kyowa exeo corporation · major banks mizuho bank, ltd., sumitomo mitsui banking corporation, the...
TRANSCRIPT
CORPORATE REPORT
Cultivating Technological Capabilities,
Seeking Affluence and
Contributing to Society
Corporate Philosophy:
The corporate philosophy of the KYOWA EXEO Group, which is the basic guideline for our corporate social responsibility, includes cultivating technological capabilities, seeking affluence and contributing to society. The corporate philosophy clearly answers the question: “Why does the KYOWA EXEO Group exist?” The utmost ground for existence is the Group’s technological capabilities. Throughout its existence, the Group has aimed to be a corporate group that always anticipates and pursues better technologies at the forefront of leading-edge technologies. The technological capabilities cultivated through these efforts will help create more affluent living environments for people. The Group intends to be a valuable enterprise by contributing to society through activities in the pursuit of state-of-the-art technologies.
Friendly to Humans, Society and the Earth: Linking
“Communications” with the Latest Technology.
The KYOWA EXEO Group Continues to Create “Linkages”
in Society as a Social Service Company for Information and
Communications Technology (ICT).
Corporate Report 20121
Create
“Linkages”
in Society
2Corporate Report 2012
Fixed line of communications (access) Metal
Mobile communication network (mobile)
Fixed communication network (network) Analog Digital
H
is t o r y
May 1954Company established as Kyowa Densetsu Kaisha, Ltd.
Feb. 1963Listed on the Second Section of the Tokyo Stock Exchange
Feb. 1972Listed on the First Section of the Tokyo Stock Exchange
Apr. 1990Entered the food plant wastewater treatment business and river purification business
May 1991Changed company name to KYOWA EXEO CORPORATION
Mobile phone base station
Feb. 1983Started optical fiber work throughout Japan
Mar. 1993Started the PDC (MOVA) service
Dec. 1963Implemented the shield tunneling method for service tunnel (communications tunnel) work (Shirogane)
Feb. 1963Started overseas work (Honduras)
Jul. 1956Started Japan’s first telex work (Osaka Central Telegraph Office)
Milestones of the KYOWA EXEO GroupSince its foundation in May 1954 as Kyowa Densetsu Kaisha, Ltd.,
KYOWA EXEO has continued to create “Linkages” in society.
1954 1960 1970 1980 1990
May 2010 Made Ikeno Tsuken Co., Ltd., a consolidated subsidiary
Aug. 2011 WAKO ENGINEERING CORP., Daiwa Densetsu Corporation and Ikeno Tsuken Co., Ltd., were converted into wholly owned subsidiaries
Nov. 2011 ICOMSYSTECH Co., Ltd., was converted into a wholly owned subsidiary
May 1954 Company established as Kyowa Densetsu Kaisha, Ltd.
Jul. 1954 Qualified to participate in telecommunications facility tenders for Nippon Telegraph and Telephone (now NTT)
Feb. 1963 Listed on the Second Section of the Tokyo Stock Exchange
Sep. 1963 Began engaging in telecommunications and electric power construction outside that for NTT
Feb. 1972 Listed on the First Section of the Tokyo Stock Exchange
Apr. 1982 Branched out into the software business
Jun. 1986 Entered the environment business
May 1991 Changed company name to KYOWA EXEO CORPORATION
Mar. 1999 Relocated head office to current address in Shibuya-ku, Tokyo
Apr. 2004 Acquired Daiwa Densetsu Corp.
May 2004 Acquired WAKO ENGINEERING CORP.
Apr. 2005 Acquired KANAC Corp.
Sep. 2009 KANAC Corp. was converted into a wholly owned subsidiary
Corporate History
Year ended September 1988: Achieved annual net sales of
¥100 billion
Year ended September 1974:Achieved annual net sales of
¥50 billion
Jun. 1986Entered the environment business: Sales activity started mainly in the water treatment field
Apr. 1982Branched out into the software business
Aug. 1988Acquired a construction technology evaluation statement from the Minister of Construction for the development of a rainfall storage penetration system
Apr. 1983Developed a detailed telephone charges statement system
Corporate Report 20123
Optical fiber
2nd generation 3rd generation 3.5th generation 3.9th generation
IP NGN
Feb. 1999Acquired ISO9001 certification (Head Office, etc.)
May 2000Acquired ISO14001 certification
Apr. 2001Merged with Showa Technos Corp.
Nov. 2001Instituted a compliance program
Sep. 2003Acquired OHSAS18001 certification
Apr. 2001Developed the Administrative Organ Accounting System
Apr. 2000Started the dioxin-countermeasure-compliant incinerator business
Jun. 2001Completed a livestock waste discharge and purification facility; Full-fledged entry into the livestock excreta disposal business
Jan. 2002Made progress on work for the B FLET’S high-speed communication broadband
Oct. 2001Started full-fledged IMT (FOMA) service
Oct. 2001Entered the Type 2 telecommunications carriers registry data center business; Developed the i-mode-compliant “Work Management System”
Apr. 2004Acquired Daiwa Densetsu Corp.
May 2004Acquired WAKO ENGINEERING CORP.
May 2004Celebrated the 50th anniversary of foundation
Apr. 2005Acquired KANAC Corp.
Jun. 2003Sold an Internet video conference system
May 2003Completed the first bio plant (Iwate Prefecture)
Apr. 2005Aggressively marketed the thermite-style dual-side ash fusion furnace
Apr. 2003Started analog-analog antenna exchange work compliant with ground digital broadcasting
Mar. 2004Telephone communications via the FOMA format became available at all subway stations in all 23 wards in Tokyo
Sep. 2006Started work for the next-generation network (NGN)
Jun. 2005Won a gold medal at the 38th World Skills Competitions in Helsinki, Finland
Oct. 2009Won a gold medal at the 40th World Skills Competitions in Calgary, Canada Feb. 2011
Received the IBM Excellent Partner Award Japan 2010
Jun. 2011Authorized as a Core Business Partner of NTT DATA CORPORATION
Mar. 2011Started Great East Japan Earthquake recovery work
Oct. 2011Won a gold medal at the 41st World Skills Competitions in London
Nov. 2011ICOMSYSTECH Co., Ltd., was converted into a wholly owned subsidiary
May 2010Made Ikeno Tsuken Co., Ltd., a consolidated subsidiary
Aug. 2011WAKO ENGINEERING CORP., Daiwa Densetsu Corporation and Ikeno Tsuken Co., Ltd., were converted into wholly owned subsidiaries
Jul. 2009Entered into a system engineering service agreement with Tokyo Stock Exchange
Mar. 2006Started sales of a wood biomass boiler system
Aug. 2006Started long-term comprehensive business consignment services at general waste treatment sites (Tochigi Prefecture)
Oct. 2010First general waste incinerator completed (Aomori Prefecture)
Oct. 2006Increased works related to mobile phone number portability
Mar. 2009Started operation of EDI-SO, or Electronic Data Interchange—Service Order Process Management System
Mar. 2010Expanded the regional intranet establishment business
Dec. 2010Started the LTE (Xi) service
Jan. 2006Acquired the ISMS certification
Nov. 2007Won a gold medal at the 39th World Skills Competitions in Shizuoka, Japan
Mar. 1999Relocated head office from Akasaka to current address in Shibuya-ku, Tokyo, as the construction of the company building was completed
Apr. 1999Developed the Social Insurance System
Apr. 1999Deployed system-coordinating solutions
Oct. 1996Started Japan’s pioneering Internet-compliant OCN establishment work (Chiyoda-ku)
Jan. 1997Acquired ISO9001 certification (Overseas Division)
Jun. 1994Acquired a construction technology evaluation statement from the Minister of Construction for the development of a high-efficiency river purification system
Jul. 1995Started Japan’s pioneering work for C·C·Box on national route No. 1
Apr. 1994Developed the Air Traffic Control System
Mobile phone base station
Since its foundation in May 1954 as Kyowa Densetsu Kaisha, Ltd.,
KYOWA EXEO has continued to create “Linkages” in society.
2000 20122010
Year ended March 1997: Achieved annual net sales of
¥200 billion
Year ended March 2006: Achieved annual net sales of
¥300 billion
Jun. 2002Acquired the ash fusion business from Niigata Engineering Co., Ltd.
Mar. 2004Entered in the KDDI au base station construction business
Apr. 2004Started to reestablish the railway communication network along with the quadruple track extension of private railway lines in Tokyo
Feb. 2005Started the KDDI Metal Plus service
Sep. 2009KANAC Corp. was converted into a wholly owned subsidiary
Feb. 2009Started the UQ WiMAX service
Apr. 2011Started next-generation PHS work
Apr. 2012Upon receiving a permit for a 900-MHz zone, started the Platinum Band Project
Co
mm
unications Infrastructure
Environmental/Social InfrastructureS
ystem S
olutio
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usiness To
pics
4Corporate Report 2012
Corporate Data
Company Name KYOWA EXEO CORPORATION
Established May 17, 1954
Paid-in Capital ¥6,888 million (as of April 1, 2012)
Stock Listing First Section of the Tokyo Stock Exchange
Representatives Kunio Ishikawa, PresidentFuminori Kozono, Vice President
Net Sales ¥273.1 billion (consolidated)¥200.0 billion (non-consolidated) (as of March 31, 2012)
Number of Employees
7,872 (consolidated)3,543 (non-consolidated) (as of March 31, 2012)
Head Office 29-20, Shibuya 3-chome, Shibuya-ku, TokyoTEL: +81-3-5778-1111 (switchboard)URL: http://www.exeo.co.jp
West Japan Head Office
6-13, Kyomachibori 3-chome, Nishi-ku, OsakaTEL: +81-6-6459-1581
Number of Business Offices
Branch offices: 14Sales offices: 14
Major Banks Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Independent Auditor
Kudan Audit Corporation
To help you better understand the corporate activities of the KYOWA EXEO Group, we are providing an integrated-version issue of the Annual Report and the CSR Report.
Corporate Report 20125
The KYOWA EXEO Group contributes to creating an earth-friendly society through its environment business.
The KYOWA EXEO Group contributes to creating a comfortable society by taking advantage of its state-of-the-art technologies.
1 From Restoration to Revival and to RevitalizationUtilize the capabilities of the KYOWA EXEO Group for the future of afflicted areas. � 19
2 Initiatives toward CreatingA Symbiotic Environmental Society �������� 21
3 Preparing for the Smartphone EraCreating a connected society ���������� 23
4 Cultivating EmployeesThat can think onsite ������������ 25
CSR Concept ��������������� 27
Management Systems
Corporate Governance ����������� 29
Compliance ��������������� 30
Risk Management ������������� 31
Involvement in the Environment
Environmental Management �������� 33
Financial Section ������������� 37
Board of Directors ������������� 52
Stock Information ������������� 53
Editorial Policy �������������� 54
Business Overview ������������� 7
Consolidated Financial Highlights ������ 11
Message from the President �������� 13
Interview with the President ��������� 15
Social Contribution through Business ActivitiesFeatures
The KYOWA EXEO Group focuses its efforts on “cultivating human resources” who can contribute to society.
One year has passed since the Great East Japan Earthquake. The KYOWA EXEO Group continues moving ahead from reconstruction to revitalization hand-in-hand with the people in the devastated areas.
C o n t e n t s
6Corporate Report 2012
Internet
ENGINEERING SOLUTIONS
Telecommunications Infrastructure
Overview by Segment
As broadband services are expanding toward the building of a safe and secure ICT
society, the diversification and sophistication of various technologies are under way. We
provide consistent quality services from planning and design to construction, operation
and maintenance for all types of communications equipment and facilities throughout
the country based on performance over the years and excellent technologies.
NTT Group EngineeringBuilding Telecommunications Facilities for NTT Group Companies
Access engineering: We lay optical fiber cable networks, which are indispensable for high-speed communication networking, and provide broadband services such as the Internet to corporations and ordinary homes. Network engineering: We build next-generation networks (NGNs) using leading-edge routers and servers. We also design, construct and maintain switchers, transmission equipment and power equipment of legacy facilities, all of which support today’s communications networks. Mobile engineering: We provide installations, negotiations and investigations for wireless phone base stations, mobile communications facilities and quality surveys toward the realization of comfortable mobile communications environments.
Non-NTT Telecom EngineeringEstablishing various telecommunications facilities for customers other than the NTT Group companies, as well as providing network integration services
Telecommunications facilities: We construct telecommunications facilities for new common carriers (NCCs) such as the KDDI Group and the Softbank Group, municipalities, cable television companies, railway companies and other customers. Network integration: We provide various services including constructing LANs and WANs for corporations and ordinary homes, improvement of server/Internet environments and security.
Home Communications cables Ground digital broadcasting CATV
Communications tunnels (underground conduits, service tunnels) Underground installation of electricity cables Wireless base station Railway communications
Home networking
Switching, transmission and power equipment
Mobile communications
Antennas and base stations for mobile
terminals
The KYOWA EXEO Group works to contribute to the realization of an affluent society and perform its corporate
social responsibility by providing high-value-added ENGINEERING SOLUTIONS and SYSTEM SOLUTIONS.
Linking all Communications.
We Contribute to Creating an Affluent Society with Two Types of Solutions.
Business Overview
Corporate Report 20127
Internet
We develop the electrical and engineering technologies that we have accumulated in building telecommunications infrastructure facilities to improve the social infrastructure including electrical and air-conditioning equipment, new energy facilities, urban civil engineering structures and environmental plants.
To help customers solve their management issues, we provide system solution services tailored to a variety of customer needs, which encompass everything from consulting to development, construction, maintenance and operation, by drawing on the latest technologies such as service-oriented architecture (SOA) and our powerful solutions.
Electrical and air-conditioning equipment: We install electrical and air-conditioning equipment for facilities such as office buildings, data centers and factories.
New energy: We construct solar and wood biomass power generation facilities.
SOA: We provide BPM and SOA solutions to swiftly cope with changes in the business environment such as the integration of data and processes by linking disparate systems within and/or among companies. Billing: We provide billing solutions such as customer-specific billing systems to flexibly adapt to market changes and/or business expansion.
Urban civil engineering: We install underground installation of electricity cables for the purpose of disaster prevention, safety and landscaping countermeasures.
Environmental plants: We construct waste treatment and water treatment facilities.
Communications systems/Public and common interest-related systems: We develop communication software products for telecommunications carriers, and we handle orders from large system integrators through government agencies for financial systems. Application development: We develop WEB applications based on technologies amassed internally, as well as Android-related applications.
Office buildingsFactories and other
facilities Wireless LANs Information security Seismic isolation solutions Digital signage
Water supply and sewage systems
Microwave transmissions
Environmental and Social Infrastructure:
SYSTEM SOLUTIONS
Software developmentLAN/WAN/IP network
establishment
Electrical/air-conditioning equipment and solar
power generation facilities
Environmental preservation facilities (water treatment, waste treatment and new
energy facilities)
Linking all Communications.
We Contribute to Creating an Affluent Society with Two Types of Solutions.
Create “Linkages” in Society
Business O
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8Corporate Report 2012
Drawing on the Group’s strengths of “Total Process,” “Total Engineering” and “Nationwide Expansion,”
we continue to provide high-quality services to meet diversifying customer needs through the concerted
Group-wide power.
We respond to customers’ needs with one-stop services from planning and development to construction, operation and maintenance, which are sustained by high engineering and technological capabilities.
