresourcesdevelopment andpromoting work
style reforms

What has supported our development
until now has been a continuous
process of securing and nurturing
human resources, and we willcontinue to actively engage in thisprocess throughout the Group, as
well as to address work style reforms.

Improving quality

We are aware at all times that it is
only thanks to the trust of customers
that our business is viable, and wework steadily to ensure the qualitythat is the prerequisite for that trust.

Expandingthe business byinvesting for growth(M&A, equity stakes, etc.)

In preparation for achieving carbon
neutrality, as well as decarbonizing
our own company we will promote
environmental businesses andinvest in renewable energy, etc. as
a way of supporting decarbonization
by others. We will also engage
in M&A to further strengthen
the structure of the Company.

Steadily executing the measures in the● Using equalization and frontloading of work to raise construction efficiency● Cost reductions involving cooperation between the company as a whole and group companies● Improving productivity through the promotion of DX• Using the DX Promotion Project to promote the transformation of “the way we do operations” that involves all departments and allgroup companies• Developing and upgrading new IT technology and systems, and adopting cutting-edge technology such as shifting to digital operations• Encouraging digital data links between group companies, general contractors/design agencies, partner companies and the Chugoku

Electric Power group● Nurturing human resources with the aim of strengthening construction management• Promoting precise technical guidance through the use of head office instructors, remote guidance through the use of online platforms,

and digital guidance through the use of VR and other technologies• Broadening the number of people who have acquired external qualifications (promoting the holding of multiple qualifications)● Securing and nurturing engineers/technicians across the Group as a whole● Continuing to practice work style reforms, and forming fulfilling workplaces• Practicing various measures to reduce total hours actually worked and promoting changes in awareness, work-life balance, and diversity● Reliable contributions to the stable supply of electric power• High-quality electric power equipment work and swift restoration of power during emergencies● Increase customer satisfaction• Eradicating complaints by implementing internal process inspections, etc. and expanding and enhancing the quality management

system, as well as improving the speed of communication with customers and responding with greater attention to detail● Decarbonizing our own company• Installing internal-consumption solar power facilities on the roofs of our buildings, shifting to ZEB, deploying renewable energy equipment, etc.
● Promoting environmental businesses to support decarbonization• Internal-consumption solar power purchase agreement (PPA) business, energy conservation proposals such as shifting to ZEB,

investments in renewable energy, etc.
● Promotion of M&A with the aim of strengthening construction systems● Promoting technical research and development• Generating higher added value, strengthening R&D initiatives that will support the production divisions

medium-term management plan, and linking them to the next long-term vision

CHUDENKO Report 2021

18

Medium-Term Management Plan

Using our business activities to help achieve the SDGs
Having referred to the 17 goals and other information contained in the SDGs, we have selected four issues. Through its
business activities, the Company seeks to fulfill the expectations of stakeholders and help achieve the SDGs.

Medium-term management plan initiatives

Related SDGs

• Confirming the state of implementation of measures to preventthe recurrence of major emergencies, and establishing
benchmark rules• Risk mitigation tailored to the site, and the elimination of unsafe

Instilling a safety andcompliance mindset

behavior• Continued implementation of educational activities aimed at

instilling a compliance mindset• Enhancing management for mental and physical well-being• Implementing measures to prevent infection by COVID-19, andother diseases• High-quality electric power equipment work and swift restorationof power during emergencies• Reinforce initiatives for underground power line work andself-operated line work

Providing high-quality,
dependable equipment

Overview of Business• Enhancing and strengthening the quality management system, bymeans of internal process inspections and other measures• Enhancing communication with the customer to enable speedier

responses with greater attention to detail• Improving productivity through the promotion of DX• Promoting technical research and development

Overview of fiscal 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
• Participating in environmental businesses, primarily renewableenergy projects such as solar power generation

Achievinga decarbonized society• Internal-consumption solar power purchase agreement (PPA)

business• Boost initiatives for energy conservation proposals such as ZEB

and ESCO• Decarbonization initiatives within the company■ Indoor Electrical Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
■ Air-Conditioning Piping Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
■ Information Communication Equipment Work . . . . 25
■ Distribution Line Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
■ Underground Power Line Work . . . . . . . . . . . . . . . . . . . . . . . . . . 27
for Power Transmission and Distribution• Securing and nurturing engineering/technical human resources

across the Group as a whole

Nurturing humanresources
and promoting
a diverse society

Technology development . . . . . . . . . . . . . . . . . . . . . . . . . 28
Group companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

• Cooperating more closely with Chudenko Association member/group companies• Following technical education at Chudenko Association member

companies• Continuing to practice work style reforms, and forming fulfilling

workplaces• Promoting work-life balance and diversity

19

CHUDENKO Report 2021

CHUDENKO Report 2021

20

Overview of Business
Ov

Overview of fiscal 2020
O

FY2020 performance(orders received / net sales by division)

Comments from General Managers

General Manager, Sales Division

General Manager, Engineering Division

General Manager, Electricity Division

Orders received¥155.6 bn.

Indoor Electrical Work¥ 67.7 bn.

Air-Conditioning Piping Work¥ 32.1 bn.

Information Communication
Equipment Work¥ 16.8 bn.

Distribution Line Work¥ 29.4 bn.
¥ 9.4 bn.

Underground Power LineWork for Power Transmission
and Distribution

Net sales¥148.4 bn.

Indoor Electrical Work¥ 72.3 bn.

Air-Conditioning Piping Work¥ 27.3 bn.

Information Communication
Equipment Work¥ 11.0 bn.

Distribution Line Work¥ 29.4 bn.

Underground Power LineWork for Power Transmission
and Distribution

21

CHUDENKO Report 2021

¥ 8.2 bn.

Jitsuo Taniguchi

Kiyofumi Ueno

Masashi Yamada

The Sales Division is working as one toachieve the targets in Medium-Term
Management Plan 2024

By continuing with initiatives to improvesafety, quality, and technical capabilities,
we are working to boost our construction
capabilities to vanquish the competition

Maintaining our position as a trusted
company by maintaining stable supplyof electricity, which is a vital piece ofsocial infrastructure

Looking back at fiscal 2020, it was a year of continual
unpredictability, typified by suspensions of construction andpostponements of the construction phase due to the impact
of COVID-19. Nevertheless, although smaller projects wereaffected in all regions, major projects recorded steadyprogress, resulting in general construction orders received of¥116.7 billion, which was above the initial forecast.
Fiscal 2021 is the first year of Medium-Term Management
Plan 2024, and the Sales Division will work together as one
to implement its main theme of “Change & Growth,” as well as
the sub-themes of “Strengthening sales and construction
systems, and expanding profits,” and “Promoting DX anddecarbonization.”
Looking at the plans of the major general contractors infiscal 2021, they are all forecasting higher revenues and lower
profits, and so we expect competition for orders in the equipment
industry to intensify further. We will tackle information gathering,
design and construction, and the creation of estimates withan even greater sense of urgency than before.
We will also continue to focus on expanding our businessin urban areas. We will pay particularly careful attention to
the Kansai area, where an increase in inbound tourist demandis expected after COVID-19 comes to an end, due partly tothe holding of EXPO 2025 and plans for the opening of
an integrated resort.
We will work on strengthening the Chugoku region base,and on reinforcing structures and expanding the business inurban areas as we move steadily towards achieving the goalsof Medium-Term Management Plan 2024.

The Engineering Division oversees the whole of general
construction, and by normalizing the business throughachieving higher safety and quality and prioritizing compliance,
we are working to enhance the power of the organizationand improve performance. As we prepare to resolve a pile ofissues that include strengthening safety, improving quality,
boosting construction systems, expanding profits, andreforming work styles, we will cherish our passion for
the work and our love for those around us, with all employees
working together to implement measures under the motto“Always tackling our work enjoyably and harmoniously.”
In fiscal 2021, in terms of initiatives aimed at strengthening
construction capabilities and governance we will introduce
a headquarters system to the Chudenko Association, andundertake the challenge of achieving zero major accidents
and zero faulty construction. In addition, although orders inurban areas have grown steadily as a result of the previous
medium-term management plan, in order to achieve the goalsof Medium-Term Management Plan 2024 it is essential that
we expand the business further, and I believe we must
implement unprecedentedly bold initiatives in order to raise
our market share in urban areas.
Moreover, we must actively tackle environmental businesses,
such as those involving decarbonization driven by an awarenessof the SDGs that are increasingly attracting global attention,
as well as the creation of new business models that utilize digitaltechnology, with the aim of helping to achieve a sustainable
society and continuous growth for the Chudenko Group.
Going forward, we will keep the concepts of passion,
love, and faith in mind as we commit fully to every piece ofwork we tackle, and apply ourselves to building a company
in which every employee can experience job satisfaction.

Electricity is an important element of infrastructure that
supports the life of communities. Electric power facilities fortransmission, distribution and conversion are important piecesof equipment that enable electricity generated at the power
station to be delivered to the customer. This includes
electricity generated from renewable energy, which has been
increasing in recent years. In the Electricity Division, we aremainly contracted to construct and maintain electric power
equipment for Chugoku Electric Power Transmission &Distribution Company, Incorporated. As a company thatplays a role in the stable supply of electric power, we always
approach our work with safety and quality in mind so as togain the trust of those in the community.
Last fiscal year, a new method related to distribution line
work developed by Chudenko was rated so highly for safety,
quality, and practicality on site that it was awarded the prestigious
Shibusawa Prize. Going forward, we will continue to promote
DX and to actively develop new technologies and methods inpursuit of safe and efficient operations, while fulfilling customer
expectations for stable supply by responding swiftly in the eventof natural disasters such as typhoons or flooding.
In addition, as a member of the Chugoku Electric PowerGroup we have accumulated a high degree of technicalcapability and extensive know-how over many years of
involvement in fields such as renewable energy and the removalof utility poles, which are being promoted as a matter of national
policy. Especially in the area of utility pole removal work,
we are leveraging our track record to propose the optimal
construction method for the characteristics of the local area.
In the future we will continue to support the stable supplyof electric power in the Chugoku region with our advanced
technical capabilities, while contributing to the development ofsociety and to more prosperous lives for people everywhere.

CHUDENKO Report 2021

22

Overview of Business

Light/outlet equipment

Image/sound/tv/broadcast equipment

Power receiving/transforming equipment

Plant equipment

Indoor Electrical Work

Environmental equipment

Plumbing and sanitary equipment

Disaster prevention/firefighting equipment

Air-Conditioning Piping Work

Overview of fiscal 2020 and outlook for fiscal 2021

Main projects received

Overview of fiscal 2020 and outlook for fiscal 2021

Main projects received

Although we were able to secure large construction projects
in various regions, private-sector capital investments werereduced and postponed due to the COVID-19 pandemic,
resulting in orders received declined by ¥5.6 billion from fiscal
2019, to ¥67.7 billion.
Due to construction starts being suspended, declines infactory work, and delays in the construction phases for hotels,
net sales fell by ¥2.2 billion compared to fiscal 2019, to¥72.3 billion.
In fiscal 2021, we will continue with the initiatives tostrengthen our business base in the Chugoku region andreinforce structures in urban areas that delivered results inthe medium-term management plan just ended, while also
working to expand orders and enhance construction systems.
In addition, we will use equalization and frontloading of work
to raise construction efficiency, reduce costs, and promote
DX to raise productivity. By doing so we aim to strengthen
our competitiveness so that we are able to secure andexpand profits even in difficult environments. Moreover, in
addition to the Company’s decarbonizing activities, we will
promote businesses that support decarbonization efforts bycustomers, such as internal-consumption solar powerpurchase agreement (PPA) business.
As a result of these measures, in fiscal 2021, we forecast¥72.8 billion in orders received and ¥69.2 billion in net sales.

