FY20 European IR Presentation Material (Telephone Conference) July - - PowerPoint PPT Presentation

URL: https://www.exeo.co.jp/en/ir/ We renewed our website.

July 2020 (Telephone Conference)

FY20 European IR Presentation Material

Contents

1. About Us

(1) Corporate Profile ･･･ 2 (2) Profile of President and CEO ･･･ 3 (3) Company History ･･･ 4 (4) Segment Overviews ･･･ 5 (5) Group Structure and Bases ･･･ 9 (6) Our Group’s Strengths ･･･ 10 (7) Public evaluation ･･･ 11

• 2. Review of Medium-term management plan（FY16-20）

(1) Medium-term vision ･･･ 12 (2) Basic Policies ･･･ 12 (3) Performance Target for FY20 ･･･ 12 (4) Objective and Growth Picture ･･･ 13 (5) Recent Performance Trends ･･･ 14

• 3. Overview of FY19 Results

(1) Performance Figures ･･･ 15 (2) Orders Received ･･･ 16 (3) Net Sales ･･･ 17 (4) Operating Income ･･･ 18 (5) Cash Flow ･･･ 21

• 4. Plans for FY20

(1) Performance Figures ･･･ 22 (2) Orders Received ･･･ 23 (3) Net Sales ･･･ 24 (4) Operating Income ･･･ 26 (5) NTT Group (Access/Network) ･･･ 27 (6) NTT Group (Mobile) ･･･ 28 (7) NCCs ･･･ 29 (8) Urban Infrastructure ･･･ 31 (9) System-Solutions ･･･ 32 (10) Efforts for Mid- to Long-Term Growth ･･･ 33

• 5. Our M&A Strategy

(1) Development Direction by Business Segment ･･･ 36

• 6. Intitatives for ESG and SDGs

(1) ESG Initiatives ･･･ 37 (2) SDGs Initiatives ･･･ 38

• 7. Raising Shareholders’ Value

(1) Shareholder Return Policy ･･･39 (2) Plan for shareholder returns for FY20, etc. ･･･40

• 8. Topics

(1)Our company Employee Wins Gold Medal at Skills Competition ･･･41 (2) Our company selected as "Nadeshiko Brand“ ･･･42

－1－

Established May 17, 1954 Paid-in capital ¥6,888 million Stock listing Tokyo Stock Exchange (First Section) Securities Code: 1951 Unit of trading: 100 Total common stock issued: 117,812,419 shares Representatives Chairman: Fuminori Kozono President and CEO:Tetsuya Funabashi Consolidated net sales (FY 2019) ¥524.5 billion Number of employees (as of March 31, 2020) Consolidated total: 13,882 Head office 3-29-20 Shibuya, Shibuya-ku, Tokyo 150-0002, Japan Number of business

• ffices

Branch offices: 13 Sales offices: 21 Consolidated subsidiaries 93 Fiscal year-end March 31

(1) Corporate Profile

• 1. About Us

－2－

• 1. About Us

(2) Profile of President and CEO Tetsuya Funabashi

Career 1982 Joined NTT Corporation 2006 Manager of Ubiquitous Service Division, NTT Communications Corporation 2010 Director, Manager of Customer Service Division, NTT Communications Corporation 2014 Representative Director and Vice-president, NTT Communications Corporation 2018 Representative Director and Vice-president, KYOWA EXEO 2019 Representative President and CEO, KYOWA EXEO Born in Tokyo Academic background 1982 Completed masters' course, Department of Electrical Engineering, Graduate School, Yokohama National University －3－

1,000 2,000 3,000 4,000 5,000

1954年 1960年 1970年 1980年 1990年 2000年 2010年 2020年

1952: Nippon Telegraph and Telephone Public Corporation launched

1972: Listed on Tokyo Stock Exchange (First Section)

1985: Telecom liberalization; NTT goes private 1997: Japan’s telecom network fully digitized 2001: Optical access service launched 1979: Nationwide automation for telephone line switching completed 2006: Mobile number portability launched

1982: Entered the SI business 1986: Entered the environment business 1998: Entered the NI business 1991: Changed company name to KYOWA EXEO CORPORATION

Note) Net before FY1991 are non-consolidated sales. 2010: LTE service launched

• 1. About Us

(3) Company History

Net Sales (consolidated) (¥bn) 2001: Merger with Showa Technos 2004: Daiwa Densetsu made a Group company Wako Engineering made a Group company 2005: KANAC made a Group company 2010: Ikeno Tsuuken made a Group company 2011: ICOMSYSTECH made a Group company Wako, Daiwa Group, and Ikeno Tsuuken became wholly owned subsidiaries 2014: Advanced Information Design made a Group company 2018 : C-Cube, Seibu Electric Industry and Nippon Dentsu made a Group company KOHKEN made a Group company 2019 : DeClout & KDT & SUN PLANNING SYSTEMS & Winner Engineering & CPU made a Group company

－4－

FY2019…524.5¥ bn

■Transition of consolidated net sales

500 400 300 200 100

1954: Company established

Waste-treatment plant Optical fiber Mobile base stations Agriculture ICT Cloud/ data center FTTH Optical fiber connected offices Solar power generators SOA, billing CCTV and digital signage Network/servers, Wi-Fi, security HEMS, smart community