We meet diversified customers’ needs by fully drawing on the latest technologies in a wide variety of fields such as telecommunications, civil engineering, electricity, network integration (NI) and system integration (SI).
Total Engineering Nationwide Expansion
Total Process
We are prepared to meet every kind of customer need, which can be covered by our operating bases and Group companies located throughout the nation.
Nationwide operation, multiple carrier compliant and migration-compliant
Optical access network
Next-generation network (NGN)
Mobile (Speeding up) 2G 3G LTE
Underground installation of electricity cables
NI solutions and SI solutions
New energy (solar light, etc.) eco business
Electric and air-conditioning equipment
Home ICT and Smart Houses
Total Process (through-process construction)
Planning and development Construction Operation and maintenance
Strength of the KYOWA EXEO Group
Group of Professionals Who
Are Acquainted with Every Kind of
Technology
From Planning to Maintenance
Support Nationwide
Total engineering (Unified construction)
EN
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Business Overview
Corporate Report 20129
KYOWA EXEO CORPORATION
35 Other Consolidated Subsidiaries
WAKO ENGINEERING CORP. Daiwa Densetsu Corporation Ikeno Tsuken Co., Ltd.
Three Major Consol idated Subsidiar ies
Group Structure
Business Bases
Bases of Three Major Consolidated Subsidiaries
WAKO ENGINEERING CORP.:1-23, Heiwajima 4-chome, Ota-ku, Tokyo
Daiwa Densetsu Corporation:5-1, Omachi 2-chome, Aoba-ku, Sendai-shi, Miyagi
Ikeno Tsuken Co., Ltd.:9-4, Kishimachi 1-chome, Kita-ku, Tokyo
Access engineering
Shinyei Tsushin Co., Ltd., Suncrex Corporation, FUJI DENSETSU CO., LTD., Ecos Hokuei Corporation, Sankyo-Techno Co., Ltd., Umex Chugoku Corporation, KANAC Corporation, K. Technos Co., Ltd., WAKO CTEC Co., Ltd., WAKO Itech Co., Ltd., Technos Co., Ltd., Sigmax Co., Ltd., Vertec Co., Ltd., EUNice Co., Ltd.
Civil engineering Exeo Infra Corporation, Infratechno Corporation
NetworksKyowa Synax Corporation, DAITOH INDUSTRY CO., LTD., Shinkyo Engineering Co., Ltd., Sanko Denwa Kogyo Co., Ltd., Multimedia Engineering Co., Ltd.
Mobile tele-communica-tions
Exeo Sanko Corporation, E Net Corporation, Toho Communications Co., Ltd., Yuaituken Corporation, Kyoei Densetsu Kogyo Corporation, Denseisya Corporation
IT ACCRESCO CO., LTD., ICOMSYSTECH CO., Ltd.
OtherKYOWA SECURITY SYSTEM CORPORATION, Kyokuyoh Corporation, Shinwa Seisakusyo Corporation, Exeo Butsuryuu Service Corporation, Exeo Business Corporation, ASAHI DENWA KOGYO CORPORATION
Thailand56/8 Moo 1 Soi Chaengwattana 14 Chaengwattana Road, Thungsonghong, Laksi, Bangkok 10210, THAILAND
Philippines 9/F Floor, DPC Place Building 2322 Chino Roces Ave. 1231 Makati City, Philippines
Overseas Bases
Domestic bases:
Hokkaido Branch: 2-20, Minami 21-jo Nishi 7-chome, Chuo-ku, Sapporo-shi, Hokkaido Iwate Office: 5-7, Honcho-dori 2-chome, Morioka-shi, Iwate
Tohoku Branch: 5-1, Omachi 2-chome, Aoba-ku, Sendai-shi, Miyagi Yamagata Office: 9-10, Minami Yonban-cho, Yamagata-shi, Yamagata
Kita-Kanto Branch: 1486 Kasahara-cho, Mito-shi, Ibaraki Niigata Office: Cosmo Shinano, 4-27 Shinano-machi, Chuo-ku, Niigata-shi, Niigata
Koshin Branch: 602-2, Ochiai-cho, Kofu-shi, Yamanashi Nagano Office: Nagano Central Building, 12-1, Minami Chitose 2-chome, Nagano-shi, Nagano
Minami Kanto Branch: 12-1 Kanagawahoncho, Kanagawa-ku, Yokohama-shi, Kanagawa Chiba Office: Chiba West Building, 24-9 Shinmachi, Chuo-ku, Chiba-shi, Chiba
Tokai Branch: Nishiki SIS Bldg., 10-33, Nishiki 3-chome, Naka-ku, Nagoya-shi, Aichi Kanto Naka Office: NTT Shirahata, 1-23, Shirahata 5-chome, Minami-ku, Saitama-shi, Saitama
Kansai Branch: 6-13, Kyomachibori 3-chome, Nishi-ku, Osaka-shi, Osaka Matsuyama Office: Sumitomo Seimei Matsuyama Ichibancho Building, 15-2, Ichibancho 1-chome, Matsuyama-shi, EhimeMiyako Branch: 539-20, Omiya Nishiiru Monzen-cho, Oike-dori, Chukyo-ku, Kyoto-shi, Kyoto
Hyogo Branch: 1-13, Ekiminami-dori 2-chome, Hyogo-ku, Kobe-shi, Hyogo Okayama Office: 498-1, Niwase, Kita-ku, Okayama-shi, Okayama
Hokuriku Branch: Kanazawa Fit Building, 53-1 Futakuchi-machi-Ni, Kanazawa-shi, Ishikawa Yamaguchi Office: 19-2, Ekiminami-machi, Hofu-shi, Yamaguchi
Shikoku Branch: 136, Mitani-cho, Takamatsu-shi, Kagawa Kumamoto Office: 27-23, Egoe 1-chome, Minami-ku, Kumamoto-shi, Kumamoto
Chugoku Branch: 7-11, Ogawachi-machi 2-chome, Nishi-ku, Hiroshima-shi, Hiroshima Kitakyushu Office: 1320-13, Aza Otsuka, Oaza Maeda, Yahatahigashi-ku, Kitakyushu-shi, Fukuoka
Kyushu Branch: 7-8, Tamagawa-machi, Minami-ku, Fukuoka-shi, Fukuoka Nagasaki Office: NTT WEST Higashi Nagasaki Building, 823 Tanaka-machi, Nagasaki-shi, Nagasaki
Okinawa Branch: 30-52, Oroku 1-chome, Naha-shi, Okinawa Oita Off ice: NTT Harashin Building, 5-1, Harushinmachi, Oita-shi, Oita
Minami-Kyushu Office: 6, Kasuga-cho 4-chome, Kagoshima-shi, Kagoshima
( Branches/ Offices)
Head Office: 29-20, Shibuya 3-chome, Shibuya-ku, TokyoNishi-Nippon Head Office: 6-13, Kyomachibori 3-chome, Nishi-ku, Osaka-shi, Osaka
(As of September 1, 2012)
(As of July 1, 2012)
Create “Linkages” in Society
Business O
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10Corporate Report 2012
(Billions of yen)
2009 2010 2011
Operating results (Fiscal year):
Orders received 276.2 273.7 288.5
Net sales 271.2 282.2 273.1
Operating income 13.8 12.3 8.9
Income before income taxes 13.6 13.4 12.0
Net income 8.3 7.7 7.8
Financial position (at year-end)
Total assets 180.1 196.9 181.2
Property and equipment 45.2 48.4 47.7
Noncurrent liabilities 25.3 9.6 13.9
Net assets 105.3 112.2 113.4
Cash flows (Fiscal year)
Net cash provided by (used in) operating activities 10.9 0.6 16.4
Net cash provided by (used in) investing activities 10.6 1.5 4.5
Net cash provided by (used in) financing activities 4.0 3.6 17.5
(¥)
Per share of common stock:
Net income (EPS) 79.7 75.5 74.9
Diluted net income 73.8 69.7 74.8
Cash dividend 20.0 20.0 20.0
(%)
Financial indicators:
Operating income margin 5.1 4.4 3.3
ROE (Note 2) 8.6 7.6 7.2
ROA (Note 3) 4.7 4.1 4.2
Equity ratio 55.4 53.9 62.4
Notes: 1. Amounts less than ¥100 million were truncated.2. ROE = Net income ÷ Total shareholders’ equity (yearly average)3. ROA = Net income ÷ Total assets (yearly average)
271.2 273.1282.2
2009 2010 2011
Net sales (¥Billion)
13.8
12.3
8.9
5.14.4
3.3
2009 2010 2011
Operating income (¥Billion)
Operating income margin (%)
Operating income Operating income margin
276.2 273.7288.5
2009 2010 2011
Orders received (¥Billion) Net Sales by Segment
Business Results for Fiscal 2009 through Fiscal 2011
SYSTEM SOLUTIONS¥13.1 billion(4.8%)
Telecommunications Infrastructure (NTT Group)¥166.1 billion(60.8%)
Telecommunications Infrastructure (Multi-carriers)¥67.4 billion(24.7%)
Environmental and Social Infrastructure¥26.3 billion(9.7%)
¥273.1billion
Note: Amounts less than ¥100 million are truncated.
Consolidated Financial Highlights
Corporate Report 201211
Based on our medium-term vision (fiscal 2010–2012), we will promote aggressive business
expansion and thoroughly enhance efficiency, aiming to increase revenues and income.
Expand businesses and achieve new growth as an ICT solutions and services enterprise.
Medium-term
vision2010–2012
Strive to achieve a V-shaped recovery and upward momentum
Thoroughly enhance efficiency and promote expansion of non-NTT businesses
(Billions of yen)
2011 2012Actual results Plan Comparison with 2011
Orders received 288.5 283.0 98%Net sales 273.1 286.0 105%Gross profit on sales 26.8 (9.8%) 30.7 (10.7%) 115%Selling, general and administrative expenses 17.8 (6.5%) 19.1 (6.7%) 107%Operating income 8.9 (3.3%) 11.6 (4.1%) 130%Ordinary income 9.1 (3.4%) 12.3 (4.3%) 134%Net income 7.8 (2.9%) 7.5 (2.6%) 95%
Notes:1. Amounts less than ¥100 million are truncated. 2. Parentheses include the ratio relative to net sales.
Thoroughly enhance efficiency
Expand Non-NTT businesses
Enhance efficiency and quality of construction
Integrate and share operational bases and resources
Improve productivity of the Group
Adopt multi-carriers (NCC, etc.)
Expand environmental and social infrastructure (solar energy, etc.)
Expand system solutions
(synergies with Icom Systech Co., Ltd., etc.)
Promote M&A
Numerical targets Fiscal 2012 plan (consolidated)
Basic Policy for Fiscal 2012
1
2
Notes:1. Amounts less than ¥100 million are truncated. 2. Parentheses include the ratios of non-NTT businesses.
2010 2011
273.1
2008 2009
271.2
Net sales( Non-NTT/ NTT) (¥Billion) Operating income margin (%)
2012 (plan)
(42%) (39%)(35%)
(38%)
4.4
5.1
6.6
3.3
4.1
288.0 286.0282.2
(47%)(47%)(39%)
Business Plan for Fiscal 2012
Create “Linkages” in Society
Consolidated Financial Highlights
12Corporate Report 2012
Message from the President
Corporate Report 201213
The KYOWA EXEO Group, since its establishment in 1954, has promoted business activities drawing on its core competence in professional technologies for establishing information communications facilities and equipment. We have offered consistent integrated services nationwide from planning, design, construction and management to maintenance for all facilities related to the information communications infrastructure.
As for our recent business results, we have established not only an information communications infrastructure but also an environmental and social infrastructure harnessing our long-nurtured environmental, civil engineering and electrical facility technologies. We also have developed many sophisticated software products. By offering various high-value-added solutions through these activities, the KYOWA EXEO Group has been contributing to
society as a corporation creating an affluent living environment.
The Kyowa of the KYOWA EXEO Group refers to cooperation, harmony and the bonds between persons and the Latin exeo, meaning “stand out” or “get out of something,” thereby conveying our commitment to breaking the mold and venturing out into new challenges.
Under the corporate vision of expanding businesses as an information communications technology (ICT) solutions and services enterprise and achieving new growth, we will strive to capitalize on business opportunities, aiming for continual growth, with an emphasis on bonds and ties among people and the spirit of pursuing innovation and tackling challenges.
We will contribute to the creation of
an affluent living environment through
continuous growth.
Kunio IshikawaPresident KYOWA EXEO CORPORATION
Message from
the President
14Corporate Report 2012
We will expand new businesses and promote the rationalization of management, aiming to achieve a V-shaped recovery.
Under the basic policy “Expand businesses and achieve new growth as an ICT solutions and services enterprise,” the KYOWA EXEO Group launched its medium-term management plan in fiscal 2010. In fiscal 2011, the second year of the plan, orders received progressed steadily due to our aggressive sales activities to ¥288.5 billion (up 5% from the previous fiscal year), whereas net sales decreased 3% to ¥273.1 billion and operating income declined 28% to ¥8.9 billion due to the impact of the Great East Japan Earthquake, a temporary rise in unprofitable construction and initial expenses for reinforcing a structure to expand new fields.
We had steady results that can lead to growth for
the next fiscal year. For the restoration work of our telecommunications infrastructure suspended by the Great East Japan Earthquake, KYOWA EXEO CORPORATION (the “Company”) sent as many as 15,000 persons a day to the Tohoku region for the two months immediately after the occurrence of the earthquake. Our employees have been highly motivated to help with the restoration. It was confirmed that all our employees have a sense of mission as part of a corporation engaging in the telecommunications construction industry, for which we felt proud of them. Especially when our employees executed the high power antenna installation construction work at the 40-meter-high base station in order to secure communications for workers at the Fukushima Daiichi nuclear power plant despite lingering anxiety about radiation contamination and strong aftershocks, our customers expressed much appreciation, which we believe has contributed to further strengthening people’s trust in the Company.
For the expansion of new businesses as well, the Company posted steady business results. Although the
Please explain the business performance and results of the KYOWA EXEO Group (the “Group”) for fiscal 2011.
Although net sales and operating income decreased, we had steady business results that will lead to growth for the next fiscal year.
A
Q
2011 2012(Plan)
2010
273.7288.5 283.0
2011 2012(Plan)
2010
282.3273.1
286.0
2011 2012(Plan)
2010
12.4
8.9
11.6
Net sales (¥billion) Operating income (¥billion)Orders received (¥billion)
Antenna installation construction
Interview with the President
Corporate Report 201215
Company’s dependence on NTT is an advantage, there is a risk of an uneven revenue structure. With a goal of expanding non-NTT businesses as a medium-term goal of the KYOWA EXEO Group, in fiscal 2011, we expanded orders received in NCC businesses 1.7 times above the previous fiscal year. Also, the environmental and social infrastructure businesses including that for mega solar energy expanded steadily.
In addition, we aggressively promoted M&A. In the engineering solution field, the Company made its three major subsidiaries—WAKO ENGINEERING CORP., Daiwa Densetsu Corporation and Ikeno Tsuken Co., Ltd.—wholly owned subsidiaries. Furthermore, toward expansion of the system solution business, the Company made Icom Systech Co., Ltd., a software house, its wholly owned subsidiary. These measures helped reinforce the Group structure, which was a significant benefit.
Reflecting on the business results of the current fiscal year, we would like to utilize these results for our growth in the next fiscal year.
