CORPORATE RE P O RT 2014 DATA BOOK KEY PERFORMANCE INDICATOR. environment. society. governance

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1 CORPORATE RE P O RT 2014 DATA BOOK KEY PERFORMANCE INDICATOR E environment S society G governance

2 Contents Taisei Group of Companies 03 Taisei Corporation Group CSR 05 Initiatives and Important Tasks and Targets in the FY 2013 CSR ESG Information Environment (E) 07 Environment 20 Third Party Certification Social (S) 21 Consumer Issues 23 Community Involvement and Development 25 Human Rights and Labor Practices 29 Labor Practices Governance (G) 31 Organizational Governance 35 Fair Operating Practices KPI Information 39 Taisei KPIs 43 Group Company KPIs Financial Information 45 Explanation and Analysis of Business Results 51 Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Company Information 58 Board of Directors,Corporate Auditors and Executive Officers 60 Overseas Network 61 Organization Chart 62 Third Party Opinion Editorial Policy This Data book is published to enable stakeholders to understand the Taisei Corporation Group ideals, the Group Action Guidelines, and the corporate activities in accordance with the management plan, and it reports in detail on the status of initiatives of CSR activities that are not described in the Main Volume. Organizations Covered Taisei Corporation and the main Taisei Group of Companies Period Covered Financial year 2013 (1st April 2013 to 31st March 2014) (Some contents are included that are outside of this financial year) Reference Guidelines Ministry of the Environment Environmental Report p p p Guidelines (2012 edition) GRI Sustainability Reporting guidelines Version 3.1 ISO (International guidance on social responsibility of organizations) International Integrated Reporting Council (IIRC) Integrated Reporting Framework p Third-party Opinions in This Report Third-party certified report Environmental information p p certified by EY ShinNihon Sustainability Institute Co., Ltd. (third-party certified locations are indicated with the symbol) Third-party Opinion Opinion of Professor Kanji TANIMOTO, Research Institute of the Faculty of Commerce, Waseda University Published 19 August 2014 Note Regarding Forward-looking Statements Opinions and predictions, etc., expressed in this report are based on the judgment of the company at the time of preparation of this document. Therefore, please be aware that there is a possibility that the results of the actual target values, etc. could be different from the stated future estimates, due to changes in various factors. We are included in the world s representative SRI indexes. We are selected in the Climate Disclosure Leadership Index (CDLI) established by the Carbon Disclosure Project. 1 TAISEI CORPORATE REPORT 2014 DATA BOOK

3 Structure of Communication Tools Financial Information Non-financial Information Website Corporate site (all corporate activities) Investors Relations Corporate Social Responsibility Activities In the IR website, both Japanese and English versions of the Annual Report PDF version, accounts explanatory meeting documents, and the main questions and answers, etc. are introduced The CSR Web site presents the commitment of top management and the company s CSR management activities, as well as introducing Annual Report on line version of this document with links to the company s website. Publications Annual Report 2014 (Main volume: English version) (Target Readership: Overseas investors, etc.) As Taisei Corporation reaches 140 years since its founding, this volume introduces the history of its challenges for creating value and its projects. This is mainly targeted at overseas investors, and introduces detailed financial information such as achievements, etc., as well as non-financial information such as overseas projects to solve social issues, the company's advanced technologies, governance information, etc., in English. Corporate Report 2014 Data Book (Separate Volume: English/ Japanese version) (Target readership: Stockholders, investors, students, etc.) In addition to financial information, non-financial information is presented including initiatives social issues such as environmental (E), social (S), governance (G), etc., the status of implementation of important tasks and targets set by reference to ISO (the 7 core subjects), environmental management targets (TAISEI AGENDA), KPIs, and other data and information. Securities Report Business Report (Taisei Circle) Taisei Corporation Technology Center Report Pamphlet for new graduates, etc. TAISEI CORPORATE REPORT 2014 DATA BOOK 2

4 Taisei Corporation Group CSR Promoting CSR with Taisei Group s Shared Ideals and Values All officers and employees of the Taisei Group share the Taisei Spirit, and aim to realize the Group ideal To create a vibrant environment for all members of society by conducting business while implementing the Overall Principles of Conduct (Taisei Group Action Guidelines) and the Overall Management Perspective (TAISEI VISION 2020, Medium-Term Business Plan). Overall Principles of Conduct The Process of Setting KPIs in CSR Management Group Action Guidelines Taisei Group Ideal Taisei Spirit Overall Management Perspective The CSR Promotion Office has prepared self check sheets by reference to each of the items set in the 7 core subjects indicated in ISO 26000*. These sheets are distributed in advance to each division and the main group companies (7 companies), and by holding interviews with each person responsible for CSR, the FY 2014 CSR tasks and KPIs (important business evaluation indices) are discussed and confirmed, and in addition are improved by reference to the opinions from CSR influential persons. This initiative is carried out every year, in order to implement CSR management by promoting PDCA to solve the issues. System for Promoting CSR A CSR committee has been established to promote CSR activities Diagram of CSR Promotion System within the Taisei Group. The CSR Committee includes 5 Taisei board members and officers. Board of Directors President CSR Committee Compliance Committee The CSR Promotion Office educates and gives guidance on CSR, Corporate Communication Department of President s Technology Committee Office CSR Promotion Office and exchanges opinions with the various departments and Group Central Safety Committee Environment Committee companies to promote the Group s CSR activities. Risk Management Committee Each Department Group companies Central Labor Affairs Committee Taisei Spirit Conceptual approaches valued by all TAISEI Group members for the pursuit and realization of the Group ideal Commitment to Openness Creation of Value Evolution of Traditions The basic principles for action by the Taisei organization and the standards for action and judgment to be strictly observed and positively acted on by TAISEI Group members at all levels 1. Cultivating an open corporate culture 2. Securing a pleasant working environment 3. Respect for fundamental human rights and diversity Group Action Guidelines 4. Creating a vibrant environment for all members of society 5. Striving to create value 6. Pursuing customer satisfaction 7. Ensuring and improving safety and quality 8. Resect for traditions 9. Promoting partnerships with subcontractors and suppliers 10. Promoting environmental conservation and creation 11. Communication with local communities 12. Conduct in the international community 13. Appropriate disclosure of information 14. Fulfilling social responsibilities Human rights and labor practices Respect for human rights Diversity management Creation of a pleasant workplace Support for the career formation of employees Labor practices Improvement in health and safety standards Consumer issues Ensuring quality and improving the satisfaction of customers Innovation management Organizational governance Corporate governance and internal controls Risk management Stakeholder engagement Environment Response to global warming Effective use of resources Conservation of biodiversity and environmentally responsible actions Response to environmental risk Research and development of environmental technologies and improvements in proposal capabilities Comprehensive environmental activities Community involvement and development Responsibilities towards local communities Fair operating practices Promotion of compliance Supply chain management Protection, management, and utilization of intellectual property Information security measures E environment S society G governance The main issues and CSR tasks for the 7 core subjects of ISO *ISO 26000: International guidance on social responsibility of organizations Opinion Message from an Influential Person in CSR Mitsuo OGAWA, President, Craig Consulting Last year tasks were proposed to promote CSR in the supply chain. This year the results will be steadily increased, by testing the monitoring of CSR procurement, etc., among the main suppliers. In particular, there is a process for creating a CSR procurement mechanism while obtaining the understanding of the suppliers regarding the points to be evaluated and coordinating opinions. This initiative is not only for Taisei Corporation, but will also contribute to raising the level of CSR in the construction industry. Materiality is identified in the process of deeply analyzing the value and issues of Taisei Corporation's projects, and the process of reflecting external expectations in targets, which is expected to result in setting tasks that can be executed. 3 TAISEI CORPORATE REPORT 2014 DATA BOOK

5 Taisei Group of Companies ESG Information KPI Information Financial Information Company Information Mid-term Business Plan Process Overall Management Perspective The Taisei Corporation Group has adopted TAISEI VISION 2020 as the Mid-term Business Plan. The Mid-term Business Plan describes each step towards achievement of the long term vision, aiming for creation of new value and sustainable development of the company by steady accumulation of growth. Phase 1 Period of addressing and reconstructing the past experiences Re-establishing the strategies 2010 TAISEI VISION 2020 We aim to be a company that creates high added value, that establishes new business structures, and that is sustainably developing as we approach 150 years since the company was founded. Phased Initiatives towards Realizing New Business Structures Reform of Corporate Structure with Emphasis on Environment Mid-term Business Plan Phase 2 Establishing the foundations for new business structures The footing for realization 2014 Phase 3 More powerfully driving the construction of new business structures Steady steps towards sustainable development 2017 Phase 4 Overall completion of achievement of the target vision Realization of TAISEI VISION years since founding 2023 Labor intensive cost based contractor High added value From contractor to corporate partner From the KPI Setting Process to Materiality Taisei Corporation sets tasks to be undertaken (Action Guidelines: P) with reference to ISO 26000, which are important items for stakeholders, sets tasks that are important to be solved (Action Guidelines: P) as a management plan based on changes in the social background (external environment) and ESG risk factors, and defines the main items to be undertaken by the Taisei Corporation Group (Action Guidelines: D) that are closely related to the two. Then, KPIs are set in order to check (C) and improve (A) each of these items. In the company these KPIs are the materiality factors in the business. Taisei Corporation Group KPI Identification Process Social background Response to environmental problems, social problems, and governance Stakeholder engagement Observing the Charter of Corporate Behavior of the Nippon Keidanren Overall Management Perspective P TAISEI VISION 2020 Mid-term Business Plan Overall Principles of Conduct P Verification of corporate actions based on the Group Action Guidelines, with reference to ISO P Set important tasks to be tackled in the Mid-term Business Plan (P47) D Main items to be undertaken by the Group of Companies (P6) P Set indexes for the important tasks (P6) C A Identify the major KPIs for the Group (P6) Information disclosure viewpoint (IIRC, G4) KPI Setting Process Degree of importance for stakeholders (ISO etc.) Changes in the external environment Reduction in CO2, energy efficiency Contributing to the community Human rights Labor safety Supply chain management Intellectual property, information Internal controls Dialog Compliance, etc. Effect on business (Business Plan) Materiality KPIs Important tasks to be tackled Contribution to the development of social infrastructure Improvement in productivity Strengthening cost competitiveness and supply power Ensuring stable profitability of overseas projects Strengthening the profitability of the Group Strengthening the balance sheet TAISEI CORPORATE REPORT 2014 DATA BOOK 4

6 Taisei Corporation Group FY 2013 CSR Items and the Main Tasks and Targets P ISO themes 7 core subjects Environment Prevention of pollution Sustainable resource use Climate change mitigation and adaptation Protection of the environment, biodiversity and <Overall Principles of Conduct> Group Action Guidelines, Individual Policies Guidelines Group Action Guidelines Environmental Policies Declaration of TAISEI on Biodiversity Preservation TAISEI AGENDA 2014 TAISEI Green Target 2020,2050 Eco first company <Overall Management Perspective> Mid-term Business Plan management tasks* 1 Strengthening of initiatives and expansion of business fields to create high added value Development/improvement of social infrastructure: Consumer Issues Fair marketing, factual and unbiased information and fair contractual practice Protecting consumers health and safety Sustainable consumption Consumer service, support, and complaint and dispute resolution Consumer data protection and privacy Access to essential services Education and awareness Community Involvement and Development Community involvement Education and culture Employment creation and skills Technology development and access Wealth and income creation Health Social investment Human Rights and Labor Practices Social Dialogue Due diligence Human rights risk situations Avoidance of complicity Resolving grievances Discrimination and vulnerable groups Civil and political rights Economic, social and cultural rights Fundamental principles and rights at work Employment and employment relationships Conditions of work and social protection Labor Practices Health and safety at work Human development and training in the workplace Group Action Guidelines Quality Policy Policy on the Protection of Personal Information Standards of Conduct for the Use of Social Media Group Action Guidelines Group Action Guidelines Group Action Guidelines Health and Safety Policy Strengthening of initiatives and expansion of business fields to create high added value Development/improvement of robust business foundations Development/improvement of social infrastructure Development/improvement of robust business foundations Development/improvement of robust business foundations Organization Governance Organizational governance Group Action Guidelines Observing the Charter of Corporate Behavior of the Nippon Keidanren Policy on Business Continuity in Times of Disaster Information Disclosure Policy Risk Management Policy Development/improvement of robust business foundations Fair Operating Practices Anti-corruption Responsible political involvement Fair competition Promoting social responsibility in the value chain Respect for property rights Group Action Guidelines Policy on Intellectual Property Procurement Policy Development/improvement of robust business foundations *1 The management tasks of the Mid-term Business Plan are reported in detail in Financial Information (P47 to P48) as the mid-term corporate business strategy, the 6 tasks (positive contributions), and the business risks (12 items) (negative items to be avoided). 5 TAISEI CORPORATE REPORT 2014 DATA BOOK

7 Taisei Group of Companies ESG Information KPI Information Financial Information Company Information Important tasks and targets Main items to be Taisei Group main KPIs* 2 undertaken by the Group Attainment Improvement D C A Classification Relevant information page Response to global warming Efficient use of resources Biodiversity conservation and environmental conservation activities Response to environmental risk Research and development of environmental technologies and improvement in proposal capability Comprehensive environmental activities Contribution to realizing a low carbon society Promotion of energy efficiency Promotion of 3R activities Promotion of green procurement Proper management of construction waste Providing environmentally friendly technologies Comprehensive environmental activities Rate of reduction of predicted CO2 emissions in the building operation stage ( ) Rate of reduction CO2 emissions in construction stage ( ) Rate of reduction of electrical power usage (office) ( ) Number of projects proposing improvement in energy efficiency at customers facilities ( ) Rate of recycling of construction waste ( ) Rate of green procurement ( ) Rate of use of Electronic Manifest System ( )* 3 Number of media announcements regarding environmental technology development and application projects ( ) Rate of attendance at environment related education ( ) Report on Environmental Activities P7 to P20 (initiative items) P39, P43 to P44 (KPIs) P14 (Taisei Agenda) Ensuring quality and raising customer satisfaction Innovation management Thorough familiarization with quality control standards and procedures Development and providing technologies to solve social issues Customer satisfaction surveys ( ) Number of patent applications filed / number of patents obtained ( ) Number of media announcements regarding technical development and application projects ( ) P21 to P24 (initiative items) P40, P42 (KPIs) P47 (financial information) Main Volume P13 to P14 (towards a sustainable society) Contributions to local communities Respect for human rights Diversity management Creating a pleasant workplace Supporting employee career formation Promotion of community contribution activities Expansion of employee volunteers (disaster support activities, etc.) Human rights education activities Promotion of diversity Supporting the balance between work and life Promotion of staff education Number of environmental and social contribution activities ( ) Number of employees participating as volunteers ( ) Rate of attendance at human rights training ( ) Numbers attending female leadership development training / number of female managers / number of female directors / rate of employment of handicapped Persons / number of re-employed ( ) Numbers taking leave for childcare ( ) Rate of taking paid leave ( ) Number of job return registrants ( ) Training hours per person ( ) Number of trainees at overseas sites, etc. ( ) Number of trainees at overseas training organizations ( ) Report on social activities (S) P23 to P24 (initiative items) P40 (KPIs) P25 to P28 (initiative items) P41 (KPIs) Improvement in safety and health standards Raising the level of safety and health with TAISEI OHSMS Number of fatal accidents / frequency rates ( ) Frequency rates ( ) Number of labor accidents ( ) P29 to P30 (initiative items) P40, P43 to P44 (KPIs) P48 (business risks: (11) Occurrence of major accidents) Corporate governance and internal controls Risk management Dialog with stakeholders, information disclosure Promotion of compliance Supply chain management Protection, management and use of intellectual property Measures for information security Spreading and consolidating the Group ideals Initiatives for business continuity planning (BCP) Dialog with stakeholders Improvement in compliance awareness Promotion of CSR procurement Practice of intellectual property strategy Measures to prevent information leakage Improvement in information security awareness Rate of implementation of e-learning regarding the Group ideals ( ) Rate of participation in large scale disasters training ( ) Number of dialogs, etc. ( ) Attendance at compliance training ( ) Number of branches training executed for compliance to the sub-contractors Number of companies monitored for CSR procurement ( ) Number of trained staff regarding intellectual property ( ) Number of major information security accidents ( ) Number of times education in information security implemented in all companies ( ) *2 KPI: Key Performance Indicators : Taisei Corporation KPI : Group company KPI : Taisei Corporation and Group company KPI *3 Construction waste management system Using online bills from construction sites to final disposal facilities Report on Governance (G) P35 to P36 (initiative items) P42, P44 (KPIs) P48 (business risk: (12) Risk of large scale natural disaster, etc.) P35 to P38 (initiative items) P42, P44 (KPIs) P48 (business risk: (10) Statutory regulations for the civil engineering and building fields) TAISEI CORPORATE REPORT 2014 DATA BOOK 6

8 Environment CSR Outline(FY ) P Important task and DP Main items to C A Main KPIs* target undertaken Response to global warming Efficient use of resources Biodiversity conservation and environmental conservation activities Response to environmental risk Research and development of environmental technologies and improvement in proposal capability Contribution to realizing a low carbon society Promotion of 3R activities Promotion of green procurement Proper management of construction waste Providing environmentally friendly technologies Rate of reduction of predicted CO2 emissions in the building operation stage Rate of reduction in predicted CO2 emissions in construction stage Rate of recycling of construction waste Rate of green procurement Rate of use of Electronic Manifest *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 39. Number of media announcements regarding environmental technology development and application projects Environmental Policy P ISO 6.5 The environment Taisei Corporation Group undertakes environmental projects to improve environmental technologies, thereby contributing to realizing a low carbon society, conserving biodiversity, and forming a recycling-oriented society. Environmental Policies With the group ideal of To create a vibrant environment for all members of society, TAISEI, through its construction activities, strives for the development of quality social infrastructure and the improvement of the living environment in harmony with Nature. As environmental problems worldwide increase, TAISEI s business activities are necessarily a part of the burden on the environment. With these environmental management principles as a guide, and working for an environmentally sensitive society, TAISEI and its group companies strive for Environmental Protection and Innovation, and promote Pioneering Environmental Projects in all corporate activities. Action Guidelines 1. We shall prevent environmental pollution through compliance with environmental laws, regulations, and agreements and, through the effective application of our Environmental Management System (EMS), expand and continually improve environmental conservation activities. 2. We shall develop environmental technologies that contribute to the realization of a low-carbon society, the conservation of biological diversity, and the formation of a recycling-based society, and use these technologies to benefit our clients and resolve environmental problems. 3. During both planning and design phases, we shall give proper consideration to global and regional environments, and propose to our clients the creation of facilities that harmoniously coexist with the natural environment, conserve energy and resources throughout their life-cycle, and reduce CO2 emissions. 4. During construction, we shall reduce CO2 emissions, give proper consideration to biological diversity, and promote the efficient use of resources, thereby reducing the burden on the environment. In cooperation with specialty contractors and business partners, we shall promote the 3R of construction byproducts (Reduce, Reuse, Recycle), along with other environmental conservation activities. 5. We shall communicate effectively with local communities, and as a worthy corporate citizen, contribute to the conservation of regional environments. 6. We shall proactively cooperate with other nations, NGO s and NPO s in creating and protecting the environment. FY 2014 Environmental Management Promotion System Organization Chart By implementing the environmental policy, environmental laws and regulations are complied with, environmental load is reduced, and environmental conservation and creation activities are continuously promoted. President Environment Committee Central Safety Committee* 1 Specific environmental representative (General manager of Environmental Division: CCMO* 2 ) Headquarters (10 divisions, 1 Center) General manager of divisions and Center Branch Offices (13 branch offices) Branch manager Environment Committee Administration Meeting Companywide EMS Administration Bureau Division Environmental Committees* 3 Division Environmental Manager Branch Office Environmental Committees Management group working groups 1 management group, 1 committee, 3 working groups Taisei Corporation Group Environmental Promotion Conference 7 main group companies Internal environmental audit team Division EMS Administration Bureau 18 teams Branch Office Environmental Manager Branch Office EMS Administration Bureau *1 Central Safety Committee: Since 2012, environmental incidents are investigated and discussed by the Central Safety Committee. *2 CCMO: Chief Carbon Management Officer *3 Division Environmental Committee: Established in some divisions 7 TAISEI CORPORATE REPORT 2014 DATA BOOK

9 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Message from the Chief of the Environmental Division Makoto Imasaka, Executive Officer, Chief of Environment Division As warming of the global climate system due to human activities continues, we have formulated TAISEI Green Target 2020, 2050 which incorporates the concept of the construction industry contributing to future generations through our business. We of course provide our customers with buildings with high energy efficiency performance undertake a wide range of initiatives including reducing carbon dioxide emissions from construction sites during construction, minimizing the quantity of construction waste disposed of, promoting 3R activities (reduce, reuse, recycle), and creating a more diverse natural environment by conserving biodiversity, as well as. Also, we develop technologies with the aim of speeding up recovery and restoration from the Great East Japan Earthquake by even 1 day. P The construction industry associated with the formation of social infrastructure is founded on environmental loads. On the other hand, environmental problems are becoming more serious on a global scale, so measures are required that extend beyond generation lines. Under these circumstances, Taisei Corporation is undertaking the following medium and long term targets, as a company with social responsibility. Realizing a Low Carbon Society Reduction in predicted CO2 emissions in the building operation stage compared with 1990 (and popularization of urban-style ZEBs as top runner architecture) 40% Reduction in CO2 emissions in the construction stage compared with % Reduction in predicted CO2 emissions in the building operation stage compared with 1990 (and aim for popularization of urban-style energy creation buildings as top runner architecture) Aim for 80% Reduction in CO2 emissions in the construction stage compared with 1990 Aim for 80% Realizing a Recycling oriented Society Aim for final disposal rate of construction waste of 3% or less Aim for a recycling index for construction byproducts of 80 or more Aim for final disposal rate of construction waste of 0 Aim for a recycling index for construction byproducts of 100 Realizing a Nature Co-existing Society Use and expansion of biodiversity evaluation methods Participation in and promotion of biodiversity offsets Aim for development of social infrastructure that co-exists with nature Aim for realizing society that increases biodiversity TAISEI AGENDA P D C A Response to Recovery and Restoration from the Great East Japan Earthquake P D Taisei Corporation sets environmental management targets in financial year units in the TAISEI AGENDA, results for KPI selected items are listed. indicated on page 39. Since the occurrence of the earthquake in 2011, Taisei Corporation has been undertaking recovery and restoration work in the affected areas, such as decontamination work, etc. Æ P14 TAISEI CORPORATE REPORT 2014 DATA BOOK 8

10 Response to global warming P ISO Climate change mitigation and adaptation Contribution to Realizing a Low Carbon Society D Prediction of CO2 Emissions in the Building Operation Stage and Reduction Percentage D The environmentally friendly design of Taisei Corporation is carried out taking into consideration CO2 emissions, green procurement, biodiversity, and CASBEE in the implementation of the design project, with the aim of contributing to a low carbon society, recycling society, and society that co-exists with nature. CO2 Emissions in the Construction Stage D All Taisei Corporation construction sites make efforts to reduce environmental impact and CO2 emissions in the construction stage by conducting CO2 Zero Action. From FY 2014 an intensity target for CO2 emissions (per construction amount) is set as an environmental management initiative, to achieve reductions. Prediction of CO2 Emissions in the Building Operation Stage and Percentage Reduction CO2 emissions (10 3 t-co2) (%) Calculated value based on 1990 criterion Predicted CO2 emissions * Predicted CO2 Reduction Percentage Emissions per unit floor area (kg-co2 /year.m 2 ) Target value (FY) (FY) CO2 Emissions in the Construction Stage Total construction this term (million yen) CO2 emissions (10 3 t-co2) Construction Site (building) Construction Site (civil engineering) Civil engineering Building Target value 247 Target value Total 269, ,347 1,026,166 CO2 emissions (10 3 t-co2) CO2 emission reduction percentage (%) * CO2 emissions intensity (kg-co2 /million yen) (FY) * KPI P39 * KPI P39 Energy Use (10 9 MJ) Construction Site (civil engineering) Construction Site (building) Offices (FY) CO2 Emissions (10 3 t-co2) Sites (all) Offices Scope 1 Scope 2 Scope (FY) External Awards The CO2 Zero Action and the Eco Model initiatives at our construction sites have been highly evaluated, and in FY 2013 we were the recipient of the Minister for the Environment Award for Activities to Prevent Global Warming. In some cases the sum of individual values may not be consistent with total values, due to rounding of data. Third-party assured values (independent assurance report on P20) are indicated with the mark. 9 TAISEI CORPORATE REPORT 2014 DATA BOOK

