ANNUAL REPORT 2016 CSR Promotion Section, Corporate Communication Department, Corporate Planning Ofﬁce TAISEI 2016 REPORT ANNUAL

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［ Inquiries ］ TAISEI CORPORATION ANNUAL REPORT 2016 CSR Promotion Section, Corporate Communication Department, Corporate Planning Ofﬁce TAISEI 2016 REPORT ANNUAL

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005_0356501372808.indd 1-3 2016/08/10 13:34:06 To Create a Vibrant Environment for All Members of Society In 1990, the Taisei Group formulated the Group philosophy of “To Create a Vibrant Environment for All Members of Society.” This is a philosophy to create safe, secure, and attractive spaces and high value in harmony with the nature, and

strive to build a global society filled with dreams and hopes for the next generation. Based on this Group Snapshot TAISEI philosophy, at the Taisei Group, we will grow hand in hand with society in a sustained manner, while attaching Our Structure of Values and Policies importance to dialogue with stakeholders. Taisei Group Philosophy Management Strategy

Taisei Spirit

Overall Principles of Overall Management Business Overview Conduct Perspective CSR

The Shareholders/ Clients/ Suppliers Environment/ Investors End-Users Employees Future Generations Governance Report

Photo: Masaaki Aihara

Photo: Female engineers at Taisei Corporation Chiba Branch (Gaikan Expressway Tajiri construction site) Social Report who were honored with the Kensetsu-komachi Empowerment Award of Excellence Contents Editorial Policy This report (published on August 31, 2016) is Scope of Reporting Assessment by 3 TAISEI Snapshot 23 Business Overview 82 Financial and Corporate Data published to enable stakeholders to obtain Reporting period: Fr om April 1, 2015 to March 31, 2016 in the main External Agency 3 About the Taisei Group 23 Progress of Medium-Term 85 11-Year Financial and Non- an overall view of the Taisei Group’s corporate Target organizations: Taisei Corporation and consolidated ● Incorporated into the subsidiaries world’s leading SRI indices 5 History of the Taisei Group Business Plan Financial Summary value creation, including corporate activities (As of July 2016) Scope of result data: ● Finance: Taisei Corporation and 25 Civil Engineering 87 Explanation and Analysis of that conform to the Taisei Group Philosophy and the Group Action Guidelines, financial consolidated subsidiaries 7 Management Strategy Business Results 29 Building Construction reporting, and management issues. ● ESG: Taisei Corporation, key group

91 Medium-Term Company Environmental Report 33 companies, and overseas companies 7 Interview with the President Real Estate Development Management Strategy and This report discloses our various CSR activities for fiscal 2015, while securing Reference Guidelines 12 Message from External Board 36 Group Companies Issues to Be Dealt with objectivity and transparency by drawing on ● Environmental Reporting Guidelines (2012 Edition) Members 39 Topics 92 Risk Information a variety of reporting-related guidelines. The ● GRI “Sustainability Reporting Guidelines 4th Edition” Applying Group Companies’ Knowhow and Total 13 Corporate Value of the Taisei report outlines the Group Action Guidelines ● ISO 26000: 2010 (International Organization for Standardization) Capabilities towards Resolving the Social Issue of Areas 93 Consolidated Financial Group with a High Density of Old Timber Buildings Statements and basic principles for actions governing those ● Integrated Reporting Framework (International Integrated Reporting Council, or “IIRC”) 17 OUR STORY 121 Independent Auditor’s Report activities, as well as how these guidelines and Aim to Penetrate Market-Oriented ZEB ❶ 40 CSR principles are promoted; highlights the results Third Party Assurance and Opinions Taisei Corporation is a member of ❷Decontamination Project Progressing Steadily 122 Third Party Opinion the FTSE4Good Index, an equity of various measures; and, presents an analysis ● Third Party Assurance Report: Environmental information 41 Taisei Group of Companies CSR index series that is designed to 21 OUR SOLUTION 123 Corporate Profile of key performance indicators (KPI). Moreover, assurance by Ernst & Young Sustainability Co., Ltd. facilitate investment in companies Research and Development Activities and Corporate DataFinancial 46 detailed information not presented in this report ● Third Party Opinion: Opinion of Mr. Kanji Tanimoto, Ph. D., that meet globally recognized ISO 26000 and CSR Activity Report 125 Overseas Network is presented in the Taisei Corporation website. corporate responsibility standards. 47 ESG Business Administration and Professor, Faculty of Commerce, http://www.taisei.co.jp/english/index.html Waseda University on overall reports 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 This report has been produced in an environmentally friendly manner. It is printed on lightweight paper to reduce possibility that the results of the actual target values, etc., could be different from the stated future estimates, due to changes in various factors. the use of timber resources and transportation energy, using vegetable oil-based ink.