(4) Segment Overviews

• 1. About Us

Segment

Net Sales FY19 ENGINEERING

• SOLUTIONS

Telecom carriers NTT Group

227.8

NCCs

40.7

Urban infrastructure

135.2

System-Solutions

120.7

Total

524.5

Telecom- Carriers

(NTT Group)

Urban infrastructure System Solutions

Sensor networks (social infrastructure)

(¥ bn)

Telecom carriers

(NCCs)

7.8%

Civil engineering (reduction of above-street wiring) Networks for telecommunication

• ffices

Mobile base stations Constructing electrical and air-conditioning facilities Mega solar power station CATV Railroad communications

－5－ 43.4% 48.1% 25.8% 23.0%

Total 51.2%

(4) Segment Overviews — Telecom carriers

• 1. About Us

◆ Kyowa Exeo’s core business, nurtured since the company was founded more than 60 years ago ・NTT Group We build and maintain telecommunications facilities for NTT Group companies. ・NCCs

We design, construct, and maintain telecommunications facilities for KDDI, Softbank, Rakuten, municipal offices, cable television companies, railway companies, and other customers. We lay optical fiber and cable between phone exchanges and homes and

• ffices and provide

construction and maintenance services. We install switchers and routers/servers at exchanges and construct and maintain related electrical facilities. We design, construct, test frequencies, and maintain mobile base stations and in-building mobile communication systems.

【Access engineering】 【Network engineering】 【Mobile engineering】

Home

Home Networking Communications cables (optical fiber) Mobile phone base station Communications tunnels (underground conduits, service tunnels) In-station facilities of telecommunications carriers

53.5% －6－

Telecom- Carriers (NTT Group)

43.4%

Telecom carriers (NCCs) 7.8%

(after) (before)

Constructing electrical facilities

【Waste-treatment plant】 【Constructing electrical and air- conditioning facilities】 【Renewable energy】 【Reduction of above-street wiring】

Mega solar power station Reduction of above-street wiring

◆ Using the electrical and civil engineering skills developed in our telecommunications infrastructure business to build a more convenient society

・Building and maintaining telecommunications facilities for local governments and cable TV, railway, and other companies ・Solar power generators, biomass boilers, and other renewable energy technologies ・Constructing electrical and air-conditioning facilities for office buildings, apartments, and data centers ・Eliminating utility poles by laying electrical and telecommunications cable in underground conduits ・Designing, constructing, operating, and maintaining water and waste-treatment plants

(4) Segment Overviews — Urban infrastructure

• 1. About Us

【Road telecommunications construction】

－7－

25.8%

【Network integration (NI)】 【System integration (SI)】

◆ Using information and communications technology to provide total solutions in the NI and SI fields

・ Network Integration (NI) Offering network solution services covering servers, wireless networks, security, cloud computing, imaging, EMS , and sensors ・System Integration (SI)

Provision of large-scale entrusted development for the public sector, telecommunications, manufacturing, and the financial industry and provision of a solution to business process reform and operation support

・Overseas projects Construction and maintenance of overseas telecommunications infrastructure, provision of network solutions services

Customer service center

(4) Segment Overviews — System Solutions

• 1. About Us

【Overseas projects】

Seminars to discuss examples of system architectures for businesses

－8－

Access works in the Philippines

23.0%

■

• ■

■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

• ▲

▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ■ ■ ▲

• ■ Group Structure (as of July 1, 2020)

KYOWA EXEO CORPORATION

Net Sales: ¥282.9 billion（Non-consolidated figures）

■ Business Bases

Major Consolidated Subsidiaries (5 companies)

Exeo Tech Net Sales: ¥32.1.6billion Daiwa Densetsu Net Sales: ¥18.0 billion

Other Consolidated Subsidiaries（88 companies）

■ Domestic bases

• Bases of Five Major Consolidated Subsidiaries

▲ Bases of Other Consolidated Subsidiaries 【Overseas Bases】

(5) Group Structure and Business Bases

• 1. About Us

Philippines Thailand Singapore

C-Cube Net Sales: ¥73.6 billion Seibu Electric Industry Net Sales: ¥56.8 billion Nippon Dentsu Net Sales: ¥38.2 billion

Access

Shinyei Tsushin, Suncrex, Ecos Hokuei, Sankyo-Techno, KANAC,

• K. Technos, Sigmax

Networks &Mobile

Exeo Mobile, Toho Communications, Yuai Tuken, Kyoei Densetsu Kogyo, Denseisya, KDT

Civil

Exeo Infra, Infratechno

IT

ICOMSYSTECH, ACCRESCO, AID, WHERE SUN PLANNING SYSTEMS, CPU

Overseas projects

MG EXEO, EXEO ASIA, EXEO GLOBAL, LAE, DeClout, Winner Engineering

Other

KYOWA SECURITY SYSTEM, Kyokuyoh, Shinwa Seisakusyo, Exeo Butsuryuu Service, Exeo Business, ASAHI DENWA KOGYO, KOHKEN

－9－

（Note）The net sales of each company are the actual results for the fiscal year ended March 2020.

■ ■ ■ ■ ■ ■

One-stop construction services across Japan・Multiple-carrier migration and migration compatibility Planning and development Construction Operations and maintenance Total process coverage (end-to-end process management) Total solutions Access (Optical-fiber networks) NI solutions (Wireless networks, Security, DX-related, etc.) Mobile (Construction of 4G&5G radio base stations, etc.) Network (Server, Router, Electric power work) Road telecommunications construction, Railway communications work, Cable TV Reduction of above-street wiring, Waste-treatment plant, Renewable Electric and air-conditioning facilities for large buildings, Solar power facilities, Data centers

(6) Our Group’s Strengths

• 1. About Us

－10－ SI solutions(Large-scale system development, Business support solutions, etc.)