For fiscal 2012, we forecast that orders received will decrease 2% year over year to ¥283.0 billion but that net sales will increase 5% to ¥286.0 billion and operating income will advance 30% to ¥11.6 billion. With regard to orders received, we predict a decrease in construction work for restoration from the earthquake, which will, however, be offset to the level of the previous fiscal year by the expansion of non-NTT businesses.
As to net sales and operating income, we intend to achieve increases in revenues by increasing construction work including orders from the previous fiscal year and eliminating unprofitable construction work, which was
concentrated in the previous fiscal year, and through thorough efforts to enhance managerial efficiency.
Although the external environment shows a decreasing trend of NTT’s capital investment in fixed communications facilities, we predict a medium- to long-term increase in demand for mobile communications. Specifically, there will be larger demand for traffic control measures associated with the dissemination of smart phones, the expansion of LTE and other high-speed mobile communications services, the reorganization of platinum band and other frequency bands and Wi-Fi or other such data offloading.
We also predict that our business opportunities will expand to such fields as ICT, new energy, disaster prevention, damage alleviation and restoration demand.
In fiscal 2012, with a strong commitment to achieving a V-shaped recovery of business results and recovering growth momentum, we will focus on the expansion of non-NTT businesses and thorough improvement of the efficiency of Group management, thereby making a structure that can generate profits.
The KYOWA EXEO Group regards profit distribution to shareholders as an important managerial issue and holds a basic policy of stable and continuous profit distribution to shareholders based on a sound financial foundation. We plan to pay ¥20 per share in fiscal 2012, the same as in fiscal 2011. About the purchase of treasury stock, we set a limit of 2 million shares of treasury stock for fiscal 2012 in addition to 3.5 million shares for fiscal 2011. The dividend payout ratio for fiscal 2012 will be approximately 50%, which should be a satisfactory standard for shareholders. We will implement appropriate profit distribution to shareholders while aggressively investing in growth fields and M&A.
Please explain your forecast of the Group’s business results for fiscal 2012.
We will increase revenues and income and strive to achieve a V-shaped recovery.A
Q Please explain your policies regarding profit distribution to shareholders.
We aim for stable and continuous profit distribution to shareholders based on a sound financial foundation.
A
Q
Dividend per Share Purchase of Treasury Stock
2012(Plan)
2011201020092007 20082006
Dividend Dividend Payout Ratio
¥18
17.9%
¥20
20.3%
¥20
22.6%
¥20
25.1%
¥20
26.5%
¥20
27.8%
¥20
26.7%
2012(Plan)
2011201020092007 20082006
Number of Shares Purchased Treasury Stock Holding Ratio
6.7%
9.9% 10.0% 10.2% 10.2%
11.7%
10.0%
Purchased 4 million shares
Purchased 2.97 million shares
Purchased 3.50 million shares
Set the limit of 2 million shares
to purchase
Interview w
ith the President
16Corporate Report 2012
0% 20% 40% 60% 80% 100%
Other companies'
average
2008
2009
2010
2011
9%
12%
15%
28%
22%
51%
55%
58%
47%
54%
30%
25%
19%
20%
8%
3%
2%
6%
4%
32%
Very satis�ed Satis�ed Not satis�ed Dissatis�edAre you satisfied with your current work and work environment?
We will strengthen solidarity among employees and fulfill our social responsibility through our business activities.
A corporation has a mission to convert its corporate
philosophy into tangible forms. The KYOWA EXEO Group’s
corporate philosophy consists of “Nurturing technological
expertise,” “seeking affluence” and “contributing to society.”
We would like to fulfill our social responsibility by converting
the Group’s philosophy into tangible forms through our
business activities.
The KYOWA EXEO Group is not a telecommunications
service operator or a manufacturer or a retailer of products.
We are a solutions and services provider that addresses
clients’ requests fully utilizing each employee’s technological
expertise. Our business activities for almost 90,000 projects
and construction works are the fruit of the concentration of
the know-how and technologies of our employees and the
organization.
The KYOWA EXEO Group has been striving to nurture
human resources because developing employees’
technological expertise links to the “fruit,” that is, the higher
quality and safety of projects and construction works,
thereby contributing to society. Also, the importance
of each employee’s own pursuit of affluence shouldn’t
be forgotten. If the working environment is not good or
employees are not motivated, their morale will decline
and it will be hard to obtain good results. The Company
Please explain the Group’s CSR concept and specific measures for that.
By converting the Group’s philosophy into tangible forms, we will fulfill our social responsibility.
A
Q
Employee Satisfaction Survey
*Other companies’ average: Diamond Weekly (May 17, 2008, edition),
Questionnaire __ 1,000 full-time workers nationwide (answered by 700 men and 300 women)
Interview with the President
Corporate Report 201217
conducts employee satisfaction surveys on a continuous
basis. The satisfaction ratio of 67% in 2008 improved to
76% three years later. By deepening the linkage between
the Company and its employees and further improving our
employee welfare benefit plans, we would like to make a
work environment where each employee can maintain high
work ethics and feel rewarded. Such a work environment
will lead to the affluent lifestyles of employees and their
families, which, I think, has been and will be reflected in the
employee satisfaction surveys. Given our efforts to make the
Company’s foundation one where employees can work with
satisfaction, the quality of our solutions and services will
improve, through which we will contribute to the continuous
growth of society.
The “Connection Culture” that I ordinarily mention is an
attempt to recover the spirit of KYOWA’s inception—
“Cooperate and unite.” While working at the KYOWA EXEO
Group, it is important to create a corporate culture of trying
to know about the other person and his/her situation. By
nurturing a spirit that does not hesitate to sacrifice “Me”
for “We,” thereby maintaining a good balance between
competition and harmony; a solid trust relationship among
employees to the extent that the sense of camaraderie is
called “too strong”; and an atmosphere that fosters sincere
appreciation of coworkers’ success, we think we can
achieve a strong corporation. By disseminating such a spirit
throughout the Group, individuals, organizations and Group
companies will cooperate and new businesses and value are
created.
Although we don’t know how much “Connection Culture”
has been contributing to business results, the creation of
connections, I think, will result in a positive cycle: “Can enjoy
working for the Company Become passionate toward
work Good business results Appreciated by customers
Feel rewarded and work becomes more enjoyable.”
Employees being highly motivated and satisfied are important
for a corporation.
By employees uniting and working together through
“Connection Culture,” we would like to fulfill our social
responsibility through our business activities.
Please explain about the “Connection Culture” that President Ishikawa advocates.
We think new value will be created by knowing each other and through mutual cooperation.
A
Q
Positive cycle created by nurturing “Connection Culture”
Can enjoy working for the Company
Good business results (Contribute to society)
Become passionate toward work
(Motivation for work goes up)
Appreciated by customers
Interview w
ith the President
18Corporate Report 2012
On March 11, 2011, as short as 10 minutes after the occurrence of the Great East Japan Earthquake, the Company launched a disaster countermeasure headquarters headed by the President as the General Manager. We hurried and confirmed the safety of our employees and tried to determine the amount of damage to the company building, while striving to grasp the damage to the telecommunications infrastructure. We quickly launched emergency restoration measures such as opening emergency telecommunications lines and the recovery of power sources at wireless base stations. From immediately after the disaster, not only our employees in charge of the Tohoku region but also those in charge of other regions were sent to disaster sites and worked on emergency
recovery construction work. By May 15, 2011, two months after the disaster, a total of 15,000 persons a day were working at the afflicted sites. Employees who did not go to the actual sites engaged in the procurement of materials and equipment, fuels and food supply. The Group companies nationwide and their employees worked hard as one to support restoration from the disaster.
In June 2011, when the emergency restoration measures were completed, to move on toward revitalization from restoration/recovery, we installed the Tohoku Area Disaster Restoration Promotion Office headed by the President to promote reinforcement of the telecommunications infrastructure, which has been operated to date.
Installed Tohoku Area Disaster Restoration Promotion OfficeEstablished an in-house structure toward full-scale restoration and recovery
Utilize the capabilities of the KYOWA EXEO Group for the future of afflicted areas.
From Restoration to Revival and to Revitalization
Board of Directors
President
Vice President
Organization chart of KYOWA EXEO CORPORATION (As of July 1, 2012)
Kyushu Branch Office
Shikoku Branch Office
Tokai Branch Office
Minam
i Kanto Branch Office
Tohoku Branch Office
West Japan Head Office
Group Business Development Division
Corporate Planning Division
Accounts & Finance Division
General Affairs Division
Chugoku Branch Office
Kansai Branch Office
Koshin Branch Office
Kita Kanto Branch Office
Hokkaido Branch Office
IT Promotion Division
Audit Division
Procurement Division
Human Resources Division
NTT Operations Headquarters
Electrical & Telecoms Engineering/Environmental Projects Headquarters
Safety & Quality Control Headquarters
Home Network Business Promotion Department
Business Solutions Headquarters
Civil Engineering Headquarters
Communications & Business Network Headquarters
NTT DOCOMO Operations Headquarters
Tohoku Area Disaster Restoration Promotion Office
Social Contribution through Business ActivitiesFeature 1
Corporate Report 201219
What is under-bridge cabling passage work?
Before the earthquake:
After the earthquake:
The status of under-bridge cables attached underneath the bridge
The Ohtsuchi Ohashi Bridge from which the attached conduits and cables were removed
The area in which I was in charge of work was completely destroyed by the tsunami; even the town hall was displaced by the flooding. As the drawings of the bridge had been destroyed, we had difficulty collecting and drawing up preparatory materials for the excavation below the bridge. We made careful preparations including a magnetic exploration to identify any hidden obstacles such as the foundation of the bridge that might hinder our excavation efforts for the tunnel below the channel. Fortunately, we completed the works for all three bridges entrusted to the Group according to the construction schedule without interruption or reworking. I believe this successful completion is a product of the Group’s technological capabilities. Following the Great East Japan Earthquake, highly disaster-resistant communications facilities have been in demand everywhere. We at the KYOWA EXEO Group will accept the challenge to address this need Group-wide.
Aiming to establish solid facilities that facilitate communications even in a disaster
Fig. A Fig. B
Communications cables
Communications cables
A tunnel for underground cables was excavated under the river to prepare for future flooding disasters, with the work intended to raise the reliability of communication facilities
Usually, communications cable conduits are fixed underneath a bridge to sustain communications equipment. However, in the aforementioned project, a
small tunnel of 400–500 mm in diameter was excavated deep below the channel to accommodate the conduit (Fig. B). This under-bridge cabling passage
protects the communications equipment by preventing the communications cables from being washed away even if the bridge is damaged by flooding.
VOICE
From Restoration to Revival and to Revitalization
Toyohiro Ono, Project Manager, Civil Engineering Section,
Civil Engineering Headquarters
Ohtsuichi Ohashi Bridge
Namiita Bridge
Ohfunato
Miyako
Minamisanrikucho
Azumabashi Bridge
Ohzuchi
Iwate Prefecture
Ohtsuchi Station
Kirikiri Station
Namiita SeacoastShizugawa
Station
Yamada Line
Miyagi Prefecture
EXEO Group took charge of restoring three of those bridges. The tunneling distance for jacking at the Ohtsuchi Ohashi Bridge (Iwate Prefecture)—the longest of the nine bridges—was 245.1 m, and the level of difficulty was high.
Following the Great East Japan Earthquake last year, many bridges were destroyed by the tsunami and the communications cable conduits that hang under bridges were also damaged, rendering communications impossible for some time.
To prepare for future disasters, at our optical networking facility project between Miyako and Ohfunato we adopted the so-called under-bridge cabling passage method instead of laying conduit alongside a bridge. With this method, a small-diameter conduit tunnel of 400–500 mm was excavated under the channel of the river to bury the cables and enhance the reliability of communication facilities.
NTT suffered earthquake damage to its equipment at nine bridges in Iwate and Miyagi prefectures. The KYOWA
Cultivating Technological Capabilities,
Seeking Affluence, andContributing to
Society
Features
20Corporate Report 2012
Water treatment
technology
Work for underground installation of
electricity cables
Waste treatment
technology
Renewable energy technology
Solar power generation
facilities
EXEO’s Environmental
Businesses
The incineration, ash fusion furnace and recycling facilities that are designed by the Company help resolve waste disposal issues at many municipalities.
This business contributes to improving social infrastructure and environmental protection by laying power and communications cables inside the common utility ducts buried underground and removing electricity poles on roads.
Drawing on the technological capabilities of a plant manufacturer that the Company acquired, we are engaged in constructing renewable energy facilities such as wood biomass boilers and garbage fermentation facilities
We are active in submitting installation proposals for power generation systems on rooftops or other sites at customer facilities, as well as construction proposals for mega solar systems.
Our advanced water treatment technology addresses diversified water-related issues including the provision of water supply/sewerage treatment systems, water disposal facilities in isolated villages and the treatment of wastewater discharged from industrial establishments or factories.
After the construction work
Before the construction work
Eco-friendly construction methods, products, examples of work, and research and development addressed by the Company
Waste treatment technology
Water treatment technology
Others
Waste treatment facilities, ash fusion furnace facilities, methane fermentation facilities, recycling facilities, disassembly business of waste treatment facilities and wood biomass boilers
Sewerage treatment facilities, final disposal site leachate treatment facilities, rainfall storage penetration facilities and lake purification facilities
Work for underground installation of electricity cables and solar power generation facilities
The KYOWA EXEO Group has been committed to environmental improvement in its own business activities and the provision of construction methods and products with less environmental load for more than 20 years in efforts to reduce its environmental impact. This approach is aimed at preserving the global environment and contributing to the creation of a society in which people can live with a sense of safety. In fiscal 2011, the Group promoted the provision of various eco-friendly technologies in different fields, including waste treatment technologies for incineration and recycling facilities, renewable energy
technologies for wood biomass boilers and solar power generation systems, and water treatment technologies for industrial wastewater and sewage treatment facilities. The Group intends to contribute to the environmental preservation of overall society and a recycling-oriented society by actively involving itself in social environment improvement businesses. Such a pioneering approach includes flood control, renewal and preservation of the water cycle, and the underground installation of electricity cables using common utility ducts.
Initiatives toward environmental business
A Symbiotic Environmental Society
Initiatives toward Creating
Social Contribution through Our BusinessesFeature 2
Corporate Report 201221
Endeavoring to contribute to the reduction of CO2 emissions through the propagation of solar power generation systems
Following the nuclear accident at Fukushima triggered by the Great East Japan Earthquake that occurred on March 11, 2011, as well as concern about the possible shortage of the electric power supply, people’s interest in power generation via renewable energy has been rising. In particular, from the viewpoint of protecting the global environment, the implementation of solar power generation systems has been expanding in Japan due to fewer CO2 emissions.
The KYOWA EXEO Group is reviewing its environmental countermeasures and system performance evaluation along with the introduction of solar power generation systems at its own facilities. At the same time, we are active in submitting installation proposals for power generation systems on rooftops or other sites at customer facilities, as well as construction proposals for mega solar systems.
The solar power generation system implemented at the Tokyo Integrated Engineering Center (Ota-ku, Tokyo) is expected to generate annual electricity output of approximately 60 MWh, which will account for about 5% of the electricity consumed by the Center. Three different types of photovoltaic battery modules—the silicon single-crystal type with high power generating efficiency, the thin-film module compound (CIS) type and the easily bendable, amorphous thin-film type—were arranged (see the photo at right) to monitor and record operating data such as the
power generation efficiency of various types of modules. The results are used not only for appropriate proposals to customers intending to implement solar power generation systems but also for our initiative to reduce CO2 emissions.