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091_0356501372808.indd005_0356501372808.indd すべてのページ4-6 2016/08/102016/08/10 13:24:55 13:34:06 To Create a Vibrant Environment for All Members of Society In 1990, the Taisei Group formulated the Group philosophy of “To Create a Vibrant Environment for All Members of Society.” This is a philosophy to create safe, secure, and attractive spaces and high value in harmony with the nature, and

Taisei Spirit

Overall Principles of Overall Management Business Overview Conduct Perspective CSR

The Shareholders/ Clients/ Suppliers Environment/ Investors End-Users Employees Future Generations Governance Report

Photo: Masaaki Aihara

91 Medium-Term Company Environmental Report 33 companies, and overseas companies 7 Interview with the President Real Estate Development Management Strategy and This report discloses our various CSR activities for fiscal 2015, while securing Reference Guidelines 12 Message from External Board 36 Group Companies Issues to Be Dealt with objectivity and transparency by drawing on ● Environmental Reporting Guidelines (2012 Edition) Members 39 Topics 92 Risk Information a variety of reporting-related guidelines. The ● GRI “Sustainability Reporting Guidelines 4th Edition” Applying Group Companies’ Knowhow and Total 13 Corporate Value of the Taisei report outlines the Group Action Guidelines ● ISO 26000: 2010 (International Organization for Standardization) Capabilities towards Resolving the Social Issue of Areas 93 Consolidated Financial Group with a High Density of Old Timber Buildings Statements and basic principles for actions governing those ● Integrated Reporting Framework (International Integrated Reporting Council, or “IIRC”) 17 OUR STORY 121 Independent Auditor’s Report activities, as well as how these guidelines and Aim to Penetrate Market-Oriented ZEB ❶ 40 CSR principles are promoted; highlights the results Third Party Assurance and Opinions Taisei Corporation is a member of ❷Decontamination Project Progressing Steadily 122 Third Party Opinion the FTSE4Good Index, an equity of various measures; and, presents an analysis ● Third Party Assurance Report: Environmental information 41 Taisei Group of Companies CSR index series that is designed to 21 OUR SOLUTION 123 Corporate Profile of key performance indicators (KPI). Moreover, assurance by Ernst & Young Sustainability Co., Ltd. facilitate investment in companies Research and Development Activities and Corporate DataFinancial 46 detailed information not presented in this report ● Third Party Opinion: Opinion of Mr. Kanji Tanimoto, Ph. D., that meet globally recognized ISO 26000 and CSR Activity Report 125 Overseas Network is presented in the Taisei Corporation website. corporate responsibility standards. 47 ESG Business Administration and Professor, Faculty of Commerce, http://www.taisei.co.jp/english/index.html Waseda University on overall reports 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.