■ Approved as a stock in the JPX Nikkei 400

The JPX Group and Nihon Keizai Shimbun (Japanease newspaper)selected 400 "a company that is attractive to investors" that meet various requirements of global investment standards, including efficient use of capital and shareholder-conscious management (Replacement in August every year based on 3-year average ROE, etc.).

■ Approved as a stock in MSCI Japan ESG Select Leaders Index

MSCI selects companies with excellent ESG evaluation from the top 700 stocks in Japan (Currently consists of 246 stocks and is replaced every June)

■ Obtained the Kurumin mark for excellent childraising support

Approved by the Ministry of Health, Labour and Welfare as a child-rearing support company based on the Law for Measures to Support the Development of the Next Generation in 2015

■ Obtained “Eruboshi (Top Class)" certification based on the Law for the Promotion of Women's Participation and Advancement

Recognized by the Ministry of Health, Labour and Welfare as an excellent company in 2016 with regard to the promotion of female participation and career advancement.

■ Approved as Nikkei Smart Work Management Survey Star 3.5 (November 2019)

Ranked 3.5 stars in the Nikkei SmartWork Management Survey, which selects leading companies that improve productivity through reformation of working styles

－11－

• 1. About Us

(7) Public evaluation

(1) Medium-term vision

Focus Group strengths to take total solutions to a new growth stage

２. Medium-term management plan（FY16-20）

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

(2) Basic Policies (3) Performance Target for FY20

■ Net sales ¥525.0bn ■ Operating income ¥32.0bn （Operating income margin 6.1%）

－12－

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

FY15 FY16 FY17 FY18 FY19 Plan FY20 Plan

Growth segment

(¥bn)

(4) Objective and Growth Picture

Actively conduct M&A in addition to organic growth

Solution fields including SI and NI Facility fields including power and air conditioning

500 450 400 350 300 250 200 150 100 50

－13－

２. Medium-term management plan（FY16-20）

Transition of consolidated sale by segment

550

FY19

298.8 312.6 423.7 525.4 525.0 20.8 25.6 31.7 31.1 32.0 7.0% 8.2% 7.5% 5.9% 6.1%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 0.0 100.0 200.0 300.0 400.0 500.0 600.0

FY16 FY17 FY18 FY19 FY20 Plan

Net sales Operating income Operating income margin

(5) Recent Performance Trends

(¥bn)

－14－

２. Medium-term management plan（FY16-20）

◆ Sales increased substantially thanks to organic growth and year-round contributions by the three companies in western Japan, but profit fell due to an increase in SG&A expenses. ◆ Profit for FY19 fell substantially as a result of the extraordinary loss recorded after a review of valuation of the subsidiaries acquired.

• 3. Overview of FY19 Results

(1) Performance Figures

■ Overview of FY19 results (consolidated)

Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

(¥bn)

Note: Negative goodwill (18.3 billion yen) was posted as an extraordinary loss in FY18.

※

FY 2018 Full year

A B C C/A C/B

424.3 495.0 556.3

131% 112%

423.7 495.0 524.5

124% 106%

(13.8%) (13.4%) (13.0%)

58.3 66.3 68.3

117% 103%

(6.3%) (6.9%) (7.1%)

26.6 34.3 37.2

140% 109%

(7.5%) (6.5%) (5.9%)

31.7 32.0 31.1

98% 97%

(7.9%) (6.6%) (5.8%)

33.4 32.8 30.6

92% 94%

(9.5%) (4.4%) (3.0%)

40.2 21.8 15.6

39% 72%

Full year FY 2019 Plan

Ordinary income

Net income attributable to

• wners of parent

Operating income Orders received Net sales Gross profit SG&A expenses

Actual YOY

Plan accuracy

Note:

The impact of the COVID-19 coronavirus

• n performance was seen to a slight

extent in overseas subsidiaries but was extremely limited in FY19.

－15－

424.3 556.3 FY18 FY19

◆ Orders in urban infrastructure and system-solutions performed well, and orders exceeded our targets significantly in all segments, including the three companies in western Japan. ＋132.0

（348.2）

(2) Orders Received

(¥bn)

Note: All amounts less than ¥100m are disregarded.

← Existing Exeo G Actual

Urban Infrastructure +11.9 NTT Group

• 0.8

NCCs +4.1 System- Solutions +19.0 Seibu Electric Industry +34.8 Nippon Dentsu +22.1 C-Cube +40.9

▲ Access ▲ Network ○ Mobile ▲ KDDI ○ SB ○ Rakuten ○ Telecommunications facilities ○ Electricity supply ○ Urban Civil engineering ▲ Environmental engineering ○ SI ○ NI ○ Global Three companies in western Japan （＋97.8）

Existing Exeo G （＋34.2）

（382.4）

Existing Exeo G→ Actual

• 3. Overview of FY19 Results

－16－

423.7 524.5 FY18 FY19

◆ Orders in urban infrastructure and system-solutions were favorable and grew significantly. Net sales targets were achieved in all segments including the three companies in western Japan.

（357.3）

Note: All amounts less than ¥100m are disregarded.

