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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. The greatest strength of our group is the advanced “technical ability” cultivated through extensive on-site experience. In the field of information and communication networks, we provide consistent services nationwide, from planning and design to construction, operation, and maintenance of various communication facilities. Additionally, in the urban infrastructure field, we utilize electrical and civil engineering technologies honed in communication construction to contribute to various social scenes such as railways, data centers, water supply and sewage, and waste treatment plants. Furthermore, in the system solutions field, we have provided solutions that meet various needs such as business process transformation, information security enhancement, and energy conservation for our customers by utilizing ICT (information and communication technology).
Our group positions ESG as the core of corporate management, and as part of that, we are advancing efforts to reduce environmental impact through environmental business. Following the operation of “Ashikaga Eco Power,” a woody biomass power plant, in March, “Furudono Ronda Eco Power” is scheduled to start full-scale operation in August. Furthermore, as part of the smart energy-related business, we have started new initiatives in collaboration with partner companies, such as grid storage batteries for power supply stabilization, EV charging infrastructure, and agrivoltaic solar power generation.
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 (2021-2025)
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 security reports, the main risks that the operator recognizes as having the possibility of significantly impacting the financial condition, business performance, or cash flow condition of the Group are as stated below.
These main risks were described in the Group's regular risk identification/assessment as matters that should be addressed as a priority, in view of the extent of their impact and frequency of occurrence. 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.
Risk Heat Map
(Possibility of Occurrence and Extent of Impact)
| Large | Increased dependence on specific clients |
Violation of laws and regulations and compliance Occurrence of major injury or death or equipment damage Development of overseas operations M&A activities and business alliances |
Natural and other disasters Surges in procurement prices of materials Occurrence of information security incidents |
| Medium | Occurrence of defects in contracts and the quality Concerns about credit standing of business partners of construction |
Securing and cultivation of human resources Delay in response to innovation or digital transformation Interest rate/exchange rate fluctuation Occurrence of unprofitable construction work Inappropriate labor environment (overwork, not taking leaves) |
Climate Change |
| Small | Infringement of intellectual property rights | Decline in market price of assets held (securities, etc.) Business risks of subsidiaries and affiliates | |
| Low | Medium | High |
List of Main Risks
| Risk factor | Risk assessment | Details of risks | Measures, etc. to address risks |
|---|---|---|---|
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1. Natural and other disasters |
Risk Exposure: LargePossibility of occurrence: HighYear-on-year comparison → |
A major disaster, etc. or an infectious disease pandemic such as the COVID-19 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). |
The Group has worked to avoid risks and minimize damage from natural disasters, novel virus epidemics and other similar contingencies mainly by carrying out drills, developing rules and manuals, introducing staggered arrival times and teleworking programs, and implementing 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 Risk Management Division was established as part of group-wide efforts to secure the provision of services, through the inspection and maintenance of various facilities and equipment, and to deal with reputation risk arising from a pandemic, etc. with the aim to ensure stable and smooth business management from customers’ perspectives. |
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2. Surges in procurement prices of materials |
Risk Exposure: LargePossibility of occurrence: HighYear-on-year comparison ↗ |
Difficulties in procuring materials, including raw materials and other resources, as a result of damage sustained by suppliers in a natural disaster, social unrest (including but not limited to war, act of terror, infectious disease and geopolitical risk), deterioration in business performance or other factors could lead to construction stoppages and affect the agreed construction periods. In addition, surging procurement costs in tandem with the rise of fuel and distribution expenses could affect the Group's business performance. Moreover, considerable time will be needed to resolve the semiconductor shortage caused by factors that include the U.S. government’s punitive measures against China, the prolonged Russian invasion of Ukraine and the escalation of conflicts in the Middle East. Furthermore, extended work periods, etc. associated with the long lead time for the procurement of materials for mobile communication base stations may affect the Group’s business performance. |
As for the rising procurement costs of materials, raw materials and other resources, we are working to mitigate risk by implementing measures such as ordering materials early, diversifying suppliers, passing on higher costs through construction prices and incorporating conditions on price increases in contracts. Regarding the semiconductor shortage, we are monitoring supply and demand and are also endeavoring to minimize its impact by planning construction work carefully, including first carrying out the construction work to the extent that goods 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. |
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3. Occurrence of information security incidents |
Risk Exposure: LargePossibility of occurrence: HighYear-on-year comparison ↗ |
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, computer virus infection or other 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. |
We have put in place a system rooted in a full recognition of the importance of information management. To create this system, we have undertaken initiatives including the construction and operation of an information security management system, the appointment of a chief information security officer, and the establishment of an Information Security Committee. The Group works to continuously improve the system and has obtained information security management system certification and is permitted to display the PrivacyMark. To appropriately and promptly respond to increasingly diverse and sophisticated cybersecurity threats, we established the EXEO Security Incident Response Team (EXEO-SIRT) in July 2019. We joined the Nippon CSIRT Association in December 2019 and are working to strengthen our system to respond to cybersecurity threats. EXEO-SIRT is a response team established on the assumption of security incidents. It detects and prevents cyberattacks targeting information, terminals and other assets that need protecting and supports the Group's response in the event of a computer virus or information leak. Through its activities, EXEO-SIRT seeks to minimize damage in the event of an incident and also shares cyberattack trends and actual cases observed within the Group and at other companies to raise awareness during normal times in an attempt to prevent damage from occurring. 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 that it offers. Moreover, we provide e-learning programs to raise awareness among all employees, targeted email attack drills, etc. and strive to improve computer literacy. |
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4. Violation of laws and regulations and compliance |
Risk Exposure: LargePossibility of occurrence: MediumYear-on-year comparison → |
Laws including the Construction Business Act, the Subcontract Act, 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, 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. |