1 TAISEI ANNUAL REPORT 2016 TAISEITAISEI CORPORATE ANNUAL REPORT 2016 2

091_0356501372808.indd すべてのページ 010_0356501372808.indd 2 2016/08/10 13:24:5513:26:32 010_0356501372808.indd 3 3 TAISEI Snapshot TAISEI ANNUAL REPORT2016 Non-Financial Highlights About theTaiseiGroup Return onequity(ROE) Return Consolidated FinancialHighlights * CDP: Net assets to ownersofparent Net incomeattributable Operating income Net sales Orders received Taisei GroupFY2015Data ● Environmental Communication Awards. Environmental Environment Minister’s Award atthe Company wasalsohonoredwiththe and relatedinformationdisclosure. The recognition ofitsresponsestoclimatechange for sixyearsconsecutivelyfrom2010in company withexcellentinformationdisclosure The CDPselected Taisei Corporationasa For more information,pleaserefer to“11-Year FinancialandNon-FinancialSummary”onpage85. For the Interest-Bearing Debt Orders Received (Billions ofYen) (Billions ofYen) emissions, analyzesandassessestheresponses before disclosingtheresults to investors. A UK-headquartered non-profit organization,whichsendsquestionnaires tothe world’s theirenvironmental leadingcompaniesconcerning strategiesandgreenhouse gas 1,000 1,500 2,000 150 300 450 600 500 . 0 0 ...... Selected bytheCDP* ...... 6

1,254.0 472.0 002011 2010 2011 2010 ...... th ...... ConsecutiveYear 1,379.5 419.2 ¥1,545.8 billion ¥1,671.0 billion ...... ¥521.2 billion ¥117.4 billion ¥77.0 billion Down 5.4%YoY 1,404.4 Down 6.8%YoY 379.0 15.3% 2012 2012 p.73 1,645.8 316.4 2013 2013 Non-Japanese Female Male Japanese Number ofemployees 1,765.7 273.2 �� ¥1,671.0 2014 2014 the thirdconsecutiveyear. ranking ofPatentResultCo., Ltd. in2015for Patent General ContractorIndustry Asset Size Taisei Corporationwonthetopspotin With itsindividualpatentsattractingattention, �� ThePatentResultRanked ¥254.6 �� fortheThir 1,671.0 254.6 2015 2015 �� billion billion (FY) (FY) �� d ConsecutiveYear 12,970 11,710 13,748 2,038 778 Debt toEquityRatio Net Sales 0.5 1.0 1.5 2.0 (Times) (Billions ofYen) 1,000 1,500 2,000 0 500 1 0 p.63 1,218.1 002011 2010 st 0021 2012 2011 2010 1.5 63.0% ¥1,015.4 billion Construction Building 7.9% ¥127.6 billion Real EstateDevelopment 1,323.5 1.3 Down 1.7%YoY 100 awardandtheEmpowermentGrandPrize. honored withtheDiversityManagementSelection centric workplace. Taisei Corporationin2015was organization generallythoughttobeamale- Use ofFemalesinaconstructioncompany In 2007, weestablishedtheOfficetoPromote Management Selection The Diversity and theEmpowermentGrandPrize 1,416.4 2012 1.0 0.0 pointsYoY ¥1,545.8 by Segment Net Sales 1,533.4 (FY 2015) 2013 billion 2013 0.8 1,573.2 ¥1,545.8 2014 2014 0.5 100 0.5 1,545.8 ¥455.7 billion 2015 2015 0.5 ¥14.8 billion Engineering times p.67 billion Others 28.2% (FY) (FY) 0.9% Civil 2016/08/10 13:26:32 Non-Financial Highlights Non-Financial Highlights

Number of Employees (Consolidated) Frequency Rates* (Non-Consolidated) Total CO2 Emissions (Non-Consolidated)

3 (Persons) （10 t-CO2）

18,000 1.2 300 Snapshot TAISEI 0.97 13,599 13,701 13,748 250 0.84 209 226 12,000 0.8 200 0.56

6,000 0.4 100

0 0 0 2013 2014 2015 (FY) 2013 2014 2015 (FY) 2013 2014 2015 (FY)

*The targets of frequency rates are set on the basis of all Management Strategy accidents entailing days off work, irrespective of the number of days.