(3) Net Sales

+100.8

Urban Infrastructure +10.7 NTT Group

• 7.1

NCCs

• 2.7

System- Solutions +19.0 Seibu Electric Industry +23.5 Nippon Dentsu +19.6 C-Cube +37.8

▲ Access ○ Network ▲ Mobile ▲ KDDI ▲ SB ○ Rakuten ○ Telecommunications facilities ○ Electricity supply ○ Urban Civil engineering ▲ Environmental engineering ○ SI ○ NI ○ Global

Existing Exeo G （+19.9）

Three companies in western Japan （＋80.9）

(¥bn)

← Existing Exeo G Actual

（337.4）

Existing Exeo G→ Actual

• 3. Overview of FY19 Results

－17－

31.7 31.1 FY18 FY19

Note: All amounts less than ¥100m are disregarded.

◆ Operating profit decreased as the sales mix worsened and the SG&A expenses increased due to M&A and new subsidiaries.

(4) Operating Income

(¥bn)

• 0.6

Existing Exeo G （-4.2）

Three companies in western Japan （＋3.6）

Up due to increase in sales +3.1 Seibu Electric Industry +0.8 Nippon Dentsu +0.8 C-Cube +2.0

Existing Exeo G→ Actual

（27.4） （23.2）

Increase in SG&A expenses (e.g. M&A)

• 2.7

Overseas subsidiaries

• 1.0

Lower, less profitable sales mix

• 3.8

Integration synergy +0.2 (Integration synergy) +0.3 over

← Existing Exeo G Actual

• 3. Overview of FY19 Results

－18－

◆ The cooperation policy with the three integrated companies in western Japan has been proceeding well, and integration synergy has been steadily created.

Reference1: Synergy with three companies in western Japan

■ While securing the profit level, concentrating operations in the same area as one operation for better construction efficiency (NTT access/service comprehensive construction in the Kyoto-Osaka region, and others) ■ Improvement of profitability through rebuilding of construction formation (reduction of outsourcing costs outside the group by mutually utilizing subsidiaries) ■ Acquisition of orders through sales collaboration and construction collaboration and provision of mutual support for construction work on a nationwide basis (e.g. the joint response of the three companies to Rakuten Mobile’s construction in the Tokyo-Nagoya-Osaka area)

FY19 actual per year

Synergy from integration

• ver 500 million

On a consolidated operating profit basis, we securely generated the integration synergy of 500 million per year as initially planned for FY19.

• 3. Overview of FY19 Results

－19－

10.0 11.2 15.1 18.1 13.6 8.4 9.6 10.5 13.6 17.5 18.4 20.8 25.6 31.7 31.1 FY15 FY16 FY17 FY18 FY19

Group companies Exeo alone

◆ The group companies achieved significant growth, and the ratio of consolidated to non-consolidated profits more than doubled.

（1.8） （1.9） （1.7） （1.8） （2.3）

Reference2: Trends in Group company profitability

■ Trends in operating profits over the past five years (consolidated/non-consolidated)

Notes: Ratio of consolidated to non-consolidated profits = operating profits from consolidated projects ÷operating profits from non-consolidated projects. All amounts less than ¥100m are disregarded.

(¥bn)

(Ratio of consolidated to non-consolidated profits)

• 3. Overview of FY19 Results

－20－

◆ Cash flow is stable and ample cash on hand has been secured.

FY16 FY17 FY18 FY19 Cash at beginning of FY 16.0 15.2 30.3 41.4 Operating activities 15.5 24.8 12.7 17.2 Investing activities

• 6.0
• 4.5
• 17.6
• 17.0

Financial activities

• 10.2
• 5.1
• 4.9

4.2

Increase/decrease of cash due to share exchange

21.0 0.1 Cash at end of period 15.2 30.3 41.4 46.0

(5) Cash Flow

■ Cash flow (consolidated)

(¥bn)

Note: All amounts less than ¥100m are disregarded.

• 3. Overview of FY19 Results

－21－

◆ We strive to increase sales through organic growth, but the impact of the COVID-19 coronavirus is somewhat unclear. ◆ Although business activities are partially limited, we aim to achieve a record-high profit while improving productivity.

• 4. Plans for FY20

(1) Performance Figures

Notes: All amounts less than ¥100m are disregarded. Figures in parentheses are ratio to net sales.

■ Plans for FY20 (consolidated)

(¥bn)

A B B/A

556.3 525.0

94%

524.5 525.0

100%

(13.0%) (13.8%)

68.3 72.5

106%

(7.1%) (7.7%)

37.2 40.5

109%

(5.9%) (6.1%)

31.1 32.0

103%

(5.8%) (6.3%)

30.6 33.0

108%

(3.0%) (4.0%)

15.6 21.1

135% Ordinary income

Net income attributable to owners of parent

Operating income

YOY

Orders received Net sales Gross profit SG&A expenses

Plan FY 2019 Actual FY 2020

In plans for FY20, the impact of the COVID-19 coronavirus on performance has been reflected in items only where the impact is clear based on the information currently available. <e.g.> ・ Decline in sales due to the temporary suspension of construction inside customers’ houses ・ Decline in orders for solutions related to commercial facilities and others due to their limited operations －22－

556.3 525.0 FY19 FY20 Plan

◆ Orders are expected to decrease temporarily against the previous fiscal year’s large orders in urban infrastructure and the three companies in western Japan.

(2) Orders Received

Note: All amounts less than ¥100m are disregarded.

