Stock Quotes (TSE First Section：1951)
2025/06/20 15:30
Since its founding in 1954, our group has contributed to solving various social issues and enriching people’s lives by expanding its business domains according to the needs of the times, with specialized technology in the information and communication infrastructure field as its core competence. Our Group’s greatest strength is the technological prowess we have developed through our extensive on-site experience. In the field of telecommunications, we provide consistent services throughout Japan for various communication equipment, from planning and design to construction, operation and maintenance. In the field of urban infrastructure, we use electrical and civil engineering technologies developed in telecommunications construction to contribute to the diverse aspects of society, including expressways, railways, data centers and renewable energy. Moreover, in the field of system solutions, we apply information and communication technology (ICT) to provide one-stop solutions to meet diverse needs, from system implementation projects such as digital transformation (DX) consulting and IT foundation formulation projects to the maintenance and operation of projects.
In recent years, the environment surrounding our Group has changed dramatically as technology has advanced and economic uncertainty has increased. To continually create corporate value in these circumstances, we believe that it is important for us to be a corporate group that combines the flexibility to autonomously and continuously innovate by flexibly responding to changes in the management environment, the resilience to single-mindedly refine and improve our ability to persevere, and the technological prowess that we have cultivated.
With the group purpose of “Bring the benefits of connectivity to all”, our group aims to solve social issues, the universal mission of companies, by connecting and integrating diverse engineering through innovation, striving to become a company needed not only in Japan but also in the global society. We kindly ask for your continued warm understanding and support for our group.
2030 Vision
People, goods, information and infrastructure in society will all be connected through sensors and networks, and engineering for connecting them is required to integrate an array of technologies.The Group aims to contribute to solving social issues in Japan and on a global scale by integrating its engineering capabilities, which it has deepened through new technologies and open innovation, and using those capabilities to provide solutions for all social infrastructures, including information and communications infrastructure.
01 Carbon-neutral society
02 A smart society where people live healthy and vibrant lives
03 Global society where diversity is enjoyed
04 Society without poverty or inequality
Medium-Term Management Plan (2026-2030)
The Group has developed a Medium-Term Management Plan that describes strategies and performance targets in the coming five years to achieve the 2030 Vision.
EXEO Group addresses social issues and contributes to solving them through our business, achieving sustainable growth together with society.
Regarding the business and accounting situations, etc. described in the financial statements in securities report, the main risks that the Manager recognizes as having the possibility of significantly impacting the financial condition, business performance, or cash flow condition of the KYOWA EXEO Group are as stated below.
These main risks are described as matters that should be addressed as a priority, in view of the extent of their impact and frequency of occurrence. The Group identifies and assesses these risks on a regular basis by connecting them to its material issues (essential issues to be addressed as a corporate group) that it announced in May 2023. However, this is not an exhaustive list of all the risks facing the Group and other risks besides those stated also exist. The Group could be impacted by any such risk factors.
Matters concerning the future contained in descriptions of this document are based on the Group’s assessments as of the date of submission of the securities report.
In the Group’s risk assessment, it assesses and reviews not only its business activities, management plans and other inherent risks but also the social situation and social issues that have been attracting more attention in recent years.
Risk factors are identified in view of all possibilities and assessed on a regular basis. Matters that should receive a priority response based on their impact and probability of occurrence are shown in the risk heat map.
Risk management and the monitoring of each risk factor are implemented by the relevant Staff Division providing support in that area of business. Events that are assessed to be serious risks are reported to the Business Risk Management Committee and specific initiatives for mitigating these risks and improving the Group are implemented through the Group’s risk management system.
We have developed Risk Management Rules that set out basic matters regarding the Group’s risk management system, and we have put in place a management system based on the approach of the Three Lines Model. We have established risk categories and assigned corresponding Staff Division and Risk Management Division that manage them. The Business Risk Management Committee has also been created to serve as the Group-wide risk manager. We have implemented a system for identifying and assessing risks throughout the Group. Furthermore, we have developed and are implementing a business continuity plan (BCP).