11 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information External Evaluations Response to Climate Change and Information Disclosure CDP CDP is a non-profit organization launched in London, UK in Since 2002 they distribute questionnaires to the world s leading companies requesting information disclosure on climate change, on behalf of institutional investors. In 2014, with the support of 767 institutional investors (total assets under management US$92 trillion (about 9,500 trillion yen)), they distributed questionnaires regarding climate change to more than 6,000 companies throughout the world. In Japan, after starting in 2006 with the top 150 companies by market capitalization, currently the questionnaire is distributed to 500 companies. At present in Europe about 50% of institutional investors carrying out long term investment, mainly pension funds, attach great importance the information disclosed in these questionnaires. Supply Chain In the CDP supply chain program, disclosure of information regarding CO2 emissions of the company s suppliers, etc., is required. In FY 2013 Taisei Corporation was one of the few Japanese companies to participate in this program, and in FY 2014 we have requested the cooperation of more than 40 suppliers from among CDP participating companies. Other CDP programs that companies undertaking are Water (water risks) and Forest (forest risk commodities), which currently have a major effect throughout the world, for which information disclosure questionnaires started to be distributed in Since 2006, Taisei Corporation has been responding to the Climate Change questionnaire, and since 2010 has been selected as a leader disclosure company for 4 consecutive years. In the questionnaire, comprehensive information disclosure regarding climate change is required, such as awareness and management of business risks and opportunities identified by the influences of climate change, whether business strategy takes into consideration climate change, what is the responsibility within the company for decision making regarding these, status of calculation of emissions and reduction activities, etc. Since FY 2012 we have started determining the CO2 emissions from some overseas construction sites, and the calculation results are disclosed to CDP. In FY 2013 we calculated the emissions from building and civil engineering sites in Taiwan, from which it was found that emissions were about 9,000 t. Scope 3 Emissions Calculation One item dealt with in the CDP climate change questionnaire program is Scope 3 emissions within the CO2 emissions criteria based on the GHG Protocol*. The CO2 emissions in 15 categories are calculated for the whole life cycle from procurement of raw materials, product use, and disposal, including the supply chain. A common category for most types of company is CO2 emissions during use of a product (in the construction industry, this is during operation of the building), and it is the responsibility of companies to reduce this. Since 2013, Taisei Corporation has participated in the Ministry of the Environment s environmental information disclosure program as a trial company, to determine a broader range of Scope 3 emissions. Also, we are developing buildings with lower CO2 emissions. *GHG Protocol: Development and provision of standards for calculation and reporting of global warming gas emissions, jointly established in 1998 by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI). TAISEI CORPORATE REPORT 2014 DATA BOOK 10

12 Efficient use of resources P Promotion of 3R Activities D The rate of recycling of construction waste by Taisei Corporation in FY 2013 was 95.6%* (target 95% or higher). The percentage of weight converted mixed waste in new construction (excluding concrete rubble, asphalt concrete rubble, mud) is 12.6% (target 30% or less), and the quantity of industrial waste commissioned for disposal in civil engineering construction was 289 t/100 million yen (target 350 t/100 million yen or less). From FY 2014 an intensity index of reduction in industrial waste in civil engineering construction has been set to promote waste reduction activities. * KPI P39 Improvement in Construction Waste Recycling Percentage D Construction Waste Emissions ISO Sustainable resource use Recycled amount Intermediate disposal amount Direct final disposal amount ( ) are the quantities excluding mud and waste not emitted from construction works (10 3 t) 3,000 2,695 (1,709) 2, ,500 (1,522) 797 (25) 17 2,000 1,687 1, (270) (14) (1,275) (1,117) (227) ,500 1, (14) (828) (13) (109) (201) 15 1,863 1, (9) 1,554 (1,414) 1,317 (89) 1,116 (1,281) 500 (1,152) 879 (903) (730) (FY) Promotion of Green Procurement D Operations based on the Green Procurement Guidelines Taisei Corporation has defined Green Procurement Guidelines with the objective of using materials, equipment, and construction methods with small environmental loads when designing, constructing, or demolishing structures. Every year the green procurement items are reviewed. The percentage of green procurement in FY 2013 was 33.4%*. Five items were added to the 77 items in FY 2012 to give 82 items (see the table on the right). In FY 2013, 59 items were adopted in 70 design build projects, and the number of items adopted per project was 8.0. On the other hand, the introduction of materials such as ready mixed concrete using blast furnace cement, blast furnace cement, recycled aggregates, slag aggregates, recycled steel materials (recycled reinforcement and structural steel), liquefied stabilized soil, high efficiency fluorescent lighting fixtures, environmentally friendly thermal insulation, etc., onto construction sites is being promoted. Green Procurement Items D * KPI P39 Results for Adoption of Green Procurement Items by Eco-sheet CASBEE Architectural items Ceramic tiles 25 Thermal insulation sashes and doors 19 Water permeable pavements (including water retaining pavements) 14 Particle board 11 Recycled vinyl flooring materials 11 Wooden materials and Wooden products (laminated wood, plywood, laminated veneer lumber) 9 Environmentally friendly thermal insulation 9 Recycled carpet tiles 7 Building greening (rooftop greening) 7 Paving blocks using recycled materials (calcined, PC unreinforced concrete products) 5 Prime coating paint (heavy anti-corrosion) 5 Recycled gypsum board 5 Environmentally friendly flooring 4 Recycled heated asphalt mixtures 4 Low organic solvent water-based paints for road signs 3 Wooden-base cement boards 2 Slope greening method using wooden materials or generated construction 2 Sunlight adjustment film 2 Bark compost 1 High sunlight reflectivity paint 1 Building greening (wall greening) 1 Equipment items Western-style toilets (water conserving type) 47 Automatic water faucets 44 LED lighting fixtures 44 Automatic flushing devices and urinals containing them (water conserving type) 36 High efficiency fluorescent lighting fixtures 34 Electric heat pump type air conditioners (multi-type for buildings) 25 High efficiency transformers 23 Solar power generation system 17 Energy efficient electric toilet seats 14 Stainless steel pipe 9 Inert gas fire extinguishers 8 High efficiency gas hot water heaters 8 Lead-free electrical wiring and cables 6 EM electrical wiring and cables 4 Recycled rigid PVC pipes for drainage and ventilation 4 High efficiency blowers 3 Gas engine heat pump type air conditioners 3 Cardboard ducts 3 Environmentally friendly road lighting 3 High efficiency pumps 2 Absorption water heater-chillers 2 Fuel cells 2 Garbage disposer 1 Solar heating systems 1 Structural items Recycled steel 24 Blast furnace slag cement 9 Metal frame panels 8 High strength concrete 7 Recycled aggregates 7 Casting formwork 6 Ready mixed concrete using blast furnace slag cement 4 Processed soil recycled from construction mud (liquefied stabilized soil) 2 Fly ash cement 1 Ready mixed concrete using fly ash cement 1 Slag aggregates 1 Recycled mixing formwork 1 EPS mixed lightweight soil 1 Steelmaking slag for soil stabilization 1 *Numbers represent the number of projects Items added in FY 2013 Thinning wood Construction mud recycling processing methods Concrete mass recycling processing methods On-road recycled roadbed construction method Water draining pavements In some cases the sum of individual values may not be consistent with total values, due to rounding of data. Third-party assured values (independent assurance report on P20) are indicated with the mark. 11 TAISEI CORPORATE REPORT 2014 DATA BOOK

13 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Biodiversity conservation and environmental contribution activities P Biodiversity Policy D ISO Protection of the environment, biodiversity and restoration of natural habitats Declaration of TAISEI on Biodiversity Preservation Based on the TAISEI Group Ideal To create a vibrant environment for all members of society, and in order to remain an organization that learns from and cares for nature, TAISEI proclaims the following action policy. 1. Analyze the risks the Company s construction activities pose to biological resources and the ecosystem, utilize environmental management systems, and minimize the impact of those risks to the maximum extent possible. 2. Develop environmental technologies to preserve and re-create biodiversity, and utilize those technologies with clients to sustain ecological services. 3. Perform urban development and facilities design that coexists in harmony with nature, and aggressively submit proposals that serve to preserve and increase biodiversity. 4. Cooperate with business associates, including specialty sub-contractors, in pursuing biodiversity preservation. 5. Promote communication with local communities, cooperate with domestic/overseas NPO/NGO s, engage in proactive biodiversity conservation activities, and disclose the accomplishments of those activities. Social Contribution Activities Taisei 1 Ton Club In FY 2013, a 7.5 ha forest was named Taisei Corporation and Amami Rabbit Forest with support from contributions from 666 members in a habitat trust activity called Protecting the Amami Rabbit in Taisei Corporation Employees Forest. Creation of Waterfront Environment in Urban Areas and Contribution to Environmental Education By introducing the water quality conservation system Aquatope (jointly developed with Nisshoku Corporation) which uses absorbent material of natural origin, waterfront environments such as ponds, etc., can be created in urban areas which achieve both conservation of biodiversity and good water quality. Aquatope does not use any chemicals, but by using high performance absorbent made from natural material, water quality can be preserved while caring for the ecosystem. When introduced into the biotope pond at Musashino University s Ariake Campus, good water quality was maintained, and in addition rarely seen damselflies were observed. This biotope was developed as part of a project on the initiative of students at the Department Of Environmental Science in Musashino University, and it is used as a place for environmental education through the students carrying out water quality surveys, plant surveys, or daily maintenance. TAISEI CORPORATE REPORT 2014 DATA BOOK 12

14 Response to environment risk P ISO Prevention of pollution Proper Management of Construction Waste D Increasing Awareness of Environmental Laws and Regulations and Thorough Preventative Measures A total of 1,296 site environmental patrols, which inspect compliance within the company with environmental laws and regulations within construction sites, have been carried out on 732 construction sites throughout the country. The matters identified are shown in the graph. Corrective and preventative actions are taken with respect to the matters identified to ensure continuous improvement. Dealing with Complaints at Construction Sites Details of the main external complaints regarding the environment received at construction sites throughout all Japan in FY 2013 and their countermeasures are as follows. Percentages of Complaint Items and Examples of Responses (FY 2013) Percentages of Matters Identified (FY 2013) Others 25% Noise 25% Education, training, etc., 39% Construction site planning 12% Laws and regulations, etc., 49% Industrial Safety and Health Act 2% Water Quality Pollution Control Act 1% Regulations to prevent asbestos damage 1% Waste Disposal and Public Cleansing Act 25% Law for Promotion of Effective Utilization of Resources 6% Construction Material Recycling Law 6% Local Ordinances 3% Others 4% In some cases the sum of individual values may not be consistent with total values, due to rounding of data. Increase in Rate of Use of the Electronic Manifest D Paper manifests are being converted to electronic manifests in order to prevent errors or omissions in filling in paper manifests by waste producing companies, collection and transport companies, and disposal companies, in order to ensure proper processing of waste. In FY 2013, a rate of use of 86.4%* was achieved. * KPI P39 Proper Management of Hazardous Chemical Waste In Important Points of Environmental Management at Branch Offices and Construction Sites, which is used in in-house lecture meetings, the proper management of hazardous chemical wastes such as asbestos and PCBs, etc., is prescribed. Noise Type Vibration Traffic obstruction Dust Water pollution Damage to buildings Damage to buildings 5% Water pollution 7% Dust 12% Traffic obstruction 13% Vibration 13% Examples of response For complaints regarding noise during construction or during night time work, adjustment of working hours, installation of soundproof sheeting, adjustment of machinery rotation rate, etc., is carried out. For complaints regarding vibration during demolition of foundations, removal of structures, driving piles, etc., the construction method is reviewed or the working hours adjusted. For complaints regarding the method of guiding at entrances and exits to construction sites, instruction on the proper method of guiding/signaling is given to the security guard, after consulting with the Police. For complaints regarding dust during construction or during soil transportation by trucks, measures to prevent dispersion are taken, such as increasing the height of the temporary enclosure, increasing water sprinkling, etc. Polluted water leaks from a container or flows into a rainwater tank within a facility. Measures to prevent flowing in are taken, and recovery and cleaning is carried out. Cracks occur in a building and peeling of glass sealing occurs due to vibrations. After surveying the situation, repair work is conducted in affected area. Thorough Implementation of Proper Processing and Management of Contaminated Soil Of the real estate for sale owned by Taisei Corporation, surveys were carried out at 5 sites in FY 2013 based on the Soil Contamination Countermeasures Act, and at no site was there any countermeasure construction necessary. Environmental technology research and development and improvement in proposal capability P Providing Environmental Technologies D In the field of energy efficiency and response to global warming, smart grid related technologies are evolving, construction of zero energy building (ZEB) demonstration buildings is proceeding, and response to the US building environment performance evaluation Leadership in Energy and Environment Design (LEED) is also advancing. We continue to undertake initiatives in renewable energy, such as power generation using biomass, foundation construction methods for megasolar, etc. In the field of environmental coexistence, we have improved biodiversity evaluation tools, and have developed methods of designing water and green networks. In FY 2013 there were 30 media announcements regarding research and development of environmentally friendly technologies and projects applying them. * KPI P39 13 TAISEI CORPORATE REPORT 2014 DATA BOOK

15 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Response to Recovery and Restoration of Areas Affected by the Great East Japan Earthquake P D In the response work for the areas affected by the Great East Japan Earthquake, in March 2014 we completed the work of processing the waste in Kamaishi and Kesennuma. We continue to assist with the decontamination work in Fukushima Prefecture in Minami Soma City, Iitate Village, Kawamata Town, the Joban Expressway, Koriyama City, etc., working to complete the recovery and restoration as soon as possible. Decontamination technologies have been developed to improve the effectiveness of decontamination, such as dry ice blasting, combustible material compression bags, decontamination of water areas with thin layer sand covering, etc. Also, we have been engaged in various urban reconstruction activities such as relocation to higher ground in Higashi-Matsushima City, construction of BCP (Business Continuity Plan) corresponding buildings with, cogeneration system (combined heat and power generation equipment), seismic isolation, etc. TAISEI AGENDA P TAISEI AGENDA 2014 The FY 2014 environmental management targets were set in accordance with the Group Action Guidelines, the Environmental Policy, and the Mid-term Business Plan. In this fiscal year new targets were set for reduction rate of CO2 emissions intensity in the construction stage, and index of industrial waste intensity in civil engineering. Also, a target for the recycling rate of construction waste is set again as a final disposal rate. The response to recovery and restoration of the areas affected by the Great East Japan Earthquake is also continuing as an important target. FY 2014 Environmental Management Targets (TAISEI AGENDA 2014) 1. Prevent global warming 2. Effectively utilize resources 3. Preserve biodiversity 4. Reduce environmental risks Objectives Targets for Fiscal Promote development of technologies 6. Promote excellent environmental activities in many fields Reduce CO2 emissions at the operation stage of buildings KPI Reduce CO2 emissions at the construction stage on building construction sites and civil engineering sites KPI Promote reduction in energy consumption rate in offices <Decrease more than 30% compared with fiscal 1990 level> <Decrease more than 40% compared with fiscal 1990 level> <Decrease more than 10% compared with fiscal 1990 level (Intensity)> <Decrease more than 10% compared with fiscal 2010 level (Intensity)> Decrease construction waste final disposal rate KPI <Final disposal rate: Less than 5%> Reduce mixed waste weight rate of new building construction projects <Less than 30%> Reduce the decrease index of construction waste processing amount in intensity, for civil engineering construction projects <Less than 1.0> Increase green procurement rate KPI <Green procurement index: Over 30%> Support and practice activities & trainings to preserve natural environment Develop and promote biodiversity technologies Manage construction waste, harmful and/or chemical substances appropriately <Over 6 activities & trainings> <Over 30 promotions> Improve electronic manifest diffusion rate KPI <Rate: Over 80%> Promoting media presentations on research, development and promotion of environmental technologies KPI Putting eco-model projects in practice <Non-occurrence of environmental accidents> <Over 20 media presentations> <Conduct more than 30 projects> Prioritized targets for Contribution to the recovery & reconstruction of devastated areas by the Great East Japan Earthquake (Promoting Div.: Related divisions and branches) Contribute to the recovery & reconstruction Prompt decontamination of disaster areas and prevent diffusion of radioactive materials of devastated areas by the Great East Japan Earthquake Consideration for local citizens and ensure safety of workers & employees Contribute to reconstruct & develop environmentally friendly towns and infrastructures [ECO FIRST] As Taisei Corporation is an Eco First certified company, the environmental targets in the TAISEI AGENDA (indicated with the symbol in the table) are undertaken as Eco First Promises. TAISEI CORPORATE REPORT 2014 DATA BOOK 14

16 Environmental data 1. Taisei Corporation Material Flow D Taisei Corporation and its Group companies endeavor to grasp the balance of resources and energy amount associated with business activities, in order to increase environmental efficiency and work towards the formation of a recycling-oriented society (terms). Taisei Corporation Material Flow Input Units FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Total energy used 10 9 MJ Construction Site (building) 10 9 MJ Construction Site (civil engineering) 10 9 MJ Offices 10 9 MJ Total fossil fuel (diesel, heavy oil, kerosene) 10 3 kl Diesel 10 3 kl Kerosene 10 3 kl Heavy oil 10 3 kl ー Total electricity 10 6 kwh Construction Site (building) 10 6 kwh Construction Site (civil engineering) 10 6 kwh Offices 10 6 kwh City gas (offices) 10 3 m Total quantity of the main construction materials (following 6 items) 10 3 t 5,549 5,958 6,742 6,676 7,702 Ready mixed concrete 10 3 t 4,627 5,082 5,440 5,200 6,441 Aggregates (gravel, crushed stone, etc.) 10 3 t Cement 10 3 t Steel 10 3 t Timber 10 3 t Asphalt 10 3 t (of which the green procurement quantity)* t 2,732 2,079 1,761 2,161 2,701 Total concrete formwork used 10 3 m 2 4,629 4,216 4,741 4,407 5,640 Tropical plywood formwork 10 3 m 2 3,605 3,079 3,094 3,543 3,712 Alternative formwork 10 3 m 2 1,024 1,137 1, ,928 Alternative formwork percentage % Water (consumption) 10 3 m 3 2,537 3,122 3,063 1,663 5,231 Output Units FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Total CO2 emissions 10 3 t-co Construction Site (building) 10 3 t-co Construction Site (civil engineering) 10 3 t-co Offices 10 3 t-co Total CO2 emissions 10 3 t-co Scope t-co Scope t-co Scope t-co NOx t 1, , ,215 SOx t Quantity of Chlorofluorocarbon and halon recovered t Construction soil (transported off site) 10 3 m 3 1,118 1,757 1,717 2,753 2,333 Construction waste 10 3 t 1,687 1,228 1,633 2,236 2,695 Quantity recycled and given intermediate processing 10 3 t 1,646 1,213 1,614 2,220 2,660 Quantity of direct final disposal 10 3 t (of which, asbestos quantity disposed) 10 3 t Water (discharged) 10 3 m 3 ー ー ー ー 964 *1 The quantity used as green procurement products out of the main construction materials In some cases the sum of individual values may not be consistent with total values, due to rounding of data. Third-party assured values (independent assurance report on P20) are indicated with the 15 TAISEI CORPORATE REPORT 2014 DATA BOOK mark.