← Existing Exeo G Plan

• 31.3

Existing Exeo G → Actual

Urban Infrastructure

• 12.6

NTT Group

• 12.4

NCCs ±0 System- Solutions +14.1 Seibu Electric Industry

• 9.0

Nippon Dentsu ±0 C-Cube

• 11.4

▲ Access ▲ Network ▲ Mobile ○ KDDI ▲ SB ○ Rakuten ▲ Telecommunications facilities ▲ Electricity supply ○ Urban Civil engineering ○ Environmental engineering ○ SI ○ NI ○ Global

Existing Exeo G （-10.9）

Three companies in western Japan （-20.4）

(¥bn) （382.4） （371.5）

• 4. Plans for FY20

－23－

524.5 525.0 FY19 FY20 Plan

◆ Although the impact of limited construction and other constraints is somewhat unclear, we focus on completing a large amount of carried-over construction work, aiming to increase sales.

(3) Net Sales

← Existing Exeo G Plan Existing Exeo G → Actual

Note: All amounts less than ¥100m are disregarded.

(¥bn)

＋0.5

Urban Infrastructure +6.4 NTT Group

• 11.4

NCCs +7.2 System- Solutions +9.1 Seibu Electric Industry

• 3.0

Nippon Dentsu +0.3 C-Cube

• 8.1

▲KDDI ○ SB ○ Rakuten ▲ Telecommunications facilities ○ Electricity supply ○ Urban Civil engineering ○ Environmental engineering ー SI ○ NI ○ Global

Existing Exeo G （+11.3）

Three companies in western Japan （-10.8）

（357.3） （368.6）

▲ Access ー Network ▲ Mobile

• 4. Plans for FY20

－24－

◆ Work carried over will continue to increase because of the increased number of orders for large construction projects for urban Infrastructure with longer construction periods.

■ Transition of amount of work carried over (consolidated)

Reference: Status of projects carried over

(¥bn)

← Existing Exeo G Actual

• 4. Plans for FY20

（169.9） （197.6）

Note: All amounts less than ¥100m are disregarded.

－25－

31.1 32.0 FY19 FY20 Plan

◆ Although the worsening of the mix and the increase in SG&A expenses are expected, we aim to achieve record-high income, while improving productivity.

（23.2）

(4) Operating Income

Up due to increase in sales +1.2 Sales mix

• 2.9

Seibu Electric Industry

• 0.2

Nippon Dentsu +0.2 C-Cube

• 0.7

← Existing Exeo G Plan Existing Exeo G → Actual

Note: All amounts less than ¥100m are disregarded.

Improved Productivity +3.9

(¥bn)

Improvement from Unprofitable status ＋2.1 Increase in SG&A expenses (e.g. new consolidation)

• 2.7

Existing Exeo G （+1.6）

Three companies in western Japan （-0.7）

＋0.9

（24.8）

• 4. Plans for FY20

－26－

117.7 115.8 119.3 116.1 107.1 32.5 62.1 61.2 117.7 115.8 151.8 178.2 168.3 FY16 FY17 FY18 FY19 FY20 Plan

Existing Exeo G Three companies in western Japan

(5) NTT Group (Access/Network)

■ Net sales of NTT Group (fixed-line network, consolidated) ◆ Access construction is expected to decline, but maintenance and construction for disaster countermeasures have been increasing gradually in recent years. ◆ In line with the launch of 5G, network construction for mobile backhaul is expected to increase.

■ NTT Group’s disaster countermeasures

1. Improvement of reliability of communication networks （including multiple transmission routes）

• 2. Securing of important

communication

• 3. Early

restoration

• Reinforcement of facilities,

underground cable installation, etc.

• Acceleration of restoration

response, estimation of damages using AI, etc.

■ Illustration of network construction transition

20年度 21年度 22年度 23年度 24年度 25年度

FY20 FY21 FY22 FY23 FY24 FY25

NTT

Non-NTT

Construction of K/SB/Rakuten’s 5G-MBH

Construction of NTT5G-MBH

NTT electric power facility installation work

NTT

docomo

Non-NTT electric power construction Virtual field, platform update, etc.

(Source: Created by Kyowa Exeo based on NTT presentation material)

(full-year plan)

(¥bn)

Network construction Electric power construction Note: MBH: mobile backhaul

• 4. Plans for FY20

－27－

50.6 51.5 48.9 45.0 42.6 2.8 4.5 4.7 50.6 51.5 51.7 49.5 47.3 FY16 FY17 FY18 FY19 FY20 Plan

Existing Exeo G Three companies in western Japan

◆ 5G construction has begun, but it is assumed that full-scale investment in the base stations should start in or after the next fiscal year. ◆ As the construction of small base stations increases, we will cooperate with Access and undertake construction effectively.

(6) NTT Group (Mobile)

■ Net sales of NTT Group (mobile network, consolidated)

(¥bn)

(Source: Created by us based on NTT DoCoMo presentation material.)