We have also implemented a system for establishing crisis management committees to minimize losses when unexpected risks materialize. We establish a crisis management committee when a crisis that could significantly impact our business occurs.
[Description of Terms]
| Internal Control Committee | The Company has developed a system to achieve compliance with laws and regulations, operational effectiveness and efficiency, and the reliability of financial reporting under its basic policy on the internal control system and has established the Internal Control Committee (chaired by the President & CEO), which monitors and evaluates the overall operation of the internal control system. |
| Business Risk Management Committee | The Business Risk Management Committee acts as the Group-wide risk manager. The committee ensures that the strategies and business objectives created and implemented by the first-tier risk managers (the heads of the organizational units at the Company’s Head Office, branch managers, and presidents of subsidiaries; hereinafter “Business Risk Managers”) are consistent with the Group’s mission, vision, and core values. The committee also manages the impact of risks related to the development of these strategies and the business objectives across the entire Group. |
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Business Risk Managers (first-tier risk managers) |
As first-tier risk managers, the Business Risk Managers establish strategies that are consistent with the Exeo Group’s mission, vision, and core values. They also create concrete action plans, or specific measures, tailored to the environments of the relevant Staff Divisions, in accordance with policies designed to address risks presented by the Staff Divisions. Additionally, the Business Risk Managers manage the progress of these action plans. |
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Staff Divisions (second-tier risk managers) |
As the second-tier risk manager, the Support Division provides guidelines for managing risks in its designated category. The Support Division also monitors the appropriateness and effectiveness of the measures implemented to address these risks and the status of corrections that are implemented. |
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Internal Audit Division (third-tier risk managers) |
As the third-tier risk manager, the Internal Audit Division independently assesses the appropriateness and effectiveness of the performance of the first- and second-tier risk managers and the risk management processes used by them. It also evaluates the risk management and compliance systems they have developed. The Internal Audit Division provides necessary information and makes recommendations regarding improvements. |
| Crisis Management Division | The Company decided to establish a division to oversee groupwide crisis management operations and to set up a Crisis Management Task Force in the event of a serious emergency such as a large-scale natural disaster, in order to continue operating. |
We have classified the risks we have identified based on extent of impact and possibility of occurrence and mapped them onto the following risk heat map. Significant risks have been selected by the Business Risk Management Committee and are reviewed annually via meetings of the Management Council and Board of Directors.
Bearing in mind the immediate impact on the entire Group, economic change driven by international situation, and advances in technology such as AI, we have newly added “Geopolitical risks” and “AI usage risks” and intend to properly address risks related to management strategies.
Details of significant business risks judged as being especially impactful together with countermeasures to address them are described in the following pages.