17 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Group Companies Material Flow D Promotion of Environmental Management in Group Companies Material data is determined for the 7 companies that participate in the Taisei Corporation Group Environmental Promotion Conference, including Taisei Rotec Co., Ltd., Taisei Yuraku Real Estate Co., Ltd., Taisei U-LEC Corporation, Taisei Setsubi Co., Ltd., Taisei Housing Corporation, and Seiwa Renewal Works Co., Ltd., to promote the common initiatives of reduction in CO2 and industrial waste emissions and energy efficiency. Also, work to standardize the method of collecting environmental data was started in the 5-year plan which commenced in FY In FY 2013 a uniform Taisei Corporation Group Environmental Data Collection Manual was prepared based on the Taisei Corporation method of collection, for data such as energy and water usage, CO2 emissions, and construction waste emissions. From FY 2014, each office, site (construction site), and factory in each company will collect data in accordance with this manual, with the aim of obtaining third party certification in FY Material Flow for Group Companies Input Units FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Total energy use 10 9 MJ Sites (construction sites) 10 9 MJ Factories 10 9 MJ Offices 10 9 MJ Total fossil fuel use 10 3 kl Heavy oil 10 3 kl Diesel 10 3 kl Kerosene 10 3 kl Gasoline 10 3 kl Total electricity use 10 6 kwh Sites (construction sites) 10 6 kwh Factories 10 6 kwh Offices 10 6 kwh City gas 10 3 m 3 2,900 2,590 3,190 2,853 3,181 LPG t Water (consumption) 10 3 m Output Units FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Total CO2 emissions 10 3 t-co Sites (construction sites) 10 3 t-co Factories 10 3 t-co Offices 10 3 t-co NOx t ー ー ー ー 164 SOx t ー ー ー ー 24 Quantity of Chlorofluorocarbon and halon recovered t ー ー ー ー 2 Total industrial waste emissions 10 3 t Quantity recycled 10 3 t Final disposal quantity 10 3 t Water (quantity discharged) 10 3 m 3 ー ー ー ー 75 TAISEI CORPORATE REPORT 2014 DATA BOOK 16

18 2. Technologies and Initiatives for Environmental Solution Plan Prevention of Global Warming Planning and Design Design energy-saving architectural structures Super-Eco buildings T-Façade Air (thin double-skin system) Eco-Sheet CASBEE* 1 (CO2 emissions) Carbon Navigator (building CO2 emission planning system) T-SEEK (structure environmental performance evaluation system) Air conditioning and lighting equipment T-Zone Saver (automatic ultra-energy-saving environment control system) T-Personal II (personal environment control technology) Geothermal air-conditioning system using cast-in-place piles North Country Air Conditioning (eco-air-conditioning system for cold climates) T-Breeze Floor System (total floor-vented air-conditioning system) T-Soleil 100 (solar lighting system for tall buildings) Original TAISEI LED lighting Miscellaneous Smart thermal/electrical storage system DC powered office BIM and VR / CIM* 2 coupled functionality Application of renewable energy (solar light, solar heat, wind power generation, etc.) CO2 underground sequestration simulation, CO2 underground sequestration related facilities Construction Promote CO2 Zero Action, Eco Model projects Carbon Navios (system for projecting CO2 emissions during building construction) Application of energy-saving construction methods Continuous belt conveyor tunnel construction method Harmonica method (large-section divided shield construction method) Upward shield construction method Paving A using Visco-Mix (medium-temperature compound material) Fiber-reinforced ferro concrete segments Improvement of transport methods Reduced transport distance Education in fuel-economical driving (Eco-Drive) Modal shift (surplus soil, industrial waste) CRM method F Reduce CO2 by shortening construction periods Continuous long-distance boring by shield machine with double bits Adopt energy-saving machines and equipment Electric-powered backhoe, LED lighting, solar power Use biodiesel fuel Mega-Solar power generation system (Soft-ground) Efficient Use of Resources Conservation of Biodiversity Reduction of Environmental Risks Zero emissions plans (3Rs of waste) Eco-Sheet CASBEE* 1 (green procurement) Long-life design (develop materials, construction methods) T-RESPO construction method (long-period ground motion countermeasure technology) TASMO (next-generation intelligent seismic control*8 system) T-Grid, T.G-WALL, T.T-WALL TASS-floor (3D floor base isolation system) TASS unit (equipment seismic isolation system for production facilities) Automatic warehouse rack vibration control system T-RESQF (earthquake emergency management system for production facilities) Ultra high-strength concrete construction planning technology TAS-Fine (ultra high-strength thin RC columns) Ductal ultra high-strength fiber-reinforced concrete (UFC) T-Feels (TAISEI Eco-material comprehensive evaluation system) Resource-saving Eco-friendly concrete T-POP construction method (ultra-light long-span precast concrete beam) CFT construction method (steel-frame construction method using concrete filled steel tubes for columns) Corrugated air duct (eco-air-conditioning duct made of high-performance corrugated cardboard) TAS-Clean (Clean room air-conditioning unit) Data center construction with cooling by introduction of outside air T-Flexible Clean room, T-Smart Clean room Ecological Planning Landscape design (landscape planning, planning and design of building greening) Planning for harmony with the environment, ecosystem conservation Mitigation, biotope Nature-friendly greening, green space ecology planning Natural environment conservation and disaster mitigation design method using GIS* 4 Wetland environment impact assessment Wetland environment restoration Water purification using high-density oxygen water IKIMONO-Concierge (Simplified biodiversity assessment tool)* 5 Environmental Assessment T-Heats (heat island countermeasure analysis and evaluation system) Low-carbon city block simulator TSounds (comprehensive noise prediction system) T-Diff (air pollution prediction and evaluation system) T Winds-II (building wind prediction and evaluation system) Low-maintenance rooftop greening system using TEPSAM greening foundation TEPSAM Cool Wall (high-tech water sprinkling system) Closed system disposal site Remediation of contaminated soil (volatile organic compounds, petroleum, heavy metals, PCBs, dioxins, etc.) Groundwater remediation Healthful housing plans Soil remediation double-cap insurance Radiation decontamination Zero emission construction (3Rs of waste) Designated worksite with implementation of zero emissions priority E-DAM (environmental data management system) Recycle wood building materials generated by construction Use tree cuttings for mulch, compost, charcoal Effective use of soil generated by construction (soil stabilization material, etc.) Reuse of soil generated by construction F Construction method using reduced-slurry soil cement columns in rows Resource-saving Precasting ultra high-strength concrete Ultra high-strength concrete with 300 N compressive strength Fc 200N precast column application nepre (structures made of precast ferro concrete) C Reuse of existing pilings during building reconstruction Green procurement (fly ash concrete, etc.) LNG tank dual PC dike The wall type precast reinforced concrete construction method Rooftop greening, wall greening, rooftop vegetable gardens E Friendly to raptors and other rare organisms Transplant rare plants Turbid water treatment system using chitosan flocculant F Local forest creation Bottom sediment purification method Mitigation Environmentally Friendly Construction Automatic noise and vibration monitoring system Temporary enclosure greening (green curtain, water curtain) Water retaining pavement technology with water supply functionality (cool road) A Underground water reservoir construction method A UD-HOMET construction method (low-noise, low vibration construction method) Large-diameter curved pipe roof method Application of photocatalytic air purifier in underground construction ICT-based management technology for dam construction (4D-DIS) Unmanned construction equipment system Tunnel blasting noise reduction system Remediation of contaminated soil (volatile organic compounds, petroleum, heavy metals, PCBs, dioxins, etc.), in-situ remediation Water injection bio-sparging method Biodegradation method Soil remediation method F Groundwater remediation Permeable purifying barrier (Multi-barrier) method F Guidance regarding MSDS* 6 Radiation decontamination *1 Comprehensive Assessment System for Building Environment Efficiency *2 BIM: building information model; VR: virtual reality (both 3D technologies); CIM: Construction Information Modeling *3 Commonly referred to as vibration damping because it addresses vibration from wind-induced motion. Here, where it specifically refers to seismic motion, it is referred to as seismic control to make it more readily understood. 17 TAISEI CORPORATE REPORT 2014 DATA BOOK

19 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information A: Taisei Rotec Corporation; B: Taisei-Yuraku Real Estate Cp., Ltd.; C: Taisei U-LEC Co., Ltd.; D: Taisei Setsubi Co., Ltd.; E: Taisei Housing Corporation; F: Seiwa Renewal Works Co., Ltd. (As of April 1,2014) Operation, Renovation, Demolition General renovation work Extending building life, installing information telecommunications capability, conversion to barrier free design, conversion to energy-saving design Energy-saving renovation work D Energy management T-Green BEMS T-Carbon Conductor T-Smart Monitor Demand response technology* 7 ESCO business* 8 B, D Recovery and destruction of fluorocarbons Recovery of SF6 Energy-saving renovation work Zero-emission demolition (3Rs of waste) Conversion (technology to change use of building) Renovation (improving the performance of buildings) Life-extending repair Earthquake resistance, base isolation, seismic vibration control* 3 Use of ground flex mole method (flexible boring) for anti-seismic reinforcement of tank conforming to old law Embankment structure anti-seismic reinforcement method Anti-seismic reinforcement F by Post-Head-bar (retrofitted steel bar reinforcement against shear) Pipe refreshing method (restoration of marine pipes) Measures against liquefaction of existing facilities with the groundwater level lowering method Measures against liquefaction of existing facilities with the WinBLADE method (improved soil mixing method by opening impellers in the ground) Efficient use of concrete debris Application of Research and Development Technology Use renewable energy Mega-Solar power generation system Concentrated Solar power generation system Tidal current power generation system Geothermal utilization system CO2 underground sequestration technology Develop liquefied CO2 storage facilities Heat-recovering solar battery louvers Light-modulating ceiling system T-Smart Focus (next-generation human detection sensor) Low-carbon city block and city simulator BIM and VR / CIM* 2 coupled functionality T-Site View (on-site panoramic photography system) Mole navigator (underground location finding system using sound waves in the ground) Inter-seasonal ice storage air-conditioning system Plant factory with inter-seasonal ice storage airconditioning system Vegetable plant (thin LED grow light unit) Aquarium using artificial seawater Methane hydrate gas leak monitoring CO2 underground sequestration (CO2 injection simulation, CO2 transportation) Electric power stabilization by electric power storage evaluation system (NaS battery* 9 ) Distributed energy network technology (smart grid, smart city construction) Mega-Solar power generation system using the top of final landfill site Wind power generation TAISEI super concrete T-POP construction method (ultra-light long-span precast concrete beam) Reuse demolished concrete as aggregate Use tree cuttings for charcoal, compost Use dehydrated cake produced after chitosan flocculant treatment for planting base Produce ethanol from rice straw Business of improving and operating final disposal sites through PFI, DBO* 10 Business of restoring final waste disposal sites Business of carbonizing and recycling city waste through PFI Biogas fermentation of domestic animal waste, garbage, and use for electric power generation Methane fermentation without dilution by water Relocation and preservation of historic buildings Inherit and develop local culture Conservation of cultural assets Forest saver project Forest restoration Research on eco-system Ecosystem survey following biotope construction Greening plan based on cluster analysis Technology for spraying local wild grasses Purification system using adsorbent and aquatic plants Aquatic environment restoration Restoration of tidal flats and Zostera beds Placement and promotion of animal pathways on existing roads Environmentally friendly demolition planning TECOREP system (environmentally friendly method for demolition of very tall buildings) Low-noise, low-vibration work method using wire saw Laser non-slip work method Remediation of contaminated soil (volatile organic compounds, petroleum, heavy metals, PCBs, dioxins, etc.), in situ remediation Asbestos countermeasures Robot to remove spray-on asbestos inside elevator shafts Asbestos removal in subways using specialized wagon Incinerator demolition system compliant with laws Proper storage of PCBs Radiation decontamination Local environment assessment system Vibration analysis system Forecasting floods from localized severe rainstorms Water purification system using photocatalytic air purifier Drinking water business Soil and groundwater remediation Sick house countermeasures Robot to remove spray-on asbestos On-site asbestos abatement detoxification system Radiation decontamination Indoor air pollution prevention In-situ remediation of soil contaminated with benzene / cyanogen activating microorganisms *4 Geographic information system *5 Assesses effects of creating a space that considers biodiversity by showing the organisms that may potentially visit. *6 Material safety data sheet *7 A system that varies the energy demand to achieve a balance between supply and demand. *8 Business providing comprehensive services including energy-saving proposals, provision of facilities, maintenance, and management. *9 Sodium-sulfur batteries *10 A business method similar to the private finance initiative (PFI) in which the public sector takes on fund-raising and contracts design, construction, and operation to the private sector. TAISEI CORPORATE REPORT 2014 DATA BOOK 18

20 3. Environmental Accounting Environmental Conservation Cost Units: million yen FY 2013 Investment amount Cost Classification Details of main initiatives Ratio of Civil Total Building Offices Total Ratio of previous year engineering previous year 1. Environmental conservation cost in business areas 10,003 13, ,414 7,479 (1) Pollution prevention cost Cost of temporary works on sites to prevent air pollution, water contamination, noise, vibration, etc (2) Global environmental conservation cost Cost of recovery of CFC and halon, green electricity procurement cost (3) Resource recycling cost Waste processing cost on site, resource recycling cost, asbestos and PCBs recovery and processing cost 9,696 12, ,758 7, Upstream and downstream Personnel costs and management costs for environmentally friendly costs design and engineering 0 0 1,705 1, Administration cost Personnel cost, education cost, and inspection cost for EMS, greening around construction sites, cooperation communities, etc ,037 1, Research and development Personnel cost and management cost for environmental research cost and development ,497 1, Social activity costs Donation to environmental NGOs, etc Environmental remediation Soil survey and decontamination cost for real estate for sale by the costs company, cost of land subsidence, and repair of roads and other neighboring repairs, etc. Total environmental cost ,016 13,197 4,461 27,673 7,976 Economic Effect Associated with Environmental Conservation Measures Units: million yen Economic Effect Associated with Environmental Conservation Measures Amount Earnings Recycling of waste produced by the main business activities 305 Economic Effect Associated with Reduction in office energy cost due to Environmental Conservation energy efficiency -183 Cost reduction Reduction in construction site energy cost 318 Measures (substantial effect) Reduction in waste processing cost associated with resource conservation and recycling -6,923 Reduction of Economic Effect Associated with environmental Environmental Conservation impact converted to Measures (estimated effect) monetary amount 36 Environmental research and development cost ratio Environmental impact ratio (only derived from the company) Environmental efficiency Environmental R&D cost / total R&D cost (%) Direct final disposal quantity / construction amount (kg/million yen) Sales / CO2 emissions (construction + office) (million yen / t-co2) (FY) Calculation Standard for Environmental Data and Indexes FY 2013 Organizations Covered: Taisei Corporation (Japan only) Objective Item Calculation method Classification by business type Classification into civil engineering (sites), building (sites), and offices (excluding real estate development and others) Scope 1: CO2 emissions associated with combustion of fossil fuels CO2 emissions Scope 2: Indirect CO2 emissions associated with use of electricity, steam, and chilled or hot water Scope classification Scope 3: CO2 emissions associated with transport of construction waste off construction sites and the outward or return transport of soil from construction Material flow related Prevention of warming Resource recycling CO2 emissions Calculation method NOx, SOx emissions calculation method [Civil engineering, Building construction] Calculation method for energy, fossil fuel (diesel, heavy oil, kerosene), electrical power, city gas, and water usage [Offices] Calculation method for energy, fossil fuel (diesel, heavy oil, kerosene), electrical power, city gas, and water usage [Civil engineering, Building construction] Calculation method for the main construction materials purchased [Civil engineering, Building construction] Calculation method for Chlorofluorocarbon and halon recovered [Civil engineering, Building construction] Calculation method for construction soil emissions [Civil engineering, Building construction] Calculation method for construction waste emissions [Civil engineering, Building construction] Calculation method for concrete formwork and alternative formwork used CO2 emission coefficient: Calculated using the emission coefficient in accordance with Act to Rationalize the Use of Diesel, Heavy Oil, and Energy and the Act on Promotion of Global Warming Countermeasures, excluding the fat content from the fuel consumption of the Japan Construction Mechanization Association. For offices, use the actual emission coefficient for FY 2012 according to the electrical power company. Electrical power: Calculate using the 2012 emission coefficient on the user end announced by the Federation of Electrical Power Industries of Japan (before reflecting the Kyoto credit), 0.571t-CO2/MWh City gas: Calculate using the standard calorific value of the gas supply company and the emission coefficient of the Act on Promotion of Global Warming Countermeasures Calculation of NOx and SOx originating from diesel, heavy oil, and kerosene Calculated using the emission coefficient of Architectural Institute of Japan s Guide to Building LCA - Evaluation Tool for Measures against Global Warming, Resource Consumption, and Waste - Revised Version, excluding the fat content from the fuel consumption of the Japan Construction Mechanization Association. The quantities used in a 2 month period in FY 2013 was sampled at 126 construction sites and calculated, and the (basic unit) quantity used per unit of construction turnover was calculated from the calculated value and the construction turnover for the 2 months. The annual emissions were calculated by multiplying this basic unit by the construction turnover for the year. For civil engineering, this calculation was carried out for each construction type. The annual quantities purchased and used by all offices was summed up for each office in monthly units The quantities of the main construction materials directly purchased for Taisei Corporation individual construction and joint venture construction for which Taisei Corporation is the representative Quantity of Chlorofluorocarbon and halon processing commissioned by Taisei Corporation Surplus construction soil discharged from construction sites Construction by-products (waste, valuable resources) emitted at sites of Taisei Corporation individual construction and joint venture construction for which Taisei Corporation is the representative Formwork purchased for sites of Taisei Corporation individual construction and joint venture construction for which Taisei Corporation is the representative Predicted CO2 emissions in the building operation stage and reduction rate Calculated using the Energy Efficiency Plan for each of 64 projects each with a total floor area of 300m 2 or more and with a total of about 790,000m 2, of Taisei Corporation building construction projects CO2 emissions in the construction stage and reduction rate Construction site CO2 emissions and reduction percentage in CO2 emissions compared with FY 1990 Results for adoption of green procurement items Calculated from the quantities specified by using Eco Sheet CASBEE for buildings designed by Taisei Corporation Recycling rate ((Waste emissions final disposal quantity)/waste emissions) 100 *Calculation standard: Calculated based on in-house standards for management of environmental information, complying with Act to Rationalize the Use of Energy, the Act on Promotion of Global Warming Countermeasures, Waste Disposal and Public Cleansing Act, Fluorocarbons Recovery and Destruction Act, the GHG Protocol, the Guide to Building LCA, etc. *Environmental data covers more than 75% of the value of construction completed by the Taisei Corporation Group. 19 TAISEI CORPORATE REPORT 2014 DATA BOOK

21 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Independent Assurance Report TAISEI CORPORATE REPORT 2014 DATA BOOK 20

22 Consumer Issues CSR Outline(FY ) P Important task and target Ensuring quality and raising customer satisfaction Innovation management D Main items to undertaken C A Main KPIs* Thorough familiarization with quality control Customer satisfaction surveys standards and procedures Development and providing technologies to Number of patent applications filed / number of patents solve social issues obtained Number of media announcements regarding technical development and application projects *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 40. Ensuring quality and raising customer satisfaction P ISO Fair marketing, factual and unbiased information and fair contractual practice Protecting consumers health and safety privacy Access to essential services Thorough Familiarization with Quality Control Standards and Procedures D Providing high quality construction products and related services is an important mission of Taisei Corporation. In order to achieve this mission, the company has established a Quality Policy, and the company activities are carried out in accordance with this policy. Also, Taisei Corporation has in the past formulated and implemented a Quality Management System, and in 1996 obtained certification under ISO 9001*, the first in the industry. Quality control is promoted by constantly developing implementation guidelines and standards necessary for quality management activities in construction, as well as by the use of advanced technologies. In addition, in conjunction with the quality management system, TAISEI QUALITY activities have been implemented since This is based on the 3 pillars of improvement in productivity, improvement in quality and eliminating quality problems, and creating an environment committed to production, and promotion activities are carried out throughout the Group. In FY 2013, the designs of posters, etc., were renewed to further strengthen quality control activities, and communicate the message throughout the whole company. Increasing Customer Satisfaction D After handing over a completed construction, a CS interview is held (for civil engineering) or a customer questionnaire (building) is carried out in order to determine the customer satisfaction. The results of the survey are reported to the Taisei Quality Committee as part of our efforts to ensure quality and increase customer satisfaction. KPI P40 Taisei Quality Taisei Quality Committee <Head Office> Civil Engineering Division TAISEI QUALITY Committee / Building Construction Division TAISEI QUALITY Committee Chair: Division General Manager Members: Department General Managers and equivalent Production Tool Innovation Group (Tools) Development of new construction technology and IT productivity tools Quality Improvement Group (HR) Quality training and education programs and elimination of quality issues Workplace Environment Improvement Group (Environment) Workplace reforms designed to foster an environment of dedication to construction <Branches> TAISEI QUALITY Committees Chair: Branch General Manager Members: Department General Managers and working group leaders Support and promotion Suggestions and reporting Production Tools Innovation Working Group (Tools) Quality improvement Working Group (People) Workplace Environment Improvement Working Group (Environment) [Implementation] at construction sites 21 TAISEI CORPORATE REPORT 2014 DATA BOOK

23 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Quality Management System Planning, marketing & sales Design Construction Maintenance Consulting Discover the needs of customers Various proposals Discover requirements Design quality plan, design verification Confirming adequacy Construction plan Reviewing drawings Various study groups Construction management, inspections during construction Construction supervision (design departments) After-sales service Periodic inspection Responding to claims, maintenance contracts Energy-saving proposals BCM Proposals and support to increase real estate value Proposal and support for advanced environmental technology Use of BIM/CIM CAFM Design review Pre-construction quality study group Use of Field Pad Guidance from third party supervisors Special, nominated construction system, designated construction system Technical guidance from those responsible for training BM service Promotion of comprehensive building diagnosis and proposal of comprehensive renewal CS surveys Human Resource Development for Construction/Craftsmanship Management training program, etc. (Civil Engineering Division) Every civil engineering employee participates group training arranged by the Civil Engineering Department every 2 years up to 9th year. We also have training courses for middle-ranking employees and newly appointed project managers to enhance their knowledge and management skills. Branch offices supply training course according to the employees capability, and education supporters (veteran employees) are assigned in every branch to carry out detailed education for young employees. Meister System, etc. (Building Division) In the Building Division, group training is held for 1st year, 2nd year, 4th year, and 6th year employees. Also, Meister are appointed from selected retired to carry out coaching in close contact with site employees. The aim is that young employees should be steadily trained in technical ability, quality control ability, and site management ability, and that the Taisei Corporation DNA is passed on through the technical experience of Meister. Also, coaching is carried out by senior members of the Building Construction Division, carrying out more practical coaching in accordance with the work undertaken by the employees on site, and supporting project manager s OJT training activities. Innovation management P Developing and Providing Technology to Solve Social Issues D Taisei Corporation Group invests 9.5 billion yen (FY 2013, consolidated) on research and development with the objective of cultivating new markets using technology, responding precisely to the needs of society and our customers. The emphasis is on design and construction core technologies in the civil engineering, building construction, development, and other business fields, as well as the new material and advanced technology fields. In addition to promoting research and development, we actively form alliances with research institutions such as universities, etc., and companies in different business fields. Intellectual property, such as inventions associated with research, brand names, etc., is positively registered in accordance with our intellectual property strategy, and more than 90% of patents applied for are awarded, a high rate of registration. In the future we intend to continue to contribute to society through the development of new technologies, technical support of works sites, the use of intellectual property, etc., with an integrated business strategy, research and development strategy, and intellectual property strategy. KPI P40 ISO Sustainable consumption Main Technical Announcements to the Media in FY 2013 [1] Technologies contributing to recovery from earthquake disaster and rebuilding Japan Development and deployment of vehicle-mounted decontamination device for turbid water treatment Development of technology for effective utilization of concrete rubble Development of technology for cleaning cut grass, etc., using a special alkaline solution Development of autonomous control construction machinery Development of decontamination support system using tablet PC (T-DECOS) Development of technology for volume reduction of combustible waste such as leaves, grass, and branches, etc., using an Eco Press Bag [2] Technology to prepare for future earthquakes Development of tsunami evacuation building, tsunami shelter Site motion simulation for an evacuation safety prediction system in preparation for a fire or tsunami at a large scale facility Seismic isolation device for semiconductor manufacturing equipment Development and application of a rack vibration control unit for automated warehouse Seismic strengthening by a method of ground improvement by agitating the ground on site Post-construction plate-anchored shear reinforcement [3] Technology to realize resilient energy systems Technology Center smart community scheme Environmental and energy analysis inside and outside buildings using Low Carbon District Simulator TAISEI CORPORATE REPORT 2014 DATA BOOK 22

24 Community Involvement and Development CSR Outline(FY ) P Important task and target D Main items to undertaken C A Main KPIs* Contributions to local communities Promotion of community contribution Number of environmental and social contribution activities activities Expansion of employee volunteers Number of employees participating as volunteers *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 40. Contributions to local communities P ISO Community involvement Education and culture Employment creation and skills Wealth and income creation Promotion of Social Contribution Activities D Taisei Corporation Group actively carries out activities with the localities and communities in fields such as the local society, environmental conservation, academic and cultural fields, etc., at the branch offices, work sites, and technology center both in Japan and overseas. KPI P40 Social Contribution Activities (Image) Local community Environment preservation Academics and culture Forest Saver Project, Protecting and Nurturing Nature and the Locality Taisei Corporation is undertaking the Forest Saver Project (FSPJ), a forest creation project stemming from an industrial estate developed at South hill side of Mt. Fuji. This project is an activity to nurture a deep relationship between people, companies, and nature for 10 years based on the concepts of creating a forest, learning from the forest, and playing in the forest, mainly through a local NPO, with assistance from government, academia, companies, etc. In the future also Taisei Corporation will continue this local cooperation, and join forces with the companies setting up in the industrial estate to strongly promote measures to promote vitalization of the area. NPO Connections TAISEI Group employees volunteer activities Social Contribution Actual Activities in FY 2013 Field of activity Local communities Environmental conservation Academic, cultural Examples of main activities Cleaning and snow removal in nearby district No. of activities 226 Ecocap activities 343 Participation in local events, etc. 139 Others (including disaster recovery, etc.) 97 Ecological conservation volunteers 38 Environmental conservation activities, such as CO2 reduction, etc. 106 Holding visits to works sites, etc. 52 Providing speakers 36 Accepting internships, etc. 39 Total 1,076 Accepting Vietnamese Skill Trainees, and Providing a Model Workplace In March 2013 the Vietnamese Construction Human Resource Development Council was launched by general contractors and specialist contractors from both Japan and Vietnam, as an organization under the auspices of the Japan-Vietnam Construction Council of the Japanese and Vietnamese Governments (Head on the Japanese side: Mr. Ogata, Chief of International Operations Division). The objective of establishing this was to train and develop Vietnamese skilled workers who have the capability to become leaders on Vietnamese construction sites. Taisei Corporation provided the Tokyo Branch Office as a model site, and received Vietnamese trainee. 23 TAISEI CORPORATE REPORT 2014 DATA BOOK