■ Image of NTT DOCOMO Main Processes (our company's assumption) FY19 FY21 FY22 FY25 FY20

Generation & main process Frequency

■ Illustration of NTT DOCOMO’s 5G area development

3.7GHz 4.5GHz 28GHz

500 stations in 150 locations nationwide 47 prefectures

20,000 stations

10,000 stations

500 cities including all

• rdinance-designated

cities

(full-year plan)

March 2020 June 2020 March 2021 June 2021 March 2022

• 4. Plans for FY20

－28－

23.3 28.1 31.4 28.6 35.9 6.6 12.1 11.0 23.3 28.1 38.0 40.7 46.9 FY16 FY17 FY18 FY19 FY20 Plan

Existing Exeo G Three companies in western Japan

(7) NCCs

■ Net sales of NCCs (consolidated)

(¥bn)

◆ Orders from KDDI are expected to recover slightly. We will continue to work actively on SB and Rakuten construction. ◆ Rakuten wireless base station construction has started nationwide, and we are working with the three companies in western Japan to respond.

(Source: Created by us based on KDDI presentation material.)

■ Estimate of KDDI’s network construction

■ Estimate of Softbank’s and Rakuten’s network construction

K D D I

(full-year plan)

SB Rakuten FY19 FY20 FY21

Pre 5G Non-standalone Standalone

FY19 FY21 FY22 FY23 FY20 5G Service

5G facility installation

2 years ahead

End of 3G

Disaster countermeasures

Maintenance/ repair

Measures for increased demand

Shared use of base stations Landmarks

Locations with no signal

Spots Events Indoors Outdoors

4G Service

5G Service 4G Pre Service 5G Pre Service

• 4. Plans for FY20

－29－

320.5 350.1 381.6 369.8 400.0 FY16 FY17 FY18 FY19 FY20

合計

325.0 519.3 560.8 601.7 615.0 610.0 FY16 FY17 FY18 FY19 FY20

Mobile

156.0 154.0 161.0 150.0 156.0 547.9 549.6 541.0 522.5 480.0 FY16 FY17 FY18 FY19 FY20

Optical fiber

597.1 577.9 593.7 572.8 0.0 FY16 FY17 FY18 FY19 FY20

■ NTT DoCoMo

Reference: Investment Trends of Major Telecom Carriers

■ NTT East/West ■ KDDI ■ SoftBank

(¥bn)

(Source: Figures released by the telecommunications carriers)

Plan Plan Unpublished Plan Plan

• 4. Plans for FY20

－30－

67.3 74.5 91.5 101.5 107.9 17.1 33.7 29.8 67.3 74.5 108.6 135.2 137.7 FY16 FY17 FY18 FY19 FY20 Plan

Existing Exeo G Three companies in western Japan

◆ Construction for 700MHz Band TV reception measures is declining, but sales are expected to remain strong until this fiscal year. ◆ We aim to continue to win large orders for electrical work in places such as data centers.

(8) Urban Infrastructure

(¥bn)

■ Urban Infrastructure net sales (consolidated)

(Source: Created by us based on the HP of Association of 700MHz Frequency Promotion)

Installation

• f filter

Or Install a filter to cancel the radio waves from the 700MHz band mobile phone base stations Replacement

• f booster

Replace a booster with one that amplifies only the bands up to 710MHz (where the situation cannot be addressed with the installation of a filter) Construction areas of the Company

Kanto and Koshinetsu

■ Data center work

Forecast of domestic business operators’ investment for new construction or expansion of data centers (Source: Created by us based on official information from IDC Japan)

Assumed scale of orders received by KYOWA EXEO alone

• Approx. 140

billion yen

(full-year plan)

FY20 FY21 FY22 FY23

• Approx. 20 billion yen

■ 700 MHz Band TV reception measures

• 4. Plans for FY20

－31－

39.7 42.5 46.9 65.9 75.1

26.5 54.8 49.7

39.7 42.5 73.4 120.7 124.8 FY16 FY17 FY18 FY19 FY20 Plan

■ System-Solutions net sales (consolidated)

■ Solution Map (added value expansion plan)

(9) System-Solutions

Proprietary package product Sales activity Sales management Paperwork efficiency improvement Securing safety Fostering

• f

engineers Division- specific work

Construction work

Site assistance

Construction companies, local governments

Map information Manager Worker Stakeholders

IT

AI data analysis

Business process transformation solution

Business process management BPM platform solution/RPA solution

management

AI / Analytics

Security Helpdesk

Work details Work Flow

Enhancement of B2B sales ability Productivity improvement

• peration

IT operation optimization

Service management platform

Business visualization

Construction work management, disaster prevention In-memory data processing

Digitalization of work

Communication

Sales ability enhancement Competitiveness enhancement

Design

Construction work

Maintenance

Sales

Digitalization of business process

Business process analysis Sales

Orders

Delivery

Maintena nce

BPM platform API / Data integration

API Management

Data integration

Domestic G system Division-specific system Overseas G system Relationship reinforcement Manager Customer Sales representative

(¥bn)

◆ We will focus on expanding new solutions such as GIGA School and ServiceNow. ◆ We will establish a foundation for global growth mainly in the APAC region.

(full-year plan)

• 4. Plans for FY20

－32－

(10) Efforts for Mid- to Long-Term Growth

◆ We will further advance activities for the expansion of the existing solution business, and provide our products in combination with partner products to help customers move forward with DX.

KYOWA EXEO’s own products and technologies

Partner’s products and technologies

IT-related

Work-related

Best suited solution models

Improvement of IT operation efficiency

Implementation of COVID-19 countermeasures Update of key systems under the 2025 Digital Cliff Update of key systems under the 2025 Digital Cliff

Sophistication of factories

・ Automated operation using ServiceNow

Challenges are: The solutions are:

・ Implementation of telework using Microsoft Teams ・ Visualization and transformation of business processes using iGrafx ・ Construction of optimal network using local 5G, EX beacon, and others

Energy saving and environmental measures for buildings

・ Efficient power supply and eco-friendly measures using DC power supplies Provide one-stop full layer solutions in collaboration with group companies.