Risk Heat Map (Possibility of Occurrence and Extent of Impact)
| Large | ⑪ Dependence on specific fields of business |
⑤ Compliance risks (Including violations of laws and regulations and human rights violations) ⑥ Risks relating to overseas business ⑦ Major injury or death or equipment damage ⑧ Risks relating to securing and developing human resources (Lack of engineers) ⑨ Risks relating to M＆A activities and business alliances ⑩ Risks relating to internal control (Including subsidiaries and associates) |
① Natural and other disasters (Including the spread of infectious diseases) ② Information security risks (Sophisticated cyberattacks) ③ Surges in procurement prices of materials |
| Medium |
Quality risks (management, defects, construction failures) |
Geopolitical risks Fluctuation of interest or exchange rates, funding Concerns about credit standing of business partners (credit checks, contract reviews) Inappropriate labor environment (overwork, taking leave) Risks relating to delay in digital transformation or innovation (technological development capability) Risks relating to the use of AI |
④ Climate change risk |
| Small | Infringement of intellectual property rights | Decrease in market price of assets held | |
| Low | Medium | High |
List of Main Risks
| ① Natural and other disasters (Including the spread of infectious diseases) |
| Risk assessment Risk Exposure : Large Possibility of occurrence : High Year-on-year comparison → |
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＜Details of risks＞ A major disaster, etc. or an infectious disease pandemic and other unforeseen circumstances accompanying the above, such as the inoperability of infrastructure or shortages of fuels, materials or personnel, could lead to projects being halted or postponed, or damage to office buildings and equipment, which would impact the performance of the Group and its business continuity plan (BCP). |
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＜Measures to address risks＞ The Group has worked to avoid risks and minimize damage from natural disasters, epidemics and other similar contingencies mainly by carrying out drills, developing rules and manuals, introducing staggered arrival times and teleworking programs, and implementing influenza vaccination in various occupational fields. These efforts are to ensure the continuity of business while preventing harm to personnel is the Group’s top priority. With an increasing number of natural disasters such as more powerful typhoons, torrential rain and frequent earthquakes in recent years, as well as escalating new threats such as novel viruses, the Group sees it as essential to enhance its risk management capability in business management. In April 2020, the Crisis Management Unit was established as part of group-wide efforts to secure the provision of services, through the inspection and maintenance of various facilities and equipment, to deal with reputation risk arising from a pandemic, etc., and to carry out the minimum necessary business operations based on predefined roles in the event of a disaster with the aim of ensuring stable and smooth business management from customers’ perspectives. |
| ② Information security risks (Sophisticated cyberattacks) |
| Risk assessment Risk Exposure : Large Possibility of occurrence : High Year-on-year comparison → |
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＜Details of risks＞ In the course of our business operations, the Group handles important data for customers, including the technical or personal data of customers and other parties. Unforeseen circumstances, such as the loss, theft or incorrect operation of personal computers, smartphones, etc., information leakage due to unauthorized system access, malware infection or other sophisticated cyberattack from outside the Group, may cause important information to be leaked or disable computer systems. This could result in the loss of customer trust as well as an obligation to pay damages or take other actions, which could impact on the performance of the Group. |
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＜Measures to address risks＞ We have established an information security management system and operate it. A chief information security officer has been appointed, and an Information Security Committee has been established. In January 2025, we created a Cybersecurity Division to enhance information security governance. We are working to create further mechanisms to strengthen governance in relation to information security. To continuously enhance our information management practices, we have achieved the certification of our information security management system and attained the right to display the PrivacyMark. The EXEO Security Incident Response Team (EXEO-SIRT), which functions as a CSIRT/SOC, is responsible for centrally monitoring and managing security technologies. The team aims to ensure the safety and security of critical assets that need to be protected, including information and devices, by detecting and defending against cyberattacks. They also provide support in our responding to malware infections and information leaks, thereby minimizing damage when incidents occur. With renewed recognition of the importance of strengthening group-wide risk management, the Group will strive to maintain and improve the security of internal systems and those systems offered by customers. We also engage in activities to increase all of our employees’ awareness of information security, including e-learning programs, targeted email attack training, and security awareness study sessions. Furthermore, we share information about sophisticated cyberattack trends and actual incidents observed within the Group and at other companies to constantly enhance awareness, prevent damage, and improve information security literacy. |