Consolidated Financial Highlights

Operating Income Net Income Attributable to Owners of Parent Business Overview

(Billions of Yen) (Billions of Yen) Up 66.8% YoY ¥117.4 billion Up 101.8% YoY ¥77.0 billion 160 100 77.0 120 117.4 75 CSR 80 70.4 50 38.1 53.7 32.0 40 36.2 36.4 35.6 25 20.0 10.8 1.1 0 0 2010 2011 2012 2013 2014 2015 (FY) 2010 2011 2012 2013 2014 2015 (FY)

Payout Ratio ROE Up 0.4 points YoY 24.3% Up 6.5 points YoY 15.3% (%) (%) Governance Report 600 20.0 482.3 15.3 450 15.0 8.8 50 10.0 8.9 6.3 52.2 28.4 24.3 21.3 23.9 3.8 25 5.0 Social Report 0.4 0 0 2010 2011 2012 2013 2014 2015 (FY) 2010 2011 2012 2013 2014 2015 (FY)

● For more information, please refer to “11-Year Financial and Non-Financial Summary” on page 85.

Taisei Group FY 2015 Data Environmental Report Real Estate Development Others Real Estate Development Others ¥9.4 billion ¥0.9 billion 2,012 147 8.0% 0.8% 14.6% 1.1% Operating Number of Income Employees ● Net sales and operating by Segment by Segment income include intersegment transaction. Therefore, the sum of the ¥117.4 13,748 value of individual billion segments may differ from (FY 2015) (FY 2015) Building Civil Building Civil figures shown at the and Corporate DataFinancial Construction Engineering Construction Engineering center of each pie graph. ¥56.4 billion ¥50.7 billion 7,794 3,795 Composition percentages are figures calculated from 48.0% 43.2% 56.7% 27.6% simple sum totals .

TAISEI ANNUAL REPORT 2016 4

010_0356501372808.indd 4 2016/08/10 13:26:33 History of the Taisei Group

History of Overseas Expansion

TAISEI Snapshot TAISEI 1962-1989 1990-1999

1 4

2 3 5 6 1962 Hotel Indonesia 1 1990 Delta IV Gas Turbine Power Station, Nigeria 5 1985 Beijing Shangri-La Hotel, China 1997 Subaru Telescope, Hawaii, U.S.A. UBN Complex, Malaysia 3 New Kuala Lumpur International Airport, 1987 Singapore Mass Rapid Transit, Singapore Malaysia 4 The modern form and functional design was Cirata Hydroelectric Power Station, 1988 carried out by the late Japanese architect, Indonesia 2 Kisho Kurokawa. The Company constructed This was the largest national project in the main terminal. Indonesia at the time. It is still the largest source Kao Ping Hsi Cable Stay Bridge, Taiwan of electric power on Java Island. 1999 R.O.C. 6

2,351.4 Financial Results (after Stock Listing on the Over-the-Counter Market) 2,279.5 135.9 Net Sales (Billions of Yen) 2,028.6 1,998.2 1,982.1 ■ 1,907.3 Operating Income (Billions of Yen) 1,868.1 1,830.5 1,873.3 1,772.9 1,750.3 1,681.3 1,707.9 1,743.9 1,711.7 1,673.8 1,644.6 1,598.5 1,641.1 127.7 1,533.4 1,573.2 117.4117.4 109.0 86.5 1,441.9 1,416.4 106.8 1,323.5 1,218.1 1,545.8 66.7 55.5 59.8 57.6 53.7 49.4 55.1 48.8 46.9 48.9 70.4 41.4 43.6 35.6 35.6 36.2 36.4 (0.6) Founded in 1873 35.0 14.9 TAISEI VISION 2020

1956 1989 19901991 1992 1993 1994 1995 1996 1997 1998 1999 20002001 2002 2003 2004 2005 2006 2007 2008 2009 20102011 2012 2013 2014 2015 （FY） History of Management