The number of new laws and regulations related particularly to the environment and ways of working that have been established and revised has been increasing in recent years, and 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 enhancing compliance by implementing online training programs for all employees and level-specific training for officers, leaders and young employees and by promoting the use of effective whistleblowing systems and awareness-raising activities using posters, etc. |
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5. Occurrence of major injury or death or equipment damage |
Risk Exposure: LargePossibility of occurrence: MediumYear-on-year comparison → |
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. |
The Group works day-in, day-out to prevent accidents resulting in death, injury, or equipment damage at construction sites, making every effort to ensure safety and quality and strengthening site management. From 2016, we worked to create a system where each of us recognizes the importance of safety and quality and is able to perform basic actions under the slogan "back to the basics of a safety and quality culture." For the five years from FY2021, our slogan is "the evolution (deepening and progression) of the safety and quality culture," and we will seek, of course, to eliminate accidents and ensure we are a company and a group that are safe, secure and are relied on through the promotion of initiatives to enhance quality and create added value. Regarding measures to mitigate risks to ensure safety, the Group is above all committed to reviewing work for the elimination and reduction of hazardous work, starting in the planning stage (essential measures) and is proactively pursuing measures involving equipment such as heavy machinery (engineering measures). We are also taking management measures, including streamlining communication between people on site and at the office and the expansion of support through the use of network cameras and other information communication technologies, as well as human resources development, including training of on-site managers and foremen. In addition, we place emphasis on measures to make safety actions a habit through the improvement of interactive-type patrols to proactively find and disseminate examples of commendable actions. We have received an industrial safety and health management system certification and a quality management system certification and continuously work to improve safety and quality. |
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6. Development of overseas operations |
Risk Exposure: LargePossibility of occurrence: MediumYear-on-year comparison → |
The Group operates refurbishing businesses that utilize used IT devices and various solution businesses in many countries primarily in Southeast Asia. There are a variety of risks, including rapid changes in political and economic circumstances, exchange rate fluctuations, unexpected changes in laws and regulations, natural disasters including earthquakes and typhoons, and infectious diseases epidemics. There are also concerns about risks arising from US government sanctions against China, the prolonged Russian invasion of Ukraine, and conflicts in the Middle East. The situation requires continuous attention, given issues such as surging raw material prices and the impact from damages to supply chains. Any difficulties in operations due to the occurrence of unexpected problems and a failure to deal with the risks these problems present could hinder the expansion of global business in the medium term and affect Group performance. |
In Asia, we have bases 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 and opened a new global headquarters building, The Pulse, to integrate EXEO GLOBAL and its eight subsidiaries. This has enabled the Company to strengthen its relationships with its overseas subsidiaries in terms of corporate governance and risk management through the enhancement of business synergy related to ICT infrastructure and technological fields, and the timely collection of information by Directors of the Company who are dispatched to local enterprises or who concurrently serve as officers of subsidiaries. Moreover, in an effort to improve the internal whistleblowing system in response to the growing overseas business, a global whistleblowing reporting desk was established for the Group’s employees working abroad. We identify expected risks and examine responses before making individual business investments and ask external experts to review matters with which we do not have adequate knowledge or experience. While we cannot fully hedge against the impact of exchange rate fluctuations in relation to our foreign currency denominated assets and liabilities, we seek to mitigate the risk mainly by concluding forward exchange contracts and holding assets and liabilities denominated in the same currencies so that we can offset foreign exchange losses. |
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7. M&A activities and business alliances |
Risk Exposure: LargePossibility of occurrence: MediumYear-on-year comparison → |
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 many incur an impairment loss related to goodwill, etc. which could affect Group performance. |
In the 2030 Vision and the Medium-Term Management Plan (FY2021 to FY2025), 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. If the Group conducts a merger or acquisition or enters into a business alliance, the Group verifies and determines matters such as future market trends, synergies with the Group, and the identification of potential risks of the target company, from various standpoints. It also refers to the results of research by outside lawyers, financial advisors and other experts, and draws on its accumulated knowledge and experience. 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. |
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8. Climate change |
Risk Exposure: MediumPossibility of occurrence: HighYear-on-year comparison → |
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. Depending on the action we take, the major risks outlined below could affect Group performance and credibility over the medium and long terms. (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. |
In response to transition risks, we are actively promoting the switch to renewables in our business activities to reduce greenhouse gas emissions and expand the electrical engineering business and other businesses to meet the growing demand for renewables, such as the construction of wood biomass fueled power plants and offshore wind farms. 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. Going forward, the Group will continue aiming to balance a sustainable society and the Group's sustainable growth by addressing social issues through its business operations while monitoring the impacts of climate change and developments in government policy and society for the reduction of greenhouse gas emissions. We also strive to enhance our disclosure of information in line with the framework recommended by the Task Force on Climate-Related Financial Disclosures (TCFD). |
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9. Increased dependence on specific clients |
Risk Exposure: LargePossibility of occurrence: LowYear-on-year comparison → |
The core business of the EXEO Group is 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. |
During the ongoing mid-term management plan (FY2021–FY2025), the Group is implementing growth strategies in each of the three business segments below and is working to expand growth opportunities, diversify risks and enhance its competitive capabilities in the individual segments. (1)Telecom carrier business This is the Group’s mainstay business that is 41% 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 29% 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 30% 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. Having placed its headquarters for the above business in Singapore, the Group is working to cultivate the Southeast Asia market where economic growth is ongoing. |
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