| ③ Surges in procurement prices of materials |
| Risk assessment Risk Exposure : Large Possibility of occurrence : High Year-on-year comparison → |
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＜Details of risks＞ Stable procurement of the materials and raw materials needed for the Group’s businesses may become difficult due to the occurrence of natural disasters at suppliers, war, an act of terror, the spread of an infectious disease, global instability or heightened geopolitical risks, tighter export controls and trade restrictions in each country on economic security grounds, or deterioration in the performance of suppliers. A marked increase in raw material prices combined with rising energy prices and fuel costs, higher logistics costs, rising labor costs and outsourcing costs in a tight labor market, and the impact of fluctuation in foreign exchange rates may push up overall procurement costs and affect the Group’s business performance. Furthermore, for the procurement of semiconductor and certain other materials, supply constraints for specific items and longer lead times for the procurement may persist even though the supply-demand environment is better than it was. Any extension of the construction period or review of the construction plan required as a result of such circumstances may affect the Group’s business performance. |
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＜Measures to address risks＞ As for the rising procurement costs of materials, raw materials and other resources, we are working to mitigate the impacts of rising procurement costs by implementing measures such as ordering materials early, diversifying suppliers, passing on higher costs through construction prices and incorporating conditions on severe fluctuation in materials prices in contracts. Regarding the supply constraints for semiconductor and certain other materials, we continuously monitor supply and demand and are also endeavoring to minimize its impact on business by making adjustments to the construction schedule, including first carrying out the construction work to the extent that materials are available and completing the work once we have all the goods we need, from the viewpoint of keeping to the delivery dates agreed upon with customers. |
| ④ Climate change risk |
| Risk assessment Risk Exposure : Medium Possibility of occurrence : High Year-on-year comparison → |
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＜Details of risks＞ Climate change is one of most urgent social issues which have an enormous impact on the sustainability of society. The Group positions solving social issues as its universal mission and it has set the “development of environmental businesses that contribute to the reduction of greenhouse gas emissions and reduction of the environmental impact of its business activities” as one of its material issues. (1) Transition risks The Group’s failure to adapt to the transition to a decarbonized society or to customer needs for adaptation to climate change could lead to a decline in corporate value and a loss of orders as a result of a negative assessment of the Group among customers, investors and other stakeholders, as well as higher costs associated with the introduction of carbon pricing and other measures. (2) Physical risks The flood damage that is expected to occur as result of climate intensification will increase the risk of damage to buildings, construction sites, facilities and other property, and the increase in temperature will increase the risk to health on outdoor construction sites (heat stroke, etc.) and will lead to lower operating efficiency, delays in the delivery of ordered work and higher costs to combat climate change. |
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＜Measures to address risks＞ In response to transition risks, we are committed to reducing greenhouse gas emissions by actively seeking to switch to virtual renewable energy in our business activities. We are also actively working to tap into business opportunities in renewable energy-related fields and expand these businesses. Regarding physical risks, the Group will work to strengthen its safety management and emergency preparedness skills guided by its BCP and work to improve the efficiency of construction sites using ICT. We will continue to carefully monitor the effects of climate change, as well as national policies and social trends regarding the reduction of greenhouse gas emissions. Additionally, we will actively work to help solve social issues by focusing on reducing greenhouse gas emissions and promoting renewable energy-related businesses. In July 2024, our greenhouse gas emissions reduction target for 2030 was certified by the Science Based Targets Initiative (SBTi) as a science-based target (SBT) in accordance with the Paris Agreement. For details, please refer to 2. Approach to Sustainability and Sustainability Initiatives, (4) Climate Change. |
| ⑤ Compliance risks (including violations of laws and regulations and human rights violations) |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ Laws including the Construction Business Act, the Act on Preventing Delay in Payment to Small and Medium-Sized Entrusted Business Operators in Relation to Manufacturing Consignment, the Anti-Monopoly Act, the Industrial Safety and Health Act, and environmental laws restrict the Group’s businesses. Any revision or abolition of laws, new restrictions, changes in applied criteria, etc. could affect the Group’s business performance and credibility. Employees being engaged in fraudulent practices, harassment or other human rights abuses throughout the supply chain, the leakage of personal information or trade secret information or other compliance violations could damage the Group’s social credibility and affect its business performance and external evaluations of the Group. |