A “system to purchase electricity from renewable energy sources at a fixed price” by power companies was enforced in July 2012. In response to this new policy, we installed a solar power generation system on the rooftop of the Fuchu Technology Center (Fuchu, Tokyo) of which the maximum output capacity is 100 kW.
We will positively propose the enhanced use of solar power generation systems to contribute to the prevention of global warming and the reduction of CO2 emissions.
(Kg)
0
1.0
0.8
0.6
0.4
0.2
Charcoal thermal
Petroleum thermal
Nuclear
Solar
Wind
Geotherm
al
Hyd
raulic
LNG
thermal
Power generation type
Solar power generation facilities on the rooftop of the Tokyo Integrated Engineering Center
Solar power generation facilities on the rooftop of the Fuchu Technology Center
CO2 emissions by power supply
Single crystal type for 40 kW
Compound type for 10 kW
Amorphous thin-film type for 2.52 kW
Note: CO2 emissions per 1 kW/h; Pre-pared from data issued by the Agency for Natural Resources and Energy
Sota Maki, Manager, Corporate Sales Section, Electrical & Telecoms Engineering Department, Electrical & Telecoms Engineering / Environmental Projects Headquarters
VOICE
Initiatives toward Creating
Social contribution by disseminating solar power generation facilities
I’m in charge of sales of solar power generation facilities mainly to private companies. Until last year, my sales activity was to promote the implementation of solar power generation facilities from the viewpoint of corporate PR or CSR. With the system to purchase electricity from renewable energy sources by power companies starting in July 2012, inquiries have increased rapidly. As solar light is a renewable energy source and solar power generation systems emit only small amounts of CO2, I expect such facilities to be increasingly used in the future.
As a salesperson, I struggle to achieve my sales targets, but I take pride in increasing my sales performance by contributing to society with the reduction in CO2 emissions.
Cultivating Technological Capabilities,
Seeking Affluence, andContributing to
Society
Features
22Corporate Report 2012
*Platinum bandRadio wave frequency band of 700–900 MHz. This band has features suitable for mobile phones such as huge transmittable data volume, a wide coverage area and the capability to bypass obstacles.
Changes in and projections for the number of smartphone subscribers
(Source: MM Research Institute, Ltd.)
(Unit: 10,000 contracts) (Unit: %)
0 0
14,000 100
80
60
40
20
12,000
10,000
8,000
6,000
4,000
2,000
2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3
Number of smartphone subscriptions Number of feature phone subscriptions Ratio of smartphone subscriptions to total
Projections
In Japan, the use of smartphones and tablet terminals has been spreading rapidly. The data traffic of smartphones is estimated to be 10–20 times more voluminous than that of conventional mobile phones (feature phones). Consequently, coping with the surge in traffic volume is a pressing issue in the ICT society.
One measure to address the traffic volume is the active introduction of high-speed mobile communications services such as LTE, WiMAX and A-XGP, which are being aggressively promoted by telecommunications carriers. In addition, a radio wave frequency called Platinum band* has been newly allocated for mobile phones to address frequency reorganization in response to the rise in traffic volume.
The KYOWA EXEO Group is endeavoring to establish
quickly a variety of mobile-related telecommunications infrastructure solutions including the construction of base stations in relation to the enhanced high-speed mobile communications services and frequency reorganization, as well as the enforcement of equipment related to such construction.
In recent years, the so-called data offload measure to let the boost in traffic go to fixed-line communications networks via Wi-Fi and other means has been promoted nationally. The Group conducted Wi-Fi spot works for about 20,000 stations during fiscal 2011.
The KYOWA EXEO Group thus endeavors to contribute to creating an easy-to-link comfortable society by installing the necessary infrastructure facilities to cope with the boost in traffic volume.
Putting the infrastructure in place to quickly handle the explosive traffic volume
Creating a connected society
Preparing for the Smartphone Era
Technical Term
Social Contribution through Our BusinessesFeature 3
Corporate Report 201223
“Long-Term Evolution (LTE)” refers to the next-generation high-speed mobile communications technology called 3.9th generation. It features high speed, high capacity and low delay. The communication speed is said to be 5–10 times faster than conventional services and will soon be almost equivalent to optical fiber lines.
LTE-related processes have increased rapidly for the mobile works undertaken by the Group. Compared with the installation of new base stations, which prevailed conventionally, the ratio of joint installation of LTE functions beside existing stations has increased. In other words, the work refers to processes such as the extension of facilities to wireless base stations that are already running and various performance tests, which require us to take absolute care of unexpected contingencies such as service interruption.
Drawing on both the innovative LTE technology and the previous mobile telecommunications technology, our engineers work day and night by taking appropriate measures so that every user can comfortably use smartphones.
Improving the telecommunications environment with LTE works so that smartphones can be comfortably used
Natsuki Yamashita, Facility Construction Section,
Mobile Infrastructure Engineering
Department, NTT DOCOMO
Operations Headquarters
2010 2011 2012
NTT docomo
KDDI
Soft Bank
e Access
LTE services of the respective telecommunications carriersOverview of mobile work
VOICE
Base station
Preparing for the Smartphone Era
Toward realizing a more convenient and comfortable mobile society
Smartphones are increasingly a part of our everyday lives. Given the rapid proliferation of
different types of mobile telecommunications services, we are engaged in relevant works to
improve the mobile environment for users as early as possible.
At home, in an underground mall, in a subway station and at any and all other places,
our lives will be made increasingly convenient and comfortable in the forthcoming mobile
society. I feel that my job is worthwhile as I am contributing to society by fulfilling that.
If you feel that your life has been improved thanks to mobile terminal services and the
ease of making phone calls, that could be due to improvements from our recent projects.
Negotiations for installing stations,
design, construction, maintenance, etc.:
LTE processes are prevalent
Installation of servers, etc., and reinforcement of
equipmentPutting optical
access networks in place Optical fiber
In-station facilities of telecommunications carriers
Mobile phone base station
Servers, etc.
Cultivating Technological Capabilities,
Seeking Affluence, and
Contributing to Society
Features
24Corporate Report 2012
Iwai: I’m in charge of planning and operating employees’ training sessions for the Group overall. So, I’m always thinking about the ideal employee image desired by the Company and how we should cultivate people. My present task is to set up a mechanism to organizationally change every employee’s ideal self-image from an employee who does not willingly engage a spirit of risk to an employee with a mind-set to address challenges. The Human Resources Development Dept. determines a rough outline for enhancing an individual’s strengths and requests that the staff in charge at each business department provide the content for technical training.
Nakayama: Well, as what each employee needs to learn technically differs depending on the department, the decisions on the content and actual materials for the training are entrusted to the dedicated staff in charge of human resources development. In my job, a major task is to teach the fixed standards that are described in the approach “Make that in this manner.” But this way of teaching is not at all effective in cultivating employees’ readiness.
Iwai: Of course, manuals are neatly prepared for the respective methods and procedures. In the field, however, onsite conditions differ. Therefore, every employee must
think about how to address his/her job on the spot using his/her own onsite capabilities.
Nakayama: Previously, a passive attitude of doing only what was instructed by a superintendent was enough. From now, however, such a negative attitude with minimum voluntary action is inadequate. As today’s employees show less capability for problem solving than their predecessors, we would like to develop employees who can think for themselves and take voluntary actions on their own judgment. We have won four gold medals over the past four years in the World Skills Olympics. The training behind “thinking power” was vital in cultivating the participants for these Olympic competitions. Although it is difficult to provide sufficient training for
Cultivating employees who have composite skills supported by onsite capabilities
The KYOWA EXEO Group’s core asset is its employees. The Group is actively creating a new corporate culture of accumulating skills and improving its technological capabilities and organizational strengths with the aim of being a valuable enterprise for customers and society. The General Manager of the Human Resources Development Dept., Personnel Division, and the Person Responsible for Education and Cultivation at the Central Technology Training Center share their views on the Group’s human resources activity.
Mitsuhisa Iwai, Unit Leader of Human Development Unit, Human Resources Division
That can think onsite
Cultivating Employees
Scene of training
Takuya Nakayama,
Central Technology Training Center,Cable Engineering Department,NTT Operations Headquarters
Social Contribution through Our BusinessesFeature 4
Corporate Report 201225
Iwai: I personally feel that employees could previously share time by working with similar workers sent from Group companies and cooperative companies under the control of the head of a project. Accordingly, there was a climate for developing employees (or have employees grow together) naturally on the spot. However, in recent years, the construction period has been increasingly shortened and the scale of work has been reduced. In addition, the need for enhanced efficiency improvement means that workers have fewer opportunities to work with the same crew. I think these trends create poor interpersonal relations within the work crew. The present business environment no longer allows us to enjoy an ideal work environment where workers are trained gradually while learning from those more experienced.Another serious issue is that we don’t know what other
on-the-spot judgments in actual work situations, we attempt to provide sufficient time for employees who participate in the Skills Olympics at their training so that they can be core personnel in the field.
Iwai: The results at the Skills Olympics are an achievement to be proud of for the Group employees’ spirit of addressing challenges. I am confident that we can establish a new employee image with a spirit to address challenges and shift our corporate culture to a teamwork focus that will ensure sustainable corporate growth in the future. With these thoughts in mind, we at the Group are now addressing measures to ferment the “Connection Culture”—a culture intended to promote exchanges of excellent know-how and human resources beyond the framework of our departments.
departments do, in effect. Given the multi-skill and multi-task business environment, it is increasingly important for us to have close collaboration with other departments. If such traditional human resources development becomes impossible, we will have to intentionally nurture a corporate climate of developing human resources as a companywide mechanism. As part of this approach, we have started a new type training for mutual understanding of other departments’ technical content, which is called “Collaborative Training.”
Nakayama: You are right. As Mr. Iwai says, the present situation is that at the end of most efficiency improvement efforts, we are obliged to give the instruction: “Do everything according to the baseline instructions and nothing more.” In other words, we have no room to consider something other than the pressing issue. I believe that creating a different mechanism is important to avoid falling into this trap. In this regard, the concept of the “Connection Culture”, which President Ishikawa recommended with the phrase “Let’s learn more about others and other departments,” is encouraging and significant. I remember that I had no time to consider other business operations when I joined the Company because I was so busy mastering my own duties. I envy today’s newcomers because they have opportunities to visit and compare different business activities under the current training system. Furthermore, the exchange of human resources has been institutionalized horizontally and vertically without being limiting to the technical aspects, thanks to vigorous interdepartmental exchanges.
Iwai: Despite the regular trial and error that occurs every year, let’s work together to create a worthwhile working environment in which employees can be successfully developed and work in a climate of cooperation and coordination.
Nakayama: Let’s work together!
Creating a culture of cultivating human resources
Cultivating Technological Capabilities,
Seeking Affluence, and
Contributing to Society
Features
26Corporate Report 2012
The KYOWA EXEO Group’s basic CSR policy is to materialize its corporate philosophy and perform
its social responsibility through its daily business activities. The Group seriously addresses promoting
corporate governance, compliance and risk management and works to ensure sincere and highly
transparent business operations to contribute to the sustainable growth of society.
The corporate philosophy of the KYOWA EXEO
Group, which is the basic guideline for our corporate
social responsibility, includes cultivating technological
capabilities, seeking affluence and contributing to
society, and we work to make integrity a fundamental
norm of our management. We recognize that efforts
to achieve the corporate philosophy are indeed efforts
toward CSR, and we are working to promote CSR.
Specifically, we are working toward high-quality
business operations by putting in place internal control
systems based on the promotion of compliance and the
development of risk management in all business fields.
CSR Structure of
the KYOWA EXEO Group
Rather than having a specific division responsible for CSR activities, at the KYOWA EXEO Group we recognize that CSR is something that every member of the staff should put into practice throughout the business process. In 2009, we reorganized the CSR promotion division that until then had been tasked with promoting CSR, and we established the new CSR Activities Division as the department responsible for disseminating information about activities. In 2010, we launched the CSR Committee, chaired by the President, with meetings held whenever necessary. Moreover, as a lower-level organization of the CSR Activities Division, a staff member in charge of CSR is assigned to every department or office and to every Group company, so that there is a group-wide system of CSR promotion. Environmental
protection activities
Promoting social contributions through primary businesses
Community and social contribution
activities
CSR Committee (chaired by the President)
Staffers in charge of CSR (a staff member in charge of CSR is assigned to every
department or office and to every Group company)
Secretariat (CSR Activities Division)
Corporate philosophy
ENGINEERING SOLUTIONS
SYSTEM SOLUTIONS
Guidelines for CSR activitiesSelf-awareness of contribution to society as a companyPromotion of contribution to society and social contribution activities through business activitiesEstablishment of a culture of safety and qualityFull information disclosure and communicationAdherence to corporate philosophy and respect for human rightsEnvironmental protection activitiesCreation of workplaces conducive to satisfactory work
Compliance Corporate governance Risk management
Business operations with integrity as the norm
Development of society
Development of the KYOWA EXEO Group
Performing Corporate Social Responsibility (CSR) through Its Primary Businesses
CSR Promotion Systems
Basic CSR Policy
The KYOWA EXEO Group works toward realizing its corporate philosophy by contributing to environmental conservation and to the sustainable growth of society through its business activities.
CSR Concept
Corporate Report 201227
Basic Actions Declaration
Corporate philosophy
Basic Ethics
Customers
Business partners
Society/Environment
Participation in and establishment
of communities
Environment
Human rights
Labor practice
Fair business practice
Consumer issues
Organizational consideration
Shareholders and investors
Group companies
Employees
We place a high priority on returns to our shareholders and investors, and we work to ensure continuous, stable dividends.
In addition to contributing to society through our business activities, we carry out proactive initiatives in a variety of community contribution activities.
We work to ensure two-way communication with our customers through events and seminars.
We believe that our collaborating companies are indispensable partners.
We aim to maximize the Group value through specialization and comprehensive power.
Based on the belief that human resources are our chief asset, we aim for Group employees and companies to develop together.
Return to shareholdersAnnouncement of business resultsDisclosure of IR informationExplanatory meetings for analysts
Social contribution activitiesLocal community contribution activitiesEXEO's afforestation
Procurement Advisory CouncilGreen Procurement
Promotion of a work-life balanceRespect for diversityFermentation of the Connection CultureEducation and training
Firm rooting of the safety and quality cultureExhibitions at events and forumsProactive information disclosure
Improvement of operating efficiencyManagement supportRaising technological capabilitiesImprovement of the worksite environment
Relationships with All Stakeholders (Classification by ISO26000 standards)Continuing to be a Company Trusted by All Stakeholders
In addition to striving to ensure ever-greater information disclosure, the KYOWA EXEO Group will engage in proactive communication
with all our stakeholders in order to fulfill our corporate social responsibility. Effective from fiscal 2011, the Group’s relationships with
various stakeholders are classified based on the seven core themes set forth in the ISO26000* standard.
*The ISO26000 standard provides organizations including companies with the best international guidance on socially responsible behavior and possible actions.