• Electrical equipment work related to improving the resistance to earthquakes of the
Okayama Prefectural Government offices• New construction work for the Hiroshima Station South Exit Plan (provisional name)• New construction work for Nerima Hikarigaoka Hospital• New construction work for Yamaguchi Prefecture Saiseikai Yamaguchi Hospital(provisional name)• New construction work for Kurate Hospital• Lighting upgrade work for the Karuoka Tunnel, etc., of the Tokai-Hokuriku
Expressway

In fiscal 2020, orders received increased by ¥1.8 billion to¥32.1 billion year on year, thanks to gains in the high-priority
market of urban areas centered on Tokyo as well as solid
performance in large construction projects in the Chugoku
region.
Due to one large construction project being affected
after another across multiple locations, net sales declinedby ¥4.6 billion to ¥27.3 billion. However, ¥25.8 billion of
construction work backlog will be carried over to fiscal 2021,
maintaining higher levels than in a normal year.
In fiscal 2021, we will take steps to secure stable
construction capability by making changes to the Chudenko
Association arrangement in order to strengthen the construction
system we use with partner companies. In order to address
large construction projects, for which demand is expected toincrease going forward, we are actively adopting prefabrication
and unit construction techniques for machinery and piping to
reduce the amount of construction required. At the same time,
we are working to improve quality and applying DX to sitemanagement with a view to enhancing productivity.
As a result of these measures, in fiscal 2021, we
forecast ¥30.8 billion in orders received and ¥31.3 billion in
net sales.

• New construction work for the Hiroshima Station South Exit Plan (provisional name)• Facilities work for equipment upgrades at outpatient clinic (medicine/dentistry),
Okayama University• New construction work for Yamaguchi Prefecture Saiseikai Yamaguchi Hospital(provisional name)• New construction work for APA Hotel Pride Roppongi Station East (provisional name)• New construction work at ESR Sachiura Distribution Center• Kansai new factory construction work (provisional name)

Orders received / Net sales■Orders received ■Net sales(Billions of yen)
100
80

77.3
65.7 68.5

68.5

73.3 74.6

67.7

72.3

72.8 69.2

Recent project
Electrical equipment work for facilities installation
at the Shin-Yamaguchi Station Northern District hub
Location

Yamaguchi City, Yamaguchi Prefecture

Construction period April 2019–March 2021
Customer

Yamaguchi City

Summary

With a capacity of up to 2,000 seats this facility is one of the largest
citizen halls in the prefecture, and is able to flexibly respond to a variety
of types and sizes of event

Comment

Shuji Senda

Construction Management Team Leader
Indoor Electrical Work Section,
Facilities Construction Division,
Yamaguchi Supervising Branch

The redevelopment work being undertaken around Shin-Yamaguchi Station isbased on the concept of “An Environmentally Friendly City of Meeting, Connecting,and Creating.” Through a process of trial and error with the manufacturer, we wereable to arrive at levels of warmth and brightness for the colors used in the lighting
to create a sense of unity between the pedestrian deck leading from the station
to the hall, thus succeeding in creating a new night-time space at the north exitof the station. During construction, we paid careful attention to countermeasures
to deal with noise that could affect stage audio equipment, and similar issues.
We will leverage the experience and skills we have gained on thisconstruction site to create future proposals that incorporate new and better
technology.

Orders received / Net sales■Orders received ■Net sales(Billions of yen)
35
28

40

14

20

7

0

0

2019

2020

2021
(forecasts)

CHUDENKO Report 2021

29.8

28.4 27.2

30.3

32.0

32.1

30.8 31.3

27.3

23.5
21

2018

Recent project
New construction work for the “Knowledge Hub” redevelopment
project on the former site of Hiroshima University
Location

Hiroshima City, Hiroshima Prefecture

Construction period April 2017–August 2020
Customer

Mitsubishi Estate Residence Co., Ltd. and others

Summary

Super high-rise condominium with seismic isolation that has become a newlandmark for Hiroshima, built as part of the “Hiroshima Knowledge Hub”
redevelopment project

Comment

Hiroki Yoshitake

Construction Management Team Leader
Air-Conditioning Piping Work Section,
Facilities Construction Division,
Hiroshima Supervising Branch

Sharing knowledge to help enhance the powerof the organization

The job satisfaction of work recorded on the map

60

2017

23

Air-conditioning equipment

2017

2018

2019

2020

The construction of this building required the execution of a six-day cycle
for the framework, combined with an interior decoration process carried out
simultaneously that straddled 20 floors. Through exhaustive labor-saving efforts
that included shortening the construction phase and streamlining work, we wereable to complete construction successfully. As for the plumbing approach,despite being a super-high-rise building with 53 floors, the plan was to avoid
using an intermediate cistern to relay water and to use instead a pressurizedpump from the receiving cistern in the basement. This required us to devise
various measures to ensure stable supply and safety.
Going forward we will further strengthen labor-saving initiatives with the aim ofcreating measures to address the declining birthrate and aging of society, as well
as work style reforms.

2021(forecasts)

CHUDENKO Report 2021

24

Overview of Business

Regional information communicationand cable television transmission equipment

Overhead distribution line work

Wireless ICT solutions equipment

Utility pole replacement work usinga vertical cable support arm
Photography

Road/river information equipment

Mobile wireless communication equipment

Information Communication
Equipment Work
Main projects received

Due to orders for work related to the conversion of cable
television to fiber-to-the-home (FTTH; optical fiber), andfor infrastructure equipment from the Ministry of Land,
Infrastructure, Transport and Tourism (MLIT) and NEXCO
West, orders received in fiscal 2020 rose by ¥8.9 billion
from fiscal 2019, to ¥16.8 billion.
This significant rise in orders received led to an increase
in work on hand completed before the end of the fiscal
year, including general work related to the conversion ofcable television to FTTH, resulting in net sales rising ¥2.6
billion year on year to ¥11.0 billion.
As for the environment in which the Information
Communication Equipment Division operates, we expect
demand for work to continue, with the market being driven
by new technology centered on the 5G networks that havecome into service, and by the rollout of disaster preparedness
and other subsidized projects. In preparation for securing
orders, we will strengthen sales activities aimed at mobile
communications operators and other businesses involved
in infrastructure equipment. For securing net sales, we will
promote DX and implement frontloading for large construction
projects, and steadily execute work.
As a result of these measures, in fiscal 2021, we forecast¥11.0 billion in orders received and ¥12.4 billion in net sales.

• Installation and operation of on-site local area networks for Hiroshima municipal
schools• Fiscal 2020 equipment work for CCTV used within the Hiroshima office of MLIT
• Phase 4 and 5 of the FTTH upgrade program for “oni” Vision• Part 1 of communication lines work within the Yamaguchi Expressway offices• Installation work for Hamada City’s high-speed information communications platform• Wireless equipment installation work for Hino Town Digital Disaster Prevention
Administration

Orders received / Net sales■Orders received ■Net sales(Billions of yen)
20

16.8

15

11.0 11.0

105

5.3 5.3

7.0

12.4

7.9 8.3

Installation and operation of a Saka Town school in on-site LAN
Saka Town, Aki Ward, Hiroshima Prefecture
July 2020–March 2021

Customer

Saka Town

Summary

Installation of a high-speed, high-capacity communications network
in preparation for implementing the Ministry of Education, Culture, Sports,
Science and Technology (MEXT)’s GIGA School Program

Comment
Kie Sakamoto

Information Communication Equipment Work Section
Facilities Construction Division,
Hiroshima Supervising BranchAbsorbing day-to-day experiences to enhance
responsivenessFor this work, we selected materials from the perspective of reducing costs andlabor inputs, and devised changes where necessary. As a result, we succeeded
in improving quality and significantly shortening the work period. In addition to
the restrictions imposed by the COVID-19 crisis, our hours of work wererestricted by the fact that the site was a school. Furthermore, because theseprojects all commenced at the same time nationwide we experienced delays inthe delivery of materials, leading to major problems in coordinating schedules
with each school and in the assignment of personnel.
The work of the Information Communication Equipment Division is very
diverse and therefore requires knowledge in a variety of fields. What we havelearned at each site will be put to good use in future projects.

Overview of fiscal 2020 and outlook for fiscal 2021

Main projects received

In fiscal 2020, the continuation of work to update old equipment,such as utility poles, and an increase in work related tointerconnection lines for new types of energy resulted in
year-on-year growth in both orders received and net sales.
To deal with the increase in workload, we continued towork on improving productivity by promoting DX anddeveloping new tools and methods. One DX initiative that wehave adopted is an iPhone-based system for automatic
registration of photos of completed construction. This aims tosimplify business processing and which has also been wellreceived by employees on site. In addition, the “vertical cable
support arm” that we developed for the purpose of improving
work efficiency when replacing utility poles is rated highly forsafety and usability, and has been awarded the Shibusawa
Prize by the Japan Electric Association.
Beyond fiscal 2021, demand for updating old equipment
is projected to continue. By working to improve productivity
further on the assumption that safety and quality will be guaranteed,
we expect steady performance in orders received and net sales.
As a result of a reorganization to ensure that we can deal withrising demand, all underground distribution line work has been
moved from Distribution Line Work and merged with Underground
Power Line Work for Power Transmission and Distribution.
As a result of these measures, in fiscal 2021, we forecast¥28.8 billion in orders received and ¥29.0 billion in net sales.

• Private distribution line electrical work for construction of Iwakuni solar power
generation plant• New construction work for transmission line on the 6kV Iinashi River Line• Construction work for 22kV Kayo Shimokamo Line (utility pole installation), Stage 3• Sakaibara communication line, Stage 4 (22kV spec), utility pole installation• New construction work for No. 20-55 22kV overhead line on Tabuse Hirao Line
• Solid rock excavation work for utility pole installation in Yamaguchi City

■Orders received ■Net sales(Billions of yen)35

29.4 29.3

CHUDENKO Report 2021

Hiroshima City, Hiroshima Prefecture

Construction period

May 2021–June 2021

Customer

The Chugoku Electric Power Company, Incorporated’s Hiroshima North
Network Center

Summary

Systematic replacement of insufficiently strong utility poles
Construction: Centrifugal-reinforced concrete pole

Comment
Hideaki Noda

Distribution Work Section, Kabe Office,Hiroshima Supervising BranchContributing to the stable supply of electricity
in the Chugoku region

27.9 28.6

29.4 29.4

2019

2020

28.8 29.0

Going forward, we will continue to execute our business safely, swiftly, andsteadily to ensure stable supply of electricity to the Chugoku region.

21
14
7
0

2017
2017

26.9 26.0

Utility pole replacement work
Location

The work of replacing utility poles is essential to the maintenance of generalelectric facilities for the stable supply of electricity. When performing the work,
because we temporarily take possession of roads along which the general publicpasses, we anticipated various scenarios that might occur so as to avoid causing
trouble for local residents, and were always careful to not only preserve safety
but also to complete the work reliably.

Orders received / Net sales

28

Recent project

5.8

0

25

Recent project

Construction period

iPhone-based system for automatic registrationof photos of completed construction

Distribution Line Work

Overview of fiscal 2020 and outlook for fiscal 2021

Location

Emergency restoration work

Automatic registration

2018

2019

2020

2021

(forecasts)

2018

2021

(forecasts)

Note: From fiscal 2021 onward, underground power line work that had been included
in Distribution Line Work is included in Underground Power Line Work for Power
Transmission and Distribution. Figures for fiscal 2020 have been restated to reflect this.

CHUDENKO Report 2021

26

Overview of BusinessTechnology development
Underground power line work

As a general equipment engineering company, Chudenko resolves technical issues and requests from inside and outside
the Company, and also conducts R&D in technical fields related to safety, quality, and reducing labor. Our main initiatives
in fiscal 2020 were as follows.