25 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Contributing to Conservation of the Natural Environment and Protecting Historical Buildings Since the founding of the Taisei Corporation Nature, History and Environment Foundation in 1993, Taisei Corporation has contributed about 15 million yen per year to various groups such as NPOs, etc., for 20 years. This foundation contributes to the conservation of the natural environment, which is the common heritage of present and future humanity, with the aim that this heritage be passed down to the next generation, and further contribute to health and cultural lifestyle of humanity. (Total number of projects supported: 452) Projects Supported in FY 2013 Nature History Marine Environment Disaster Prevention Study and Research Group (Ishikawa Prefecture), etc. 15 projects NPO Former Onshi Munedayu Maruoka House Conservation and Restoration Council (Mie Prefecture), etc. 18 projects Taisei Corporation Operates Galerie Taisei to Promote Architectural Culture Galerie Taisei is operated as a focal point for activities to introduce the achievements of Le Corbusier (1887 to 1965), an architect that is representative of the 20th century. In FY 2013 exhibitions were held on Le Corbusier and Sports and Le Corbusier Meets Michelangelo. Also, to enable more people to come into contact with the works of Le Corbusier, works are loaned out, and exhibitions are planned and supervised. We cooperated on the Le Corbusier and 20th Century Art exhibition held at the National Museum of Western Art (Ueno, Tokyo) from the planning stage, many works owned by the company were exhibited there, and lectures were given by the company s curator. Supporting Workers with Infants and Children, Promoting and Supporting Local Employment At the office site for the civil engineering works for the Kesennuma Processing Area JV, a project daycare center for children Kids Terrace Kesennuma has been opened for the duration of the project for workers engaged in the disaster waste processing work, with the objective of assisting workers having infants and children. Also, the Kesennuma Processing Area JV established a reemployment support program for workers in conjunction with the Kesennuma job-placement office. Follow-up seminars were held for business owners and re-employment support seminars were held for workers, to provide information to workers engaged in processing the disaster waste. Recipient of the Excellent Company Award for Companies Supporting Happy Childcare by Lively Men and Women in FY 2013 Cooperating in Training Teachers in Private Companies Since 2009 Taisei Corporation has been cooperating with the Training Teachers in Private Companies training program of the Japan Institute of Social and Economic Affairs (Keizai Koho Center). In this program the understanding and interest of teachers working in schools is deepened, so that they can pass on their experience during training to their pupils. Galerie Taisei photo: Masaaki Aihara Expansion of Employee Volunteers D Taisei Corporation Group provides activity places where employees can voluntarily participate, as a good corporate resident contributing to the local community and as part of our social responsibility. In addition, interest in local volunteer activities increased as a result of the recent earthquake disaster, so in FY 2012 volunteer leave was instituted. KPI P40 Examples of Employee Volunteer Activities in FY 2013 Creating a Lively Village Forest Since 2007 Taisei Corporation has participated in "Tokyo Green Ship Action" held by Tokyo Metropolitan Government jointly with companies and NPOs, which carries out employee volunteer activities in various fields every year in Kiyose City, Machida City, and Hino City. Creating Nest Boxes for Dormice Creating nest boxes for dormice has been held every year since 2004 by volunteers of Keep Kyokai in conjunction with the organization Animal Pathway and Wildlife Group, with the aim of protecting the Japanese dormouse, a small animal that lives in trees in forests. Visit to Technology Center (Yokohama City) In July FY 2013 Dialog on a construction site with 8 teachers from elementary and junior high schools TAISEI CORPORATE REPORT 2014 DATA BOOK 24

26 Human Rights and Labor Practices Social Dialogue CSR Outline (FY ) P Important task and target Respect for human rights Diversity management Creating a pleasant workplace Supporting employee career formation D Main items to undertaken C A Main KPIs* Human rights education activities Rate of attendance at human rights training Promotion of diversity Numbers attending female leadership development training / Supporting the balance between work and number of female managers / number of female directors / life rate of employment of handicapped Persons / number of re-employed Numbers taking leave for childcare Rate of taking paid leave Number of job return registrants Promotion of staff education Training hours per person Number of trainees at overseas sites, etc. Number of trainees at overseas training organizations *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 40. Respect for human rights P ISO Due diligence Human rights risk situations Avoidance of complicity Human Rights Policy P Taisei Corporation respects the Universal Declaration of Human Rights and the 8 ILO core treaties, and respect for human rights and diversity is written into the Group Action Guidelines. (Chapter 1. Article 3 Respect for Human Rights and Diversity) The policy prohibits all staff members from discriminatory behavior, and requires respect for cultures and customs overseas. Also, child labor and forced labor, and discrimination in employment and work are prohibited, and the right to organize and right to collective bargaining are guaranteed. In addition, with the publication of ISO 26000, JIS Z 26000, etc., respect for human rights has been placed as the basis for management, while learning the international standards of human rights and international norms of behavior from the trends in human rights today both in Japan and overseas, and efforts are made to raise awareness of human rights among employees. System for Promoting Human Rights In 1984 the Taisei Corporation Human Rights Awareness Promotion Committee was established with the objective of supporting the formation of a higher standard of character among the employees and cultivating employees with a high awareness of human rights. Every year this committee formulates a fundamental policy and action plan, and reports on the previous year s achievements. Also, each division at Headquarters and all branch offices have a Human Rights Awareness Promotion Committee, which promote companywide human rights activities. Human Rights Awareness Activities D In Taisei Corporation human rights awareness is raised throughout the whole Group based on measures debated and decided by the Human Rights Awareness Promotion Committees. In FY 2013, lectures and training meetings were held 3 times for members of the Human Rights Awareness Promotion Committees throughout Japan. Also, human rights training is undertaken for all employees in a basic education system according to level and department within the company. Various types of human rights training are held, from group training to e-learning, etc. During the training, a Human Rights Booklet which has been produced by Taisei Corporation is used as a supplementary document. KPI P41 Monitoring Respect for Human Rights and Responding to Problems A Group helpline (notification system) is provided to respond at an early stage to human rights infringement problems, sexual harassment problems, power harassment problems, etc. A survey of the facts is undertaken after ensuring that the reporter will not be penalized, a disciplinary case is opened, and measures are taken to prevent recurrence. In addition, respect for human rights is demanded from suppliers and procurement partners, the Procurement Policy describes the considerations regarding human rights, and the status is confirmed through CSR procurement monitoring. (See P37) Committee office: Personnel Department Head Office Committee Chairperson Managing Executive Officer Deputy Chairperson Manager of Personnel Department Committee members Managers of Administration Department of each division Branch Office Committees Chairperson Manager of Administration Department Committee members Managers of each department 25 TAISEI CORPORATE REPORT 2014 DATA BOOK

27 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Diversity management P ISO D Fundamental principles and rights at work Discrimination and social protection Employment and employment relationships Promotion of Diversity D To invigorate the company, it is considered important to have diverse employees working with vitality. Therefore we endeavor to create a workplace environment where diverse employees with various differences such as race, nationality, sex, age, handicap, etc., can realize their ability to the maximum extent. Stable Employment Working conditions of employees complying with the various laws and regulations are ensured based on the Action Guidelines. Every year a questionnaire survey among labor and management and various kinds of dialog are held, with the objective of smoothing labor-management relations and social project activities. Changes in working conditions, etc., are determined in advance between labor and management as an item discussed between labor and management. Personnel Data (employee structure) As of 31st March 2014 End March 2012 End March 2013 End March 2014 No. employees (consolidated) 13,776 13,569 13,599 No. employees (unconsolidated) 8,087 7,945 7,951 Male 6,841 6,707 6,721 Female 1,246 1,238 1,230 Average age Average number of years continuous service 19.1 years 19.1 years 19.1 years Average income 8.62 million yen 8.70 million yen 8.78 million yen Turnover rate of new graduates after 3 years Recruited in % Recruited in % Recruited in % Creating a Corporate Environment in which Female Employees can Work at Ease Since 2006 Taisei Corporation has undertaken to actively use female employees and to develop a workplace environment where they can work at ease. In particular, efforts have been made to positively recruit females and to broaden their range of work, so year by year the percentage of female employees is increasing and the numbers of female employees active on works sites and sales departments, which have been predominantly staffed by male employees, is increasing. These initiatives have been recognized, and in 2013 we received the Tokyo Labor Bureau Director s Award for Excellence in Promoting Equality and Opportunity. Also, in 2012 for the first time a female was appointed to the Head of Department level. As the number of female employees increases, various measures are undertaken to steadily increase the number of female management staff, such as screened training for young female employees, training for male managers having female employees as subordinates, etc. KPI P41 Promotion of Employment of Foreigners The employment of employees with foreign nationality is being promoted to promote diversity, in response to globalization both in Japan and overseas. Since FY 2008 employment seminars have been held for students studying in Japan to positively recruit them as new graduates, and at present employees from 18 different countries and regions have been employed (as of 1st April 2014). Training is provided on Japanese culture and systems for foreign nationality employees, and training is provided for managers having foreign nationality employees as subordinates, in order to promote an environment in which foreign nationality employees having diverse values and cultures can work with vitality. Trend in Number of Foreign Nationality Employees FY 2011 FY 2012 FY 2013 Permanent employees Contract employees Total employees Use of the Elderly The post-retirement re-employment system has been expanded with the aim of creating a working environment in which employees having valuable specialist knowledge, experience, and technologies can be provided with worthwhile work after retirement. Through the Meister system (Building Construction Division) and the Education Supporter system (Civil Engineering Department), etc., know-how and technologies cultivated through long experience can be passed on to the next generation, and a workplace can be created to enable lifetime working. KPI P41 Support for the Use of Persons with Disabilities To enable persons with disabilities to be active in society, we are undertaking activities to positively employ persons with disabilities by participation in seminars for employment of the handicapped Persons, as part of our employment promotion activities. Also, training is held to examine methods to resolve problems within the company, to strengthen their communication capability, to form their own career vision, etc. Report meetings are held after the training, which provide information leading to improvement in understanding of employees working in the same workplace as persons with disabilities. KPI P41 Seminar for handicapped Persons Decision to undertake promotion of use of females Start of positive action FY 2006 Start of positive recruitment of females among new graduates Deployment of female employees in sales staff FY 2007 to Establishment of Office to Promote Use of Females Start of initiatives emphasizing the use of female employees FY 2009 Enhancement of system (establishment of new job return system, start of childcare support program) Management training for female employees. Appointment of female to management level Change of office name to Office to Promote Vitality of Human Resources Support for balancing work and lifestyle for all employees, and use of diverse human resources Expansion of systems (establishment of new system for changing workplace, expansion of system for shortening working hours) Participation in work/lifestyle seminars with partner, leadership training for female employees, training for male managers having female employees as subordinates, etc. FY 2010 TAISEI CORPORATE REPORT 2014 DATA BOOK 26

28 Creating a pleasant workplace P Supporting Work / Life Balance D Various systems have been introduced to enable all employees to accept diversity, to harmonize work and their lifestyle, and to work with vitality. Promotion of Various Types of Leave Taking and Shortening Overall Working Hours Planned annual leave is implemented in order to promote taking annual paid leave, and taking leave in half day and time units is also permitted. Besides annual leave, refreshment leave, milestone leave, volunteer leave for social contribution activities, etc. are provided. Twice a month an across-the board no overtime day is provided, in order to shorten working hours. Also, for management level staff, training is held to strengthen time management capability through case studies on actual experiences with initiatives to shorten time. KPI P41 Supporting both Work and Childcare A childcare support program is implemented to support both work and childcare for employees about to become parents and those caring for children. TOPICS Kurumin Mark acquired for third time ISO Resolving grievances Conditions of work and social protection Economic, social and cultural rights Health and safety at work Support for Both Work and Caregiving Unlike childcare, caregiving is very diverse, depending upon the circumstances of the person requiring care, the lifestyle environment of the caregiver, etc. Therefore a system has been prepared to enable flexible working in accordance with the various circumstances. It is considered important to provide information in advance to prepare the employee for caregiving, in order to enable both work and caregiving. Caregiving Leave System From April 2014 the number of days available for caregiving leave has been expanded from 93 to 180 days, and it is possible to split the leave time, or take it in half day units. Caregiving Seminar From FY 2010 seminars have been held to promote understanding of caregiving, open to the whole company. To date 11 seminars have been held, to familiarize the attendees with the company and public systems, to discuss balancing work and life to enable both work and caregiving. In addition, particular contents on individual themes such as caregiving insurance and facilities can be selected to suit the needs of the employees. Providing Information Information on the caregiving system and the contact details to discuss it are provided through the intranet, and in addition a Caregiving Booklet has been prepared that summarizes the company s system, to assist in the employee's understanding and for use in discussions with family and care managers. Also, links have been formed with external organizations to enable long distance caregiving and specialist advice, in order to provide an environment to enable employees to work without worry. Seminars to Support Both Work and Childcare Attended with Partner Since 2012 seminars are held for employees and their partners (spouse, boy/girlfriend, etc.) that are both working, in order to promote both the work of the employee and their lifestyle. In order for female employees to balance work and lifestyle, it is indispensable that the male participates in the childcare and housework. It is considered that cooperation of the couple results in more satisfying work, and it improves the motivation of the employee. Safety and Health of Employees EAP(Employee Assistance Program)has been introduced in order to resolve or ease anxieties and worries due to psychological or physical problems of employees or their families. An in-house counsellor for mental health is provided EAP services are commissioned from external specialist organizations Information regarding mental health is provided through the intranet Mental health seminars are held <Main Support Systems to Support Balance of Work and Life> Caregiving leave Caregiving leave system Spouse child birth leave Fertility treatment leave system Childcare leave system Nursing care leave Workplace change system (enabling a change from the workplace decided at employment) Short working hours system (selection from 4 patterns) Job return system (system to enable an employee that had to resign to return to the workplace) System to bring forward or postpone working hours KPI P41 27 TAISEI CORPORATE REPORT 2014 DATA BOOK

29 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Creating a pleasant workplace P Promotion of Human Resource Development D Various types of training and schemes are implemented to support acquisition of qualifications, in order to develop autonomous human resources with the human qualities and specialism to support the Taisei Spirit: commitment to openness, creation of values, and evolution of traditions. Training System Various types of training are implemented after joining the company in order to develop autonomous human resources having specialism, creativity, and individuality. KPI P41 Training System New recruit ~ early 30s Early 30s ~ mid 40s Mid 40s ~ Retirement Training for new recruits OJT and annual young persons training Overseas training Step-up training for managerial positions Management training for employees promoted to managers Divisional training (sponsored by every division branch) Self-development and company support for language and qualification acquisition Compliance training, human rights training Support for Acquiring Qualifications High-level executive training Support is provided for acquiring qualifications companywide, in order to develop highly specialized engineers and managers. ISO Human development and training in the workplace Civil and political rights Development of Global Human Resources Various specialized education programs have been prepared for new recruits and employees in their 3rd to 6th years after recruitment. External Training Employees are dispatched to universities, design offices, research institutes, etc., both in Japan and overseas, to enable them to acquire knowledge and technologies, etc., that they cannot obtain within the company. As of 1st April 2014, 11 employees are dispatched as trainees. Training Prior to Overseas Posting Training is provided for employees that are about to be posted overseas. This training not only provides preparation for the posting, but they also learn about the country they are about to be posted to, and practical basic knowledge regarding contract management overseas, crisis management, etc. Training at Overseas Offices Training is provided for 6 months at the actual overseas office where the employee is working, to enable them to become proficient in negotiating, understanding different cultures, languages, etc., through their overseas work, and thereby become a project manager capable of being proficient and active overseas. Training at overseas offices was started in FY 2002, and about 150 people have been dispatched for this training. In FY employees were dispatched to 9 countries, including Turkey, Vietnam, and Sri Lanka. KPI P41 Countries to Which Employees Have Been Sent for Construction Site Training Since Fiscal 2002 Example of Qualification Acquisition Construction works Civil engineering works Design (qualified) International : Countries to which employees have been sent for construction site training since fi scal 2002 Urban Development Engineering Business Administrative TAISEI CORPORATE REPORT 2014 DATA BOOK 28

30 Labor Practices CSR Outline(FY ) P Important task and target D Main items to undertaken C A Main KPIs* Improvement in safety and health standards Raising the level of safety and health with TAISEI OHSMS Number of fatal accidents / frequency rates *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 40. Improvement in health and safety standards P ISO Health and safety at work Human development and training in the workplace Principle of Safety First DP Taisei Corporation endeavors to prevent accidents and disasters, to realize a safe and secure workplace for workers, and to be accepted by the public with trust and empathy, under the principle Safety First. In order to realize this goal, since 2001 the Operational Health and Safety Management System (TAISEI OHSMS) has been operated companywide to systematically and organizationally implement health and safety management. Health and Safety Policy (except) Health and Safety Policy We systematically implement TAISEI OHSMS, our occupational health and safety management system, as the basis for managing the health and safety of our employees. We are committed to improving the working environment for our employees under the maxim Safety First, and aim to win the trust and understanding of society at large. 1. Eradicating occupational accidents and hazards 2. Preventing third-party hazards 3. Improving health and safety standards Improvement in Health and Safety Standards in TAISEI OHSMS D TAISEI-OHSMS was constructed based on the company s longterm methods and know how in management of health and safety. By properly implementing plan do check adjust (PDCA) cycles based on this system, the aim is to prevent accidents and damage. Specifically, matters to be implemented as a matter of importance in all companies throughout the year are compiled into a Health and Safety Management Policy Document, in accordance with the Health and Safety Policy indicated by the President at the beginning of the year, and based on this each branch office and works site prepares and operates their individual Health and Safety Management Plan. Also, appropriate patrols are carried out to check whether or not the matters defined in the Health and Safety Management Policy Document are being properly implemented or not. By analyzing the results of these patrols and the causes and background to any accidents that do occur, measures are formulated in accordance with the trend of the accidents, in order to prevent their recurrence and to raise the level of health and safety. TAISEI OHSMS Specific causes of danger and harm and specific items to be addressed Accident information database Head office Health and Safety Management policy President s Health and Safety Policy Branches Branch Health and Safety Management Plan Central Safety Committee Branch Safety Committee Targets Branch targets Action priorities Action priorities Management priorities, other Head office plan Branch action plan Construction sites Construction Health and Safety Plan Construction Site Manager s Management Policy Health and Safety Management Policy Health and Safety Management Plan Emergency Response Plan Basic Construction Work Plan (Guidance) (Guidance) Implementation and operation Implementation and operation Implementation and operation Accident investigation and analytical information Accident analysis Prevention of reoccurrence (Warning) Accident analysis Prevention of reoccurrence (Warning) Accident response Internal audits/guidance Construction site patrols On-site inspections/remediation Records/storage System review Records/storage Records/storage 29 TAISEI CORPORATE REPORT 2014 DATA BOOK

31 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Implementation of Site Patrols by the President Safety patrols are carried out by the President himself in order to impress on all staff and workers the strong determination of the top management of the company regarding Safety First and Prevention of Accidents and Damage. Patrol by the President Cooperation with Specialized Contractors Specialized contractors throughout Japan are closely linked through the organization Taisei Corporation Safety and Health Environment Cooperative Association, in order to prevent accidents and disasters. Members of cooperating companies participate in Health and Safety Conferences, and use the organization's publication Cooperation or Compendium of Examples of Accidents, etc., for education and guidance in health and safety management to prevent accidents and disasters. Safety Achievements C The achievements of the company in safety as a result of thorough health and safety management based on TAISEI OHSMS remain at a high level compared with other major companies in the same industry, and for financial year 2013 the occurrence rate of accidents was 0.84*. * KPI P40 System of Awards A system of awards has been instituted whereby branch offices that have outstanding achievements in health and safety and specialist contractors with outstanding achievements receive the President s Award, and sites that have received the an Award from the Minister of Health, Labour and Welfare receive the President s Special Award. TOPICS Safety Management in Overseas Project In order to strengthen our safety management and environmental conservation in overseas projects, Taisei Corporation has established the Safety Administration & Environmental Department within the International Operations Headquarters. Activities of the Department are as follows. (1) Hold Safety Committee Meetings at Headquarters Safety Committee regular meetings are held six times a year with senior management members of the International Operations Headquarters in order to share information on safety management-related events (both overseas and domestic), safety patrol results, notification matters, and to discuss the verification of accident causes and determination of measures to prevent accident recurrence. Results of these discussions are then applied to our overseas project sites. (2) Review Construction Safety Plan of Project Site Head Office and International Operations Headquarters share information on current status of our project sites, then both Head Office and Headquarters take part in planning the construction safety plan of high-risk sites in order to eliminate potential hazards in advance. (3) Project Site Safety Patrol Safety patrols are carried out periodically on our overseas project sites. (4) Safety Guidelines Safety guidelines of the International Operations Headquarters enable us to work safely under different conditions in various countries. Safety measures are being progressively prepared for mobile cranes, scaffolding, electricity, etc. and we are working to prevent the recurrence of similar work accidents. Reorganization of the New Soyukai Organization for Cooperating Companies The company s cooperating company organization, Soyukai, has been extensively re-organized. The Branch Office Soyukai which encompasses the Soyukai of each branch office has been reorganized to establish a Nationwide Federation of Soyukai, in order to strengthen the response to nationwide issues, and to establish several conferences as for discussions regarding constructing closer relationships. Joint initiatives from the perspective of developing excellent engineers and workers to support production activities and support for recruitment activities of cooperating companies are implemented, with the aim of further strengthening relationships through the re-organization. Also, enrollment in social welfare is promoted in accordance with the Ministry of Land, Infrastructure, Transport and Tourism s Guidelines for Enrollment in Social Welfare for Subcontractors. Discussions are also held on nurturing successors for cooperating companies, as well as well as backup for employment activities by Taisei Corporation. Discussions regarding enhancing the pay and benefits of foremen are due to be held in the future. Activities of Japan Federation of Construction Contractors to Attract and Nurture Construction Technical Personnel and Workers Japan Federation of Construction Contractors, Inc., is working on improvements in the level of pay, amending the multi-layered subcontract structure, promoting measures against nonparticipation in social welfare, etc., as radical improvements in the conditions to attract and nurture construction technical personnel and workers. Wide-ranging activities will be implemented jointly with the Ministry of Land, Infrastructure, Transport and Tourism to attract and nurture those who will be responsible for the construction industry in the future from the point of view of "transition of power between generations", in particular promotion of the entry of young people to the construction industry, and initiatives to positively use female skilled workers, Self-Defense Forces Reserve personnel, and foreign skill trainees. TAISEI CORPORATE REPORT 2014 DATA BOOK 30