Create “Linkages” in Society
CS
R C
oncep
t
28Corporate Report 2012
The KYOWA EXEO Group aims to maintain the full trust of shareholders and all other stakeholders by operating with integrity and a high standard of transparency. To this end, we are confident that it is one of the significant management issues to establish and maintain an organizational structure and management systems through which corporate governance can effectively function. Moreover, it is our basic CSR policy to make ongoing improvements to strengthen corporate governance mechanisms that are suitably tailored to the Group’s circumstances, including the assessment of structures for monitoring management in light of changes in social conditions, laws and other developments.
Promotion of internal controlThe KYOWA EXEO Group works to thoroughly adhere to compliance, manage various risks and properly and efficiently execute business operations. At the same time, to ensure the reliability of financial reporting, the Group has stipulated the Basic Guideline for Establishing Internal Control Systems in accordance with the relevant provisions of the Companies Act and addresses its appropriate and efficient operation.
In August 2011, the Compliance Committee, chaired by the President, was established to further promote reinforcing internal control operations.
Endeavoring to ensure transparent management by establishing sound management systems and
strengthening internal controls
KYOWA EXEO’s Corporate Governance System
Establishing Various Mechanisms to Promote Globally the Overall Group
Corporate Governance
Corporate auditorsBoard of Corporate Auditors
DirectorsBoard of Directors
Nomination CommitteeInternal Control CommitteeCompensation CommitteeIndependent Auditor
General meeting of shareholders
Group companies
Internal Audit Division
Committees
CSR CommitteeCompliance Committee
Process Management Committee
President
Management Council
Operating officers and organizational heads
Business and administrative departments and branches
http://www.exeo.co.jp/overseas/management/cg.html
To view the Basic Guideline for Establishing Internal
Control Systems, visit
Management Systems
Corporate Report 201229
In the KYOWA EXEO Group, everybody on the management team maintains a high standard of
ethics—integrity—when conducting business. Furthermore, individual directors and employees make
principled actions grounded in compliance to fulfill their social responsibility.
Basic Stance on Compliance
—EXEO Group Basic Actions Declaration—
Individual directors and employees of the Group make principled actions grounded in compliance, the guiding force of our business activities, in the practice of our business activities; engage in socially trusted management; and perform their social and legal responsibilities. They promote compliance toward the realization of the corporate philosophy of “Contributing to Society,” in accordance with the “EXEO Group Basic Actions Declaration,” a code of conduct of the Group.
Flow chart of compliance fulfillment
Basic Ethics of the KYOWA EXEO Group
Matters to be observed in business activities
Relationships with customersElimination of accidents; assurance of quality; technical improvement; confidentiality; transparent transactions; appropriate inducement
Relationships with industriesFair competition; compliance with industry-specific laws and regulations
Relationships with business partnersImpartial transactions; fair transactions; respect of counterparty’s technologies
Matters to be observed regarding employees
Respect for human rights; ensuring the physical safety of employees
Matters to be observed regarding society
Relationships with securities markets and the mass mediaInformation disclosure; control of insider information
Relationships with the public at largeManagement with responsibility; resolute attitude against antisocial forces; protection of the environment; ensuring the security of society
Matters to be observed internally at the company
Conservation of company assets; observance of authority; appropriate accounting procedures; maintenance of discipline
Compliance
Fulfillment of economic responsibilities
Risk avoidance
Achievement of business plans
Day-to-day operations
Compliance (actions with integrity)
Fulfillment of social responsibilities
Fulfillment of legal responsibilities
Create “Linkages” in Society
Com
pliance/Risk M
anagement
Manag
ement S
ystem
30Corporate Report 2012
Establishing the promoting system, the KYOWA EXEO Group actively addresses risk management in all its
business fields.
Measures taken Description
Whistle-blowing system
Establishing the Support Desk regarding compliance and the Lawyer Hot Line for direct consulting or communicating with corporate lawyers
Compliance training Conducting basic training for new employees and brush-up training with specific themes to be observed in business activities
Compliance training for management executives
Conducting training for management executives (e.g., Chairman, President, General Managers of the Head Office, Branch Managers, Presidents of the Group companies) by inviting outside experts as lecturers
Evaluation on compliance observance
Inspecting the observance status of compliance plans, which have been prepared by the respective branches and Group companies, as well as the relevant laws and regulations, for evaluation; compliance mind-set of each employee is checked in terms of his/her level of understanding
Compliance promotion and enhancement month
October was designated as the annual Compliance Promotion and Enhancement Month in 2010. Various campaign measures such as signage and meetings encourage in-depth understanding of and raise awareness among employees.
Promotion Systems and Activities
The Company instituted a compliance program in November 2001 and extensively applied the program to Group companies in March 2003. Consequently, the group-wide EXEO GROUP Compliance System was established.
To promote compliance, the formulation of the EXEO Group Compliance Manual and the establishment of a dedicated promotional department followed. Compliance training is given to employees of the Group companies on an ongoing basis.
Initiatives to Promote
Basic Stance on Risk Management
To realize further business expansion and new growth as
an ICT solution service company, the KYOWA EXEO Group
strives to appropriately control risk factors by reducing ex-
posure to risks and adverse effects for risk that might occur
in overall business activities. Meanwhile, it is necessary for
the Group to minimize the economic loss and/or damage in
case of exposure to any risk. The Group’s risk management
is set up based on such recognition.
Promoting System
Risk Management
Guidance and control
CollaborationM
anagement of
compliance system
establishm
ent conditions
Oversight on the spot and of trading units
Whistle-blow
ing
Referrals and question
Group companies
Group Compliance Officer (President of KYOWA EXEO)
[Departments and Branches]
Support Desk at the Legal unit,
General Affairs Division.
Responsible Compliance Promoter
Persons in Charge of Promoting Compliance
KYOWA EXEO employees
Group Business Development Division
Relevant departments for referrals
Compliance Officer at each company (President)
Responsible compliance promoter at each company
Employees of each Group company
Lawyer Hot Line
KYOWA EXEO CORPORATION:
Management Systems
Corporate Report 201231
President
Internal audit organizationAudit Division
Responsible persons for risk management
Heads of Head Office organization units and Branch Managers
Management Planning Division (for management risk)
Safety and Quality Management Group (for process risk)
General Affairs Division (for disaster risk)
Risk management organizations
Information Security Committee
Committee members (Responsible Information Managers)
Committee secretariat
Committee chairman
Deputy committee chairman
Jun. 2004 Implemented an information management systemEstablished the Information Security Committee
Jul. 2006 Assigned the Chief Information Security Officer (CIO) at the Information Security Committee
May 2009 Extended the information management system to the Group companies
Improved group-wide security
Thoroughly executed employee training toward enhanced awareness of information security
Upgraded antivirus measures
Reinforced e-mail service countermeasures
Enhanced inspections of private-use personal computers at home
Business risk
Management risk
Business environment risk Risk in the business environment Issues shall be solved by establishing a task force and/or holding a business
strategy conference to find the best solutions, according to the instructions of management.Management
strategy riskRisk in decision making for management strategies or business strategies
Process risk Risk in daily business operations General manager of each department or branch manager shall be responsible for taking measures to reduce the risk concerned.
Disaster risk Risk of various disasters such as earthquakes, fires and typhoons
The Disaster Countermeasure Rules shall be stipulated to cope with the risk. Meanwhile, disaster prevention-related capital investment and disaster exercises shall be proactively made.
Credit riskRisk of uncollectible credits with regard to transactions with new customers and long-term and large-sum projects
The Credit Control Office was established in January 2006. The office examines and determines the appropriate scale of trading by customer to prevent trading problems and minimize risk damage. The office also holds the Extended Order Study Committee, consisting of the heads of related organization units, which meets as required.
Risk Management System
The KYOWA EXEO Group takes appropriate risk control measures after grasping and analyzing various risks surrounding the Group management to conduct sound business activities.
In accordance with the Risk Management Rules, which provide for basic guidelines regarding risk management, the Group classifies various risks as shown below, and works to streamline and sophisticate management methods and systems depending on the characteristics of the respective risks. The Process Management Committee was established to ensure appropriate risk status monitoring and take cross-sectional responses, as well as for lateral, intra-organizational information exchanges concerning risk management.
Furthermore, the Audit Division formulates an audit plan every year and conducts audits to check whether improvement measures or actions have been taken appropriately from an independent standpoint. The audit
results are reported to the management and to conferences at which the heads of organizational units attend according to the plan-do-check-act (PDCA) cycle.
Initiatives to Promote
Promoting Information Security
—Initiatives at the Information Security Committee—
The KYOWA EXEO Group established the Information
Security Committee in June 2004 to handle diverse
requests for security-related requests from customers. The
committee is committed to bolstering protective measures
with regard to information security related accidents and
incidents.
Risk management system
Information Security Committee
Major initiatives taken in fiscal 2011 were as follows:
Timing
Create “Linkages” in Society
Com
pliance/Risk M
anagement
Manag
ement S
ystem
32Corporate Report 2012
Social contribution
Customer satisfaction
Environment preservation
activities
Basic Stance on Environment Preservation Activities
Coexistence with the global environment is a social responsibility of corporations and is a significant element in creating a sustainable society.
The KYOWA EXEO Group engages in business activities as a company that offers customer-satisfying solutions based on its core IC networking technologies. The Group therefore pays careful attention to coordination with the environment in its business activities and endeavors to reduce the environmental impact that inevitably accompanies such activities. Meanwhile, every employee of the Group is committed to environment preservation activities with “what he/she can and he/she should do” in mind—always taking into account the effects of business activities on global environment.
Promotion of an Environmental Management System
In promoting the environmental management system (ISO14001), of which certification has been continuously obtained since May 2000, the Company works to reduce the environmental impact on an ongoing basis through companywide environment preservation activities according to the PDCA cycle. The Company identifies predictable environmental risks, which are determined depending on onsite working environments, the location conditions of the building and other factors, sets up specific environment-related targets and extensively applies them to all the departments at the Head Office and branches.
Environmental Education
Environment preservation activities cannot be achieved without low-key efforts for the activities and strong consciousness of every employee regarding the improvement of environmental issues. Consequently, the Head Office and branches prepare their respective plans and conduct environmental education programs so that all the employees can understand the importance of environmental preservation and voluntarily and positively participate in such activities in their daily lives. With this approach, precise knowledge and consciousness of environmental issues and preservation initiatives have been steadily disseminated among employees.
The educational training courses in fiscal 2011 were as follows: In-house environmental auditors’ training for the purpose of obtaining qualification as in-house auditors; in-house environmental auditors’ brush-up training for the purpose of upgrading skills as auditors; environmental operation training for the purpose of mastering knowledge of promoting environmental activities; and basic environmental management training mainly targeting new employees. A total of 578 persons attended the course lectures.
Number of qualified persons as in-house environmental auditors and participants in various training courses
Training course name Target Fiscal 2009 Fiscal 2010 Fiscal 2011 Description
In-house environmental auditors’ training
Prospective in-house auditors
100 97 48Qualification as in-house auditors
In-house environmental auditors’ brush-up training
In-house auditors
171 304 187Enhancing skills of in-house auditors
Environmental operation training
Regular employees
306 200 202Mastering knowledge of environmental activities
Industrial waste training
Regular employees
60 32 4Mastering knowledge of industrial waste
Basic environmental management training
New employees, etc.
180 132 127Basic knowledge of environmental MS
Total 817 765 578
The Group works to reduce the environmental impact accompanying business activities,
and every employee acts with “what he/she can and he/she should do” in mind.
Environmental Management
While Promoting Resources Recycling and Effective Utilization of Resources, Developing Environment Preservation Activities Toward the Prevention of Global Warming and Other Concerns
MS Operating Committee
Responsible MS managerResponsible auditing staff
Each department Each department Each department
Responsible environmental promoter Responsible environmental promoter Responsible environmental promoter
IC networking technologies
Business Environment
President
Fiscal 2009 Fiscal 2010 Fiscal 2011
In-house environmental auditors 915 895 870
Involvement in the Environment
Corporate Report 201233
Promotion of Recycling and Effective Utilization of Resources
The KYOWA EXEO Group proactively addresses abating volumes and the appropriate treatment of waste, as well as promoting its reuse as recycled resources in the pursuit of reduced waste volume and complete recycling. The waste category covered by this initiative is industrial waste produced from the construction work of information and communication facilities and general waste discharged from offices.
Asphalt, concrete debris, electric wire trash, etc., are properly
treated via a sorting control for further reuse or recycling. Moreover, ongoing initiatives include the enhanced use of proper amounts for work materials, requests for collection of packaging materials to suppliers and guidance on the necessary steps to workers for recycling via onsite patrols.
The Company’s recycling rate is maintained as high as 89.3% due to these initiatives.
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total industrial waste emissions
(tons)2,010 2,566 1,957
Industrial waste emissions per value of finished work
(kg/¥ million) 601 273 1,072
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total general waste emissions
(tons)283 279 232
General waste emissions per person
(kg/person)33.8 36.1 35.2
Fiscal 2009 Fiscal 2010 Fiscal 2011
Recycled industrial waste (tons)
28,811 17,961 20,202
Recycled general waste (tons)
425 359 331
Total recycled waste (tons)
29,236 18,320 20,533
Change in industrial waste emissions Change in general waste emissions Change in total recycled volume
0
1,200
900
600
300
2007 2008 2009 2010 2011 0
40
30
20
10
2007 2008 2009 2010 2011 0
30,000
20,000
10,000
2007 2008 2009 2010 2011
Industrial waste emissions per value of finished work (kg/¥ million) General waste emissions per person (kg/person) Total recycled waste (tons)
Fiscal 2011 Initiatives Regarding the Prevention of Global Warming
As for the reduction of power consumption, power-saving measures for equipment are taken including the conversion of electric appliances to energy-saving type ones and the enhanced use of inverters for diverse equipment. In addition, companywide initiatives mainly taken by the responsible person on each floor
include setting the energy-saving mode for PCs, removing unnecessary lighting devices, turning off lights during lunchtime hours and setting appropriate temperatures for air conditioners. Moreover, every employee aggressively promotes electricity-saving activity in his/her daily actions.