1873 1956 1962 Kihachiro Okura Established Okura Gumi Shokai, Became the First Construction Company to List Completed Construction of Hotel Indonesia the First Japanese Trading Company, Which Had Its Shares on the Tokyo Stock Exchange This was our first post-war overseas project. Its Headquarters in Ginza, Tokyo, Japan Over-the-Counter Market At the time this was the only international In addition to pursuing direct import In 1956, Taisei Corporation became the first class hotel in Indonesia, so 30 years later in businesses, the founder, Kihachiro Okura, company to list shares on the exchange, a 1993 it was declared to be a historical asset of engaged in the construction and operation of step taken because funding posed a challenge Jakarta City. buildings, undertaking a series of pioneering with the increasing scale of construction work projects. In 1946, the Company changed and mechanization, at a time when orders its corporate name to Taisei Corporation, were growing sharply due to the nation's post- becoming a non-family-controlled company, a war economic rehabilitation. rarity for construction companies at the time.

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010_0356501372808.indd 5 2016/08/10 13:26:34 2000-2009 2010-2015 TAISEI Snapshot TAISEI

7 9 12 Management Strategy

8 10 11 13 2003 Indus Highway Project (N-55), Pakistan 2010 Almas Tower, Dubai 11 Kohat Tunnel and Access Roads, Pakistan 7 2013 Bosphorus Strait Crossing Railway Tunnel, 2006 Bangkok Ring Road Cable-stayed Bridge, Turkey 12

8 Business Overview Thailand New Doha International Airport Terminal 2008 Jimah Power Station, Malaysia 9 Building, Qatar 13 2009 Djibouti Palace Kempinski Hotel 10 This is an international hub airport constructed This remarkable project was the design and to the world's highest standards in Qatar. This project was successfully completed by

construction of a high-class five-star hotel in just CSR nine months. bringing together our know how cultivated in the construction of many airports. 2015 No.2 Terminal Building Noi Bai International Airport, Vietnam

2,351.4 2,279.5

135.9 Governance Report Net Sales (Billions of Yen) 2,028.6 1,998.2 1,982.1 ■ 1,907.3 Operating Income (Billions of Yen) 1,868.1 1,830.5 1,873.3 1,772.9 1,750.3 1,681.3 1,707.9 1,743.9 1,711.7 1,673.8 1,644.6 1,598.5 1,641.1 127.7 1,533.4 1,573.2 117.4 109.0 86.5 1,441.9 1,416.4 106.8 1,323.5 1,218.1 1,545.8 66.7 55.5 59.8 57.6 53.7 Social Report 49.4 55.1 48.8 46.9 48.9 70.4 41.4 43.6 35.6 35.6 36.2 36.4 (0.6) 35.0 14.9 TAISEI VISION 2020

1956 1989 19901991 1992 1993 1994 1995 1996 1997 1998 1999 20002001 2002 2003 2004 2005 2006 2007 2008 2009 20102011 2012 2013 2014 2015 （FY） Environmental Report

1990 2010 Established a New Management Philosophy, Reestablished a Philosophy Structure for the Action Guidelines for the Taisei Group, and Group and Formulated TAISEI VISION 2020 Symbol Mark We reestablished a philosophy structure for the We established the new Management Group that was clear-cut, easy-to-understand, Philosophy of "To Create a Vibrant and sharable, allowing Taisei Group directors Environment for All Members of Society." and employees to have a sense of group unity. To turn a sustainable society into reality, we Moreover, the Company formulated a long- stepped up environmental activities. term vision for sustainable growth. Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 6