Overhead power line work

Substation work

Technology development issues
Safety/quality-related
We conduct R&D into safety improvements and preventionof human error with the aim of preventing accidents andpreparing for disasters.
For example, we worked to develop a Liner
Plate-Mounted, Movable Fall-Prevention Handrail thatcan be easily moved when using a backhoe to excavate
the foundations for metal pylons, and an Auxiliary Rope
Attachment Confirmation Device.

Underground Power Line Workfor Power Transmission and Distribution

Overview of fiscal 2020 and outlook for fiscal 2021

Main projects received

Due to large construction projects from Chugoku ElectricPower Transmission & Distribution Company, Incorporated,private distribution line work related to renewable energy,
and new underground distribution line work, orders
received in fiscal 2020 significantly exceeded those of fiscal
2019. By making steady progress in our work, net sales
also exceeded previous-year levels.
In fiscal 2021, large construction projects for Chugoku
Electric Power Transmission & Distribution are expected totrend downwards, but in addition to strengthening activities
to win orders for competitive projects and value engineering(VE) proposal work, we will cooperate with other divisions to
implement sales activities that target orders from special
high-voltage customers and for general underground line
work. In order to achieve targets, we will also work tosecure and expand profits, and boost construction systems
to raise our competitiveness.
As a result of these measures, in fiscal 2021, we forecast¥7.6 billion in orders received and ¥8.1 billion in net sales.

• End-of-service life replacement work for 220 kV metal pylons No. 351–364 on main
power line between Hiroshima and Matsue• Construction work on Yonago solar power generation plant• End-of-service life replacement and removal work for 110 kV metal pylons No. 55–63
on Tottori Line
• New construction and removal work for 22 kV solar power lines at Daisen Nikko
Country Club
• Duct work following the construction of Tokuyama East No. 3 power station, Phase 2

Recent project

Duct work following the construction of 110 kV Kaita Biomass Line
(Stage 2)
Location

Kaita Town, Aki Ward, Hiroshima Prefecture

Construction period

November 2018–June 2020

Customer

Chugoku Electric Power Transmission & Distribution Company, Incorporated

Summary

Voltage/circuits: 110 kV, 1 circuit;
Duct installation: (cut-and-cover) 0.03km, (bored) 0.34km
Stage/spacing: No.1 MH higher number end 0.26km - Kaita (substation) 0.37km

Comment

Kiyoshi Saito

Electric Power Construction Office
Underground Line Section,
Construction Management Team Leader

Aiming to maintain the trust of customers andlocal communities

Orders received / Net sales■Orders received ■Net sales(Billions of yen)
10

9.4
8.2

7.5

6.5

6.1
5.0

5.0

5.2 5.4

5.6

2017

2018

2019

7.6

8.1

2.5

0

2020

2021

(forecasts)

Note: From fiscal 2021 onward, underground power line work that had been included
in Distribution Line Work is included in Underground Power Line Work for Power
Transmission and Distribution. Figures for fiscal 2020 have been restated to reflect this.

27

CHUDENKO Report 2021

When carrying out duct-boring work, it is not uncommon to encounter unexpectedobstacles during construction. During this work we encountered a concrete
wall that we had to cut and remove, and this caused problems with the machinery
such as blocking the faceplate, resulting in unexpected delays to the process. As
we needed to adhere to the start of service date, we extended working hours todeal with the problems. Through exhaustive process and safety management,
we managed to complete the project within the construction phase and without
accidents or disasters. Going forward, we will continue to put safety as our top
priority while working to maintain efficient process management.

Quality-related
We conduct R&D into new systems to improve
construction quality.
These include a Measuring Equipment Wiring Image
Recognition Inspection System that seeks to prevent
incorrect wiring of measuring equipment, and an ElectricOutlet Testing Method Using PLC Technology that aims
to improve the quality of electric outlet testing.

Labor-saving initiatives
We conduct R&D into software, new methods, new tools,
and new systems to reform, improve, and raise the efficiency
of operations.
The results of our development include a LuminanceIntensity Measurement System for Large Spaces, which isintended to reduce labor and raise efficiency, an initiative toimprove the functionality of software used for calculations
related to electrical equipment technology, anda “New Hot Stick.”

initiatives for technologies that open the way to
improvements in safety, customer satisfaction, and qualityof work. In order to prevent the spread of COVID-19
infections, the event was also held online for remoteparticipants.

Technology development case study
Measuring Equipment Wiring Image Recognition
Inspection System
When performing replacement work of voltage andcurrent transformers (VCTs) or high-voltage measuring
equipment, the worker applies a color standard whencarrying out visual checks of the connections, but
incorrect connections do still occur as a result of operator
preconceptions. We developed an image recognition
inspection app to prevent incorrect connections and to
reduce the workload associated with report writing.

Features of the Measuring Equipment Wiring
Image Recognition Inspection System• Takes photo for construction report purposes, while
simultaneously showing connections on the smartphone checks• Eliminates careless errors stemming from visual inspection• Automatically write reports on site

1

Photo taken using
smartphone andforwarded using app

Presentation of technology development
results
By horizontally deploying to all branches the results of thetechnology that we have devised through our own
ingenuity in the course of our day-to-day operations, we
contribute to the strengthening of technical capabilities
and help promote technical proposal-based sales.
In addition, we hold events topresent the results of ourtechnology development
every year with the aim of
motivating technical staff.
In fiscal 2020, we
announced 14 different
Fiscal 2020 presentation of technology

2

Automatically write reports

development results

CHUDENKO Report 2021

28

Overview of BusinessGroup companies
Hayamizudenki Co., Ltd.
Hayamizudenki shares a philosophy of “Safety takes priority
over everything,” as a Chudenko Group company, andguided by this philosophy, it jointly developed Michi-Tera,
which is a highly visible guidance light for placing on the roadsurface with a major road-construction company.
As renewal work on expressways and local roads
continues, vehicle accidents and tragic accidents
involving workers have occurred more often than before.
In addition, the rising average age of drivers has alsotended to lead to accidents caused by delayed decisions.
Securing the safety of construction workers and ensuring
the convenience of road users are now becoming
significant issues. In response to this, the two companies
developed Michi-Tera.
Michi-Tera creates a light to safely guide both vehicles andpeople by making full use of the technologies accumulated
through LED product development (such as GARASU LIGHT,
a mirror that uses LEDs in conjunction with a light guidepanel to provide even illumination over its entire surface, andproducts used in amusement parks). Michi-Tera can beeasily set up on the road surface, and because the lightemitted and color of each device can be controlled, flows ofpeople and traffic can be managed smoothly and safely.
This product already has a track record for itself in many
construction projects, and the two partners will continue
to meet additional customer needs by developing
Michi-Tera into a ubiquitous road surface guidance systemthat can be easily used by anybody to improve safety, andthat can be linked to traffic management systems or into
networks such as Wi-Fi.

ESG Initiatives
E

Environmental
Environmental policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Environmental initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Environmental goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

S

Chudenko World Farm Co., Ltd.
In Hiroshima Prefecture (Sera Town, Shobara City andelsewhere) Chudenko World Farm Co., Ltd. (CWF)
operates a business for the cultivation and sale ofvegetables, on open ground and inside facilities.
On open ground it cultivates spinach, cabbage, green
soybeans, and leeks, while in facilities CWF also cultivates
spinach, as well as asparagus and other vegetables.
After adding 12 facilities in fiscal 2021 and a further
21 facilities in fiscal 2022, CWF plans to use 33
facilities for the cultivation of spinach in fiscal 2022.
CWF is developing
and growing thisbusiness with the aimof nurturing agricultural
workers and preventing
more cultivated land
from being abandoned,

29

CHUDENKO Report 2021

SocialHuman resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Health and safety activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Coexistence with communities . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

G
in accordance with the government policy of maintaining“a strong agricultural and fishery industry.” At the sametime, as well as generating local employment andcontributing to the revitalization of non-urban districts,
the company seeks to achieve a sustainable society thatcoexists harmoniously with nature.

GovernanceManagement team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Message from an outside director . . . . . . . . . . . . . . . . . . . . . . . 48
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

CHUDENKO Report 2021

30

E

ESG Initiatives

Environmental policy

Environmental initiatives

Fundamental philosophy

Decarbonization initiatives

Chudenko is considerate of the earth’s environment, and understands living with nature is an important
theme in our business. Through employing our technological prowess as a general equipment engineering
company, we contribute to creating a happier tomorrow and a healthy and comfortable environment.

Chudenko regards initiatives aimed at achieving
decarbonization by fiscal 2050 as one of the issues faced
by its management, and is working to reduce CO2
emissions as one of the sub-themes in the medium-term
management plan.
The Medium-Term Management Plan 2024, whichbegan in fiscal 2021, incorporates plans for a significant
expansion in solar power for internal consumption (to beinstalled at business locations), and ZEB-compliancewhen rebuilding business locations or when implementing
refurbishments on a large scale.

Basic policy
1. Through establishing and operating an environmental management system, we work towards continued
environmental improvements and prevention of environmental pollution.
2. We set our goals for environmental protection, and revise them periodically.
3. We strive to reduce environmental impacts through actively undertaking energy conservation, resource
conservation, waste reduction, and recycling.
4. While we promote development of environment-related technology, we also actively suggest products andconstruction work with less environmental impact.
5. We abide with environmental laws, regulations, and agreements in our activities.
6. We perform training to prepare for emergency situations and prevent such situations from happening.
7. We raise employee mindfulness towards environmental protection through education and training.

Environmental management
The head office divisions, which bring together andsupervise planning and results for management as a whole,
make plans for activities based on an environmental
management approach that is compliant with ISO 14001.
By deploying these policies to business locations, weensure that all branches put environmental activities into
practice.
ISO 14001 registration status
Applicablestandards
Date registered

ISO 14001: 2015

Registration
numberCertifying body

Important matters relating to the environmental
management system are deliberated and considered by
the Environmental Management Committee, the membersof which are the general managers of the various head
office divisions.
The General Manager of the Safety, Sanitation, Quality,
and Environmental Department submits regular reports tothe president on the operational status of the environmental
management system, in turn receiving instructions
for improvement that drive the plan-do-check-act(PDCA) cycle.

In preparation for reducing CO2 emissions it will benecessary to use electricity derived from renewablesources. As we are prioritizing self-generation of renewableenergy, we plan to deploy solar power generation facilities
for internal use at business locations (gradual implementation
scheduled to begin in fiscal 2021).

The new building for the Okayama Supervising Branchthat was completed in April 2019 is ZEB-compliant. It
meets the “ZEB Ready” standard (achieves a renewableenergy ratio 50% or higher) by combining the passive
techniques of external insulation, natural ventilation, andnatural lighting with active methods such as the
deployment of highly functional lighting andair-conditioning equipment.
Okayama Supervising Branch figures for energy
conservation (ZEB compliance)Primary energy consumption (MJ/year)
Item
Target value

Reduction
volume3,378,000

1,709,640-1,668,360-49.4%

Ventilation

179,800

92,590-87,210-48.5%

Lighting

1,461,200

476,280-984,920-67.4%

Plumbing

34,58067,18032,60094.3%

Elevators

36,00036,0000

0.0%

5,089,580

2,381,690-2,707,890

1,053

493

-560

Air-conditioning

Total

ZEB-compliant business locations
Previously we had approached energy conservation bysystematically implementing upgrades to LED lighting andhigh-efficiency air conditioning equipment. But as we needto further strengthen the use of renewable energy in orderto achieve decarbonization, we will promote ZEB-complianceat business locations at the time of rebuilding and major
refurbishments.