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total power consumption
(thousand kWh)14,876 14,753 12,460
Power consumption per square meter
(kWh/m2)10.96 10.69 10.63
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total city gas consumption(thousand m3)
38.3 35.1 50.0
City gas consumption per square meter
(m3/m2)3.7 3.4 4.8
Fiscal 2009 Fiscal 2010 Fiscal 2011
Total gasoline and light oil
consumption (kl)2,325 2,343 1,615
Gasoline and light oil consumption per travel
distance (l/thousand km)104.0 101.0 101.0
Change in power consumption Change in city gas consumption (at the Head Office building) Change in gasoline and light oil consumption
0
16
12
8
4
2007 2008 2009 2010 2011 0
5
4
3
2
1
2007 2008 2009 2010 2011 0
120
80
40
2007 2008 2009 2010 2011
Power consumption per square meter (kWh/m2) City gas consumption per square meter (m3/m2) Gasoline and light oil consumption per travel distance (l/thousand km)
Create “Linkages” in Society
Involvement in the Environm
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nvironmental M
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34Corporate Report 2012
Measures takenContent of
specific initiative
Fiscal 2011 targets and full-year results of activities Fiscal 2012 activity targetsFiscal 2011 targets Full-year results of activities
Reduction in CO2 emissions
①Reduction in power consumption:
Set power consumption management targets
Work to precisely grasp monthly management of power consumption values
(on the basis of medium- and long-term planning based on the revised Energy Conservation Law)
Monthly management of total power consumption
Turning off lights during break time, room temperature setting, economy in electricity
Enhanced use of “Cool Biz” and “Warm Biz” ambient-temperature-compliant wear
Review of conversion to energy-saving equipment and devices at their new installation or renewal (e.g., air conditioners, PCs, LED lights)
Improvement of 1% or more in power used against fiscal 2010
1% reduction against the previous fiscal year (target) 10.58 kWh/ m2
Power used Fiscal 2010: 10.69 kWh/m2
Fiscal 2011: 9.16 kWh/m2
Reduction rate: 16.2%(Against the target set forth in the Energy Conservation Law; 1% reduction every year for five years from fiscal 2009; passed)
Economy in electricity
Against the previous fiscal year: 1.0% reduction(target) 9.07 kWh/ m2
Restriction on peak power used[Summer] Large-lot customers
Against the previous fiscal year
15% reduction must be achieved
Other small-lot customers
Against the previous fiscal year
15% reduction targeted
[Winter] Kansai jurisdiction
10% Kyushu jurisdiction
5% Tokyo jurisdiction
5% Other jurisdictions
5%
Restriction on peak power used[Summer] Tokyo Tohoku Electric Power’s jurisdictionLarge-lot customers: 23% Small-lot customers: 21% Tokyo Other than Tohoku Electric Power’s jurisdictionSmall-lot customers: 16%
[Winter] Kansai jurisdiction 13% Kyushu jurisdiction 13% Tokyo jurisdiction 12% Other jurisdictions 7%
Restriction on peak power used[summer] against fiscal 2010
10% reduction target[winter] against fiscal 2010
5% reduction target
②Reduction in gasoline used:
Review reduction in the number of vehicles owned
Implement gasoline card-based management measures
Gasoline card control (monthly management of amounts used)
Purchase and renewal of vehicles with good fuel consumption
Study on partial introduction of hybrid/idling-stop/electric vehicles
Eco-driving education
Reduction in the number of vehicles owned
Against the previous fiscal year:
3.0% reduction(target) 98.0 l/thousand km
Fiscal 2010: 98.2 l/thousand km
Fiscal 2011: 94.9 l/thousand km (expected) Reduction rate: -3.4%
Against the previous fiscal year:
3.0% reduction(target) 92.0 l/thousand km
③Use of green energy:
Promote the use of solar power generation systems, etc.
Review of implementing solar power generation systems on company-owned buildings
To be implemented at two operating bases
TEC Building (February 2011; 50 kW installed)April 2011: 3 kW installed
To be implemented at one operating base:An electricity-sales demonstration system (100 kW) will be implemented at the Fuchu Technology Center.
CO2 emissions
(total of the above items ①-③)
Against the previous fiscal year:
Reduction of 1% or more
Fiscal 2010: 5,975 t-CO2
Fiscal 2011: 5,082 t-CO2
Reduction rate: 14.9%
Against the previous fiscal year:
1% reduction
Reduction in general waste
④Reduction in paper consumption:
Take paperless-oriented initiatives to reduce paper consumption volume
Actual inventory of paper materials, reduction in stored volume of paper materials and reduction in the file meter (fm)-converted volume Simultaneous campaign to designate a day to destroy documents (once per month)
Against the previous fiscal year:
4% reduction(target) 20,759 fm
End of August 2010: 21,624 fm
End of March 2012: 18,327 fm Reduction rate: 15.2%
Against the previous fiscal year:
4% reduction(target) 17,594 fm
Initiatives of promoting greenery of buildings
⑤Promotion of rooftop greening
Studying targets regarding permanently owned company assets
To be studied at the target facility on a case-by-case basis
①Late June 2011Planted several kinds of twiners on the rooftop and at the entrance of the Kansai Branch Building
②Late June 2011Planted several kinds of twiners on the rooftop of the Showa Annex Building
③Mid-June 2011Planted three kinds of sweet potatoes on the rooftop of the Kyushu Branch Building
To be studied at the target facility on a case-by-case basis
April 2012: Fuchu Technology Center
⑥Promotion of greenery within the premises
Studying possible implementation of measures at parking lots on company-owned premises
Fiscal 2011 Initiatives Regarding the Prevention of Global Warming
Involvement in the Environment
Corporate Report 201235
Content of Activities
Five branches, of which the business area is located near EXEO’s forests (Mori), regularly conduct forest preservation and cleaning activities such as maintenance of walking trails, mowing of bottom weeds, cutting ivy and putting up bird houses.
Degree of environmental contribution of EXEO’s forests (Mori)
Term of contract Region LocationArea (ha)
Degree of environmental contribution: One year (effects for the period of April 2011–March 2012 converted in the respective units shown below)
Watershed pondage or water quality purification volume
(in terms of 2-L PET bottles)
Sediment runoff prevention volume (in terms of a 10-ton
truck loading 5.5 m3)
Absorbed and fixed CO2 volume (in terms of CO2
emitted by a person in a year)
60 years(1/2005–3/2065)
Kyushu Karimawashi-yama government-owned forest, Uto-shi, Kumamoto Prefecture
5.363,715 m3
(1,858,000 bottles)70 m3 (13 trucks) 15 tons (48 persons)
21 years(2/2005–3/2026)
KansaiKitayama government-owned forest, Nishinomiya-shi, Hyogo Prefecture
1.14465 m3
(233,000 bottles)14 m3 (3 trucks) 3 tons (9 persons)
60 years(8/2006–3/2066)
HokkaidoChitose government-owned forest, Chitose-shi, Hokkaido Prefecture
3.101,181 m3
(591,000 bottles)40 m3 (7 trucks) 8 tons (26 persons)
22 years(10/2006–3/2028)
TohokuFubosan government-owned forest, Shiroishi-shi, Miyagi Prefecture
2.48656 m3
(328,000 bottles)20 m3 (4 trucks) 5 tons (16 persons)
20 years(3/2007–3/2027)
ChugokuNoroyama government-owned forest, Kure-shi, Hiroshima Prefecture
3.291,664 m3
(832,000 bottles)40 m3 (7 trucks) 7 tons (20 persons)
Total 15.377,681 m3
(3,842,000 bottles)184 m3 (34 trucks) 38 tons (119 persons)
EXEO’s forests (Mori), which extending
nationwide, are groomed by employees’ hands
*Profit-sharing afforestation contract: Agreement on the maintenance activities of government-owned forests (natural forests), which are premised on there being no logging.
(According to the Forestry Agency Report (Source: 24-Rin-Koku-Gyo No. 72 issued by the Forestry Agency)
Forest exploration is also conducted as part of the recreation activities for employees and their families. Such events are also used for enlightening activities to explain the importance of preventing global warming and biodiversity preservation.
Initiatives toward Prevention of Global Warming and Preservation of Biodiversity
Chitose-shi, Hokkaido
Shiroishi-shi, Miyagi
Nishinomiya-shi, HyogoKure-shi, HiroshimaUto-shi, Kumamoto
Hokkaido Branch Office
Tohoku Branch Office
Chugoku Branch Office Kansai Branch Office
Kyushu Branch Office
Embracing the opportunity of the Company’s 50th anniversary of its foundation, forest preservation activity started and the Company continues to maintain government-owned forests for up to 60 years.
Seizing the opportunity of the 50th anniversary of its foundation, the Company became strongly conscious of the prevention of global warming and contributing to local communities. Giving its approval to the maintenance enhancement campaign of forest resources, which was then promoted by the Forestry Agency, the Company entered into a profit-sharing afforestation contract* with the Hokkaido, Tohoku, Kansai, Kyushu, Chugoku and Kyushu regional forest offices regarding so-called corporate forests. The Company named the forests “EXEO’s forests” and continues their maintenance activity, which also serves as an occasion for social assembly and recreation among employees and their families.
Create “Linkages” in Society
Involvement in the Environm
entE
nvironmental M
anagement
36Corporate Report 2012
Financial Highlights (Consolidated)
■Orders Received ■Net Sales ■Gross Profit
■Operating Income ■Ordinary Income
■Net Income ■Total Assets ■Net Assets
(¥Millions)
0
120,000
240,000
360,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
15,000
30,000
45,000
2012/32011/32010/32009/32008/3
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Orders Received 297,899 286,233 276,289 273,788 288,532Net Sales 287,744 288,017 271,230 282,264 273,134Gross Profit 36,298 36,960 31,295 30,299 26,806Operating Income 16,400 18,871 13,867 12,390 8,919Ordinary Income 17,203 19,489 14,425 13,246 9,178Net Income 10,685 9,388 8,378 7,780 7,856Total Assets 176,955 179,555 180,128 196,918 181,291Net Assets 95,573 101,878 105,307 112,232 113,411
(¥Millions)
0
8,000
16,000
24,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
4,000
8,000
12,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
8,000
16,000
24,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
80,000
160,000
240,000
2012/32011/32010/32009/32008/3
Financial Section
Corporate Report 201237
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Telecommunications infrastructure (NTT group engineering)
183,600 187,601 169,583 164,562 166,199
Telecommunications infrastructure (Non-NTT telecom engineering)
56,355 58,932 60,240 82,447 67,411
Environmental and social infrastructure 32,219 28,429 29,798 23,782 26,399
SYSTEM-SOLUTIONS 15,569 13,054 11,608 11,471 13,123
Total 287,744 288,017 271,230 282,264 273,134
Net Sales by Business Segment (Consolidated)
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Telecommunications infrastructure (NTT group engineering)
38,725 36,609 36,287 38,992 43,854
Telecommunications infrastructure (Non-NTT telecom engineering)
13,992 15,213 26,962 19,215 27,636
Environmental and social infrastructure 30,700 30,023 23,181 25,576 28,168
SYSTEM-SOLUTIONS 1,347 1,135 1,301 1,849 1,394
Total 84,766 82,982 87,732 85,634 101,054
Outstanding Orders by Business Segment (Consolidated)
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Telecommunications infrastructure (NTT group engineering)
188,852 185,484 169,261 164,421 171,061
Telecommunications infrastructure (Non-NTT telecom engineering)
59,679 60,153 71,988 72,442 75,811
Environmental and social infrastructure 33,521 27,752 23,265 24,905 28,991
SYSTEM-SOLUTIONS 15,846 12,842 11,773 12,019 12,669
Total 297,899 286,233 276,289 273,788 288,532
■Telecommunications infrastructure (NTT group engineering)■Telecommunications infrastructure (Non-NTT telecom engineering)■Environmental and social infrastructure ■SYSTEM-SOLUTIONS
■Telecommunications infrastructure (NTT group engineering)■Telecommunications infrastructure (Non-NTT telecom engineering)■Environmental and social infrastructure ■SYSTEM-SOLUTIONS
■Telecommunications infrastructure (NTT group engineering)■Telecommunications infrastructure (Non-NTT telecom engineering)■Environmental and social infrastructure ■SYSTEM-SOLUTIONS
(¥Millions)
0
280,000
350,000
210,000
140,000
70,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
280,000
350,000
210,000
140,000
70,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
80,000
100,000
60,000
40,000
20,000
2012/32011/32010/32009/32008/3
Orders Received by Business Segment (Consolidated)
Trends by Segment (Consolidated)
Create “Linkages” in Society
Financial S
ection
38Corporate Report 2012
■Return on Equity ■Return on Assets ■Total Assets Turnover
2008/3 2009/3 2010/3 2011/3 2012/3
Gross Profit to Net Sales (%) 12.6 12.8 11.5 10.7 9.8Operating Income to Net Sales (%) 5.7 6.6 5.1 4.4 3.3Ordinary Income to Net Sales (%) 6.0 6.8 5.3 4.7 3.4Net Income to Net Sales (%) 3.7 3.3 3.1 2.8 2.9Return on Equity (%) 12.3 10.2 8.6 7.6 7.2Return on Assets (%) 5.9 5.3 4.7 4.1 4.2Total Assets Turnover (Times) 1.58 1.62 1.51 1.50 1.44
(%)
0.0
8.0
12.0
16.0
4.0
2012/32011/32010/32009/32008/3
(Times)
0.0
1.0
1.5
2.0
0.5
2012/32011/32010/32009/32008/3
Profitability Indices (Consolidated)
■Gross Profit to Net Sales ■Operating Income to Net Sales
■Ordinary Income to Net Sales ■Net Income to Net Sales
(%)
0.0
3.0
6.0
9.0
2012/32011/32010/32009/32008/3
(%)
0.0
5.0
10.0
15.0
2012/32011/32010/32009/32008/3
(%)
0.0
3.0
6.0
9.0
2012/32011/32010/32009/32008/3
(%)
0.0
2.0
3.0
4.0
1.0
2012/32011/32010/32009/32008/3
Financial Section
Corporate Report 201239
Stability Indices (Consolidated)
■Shareholders’ Equity to Total Assets ■Current Ratio
■Quick Assets to Current Liabilities ■Fixed Assets Ratio ■Fixed Assets to (Shareholders’ Equity + Long-term Liabilities)
■Interest Coverage Ratio ■Debt Equity Ratio
(%)
0.0
40.0
60.0
80.0
20.0
2012/32011/32010/32009/32008/3
(%)
0.0
100.0
200.0
300.0
2012/32011/32010/32009/32008/3
2008/3 2009/3 2010/3 2011/3 2012/3
Shareholders’ Equity to Total Assets (%) 50.1 53.3 55.4 53.9 62.4Current Ratio (%) 215.1 232.8 240.9 177.9 215.0Quick Assets to Current Liabilities (%) 170.4 181.4 189.3 133.5 164.3Fixed Assets Ratio (%) 62.2 55.6 61.0 59.8 57.7Fixed Assets to (Shareholders’ Equity + Long-term Liabilities) (%) 48.6 44.7 48.6 54.8 51.4Interest Coverage Ratio (Times) — 949.8 672.2 6.7 289.7Debt Equity Ratio (%) 18.6 17.0 17.7 19.2 6.7
Note : Interest Coverage Ratio for FY 2008/3 is not stated due to negative operating cash flow.
