President's Interview

We believe that every member of the KONOIKE Group working as one is the most important aspect to pursue within our corporate philosophy in order to be trusted by everyone, be widely supported by society and continue to exist in the future.

We reconfigured the elements making up "Brand Value" held by the KONOIKE Group up until now, such as the Business Principle and Action Guidelines and reconstructed them as "Our Brand" in May 2018.

As part of this, we have nominated "Our Mission" as our corporate philosophy, which we define as "We pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust."

Each and every member of the KONOIKE Group shall reevaluate their "wills" toward "humanity" and "relationships of trust" and, with a new readiness for work, go forward to create unique value.

Our vision for 2030

We see the major two changes of the emerging era to be a "rising labor shortage" and the "progress of technological innovation," as typified by utilization of AI, IoT, big data and robots. We plan to respond to this trend on the front foot and change our business and management practices at the fundamental level and aggressively carry out significant transformation.

We have formulated the "2030 Vision" to describe in concrete terms how we expect to change through reforms. We have positioned the current Medium-Term Management Plan, which started in the fiscal year ended March 31, 2019, as the "Foundation-Building" stage in which we will build a firm foundation for achieving our "2030 vision."
The following is an explanation of this "Foundation-Building."

"Foundation-Building" in the Medium-Term Management Plan

We consider the "Five Specific Initiatives" that we are earnestly implementing in the Medium-Term Management Plan (FY3/2019 - FY3/2021) to be the first step toward realizing the "2030 Vision" and important measures that will affect future initiatives. Specifically, these initiatives are as follows:

• Build a Deeper Foundation for Future Growth
• Restructure Management Foundation
• Management Focus on Cost of Capital
• Pursue Growth Spanning Divisional Boundaries
• Discover, Incubate New Core Businesses; Innovate New Value

Our first initiative is to "Build a Deeper Foundation for Future Growth" First, we have focused on addressing the labor shortage that we expect to continue to become more serious going forward. After comprehensively reviewing the preexisting human resources system, we introduced a new system in this April. In addition to this, we are working to realize measures that will improve the quality of the value that the KONOIKE Group provides, including improving productivity through innovative deployment of IT systems and strengthening initiatives in the areas of safety and quality.

Our second initiative is "Restructure Management Foundation" Aiming to strengthen governance to boost the business efficiency of the entire Group and thereby improve growth and profitability, we are further delegating authority of operational execution at each operating base and project site to promote swift decision making. In addition, we will carry out restructuring of the management accounting system to visualize the management statuses of each business from various viewpoints and realize appropriate human resource development and evaluation.

Our third initiative is "Management Focus on Cost of Capital" We have introduced ROIC (Return on Invested Capital) as a new management index. By clarifying the direction of strategies based on business portfolio, we have aimed to develop concrete strategies for each business division.

In our fourth initiative, which is "Pursue Growth Spanning Divisional Boundaries" we have launched projects that are centered on the Sales Division that we newly established last year and have begun marketing activities as united and coordinated efforts of all the related business departments. Also, we established India Headquarters in April this year, and we have been promoting the business development of each division in India.

In our fifth initiative, which is defined as "Discover, Incubate New Core Businesses; Innovate New Value" we have steadily carried out initiatives aimed at promoting the introduction of new technology at work sites and the promotion of demonstration trials, centering on the New Business Development Division. In addition, we carried out investment in venture capital in May this year and are working to further strengthen activities.

To our shareholders

Finally, I would like to thank shareholders for their support as we pass our sixth year on the First Section of the Tokyo Stock Exchange. I especially wish to thank our stakeholders, including shareholders, investors, customers, trading partners, and local communities, for your tremendous support and patronage.

Looking forward, we aim to meet the expectations placed on the KONOIKE Group and fulfill our social responsibilities. To achieve this, we will work to take dramatic steps forward in accomplishing our 2030 Vision and realizing our corporate philosophy.

I ask for your continued support as we move forward.