Reduction
rate

Base value-53.2%On unit area
basis

Note: In addition to the above table, solar power generation capacityof 33 kW has been installed (22 kW of battery capacity)

July 19, 2002

Registered
Chudenko Corporation, Head Officebusiness operator
Scope of activities

Operation of the environmental
management system

Installing solar power for internal use
at business locations

Okayama Supervising Branch’s new
ZEB-compliant building

Head office operations for a general equipment
engineering company (design, technology
development, construction support)
JQA/EM2506

Net Zero Energy Building (ZEB)
President

General Managerof the Safety,
Sanitation, Quality,
and Environmental
Department

Japan Quality Assurance Organization
Head office divisions

Environmental
Management Committee
Chair:
General Managerof the Safety, Sanitation,
Quality, and Environmental
Department
Members:
General managers
of head office divisions(Scope of ISO 14001
examination/registration)

ZEB refers to buildings that significantly reduce the amountof energy consumed annually, maintaining a comfortableinternal environment by using a high degree of insulation andsolar radiation shielding. They also utilize renewable energy
and highly efficient facilities to minimize energy consumption,
as well as generating their own energy from sources such as
solar power.

External view of Okayama Supervising Branch’s new ZEB-compliant
building• ZEB
Buildings that achieved a renewable energy ratio of 100% or higher• Nearly ZEB
Buildings that achieved a renewable energy ratio of 75% or higher• ZEB Ready
Buildings that achieved a renewable energy ratio of 50% or higher
Business locations

31

CHUDENKO Report 2021

Understanding of environmental
activities practices/results

Combination skylight andnatural ventilation ventTotal heat exchanger

CHUDENKO Report 2021

32

E

ESG Initiatives

FY2020 environmental goals and results

Developing the decarbonization support businessAs a general equipment engineering company, we willleverage these strengths to accumulate consulting
experience in the ZEB conversion business, participatingin numerous ZEB conversion projects to facilitate andpopularize the concept going forward.

Customer awareness of decarbonization is rising sharply.
In order to respond to customer needs, we are putting
our efforts into proposals for conversion to ZEBs andfor renewable energy such as solar power generation
for internal use (PPA/purchases).
We have been continuously taking advantage ofthe opportunities presented by upgrade initiatives tocreate proposals that offer low energy consumption withthe aim of cutting running costs.
Based on our success in achieving ZEB Readystatus for the new building of the Okayama Supervising
Branch, we have registered as a ZEB Leading Owner andacquired ZEB Planner certification.

ZEB Leading Owner markZEB Planner markEnvironmental goals

Item

Goals

Results

Proposals for energy conservation related to renewal work

Number of proposals: 700 or more (¥5 million or more)

Number of proposals ∙∙∙∙∙∙∙∙∙∙∙∙∙∙750

Proposals for solar power for internal consumption

Number of proposals: 40 or more

Number of proposals ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙49

Proposals for ZEB conversion

Number of proposals: 3 or more

Number of proposals ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙7

Reductions in CO2 emissions

Reduction of 26% from FY2013 level by FY2030
Note: Revision to FY2030 goal is under consideration

CO2 emissions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙21%
reduction from FY2013 level

Reductions in energy consumption on crude oilconversion basis

1% reduction in energy consumption on crude oilconversion basis(Average reduction over most recent 5 years)

Energy consumption on crude oilconversion basis ∙∙∙∙∙1% reduction

Improvements in vehicle fuel economy(excluding cherry pickers)
Note: Combined figures for gasoline and diesel vehicles

Making efforts to improve (FY2019: 11.8 km/L)

Fuel economy ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙11.8 km/L

Raise industrial waste recycling rate

Recycling rate: 75% or higher

Recycling rate ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙79%

Promote green purchasing (paper, stationery)

Improved over previous fiscal year (FY2019: 81%)Note: Applicable scope for goal changed in FY2020.
FY2019 actual figures are adjusted for change toapplicable scope

Green purchasing rate ∙∙∙∙∙∙∙∙∙∙83%

Prevent environmental accidents

Occurrence of environmental accidents: 0

Occurrence of environmental
accidents∙∙∙∙∙0

Implement regional environmental conservation activities

Promoting active implementation(while taking into account COVID-19)

Implemented/Participated ∙∙∙∙∙∙∙75

Performance of main environmental metrics

Overview of environmental impact (FY2020 results)

CO2 emissions*1

Reduction rate in energy consumption
on crude oil conversion basis (%)

Energy consumption on crude oilconversion basis*2 (offices, etc.)

9,301

−3.0

1,926

(t-CO2)

Offices, etc.
Input

Vehicles• Electricity 7,385 thousand kWh• Small amounts of other energy (gas, diesel, etc.)• Office paper 130 t• Water 46 thousand m3

Incidental/
indirect
operations

4.9

Customersatisfaction

Equipment needs

DesignChudenko

Customer

Purchasing

Equipment needs

Construction

1.0%

Reduction rate (YoY)
Average annual reduction rate(base year: FY2016)(%)

Vehicle fuel5,666

Chudenkobusiness
activities

Energy consumption volume at offices, etc.

Average annual
reduction rate

Ease-of-use/
Comfort
Running costs
Energy consumed

2013

5,075

5,411

2017

5,012

5,016

2018

4,870

4,937

(km/L)

13.9

4,364

2019

2020

Gasoline vehicles

6.8

km/L

Diesel vehicles

13.6

13.8

13.9

1,920

1,869

1,926

2016

2017

2018

2019

2020

1.0

1.4

−3.0
2016

2017

2018

2019

2020

20,961

Recyclingrate

Amount generated

Recycling rate

Amountgenerated(t)

Green purchasing rate
t

80
13.5

2,019

−0.5

...etc
13.5

2,008
2.6

Industrial waste
Dieselvehicles

km/L

1.3

0
4,597

Vehicle fuel economy
Gasoline
vehicles

1.9

0

kL

(kL)

• Fuel 1,999 kL
6,087

Sales

%

t-CO2

74

84

79

%

83

%

(%)

79
74
80

81

2018

2019

83

79
7.0

OutputCO2

Waste

Others• 9,301 t-CO2• Industrial waste 20,961 t• Use of CFCs
• Noise and exhaust gas causedby construction and vehicle usage

33

CHUDENKO Report 2021

2016

6.8

2017

7.0

2018

6.9

2019

6.8

2020

15,99916,53815,882

16,668 20,961

2016

2017

2018

2019

2020

2017

2020

*1 CO2 emissions are calculated using energy consumption on a crude oil conversion basis and fuel used by vehicles(electricity purchased from electric power suppliers uses adjusted emission coefficients).
*2 Energy consumption on a crude oil conversion basis is calculated for energy/fuel related to specified businesses as set forth in the Act on Rationalizing Energy Use.
CHUDENKO Report 2021

34

S

ESG Initiatives

Human resources
Basic approach
Human resources are our most important asset. As
the starting point for our education, we nurture people
filled with humanity and vitality and work to develop
the next-generation talent who supports and develops
Chudenko’s technological advantages.
Through such programs as rank-specific training andeducation aimed at obtaining qualifications, we seek toenable employees to acquire a high level of technical skills,
and to enhance their technical ability. In this way wesystematically and continuously develop engineers who
can respond to diversifying customer needs in response to
the changing times.
Above all, we emphasize the nurturing of younger
employees, including new hires. By effectively combining
on-the-job training (OJT) conducted at the workplace with
off-the-job training (OFF-JT) conducted outside
the workplace, we provide education to employees for theiracquisition of knowledge and technical skills.

and three years for sales/technical employees, respectively.
During these training periods, employees alternate repeatedly
between group OFF-JT at the Training Center and OJTat a business location, to ensure that they acquire
knowledge and technical skills.
Education system
Progression as a groupacross all workplaces

Supplementation

Distance learning to support
personal development

Support for personal
development
SupportSupportPromotion of women’s empowerment

Voluntary training
Supplementation

Supplementation

Rank-specific education

OFF-JT

Education and nurturing ofyounger employees〔

Education aimed atacquiring qualifications

Three fundamental skills
1. Awareness of basic norms oflifestyle and social etiquette
2. Self-awareness as an employee
and camaraderie
3. Basic knowledge, technicalskills required to perform duties
Distribution line
education for new hires

General external training
Education for human rights
awareness

Support for personal development
The Group operates a distance learning system asa framework to support all employees who actively
decide to try something new. The courses available
under this system are divided into the five categories ofBusiness Practice, Management, Work-Life Balance /Self-Management,
General Education,and Qualifications,with each containing
approximately 200
courses.

With regard to women’s empowerment, in 2015 welaunched the “Committee for the Promotion of Women’s
Empowerment,” formulating a plan of action as set out in
the Act on the Promotion of Female Participation and Career
Advancement in the Workplace, and taking into considerationfrom a cross-divisional perspective the planning andimplementation of a variety of measures. In 2016, the “Working
Group for the Promotion of Women’s Empowerment”
was established by voluntary female employees.
The working group has developed initiatives such as
the exchanging of opinions among female employees.
In 2019, the Company received from the city of Hiroshimaa General Prize as a Business Promoting Participation by
Both Men and Women. This prize is awarded by the city
to businesses that provide a model for other organizationsin the way they work actively to enable women to demonstrate
their ability, expand their range of work, and balance workwith household and community activities.
We will continue to promote initiatives for fullparticipation by women.
Chudenko Corporation’s Action Plan
Period ofthe planApril 1, 2021–March 31, 2025

Issues at
Chudenko• Steady and consistent promotion of female managers• Steady and consistent hiring of female employees• Active participation by male employees in childcare

Intranet (support for personal development)

Goal 1: Female managers to account for 3.0% of total
managerial positions* by FY2024* Managerial position: The person assigned to a role equivalent to or
higher than supervisor

Nurturing younger employeesWith regard to younger employees (in their first to thirdyear after joining), we aim to cultivate them at an earlystage as the human resources who will be responsible
for the future of the Company. To this end, we set the training
periods as two years for the administrative employees,

35

CHUDENKO Report 2021

General Manager, Administration Division

Competition in progress
SupportSpecialist skills education

While the duration is determined in accordance with
the number of new hires in each division, a period of one
to six months after entering the company is designated as
the training period.
During this period, all new hires stay at the Training
Center. They live in a dormitory with others who havejoined the Company the same time, we foster the “threefundamental skills” that are required for life as a memberof society and as an employee of the Company.

Comment from General Manager

OJT

Health and safety education

Education for new hires

competitions that take place every two years. Chudenko
participates in the National Skills Competition every year.
At the 58th National Skills Competition held in Aichi
Prefecture in fiscal 2020, three participants from Chudenko
represented Hiroshima
Prefecture, one ofwhom was awarded aBronze Prizein the “ElectricalEngineering” category.

Participation in National Skills Competition
The National Skills Competition is an event in which
participants compete to become recognized as the mosttechnically skillful competitors in Japan, and also serves
as a qualifying competition for the international

Goals anddetails of
initiatives

Goal 2: Female employees to account for 5.0% or higherof annual hirings (of which technical staff to be 2.0% or higher)

Hideaki Oba

Promoting diversity initiatives and building
a working environment that allows growthin both the Company and employees
The Company’s most important assets are human resources,
and we aim to create an organization in which each and every
one of them is able to play a leading role, and is highly motivatedto participate in their work. To achieve this, we must confront thevarious issues in our human resources strategy from the perspectivethat both company and employees change and grow together,and respond flexibly to changes in the business environment.
I focus on two points. One is work style reforms. I believe
that, in order to secure human resources, achieving work-lifebalance by means of work style reforms is an urgent issue. To
tackle this issue, we are striving to promote DX to make
operations more efficient and to raise productivity, which will leadto improvements in the working environment. The other point isdeveloping the middle management and top management who
will be responsible for the next generation. In preparation for this,
we just started creating a mechanism that will allow for autonomous
career progression.
In the construction industry, hiring and retaining younger
people and women is a pressing issue, and althoughindustry-wide initiatives have been undertaken, the situation
remains difficult. Against this backdrop, Chudenko is focusing
on promoting and instilling diversity. Diversity is not something
done only to secure human resources but also is a means ofmaintaining corporate competitiveness in times of change, andrequires robust initiatives.
Going forward, we will make even greater efforts to create
an environment in which all employees can express theirindividuality and fully demonstrate their ability, irrespective of
their form of employment, gender, age, and whether or not they
have disabilities.