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＜Measures to address risks＞ In recent years, the Subcontract Act has been amended into the Act Against Delay in Payment of Fees, etc. to Small and Medium-sized Entrusted Business Operators in Manufacturing and Other Specified Fields for the purpose of ensuring fund optimization throughout the supply chain, and moves to amend labor-related laws and regulations for the purpose of sustained wage rises and improvement in the labor environment are also planned. Related departments within the Company monitor legal changes and produce an appropriate response to the legal changes known to the Group companies prior to their enforcement. In this way, the Group is building a system to ensure it promptly complies with laws and regulations in a unified way. The Group conducts legal compliance self-inspections once a year, confirms the status of compliance in internal audits and takes corrective actions. Moreover, the Group is implementing online training programs for all employees and level-specific training for officers, leaders and young employees to strengthen compliance across the Group, and promoting the use of effective whistleblowing systems and awareness-raising activities using posters, etc. We believe that respecting human rights, including preventing harassment, is an important responsibility that corporations have to society, and we have established the EXEO Group Human Rights Policy. We work to increase people’s understanding of this policy within the Group. We aim to foster an environment where diverse values are respected. Our diversity and inclusion initiatives received PRIDE Index 2025 gold certification. In 2024, we established a procurement policy and guidelines to encourage our supply chain partners to comply with laws and regulations and respect human rights. For information about our human rights initiatives, please refer to 2. Approach to Sustainability and Sustainability Initiatives, (3) Respecting Human Rights. |
| ⑥ Risks relating to overseas business |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ The Group currently has 19 locations worldwide, offering services in its managed services, ICT Infrastructure and M&E engineering businesses in more than 150 countries. In each business, we face various risks associated with changes in the business environment in the countries in which we operate. More specifically, the Group business operations may be affected by factors such as local market trends and economic fluctuations, changing customer needs, intensifying competitive environment, changes in laws, regulations, licensing and other systems, changes in system operations including tax and accounting, difficulty securing and developing human resources and managing labor, differences in business customs and trade practices, the occurrence and spread of natural disasters and infectious diseases, and we need to keep a close on developments. Any difficulties in operations due to the occurrence of unexpected problems and a failure to deal with the risks these problems present properly could make business operations difficult and hinder the expansion of global business in the medium term and affect Group performance. |
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＜Measures to address risks＞ In Asia, we have bases including in the Philippines, Thailand, Singapore and Indonesia. To strategically manage and facilitate the management of the operations of these overseas subsidiaries, we established the EXEO GLOBAL regional headquarters in Asia in Singapore in November 2018. In July 2023, we completed the construction of a new global headquarters building, The Pulse, to integrate EXEO GLOBAL and its subsidiaries. This has enabled the creation of business synergy in the ICT infrastructure and technology businesses and prompt decision-making across the Group. In overseas subsidiaries, we strengthen governance and risk management at overseas subsidiaries by dispatching Japanese officers and employees to the local subsidiaries to assess the local business environment and information in a timely manner and share it across the Group, and we also promote close cooperation between the Company and overseas subsidiaries. At the same time, we endeavor to ensure the effectiveness of governance and risk management with respect to important matters through prescribed approval and reporting procedures and internal audits. Moreover, in an effort to improve the internal whistleblowing system in response to the growing overseas business, a global whistleblowing reporting desk for the Group’s employees working abroad was established. Through this system, we aim to achieve the early detection and correction of issues. Before making individual overseas business investments, we identify expected risks and consider countermeasures, and we also ask external experts to give advice on or review matters with which the Group do not have adequate knowledge or experience within the Group, in an effort to mitigate risks. |
| ⑦ Major injury or death or equipment damage |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ A major accident resulting in death, injury, or equipment damage as a result of unforeseen circumstances in the Group could result in the loss of customer trust and could lead to the need to pay compensation, reduced chances for orders, or other consequences that impact the performance of the Group. |