32 Organization Governance CSR Outline(FY ) P Important task and target Corporate governance and internal controls Risk management Dialog with stakeholders, information disclosure D Main items to undertaken C A Main KPIs* Spreading and consolidating the Group Rate of implementation of e-learning regarding the Group ideals ideals BCP(Initiatives for business continuity Rate of participation in training for large scale disasters planning) Dialog with stakeholders Number of dialogs, etc. *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 40. Corporate governance and internal controls P ISO Decision-making processes and structures Corporate Governance D In Taisei Corporation, the Board of Directors (including external directors) has introduced a system of executive directors, and various director committees have been established (Personnel Committee, Finance Committee, Related Company Committee, etc.) in order that the Board of Directors can devote itself to management decision making and supervision. Also, an Audit Committee (including external auditors) has been established to strengthen the audit independence and the group-wide audit system that implements audits in close liaison with financial auditors and the in-house Auditing Department. Corporate Governance System Audit Election Accounting auditors Cooperation Group companies General meeting of shareholders Internal audits Support Cooperation Election Corporate Auditors/ Board of Auditors Auditor s Secretarial Department Auditing Department Members of the Board/ Board of Directors Cooperation Division/ Branches (Operations) President and Chief Executive Officer Election Prior consultation and reporting Election/Supervision Division/ Branches (Operations) Committees of the Board of Directors Reporting and advice Operations Committee Division/ Branches (Operations) Special Committee Governance System Appropriate Practice of Internal Controls D In order to ensure reliability of the systems of appropriately and efficiently executing work and financial reporting, the Board of Directors has established a "Basic Policy for Development of a System for Ensuring Appropriate Working", upon which various measures have been taken. Also, internal controls regarding financial reporting based on the Financial Instruments and Exchange Act is recognized as one of the most important tasks as a company, and a system of internal controls has been instituted in order to ensure the reliability of financial reporting disclosed to the public. The status of development and operation of the internal controls is evaluated every year by the Audit Department and its effectiveness is checked by auditing carried out by KPMG Azsa LLC audit company. The evaluation results are presented in the Internal Controls Report, and the audit results in the Internal Controls Audit Report. In the future a companywide system applicable to all departments and group companies will be developed, and a system of guidance to maintain appropriate operation of business processes will be developed, so by ensuring the effectiveness of the internal controls, the reliability of financial reporting will be further increased, thereby fulfilling our social responsibility as a company. Propagation and Establishment of System of Group Ideals D In 2010 Taisei Corporation re-constructed the system of group ideals, and instituted various measures to ensure their propagation and establishment. Specifically, the support tool Group Action Guidance File which considers management and employees to be linked to their work was created and made available on the intranet. Also, e-learning* regarding this system of group ideals has been implemented every year since * KPI P42 31 TAISEI CORPORATE REPORT 2014 DATA BOOK

33 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Appointment of External Directors and External Auditors In order to further enhance corporate governance within Taisei Corporation, 6 external executives (external directors and external auditors) have been appointed. All six satisfy the criteria of independence established by Tokyo Stock Exchange, and they have been notified as independent directors based on the Tokyo Stock exchange regulations for listing securities. External Directors Tohru Tsuji External Auditors 1995 Appointed Managing Officer of Marubeni Corporation 1996 Appointed Representative Managing Executive Officer of Marubeni Corporation 1997 Appointed Representative Senior Managing Executive Officer of Marubeni Corporation 1999 Appointed President and CEO of Marubeni Corporation 2003 Appointed Chairman of the Board of Marubeni Corporation 2004 Appointed Chairman of Marubeni Corporation 2008 Appointed as Adviser to Directors of Marubeni Corporation 2008 Appointed as Adviser to Marubeni Corporation 2011 Appointed as Members of the Board to Taisei Corporation (current post) 2012 Appointed Honorary Executive to Marubeni Corporation (current post) Attendance at Board meetings: 13/13 (number of meetings attended/number of meetings held) He has provided valuable opinions regarding the management of the company in order to strengthen the corporate governance, from a neutral standpoint with deep experience and wide knowledge as a manager in a different field, and as an external director. Masakuni Sekimoto 1991 Head of 1st Bureau Ministry of Finance Auditing Section Board of Audit of Japan 1998 Head of 1st Bureau Board of Audit of Japan 2002 Secretary-General Board of Audit of Japan 2011 Appointed as Audit & Supervisory Board Member to Taisei Corporation (current post) Attendance at Board meetings: 13/13 (number of meetings attended/number of meetings held) Attendance at Audit Committee meetings: 14/14 (number of meetings attended/number of meetings held) He has provided appropriate opinions based on his deep knowledge of finance and accounting, and opinions regarding matters relating to execution of the work of auditors. Terunobu Maeda 1995 Appointed Director of Fuji Bank Limited 1997 Appointed Managing Director of Fuji Bank Limited 2001 Appointed Vice President of Fuji Bank Limited 2002 Appointed Director of Mizuho Holdings, Inc Appointed President of Mizuho Holdings, Inc Appointed President of Mizuho Financial Group, Inc Appointed Chairman of Mizuho Financial Group, Inc Appointed Special Consultant to Mizuho Financial Group, Inc Appointed as Audit & Supervisory Board Member to Taisei Corporation (current post) Attendance at Board meetings: 12/13 (number of meetings attended/number of meetings held) Attendance at Audit Committee meetings: 13/14 (number of meetings attended/number of meetings held) He has provided appropriate opinions based on his deep knowledge of finance and accounting, and opinions regarding matters relating to execution of the work of auditors. Fumio Sudo 1997 Appointed Managing Director of Kawasaki Steel Corporation 2000 Appointed Vice President of Kawasaki Steel Corporation 2001 Appointed President and CEO of Kawasaki Steel Corporation 2002 Appointed Director (Part time) of JFE Holdings, Inc Appointed President and CEO of JFE Steel Corporation 2005 Appointed President and CEO of JFE Holdings, Inc Appointed Director of JFE Holdings, Inc Appointed Adviser to JFE Holdings, Inc Appointed as Members of the Board to Taisei Corporation (current post) Attendance at Board meetings: 13/13 (number of meetings attended/number of meetings held) He has provided valuable opinions regarding the management of the company in order to establish the system of internal controls and strengthen the corporate governance, from a neutral standpoint with wide knowledge and multi-faceted viewpoint as a manager in a different field, and as an external director. Shigeru Morichi 1987 Professor Civil Engineering Department, Engineering Faculty, Tokyo Institute of Technology 1996 Professor Social Infrastructure Engineering Department, Graduate School of Engineering, Tokyo University 2004 Professor National Graduate Institute for Policy Studies 2004 Vice Chairman of Institution for Transport Policy Studies and President of Institute for Transport Policy Studies 2011 Director of the Policy Research Center of the National Graduate Institute for Policy Studies 2012 Appointed as Audit & Supervisory Board Member to Taisei Corporation (current post) Attendance at Board meetings: 13/13 (number of meetings attended/number of meetings held) Attendance at Audit Committee meetings: 13/14 (number of meetings attended/number of meetings held) He has provided appropriate opinions based on his deep knowledge cultivated through his experience as a university professor, and opinions regarding matters relating to execution of the work of auditors. Kiwamu Miyakoshi 1 April Ministry of Foreign Affairs, First Secretary, Embassy of Japan, Germany 1998 Police Commissioner, Tokushima Prefecture 2004 Auditor-Secretary for Hanshin Expressway Company, Limited 2005 Police Commissioner for Ibaraki Prefecture 2010 Chief of Police for Chugoku District 2011 Chief of Police for Kanto District 2012 Appointed as Audit & Supervisory Board Member to Taisei Corporation (current post) Attendance at Board meetings: 13/13 (number of meetings attended/number of meetings held) Attendance at Audit Committee meetings: 14/14 (number of meetings attended/number of meetings held) He has provided appropriate opinions based on his deep knowledge cultivated through his experience in police affairs, and opinions regarding matters relating to execution of the work of auditors. Amounts of Remuneration and Others Paid to Members of the Board and Audit & Supervisory Board Members (Unit: Million) External Members of the Board and External Audit & Total Category Supervisory Board Member Number of Payees Amount Paid Number of Payees Amount Paid Member of the Board Audit & Supervisory Board Member Note: 1. Maximum amount of remunerations for Members of the Board in total is 70 million per month as resolved at 146th General Meeting of Shareholders held on June 27, Maximum amount of remunerations for Audit & Supervisory Board Member in total is 12 million per month as resolved at 134th General Meeting of Shareholders held on June 29, TAISEI CORPORATE REPORT 2014 DATA BOOK 32

34 Risk management P Promoting company-wide risk management D To ensure appropriate management of the risks associated with our business activities, TAISEI established and operates a company-wide risk management system by identifying the risks involved in our business activities, classifying those risks by their degree of severity as company-wide risks, risks under division control, etc., and clarifying those responsible for managing said risks. In the case of company-wide risks that could have a serious effect on business management, we practice effective risk management throughout the company by centralizing information in the CRO Secretariat and sharing information with the Risk Management Committee and Risk Management Council. In addition, every year we follow the PDCA cycle, ensuring that our risk management remains constantly effective. BCP (Initiatives for Business Continuity Planning) D To fulfill our social responsibilities as a general constructor that provides infrastructure for socio-economic activities, we have established action guidelines and rules concerning business continuity planning (BCP*) in anticipation of disasters such as an earthquake. TAISEI s disaster prevention and business continuity measures have been highly evaluated. The Kanto Regional Development Bureau and the Kinki Regional Development Bureau of the Ministry of Land, Infrastructure, Transport and Tourism have approved TAISEI s Basic Business Continuity Capabilities during a Disaster as a Construction Company and the Development Bank of Japan (DBJ) has given TAISEI the highest rank in its disaster preparedness rating (now known as the DBJ BCM rating). System for the Promotion of Company-wide Risk Management Emergency situation Emergency response system President CRO* Normal situation Company-wide risk management system Major disaster response training in Fiscal 2013 KPI P42 CRO Section Emergency Headquarters Review of the risk factors/classification Incorporation of recurrence prevention measures into risk management *CRO: Chief Risk Management Officer Head office Risk Management Promotion Committee Risk Management Committee Risk Management Council Branches and business divisions Risk Management Promotion Committee Action Guidelines Concerning Countermeasures to New Strains of Influenza D Taisei Corporation formulated the Directors and Employees Action Guidelines (Infection Prevention Measures for Directors and Employees to Implement) and the Response Guidelines for New Strain Influenza in 2009 in order to respond to new strains of influenza which are said to have a high potential to cause a global pandemic. We established the New Strain Influenza Countermeasures Website on our internal website to provide ongoing training about measures to combat virulent new strains of influenza. Moreover, in 2013, we established a system for registering the incidence of illness among employees based on the Safety Confirmation System to prevent the spread of new strains of influenza within the Company. Contents of New Strain Influenza Countermeasure Website Directors and Employees Action Guidelines Taisei s Response Guidelines Safety Confirmation System Manual Training materials concerning countermeasures advisory service *BCP: Business Continuity Plan 33 TAISEI CORPORATE REPORT 2014 DATA BOOK

35 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Dialog with stakeholders, information disclosure P Dialog with stakeholders D TAISEI holds various dialogues with the purpose of reconsidering our business activities through exchanges of information and communication with a wide range of stakeholders. We have also established an information disclosure policy and conduct our business activities in accordance with that basic policy. KPI P42 Customers We conduct satisfaction surveys to accurately ascertain customer requests. Shareholders We encourage communication through general meetings of shareholders and the publication of shareholder newsletters. Shareholders and investors We hold briefings at which the president explains our performance and business strategies and engages in an exchange of opinions, which we feed back to the management team. Suppliers We established a procurement policy and aim to help create a sustainable society together with suppliers. Employees We has established an internal hotline to provide advice and resolve problems regarding human rights, and sexual and power harassment at an early stage. Local communities We hold various tours to give local residents an understanding of our business activities. NPOs/NGOs We carry out activities to preserve green areas and environment together with the Tokyo Metropolitan Government, local environmental organizations, and NPOs. Topic Example of Dialog Future Session Resilience in the Future* On 14th march 2014 Taisei Corporation held a future session Resilience in the Future at Kokuyo Hall in Minato-ku, Tokyo, to envisage through dialog the form of countermeasures against earthquakes in the future. In addition to 10 Taisei staff members, about 100 stakeholders gathered from various types of organization such as disaster prevention-related companies, NPOs, think tanks, educational organizations, etc., as a result of an announcement to the general public. A lively dialog resulted on the theme of what countermeasures are necessary against earthquakes in the future, while listening to the talk of an inspiration commentator, and the participants proposed 19 unique initiatives. Countermeasures against earthquakes need to change from the viewpoint of just prevention to a viewpoint of resilience which includes how to start up again after being subjected to damage. This was an opportunity to consider the future direction of countermeasures against earthquakes in Japan. Date and time: 14th March 2014 (Friday), 13:00 to 17:00 Location: Kokuyo Hall (Minato-ku) Held by: Taisei Corporation Cooperating organizations: Toyo Keizai Inc., Aioi Nissay Dowa Insurance Co., Ltd., InterRisk Research Institute & Consulting, Inc., Future Sessions Inc., Yahoo Japan Corporation, Kyoto University of Art and Design, Gaien Campus Planetary Design Course (Professor Shinichi Takemura), Enterprises Alliance Future Centre Related communities: Future Meeting (Nissan Motors volunteer association), Tasukeai Japan, ITx Saigai, Community Crossing Japan, ispp Inspiration commentator: Professor Kenji Watanabe, Graduate School of Engineering, Nagoya Institute of Technology Facilitator: Takahiko Nomura, Representative Director and President, Future Sessions Inc. * The ability of a system, community or society exposed to hazards to resist, absorb, accommodate to and recover from the effects of a hazard in a timely and efficient manner, including through the preservation and restoration of its essential basic structures and functions. (Source: UNISDR Terminology on Disaster Risk Reduction (2009)) TAISEI CORPORATE REPORT 2014 DATA BOOK 34

36 Fair Operating Practices CSR Outline(FY ) P Important task and target Promotion of compliance Supply chain management Protection, management and use of intellectual property Measures for information security D Main items to undertaken C A Main KPIs* Improvement in compliance awareness Attendance at compliance training Number of branches training executed for compliance to the sub-contractors Promotion of CSR procurement Number of companies monitored for CSR procurement Practice of intellectual property strategy Number of trained regarding intellectual property Measures to prevent information leakage Improvement in information security awareness *KPIs: Level of achievement (Check) of Key Performance Indicators and fiscal 2014 improvements (Act) are described on page 42. Number of major information security accidents Number of times education in information security implemented in all companies Promotion of compliance P ISO Anti-corruption Responsible political involvement Fair competition Compliance Policy P The Taisei Corporation Group Action Guidelines states that in order to realize social responsibility, laws and regulations, etc. (laws, ordinances, bylaws, administrative guidance, social rules such as customs, and the company s various rules and regulations, etc.) must be strictly complied with, and actions must be carried out with good social awareness, and contracts and promises made with customers, suppliers, the local community, etc., must be fulfilled with sincerity. This is the basis of compliance for all officers and employees of the Taisei Corporation Group. Compliance System President Administrative structure Head Office Business Administration Div. CP General Manager (Business Administration Div. General Manager) Implementation Structure CP General Promoter (General Affairs Dept. General Manager) Head Office Division CP Manager (Corporate General Manager, Division General Manager) Division CP Promoter (General Manager In Charge of Administration) CP Implementers (All Department General Managers) All Executives and Employees CP Committee Secretariat CP Promotion Office Business Divisions and Branches Division CP Manager (Business Division General Manager, Branch Manager) Division CP Promoter (Administrative Manager) CP Implementers (All Department General Managers) All Executives and Employees Compliance System D A Compliance Committee has been established in Taisei Corporation as an advisory organization to the President consisting of 6 members whose chairperson is an external influential person (committee members consist of 2 external influential persons, and 4 directors, etc.), and committee meetings are held several times per year as needed. In the Compliance Committee, the reports on the status of specific initiatives to promote compliance and reports on proposals are discussed, and opinions are exchanged regarding the status of implementation of compliance training and training schemes, etc. Opinions and proposals are received from the committee members to strengthen the promotion of compliance. Also, an in-house compliance promotion system is provided consisting of the President on top, and those responsible for promoting and implementing the system in each department, in order that compliance awareness and education is implemented throughout the company. *CP: Abbreviation for compliance *Compliance Promotion Office: Office having the secretarial function for the Compliance Committee, and that promotes compliance awareness among officers and employees. * Compliance implementer: All heads of departments are appointed as compliance implementers, and the head of each department creates awareness of and provides education on compliance for all officers and employees, etc., in the department for which they are responsible. 35 TAISEI CORPORATE REPORT 2014 DATA BOOK

37 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Improving Compliance Awareness D In Taisei Corporation, compliance training is implemented and compliance communications are used for training and awareness, in order to propagate compliance awareness. Group compliance training is carried out several times per year out for all employees, either as group training in small groups or by e-learning. Also, awareness of officers and employees is raised by publishing Compliance Communication on the intranet once per month, providing a column to raise a broad range of topics regarding compliance in an easy to understand and timely manner. Each group company develops their own training materials, and compliance is promoted as a single Group. Measures to Ensure Thorough Compliance D Use of the Communication System An in-house notification system Corporate ethics helpline for actions that infringe laws or regulations or the Group Action Guidelines, and a notification contact at a lawyer s office as an external organization is also provided. Officers and employees are made familiar with these systems through the Notification and Discuss menus on the company s intranet and by the use of posters, etc. Also, there is a method of handling notifications from the employees of supplier that have direct transactions with the company on the Taisei Corporation website, and they are made familiar with this. In addition, a Group Helpline System is provided for all 20 companies in the Taisei Corporation Group, to implement the compliance system. Flow Diagram for the Corporate Ethics Helpline Notifier Internal notifier (company officer or employee, etc.) External notifier (officer or employee of the company s supplier, etc.) Notify, discuss Notify the notifier (survey results, corrective action) Notification and consultation contact Law office Manager of Compliance Promotion Office Manager of General Affairs Department Administration Manager of Branch Office Report contents of notification and discussion Report contents of notification and discussion Response, corrective action CRO Response to a notification regarding a major event or accident is by the CRO Office Department responsible KPI P42 FY 2013 Themes Raised in Compliance Communication D Construction Business Act (subcontractors) Information security and information leakage Amended Public Offices Election Act (lifting the ban on internet elections) Anti-trust Act Traffic accidents while commuting and during work, etc. FY 2013 Themes Raised in Compliance group training D Compliance regarding elections Information management and information security Breaches of the Anti-trust Act (cartels) Response to Group Companies and Specialist Contractors Compliance training is held every year for the heads of suppliers and specialist sub-contractors at the Taisei Corporation Safety and Health Management Conference*. Also, a liaison conference is held once every year for those responsible for legal affairs in Taisei Corporation and Group companies, at which information is exchanged regarding issues in legal affairs that are common to each company (trends in amendment of laws, compliance with laws and regulations regarding sub-contractors, etc.). System for Ensuring Proper Conduct of Tendering and Verification of the Status of Compliance The chiefs of branch offices confirm that tendering work is conducted properly, and an in-house system is operated for preparation and storage of the verification records. Also, every year the Legal Department verifies the status of compliance of all branch offices with the Construction Business Act and Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractor and that tendering work has been done properly. Obligation to Notify Regarding Major Infringements of the Law If any officer or employee becomes aware that they themselves or another officer or employee has committed or is about to commit an action that infringes a certain law, etc., that could cause major damage to the company (prohibition from being nominated on tenders, order to suspend operations, etc.), then they have an obligation to notify the company. *Safety and Health Management Conference: A conference held to familiarize specialist sub-contractors regarding safety and health management TAISEI CORPORATE REPORT 2014 DATA BOOK 36

38 Supply chain management P ISO Promoting social responsibility in the value chain Promotion of CSR Procurement* 1 D In April 2013 Taisei Corporation established a Procurement Policy with the aim of achieving CSR in the entire supply chain, towards realizing a sustainable society. Also, a CSR Procurement Working Group has been established from the Building Division, the Civil Engineering Division, the Procurement Division, the Corporate Planning Department, and the CSR Promotion Office of the Corporate Communication Department, in order to raise the awareness of the CSR initiatives in the supply chain. The aim is to improve CSR in the construction industry by nurturing good partnerships with suppliers. System for Promotion of CSR Procurement CSR Procurement Working Group CC Department CSR Promotion Office Building Division / Branch Building Departments Civil Engineering Division / Branch Civil Engineering Departments Send monitoring docket Recover monitoring docket Follow up / guidance Follow up / guidance Suppliers Building companies Civil Engineering companies Holding Lecture Meetings and Monitoring From April to November 2013, CSR Procurement Explanatory Meetings were held for members of Soyukai (an organization of cooperating companies of Taisei Corporation), and the managers of Taisei building and civil engineering works sites to promote CSR Procurement including the supply chain, based on the Procurement Policy adopted in April. Also monitoring was carried out by about 1,000 members of Soyukai, who are the first-tier suppliers. KPI P42 Number of Participants to CSR Procurement Explanatory Meeting Number of participants Members of Soyukai of each branch (companies registered as of April 2013) Taisei Corporation headquarters Building Division / Civil Engineering Division Taisei Corporation branch offices Site Managers for each Building / Civil Engineering site Total 949 Procurement Division / Corporate Planning Department Follow up / guidance Procurement related companies Protection, management, and use of intellectual property P ISO Respect for property rights Policy Regarding Intellectual Property* 2 P Intellectual property disputes due to infringement of rights such as patent rights, etc., are increasing in the construction industry, so it is necessary to strengthen intellectual property management to deal with such disputes and to prevent leakage of technology. Taisei Corporation adopted a Policy regarding Intellectual Property in 2007 from the point of view of clarifying its corporate attitude towards the importance of intellectual property, in order to strategically utilize intellectual property, strengthen the competitiveness of the company, and the increase corporate value. Policy on Intellectual Property Norms of Conduct 1. Promote intellectual property-based business and R&D strategies 2. Establish a structure for strategic acquisition and management 3. Promote strategic utilization 4. Thoroughly enforce intellectual property risk management 5. Improve group-wide intellectual property capabilities 6. Improvement of brand value through the use of intellectual property Intellectual Property Policy in Practice D Based on the "Policy regarding Intellectual Property", Taisei Corporation promotes management of the company with an emphasis on intellectual property, by strategically managing and utilizing all intellectual property such as patent rights, as well as copyright and know how in construction and business. Regarding trademark strategy, appropriate trademark management is carried out for product brands used in the individual names of technologies and services, in order to increase the name value and confidence of customers, the public, shareholders, and stakeholders, and increase the brand value of the company. In financial year 2013 courses on intellectual property were held for headquarters technical departments, branch technical departments, and the Marketing & Sales Division, that carried out training* to impart the basic knowledge of intellectual property, with the objective of raising awareness and training staff in intellectual property. Also, activities were implemented on the main works sites to identify patents, and to identify and study infringements of the patent rights of others. In addition, efforts are made to raise the level of intellectual property capabilities of the group as a whole by implementing e-learning for all employees, publicizing information regarding intellectual property risks, and continuously carrying out educational activities regarding basic knowledge, targeting group companies also so that the intellectual property rights of others will not be infringed. * KPI P42 *1 CSR Procurement: Requiring supplier companies to also implement Corporate Social Responsibility (CSR) initiatives. *2 Intellectual property: Information having property value created through intellectual creative activities, not a tangible asset. 37 TAISEI CORPORATE REPORT 2014 DATA BOOK