Goal 3: Male employees taking paternity leave to accountfor 2.0% or higher by FY2024, taking an average of at least
one week off

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Health and safety activities
Priority goals

FY2021 health and safety activity policy
Based on our philosophy of “safety takes priority overeverything,” the Company is working as one to eradicate
accidents and disasters and striving to encourage,
preserve and increase mental and physical well-being.
In addition, we will work on the following priority goals
under such ongoing situations that major accidents
continue to occur, serious traffic accidents have not been
eliminated, and COVID-19 remains prevalent.

• Major electric shock/Arc accidents: Zero
• Major accidents involving falls: Zero
• Serious/fatal traffic accidents: Zero
• Prevention of disease/infection, early
discovery of health problems

Enhancement of vehicle safety facilities

Response to COVID-19

To achieve zero traffic accidents, we are currently
promoting the introduction of safety support cars andauxiliary collision prevention system equipment, which arehighly effective in preventing accidents.
In the event of an accident, in addition to making efforts
to establish a complete picture of the accident using
the footage from the dash cams installed in every vehicle,
we utilize information derived from actual footage in groupmeetings to prevent further traffic accidents.

In response to COVID-19, the Company set up
a Countermeasures Headquarters (Countermeasures
Preparation Headquarters) in March 2020. As well as
devising infection countermeasures tailored to the changing
situation, the headquarters is gathering information andsharing it with Group companies in Japan and overseas.
We will make efforts on our business continuity while
complying with instructions from central and local
governments, paying close attention to the most recent
information, securing the health and safety of employees
and their families, and taking measures to prevent the spreadof infection.

Priority actions
1. Awareness of safety as highest
priority, and of own responsibility

With an awareness of safety as the highest priority and one’s own responsibility to practice safety
management and safe behaviors, take every opportunity to provide guidance, education, and support toGroup companies and partner companies.

2. Understanding and complying
with laws and regulations,standards, and rules

Comply with and deepen one’s understanding of laws and regulations, standards and rules. In addition,
steadily implement measures to prevent recurrence of accidents that took place in the past.

3. Mitigating risks and eliminating
unsafe behavior

As well as considering and implementing risk mitigation measures derived from risk assessments
adapted to the site, be sure to instill practices for risk and hazard prediction. Make efforts to prevent
work-related accidents by practicing “speaking out” and having the courage to point out unsafe
behavior without letting it pass by.

4. Hints for thorough practice ofsafe driving

Be sure to practice “commentary driving” and “defensive driving,” which are extremely effective inenhancing safety, and dedicate yourself to driving the vehicle with an awareness of the serious
responsibility it entails.

5. Maintaining the workplaceenvironment

In addition to the “five practices” for maintaining workplaces, sites and vehicles (organized, arranged,
cleaned, hygienic, disciplined), implement pre-use inspections of equipment and machinery, and be
sure to eliminate unsafe situations.

6. Encouraging mental and physicalwell-being

Use health and stress checks to get an understanding of the state of mental and physical well-being
for each and every employee, and make efforts to prevent illness and discover and treat health problems
as early as possible. Aim to create a bright and energetic workplace by encouraging lively communication.

7. Implementing measures toprevent infection of COVID-19

In order to prevent COVID-19 infections, the latest countermeasures issued by the COVID-19
Headquarters are to be implemented and practiced diligently.

The Company utilizes the Practical Safety Training
Building within its Training Center located in Asaminami
Ward, Hiroshima City, for the purpose of improving safety
awareness by providing participants with a simulated
experience of the various dangers that can occur on site,
and increasing their sensitivity to hazards.
These are categorized into five themes of “electric
shocks / arcs,” “falling,” “overturning,” “pinching & other,”and “traffic.” For example, those who are involved canexperience for themselves shorts reproduced in
low-voltage measuring equipment and between low- andhigh-voltage lines, the shock imparted by falling objects,
and the experience of a ladder sliding both vertically andhorizontally. Each of these utilizes facilities designed forthe purpose, and participants undergo simulated
experiences while their safety is ensured.
These facilities provide simulated experiences every

CHUDENKO Report 2021

Total vehicles

2,058

year not only to employees of the Company but also topeople from Group companies, partner companies, andtechnical high schools, and other organizations. Even
during the COVID-19 pandemic in fiscal 2020, around
1,500 people underwent simulated experiences, and byhaving the facility used by such a wide range ofparticipants we contribute to the spread of safety
awareness and knowledge.
We also invite high school students learning electricalsubjects, providing tours and opportunities to experience
the practical safety training facilities. (Suspended infiscal 2020.)

Practical Safety Training Building

Simulation of a fall from height

Main countermeasures

Safety equipment
Safety support car

Improvement of safety awareness37

Status of vehicle safety equipment(as of March 31, 2021)

457

Auxiliary collision prevention system

1,347

Dozing prevention device

254

Total

2,058

Dash cams

2,058• Distribution of non-woven masks to all employees• Setting up of hand sanitizer points and panels toprevent droplets• Requests for self-restraint in non-essential businesstrips and meetings• Utilization of remote work and online meetings

Daily sanitizing and ventilation of shared facilities

Promotion of health management
In addition to encouraging every employee to address
their mental and physical well-being, we are implementing
initiatives for promoting health management. These seek
to raise motivation by investing in employee health,resulting in the revitalization of the organization, improved
performance and increased corporate value, and thesemeasures will be maintained going forward.
With regard to mental well-being, the Company
implements stress checks for all employees every year, in
accordance with the stress check system set out in
the Industrial Safety and Health Act. The results are utilized
for formulating internal measures to improve the workplaceenvironment and for other purposes, and we implement
follow-ups as appropriate for people under significant
stress, such as by arranging meetings with a physician.

• FY2020 regular health checkconsultation ratio100%• FY2020 ratio of stress checks
performed

97.1%

Setting up of panels to prevent droplets

Donation of medical masks and personal protective equipment
to the five prefectures of the Chugoku region
CHUDENKO Report 2021

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Quality

Coexistence with

Increasing customer satisfaction

Providing employment opportunities

On-site lectures at external organization

Implementing “Customer Appreciation Days”

In order to increase customer satisfaction, we are working
to strengthen management systems related to construction
quality to achieve zero defects. We are also seeking to
improve construction and operational quality by carryingout thorough staff education and by enhancing
communication with customers.
In addition, we conduct customer questionnaires andseek their feedback regarding the status of ourconstruction and sales activities, opening the way toincreases in customer satisfaction.

Internships
The Company operates internships (summer/winter) tohelp students choose an occupation, and encourages
research into the industry and companies.
By enabling students to visit workplaces and sites,
and to experience business operations, internships allow
them to get a real feeling for employment in theconstruction industry, and provide answers to suchquestions as “What kind of work do people do everyday?” and “What do they keep in mind while working?”.

Highly experienced Hiroshima Certified Meister*
employees and instructors for the National Skills
Competition visit technical high schools in the Chugoku
region, sharing their own experiences while providing
technical instruction and practical demonstrations ofelectrical work. The aim is to impart the enjoyment ofcreating things and to support the individuals who will be
responsible for the future.

“Customer Appreciation Days” began as “Days of
Magokoro (Sincerity)” in 1992, based on the idea thatcompanies can grow only when they are trusted by local
communities and local people. Since 2004, the event has
been held in November every year with the new name
“Customer Appreciation Days.” (Starting in 2021 we plan
to hold “Customer Appreciation Month” in November)
In fiscal 2020, having devised appropriate COVID-19
countermeasures, we undertook cleaning activities
for roads and parks; performed inspections of electricaland air-conditioning equipment in public facilities;
donated pamphlets on electricity to all elementary
schools in the Chugoku region; provided high school
students with tours of the Practical Safety Training
Building and allow them to experience its facilities, as wellas the opportunity to experience riding in a cherry picker.

ISO 9001 registration status
Applicable standards

ISO 9001: 2015

Date registered

March 31, 2000

Registered business
operator

Chudenko Corporation

Scope of activities

Design and construction of electrical,
information communication, air-conditioning,plumbing and sanitary equipment,
and related facilities; construction workfor overhead power lines; design, manufacture
and construction of electrical equipment(switchboards, control boards, etc.)

Relevant businesslocationsSupervising Branches in Hiroshima, Okayama,
Yamaguchi, Shimane, and Tottori, Tokyo/
Osaka Headquarters, Electric Power Construction
Plant, Equipment Plant

Registration number

JQA/QM4594

Examining andregistering body

Japan Quality Assurance Organization

Operating a management systemfor customer requirements
As well as ensuring a response in cases wherea construction error has caused problems for the customer,
the management system enables us to unify information
management, understand the status of processing andsimilar cases, and prevent a recurrence.

Summer Work Visits to Chudenko
In cooperation with the “Summer Science andTechnology Challenge” initiative being led primarily by
the Gender Equality Bureau Cabinet Office, the Company
holds “Summer Work Visits to Chudenko” targeting
female junior and senior high school students and female
college students with an interest in fields related to scienceand technology.
As an initiative to support their future career paths, wearrange our work visit programs and provide
opportunities for the participants to have discussions withfemale engineers.

CHUDENKO Report 2021

Cleaning streetlights

Donating pamphlets to elementary
schools

Chudenko Running TeamThe Running Team was established in April 1990 withthe aim of energizing employees, improving the corporate
image, and enhancing cooperation with local communities.
While training daily toward the team goal of winning
the Chugoku Track & Field Corporate Ekiden (long-distance
relay road race) and being ranked in the top eight in
the New Year Ekiden, the team also holds a running schoolas part of its volunteer activities in the local community.
On-site lectures at external organization

To ensure construction quality, we conduct internal
inspections of facilities before delivering them tocustomers. Where
appropriate, we also
implement quality
patrols in accordancewith the progress ofconstruction, andtake other steps toensure quality.

39* A system that seeks to raise society’s appreciation of technicians,
foster respect for them, raise technical standards, develop and pass
on skills, and promote the development of successors by certifying
particularly competent technicians in Hiroshima Prefecture. As of
August 19, 2021, 150 individuals in 31 different occupations are certified.

Internships

Implementing internal inspections andquality patrols

An inspection in progresscommunities

Running school

Round-table discussions with female employees

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Management team

41

Haruko Murata

Shigeki Ekuni

Takakazu Higashioka

Kosaburo Nishikawa

Director (Outside)

Director (Outside)

Director andManaging Executive Officer

Director andManaging Executive Officer

Jitsuo Taniguchi

Hidefumi Ogata

Hiroshi Matsunaga

Kumi Iioka

Director andManaging Executive Officer

Standing Auditor

Statutory Auditor

Auditor (Outside)

Naoto Yorino

Nobuhide Inamoto

Kiyofumi Ueno

Akira Sakotani

Takanobu Tsutsumi

Masashi Yamada

Kazuhiro Takeuchi

Kazuhiro Takeuchi

Director (Outside)

Director (Outside)

Representative Director andSenior Managing Executive Officer

Representative Director andPresident

Representative Director andExecutive Vice President

Director andSenior Managing Executive Officer

Auditor (Outside)

Auditor (Outside)

CHUDENKO Report 2021

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Corporate governanceCorporate governance framework
Our company motto and mental foundation is a heart oftruthfulness, a heart of honesty with no ill feelings, a pureheart, a selfless heart. As a general equipment engineering
company, we have established a corporate philosophy
that makes it our mission to contribute to the developmentof society by creating value added to everyday life andthe business environment for our customers. Our corporate
philosophy lays out the specific direction for the Company.