・・・

Expanded use of cloud Expanded use of cloud

・ Optimization of IT infrastructure and security enhancement

Urgent disaster countermeasures

・ Installation of disaster-prevention IoT to monitor water levels and portable storage batteries

Azure AWS

Teams Teams

DX: digital transformation

• 4. Plans for FY20

－33－

ServiceNow is a U.S. cloud service company that offers workflow platforms to enhance corporate productivity with the objective of reforming people’s workstyles.

◆ Efforts for new technologies and areas (examples of new products that we are working on)

Local 5G

• Ave. increase of

71.3% per year (Source: Created by us based on information from the Japan Electronics and Information Technology Industries Association (JEITA))

Forecast of total demand in Japan

(¥bn)

Service Now

Develop the contracted installation business for clients, and increase certified engineers to expand businesses.

The GIGA School Concept, which is led by the Japanese Ministry of Education, Culture, Sports, Science and Technology (MEXT), is a 5-year plan to provide students in compulsory education with personal computers for studying (one per student), a high-speed network environment, and other measures. ◆Government’s supplementary budget◆ 461 billion yen (FY19+FY20) => Installation of in-school network 129.6 billion yen Provision of PCs and other terminals 331.4 billion yen

GIGA School

In collaboration with companies in the market and related organizations, we aim to offer engineering, solutions, maintenance, and other services.

(10) Efforts for Mid- to Long-Term Growth

Infrastructure IoT equipment Solution services

2020 2025 2030

1,339.8 6.2 302.3 9.0 124.3 169.0 598.8 696.0 45.0

• 4. Plans for FY20

－34－

・ Review and group sharing of common and business systems ・ Use of new technologies such as AI and IoT ・ Building of data analysis platforms, and others

・ Improvement of desk work and on-site work processes ・ Business process transformation through the digitalization of analog operations ・ Improvement of workplace environments, and others

◆ Work on the improvement of productivity through the digitalization of business processes Promotion of work innovation

Promotion of system innovation

Improvement of expense calculation process => Automatic entry of travel and other expense payments from transportation IC cards and the digitalization of receipts Creation of smart offices => Creation of a smart office at our DX Strategy Department in the Shinagawa office to promote work-style reform Installation of AI-based photo evaluation system for on-site operations

(10) Efforts for Mid- to Long-Term Growth

Pass

AI-based photo evaluation

Fail Re-send

Retake photo Reposition

Safety check status

Send

Safety management server

○Cherry picker truck ○Safety cones ○Bars ○Enclosure check

Safety check status

○Safety cones ○Cherry picker truck ？ Enclosure check ○Bars Correctly positioned safety bars?

No safety bars positioned

• n vehicle side

Retake Confirm Retake Confirm

• 4. Plans for FY20

－35－

Engineering Solutions （NTT Group, NCCs） Engineering Solutions （Urban infrastructure） System Solutions

2011 Wako Engineering 2011

Icom

2010 Ikeno Tsuken 2014

AID

2018 C-Cube 2018 Nippon Dentsu 2018 Seibu Electric Industry 2015

WHERE

2018 ＫＯＨＫＥＮ Anti- corrosion coating

ＳＩ ＳＩ ＮＩ

Competitors (mainly undertaking NTT's communication facility construction)

Currently: Exeo Tech

Expanding areas of power/air conditioning and maintenance

・M&A in the power/air conditioning field, where synergy can be generated ・M&A in the facility maintenance field

Implementation of system enforcement, maintenance area expansion

・ Generation of synergy with each of the companies merged and previously acquired ・ M&A aiming at enhancing implementation system and expanding maintenance

Expansion of SI, NI, and global fields

・M&A in the IoT, AI, RPA, and BPM fields ・M&A in the fields of facility construction, SI, and NI in the ASEAN region

2011 Daiwa Densetsu

(1) Development Direction by Business Segment

• 5. Our M&A Strategy

2018

LAE

Electricity supply

2019

DeClout

ＮＩ

2019

eiwa-builtech

air conditioning sanitation 2019

SPS

ＳＩ

2019

KDT

2019

Winner E

air conditioning sanitation 2019

CPU

ＳＩ

2020

Sanetsu

(Partial investment)

Instrumentation

－36－

Our stocks have been selected for the MSCI Japan ESG Select Leaders Index. (as of June 2019)

Ｅ

Environment

・Reduction of CO2 emissions ⇒ 1% reduction of power/gasoline use compared to the previous year ・Use of green energy, forest conservation ⇒ Solar power business, Forest of Exeo, and so on ・Promotion of green procurement ⇒ 63% or more of ecological product purchases

Ｓ Society

・ Promotion of DS/WLB* ⇒ More than 25% new female graduate employment, total reduction of working hours, and so on ・ Securing safety and quality ⇒ Zero serious accidents per year, ensuring and disseminating the quality philosophy ・ Contribution to society and community ⇒ Recovery measures in the case of natural disasters, and community contribution

Ｇ

Governance

・ Strengthening corporate governance ⇒ 4 independent outside directors (Out of 12), 2 female directors, etc. ・ Ensuring compliance ⇒ Promotion of use of internal reporting system, etc. ・ Proper risk management ⇒ Specifying risks of processes, enhancement of BCP

• Activities on Forest of Exeo -

Fifty years after Exeo’s foundation, we once again acknowledge the need for global warming protection and community contribution, by currently concluding profit-sharing silviculture agreements* with five regional forest management offices nationwide. Naming each one a "Forest of Exeo," we are promoting activities to protect national forests and develop a friendship between employees and their families.