010_0356501372808.indd 6 2016/08/10 13:26:35 011_0356501372808.indd 7 7 Management Strategy TAISEI ANNUAL REPORT2016 Interview withthePresident through debrisremoval, road restoration work,and due tothefactthatwesupported disastervictims’lives recreate avibrantenvironment forallmembersofsociety, of theconstructionindustry'srole. We felttheneedto society asawhole.Theearthquakerenewed arecognition those valuesinthespotlightrelation tocustomersand intended toputemployees’valuesthetest. customers andsocietyasawhole,thisgroup philosophyis one generationtoanother. shared valuesandemployeescarryonthosefrom Group Philosophyisdesignedtohaveallemployeesretain to provide as“Something Important” tosociety. TheTaisei Meanwhile, wemustalwayskeepintactvaluesaboutwhat itself toadaptinresponse toachanging society. For anenterprisetosurvive,itmustcontinuechange A Q It wasthetragicGreat EastJapanEarthquakethatput In additiontodemonstratingourvaluesconcerning 1 1 Hand inwithSociety Seeking toGrowinaSustainedManner towards ResolvingSocialChallenges,while Taking theInitiativetoPursueInnovation employees, and the Taisei Group Philosophy employees, andtheTaiseiGroupPhilosophy of differentgenerations. must bepassedonbyandtoemployees reality asasharedmissionamong employees mustturnthisaspirationinto Through theconstructionbusiness, environment peopleaspiretoachieve. A “VibrantEnvironment”representsan of Society”? a VibrantEnvironmentforAllMembers the TaiseiGroupPhilosophyof“ToCreate In yourview,whatshouldbedoneunder

■ beyond theboundariesoferasandregions. have establishedwillcontinuetobeuniversallyvaluable future. Iamconvincedthat theTaisei Group Philosophywe pursue, evenaftertheirlivesbecomemore affluent inthe that peopleinJapanandabroad always continueto and society. Environment,”a “Vibrant whilecontributingtocustomers into onewhere theycanworkwith asenseoffulfillmentas altitude. relocation ofcoastalresidential zonestoareas atahigher Our Structure ofValues andPolicies Group ActionGuidelines A “Vibrant Environment”A “Vibrant willremain anenvironment theirworkplace In addition,Icallonemployeestoturn “Overall Principlesof Individual Policies Conduct” Taisei Group Medium-Term Transparent Active and Taisei Group Philosophy Culture “Overall Management all membersofsociety TAISEI VISION2020 To create avibrant environment for Business Plan Perspective” Taisei Spirit Creation Value of Tradition Evolution 2016/08/12 20:18:34 TAISEI Snapshot TAISEI Management Strategy

Yoshiyuki Murata President and Chief Executive Officer

(Chairman of the Board) Business Overview CSR Could you describe the Taisei Spirit, our competitive advantage. These actions represent the spirit Q2 comprising “Active and Transparent generated by the platform of “Value Creation,” “Evolution of Culture,” “Value Creation,” and “Evolution Tradition,” and “Active and Transparent Culture.” of Tradition,” that is shared by all The construction industry, albeit equipped with values directors and employees? and strengths developed through its history as a business that has existed since ancient times, has undeniably failed Idea generation based on an “Active and A2 Transparent Culture” leads to “Value to break out of undesirable conventional practices. Governance Report Creation” supported by the newest The Taisei Spirit comprising an “Active and Transparent technologies, and the value is passed on Culture,” “Value Creation,” and “Evolution of Tradition” is in an “Evolution of Tradition.” I believe also a cautionary reminder and is designed to prevent one this three-fold spirit will give strength to from easily becoming content with assets accumulated in the Company, while we pursue innovation the past by our predecessors.

towards resolving social challenges as a The Urban-style Zero Energy Building (ZEB), on which Social Report construction company. the Company has been focusing in recent years, is an initiative incorporating all three components of the Taisei The “Active and Transparent Culture,” representing the Spirit. ZEB is an absolute energy-saving building that Company’s corporate ethos, is its best attribute. While an achieves a net balance of annual energy consumption of active and transparent culture sounds attractive, a zero by reducing energy consumption to the minimum supervisor must essentially create an environment that extent possible, using various energy-saving technologies allows one to express an opinion easily, and it is a

for architecture in urban areas that are densely populated Environmental Report prerequisite for directors and employees to freely exchange with buildings, and using renewable energy. We set up the their opinions and have detailed discussions in a truly ZEB Demonstration Building within the Taisei Technology active manner. On the other hand, each subordinate must Center in Yokohama before performing demonstrations be serious and earnest in executing duties with a positive and experiments for a period of one year. This resulted in mindset. The resultant self-confidence and pride enables the Company becoming Japan’s first-ever company to subordinates to empower themselves. achieve a net zero balance of annual energy consumption Our mission as an enterprise is to create new value on on a single building basis in June 2015. the back of the synergies of the “Individual Strengths” thus and Corporate DataFinancial The initiative to achieve ZEB in an urban area, based developed, and evolve it, while having it passed on as a on the concept of creating energy equivalent to the corporate tradition, as a set of actions that also constitute