(%)
0.0
100.0
200.0
300.0
2012/32011/32010/32009/32008/3
(Times)
0.0
400.0
800.0
1,200.0
2012/32011/32010/32009/32008/3
(%)
0.0
60.0
90.0
30.0
2012/32011/32010/32009/32008/3
(%)
0.0
20.0
40.0
2012/32011/32010/32009/32008/3
Create “Linkages” in Society
Financial S
ection
40Corporate Report 2012
Per Share Data (Consolidated)
■Number of Shares Outstanding at end of period ■Net Income per Share
■Net Assets per Share ■Operating Cash Flow per Share
■Cash Dividends per Share
(¥)
0.0
40.0
80.0
120.0
2012/32011/32010/32009/32008/3
(Thousand shares)
0
50,000
100,000
150,000
2012/32011/32010/32009/32008/3
2008/3 2009/3 2010/3 2011/3 2012/3
Number of Shares Outstanding at end of period (Thousand shares) 106,112 106,060 102,625 103,292 104,361
Net Income per Share (¥) 98.42 88.50 79.75 75.58 74.96
Net Assets per Share (¥) 836.10 903.15 973.13 1,027.98 1,084.44
Operating Cash Flow per Share (¥) (14.60) 164.34 104.60 5.97 156.82
Cash Dividends per Share (¥) 20.0 20.0 20.0 20.0 20.0
(¥)
0.0
400.0
800.0
1,200.0
2012/32011/32010/32009/32008/3
(¥)
0.0
10.0
20.0
30.0
2012/32011/32010/32009/32008/3
(¥)
-100.0
0.0
100.0
200.0
2012/32011/32010/32009/32008/3
Financial Section
Corporate Report 201241
Other Indices (Consolidated)
■Selling, General and Administrative Expenses
■Number of Consolidated Subsidiaries
■Depreciation Expenses
■Price Earnings Ratio
■Price Book-value Ratio
(Number)
0
30
45
60
15
2012/32011/32010/32009/32008/3
(¥Millions)
0
8,000
16,000
24,000
2012/32011/32010/32009/32008/3
2008/3 2009/3 2010/3 2011/3 2012/3
Selling, General and Administrative Expenses (¥Millions) 19,897 18,088 17,428 17,908 17,886
Depreciation Expenses (¥Millions) 2,632 2,554 2,992 3,039 2,947
Number of Consolidated Subsidiaries (Number) 45 43 38 37 39
Price Earnings Ratio (Times) 7.8 9.0 9.7 11.0 9.9
Price Book-value Ratio (Times) 0.9 0.9 0.8 0.8 0.7
(¥Millions)
0
1,200
2,400
3,600
2012/32011/32010/32009/32008/3
(Times)
0.0
10.0
20.0
2012/32011/32010/32009/32008/3
(Times)
0.0
1.0
2.0
2012/32011/32010/32009/32008/3
Create “Linkages” in Society
Financial S
ection
42Corporate Report 2012
Consolidated Balance Sheets
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
ASSETSCurrent assets 121,733 126,317 119,239 133,466 116,010
Cash and deposits 6,576 6,317 6,136 17,185 5,849Notes receivable, accounts receivable from completed construction contracts 80,931 72,127 70,917 82,462 76,311Short-term investment securities 8,902 20,001 16,630 499 6,515Costs on uncompleted construction contracts and other 18,886 21,097 19,404 25,617 21,799Deferred tax assets 4,202 4,227 3,329 3,451 2,971Other current assets 2,502 2,748 3,021 4,372 2,632Allowance for doubtful accounts (268) (202) (199) (122) (68)
Noncurrent assets 55,221 53,238 60,889 63,452 65,280Property, plant and equipment 37,309 38,138 45,228 48,447 47,736
Buildings and structures 12,252 12,239 18,166 17,777 16,975Machinery, vehicles, tools, furniture and fixtures 1,904 1,472 1,218 1,067 887Land 23,117 23,333 25,429 29,179 29,319Other property, plant and equipment 35 1,092 413 422 553
Intangible assets 3,510 3,244 2,932 2,435 4,938Goodwill — — — 98 3,294Other intangible assets 3,510 3,244 2,932 2,337 1,644
Investments and other assets 14,401 11,854 12,729 12,569 12,605Investment securities 7,106 5,440 6,379 7,001 6,872Long-term loans receivable 1,854 1,266 — — —Deferred tax assets 1,518 701 924 495 617Other investments and other assets 5,783 7,115 7,444 7,468 7,363Allowance for doubtful accounts (1,862) (2,670) (2,019) (2,396) (2,248)
Total assets 176,955 179,555 180,128 196,918 181,291
LIABILITIESCurrent liabilities 56,589 54,263 49,494 75,033 53,957
Notes payable, accounts payable for construction contracts 33,455 28,729 28,722 35,482 31,025Income taxes payable 3,015 5,120 3,738 4,419 3,809Advances received on uncompleted construction contracts 4,392 5,087 2,948 3,787 4,400Provision for bonuses 489 449 424 435 562Provision for directors’ bonuses 180 193 75 87 105Provision for warranties for completed construction 276 369 201 154 704Provision for loss on construction contracts 107 214 257 350 246Other current liabilities 14,670 14,098 13,125 30,317 13,101
Noncurrent liabilities 24,792 23,413 25,326 9,653 13,922Convertible bond-type bonds with subscription rights to shares 15,000 15,000 15,000 — —Long-term loans payable — — 2,450 2,139 6,310Deferred tax liabilities 313 723 852 1,411 1,042Provision for retirement benefits 5,820 5,515 4,469 4,367 4,875Provision for directors’ retirement benefits 699 736 410 423 410Allowance for investment loss 349 283 373 104 102Negative goodwill 403 204 385 — —Other noncurrent liabilities 2,205 949 1,385 1,205 1,182
Total liabilities 81,382 77,677 74,821 84,686 67,879
NET ASSETSShareholders’ Equity 88,427 95,537 99,215 105,543 112,170
Capital stock 6,888 6,888 6,888 6,888 6,888Capital surplus 5,953 5,959 6,009 6,097 6,230Retained earnings 84,023 91,184 97,590 103,315 109,067Treasury stock (8,438) (8,494) (11,272) (10,758) (10,016)
Accumulated other comprehensive income 293 250 652 639 1,002Valuation difference on available-for-sale securities 293 250 652 639 1,002
Subscription rights to shares 77 181 272 361 217Minority interests 6,774 5,908 5,167 5,687 19
Total net assets 95,573 101,878 105,307 112,232 113,411Total liabilities and net assets 176,955 179,555 180,128 196,918 181,291
Financial Section
Corporate Report 201243
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Net sales 287,744 288,017 271,230 282,264 273,134Cost of sales 251,446 251,056 239,934 251,965 246,327Gross profit 36,298 36,960 31,295 30,299 26,806Selling, general and administrative expenses 19,897 18,088 17,428 17,908 17,886Operating income 16,400 18,871 13,867 12,390 8,919Non-operating income 1,526 1,232 880 2,218 1,310
Interest income 204 266 118 70 37Dividends income 123 173 136 191 284Land and house rent received — — 111 126 181Commission fee — — 93 — —Reversal of allowance for doubtful accounts 213 — — — —Amortization of negative goodwill 367 266 199 — —Other 618 525 221 1,830 806
Non-operating expenses 724 615 322 1,362 1,051Interest expenses 19 18 19 92 60Provision of allowance for investment loss — — 85 — —Bad debts expenses 99 103 33 — —Impairment loss — — — 90 196Loss on valuation of investment securities 75 — — — —Loss on retirement of noncurrent assets 103 — — — —Loss on sales of noncurrent assets — — — 51 167Foreign exchange losses 288 262 — — —Other 138 231 184 1,127 626
Ordinary income 17,203 19,489 14,425 13,246 9,178Extraordinary income 171 277 — 517 2,863
Gain on revision of retirement benefit plan — — — 517 —Gain on negative goodwill — — — — 2,660Gain on reversal of subscription rights to shares — — — — 203
Extraordinary loss — 3,006 776 315 —Loss on disaster — — — 315 —
Income before income taxes and minority interests 17,374 16,759 13,649 13,449 12,041Income taxes-current 4,020 6,849 4,406 4,683 4,199Income taxes-deferred 2,299 1,133 611 633 145Total income taxes 6,319 7,983 5,017 5,316 4,344
Income before minority interests 11,054 8,776 8,631 8,132 7,697Minority interests in income (loss) 369 (612) 253 352 (158)Net income 10,685 9,388 8,378 7,780 7,856
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Income before minority interests — — — 8,132 7,697Other comprehensive income
Valuation difference on available-for-sale securities — — — (32) 371Total accumulated other comprehensive income — — — (32) 371
Comprehensive income — — — 8,099 8,068BreakdownComprehensive income attributable to owners of the parent — — — 7,767 8,219Comprehensive income attributable to minority interests — — — 332 (150)
Create “Linkages” in Society
Financial S
ection
44Corporate Report 2012
Consolidated Statements of Changes in Net Assets
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3Shareholders’ equity
Capital stockBalance at the beginning of current period 6,888 6,888 6,888 6,888 6,888Changes of items during the period — — — — —
Total changes of items during the period — — — — —Balance at the end of current period 6,888 6,888 6,888 6,888 6,888
Capital surplusBalance at the beginning of current period 5,866 5,953 5,959 6,009 6,097Changes of items during the period
Disposal of treasury stock 87 5 50 87 133Total changes of items during the period 87 5 50 87 133
Balance at the end of current period 5,953 5,959 6,009 6,097 6,230Retained earnings
Balance at the beginning of current period 75,537 84,023 91,184 97,590 103,315Changes of items during the period
Dividends from surplus (2,199) (2,228) (2,127) (2,054) (2,103)Net income 10,685 9,388 8,378 7,780 7,856Change of scope of consolidation — — 154 — —Total changes of items during the period 8,485 7,160 6,405 5,725 5,752
Balance at the end of current period 84,023 91,184 97,590 103,315 109,067Treasury stock
Balance at the beginning of current period (5,354) (8,438) (8,494) (11,272) (10,758)Changes of items during the period
Purchase of treasury stock (3,290) (75) (3,297) (1) (2,691)Disposal of treasury stock 206 19 519 546 3,464Change of scope of consolidation — — — (30) (31)Total changes of items during the period (3,083) (56) (2,778) 514 741
Balance at the end of current period (8,438) (8,494) (11,272) (10,758) (10,016)Total shareholders’ equity
Balance at the beginning of current period 82,937 88,427 95,537 99,215 105,543Changes of items during the period
Dividends from surplus (2,199) (2,228) (2,127) (2,054) (2,103)Net income 10,685 9,388 8,378 7,780 7,856Purchase of treasury stock (3,290) (75) (3,297) (1) (2,691)Disposal of treasury stock 293 25 569 634 3,597Change of scope of consolidation — — 154 (30) (31)Total changes of items during the period 5,489 7,110 3,677 6,327 6,627
Balance at the end of current period 88,427 95,537 99,215 105,543 112,170Accumulated other comprehensive income
Valuation difference on available-for-sale securitiesBalance at the beginning of current period 1,541 293 250 652 639Changes of items during the period
Net changes of items other than shareholders’ equity (1,248) (42) 401 (12) 363
Total changes of items during the period (1,248) (42) 401 (12) 363Balance at the end of current period 293 250 652 639 1,002
Total accumulated other comprehensive incomeBalance at the beginning of current period 1,541 293 250 652 639Changes of items during the period
Net changes of items other than shareholders’ equity (1,248) (42) 401 (12) 363
Total changes of items during the period (1,248) (42) 401 (12) 363Balance at the end of current period 293 250 652 639 1,002
Subscription rights to sharesBalance at the beginning of current period — 77 181 272 361Changes of items during the period
Net changes of items other than shareholders’ equity 77 103 90 89 (143)
Total changes of items during the period 77 103 90 89 (143)Balance at the end of current period 77 181 272 361 217
Minority interestsBalance at the beginning of current period 6,657 6,774 5,908 5,167 5,687Changes of items during the period
Net changes of items other than shareholders’ equity 117 (866) (740) 520 (5,668)
Total changes of items during the period 117 (866) (740) 520 (5,668)Balance at the end of current period 6,774 5,908 5,167 5,687 19
Total net assetsBalance at the beginning of current period 91,136 95,573 101,878 105,307 112,232Changes of items during the period
Dividends from surplus (2,199) (2,228) (2,127) (2,054) (2,103)Net income 10,685 9,388 8,378 7,780 7,856Purchase of treasury stock (3,290) (75) (3,297) (1) (2,691)Disposal of treasury stock 293 25 569 634 3,597Change of scope of consolidation — — 154 (30) (31)Net changes of items other than shareholders’ equity (1,053) (805) (248) 596 (5,448)
Total changes of items during the period 4,436 6,305 3,429 6,924 1,179Balance at the end of current period 95,573 101,878 105,307 112,232 113,411
Financial Section
Corporate Report 201245
Consolidated Statements of Cash Flows
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Net cash provided by (used in) operating activities (1,583) 17,434 10,989 614 16,435
Income before income taxes and minority interests 17,374 16,759 13,649 13,449 12,041
Depreciation and amortization 2,632 2,554 2,992 3,039 2,947
Impairment loss — 166 — — —
Amortization of goodwill (324) (236) (192) — —
Gain on negative goodwill — — — (278) (2,660)
Increase (decrease) in allowance for doubtful accounts (433) 741 (650) 188 (201)
Increase (decrease) in provision for retirement benefits (359) (305) (1,018) (854) 93
Interest and dividends income (327) (440) (255) (262) (322)
Interest expenses 19 18 19 92 60
Decrease (increase) in notes and accounts receivable-trade (4,138) 8,803 1,029 (9,263) 6,951
Decrease (increase) in costs on uncompleted construction contracts and other 866 (2,210) 1,751 (2,902) 3,931
Decrease (increase) in other assets (1,448) (1,371) 975 (1,409) 836
Increase (decrease) in notes and accounts payable-trade (1,078) (4,725) 59 5,269 (4,579)
Increase (decrease) in advances received on uncompleted construction contracts (1,065) 695 (2,076) (156) 612
Increase (decrease) in other liabilities (5,669) (1,038) 37 (2,766) 532
Other, net 539 2,107 308 402 630
Sub-total 6,587 21,518 16,630 4,548 20,875
Interest and dividends income received 340 439 257 262 321
Interest expenses paid (20) (18) (16) (91) (56)
Income taxes paid (8,491) (4,505) (5,881) (4,104) (4,704)
Net cash provided by (used in) investing activities (5,690) (4,057) (10,600) (1,535) (4,523)
Purchase of property, plant and equipment (2,713) (3,022) (8,963) (3,449) (1,545)
Proceeds from sales of property, plant and equipment 18 282 168 746 496
Purchase of intangible assets (2,036) (1,018) (714) (387) (590)
Purchase of investment securities (701) (683) (611) (675) (36)
Proceeds from sales of investment securities 298 550 251 — —
Purchase of investments in subsidiaries resulting in change in scope of consolidation — — — — (3,752)
Payments of loans receivable (1,496) (429) — — —
Collection of loans receivable 1,186 337 324 315 236
Other, net (246) (72) (1,055) 1,915 667
Net cash provided by (used in) financing activities (5,051) (2,531) (4,095) (3,650) (17,533)
Net increase (decrease) in short-term loans payable 242 (170) (992) (892) (2,015)
Repayment of long-term loans payable (8) (30) — (1,041) (1,114)
Proceeds from long-term loans payable — 55 2,450 50 5,000
Redemption of bonds — — — (180) (15,180)
Purchase of treasury stock (3,290) — (3,297) (3) (2,691)
Proceeds from sales of treasury stock 293 — — 677 829
Cash dividends paid (2,197) (2,228) (2,127) (2,054) (2,104)