39 Taisei Group of Companies KPI Information Financial Information Company Information ESG Information Measures for information security P ISO Respect for property rights System for Management and Control of Information P A company-wide information security system and various regulations and detailed rules regarding the control of information have been systematically constructed, in order to properly use and preserve the company s information. Overall Perspective on the System of Information Control Rules Group action guides Organizational basic rules Basic rules of Standard for establishing emergency information disclosure response headquarters, etc. Basic rules regarding business continuity during disasters 1st layer Basic rules regarding control of company information 2nd layer 3rd layer 4th layer Rules regarding control of customer information Regulations regarding handling company information Rules regarding protection of personal information Rules regarding management of intellectual property information Raising the Level of Information Security of the Construction Industry as a Whole D Providing a Free Security Diagnosis Site A free website Personal Computer Diagnosis Site, jointly developed with security vendors, has been opened. Under the present circumstances it is not sufficient to just take information security measures as a single company. The aim is to raise the level of information security of the construction industry as a whole, and not just our company, by promoting the use of this site by companies that deal with Taisei Corporation and other companies in the same industry, etc. Establishment of Taisei-SIRT Rules regarding storage of documents Guidelines, manuals, etc Rules regarding control of insider information, and prevention of insider trading Guidebooks (regulation guidelines) Standard for implementing information security for electronic information Taisei Corporation has established a Computer Security Incident Response Team* 2 (CSIRT) within the organization called Taisei-SIRT, as a measure to prevent damage caused by electronic information security incidents* 1 and to strengthen the system of responding to emergencies. In March 2013 Taisei-CSIRT became affiliated with Nippon CSIRT Association* 3. Taisei-SIRT carries out information sharing and cooperation with CSIRTs within other organizations in Japan regarding activities to prevent damage due to electronic information security incidents, and rapid response to prevent spread of the damage in the event of occurrence of an incident. Taisei Corporation will continue its efforts to strengthen the electronic information security response system, to deliver security and safety in response to the trust of our customers. Measures to Prevent Information Leakage D Various measures have been implemented to ensure the level of information security throughout the Taisei Corporation Group, and the slogan Safety First in Use of ICT! has been produced, with the aim of zero information security incidents* among each of the group companies, as well as specialist subcontractors and cooperating companies. * KPI P42 Raising Awareness of Information Security D The first step in information security is to increase the security awareness of all management and employees. Education is continuously implemented for management and employees on information security related knowledge and the internal rules and regulations, etc. Information Security Pocketbook The rules that constitute the minimum level to be complied with by all management and employees have been summarized in an Information Security Pocketbook. Education for all management and employees and collective training for fresh recruits and those joining Taisei from other companies is continuously implemented. Also, a Pocketbook for Cooperating Companies has been prepared for cooperating companies such as specialist contractors, etc. This pocketbook is used for education and guidance for cooperating companies, by using the contents of the pocketbook for education of persons joining a works site, and at disaster prevention discussion meetings, etc. Information Security Homepage A homepage that summarizes matters concerning information security has been instituted on the company intranet. This contains internal rules and regulations regarding information security, past notifications and educational content, etc., as well as techniques to prevent information leakage. Through the use of this homepage by management and employees, they can constantly gain information regarding information security, and increase their awareness. Education for All Employees by e-learning To ensure thorough familiarity of all management and employees with information security, e-learning* regarding information security is carried out several times per year and continuously implemented. Details of information security incidents that frequently occur throughout the world and countermeasures against them, and various topics in information security are discussed, in an endeavor to prevent information security incidents by implementing timely education. * KPI P42 *1 A generic term for electronic information security incidents or attacks, regardless of whether they are external or internal. *2 A generic term for an organization that responds to computer security incidents that occur within an organization. *3 The formal name is the Nippon Computer Security Incident Response Team Association. TAISEI CORPORATE REPORT 2014 DATA BOOK 38

40 Taisei KPIs Environment Contribution to realizing a low carbon society Definition u Rate of reduction in CO2 emissions for building operation and construction stages compared to fiscal 1990 C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Reduction rate of predicted CO2 emissions in the building operation stage 37.5% 43.6% 30% / 35.3% 30% or above Reduction rate of CO2 emissions in the construction stage 50.8% 55.9% 40% / 48.0% 40% or above Explanation of results u At the building operation stage, we applied the Eco-sheet CASBEE in design. In addition, at the construction stage, at each construction site we reduced CO2 emissions by means of initiatives including using eco drive techniques for construction machinery and reducing the distances over which excavated soil was transported. A Improvements/issues u We are aiming to reduce CO2 emissions by 40% at the building operation stage and by 50% at the construction stage by fiscal From FY 2014, a new target for the CO2 emissions intensity in the construction stage (10% reduction compared with 1990) has been set. Promotion of 3R activities-/promotion of green procurement Definition u Rate of recycling of construction waste (excluding sludge) = (Amount generated Amount for final disposal) / Amount generated 100 Rate of procurement following Green Procurement Guidelines C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of recycling of construction waste 94.9% 95.6% 95% / 95.6% 95% or above Rate of green procurement 39.1% 30.6% 30% / 33.4% 30% or above Explanation of results u In FY 2013 the recycling rate was 95.6% overall including civil engineering and building construction, and the green procurement percentage was 33.4%, which exceeded the targets. A Improvements/issues u Promotion of use of wide-area certification system, effective use on-site, and separation into saleable resources and other waste, in order to increase our construction waste recycling rate. Realization of increase in green procurement rate through reexamination of products categorized for green procurement. Proper management of construction waste Definition u Digitalization of manually input manifest data, creation of system for management by network of producers of construction waste, collection and transportation contractors, and waste disposal contractors via a data processing center. Rate of electronic manifest penetration = (the number of electronic manifests issued / the number of manifests issued) 100 C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of use of Electronic Manifest 81.7% 85.9% 80% / 86.4% 80% or above Explanation of results u We achieved our targets in collaboration with each of our branches and construction site offices. A Improvements/issues u Specific targets are set for each branch office and construction site, to increase the rate of usage of the Electronic Manifest. Providing environmentally friendly technologies Definition u Amount of media coverage of development of environmentally-friendly technologies and projects (PJ) in which they are applied. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of media announcements regarding environmental 32 cases 30 cases 20 cases / 30 cases 20 cases or above technology development and applied projects Explanation of results u The relevant departments conducted their activities with targets for media coverage of the development of environmental technologies and projects using those technologies. A Improvements/issues u Collaboration between departments responsible for research and development of CO2-reducing and energy saving technologies and departments responsible for projects in which the technologies are applied. Status of achievement: ~90.0 r 89.9~ or below Number of fatal accidents/frequency rates, Number of major information security accidents: Achieved Not achieved 39 TAISEI CORPORATE REPORT 2014 DATA BOOK

41 Taisei Group of Companies ESG Information Financial Information Company Information KPI Information Consumer Issues Full compliance with quality control standards and procedures Definition u Rate of implementation of surveys of customer satisfaction conducted after building handover(civil Engineering Division)and rate of return of customer satisfaction survey questionnaires(building Division) C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Civil engineering 100% 100% 100% / 100% 100% Customer satisfaction surveys Building construction 80% 60% 100% / 65% 100% Explanation of results u For the civil engineering survey, CS interviews were held with customers 41 times. The building surveys are in an unfinished stage, so in the future continuous follow up will be made to ensure that the rate of return of the questionnaire sheets is 100%. A Improvements/issues u The content of questionnaires will be checked and factors involved in items that received low evaluations will be analyzed and countermeasures reflected in project wrap-up meetings, etc. We will also aim to increase satisfaction by understanding customers through dose communication. Development and providing technologies to solve social issues Definition u Number of patent applications and patents granted(registered),and amount of media coverage of the development of new technologies are applied. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of patent applications filed 256 cases 297 cases 250 cases / 273 cases 270 cases Number of patents obtained 193 cases 224 cases 200 cases / 272 cases 230 cases Number of media announcements regarding technical development and application projects 66 cases 75 cases 60 cases / 84 cases 60 cases Explanation of results u We do not compete in terms to the number of patent applications we file, but rather try to apply for patents for useful technologies that we will actually use, with a view toward differentiation with competitors and obtaining useful rights in our business. A Improvements/issues u The high rate of registration of 91% was achieved, which greatly exceeds the average of about 60% for all industries. In the future we will aim to make further high quality applications and obtain rights with a broad scope. Community Involvement and Development Promotion of community contribution activities Definition u Number of activities conducted at Taisei Group offices and construction sites to contribute to the environment and society. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of environmental and social contribution activities 779 cases 1,048 cases 1,000 cases / 1,076 cases 800 cases Explanation of results u Environmental management values, which call the TAISEI AGENDA, have been introduced as a focus of our activities, and we conducted activities to contribute to society in close cooperation with local communities at our offices and construction sites throughout the country. A Improvements/issues u We will continue to incorporate action items into the TAISEI AGENDA. We will publicize that contribute to the environment and society in cooperation with local communities at construction sites and other operational areas in an effort to make them standard practice. Expansion of employee volunteers Definition u Number of employees participating in activities that contribute to the environment and society and activities to aid recovery from the Great East Japan Earthquake, organized by Taisei to provide support for employees volunteer initiatives. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of employees participating as volunteers 258 people 247 people 150 people / 176 people 150 people Explanation of results u The number of volunteers participating in annual environmental conservation was 142 persons, and the number of volunteers participating in communities was 34, or a total of 176. A Improvements/issues u The construction industry is a contract business, so depending on the time it may not be possible to take leave. However, in FY volunteers participated, wishing that their small amount of free time should be useful for society. It is necessary to promote use of volunteer leave, which was instituted in April The target for FY 2013 onwards is 150, as the opportunities to support the recovery from the Great East Japan Earthquake have reduced. Labor Practices Raising the level of safety and health with TAISEI OHSMS Definition u The frequency rate is the ratio of the number of deaths and injuries caused by industrial accidents per million man-hours worked. It is an indicator that expresses the frequency with which accidents occur. C Main KPIs 2011 results 2012 results 2013 target/results Level achievement 2014 targets Number of fatal accidents 4 cases 2 cases 0 cases / 3 cases 0 cases Frequency rates 0.58* or below / or below Explanation of results u 101 accidents occurred that required time off work(including accidents by business proprietors). Of these,72 required for or more days off work and tree were fatal accidents. A Improvements/issues u We aim to achieve our target through thorough implementation of the 2013 Health and Safety Policy. *Calculated for accidents entailing four or more days off work. From 2012, the target is set on the basis of all accidents entailing days off work, irrespective of the number of days. TAISEI CORPORATE REPORT 2014 DATA BOOK 40

42 Human Rights and Labor Practices Human rights education activities Definition u The ratio of employees who have participated in training concerning human right (e-learning programs, group training sessions, etc) C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of attendance at human rights training 100% 100% 100% / 100% 100% Explanation of results u This year as well, we conducted human rights awareness-raising activities aimed at the importance of fair employment selection and resolution of various human rights problems. A Improvements/issues u Aiming to enable all of our employees to think, learn, and act on their own initiative, We will continue working at awareness building that leads to sensitivity in addition to imparting accurate knowledge of human rights and promoting the cultivation of awareness. Promotion of diversity Definition u Number and ratio of employees affected by diversity-related measures C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Numbers attending female leadership development training 26 people 26 people 40 people / 47 people 40 people Number of female managers 30 people 31 people / 31 people 32 people Number of female directors 133 people 135 people / 159 people 180 people Rate of employment of persons with disabilities 1.88% 1.95% 2.00% / 2.05% 2.00% Number of re-employed 676 people 582 people 600 people / 643 people 620 people Explanation of results u Seeking to promote diversity, Taisei is creating workplaces in which a wide range of personnel can thrive. Taisei promoted the employment of physically challenged individuals as one social contribution toward their self-reliance. A Improvements/issues u In the future, we will continue to support diverse working styles and create working environments suited to employees with diverse attributes. Supporting the balance between work and life (1) (Number of employees taking child raising leave) Definition u Number and ratio of employees affected by diversity-related measures C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Numbers taking leave for childcare (Male/Female) 2/27 people 1/37 people 4/31 people 2/25 people Numbers taking leave when their spouse gives birth 70 people 76 people 97 people 70 people Numbers taking nursing care leave (Male/Female) 30/85 people 36/82 people 46/107 people 35/85 people Explanation of results u Taisei conducts its own childcare support program, for example holding nationwide meetings via Web conferencing system for employees who are on childcare leave and providing information via our company intranet. This has produced positive results, with the number of employees making use of childcare-related leave increasing. A Improvements/issues u In the future, we will continue to publicize the system and to create an environment that encourages taking such leave. Supporting the balance between work and life (2) (Number of former employees registered with Job-Return system) Definition u The enrollment of former employees who resigned due to childbirth, childcare, nursing care, or the relocation of a spouse at our Job Return system, which offers the opportunity for ex-employees to return to employment if it suits the company s needs. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of job return registrants 48 people 49 people 45/51 people 51 people Explanation of results u As a result of distributing the meetings of persons on childcare leave throughout Japan via the internet, providing interviews with persons on childcare leave on the company intranet, and implementing the company's own childcare support program, the number of users has increased, and a certain level of effect can be seen. A Improvements/issues u We will continue to offer guidance. Supporting the balance between work and life (3) (Rate of paid leave utilization) Definition u Rate of employees taking annual paid leave, Refresh leave(special leave that can be taken when reaching certain milestones concerning years of employment), and Milestone leave(special leave able to be taken when a employee at a construction site office is transferred or reaches certain milestones of the construction project) C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of paid leave utilization 32.6% 34.2% 35.0% / 29.0% r 35.0% Rate of refresh leave utilization 88.9% 88.4% 85.0% / 86.7% 85.0% Rate of milestone leave utilization 78.2% 74.1% 75.0% / 74.1% 75.0% Explanation of results u At the beginning of the term measures were taken to increase the rate of taking paid leave, by holding discussions regarding scheduling dates for leave between those who could take leave and their superiors. However the rate of taking paid leave reduced due to an increase in work. A Improvements/issues u Taisei attempts to increase the leave usage rate by instructing personnel in supervisory positions to monitor the leave usage status appropriately, and encouraging employees who have not taken leave to do so. Promotion of staff education Definition u Number of training hours per person for employee training programs conducted by the Head Office and branches, number of employees who have received training at overseas construction sites or subsidiaries, research institutes, etc. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Training hours per person 40.0 hours 42.1 hours 42.0 hours / 42.2 hours 42.0 hours Number of trainees at overseas sites, etc. 26 people 16 people 15 people / 12 people r 15 people Number of trainees at overseas training organizations 17 people 10 people 10 people / 11 people 10 people Explanation of results u The objective is to cultivate autonomous human resources having specialism, creativity, and individuality. Also, in order to strengthen human resource training with a view towards overseas expansion, efforts are being placed on improving understanding of different cultures, negotiating capability, and languages. In FY 2013 trainees were dispatched to 5 countries, including Turkey, Vietnam, and Sri Lanka. A Improvements/issues u To respond to accelerating globalization, more effective training continues to be held at overseas sites, etc. Also, the training system is being enhanced with the promotion of diversity measures. 41 TAISEI CORPORATE REPORT 2014 DATA BOOK

43 Taisei Group of Companies ESG Information Financial Information Company Information KPI Information Organization Governance Spreading and consolidating the Taisei Group Ideal Definition u Rate of implementation of e-learning for employees C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of implementation of e-learning regarding the Taisei Group Ideal 90.5% 97.8% 100% / 91.1% 100% Explanation of results u Conducted one time in fiscal Had effect on the dissemination and establishment of the Taisei Group Ideal Structure of Values and Policies. (including matters relating to ISO 26000) A Improvements/issues u Seeing further penetration and establishment of the Taisei Group Ideal Structure of Values and Policies, we will continue conducting e-learning programs in the future, with a target of 100% employee participation. BCP (Initiatives for business continuity planning) Definition u Rate of employee participation in major disaster response training conducted at the head office and branches (including the number of employees participating in training in the use of safety confirmation systems) C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Rate of participation in training for large scale disasters 99.6% 100% 100% 100% Explanation of results u We enhanced the effectiveness of our BCP by executing company-wide major disaster response trainings simultaneously at all our bases on the assumption that occur major earthquakes concerned by local governments and Cabinet Office. A Improvements/issues u We will continuously conduct major disaster response training to increase the effectiveness of our BCPs, aiming towards a 100% employee participation rate. Dialog with stakeholders Definition u Number of times TAISEI conducts dialogues with stakeholders C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of dialogs, etc. 5 times 5 times 5 times / 7 times 5 times Explanation of results u In FY2013 various kinds of dialog have been held, such as a site visit for analysts, a Future session, a symposium held by the NGO CARE. A Improvements/issues u We will continue to hold dialogues and exchanges of opinion with a variety of stakeholders. Fair Operating Practices Improvement in compliance awareness Definition u Rate of participation in compliance training conducted for employees, number of branches (domestic) conducting compliance training for subcontractors. C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Attendance at compliance training 100% 100% 100% 100% Number of branches training executed for compliance to the subcontractors 12 cases 12 cases 12 cases 12 cases Explanation of results u We inform employees of the laws and regulations related to their actual works in a small-group discussion format or by e-learning for employees. Seeking to increase awareness of compliance in all specialist contracting companies, we conduct compliance training for the subcontractors at Occupational Health and Safety Conventions held at our branches. A Improvements/issues u We continuously conduct compliance training and training for subcontractors at all of our branches. Promotion of CSR procurement Definition u Number of companies Tier 1(Soyukai,the organization of the company's cooperating companies)monitored for CSR procurement C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of companies monitored for CSR procurement 150 companies / 160 companies 150 companies Explanation of results u In FY 2013,monitoring of CSR activities in accordance with the contents of the Procurement Guidelines is carried out (160 companies: KPIs set), to evaluate the status of implementation of CSR activities, and guidance has been given to 16 companies. A Improvements/issues u We will continuously monitored for CSR procurement and attempt to establish CSR awareness among tier 1 suppliers. Practice of intellectual property strategy Definition u Number of times training is conducted to increase awareness of support for patent applications and intellectual property C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of training regarding intellectual property 31 times 36 times 30 times / 40 times 30 times Explanation of results u In addition to conducting intellectual property-related training at the Head office and branches, we are working to increase the level of IP awareness throughout the company by conducting a series of activities such as a visiting 38 major construction sites. A Improvements/issues u We will continuously conduct training to increase awareness of intellectual property rights among all employees, not just employees working in Intellectual Property departments, and we will work to foster a culture of invention and strengthen risk management by means of close cooperation between the Intellectual Property Department and other technology-related departments. Measures to prevent information leakage / Improvement in information security awareness Definition u Number of major security breaches of electronic information related to TAISEI Group, and number of times company-wide education programs regarding information security have been conducted C Main KPIs FY2011 results FY2012 results FY2013 target/results Level achievement FY2014 targets Number of major information security accidents 0 cases 0 cases 0 cases / 1 cases 0 cases Number of times education in information security implemented in all companies 12 times 16 times 15 times / 13 times r 15 times Explanation of results u 1 MAIL SENDING ERROR. We also believe that the practice of conducting company-wide information security education classes has become well established, including at Group companies. A Improvements/issues u New threats relating to information security are appearing one after the other, and so there is a need to keep employees informed of these threats. TAISEI CORPORATE REPORT 2014 DATA BOOK 42

44 Group Company KPIs Taisei Rotec Corporation A ISO Labor practices KPIs Main items to be undertaken Thoroughgoing occupational health and safety management Definition u The ratio of the number of fatalities and injuries caused by industrial accidents per million actual man-hours worked. It is an indicator that expresses the frequency with which accidents entailing four or more days away from work occur. C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Frequency rates / Explanation of results u Most accidents occur when people work on their own, accounting for 70% of accidents requiring 4 or more days away from work. Improvements/issues u To provide repeated psychological education for workers regarding familiarity, lack of attention, carelessness, taking short cuts, etc., resulting in increasing safety awareness. ISO Environmental KPIs Main items to be undertaken Proper control of construction waste Definition u The ratio of construction projects using the Computerized Manifest System to all construction projects that generates industrial waste. It is an indicator that measures the accuracy of appropriate management. C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Rate of electronic manifest penetration 12.6% 15.0% / 9.0% 15.0% Explanation of results u Industrial waste collection and transport companies are mainly small and medium-sized businesses, for whom the cost of introducing the Electronic Manifest is a problem. A Improvements/issues u To go around new sites with e-reverse.com, Inc., to see the convenience of the Electronic Manifest and increase its rate of usage. Taisei-Yuraku Real Estate Co., Ltd. ISO Main items to be undertaken Definition u Reduction rate for power consumption in offices (scope of aggregation: head office) compared to the base year (fiscal 2010) Number of energy saving improvements proposals suggested to customers in facilities management C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Rate of reduction of electrical power usage (office) 11% 11% / 13% 0.5% Environmental KPIs Promote energy conservation Number of projects proposing improvement in energy efficiency at customers facilities 20 cases 20 cases / 25 cases 22 cases Explanation of results u As a result of promoting ISO EMS activities, the targets for rate of reduction in electricity consumption and number of energy efficiency improvement proposals have been achieved. Of the 25 energy efficiency improvement proposals made, 24 have been adopted. A Improvements/issues u Regarding rate of reduction in electricity consumption, the FY 2014 target is being reviewed with the reference year changed to FY 2013 and the scope of calculation expanded to the whole company. We aim to achieve the new target. Taisei U-LEC Co., Ltd. ISO Environmental KPIs Main items to be undertaken Promotion of 3R activities Proper management of construction waste Definition u Rate of recycling of construction waste (excluding sludge) = [(Amount generated Amount for final disposal) / Amount generated] 100 Rate of electronic manifest penetration = (number of electronic manifests issued/number of manifests issued) 100 C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Rate of recycling of construction waste 97% 98% / 98% 98% Rate of use of Electronic Manifest 92% 92% / 96% 92% Explanation of results u The construction waste recycling percentage for FY 2013 was 97.8%, which almost reached the target. The rate of use of the Electronic Manifest in demolition work increased by 21.2% compared with the previous financial year to 87.5%, so to the overall percentage was 96.1% and the target was achieved. (The rate for demolition work in FY 2012 was 66.3%) A Improvements/issues u High values were achieved for both the construction waste recycling percentage and the Electronic Manifest usage rate, so in the future our efforts will be to maintain these achieved values. Status of achievement: ~90.0 r 89.9~ or below 43 TAISEI CORPORATE REPORT 2014 DATA BOOK

45 Taisei Group of Companies ESG Information Financial Information Company Information KPI Information Taisei Setsubi Co., Ltd. ISO Fair Business Practice KPIs Main items to be undertaken Improvement in compliance awareness Definition u Rate of participation in compliance training (small-group training and group training) and e-learning provided to executives and employees C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Rate of attendance at compliance training 100% 100% / 100% 100% Explanation of results u By carrying out group learning in small groups followed by e-learning, a greater effect is achieved. A Improvements/issues u We will continuously provide compliance training company-wide and attempt to establish compliance awareness among executives and employees. ISO Environmental KPIs A Definition u Rate of participation in environment-related education provided to all employees at the head office and branches Main items to be undertaken C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Comprehensive environmental activities Rate of attendance at environment related education 90% 100% / 74% 100% Explanation of results u Study groups with the objective of raising environmental awareness and acquiring knowledge regarding environmental legislation, etc., has been held companywide. Improvements/issues u Efforts will be continued in the future to increase environmental awareness and knowledge regarding environmental laws and regulations, with the objective of 100% attendance. Taisei Housing Corporation ISO Definition u Customer questionnaire evaluation rate from questionnaires given to customer at the time of building handover Main items to be undertaken C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Consumer issues KPIs Ensuring quality and raising customer satisfaction Customer satisfaction surveys 97% 100% / 95% 100% Explanation of results u A questionnaire survey is carried out in which customer questionnaires are handed over to customers, and the responses are returned within 1 month. In most cases the reason for selecting the maker was it is a reliable company, the explanation by the sales representative, or the quality and performance was excellent, and these 3 items lead to an inclination to recommend. The result was 2% down compared with the previous year, and the target was not achieved. A Improvements/issues u With excellent building quality and performance, the inclination to recommend can be further increased with high quality staff and after service. Seiwa Renewal Works Co., Ltd. ISO Definition u An indicator that expresses the frequency of occurrence of accidents that require four or more days off work. Main items to be undertaken C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Labor practices KPIs Thoroughgoing occupational health and safety management Number of labor accidents 2 cases 0 cases / 4 cases 0 cases Explanation of results u In FY 2013 there were 4 accidents requiring 4 or more days away from work, which was the worst in the past 5 years. A Improvements/issues u Most accidents are caused by hand signals, so we intend to take specific measures to ensure thorough familiarization with the working procedures. ISO Definition u Rate of participation in safety confirmation training during major disaster response training Main items to be undertaken C Main KPIs FY2012 results FY2013 targets / results Level achievement FY2014 targets Organizational governance KPIs A Risk management Rate of participation in training for large scale disasters 100% 100% / 100% 100% / 100% Explanation of results u The participation rate in the safety confirmation training in FY 2013 was the target 100%, as a result of thoroughly informing the employees in advance. Improvements/issues u The safety confirmation information for everyone is registered on the system, but follow up is necessary. We aim that there should be 100% voluntary registration. TAISEI CORPORATE REPORT 2014 DATA BOOK 44