Based on this philosophy, we will improve the efficiency
and transparency of our management and also enhance
the supervisory functions of our Board of Directors,
internal audit divisions, and corporate auditors with the aimof becoming a company that is trusted by all our
stakeholders.
Furthermore, we agree with the basic thinking behind
the Japan’s Corporate Governance Code and pursue
the best possible corporate governance, working
continually to enhance it.

Corporate governance structure
General Meeting of Shareholders
Appointment/
dismissal

Appointment/
dismissal

Appointment/
dismissal
Auditing

Board of Corporate Auditors(5 auditors*1)
Corporate Auditors Office

Auditing

AdviceBoard of Directors (11 directors*2)
Reporting on executionof business

ReportingAppointment/
dismissal and supervision

Advisory Committees(Nomination Advisory Committee)(Remuneration Advisory Committee)

Execution of business
Cooperation
ReportingCommittees

Accounting Auditor

Reporting(Internal Control Committee)(Corporate Ethics Committee)

Auditing

ReportingInstruction/ordersExecutive Vice President/
General Managers

ReportingExamination
Department Instruction/orders
Internal auditing*1 Includes two independent auditors andone outside auditors.
*2 Includes four independent outside directors

Board of Directors / Management Policy
Council
The Board of Directors is comprised of 11 directors (fourof which are independent outside directors). The meetings
are, in principle, held once a month and are attended bycorporate auditors. The Board of Directors makes decisions
on important matters of business execution and supervises
the execution of duties by directors. To date, we havebeen gradually decreasing the number of directors andincreasing the number of outside directors to ensure
flexible operations of the Board of Directors and improve
its efficiency and dynamism.
In addition, to enhance the independence, objectivity,
and accountability of the functions of the Board of Directors,
matters of officer candidate nomination and director
remuneration are referred to the Nomination Advisory
Committee and the Remuneration Advisory Committee, both

CHUDENKO Report 2021

Instruction/ordersCooperation

Cooperation

43

Representative Director and President

Supervising Branches/
Branches, Tokyo/
Osaka Headquarters,
Electric Power
Construction Office

Discussion

Management Policy Council

ReportingInstruction/ordersInstruction/orders

Departments in head office
Reporting
ReportingInstruction/
guidancedelegation of executive authority enhances the businessexecution function and accelerates decision-making
while also clarifying business execution responsibilities.
Moreover, it improves the efficiency of decision-making
and business execution by the Board of Directors.

Board of Corporate Auditors
The Board of Corporate Auditors is comprised of fivemembers (three of which are outside auditors) andestablishes audit policies and plans. Corporate auditors
audit the execution of duties by directors based on
the audit policies and plans established by the Board of
Corporate Auditors. In addition, the corporate auditors
receive regular reports from the accounting auditor on
audit plans and results and observe audits conductedby the accounting auditor. By sharing information andopinions in a timely manner and enhancing coordination,
they seek to improve the quality and efficiency of audits.
Furthermore, the corporate auditors receive reports
from the Examination Department, which is an internal
audit division, on examination and inspection plans asnecessary. By sharing information and opinions in a timely
manner and enhancing coordination, they seek to improve
the quality and efficiency of audits.
Individuals who have knowledge related to finance,accounting, and legal affairs are also appointed ascorporate auditors.

Support system for outside directors andoutside corporate auditors
Outside directors
The Board of Directors Secretariat (General Affairs
Department [in charge of secretarial affairs]) takes the leadin providing advance notice of the annual schedule ofBoard of Directors meetings. It sends the materials forthe meeting in advance, and provides an overview of
the agenda as appropriate. If an outside director is absent
from the meeting, a summary report is provided to thembased on the minutes.
In addition, information is provided as necessary,
including emails containing information on press releases
and other developments at the Company.
We are working to provide outside directors with
the necessary information as appropriate, including by
having them attend Management Executive Council
meetings and participate in various events and sending
them meeting materials.
Outside corporate auditors
The Corporate Auditors Office has been establishedspecifically to provide assistance to corporate auditorsand supports general operations related to corporate
auditors, including outside corporate auditors.

Internal auditsGroup companies

Outside officersof which more than half of the members are independent
officers. This ensures greater objectivity and transparency
in the decision-making process.
Furthermore, the term of office for directors is one year
to clarify their management responsibilities in that fiscal year.
Remuneration for corporate auditors is referred to
the Remuneration Advisory Committee and determinedwith the cooperation of the Board of Corporate Auditors.
With regard to execution of business, such matters
are left up to the Representative Director and President to
the extent possible. However, important matters related to
management, including matters to be discussed at Boardof Directors meetings, are discussed at Management Policy
Council meetings, which are held at least once a month inprinciple and attended by the Chair, President, managing
executive officers, and corporate auditors.
At the same time, a managing executive officer /executive officer system has been adopted as a system
to assist the Representative Director and President. This

There are four outside directors and three outside corporate
auditors. The four outside directors are independent
officers. By having them share information and provide
opinions from a neutral and objective standpoint not onlyat Board of Directors meetings but also Executive
Management Council meetings, which is attended bydirectors, corporate auditors, general managers, andbranch managers, the Company is working to revitalize
the Board of Directors and enhance its management
supervision function. In addition, meetings are held atleast once a year for outside directors to share opinionswith representative directors and corporate auditors, andthe Company is working to enhance the ability of outside
directors to gather information by having corporate auditors
provide reports to them on audit results.
Outside corporate auditors conduct audits from a neutral
and objective standpoint. They gather information on
the status of audits by corporate auditors, the accounting
auditor, and the Examination Department as well as on
the content of important meetings through the Board of
Corporate Auditors and share opinions to conduct audits.

Nine dedicated staff members are allocated to
the Examination Department, which conducts internal audits.
The department establishes an examination andinspection plan for the purpose of increasing management
efficiency and improving operations based on the primary
aim of the medium-term management plan. It theninvestigates the status of corporate operations fromthe standpoint of compliance and appropriateness andprovides a report on its findings and suggestions to
the president and Management Policy Council.
In addition, the department conducts an independent
assessment of matters requiring improvement within
the internal control system and provides a report to
the Internal Control Committee.
Regular reports on the results of examinations andinspections are provided to corporate auditors, andopinions are exchanged as needed to coordinate efforts.

Accounting audits
Deloitte Touche Tohmatsu LLC has been appointed as
the accounting auditor of the Company. Two certified public
accountants execute accounting audits for the Company.
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They are assisted by five other certified public accountants
and 12 others.
The Board of Corporate Auditors takes appropriate
steps to ensure proper audits. These include helping
the accounting auditor recognize its responsibilities throughthe selection procedures and sharing information as necessary.
The accounting auditor and the president engage inregular discussion (at least once a year) and meet as
necessary when requested by the accounting auditor.

Officer remuneration
The amount, method of calculation, and policy for
determining officer remuneration are detailed below.
1. Basic thinking on officer remuneration• Provide an appropriate amount as basic remuneration
for the performance of duties.
• Build a remuneration structure that leads to ongoing
improvement to corporate value.
• Ensure that the compensation structure is easy
for shareholders and other stakeholders to understand.
2. Basic policy on officer remuneration
a. Basic policy on director remuneration
Director remuneration consists of basic remuneration,
which is fixed, and performance-linked/stock
price-linked remuneration, which are variable. Fromthe standpoint of their role and independence, outside
directors are only paid basic remuneration.
• Provide basic remuneration for the performance of
duties.
• Provide performance-linked remuneration to further
incentivize improvement of short-term performance.
• Provide stock price-linked remuneration to incentivize
improvement of medium- to long-term performanceand aim for improvement of the stock price.
b. Basic policy on corporate auditor remuneration
Corporate auditor remuneration consists only of basic
compensation, which is fixed, in light of their role.
• Provide basic remuneration for the performance of
duties.
3. Policy on determining the amount or method of
calculating individual remuneration and timingof payment
a. Policy related to director remuneration○ Basic remuneration
The amount of individual remuneration is determinedbased on criteria that are established by position
according to role and responsibility and is paid in
cash monthly.
○ Performance-linked remuneration
This remuneration system varies according to

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CHUDENKO Report 2021

consolidated operating profit.
The amount of individual remuneration isdetermined based on the criteria that at each level ofconsolidated operating profit, standard remuneration
amounts are established according to position, andthese are then adjusted according to the level ofthe individual’s contribution through the performanceof their duties. The amount is paid in cash at the endof the individual’s term of office in June of every year.
○ Stock price-related remuneration
Restricted stock remuneration is paid to directors.
The number of shares to be paid to eachindividual is determined based on the amountequivalent to the shares granted by position
according to role and responsibility and the stock
price on the business day prior to the date of
the resolution by the Board of Directors related toallocation of shares. Every year, the Board of
Directors passes a resolution on the allocation ofshares within one month of appointment of
directors, and the shares are paid within one monthof the date of the resolution.
b. Policy related to corporate auditor remuneration
The amount of individual remuneration is determinedbased on criteria that are established by position
according to role and responsibility and is paid in
cash monthly.
4. Policy on determining the percentages ofindividual remuneration
The ratio of basic remuneration to variable remuneration(performance-linked and stock price-linked renumeration)
for directors (excluding outside directors) is around
5:1–5 so that the remuneration functions effectively as
an incentive to continually improve corporate value.
Outside directors and outside corporate auditors
are only paid basic remuneration.
5. Method of determining individual remuneration
To enhance the transparency and objectivity ofthe process for determining basic remuneration andperformance-linked remuneration for directors,
remunerations deliberated on by the Remuneration
Advisory Committee, which is comprised of more thana majority of independent officers, and then determinedby the Representative Director and Chair andthe Representative Director and President, who aretasked with doing so by the Board of Directors.
Stock price-linked remuneration is determined by
the Board of Directors based on the deliberations of
the Remuneration Advisory Committee.
Basic remuneration for corporate auditors isdetermined with the cooperation of the Board of
Corporate Auditors based on the deliberations of
the Remuneration Advisory Committee.

Total amount of director and corporate auditor remuneration in FY2020

Performance-linked remuneration table
Consolidated operating
profit level

Total amount of remuneration by category (millions of yen)
Officerclassification

Total
amount of
remuneration(millions of yen)

Directors(Outside directors)
Corporate auditors(Outside corporate
auditors)

422
(12)
69
(16)

Stock price-linked remuneration
Basic
remuneration

Performance-linkedremuneration

230
(12)
69
(16)

146
(−)
−
(−)

Stock
options forshare-based
remuneration

Restricted
stock
remuneration

11
(−)

33
(−)

−
(−)

−
(−)

Number of
officers
eligible forremuneration

13
(3)
6
(3)

Note: In conjunction with the introduction of restricted stock remuneration, new stock options were not granted
in fiscal 2020, but the amount shown represents the costs recorded in fiscal 2020 for the portion granted
in previous years.

Internal Control Committee
With regard to internal control, the Board of Directors
decided on a basic policy for building an internal control
system and has prepared a structure so that the ChudenkoGroup can come together and promote appropriate businessactivities. Based on this basic policy, the basic mattersfor enhancing and promoting internal control throughout
the Group have been set forth in the Internal Control Rules,
and an Internal Control Committee has been established.
The Internal Control Committee is comprised of
the President, the General Manager of the Planning
Division, the General Manager of the Operations Division,and the General Manager of the Examination Department.
In principle, it meets three times a year and is attended bycorporate auditors. It deliberates on matters related tothe enhancement and promotion of internal control andreports on the results to the Management Policy Council.
It also refers the important matters to the Board of Directors.