Conservation activities of national forests on the premise of not cutting them down.

*DS: diversity, WLB: work life balance

(1) ESG Initiatives

• 6. Intitatives for ESG and SDGs

－37－

• 6. Intitatives for ESG and SDGs

(2) SDGs initiatives

① Achievement of a safe and secure society through the infrastructure business

Achieve urban development that is safe and secure for everybody, as well as contributing to building infrastructure that is resilient to natural disasters

② Achievement of an affluent society through the solution business

Resolution of social issues and achievement of an affluent society through IoT technology Promotion of recycling and effective utilization of resources; achievement of a society for the prevention

• f global warming

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

③ Global environment conservation and achievement of a recycling-oriented society ④ Achievement of favorable communication with stakeholders －38－

(1) Shareholder Return Policy

• 7. Raising Shareholders’ Value

■ FY2020 planned annual dividend: 82 yen

◆ Our fundamental policy is to make active and stable dividend payments to all shareholders. ◆ From the FY2018 dividend, DOE was raised to around 3.5% to strengthen shareholder returns

Item FY17 FY18 FY19 FY20 Forecast DOE 3％ DOE 3.5% (integrated from 2H) DOE 3.5％ DOE 3.5％ Annual dividends per share ¥50 ¥70 ¥80 ¥82 Total annual dividends ¥4.78 billion ¥7.31 billion ¥8.97billion ¥9.21billion Payout ratio 26.4％ ※32.9 ％ 57.2％ 43.4％

*Calculated by subtracting the extraordinary profit (negative goodwill) arising from the management integration.

■ Basic concept of treasury stock repurchase Comprehensively consider cash flow and other items while watching market trends and share price level, and flexibly repurchase stock.

－39－

4.3 4.7 7.3 8.9 9.2 3.0 3.0 5.0 7.3 4.7 10.3 13.9 0.0

FY16 FY17 FY18 FY19 FY20 PLAN Total dividends Total acquisition of treasury stock

46 50 70 80 ¥82

FY16 FY17 FY18 FY19 FY20 Plan

■ Dividend history (per share)

(2) Plan for shareholder returns for FY20, etc.

■ Total shareholder return

(Total dividends + total acquisition of treasury stock)

■ EPS/ROE ■ Acquisition of treasury stock

• 7. Raising Shareholders’ Value

Interim 41 plan Year-end 41 plan

9.2

3.0 3.0 ¥5.0 bn

FY16 FY17 FY18 FY19 FY20 Plan

145 189 212 139 ¥189 8.9% 10.8% 10.0% 5.9% 7.8%

FY16 FY17 FY18 FY19 FY20 Plan

EPS ROE

Note)EPS and ROE are calculated by subtracting the special profit (negative goodwill) from the management integration.

Undecided Undecided

Plan

－40－

Note: The National Skills Competition is a competition in which young technicians under the age of 23 compete in skills by event. This competition has 1,239 athletes participating in 42 job categories. Employees of Ebihara participated in the "information network construction" race, in which they competed in speed competitions of fiber-optic fusion splicing and wiring tasks for buildings during a fixed time of approximately 8 hours in 2 days.

◆ Employees of Ebihara in our company successfully won the gold medal in the information- network construction category at the "The 57 National Skills Competition" held in Aichi- Prefecture for 4 days from November 15, 2019.

■ Our company Employees Win 7th Gold Medal at National Skills Competition for the First Time in 3 Games In addition, our company employees have participated in international competitions held every other year 5 times in the past as representatives of Japan, and have won gold medals in all competitions.

• 8. Topix

(1) Our company Employee Wins Gold Medal at Skills Competition

－41－

(2) Our company selected as "Nadeshiko Brand"

◆ In fiscal 2019, the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange jointly selected listed companies that excel in promoting women's participation and career advancement "Nadeshiko Brand“ ,and our company selected as it’s brand (Announced March 3, 2020).

Note: The "Nadeshiko Brand" is a program launched jointly by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange in fiscal 2012 to promote investment in companies and accelerate the efforts of listed companies by introducing companies that excel in "Promotion of Women's Activities " as stocks attractive to investors who place importance on medium- to long-term corporate value improvement. In fiscal 2019, 46 companies in each industry were selected.

As part of its management strategy, our company is actively promoting diversity. Based on the commitment of top management, we have announced quantitative targets for the promotion of women's participation in the workplace, and are working to improve the awareness of management, male employees, and female employees, as well as implementing various training programs and review of the system. We are also actively working to improve productivity in conjunction with DX (digital transformation) initiatives.

• 8. Topix

－42－

A variety of IR materials is available for consultation on our company website.

Management of the Company has made estimates and assumptions relating to financial forecasts based on information available as of the reporting date. Actual results could differ from those estimates. Disclaimer Regarding Forward-Looking Statements

3-29-20 Shibuya, Shibuya-ku, Tokyo 150-0002 JAPAN

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

TEL: (81)3-5778-1073