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＜Measures to address risks＞ The Group considers “ensuring safety and quality” to be a top priority and is continuously working to strengthen management systems. In the five years that started with FY2021, our slogan has been “the evolution (deepening and progression) of the safety and quality culture.” We have implemented initiatives to eliminate accidents, enhance quality, and create added value. To mitigate risks, the Group is above all committed to the implementation of essential safety measures. We focus on reducing or eliminating hazardous work in the planning stage. We also implement engineering measures such as introducing heavy machinery and vehicles with safety features (moment limiter) and specialized tools. We actively implement management measures. We have installed network cameras to monitor working conditions and utilize artificial intelligence and other digital technology to inspect safety equipment. We also provide on-site hazard prediction training. We attach importance to interactive patrols to internally share best practices and commendable actions. We aim to foster safe actions by encouraging each employee to prioritize their own safety. We refer to this as “safety thinking.” Our aim is to make this approach to safety a habit for everyone. Additionally, we have formulated the Group’s Code of Conduct for Safety and strengthened “STOP & LOOK + Report” initiatives for reassessing surroundings and risks before starting work and for stopping and reassessing during important processes. We are also working to instil a safety mindset, encouraging individuals to think and act for themselves, while at the same time making continuous improvements by obtaining and operating industrial safety and health management system certification and quality management system certification, in an effort to enhance the sustainability of our business. |
| ⑧ Risks relating to securing and developing human resources (Lack of engineers) |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ We acknowledge the challenges we face in securing human resources. These challenges are the result of a declining birthrate and an aging population, the aging of engineers and the need for diverse working styles. Additionally, we face intense competition in the recruitment market. We also recognize the difficulty of responding to the latest technological trends while considering the business environment within the industry, and the difficulty of developing the next generation of management executives. If we are unable to secure and develop sufficient human resources, it could adversely affect the Group’s competitiveness, employee morale, and our business operations, performance, and financial position. |
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＜Measures to address risks＞ The Group considers “securing and developing human resources” based on a human resource strategy that is linked to business strategy to be an important management issue for realizing sustainable growth and the enhancement of corporate value. We are working to strengthen the foundations for the sustainable growth of the Group as a whole and all our businesses by working together with Group companies to promote hiring and development despite the structural issue of insufficient human resources. In particular, we are systematically working to secure and develop human resources in terms of both quantity and quality, in anticipation of future business expansion and technological advancement. (1) Stepping up measures to secure human resources through diverse recruitment approaches We are committed to both new graduate recruitment and mid-career recruitment and are working to continuously secure young human resources for the future and acquire specialist resources who can contribute immediately. Additionally, we are focusing on the recruitment of highly skilled human resources both in Japan and overseas and on the utilization of non-Japanese human resources in cooperation with overseas locations (offshore), and striving for diversification in the channels through which we acquire human resources. (2) Retaining and securing human resources through the development of comfortable work environments Based on the recognition that it is important not only to recruit employees but also retain them in securing human resources, we are working to develop a comfortable work environment through measures such as the introduction of flexible workstyles, the review of compensation and benefits systems and the promotion of health and productivity management. Through these measures, we seek to improve employee’s job satisfaction and engagement and develop an environment where individual employees can fulfil their potential, which in turn helps us to retain and continually secure human resources. We will also seek to secure personnel, including from outside the Group by building partnerships with partner companies, promoting the collaborative development of human resources and utilizing the partnership programs. |
| ⑨ Risks relating to M＆A activities and business alliances |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ The Group believes that mergers, acquisitions and business alliance strategies are important and an effective part of business expansion, etc. However, a failure to identify effective investment opportunities and results of investments being lower than expected could affect Group performance. Moreover, if the Group enters new business domains or new markets through M&A activities or by other means, risks specific to the new domains or markets could be added. If goodwill arises, our assumption is that we have sufficiently stable earnings power to exceed the amortization of goodwill. However, if the execution of the business plan made at the time of the acquisition is hampered due to changes in the business environment, the competitive landscape or other reasons after the acquisition, and progress is not made as planned, the Group may incur an impairment loss related to goodwill, etc. which could affect Group performance. |