Corporate Ethics Committee
With regard to corporate ethics, the Group has establisheda Compliance Policy that fleshes out the code of conductof the Corporate Philosophy and serves as the model for
employee behavior. In addition, basic matters related toefforts to promote corporate ethics have been set forth in
the Corporate Ethics Rules, and a Corporate Ethics
Committee has been established to ensure the fairness ofbusiness activities and allow the Group to maintain andimprove the trust it has received from shareholders,customers, local communities, and others. Moreover, weestablished a Corporate Ethics Helpline to field questions
and concerns regarding legal violations or corporate
ethics-related problems occurring in the course ofcarrying out operations.

Remuneration
amount¥12 billion or above

Up to ¥230 million¥8 billion–Less than ¥12 billion

Up to ¥190 million¥6 billion–Less than ¥8 billion

Up to ¥155 million¥4 billion–Less than ¥6 billion

Up to ¥125 million¥2 billion–Less than ¥4 billion

Up to ¥80 million¥1 billion–Less than ¥2 billion

Up to ¥40 million

Less than ¥1 billion

0

Note: Performance-linked remuneration is paid to
directors, excluding outside directors.

The Corporate Ethics Committee is comprised of
the President, the Vice-President, the General Manager of
the Operations Division, and three outside experts. In
principle, it meets twice a year and is attended by corporate
auditors. It deliberates on matters related to promoting
corporate ethics awareness and reports on the content
and results to the Board of Directors.

Status of preparation of structure for ensuring
appropriateness of Group company operations
The Corporate Planning Department, which is the sectionthat oversees Group companies, provides appropriate
instruction and support related to compliance, the promotionof appropriate business activities, and the establishmentof a compliance structure at Group companies.
Meanwhile, the Corporate Ethics Helpline has been
established by the Company, which accurately addresses
consultations and reports and is also available to employeesof Group companies.
The Examination Department audits Group companies
and provides instruction and guidance, while corporate
auditors of the Company conduct investigations of Group
companies as necessary and request reports on audits
from the corporate auditors of Group companies.
As for the preparation of a structure for promoting risk
management within the Group, the related departmentsof the Company coordinate to provide appropriate instruction
and support.
In addition, we have established Group Management
Guidelines, and when group companies make decisions
on important business matters, they seek the cooperationof the Company as necessary. In the event that something
happens or is expected to happen that will have a serious
impact on group management, they are asked to provide
a report to the Company.

CHUDENKO Report 2021

46

G

ESG Initiatives

Message from an outside director

Disclosure of information to shareholders/investors

I will provide a different perspective as
At least once a year
Regular IR conferences
for individual investors

Regular IR conferences
for analysts andinstitutional investors

Most recent events

I supervise management to improveNote: In FY2020, we suspended these conferences due to the COVID-19 pandemic.

the corporate value of the Chudenko Group andHeld regularly, twice a year

provide an opportunity for more open discussions.

Most recent events• Streaming of results briefing video for 2Q FY2020(Starting on November 20, 2020)
To prevent the spread of COVID-19, we canceled the 2Q FY2020 results briefing andstreamed a video of an explanation by the President online instead.
• Live streaming of results briefing for FY2020(May 27, 2021)
To prevent the spread of COVID-19, we streamed live video of the FY2020 results briefing online,
and the President provided an explanation of the results, medium-term management plan,shareholder return, and other matters. The recorded briefing video is available online for streaming.

We publish shareholder and stock information (General Meeting of Shareholders, Articles ofIncorporation, dividends, shareholders memos, etc.), the Chudenko Report, consolidated
financial results, securities reports / quarterly reports, financial results briefing materials /Publishing of IR materials
company information session materials, business reports (IR communications), and other IR
on website
materials (such as notices of revision of performance or dividend forecasts) on our website.
IR information https://www.chudenko.co.jp/en/info/

Nobuhide Inamoto
Outside Director (Independent Officer)

Q1. What do you place emphasis on as an Outside Director?

Career Summary

In general, I believe that supervision of management from the perspective ofa third party, contributes to the sustainable and healthy growth of Chudenko
as well as the improvement of corporate value over the medium to long term.
In addition, having served as a Director at Mazda previously, I understand that
there are some things that are difficult to say when you are a part of the company.
People who come up through the same corporate culture can sometimes bebiased in their thinking, so I think it is necessary for me, as someone who comesfrom a different corporate culture, to express my opinions that come froma different angle.
I place emphasis on providing an opportunity for people from the Company
to think about and discuss different matters by expressing opinions on things
that people from the Company are either hesitant to say or have not noticed.
That is what I hope to do in my efforts.

Jun. 2001 Director and General Manager,
Business Logistics Division,
Mazda Motor Corporation
Mar. 2002 Director and General Manager,
Production Engineering DivisionJun. 2002 Executive Officer and General Manager,
Production Engineering DivisionJun. 2003 Executive Officer and General Manager,
Quality Division
Apr. 2007 Managing Executive Officer andin charge of Quality Assurance andEnvironment
Apr. 2008 Managing Executive Officer andGeneral Manager,
Domestic Business DivisionNov. 2008 Managing Executive Officer,
in charge of Domestic Business,
and General Manager,
Domestic Business Division
Apr. 2011 Managing Executive Officer andin charge of Domestic Business andFleet Sales
Jun. 2012 Managing Executive Officer andin charge of Domestic Business,
Fleet Sales, and Customer Service
Jun. 2013 Director,
Senior Managing Executive Officer,
oversight of Operations in China,
Domestic Sales, Fleet Sales No. 1,
and Chairperson,
Mazda Motor (China) Co., Ltd.
Jun. 2015 Director,
Senior Managing Executive Officer,
oversight of Operations in China,
Domestic Sales, Fleet Sales No. 1,
in charge of Global Auditing,and Chairman,
Mazda Motor (China) Co., Ltd
Apr. 2016 Director,
Senior Managing Executive Officer,
oversight of Operations in China,
Domestic Sales and Fleet Sales,
and in charge of Global Auditing
Apr. 2017 Director,
Senior Managing Executive Officer,
and oversight of Operations in China,
Domestic Sales and Fleet Sales
Jun. 2019 Special Advisor (resigned Oct 2019)
Jun. 2020 Director,
the Company (current position)

Q2. What is your assessment of governance at Chudenko?
With regard to corporate governance and the Board of Directors, the Company
emphasizes its motto of “a heart of truthfulness, a heart of honesty with no ill
feelings, a pure heart, a selfless heart” and engages in serious efforts,
undertaking initiatives in a comprehensive manner. They also provide us outside
directors with explanations of what will be discussed at the Board of Directors
meetings in advance so that we can deepen our understanding. At the sametime, I feel that the efforts are somewhat passive. Businesses are constantly
exposed to competition, and I believe that the Company as a whole must respondto this with a sense of urgency.

Q3. What are your expectations of Chudenko, and what do you
see as its challenges in the medium to long term?
The biggest challenges I see for Chudenko is whether the employees aregoing about their operations while thinking about what kind of company theywant Chudenko to be in the future and, as a general equipment engineering
company, what kinds of technical capabilities Chudenko will employ to stayahead of the competition and what kinds of outstanding technology it will have.
Chudenko is working hard to set up operations in Tokyo and other urban
areas. My personal opinion is that I would like for the Company to absorb
the latest technologies, return them to the Chugoku region, and endeavor to
become a truly leading company in the Chugoku region.
47

CHUDENKO Report 2021

CHUDENKO Report 2021

48

G

ESG Initiatives

Compliance
Compliance
One of our highest management priorities is tocontinuously engage in fair and appropriate operational
management in accordance with compliance. We haveestablished a Compliance Policy that goes into moredetail on the fourth corporate guideline of our Corporate
Philosophy, which is to “stick to social rules and be
mindful of common sense in one’s actions,” in order toserve as a code of conduct for our officers and employees.
In addition, based on the Compliance Policy, we arepromoting corporate activities that prioritize compliancewithin the medium-term management plan.

in collaboration with the corporate ethics leaders of each
workplace. The purpose of this is to deepen individual
understanding of the importance of compliance andshare a thorough awareness of compliance throughout
the Group companies.
We are also working to instill awareness that
the Corporate Ethics Helpline is a tool to protect
the Company.

5. Information security risk
The Group possesses business partner information andother confidential information, and in recent years, there
have been many cases of companies falling victim tounauthorized access and cyberattacks.
In the event that such information were to be leakedor lost due to human error, technical error or unforeseen
circumstances, it could result in a hefty claim for damages,suspension of business, or loss of social credibility, which
in turn could significantly damage the Group’s credibilityor reputation, impacting performance.

Compliance education throughout Group
companies
The Compliance Division carries out compliance education
for all officers and employees (including contract andtemporary employees), including those of Group companies,

A class at a Group company

Risk management
Risk management
Below are the main types of risks recognized as having
the potential to affect the financial condition, businessperformance, and cash flows of consolidated Group
companies.
These risks were identified based on the degree of
impact and frequency of occurrence during the course of
the Group’s regular brainstorming, evaluation, and review
of countermeasures. They are managed by the Group as
risks that require the involvement of top management.
There are other risks in addition to these, such as
the risk of a sharp rise in material or outsourcing expenses,
credit risk related to business partners, and the risk ofa drop in the market value of securities holdings.
1. Risk of quality defects
In the event of a serious quality problem arising fromhuman error in the design or construction stage ofbuilding equipment work or the planning or manufacturing
stage of our products, it could result in a heavy costburden associated with repairs or a claim for damages
due to construction or delivery delays, and the suspension

49

CHUDENKO Report 2021

4. Risk of work or traffic accidents
The Group has many construction sites and has
implemented measures to prioritize safety, but inthe event of a work or traffic accident despite thosemeasures, it could result in compensation for human loss or
victims, judicial or administrative penalty, or loss of social
credibility, which in turn could significantly damage
the Group’s credibility or reputation, impacting performance.

of business in conjunction with this could significantly
damage the Group’s credibility or reputation, impacting
performance.
2. Risk of legal or compliance violations
In the event that a business operation or process iscarried out that runs contrary to the Construction
Business Act, the Industrial Safety and Health Act, or otherrelated laws or that violates compliance, it could result ina criminal penalty, suspension of business, loss of social
credibility, hefty fine or claim for damages, which in turn could
significantly damage the Group’s credibility or reputation,
impacting performance.
3. Risk of decline in orders received
In the event of a significant decline in orders received
because of factors such as a decrease in capital
investment by the Chugoku Electric Power Group, which
is a major business partner of the Chudenko Group, andby another private company or government agency,
the Group may be unable to secure the necessaryorders, impacting performance.

6. Risks related to M&As and business investments
The Group engages in M&As and invests in businesses
for the purpose of expanding our business and enhancing
our competitiveness centered on equipment work, which
is our main business.
However, in the event that we were unable to recover
our investment or additional expenses were to be
incurred due to not being able to develop the acquired orinvested business according to plan despite the preliminary
investigation and review, there could be an impact on
the Group’s performance.
7. Risk of natural and other disasters
The Group has many workplaces in Japan and othercountries.
Large-scale natural disasters such as earthquakes,
tsunamis, and typhoons, and the spread of novel viruses
and other infections could not only cause direct damage
to employees and facilities but could also result in indirect
damages such as interruptions and congestion in
the distribution and transportation network and evensluggishness or confusion in society and the economy.
This, in turn, could result in an interruption or delay
in business activities, impacting the Group’s performance.
8. Risks related to Group internal control
The Group endeavors to prepare and maintain internal
control systems and comply with the various laws as it
engages in business development in Japan and overseas,
but in the event that its internal control were to fail toprevent an impropriety, the resulting loss of social
credibility could impact the Group’s credit or performance.

