Medium-Term Management Plan

Medium-term Management Plan “NK-Innovation 2021”

Goals of Nippon Koei Group

To play a role in society by proving solutions taking advantage of the superiority and uniqueness of Nippon Koei Group to achieve the goals of society

Medium-term Management Plan “NK-Innovation 2021”

Three years of tackling various innovations to become a truly global company

Priority investment area

Promote businesses with the integrated efforts of the NK Group by concentrating investment in the three areas of “Railway,” “Urban Development,” and “Energy” to strengthen mutual cooperation and collaboration.

Priority investment area (1) Enhancement of operating system for Railways Business
Increase sales of the railway area to no less than 1.5 times the present size by 2021

Our strengths	Abundant track record in projects and networks in emerging Asian countries Entered overseas railways early

Strategy	Develop and strengthen the production system in alliance, etc., with local companies （group companies staff about 1,700 in FYE18/6→about 3,000 in FYE21/6） Improve project management ability by further evolution of IT tools Strengthen technological abilities of regional engineers with teaching materials from the head office and the implementation of OJT →Improve operational speed and profitability in response to an increase in orders received

Strategy

Develop and strengthen the production system in alliance, etc., with local companies
（group companies staff about 1,700 in FYE18/6→about 3,000 in FYE21/6）
Improve project management ability by further evolution of IT tools
Strengthen technological abilities of regional engineers with teaching materials from the head office and the implementation of OJT
→Improve operational speed and profitability in response to an increase in orders received

Main related segments

International Consulting

Domestic Consulting

Priority Investment Area (2)　Overseas expansion of Urban & Spatial Development Business
Accelerate global expansion through strengthened cooperation between the NK Group and BDP

Our strengths	Comprehensively deal with a wide range of needs as a total consultant BDP’s architectural design technology

Strategy	Develop a cooperative structure between the NK Group and BDP local subsidiaries (Singapore, India and China) to win urban development projects in Asia and specific projects Strengthen the superiority and uniqueness in smart city development by accumulating track records of projects combining civil engineering and architecture Construct cooperative structures with each segment and R&D Center led by domestic divisions for the acceleration of global expansion utilizing domestic know-how （mainly the urban transportation area and water/transportation-related asset management area）

Strategy

Develop a cooperative structure between the NK Group and BDP local subsidiaries (Singapore, India and China) to win urban development projects in Asia and specific projects
Strengthen the superiority and uniqueness in smart city development by accumulating track records of projects combining civil engineering and architecture
Construct cooperative structures with each segment and R&D Center led by domestic divisions for the acceleration of global expansion utilizing domestic know-how （mainly the urban transportation area and water/transportation-related asset management area）

Main related segments

Urban & Spatial Development

International Consulting

Domestic Consulting

Priority Investment Area (3) Establishment of Energy Business
Establish a business model at an early stage, aiming to contribute to profit in 2021 and after

Our strengths	Know-how of electric power business (consulting, manufacturing and construction) Track record of small-scale hydraulic electric power generation business in Japan

Strategy	Engage in investment and business in Europe where liberalization of electric power is under way to accumulate the know-how for energy management in anticipation of electric power system reform (Storage battery EPC service, etc.) Construct a supply chain by securing overseas manufacturing bases of water power products Develop products by international standards (mainly equipment for transformer substations) Develop and operate distributed power sources in Japan and Asian region

Strategy

Engage in investment and business in Europe where liberalization of electric power is under way to accumulate the know-how for energy management in anticipation of electric power system reform (Storage battery EPC service, etc.)
Construct a supply chain by securing overseas manufacturing bases of water power products
Develop products by international standards (mainly equipment for transformer substations)
Develop and operate distributed power sources in Japan and Asian region

Main related segments

Energy

Power Engineering

International Consulting

Domestic Consulting

Common Measures for All Companies

Construction of one-stop marketing system

Improve customer satisfaction by providing solutions utilizing products and services in all segments
In the long-term, aim to create businesses in smart society (targeted business area) through cooperation and integration with other segments.

Investment in technology and human resources

Technology: Develop new technology utilizing AI/Big Data, while promoting the development and spread of next-generation core technologies. (Jul 2018 established Research Planning Office, Advanced R&D Center)For this, make investments of 1.5 times more than those in 3 years in the previous Medium-term Management Plan
Human Resource: Aim to increase staff in Japan and overseas by 1.4 times by maintaining and securing professional human resources through improvement of the labor environment with personnel system reform

Reinforcement of group governance

Develop a group governance system, introduce global accounting, and continue dealing with IFRS・BEPS

NK-Innovation 2021 Plan

(Billion yen)	FYE19/6 Plan	FYE20/6 Plan (IFRS)	FYE21/6 Plan (IFRS)
Orders	125	125	140
Net sales	115	125	140
Operating income	6.2	7.9	12.6

Presentation of Financial Results FYE June 30, 2018 and Medium-Term Management Plan “NK-Innovation 2021”

Management Plan

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