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＜Measures to address risks＞ In the 2030 Vision and the Medium-Term Management Plan (2021 to 2025), the Group states that it will actively and strategically invest, including in M&A activities. The Group must always consider the possibility that risks related to these investments may materialize. When engaging in mergers and acquisitions or forming business alliances, the Group carefully analyzes future market trends and synergies with the Group and identifies potential risks associated with the relevant companies utilizing the findings of investigations conducted by external lawyers and financial advisors. The Group uses the Company’s weighted average cost of capital (WACC) as a hurdle rate. After this evaluation, the Group determines whether the strategic investment in the merger, acquisition, or alliance will enhance the Group’s corporate value. Leveraging our knowledge and experience, we review our investment decision criteria and investment decision process as necessary. After M&A activities, etc., the Group monitors developments such as the progress of business plans made during the planning stages of M&A activities, etc. and the extent to which synergy is generated. We will establish a process from due diligence, PMI, and monitoring, aiming to implement our efforts to reduce the risk of incurring impairment losses on goodwill. |
| ⑩ Risks relating to internal control (including subsidiaries and associates) |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Medium Year-on-year comparison → |
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＜Details of risks＞ If internal controls are ineffective, it may be impossible to ensure business is properly conducted, potentially leading to the occurrence of misconduct and errors and violations of laws and regulations. Consequently, this could harm the Group’s performance and reputation. |
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＜Measures to address risks＞ The Company has developed a system to achieve compliance with laws and regulations, operational effectiveness and efficiency, and the reliability of financial reporting under its basic policy on the internal control system and has established the Internal Control Committee (chaired by the President & CEO), which monitors and evaluates the overall operation of the internal control system. Further, to manage and supervise risks according to their characteristics, the Company has established the Compliance Committee, Business Risk Management Committee, Information Security Committee and Sustainability Committee in an effort to strengthen the risk management system. In addition, the internal audit division works to continuously improve internal controls by auditing the appropriateness of the business operations of the Company and its subsidiaries from an independent perspective and also developing internal control systems, including internal control over financial reporting, auditing their operation status, and reporting the audit results to management. The basic guidelines for establishing and operating the internal control system that have been decided by the Board of Directors are described in 4. Status of Corporate Governance. |
| ⑪ Dependence on specific fields of business |
| Risk assessment Risk Exposure : Large Possibility of occurrence : Low Year-on-year comparison → |
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＜Details of risks＞ The core business of the EXEO Group has been building and constructing information and communication networks, and transactions with telecom carriers account for a large proportion of transactions. This trend is expected to continue. Changes in the way telecom carriers carry out and structure their capital investments as a result of market trends in the telecommunications industry, technological innovation, or other factors could impact the business performance of the Group. |
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＜Measures to address risks＞ Under the Medium-term Management Plan (2021 to 2025), we are implementing growth strategies in each of our three business segments, seeking to expand growth opportunities, diversify risks and enhance competitive capabilities. As of the end of FY2025, each segment accounted for one third of total sales as shown below. However, the Group is still heavily dependent on the telecom carrier business on the profit front. Accordingly, in the Medium-term Management Plan (2026 to 2030), the Group intends to achieve growth in a way that ensures profits are a similar level in each segment by FY2030. (1) Telecom carrier business This is the Group’s mainstay business that is 32% of its net sales. It has the strength of offering one-stop services from design and construction to the maintenance and operation of telecom facilities leveraging its experience and the technology it has accumulated since its foundation. Going forward, it is expected that the area of 5G communications will expand and that telecom infrastructure will become even more sophisticated and technological innovation will continue in this area. (2) Urban infrastructure business This business is 32% of the Group’s net sales. This field of business is expected to contribute to the expansion of the renewable energy market for green transformation (GX) and the establishment of a decarbonized society by offering one-stop services for various construction projects in telecommunications, electricity, urban engineering and other areas. (3) System solutions business This business is 36% of the Group’s net sales. In this business segment, companies and government organizations’ needs for digital transformation strategies are expected to increase and the market related to the introduction of education products and IoT devices is expected to expand. |
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