9. Risks related to securing andtraining human resources
In the Group’s equipment work business, which is its
main business, the labor force is aging due to a decreasein new employment and high turnover rates. Therefore,
securing people to take over is a pressing issue.
In the event that the Group is unable to secure humanresources with the required national qualifications andskills when they are needed, insufficient construction
capabilities could result in a failure to secure sales,
impacting the Group’s performance.
10. Risks related to long working hours or overwork
In the event that long working hours or overwork were tooccur within the Group due to strain on the construction
process resulting from human resources shortages orprocess delays or responding to unforeseen circumstances,
it could result in employee health complications ordecreased productivity or in excellent humanresources choosing to leave and go elsewhere,
impacting the Group’s performance.

Business continuity plan (BCP)
Being involved in the supply of electricity, we are charged
with a vital mission by our customers and society ingeneral. Therefore, it is extremely important that we makepreparations for disasters. As such, we have establisheda business continuity plan both from the short-term
perspective of preventing suspension of our business inthe event of a disaster and the long-term perspective ofpreventing bankruptcy following a disaster. We regularly
conduct training in anticipation of a major earthquake,such as verification of the emergency contact system andsafety confirmation, so that our officers and employees
understand their respective roles.

Training at Head Office (Special Emergency Response Headquarters)

CHUDENKO Report 2021

50

Corporate Information

11-year financial summary (consolidated)
Millions of yen

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020116,535
101,754
14,78014,067
713
1,962
49
2,627
288
469
2,445
1,224

110,332
95,814
14,517
14,668
–150
2,060
50
1,859
36
3,621
–1,726–3,121

118,038
100,597
17,44014,197
3,243
2,796
94
5,946
704
2,827
3,822
1,665

136,396
119,376
17,019
9,788
7,231
10,71887
17,861
107
123
17,844
13,502

145,547
126,062
19,485
10,054
9,430
6,748
48
16,13030
502
15,658
10,492

147,752
126,326
21,425
10,448
10,9773,885
58
14,8041,350
318
15,836
10,889147,935
126,556
21,37911,703
9,675
2,285
90
11,871
1,659
285
13,246
9,273

148,300
127,540
20,75912,224
8,535
3,338
129
11,74497
208
11,632
7,809

153,322
133,986
19,335
12,848
6,486
2,504
69
8,921
1,837
911
9,848
6,160

168,888
147,620
21,26812,934
8,333
2,956
101
11,188
1,240
3,292
9,136
4,795

184,482
159,078
25,404
15,921
9,482
2,556
139
11,8991,004
85
12,8188,119

221,830
178,516
3,810
59
1,788
79.9%

216,241
175,932
2,419
49
2,063
80.8%

226,968
188,152
1,961
42
2,154
82.4%

248,314202,804
4,571
88
2,303
81.1%

261,858
216,047
3,776
97
2,601
81.8%

260,073
215,058
3,802
170
2,678
81.9%

263,618
217,013
3,264
178
2,790
81.5%

269,875
222,373
4,589
332
2,862
81.8%

267,181
218,036
3,811
240
2,960
80.2%

274,976 *
212,043
2,279
156
2,776
75.7%

5,007
–1,180–1,613
26,105–2,6032,217–930
24,8867,371
7,686–2,37337,581

8,685
12,411–2,59556,095

5,142–12,761–2,75945,724

10,4609,339–7,43658,314

10,719–1,231–9,20758,5806,700–6,499–5,05553,74010,126–25,559–5,71232,566

11,835–15,725–6,43822,242

9,116
6,344–7,18230,477

3,018.24
20.84
20
96.0%

2,974.30–53.1320—

3,181.27
28.35
20
70.5%

3,426.03
229.8130
13.0%

3,638.40
178.2962
34.8%

3,654.78
185.9772
38.7%

3,844.92
160.2072
44.9%

3,909.09
139.61
94
67.3%

3,855.67
110.22
104
94.4%

3,739.30
86.13
104
120.7%

3,870.58
146.13
104
71.2%

14.8%
2.7%
5.0%
1.4%
0.9%
0.8%
32.56
0.29

12.5%
5.3%
13.1%
9.9%
7.0%
5.7%
7.75
0.52

13.4%
6.5%
11.1%
7.2%
5.0%
4.1%
13.14
0.64

14.5%
7.4%
10.0%
7.4%
5.1%
4.2%
12.09
0.62

14.5%
6.5%
8.0%
6.3%
4.3%
3.5%
14.73
0.61

14.0%
5.8%
7.9%
5.3%
3.6%
2.9%
20.61
0.74

12.6%
4.2%
5.8%
4.0%
2.8%
2.3%
20.48
0.59

12.6%
4.9%
6.6%
2.8%
2.3%
1.8%
25.55
0.59

13.8%
5.1%
6.5%
4.4%
3.8%
2.9%
16.16
0.61

Profit and loss
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Non-operating expenses
Ordinary profit
Extraordinary profit
Extraordinary loss
Profit before income taxes
Profit attributable to owners of parent
Financial position
Total assets
Net assets
Capital expenditures
R&D expenses
Depreciation and amortization
Equity ratio (%)

1*2

276,519
218,747
2,151
235
2,839
77.6%

Cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents
Per share information (yen)Net assets per share
Earnings per share
Dividend per share
Dividend payout ratio (%)
Principal indicators (%)
Gross profit margin
Operating margin
Ordinary margin
Net profit margin
Return on equity (ROE)
Return on assets (ROA)
Price earning ratio (PER) (times)
Price book-value ratio (PBR) (times)

12.7%
0.6%
2.3%
1.1%
0.7%
0.6%
50.77
0.35

13.2%
–0.1%
1.7%
–2.8%
–1.8%
–1.4%
—
0.29

OthersNumber of shares issued
Number of treasury shares
Year-end share price (yen)65,138,117
6,380,935
1,058

65,138,117
6,381,998
850

65,138,117
6,382,419
923

65,138,117
6,136,172
1,784

65,138,117
6,091,412
2,342

65,138,117
6,780,936
2,249

58,138,117
2,024,710
2,359

58,138,117
1,994,845
2,877

58,138,117
2,481,265
2,257

58,138,117
2,060,413
2,201

58,138,117
2,437,064
2,361

4,330

4,265

4,149

4,089

4,063

4,105

4,167

4,190

4,210

4,474

4,468

Non-financial information
Number of employees
1* In fiscal 2014, as we changed the method of recording construction costs, figures for fiscal 2013 profit, loss, and assets have been restated.
*2 In fiscal 2020, as we finalized the provisional accounting treatment of business combination, the figures for fiscal 2019 reflect this provisional treatment.

51

CHUDENKO Report 2021

CHUDENKO Report 2021

52

Corporate Information

Company profile

Name
Established
Capital

CHUDENKO CORPORATION

Chudenko Group

Shareholder information (As of March 31, 2021)

Consolidated Group companies

Total number of shares authorized to be issued ........................... 260,000,000

Name

Description of main businessTotal number of shares issued ..................................................................... 55,701,053

Sale of electric equipment andconstruction materials

Number of shareholders .............................................................................................. 8,997(Excluding 2,437,064 treasury shares)

September 29, 1944

Sanshin Electric Materials
Co., Ltd.

¥3,481,905,850

CHUKO KAIHATUCORPORATION

Insurance agency and leasing

Name

Number ofshares held

Shareholding
ratio (%)

Eapec Hiroshima Co., Ltd.

Design and integration of electricalwork, air conditioning piping work, etc.

The Chugoku Electric Power Company, Incorporated

21,892,259

39.30

ChudenkoTechno Co., Ltd.

Distribution line work

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

2,329,200

4.18

Chudenko Eletech Hiroshima /Shimane Co., Ltd.*1

Design and implementation ofelectrical work, etc.

Custody Bank of Japan, Ltd.

Chudenko Eletech Okayama /Tottori Co., Ltd.

Design and implementation ofelectrical work, etc.

Chudenko Eletech YamaguchiCo., Ltd.*2

Address of
Head Office6-12 Koamicho, Naka-ku,
Hiroshima 730-0855, Japan
Tel: +81-82-291-7411 (main line)

Number of
employees

Consolidated: 4,468
Non-consolidated: 3,366 (As of March 31, 2021)

Main
business
locationsSupervising Branches in Hiroshima, Okayama,
Yamaguchi, Shimane, and TottoriTokyo/Osaka Headquarters,
Electric Power Construction Office

History
1944

Stock information

Twelve electric construction companies merge toestablish Chugoku Electrical Work Co., Ltd. in
Komachi, Hiroshima City.

1950

Tokyo Office (now Tokyo Headquarters) is opened.

1970

The Company is listed on the Second Section of
the Tokyo Stock Exchange.

1972

The Company is designated for the First Sectionof the Tokyo Stock Exchange.

1980

The Company motto “Magokoro” is established.

1990

The company name is changed to CHUDENKOCORPORATION.

1996

The Head Office is relocated to Koamicho,
Naka-ku, Hiroshima City (the current location).

2001

The Corporate Philosophy is established.

2010

CHUDENKO (Malaysia) Sdn. Bhd. is establishedin Malaysia.

2016

Sugiyamakankousetsubi Co., Ltd. andHayamizudenki Co., Ltd. become part of Group.

2017

RYB Engineering Pte. Ltd. becomes part of Group.

2020

Showa Corporation becomes part of Group.

Major shareholders(Retirement Benefit Trust Account for Momiji Bank, Ltd.,re-entrusted by Sumitomo Mitsui Trust Bank, Limited)

1,673,900

3.00

Custody Bank of Japan, Ltd. (Trust Account)

1,526,500

2.74

Design and implementation ofelectrical work, etc.

The Chugoku Bank, Limited

1,398,619

2.51

The San-in Godo Bank, Ltd.

1,256,481

2.25

Sugiyamakankousetubi
Co., Ltd.

Design and implementation of air
conditioning piping work, etc.

Meiji Yasuda Life Insurance Company

1,129,465

2.02

Design and implementation ofelectrical work, etc.

The Hiroshima Bank, Ltd.

1,036,180

1.86

Hayamizudenki Co., Ltd.

Chudenko Employee Shareholding Association

1,036,179

1.86

The Yamaguchi Bank, Ltd.

1,000,279

1.79

Showa Corporation

Design, implementation, andsupervision of thermal insulation work
Manufacture and sale of insulated
pipe supporting hardware

CHUDENKO (Malaysia)
Sdn. Bhd.

Design and implementation ofelectrical work, etc.

Share price and trading volume

CHUDENKO ASIA Pte. Ltd.

Management of the RYB GroupRYB Engineering Pte. Ltd.

Design and implementation ofelectrical work, etc.

RYB Corporation Pte. Ltd.

Design and implementation ofelectrical work, etc.

*1 In July 2021, Hiroshima Eletech Co., Ltd.
absorbed Shimane Eletech Co., Ltd., and the name was changed.
*2 In April 2021, the name was changed from Yamaguchi Eletech Co., Ltd.

Individuals/
other14.10%

Treasury shares
4.19%

Foreigncorporations,
etc.
9.69%

Other corporations
42.72%

Shareownership

Financial
institutions,etc.
29.30%

Share price (closing) (yen)Trading volume
3,500,000

3,500

3,000,000

3,000

2,500,000

2,500

2,000,000

2,000

1,500,000

1,500

1,000,000

1,000

500,000

500

Non-consolidated Group companies
Name

Description of main businessBerryne Co., Ltd.

Agricultural business

Chudenko World Farm Co., Ltd.

Agricultural business

0

0
Apr.

Aug.

Dec.

Apr.

2018

Aug.

Dec.

2019

Apr.

Aug.

Dec.

2020

Apr.

July

2021

Inquiries

Chudenko Corporation

6-12 Koamicho, Naka-ku, Hiroshima 730-0855 Japan
Investor Relations, Corporate Planning Department, Planning Division
Tel: +81-82-233-9034
Fax: +81-82-234-8075

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54

https://www.chudenko.co.jp/en/