Cash dividends paid to minority shareholders (91) (95) (82) (68) (72)
Other, net — (63) (45) (138) (185)
Effect of exchange rate change on cash and cash equivalents (19) (15) (1) (22) (10)
Net increase (decrease) in cash and cash equivalents (12,345) 10,829 (3,706) (4,594) (5,631)
Cash and cash equivalents at beginning of period 27,776 15,431 26,261 22,229 17,634
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation — — (325) — 301
Cash and cash equivalents at end of period 15,431 26,261 22,229 17,634 12,304
Create “Linkages” in Society
Financial S
ection
46Corporate Report 2012
Financial Highlights (Non-consolidated)
■Orders Received ■Net Sales ■Gross Profit
■Operating Income ■Ordinary Income
■Net Income ■Total Assets ■Net Assets
(¥Millions)
0
80,000
160,000
240,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
10,000
20,000
30,000
2012/32011/32010/32009/32008/3
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Orders Received 234,965 230,410 222,980 204,678 218,527Net Sales 223,932 231,671 216,315 213,973 200,061Gross Profit 25,637 27,487 22,783 21,495 18,320Operating Income 11,319 14,493 10,019 9,201 6,651Ordinary Income 11,597 14,632 10,582 9,753 7,259Net Income 7,085 7,109 6,494 5,624 4,466Total Assets 143,973 149,393 152,090 159,787 153,493Net Assets 69,508 74,327 76,294 80,599 84,533
(¥Millions)
0
5,000
10,000
15,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
3,000
6,000
9,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
5,000
10,000
15,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
60,000
120,000
180,000
2012/32011/32010/32009/32008/3
Financial Section
Corporate Report 201247
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Telecommunications infrastructure (NTT group engineering)
143,939 153,004 134,267 123,041 119,991
Telecommunications infrastructure (Non-NTT telecom engineering)
44,353 48,674 50,816 64,745 52,946
Environmental and social infrastructure 22,181 18,961 21,547 16,662 17,180
SYSTEM-SOLUTIONS 13,458 11,030 9,685 9,523 9,943
Total 223,932 231,671 216,315 213,973 200,061
Net Sales by Business Segment (Non-consolidated)
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Telecommunications infrastructure (NTT group engineering)
149,736 150,515 134,288 122,680 124,821
Telecommunications infrastructure (Non-NTT telecom engineering)
48,317 49,844 63,502 54,580 62,450
Environmental and social infrastructure 23,212 19,043 15,475 17,332 21,863
SYSTEM-SOLUTIONS 13,700 11,007 9,713 10,084 9,392
Total 234,965 230,410 222,980 204,678 218,527
(¥Millions)
0
200,000
250,000
150,000
100,000
50,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
200,000
250,000
150,000
100,000
50,000
2012/32011/32010/32009/32008/3
Orders Received by Business Segment (Non-consolidated)
Trends by Segment (Non-consolidated)
■Telecommunications infrastructure (NTT group engineering)■Telecommunications infrastructure (Non-NTT telecom engineering)■Environmental and social infrastructure ■SYSTEM-SOLUTIONS
■Telecommunications infrastructure (NTT group engineering)■Telecommunications infrastructure (Non-NTT telecom engineering)■Environmental and social infrastructure ■SYSTEM-SOLUTIONS
Create “Linkages” in Society
Financial S
ection
48Corporate Report 2012
Other Indices (Non-consolidated)
■Capital Expenditures ■Depreciation Expenses
■Selling, General and Administrative Expenses ■Dividend Payout Ratio
■Percentage of Stock Held by Foreigners
(¥Millions)
0
1,000
2,000
3,000
2012/32011/32010/32009/32008/3
(¥Millions)
0
4,000
8,000
12,000
2012/32011/32010/32009/32008/3
2008/3 2009/3 2010/3 2011/3 2012/3
Capital Expenditures (¥Millions) 2,768 3,194 9,011 3,272 1,553Depreciation Expenses (¥Millions) 1,916 1,953 2,459 2,457 2,362Selling, General and Administrative Expenses (¥Millions) 14,317 12,993 12,763 12,294 11,669Dividend Payout Ratio (%) 30.6 29.8 32.4 36.6 47.1Percentage of Stock Held by Foreigners (%) 19.9 14.6 17.3 16.6 17.4
(¥Millions)
0
6,000
12,000
18,000
2012/32011/32010/32009/32008/3
(%)
0.0
50.0
100.0
2012/32011/32010/32009/32008/3
(%)
0.0
8.0
16.0
24.0
2012/32011/32010/32009/32008/3
Financial Section
Corporate Report 201249
Non-consolidated Balance Sheets
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3ASSETSCurrent assets 98,191 105,102 100,115 105,593 91,375
Cash and deposits 5,224 4,856 5,061 15,720 4,259Notes receivable-trade 514 285 173 201 154Accounts receivable from completed construction contracts 63,824 58,585 56,592 61,896 56,749Short-term investment securities 8,902 20,001 16,630 499 6,506Costs on uncompleted construction contracts 12,916 14,394 13,433 15,148 14,072Raw materials and supplies 19 141 340 43 113Short-term loans receivable 2,726 2,786 4,666 7,649 6,850Prepaid expenses 243 265 226 202 214Deferred tax assets 3,142 3,109 2,322 2,210 1,817Other current assets 903 850 842 2,115 690Allowance for doubtful accounts (226) (173) (172) (94) (54)
Noncurrent assets 45,781 44,290 51,974 54,193 62,118Property, plant and equipment 25,288 26,486 33,604 34,877 34,809
Buildings 8,409 8,650 14,302 13,446 12,855Structures 495 477 551 470 408Machinery and equipment 189 131 121 85 101Vehicles 11 15 14 2 1Tools, furniture and fixtures 1,057 844 726 642 536Land 15,089 15,314 17,525 19,952 20,547Lease assets — 61 342 270 352Construction in progress 35 991 20 7 6
Intangible assets 3,138 2,871 2,582 1,981 1,370Software 2,873 2,661 2,379 1,764 1,201Other intangible assets 264 210 203 216 169
Investments and other assets 17,355 14,932 15,787 17,334 25,937Investment securities 4,538 3,360 4,096 3,951 4,326Stocks of subsidiaries and affiliates 6,872 6,771 7,001 9,118 17,263Long-term loans receivable 2,585 2,180 1,698 1,630 1,634Claims provable in bankruptcy, claims provable in rehabilitation and other 489 484 73 134 229Long-term prepaid expenses 238 212 183 157 133Prepaid pension cost 2,009 2,526 2,637 2,769 3,362Deferred tax assets 789 365 — — —Other investments and other assets 2,005 1,999 2,183 1,811 1,116Allowance for investment loss — (720) (288) (237) (162)Allowance for doubtful accounts (2,174) (2,247) (1,798) (2,002) (1,966)
Total assets 143,973 149,393 152,090 159,787 153,493
LIABILITIESCurrent liabilities 57,587 59,388 57,277 76,201 61,690
Notes payable 322 108 484 485 —Accounts payable for construction contracts 32,781 28,909 29,058 32,615 29,027Short-term loans payable — — — 500 1,000Lease obligations — 15 86 91 130Convertible bond-type bonds with subscription rights to shares — — — 15,000 —Accounts payable-other 2,796 1,728 1,590 720 749Accrued expenses 5,983 6,322 5,586 5,303 4,982Income taxes payable 2,117 3,836 3,185 3,565 2,778Advances received on uncompleted construction contracts 3,122 4,114 2,479 2,127 3,707Deposits received 9,746 13,140 13,960 14,653 18,209Provision for directors’ bonuses 101 118 — — —Provision for warranties for completed construction 267 354 181 118 372Provision for loss on disaster — — — 145 —Provision for loss on construction contracts 89 151 223 207 181Other current liabilities 259 589 440 666 551
Noncurrent liabilities 16,877 15,677 18,518 2,986 7,269Convertible bond-type bonds with subscription rights to shares 15,000 15,000 15,000 — —Long-term loans payable — — 2,450 1,904 6,296Lease obligations — 49 280 202 249Deferred tax liabilities — — 117 499 381Provision for directors’ retirement benefits 321 343 — — —Allowance for investment loss 349 283 369 104 102Other noncurrent liabilities 1,205 0 301 275 239
Total liabilities 74,464 75,066 75,796 79,187 68,960
NET ASSETSShareholders’ equity 68,888 73,719 75,358 79,498 83,273
Capital stock 6,888 6,888 6,888 6,888 6,888Capital surplus 5,953 5,959 6,009 6,035 6,738Legal retained earnings 1,547 1,547 1,547 1,547 1,547Reserve for reduction entry of noncurrent assets 134 173 171 313 325General reserve 54,630 59,500 64,200 68,900 72,300Retained earnings brought forward 8,173 8,145 7,813 6,541 5,483Treasury stock (8,438) (8,494) (11,272) (10,727) (10,010)
Valuation and translation adjustments 541 425 663 739 1,042Valuation difference on available-for-sale securities 541 425 663 739 1,042
Subscription rights to shares 77 181 272 361 217Total net assets 69,508 74,327 76,294 80,599 84,533Total liabilities and net assets 143,973 149,393 152,090 159,787 153,493
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Financial S
ection
50Corporate Report 2012
Non-consolidated Statements of Income
(¥Millions)
2008/3 2009/3 2010/3 2011/3 2012/3
Net sales 223,932 231,671 216,315 213,973 200,061
Cost of sales 198,295 204,183 193,531 192,477 181,740
Gross profit 25,637 27,487 22,783 21,495 18,320
Selling, general and administrative expenses 14,317 12,993 12,763 12,294 11,669
Operating income 11,319 14,493 10,019 9,201 6,651
Non-operating income 884 833 901 1,565 1,198
Interest income 39 39 36 38 37
Interest on securities 125 233 94 43 14
Dividends income 227 261 235 256 241
Land and house rent received 111 127 251 408 478
Gain on sales of investment securities 95 — — — —
Reversal of allowance for doubtful accounts 101 — 98 — —
Other 183 170 185 817 426
Non-operating expenses 606 695 338 1,012 590
Interest expenses 62 49 24 51 49
Provision of allowance for doubtful accounts — 73 — — —
Bad debts expenses 99 72 33 102 28
Provision of allowance for investment loss — — 85 — —
Loss on debt waiver of subsidiaries and affiliates — 70 58 — —
Foreign exchange losses 288 262 — — —
Loss on valuation of investment securities 65 — — — —
Rent expenses — — — 141 126
Other 92 167 137 716 385
Ordinary income 11,597 14,632 10,582 9,753 7,259
Extraordinary income 171 219 432 — 203
Extraordinary loss — 2,362 234 196 —
Income before income taxes 11,768 12,489 10,781 9,557 7,462
Income taxes-current 2,040 4,843 3,180 3,491 2,790
Income taxes-deferred 2,643 537 1,106 440 206
Net income 7,085 7,109 6,494 5,624 4,466
Financial Section
Corporate Report 201251
President
Kunio Ishikawa
Director and Executive Operating Officer
Terutaka Sakai
Director and Managing Operating Officer
Yoshiharu Yamazaki
Statutory Auditor
Kazuteru Kanazawa
Director and Managing Operating Officer
Takayuki Watanabe
Director
Kazufumi Watanabe
Statutory Auditor
Akira Yamada
Kenjiro TsunodaHaruhiko WatanabeYoshiharu TakizawaSeiji FujikakeTeru SuzukiToshimitsu Kiribayashi
Operating Officers
Yoshimichi TakayabuAkira GoharaShigeru TanakaTsuneto HinoharaNaoe TakedaMakoto Nakagawa
Hiroshi SatoHisamitsu HoshiKazuyuki KaihatsuAtsuo YuharaGenzaburo Oe
Managing Operating Officers
Yukio SanoTsutomu OtaTakashi Shikano
Director and Managing Operating Officer
Akira Yabiki
Director
Hisashi Yazawa
Director and Managing Operating Officer
Takashi Sakai
Standing Statutory Auditor
Hideo Oshima
Director and Managing Operating Officer
Toshio Tsuda
Standing Statutory Auditor
Yuji Sugita
Director
Yoshiaki Matsuzaka
Vice President
Fuminori Kozono
With stakeholders
Board of Directors
(as of June 22, 2012) Create “Linkages” in Society
Financial Section/Board of Directors
52Corporate Report 2012
Number of shares held (thousand)
Percentage of total shares issued (%)
Japan Trustee Services Bank, Ltd. (Trust Account)
8,597 7.30
Japan Trustee Services Bank, Ltd. (Trust Account 9)
8,135 6.91
Japan Trustee Services Bank, Ltd. (Sumitomo Electric Industries, Ltd., Retirement Benefit Trust Account re-entrusted by The Sumitomo Trust & Banking Co., Ltd.)
5,766 4.89
The Master Trust Bank of Japan, Ltd. (Trust Account)
5,747 4.88
ESOP Association of KYOWA EXEO CORPORATION 3,651 3.10
Trust & Custody Services Bank, Ltd., as trustee for Fujikura Ltd. Retirement Benefit Trust Account re-entrusted by Mizuho Trust & Banking Co., Ltd.
2,930 2.49
Mizuho Bank, Ltd. 2,748 2.33
JUNIPER 2,342 1.99
GOLDMAN, SACHS & CO. REG 2,149 1.82
SUMITOMO LIFE INSURANCE COMPANY 2,000 1.70
Note: Effective April 1, 2012, The Sumitomo Trust & Banking Co., Ltd., merged with The Chuo Mitsui Trust and Banking Co., Ltd., and Chuo Mitsui Asset Trust and Banking Company, Limited, and its name has changed to Sumitomo Mitsui Trust Bank, Limited.
Fiscal Year-End March 31
Annual Shareholders’ Meeting
June 22, 2012
Stock Listing Tokyo Stock Exchange (First Section)
Ticker Code 1951
Common Stock Authorized: 300,000,000 sharesIssued: 117,812,419 shares
Total Number of Shareholders
11,100
Transfer Agent and Registrar
Sumitomo Mitsui Trust Bank, Limited1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
0
500
1,000
1,500
0
10
20
30
40
50
Trading Volume (Million Shares)
3211211109876543211211109876543211211109876543211211109876543211211109876542007 2009 2010 2011 20122008
Stock Price (¥)
Stock Price Range and Trading Volume on the Tokyo Stock Exchange
Composition of Shareholders
Major Shareholders
Financial institutions44.67%
Securities companies0.90%
Other corporations9.59%
Foreign companies17.38%
Individuals and others17.47%
Treasury stock9.99%
Stock Information
(as of March 31, 2012)
Corporate Report 201253
Editorial Policy
Period Covered by the Report: From April 1, 2011, to March 31, 2012
(However, in some cases, activities before and after the
coverage period are also included in this report.)
Organizations Covered by the Report: Companies subject to consolidation of the KYOWA EXEO Group
(However, in some cases, KYOWA EXEO CORPORATION’s
non-consolidated data are used instead of consolidated data.)
Reference Guidelines: GRI “Sustainability Reporting Guideline 3rd Version 2006”
Ministry of Environment “Environmental Reporting Guidelines
(Fiscal 2007 Version)”
ISO26000 “Guidance on social responsibility”
Issuance: August 2012
Next Issuance Scheduled: August 2013
KYOWA EXEO CORPORATION
http://www.exeo.co.jp/overseas/index.html
29-20, Shibuya 3-chome, Shibuya-ku, Tokyo 150-0002, Japan
Notice on forward-looking statements:
This Corporate Report 2012 contains forward-looking statements such as the future business
performance of KYOWA EXEO. As these statements are based on the currently available information at
the time of the creation of the report, the actual results may differ materially from the content described
or suggested therein due to various factors. As this corporate report is not intended for the purpose of
soliciting investment, all users of this report are advised to undertake decisions concerning investment at
their own discretion.
The figures stated in units of ¥100 million and ¥1 million are rounded down.
Create “Linkages” in Society
Stock Information/Editorial Policy
54Corporate Report 2012
29-20, Shibuya 3-chome, Shibuya-ku, Tokyo 150-0002, JapanURL: http://www.exeo.co.jp/overseas/index.html