46 Explanation and Analysis of Business Results TAISEI CORPORATION and Consolidated Subsidiaries Years ended March 31, 2013 and 2014 Millions of Yen (except for per share figures) Thousands of U.S. Dollars* (except for per share figures) Change (percent) Contract backlog at the beginning of the year 1,663,459 1,651,370 $ 16,045,181 (0.7) % New orders received during the year 1,404,407 1,645,895 15,991, Net sales 1,416,496 1,533,473 14,899, Contract backlog at the end of the year 1,651,370 1,763,792 17,137, Net income 20,051 32,089 $ 311, % Per share (in yen and dollars) Cash dividends applicable to the year 5,698 6,834 66, Per share (in yen and dollars) Net assets 343, ,166 3,732, Per share (in yen and dollars) Total assets 1,543,095 1,599,065 15,536, * U.S. dollar amounts above and elsewhere in this Annual Report were translated from yen, for convenience only, at the rate of US $1 = , the approximate exchange rate at March 31, Status of Results In this financial year the Japanese economy has seen an improvement in production and consumption due to financial and fiscal measures having a certain amount of effect, and there are signs of recovery such as recovery in capital investment. In the domestic construction market, demand has been strong due to the recovery in the non-manufacturing sector, as well as demand associated with a last-minute rush before the increase in consumption tax. Under these circumstances, the business results of our Group was as follows. New orders received increased by 17.2% compared with the previous consolidated financial year to trillion yen, and sales increased by 8.3% year on year to trillion yen. Regarding profitability, operating income increased by 51.0% compared with the previous consolidated financial year to 53.7 billion yen, ordinary income increased by 61.9% year on year to 56.7 billion yen, and net income for this term increased by 60.0% year on year to 32 billion yen. Major new orders received during FY ended March 2014 Client Roppongi 3-chome East Area Urban Land Redevelopment Association Land Transport Authority of Singapore Ministry of the Environment Japanese Red Cross Society Tokyo Metropolitan Government Major projects completed during FY ended March 2014 Project Roppongi 3-chome East Area 1 st Type Urban Land Redevelopment New Construction of Building Facilities and Public Facilities Contract T226 Construction of Marina Bay Station and Tunnels for Thomson Line FY2013 Iitate-mura Radioactive Decontamination Work (NO.2) New Construction of Saitama Red Cross Hospital Construction work for the new Toyosu market (tentative name) seafood wholesale building and other facilities NO.2 Client Project Miyagi Prefecture Disaster-related wastes management (Kesennuma area of Kesennuma Block) Kitasato Daiichi Sankyo Vaccine Co., Ltd. Construction of New Vaccine Research Production Building MM Development Tokutei Mokuteki Kaisha (Tentative Name) MM21 34 th Town Area Commercial Facilities Development Plan (MARK IS MINATOMIRAI) Land Transport Authority of Singapore Contract 907 Construction and Completion of Landmark Station Including Associated Tunnels for Downtown Line SHOWA UNIVERSITY (Tentative Name) Construction of SHOWA UNIVERSITY New Toyosu Hospital 45 TAISEI CORPORATE REPORT 2014 DATA BOOK

47 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information Results according to reporting segment, etc., are as follows (the results for reporting segments include internal transactions between segments). 1 Civil Engineering In our Group, sales increased for the company and consolidated subsidiaries, increasing by 17.6% compared with the previous consolidated financial year to billion yen. Also, operating income increased by 236.4% year on year to 32.5 billion yen, due to the increase in sales and an improvement in the gross profit margin. 2 Building Construction Although sales in the Group were similar to the previous consolidated financial year at 956 billion yen, due to a worsening in gross profit margin an operating loss of 8.9 billion yen was recorded (previous consolidated financial year profit of 19.2 billion yen). 3 Real Estate Development In the real estate sales market, in the condominium market the business environment is solid as the contract rate remains high due to the low interest rates and improvement in business confidence, although the trend towards higher construction costs continues. Also, in the real estate rental market, the vacancy rates in office buildings has improved, and there is a trend towards higher rents in some buildings, so signs of recovery can be seen. In our Group, sales have increased by 35.5% compared with the previous consolidated financial year to billion yen, due to the yield on large scale projects, and operating income has increased by 391.4% year on year to 27.9 billion yen. 4 Others Sales in our Group was broadly similar to the previous consolidated financial year at 11.9 billion yen, with operating income increased by 21.6% year on year to 500 million yen. [Consolidated] Results for Orders Received Units: million yen Name of reporting segment, etc. Previous consolidated financial year (1 st April 2012 to 31 st March 2013) This consolidated financial year (1 st April 2013 to 31 st March 2014) Civil engineering 391, ,492 Building Construction 867, ,867 Real estate development 135, ,581 Others 9,707 9,953 Total 1,404,406 1,645,895 [Consolidated] Results for Sales Units: million yen Name of reporting segment, etc. Previous consolidated financial year (1 st April 2012 to 31 st March 2013) This consolidated financial year (1 st April 2013 to 31 st March 2014) Civil engineering 358, ,526 Building Construction 915, ,647 Real estate development 132, ,346 Others 9,707 9,953 Total 1,416,495 1,533,473 TAISEI CORPORATE REPORT 2014 DATA BOOK 46

48 Financial Status, Business Results and Analysis 1 Overview The business results for this consolidated financial year achieved the predictions at the beginning of the financial year for all items: orders received, sales, operating income, normal income, and current net income. In addition to the current net income, net assets increased to billion yen due to effects such as the rise in the stock market, so the ratio of capital to assets increased by 1.8% compared with the previous consolidated financial year to 23.9%. Also, interestbearing loans associated with procurement of finance reduced by 62.5 billion yen to billion yen, so the D/E ratio improved by 0.2 points to Financial Status (1) Status of Assets As a result of an increase in cash deposits, etc., total assets increased by 3.6% or 55.9 billion yen compared with the previous consolidated financial year to trillion yen. (2) Status of Liabilities Although there was a reduction in interest-bearing loans associated with procurement of finance, total liabilities increased by 1.3% or 15.1 billion yen to trillion yen, due to an increase in deposits and an increase in amounts received for construction in progress, etc. The balance of interest-bearing loans associated with procurement of finance at the end of this consolidated financial year was billion yen. (3) Status of Net Assets Net assets have increased by 11.9% or 40.8 billion yen to billion yen compared with the previous consolidated financial year, as a result of an increase in valuation difference on available-for-sale securities due to the rise in the stock market, in addition to recording a current net income. 3 Operating Results (1) New Orders and Net Sales Orders received have increased in all segments, increasing by 17.2% to trillion yen compared with the previous consolidated financial year. Also, sales increased in all segments, increasing by 8.3% to trillion yen compared with the previous consolidated financial year. (2) Operating Income and Ordinary Income Although operating income was reduced in the building segment due to poor gross margins in some large scale projects, profit was increased due to the increase in revenue associated with real estate development and the increase in the gross margin rates in the civil engineering segment. Sales costs and general management costs were generally the same as the previous year, so operating income increased by 51.0% compared with the previous consolidated financial year to 53.7 billion yen. Ordinary income increased by 61.9% compared with the previous consolidated financial year to 56.7 billion yen, due to an improvement in non-operating profit and loss from foreign currency gain. (3) Net Income Net income increased by 60.0% compared with the previous financial year to 32 billion yen, due to the increase in ordinary income, although extraordinary losses for the increase in losses on sales of fixed assets increased. 47 TAISEI CORPORATE REPORT 2014 DATA BOOK

49 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information Dividend Policy The company has a fundamental long term stable dividend policy, enhancing retained earnings in preparation for future business development, and issuing special dividends when results are good, etc., to return the profits to the shareholders. Taking into consideration that circumstances have been prepared to enable a stable current net income to be earned as a result of the good progress of the Mid-term Business Plan (FY 2012 to FY 2014), it has been decided to increase the dividend by 1 yen compared with the previous term, or a dividend of 6 yen per year per ordinary share is allocated (of which 2.50 yen is allocated as an interim dividend). The Articles of Association of the company permit an interim dividend to be allocated, in accordance with Article of the Companies Act, with dividends allocated twice every year, at the middle and at the end of the financial year. These dividends are decided by the shareholders meeting for the end of term and the Board of Directors Meeting for the interim dividend. Also, it is the policy to utilize retained earnings to further strengthen the company s financial standing. Total Dividend Amount and Dividend Per Share Resolution meeting date Total dividend amount (million yen) Dividend per share (yen) Board of Directors Meeting 12 th 2, November 2013 Shareholders Meeting 27 th June , Note: The dividends on surplus earnings at the criterion date of this term are as shown above. Cash Flows 1 Cash Flows from Sales Activities A net income before tax of 46.5 billion yen was earned this term, resulting in excess revenue of billion yen (excess revenue in previous consolidated financial year was 73 billion yen). 2 Cash Flows from Investment Activities An excess revenue of 16 billion yen was achieved from the sale of investment securities, etc. (expenditure of 4.7 billion yen in previous consolidated financial year). 3 Cash Flows from Financing Activities An expenditure of 68.8 billion yen was incurred for repayment of interest-bearing loans, etc., associated with procurement of finance (expenditure of 46.5 billion yen in previous consolidated financial year). As a result of the above, cash and cash equivalents at the end of this consolidated financial year was billion yen (an increase of 88.5 billion yen compared with the previous consolidated financial year), and the balance of interest-bearing loans associated with procurement of finance was billion yen (a reduction of 62.5 billion yen year on year). Cash Flows Status (billion yen) (50) (100) Cash flows from sales activities Cash flows from investment activities Cash flows from financing activities (46) 47 (3) (64) (8) (58) Increase/decrease in cash and cash equivalents (4) (46) (68) (FY) TAISEI CORPORATE REPORT 2014 DATA BOOK 48

50 Medium Term Company Management Strategy and Issues to be dealt with Mainly as a result of the progress in reconstruction projects after the Great East Japan Earthquake and growing demand in the private sector due to expectations for economic recovery, the market is expected to remain strong in the future. However, taking into account the impact of steep price increases for construction materials, as well as demand trends after the Tokyo Olympics, the business environment may continue to be harsh in the years to come. Recognizing these circumstances, the Company and the Affiliated Companies have formulated strategies for each business segment and specific measures in accordance with the medium-term business plan, which started in FY 2012, and are working toward achieving our management goals listed below. Summary of Medium-term Business Plan (FY ) Basic Policy 1. Fulfillment of social responsibilities on the construction industry 2. Establishment of business structure for the creation of high-added value Business Issues (1) Construction business: Strengthening of the core business (2) Development/improvement of social infrastructure and Contribution to post-earthquake reconstruction (3) Overseas business: Establishment of an earnings structure (4) Strengthening of initiatives and expansion of business fields to create high-added value (5) Development/improvement of robust business foundations The Company and the Affiliated Companies recognize the six items listed below as important issues to be addressed and will strive to achieve the business plan by tackling these issues. 1 Contributing to the Development of Social Infrastructures The Company and the Affiliated Companies will continue to tackle projects for recovery from the Great East Japan Earthquake and problems of deteriorating infrastructures with whole power of our group, and thus contributing to the future development and improvement of Japanese social infrastructure. 2 Improving Production Capacity As there is concern about lack of engineers as a result of the growing demand for construction, the Company and the Affiliated Companies will improve its productivity through the appropriate allocation of engineers and technological innovation, and promote the active hiring of capable technical personnel as required. By doing this, the Company and the Affiliated Companies will increase its production capacity and maintain the high quality of its products and services. 3 Enhancing Cost-competitiveness and Procurement Capabilities Under current circumstances where the labor market has become tight and the prices of construction materials and machinery have soared, the Company and the Affiliated Companies will strive to maintain and improve the profitability by making further efforts to strengthen the procurement functions and enhance its cost-competitiveness. 4 Securing Consistent Profits in Overseas Business In operations outside Japan, the Company and the Affiliated Companies will make every effort to maintain steady profits and achieve sound growth in the future by focusing on the specific regions and business sectors where we can make the most of our strengths, and reinforcing our profit management system and construction management systems. 5 Increasing the Affiliated Companies profit-making Capabilities The Company will ensure integrated management of the Affiliated Companies and will increase the Affiliated Companies profitmaking capabilities by allocating the Affiliated Companies managerial resources appropriately, reinforcing the governance of the Affiliated Companies, and establishing closer cooperation among the Affiliated Companies. 6 Strengthening Financial Structure By improving its profitability and operating cash flow, the Company and the Affiliated Companies aim to achieve the goal of reducing interest-bearing debt (to less than 300 billion yen on a consolidated basis) under the medium-term business plan and further increase its internal reserves. 49 TAISEI CORPORATE REPORT 2014 DATA BOOK

51 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information Risk Information The main items of risk for the business of this Group which are considered to have the potential to have an important effect on the decisions of investors are as follows. The Group recognizes the possibility of occurrence of these risks, and intends to take measures to avoid these risks, and deal with them when they occur. Matters described relating to the future are the judgment of the Group as of the end of this consolidated financial year. 1 Trends in the Construction and Real Estate Markets If the construction or real estate markets suddenly shrink or if the competitive environment becomes severe, it could affect out results. 2 Risks Associated with Overseas Projects We carry out projects in many countries throughout the world, so terrorism, war, violence, etc., could occur, the circumstances in the country could worsen, there could be sudden fluctuations in the economic situation, there could be large fluctuations in the exchange rates, and changes in laws and regulations could change without notice, and if it is not possible to hedge these risks through the contract, our results could be affected. 3 Customer Credit Risk Normal contracts in the construction industry involve a large contract amount in a single transaction, and in most cases contracts are concluded on the condition that a large amount of the construction fee is paid when the constructed object is handed over. Therefore, if the customer runs into credit problems before the construction fee is received, it could affect out results. 4 Fluctuations in Material and Equipment Prices If the price of raw materials suddenly increases, and if it is difficult to reflect this in the contract amount, our results could be affected. 5 Asset Holding Risks Assets such as real estate and tradable securities, etc., are held out of necessity for sales activities, so our results could be affected by fluctuations in the present market price. 6 Retirement Benefit Obligations If there are changes in the assumptions for calculating the retirement benefit obligations, such as a drop in the value of retirement assets, investment yield, discount rate, etc., our results could be affected. 7 Fluctuations in Interest Rates If interest rates suddenly increased, our results could be affected. 8 Defects on Construction Products or Services If we become liable for a large amount of compensation based on liability for defects caused by the Group s work or product liability, our results could be affected. 9 Ancillary Related Project Risks The Group operates ancillary projects associated with PFI projects, leisure projects, as well as civil engineering, building, and real estate development projects. The project period for most of these is long, so if the project environment changes greatly in the future, our results could be affected. 10 Legal Controls Over the Civil Engineering and Building Construction Business The civil engineering business and the building construction business are subject to legal controls such as the Construction Industry Act, the Building Standard Act, the Industrial Safety and Health Act, and the Anti-Monopoly Act, etc., and if these laws or regulations were amended or abolished, or if new laws or regulations were enacted, and if we were subjected to administrative disciplinary action in accordance with these laws or regulations, our results could be affected. 11 Occurrence of a Major Accident If a major accident involving human injury or loss or life or damage to a structure occurs in the civil engineering or building construction fields, our results could be affected. 12 Large Scale Natural Disaster, etc., Risk If a large scale earthquake, a large scale natural calamity such as wind or water damage, etc., or if an infectious disease became an epidemic, our results could be affected. TAISEI CORPORATE REPORT 2014 DATA BOOK 50

52 Consolidated Balance Sheets TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2013 and 2014 ASSETS Current assets: Millions of Yen Thousands of U.S. Dollars Cash and time deposits , ,548 $ 3,454,606 Notes and accounts receivable, trade , ,425 4,318,160 Cost on uncompleted contracts... 83,926 74, ,628 Cost on development projects in progress , , ,076 Other inventories... 5,375 5,740 55,771 Deferred income tax assets... 34,918 37, ,284 Other current assets... 58,812 59, ,214 Allowance for doubtful accounts... (960) (818) (7,948) Total current assets... 1,012,639 1,076,213 10,456,791 Fixed assets: Property, plant and equipment: Buildings and structures , ,146 1,215,955 Machinery, vehicles and equipment... 57,462 58, ,212 Land , ,657 1,182,054 Construction in progress ,197 11, , ,995 2,982,851 Accumulated depreciation... (133,646) (125,944) (1,223,708) Net property and equipment , ,051 1,759,143 Intangibles:... 7,239 5,017 48,747 Investments and other assets: Investment securities , ,859 2,583,162 Net defined benefit asset... 30, ,763 Deferred income tax assets... 11, ,764 Other assets... 54,963 44, ,280 Allowance for doubtful accounts... (6,334) (5,216) (50,680) Total investments and other assets , ,784 3,272,289 Total fixed assets , ,852 5,080,179 Total assets... 1,543,095 1,599,065 $ 15,536,970 The accompanying notes are an integral part of these balance sheets. 51 TAISEI CORPORATE REPORT 2014 DATA BOOK

53 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information LIABILITIES AND NET ASSETS Current liabilities: Millions of Yen Thousands of U.S. Dollars Notes and accounts payable, trade , ,030 $ 4,528,080 Short-term borrowings , ,799 1,154,285 Straight bonds due within one year... 2,200 11, ,822 Lease obligations ,750 Advances received and progress billings on uncompleted contracts , ,657 1,366,663 Deposits received... 91, ,875 1,193,889 Allowance for warranty on completed contracts... 2,584 3,059 29,722 Allowance for losses on construction contracts... 31,278 50, ,334 Allowance for losses on order received Other current liabilities... 32,993 32, ,332 Total current liabilities , ,097 9,192,547 Long- term liabilities: Straight bonds 46,200 55, ,396 Long-term borrowings , ,494 1,277,633 Lease obligations ,404 Deferred income tax liabilities... 4,345 42,217 Deferred income tax liabilities for revaluation of land... 5,696 4,913 47,736 Retirement benefits for directors and corporate auditors ,877 Allowance for losses on investments in subsidiaries and affiliates ,439 Allowance for environmental spending ,565 Allowance for employees severance and retirement benefits... 33,729 Net defined benefit liability... 54, ,390 Asset retirement obligations... 1, ,900 Other long-term liabilities... 18,031 16, ,200 Total long-term liabilities , ,802 2,611,757 Total liabilities... 1,199,795 1,214,899 11,804,304 Net assets: Shareholders equity: Common stock Authorized: 2,200,000,000 shares Issued: 1,140,268,860 shares , ,448 1,092,577 Capital surplus... 94,170 94, ,983 Retained earnings... 93, ,778 1,173,513 Less: Treasury stock, at cost... (302) (329) (3,197) Total shareholders equity , ,067 3,177,876 Accumulated other comprehensive income: Unrealized holding gains on securities, net of taxes... 45,931 59, ,577 Deferred gains or losses on hedging derivatives, net of taxes... (208) (181) (1,758) Revaluation reserve for land... (960) (2,338) (22,717) Foreign currency translation adjustments... (2,569) (2,285) (22,202) Remeasurements of defined benefit plans ,253 Total accumulated other comprehensive income... 42,194 54, ,153 Minority interests:... 1,770 2,124 20,637 Total net assets , ,166 3,732,666 Total liabilities and net assets... 1,543,095 1,599,065 $ 15,536,970 TAISEI CORPORATE REPORT 2014 DATA BOOK 52

54 Consolidated Statements of Income TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2013 and 2014 Revenue: Net sales: Millions of Yen Thousands of U.S. Dollars Construction contracts... 1,254,291 1,321,289 $ 12,838,020 Real estate development (and other) , ,184 2,061,640 1,416,496 1,533,473 14,899,660 Costs and expenses: Cost of sales... 1,304,677 1,402,446 13,626,564 Selling, general and administrative expenses... 76,213 77, ,622 1,380,890 1,479,700 14,377,186 Operating income... 35,606 53, ,474 Other income (expenses): Interest and dividends income... 3,295 3,264 31,714 Interest expenses... (6,312) (5,071) (49,271) Taxes and dues... (159) (340) (3,304) Foreign exchange gains (losses)... 2,710 3,568 34,668 Investment gain on equity method ,549 15,051 Gains on sale of investment securities... 1,895 18,412 Gains on sale of property and equipment Losses on sales of investment securities... (4) Losses on sales of property and equipment... (6,337) (61,572) Impairment losses on fixed assets... (1,402) (4,599) (44,685) Write-down of investment securities... (170) (25) (243) Other, net... (1,661) (1,084) (10,533) (2,778) (7,180) (69,763) Income before income taxes... 32,828 46, ,711 Income taxes: Current... (3,623) (10,773) (104,674) Deferred... (8,776) (3,347) (32,520) (12,399) (14,120) (137,194) Income before minority interests... 20,429 32, ,517 Minority interest in consolidated subsidiaries... (378) (384) (3,731) Net income 20,051 32,089 $ 311,786 Amounts per share of common stock: Yen U.S. Dollars Net income $ Diluted net income Cash dividends applicable to the year The accompanying notes are an integral part of these statements. 53 TAISEI CORPORATE REPORT 2014 DATA BOOK

55 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information Consolidated Statements of Comprehensive Income TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2013 and 2014 Millions of Yen Thousands of U.S. Dollars Income before minority interests 20,429 32,473 $ 315,517 Other comprehensive income: Unrealized holding gains (losses) on securities, net of taxes... 35,990 13, ,288 Deferred gains (losses) on hedging derivatives, net of taxes... (144) Foreign currency translation adjustments ,662 Share of other comprehensive income of associates accounted for using equity method Total other comprehensive income 36,072 14, ,388 Comprehensive income 56,501 46,613 $ 452,905 Comprehensive income attribute to: owners of the parent... 56,065 46,118 $ 448,096 minority interests ,809 The accompanying notes are an integral part of these statements. TAISEI CORPORATE REPORT 2014 DATA BOOK 54

56 Consolidated Statements of Changes in Net Assets TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2013 and 2014 Millions of Yen Common stock Capital Surplus Retained earnings Treasury stock Total shareholders equity Unrealized holding gains on securities, net of taxes Balance at March 31, ,448 94,170 78,293 (197) 284,714 9,943 Dividends... (5,697) (5,697) Net income... 20,051 20,051 Sale of treasury stock... (0) 1 1 Acquisition of treasury stock... (106) (106) Reversal of revaluation reserve for land Changes other than shareholders equity, net... 35,988 Balance at March 31, ,448 94,170 93,020 (302) 299,336 45,931 Dividends... (5,695) (5,695) Net income... 32,089 32,089 Sale of treasury stock Acquisition of treasury stock... (28) (28) Reversal of revaluation reserve for land... 1,378 1,378 Foreign currency translation adjustments on overseas (14) (14) affiliate... Changes other than shareholders equity, net... 13,719 Balance at March 31, ,448 94, ,778 (329) 327,067 59,650 Thousands of U.S. Dollars Common stock Capital Surplus Retained earnings Treasury stock Total shareholders equity Unrealized holding gains on securities, net of taxes Balance at March 31, 2013 $ 1,092,577 $ 914,983 $ 903,809 $ (2,934) $ 2,908,435 $ 446,279 Dividends... (55,334) (55,334) Net income , ,786 Sale of treasury stock Acquisition of treasury stock... (273) (273) Reversal of revaluation reserve for land... 13,389 13,389 Foreign currency translation adjustments on overseas (137) (137) affiliate... Changes other than shareholders equity, net ,298 Balance at March 31, 2014 $ 1,092,577 $ 914,983 $ 1,173,513 $ (3,197) $ 3,177,876 $ 579,577 The accompanying notes are an integral part of these statements. 55 TAISEI CORPORATE REPORT 2014 DATA BOOK

57 Taisei Group of Companies ESG Information KPI Information Company Information Financial Information Unrealized losses on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Millions of Yen Remeasurements of defined benefit plans Total accumulated other comprehensive income Minority interests Total net assets (62) (587) (2,739) 6,555 1, ,602 (5,697) 20,051 1 (106) (373) (373) (146) , ,449 (208) (960) (2,569) 42,194 1, ,300 (5,695) 32,089 1 (28) (1,378) (1,378) , ,499 (181) (2,338) (2,285) ,975 2, ,166 Deferred gains or losses on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Thousands of U.S. Dollars Remeasurements of defined benefit plans Total accumulated other comprehensive income Minority interests Total net assets $ (2,021) $ (9,328) $(24,961) $ $ 409,969 $ 17,198 $ 3,335,602 (55,334) 311, (273) (13,389) (13,389) ,622 1, ,436 3, ,875 $ (1,758) $ (22,217) $ (22,202) $ 1,253 $ 534,153 $ 20,637 $ 3,732,666 TAISEI CORPORATE REPORT 2014 DATA BOOK 56

58 Consolidated Statements of Cash Flows TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2013 and 2014 Millions of Yen Thousands of U.S. Dollars Cash flows from operating activities: Income before income taxes 32,828 46,593 $ 452,711 Depreciation and amortization... 6,866 7,407 71,969 Impairment losses on fixed assets... 1,402 4,599 44,685 Increase (Decrease) in allowance for doubtful accounts... (9,012) (1,265) (12,291) Increase (Decrease) in allowance for losses on construction contracts... 7,193 19, ,195 Increase (Decrease) in retirement benefits... 1,866 (33,729) (327,721) Increase (Decrease) in net defined benefit liability... 54, ,390 Interest and dividend income... (3,295) (3,264) (31,714) Interest expenses... 6,312 5,071 49,271 Foreign exchange losses (Gains)... (2,710) (3,568) (34,668) Write-down of investment securities Losses (Gains) on sales of investment securities... 4 (1,895) (18,412) Losses (Gains) on sales of property and equipment... (464) 6,337 61,572 Write-down of cost on development projects in progress... 3,229 24, ,041 Decrease (Increase) in trade receivables... (45,069) (13,370) (129,907) Decrease (Increase) in cost on uncompleted contract... 27,137 9,791 95,132 Decrease (Increase) in inventories other than cost on uncompleted contract... 12,456 14, ,243 Decrease (Increase) in other inventories other than cost on uncompleted contract... 4,877 (361) (3,508) Decrease (Increase) in other current assets... (6,562) (582) (5,655) Decrease (Increase) in prepaid pension cost... (2,295) 6,729 65,381 Decrease (Increase) in net defined benefit asset... (30,337) (294,763) Decrease (Increase) in investment and other assets... 18,496 1,712 16,634 Investment gain on equity method... (461) (1,549) (15,051) Increase (Decrease) in trade payables... 38,095 (18,293) (177,740) Increase (Decrease) in advances received and progress billings on uncompleted contracts... (16,606) 24, ,845 Increase (Decrease) in deposits received... 6,028 31, ,886 Increase (Decrease) in other current liabilities... 6,276 (1,849) (17,965) Other, net... (4,542) 2,715 26,381 82, ,150 1,449,184 Cash received (paid) during the year for: Interest and dividends received... 3,619 3,416 33,191 Interest paid... (6,373) (5,203) (50,554) Income taxes paid... (6,615) (8,613) (83,687) Net cash provided by (used in) operating activities 73, ,750 $1,348,134 Cash flows from investing activities: Decrease (Increase) in time deposits... 1,753 (142) $ (1,380) Purchase of marketable and investment securities... (11,627) (9,863) (95,832) Proceeds from sale of marketable and investment securities... 6,521 24, ,717 Purchase of property, equipment and intangible assets... (6,284) (12,194) (118,480) Proceeds from sale of property, equipment and intangible assets... 4,193 14, ,915 Other, net (536) (5,207) Net cash provided by (used in) investing activities (4,703) 16, ,733 Cash flows from financing activities: Increase (Decrease) in short-term borrowings... (16,168) (36,648) (356,082) Proceeds from long-term borrowings ,810 14, ,858 Repayment of long-term borrowings... (104,618) (58,331) (566,761) Issue of bonds... 19, ,461 Redemption of bonds... (2,200) (2,200) (21,376) Payment for retirement by purchase of convertible bond... (20,276) Cash dividends paid, including those to minority interest... (5,697) (5,695) (55,334) Other, net... (402) (464) (4,509) Net cash provided by (used in) financing activities (46,551) (68,827) (668,743) Effect of exchange rate changes on cash and cash equivalents... 2,783 2,648 25,729 Net increase (Decrease) in cash and cash equivalents... 24,610 88, ,853 Cash and cash equivalents at beginning of year , ,773 2,582,326 Cash and cash equivalents at end of year , ,372 $3,443,179 The accompanying notes are an integral part of these statements. 57 TAISEI CORPORATE REPORT 2014 DATA BOOK

59 Taisei Group of Companies ESG Information KPI Information Financial Information Company Information Board of Directors, Corporate Auditors and Executive Officers (As of May 1, 2014) Board of Directors and Corporate Auditors Chairman of the Board (Representative Director) 1 Members of the Board 2 Takashi Yamauchi Hirofumi Ichihara (Representative Director) Hiroyuki Kimura (Representative Director) Misao Akune (Representative Director) Kazuhiko Dai Yoshiyuki Murata Shigeyuki Sakurai Masahiro Sakai Tohru Tsuji Fumio Sudo Senior Audit & Supervisory Board Member 9 10 Atsushi Okamoto Nobuyuki Motegi Audit & Supervisory Board Member Masakuni Sekimoto Terunobu Maeda Shigeru Morichi Kiwamu Miyakoshi TAISEI CORPORATE REPORT 2014 DATA BOOK 58

60 Executive Officers President and Chief Executive Officer Takashi Yamauchi Executive Vice Presidents Hirofumi Ichihara Chief of Marketing & Sales Division (Integrated); Deputy Chief of Corporate Planning Office; In charge of Safety Administration Hiroyuki Kimura Chief of Civil Engineering Division; Deputy Chief of Corporate Planning Office Misao Akune Chief of Business Administration Division; Deputy Chief of Corporate Planning Office; In charge of International Operations Satoru Ogata Chief of International Operations Headquarters Toshio Tominaga Chief of Marketing & Sales (Building Construction) Division III Senior Managing Executive Officers Kazuhiko Dai Chief of Marketing & Sales (Civil Engineering) Division; Deputy Chief of Corporate Planning Office Masatake Taniuchi Chief of Marketing & Sales (West Japan) Division Yasushi Suzuki Chief of Procurement Division; Deputy Chief of Corporate Planning Office Hisao Tamura Deputy Chief of Civil Engineering Division; General Manager of Civil Engineering Department Managing Executive Officers Fumihiro Yamada Chief of Kansai Branch Shigeki Watanabe In charge of Civil Engineering Junichi Ikeguchi Chief of Nagoya Branch Toshio Matsuda Chief of Safety Administration Division Kazuhiko Hombu In charge of Technology Michio Kuboniwa Chief of Mechanical & Electrical Division Shigeru Konnai Chief of Yokohama Branch Shigeyoshi Tanaka Chief of Corporate Planning Office Yoshiyuki Murata Chief of Architecture & Engineering Division (Integrated); Chief of Building Construction Division; Deputy Chief of Corporate Planning Office Executive Fellows Osamu Hosozawa Deputy Chief of Design Division; General Manager of Structural Planning Department Shigeyuki Sakurai Deputy Chief of Business Administration Division; General Manager of Accounting Department Masahiro Sakai Chief of Marketing & Sales (Building Construction) Division II Motofumi Fujiwara In charge of Algeria East-West Highway Project, International Operations Headquarters Yoshinobu Shigeji In charge of Marketing & Sales (Building Construction), Marketing & Sales Division (Integrated) Hiroshi Kanazawa In charge of Technology Hirofumi Kamata Chief of Nuclear Facilities Division Masahiro Oshima Deputy Chief of Marketing & Sales (Civil Engineering) Division; In charge of Olympic projects Katsuyuki Kanai Chief of Urban Development Division Takashi Ohkawa Deputy Chief of Marketing & Sales (Civil Engineering) Division Tamotsu Umehara Chief of Tokyo Branch Takeo Horinouchi Chief of Marketing & Sales Promotion Division; Deputy Chief of Corporate Planning Office Haruhiko Kouno Chief of Design Division Executive Officers Satoru Tsutae Deputy Chief, In charge of Civil Engineering Division, International Operations Headquarters Yukio Matsuno Deputy Chief, In charge of Building Construction Division, International Operations Headquarters Masafumi Anami Deputy Chief, In charge of Business Administration Division, International Operations Headquarters Yoshitaka Inoue General Manager of Building Construction Department, International Operations Headquarters; General Manager of Nuclear Facilities Project Department, International Operations Headquarters; In charge of NDIA Project (package 18), International Operations Headquarters Yasushi Yoshinari Chief of Medical & Welfare Business Division Yusuke Fukuda In charge of Marketing & Sales (Building Construction), Marketing & Sales Division (Integrated) Tetsuya Shibayama Chief of Proposal & Solutions Division; In charge of Olympic projects Satoshi Imamura Deputy Chief of Taisei Technology Center; Chief of Civil Engineering Research Institute; General Manager of Civil Engineering Technology Development Department Shoji Kondo Chief of Tohoku Branch Norihiko Yaguchi Chief of Chugoku Branch Takao Kanai Deputy Chief of Marketing & Sales (West Japan) Division Hiroshi Shirakawa Chief of Chiba Branch Yoshinori Nishida Deputy Chief, In charge of Civil Engineering, Tokyo Branch General Manager of Civil Engineering Department, Tokyo Branch Hiroshi Suzuki Project Director, International Operations Headquarters Tsuyoshi Nakanishi Chief of Engineering Division Atsuo Ogawa In charge of Technology Takeshi Kagata Deputy Chief, In charge of Civil Engineering,Kansai Branch Masaharu Okada Chief of Kanto Branch Jirou Taniyama General Manager of Next Generation Project Department Yoshiro Aikawa Chief of Kyusyu Branch Keiji Hirano Deputy Chief of Corporate Planning Office; General Manager of Corporate Planning Department Masahiro Tsuchiya General Manager of Projects Creation Department Marketing & Sales Division (Integrated) Masaaki Ito Chief of East Japan Reconstruction Division; Deputy Chief, In charge of Building Construction Division, Tohoku Branch Makoto Imasaka Chief of Environment Division Nobuyuki Hayashi General Manager of Design Department, Civil Engineering Division Hiroshi Tsuchiya Chief of Marketing & Sales (Building Construction) Division I Shimpei Oguchi Deputy Chief of Marketing & Sales (Building Construction) Division II Tatsuhiko Matsui Chief of Taisei Technology Center Susumu Morita Chief of Hokushinetsu Branch Taku Yamamoto Deputy Chief of Marketing & Sales (Building Construction) Division II Noriaki Kon Chief of Sapporo Branch Atsushi Yamamoto General Manager of Secretarial Department 59 TAISEI CORPORATE REPORT 2014 DATA BOOK

61 Taisei Group of Companies ESG Information KPI Information Financial Information Company Information Overseas Network (As of April 1, 2014) Head Office Nishi-Shinjuku, Shinjuku-ku,Tokyo , JAPAN TEL Branches Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, Sendai, Hiroshima, Yokohama, Niigata, Takamatsu, Chiba, Saitama, Kobe, Kyoto Major Subsidiaries in Japan Taisei Rotec Corporation, Taisei-Yuraku Real Estate Co.,Ltd., Taisei U-Lec Co,Ltd., Taisei Setsubi Co.,Ltd., Taisei Housing Corporation, Seiwa Renewal Works Co., Ltd., International Operations Headquarters Nishi-Shinjuku, Shinjuku-ku, Tokyo , JAPAN TEL FAX Overseas Business Offices TAIPEI OFFICE MIDDLE EAST OFFICE Zone B, 6F, No.16, Sec.4, Nan-Jing E. Road, Taipei, Taiwan R.O.C. Corner Abdullah Bin Jassim St. United Bank Bldg. 4th Floor, Facing QNB Bldg, Doha - Qatar, PO BOX TEL FAX TEL FAX U.S.A OFFICE 6261 Katella Avenue, Suite 200, Cypress, CA 90630, U.S.A TEL FAX KUALA LUMPUR OFFICE 9-3, 9th Floor, Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur, MALAYSIA JAKARTA OFFICE Plaza PP 5F, JL Letjend TB Simatupang, No.57, Pasar Rebo, Jakarta 13760, INDONESIA INDIA OFFICE 4th Floor, SCO-56, Old Judicial Complex, Civil Lines, Gurgaon. Haryana , INDIA TEL FAX TEL FAX TEL FAX PAKISTAN OFFICE House No.25-B, Street No.20, Sector F-7/2, Islamabad, Pakistan TEL FAX VIETNAM OFFICE (Hanoi) VIETNAM OFFICE (Hochiminh City) 289 Khuat Duy Tien Road, Trung Hoa Ward, Cau Giay District, Hanoi, S.R.VIETNAM VIETNAM CHAMBER OF COMMERCE AND INDUSTRY, Hochiminh City Branch Building 7th FL, 171 Vo Thi Sau St., Ward 7, District 3, Hochiminh City, S.R.VIETNAM TEL FAX TEL FAX MYANMAR OFFICE 2nd Floor, Tokyo Enterprise Building, No.32, Pyay Road, 61/2 TEL. / FAX miles, Hlaing Township, Yangon, Myanmar SRI LANKA OFFICE No.177, 3rd Floor, Galle Road, Colombo 03, Srilanka TEL FAX NORTH AFRICA OFFICE 25th, Rd. No.10, Station Sqr., Maadi, Cairo, Arab Republic of Egypt ISTANBUL OFFICE Barbaros Mah. Seyit Ahmet Deresi Sok. Bahar Sitesi Yani, Altunizade - Uskudar Istanbul, TURKEY TEL FAX TEL FAX Overseas Subsidiaries / Affiliated Companies PT.PP-TAISEI INDONESIA CONSTRUCTION 5th Floor, Plaza PP, JL Letjend TB Simatupang, No.57, Pasar Rebo, Jakarta 13760, INDONESIA TAISEI (THAILAND) CO., LTD. 9th Floor, Thanapoom Tower, 1550 New Petchburi Road, Kwaeng Makkasan, Khet Rachtavee, Bangkok 10400, THAILAND PT. INDOTAISEI INDAH DEVELOPMENT. (Chikanpeck Office) TAISEI PHILIPPINE CONSTRUCTION INCORPORATED TAISEI CONSTRUCTION CORPORATION CSCEC-TAISEI CONSTRUCTION, LTD VINATA INTERNATIONAL J/V LTD. CO. (Vinata Head Office) Kawasan Industri Indotaisei, Kota Bukit Indah Sector IA, Block B Karihurip, Cikampek, Karawan, Jawa Barat, INDONESIA 23rd Floor, Equitable Bank Tower, Paseo de Roxas, Salcedo Village, Makati City, PHILIPPINES TEL FAX TEL (MAIN), 0325~0329 FAX TEL FAX TEL FAX Katella Avenue, Suite 200, Cypress, CA U.S.A TEL FAX th Floor, Building No.37, Foreign Culture Creativity Park, 19 TEL Chegongzhuang Xi Road, Haidian District, BEIJING, P.R.C. VINATA Workshop, Khuat Duy Tien Road, Trung Hoa, Cau Giay, Hanoi, S.R.VIETNAM TEL , FAX TAISEI CORPORATE REPORT 2014 DATA BOOK 60

62 Organization Chart (As of April 1, 2014) President Secretarial Dept. Auditing Dept. Corporate Planning Office Corporate Planning Dept. Corporate Communication Dept. Information Planning Dept. Engineering Div. Engineering Planning Dept. Groups Personnel Dept. Marketing & Sales Div.(Integrated) Business Administration Div. Safety Administration Div. Environment Div. Taisei Technology Center Nuclear Facilities Div. Marketing & Sales Promotion Div. Proposal & Solutions Div. Marketing & Sales (Building Construction) Div. I Marketing & Sales (Building Construction) Div. II Marketing & Sales (Building Construction) Div. III Medical & Welfare Business Div. Urban Development Div. Marketing & Sales (Civil Engineering)Div. Marketing & Sales (West Japan) Div. East Japan Reconstruction Div. General Affairs Dept. Legal Dept. Accounting Dept. Finance Dept. Safety Administration Dept. Environmental Administration Dept. Planning & Administration Dept. Environmental Development Dept. Environmental Planning Dept. Soil Remediation & Geo-Environmental Services Dept. Technology Planning Dept. Intellectual Property Dept. Building Engineering Research Institute Civil Engineering Research Institute Building Technology Development Dept. Civil Engineering Technology Development Dept. Nuclear Facilities Planning Dept. Nuclear Facilities Engineering Dept. I Nuclear Facilities Engineering Dept. II Nuclear Facilities Engineering Dept. III Nuclear Facilities Construction Planning Dept. Marketing & Sales Promotion Dept. Planning & Business Promotion Dept. Real Estate Information Dept. Life Cycle Care Promotion Dept. Customer Satisfaction Dept. Project Solutions Dept. Business Solutions Dept. Marketing & Sales Depts. Marketing & Sales Depts. Marketing & Sales Depts. Marketing & Sales Depts. Planning & Management Dept. Project Development Dept. I Project Development Dept. II PPP Projects Dept. Urban Redevelopment Dept. I Urban Redevelopment Dept. II Asset Management Dept. Development Business Dept. Marketing & Sales Depts. Marketing & Sales Depts. Reconstruction Dept. I Reconstruction Dept. II Architecture & Engineering Div.(Integrated) Strategic Projects Support & Technology Coordination Dept. Building Construction Div. Mechanical & Electrical Div. Design Div. Civil Engineering Div. Procurement Div. Branch International Operations Headquarters Technology Management Dept. Building Construction Dept. Technology Control Dept. Estimate Dept. Mechanical & Electrical Dept. Operations Planning Dept. Architectural Design Depts. Structural Engineering Depts. Structural Planning Dept. M&E Engineering Depts. M&E Planning Dept. Planning & Design Dept. Technical Design Dept. Quality Management Dept. International Projects Dept. Nuclear Facilities Dept. Civil Engineering Dept. Construction Engineering Dept. Machinery Dept. Design Dept. Estimate Dept. Project Analysis & Information Dept. Next Generation Project Dept. Procurement Dept. I Procurement Dept. II International Procurement Dept. Procurement Dept. III Planning & Administration Dept. Administration Dept. Safety Administration & Environmental Dept. Marketing & Sales Depts. Building Construction Dept. Design Dept. Civil Engineering Dept. Reconstruction Project Dept.* (Civil Engineering) *Tohoku Branch Administration Dept. Contracts & Claims Management Dept. Safety Administration & Environmental Dept. Marketing & Business Development Depts. Building Construction & Engineering Dept. Civil Engineering Dept. Nuclear Facilities Projects Dept. Projects Creation Dept. Sales Mindset/Skills Training Dept. Audit & Supervisory Board Member Audit & Supervisory Board Members' Dept. 61 TAISEI CORPORATE REPORT 2014 DATA BOOK

63 Taisei Group of Companies ESG Information KPI Information Financial Information Company Information Third Party Opinion This year s report looks back 140 years of progress since the founding of the TAISEI Group roughly divided into four eras, presenting the changing role expected by society in each era and the Group s efforts to meet these expectations. Every individual at each of the Group s construction sites shares a common mission to make a contribution with a high level of technical capabilities and aims to realize the value of sustainability, which is demanded in the current era. Giving life to this mission in each job is what forms TAISEI s strength as an organization. Business Plans and CSR In positioning CSR and establishing KPIs, this year s report presents an overview of TAISEI VISION 2020, the long-term vision, and positions the current Medium-Term Business Plan based on it, making the overall direction clearer. The Data Book clearly states the basic policies of the Medium-Term Business Plan, challenges for management and business risks. Presenting the connections between the Medium- Term Business Plan, ISO and the Action Guideline in the establishment of challenges and targets for CSR issues has made the positioning clearer. However, as pointed out two years ago when the current medium-term plan began, it is necessary to make it clear how the basic policies are connected to the various CSR challenges. As the basic policies of the Medium-Term Business Plan, the report presents the two key themes of 1) Fulfillment of social responsibility imposed on the construction industry, and 2) Establishment of a business structure for the creation of high-added value. Expressing the specific relationships between these is a crucial challenge for any company, and is not always simple. In the past few years, there have been conscious connections between initiatives in CSR management and business strategy and operations at the TAISEI Group, and I believe that building up in-house understanding and experience in this way is valuable. As an extension of this, the integrated report can also enhance its quality. This will establish the CSR-related plans and indicate their direction in conjunction with the formulation of the Medium-Term Business Plan. The clarification of important challenges and issues, and the positioning of KPIs are expected as part of this process. This year s report presented messages from officers with responsibility for the civil engineering, building construction and real estate development segments in addition to the Top Message. It is important for senior management in each segment to speak out. However, the same issues are observable here as those I noted above. If possible, I would hope for these sections to address not only part 2) of the basic policies of the Medium-Term Business Plan, but also how they will contribute to the intra-organizational challenges in terms of part 1) and sustainable development. The Top Message at the beginning of the report touched on these issues. Thus, I think that it would make it much easier to understand if Professor, Faculty of Commerce, Waseda University ph. D., Business Administration Kanji Tanimoto each segment explicitly presented its ideals and an outline of how it is tackling the issues, how the technical capabilities in each sector are involved in solving social issues and how they lead to the creation of corporate value (including the way the principal results of operations are presented.) The report presents the TAISEI Group not only as a traditional subcontracting business, but also modestly positions it as a business partner that makes proposals based on advanced technology, and I think that the TAISEI Group s overall message as a company would be more explicit if this was expressed in the message for each segment. CSR Procurement CSR procurement initiatives have been steadily progressing. The TAISEI Group formulated its CSR procurement policy two years ago and began implementation on it last year by running briefing sessions for not only its main suppliers across Japan but also for purchasing staff, sending out questionnaires (monitoring forms) and obtaining replies. A positive evaluation has been accorded to the explicit statement of a CSR-based procurement policy and procurement guidelines, careful explanation of why it is needed, and the steady work involved in promoting initiatives, primarily carried out by CSR staff. It recognizes challenges that involved a range of departments in the past in a distinct form and also serves as risk management. The questions of how to increase the precision of monitoring at each construction site and how to tackle issues that become more apparent are likely to be the challenges in the future. It is necessary to furnish the information that is disclosed with as much depth as possible for being evaluated as a Group overall in non-financial aspects as much as possible along with financial aspects on consolidated basis. This will result in the appreciation and realization of total corporate value. In line with an appreciation of the various issues involved in CSR management, together with expanding business, the need for establishing internal systems, collaborating with Group companies and even addressing suppliers has been understood. This is a lot of work, but it can be said that it will build up organizational strength as a Group and lead to greater responsible competitiveness. TAISEI CORPORATE REPORT 2014 DATA BOOK 62