TAISEI ANNUAL REPORT 2016 8

011_0356501372808.indd 8 2016/08/12 20:18:34 011_0356501372808.indd 9 9 Management Strategy TAISEI ANNUAL REPORT2016 construction industry, faces more challengesthatneedto I thinkTaisei Corporation,whichisinapositiontoleadthe based onthethree aspectsoftheTaisei Spirit. So, Urban-styleZEBisastoryofresolving socialchallenges, form ofvaluethatispassedoninan“EvolutionTradition.” lead ideasgeneratedtowards “Value Creation,” whichisa variety ofconceptualapproaches. Thenewesttechnologies Transparent” manner, contributingknowhowandcombininga departments expressing opinionsina“Activeand amount consumed,wasformulatedbyvarious Interview withthePresident ■ A Q Basic Policy[Medium-Term BusinessPlan(2015-2017)] ● ● ● ● 3 3 appraisal fromallstakeholders To obtainahighlevelofcredibility and added businessstructure To promote transformationtoahighvalue- continuous manner To pursuegrowth inasteadyand through qualityandsafety assurances To obtainhighcustomer satisfaction new financialtargets. construction,” therebyworkingtoachieve cultivation ofourprimarybusiness based chieflyontheconceptof“Deep continue totacklebusinesschallenges financial targetsignificantlyupward.Wewill revised theMedium-TermBusinessPlan construction market.Therefore,werecently thanks toanimprovingdomestic achieved the financial target of its final year the Medium-TermBusinessPlan,we construction business.Inthefirstyearof by revisitingfundamentalaspectsofthe satisfaction intermsofqualityandservice gives topprioritytoearninghighcustomer “Cultivation” representsanattitudethat progress ofthat“cultivation”? of construction”?Whatisthecurrent “Deep cultivationofourprimarybusiness Business Planbasicpolicybasedonthe Could youtellusabouttheMedium-Term Deep CultivationofOurPrimaryBusiness ofConstruction Aims ❽ ❼ ❻ ❹ ❸ ❷ ❺ ❶ Developing thebusinessfoundation Improving thetotalstrength of theTaisei Group Developing thestructure forhealthygrowth ofoverseasprojects Strengthening domesticconstructionprojects Establishing next-generationbusinessmodelsinthefocusedfields Promoting thedevelopmentofnext-generationtechnologies Actively contributingtoimproving infrastructures Undertaking strategicapproaches regarding focusedprojects sophisticated technologiesandstrong procurement and supersizedredevelopment projects thatrequire growing numberofinfrastructure developmentprograms improved supply-demand balance. There hasbeena enjoying generallyfavorableconditions,supportedbyan record profits. Theconstructionindustryhas recently been achieved thefinancialtargetoffinalyear, posting our primarybusinessofconstruction.” principle basedontheconceptof“Deepcultivation Such businessexpansionisalsoguidedmainlybya companies andallianceswithinotherindustries. by steppingupcollaborationamongitsdivisionsandgroup a widerrangeofnewconstructionbusinessopportunities business towards 2020. at atimewhentheCompanyislikelytoenjoyhighlevelof to award thatcontract,withrespect toqualityandservice, awarded acontracttoTaisei Corporation,andbeingeager company thatmakesacustomerhappyabouthaving of construction,”withtheaspirationtobeaconstruction the conceptof“Deepcultivationourprimarybusiness appropriate levelsofqualityandsafety. and foremost istoperformtheessentialtaskofsecuring industry. Whatisrequired ofaconstructioncompanyfirst increasing lossofpublicconfidenceintheconstruction utilization andlabor-saving activities. companies inotherindustriestermsofICT-based robot much room fordevelopingtechnologiesandittrails be addressed. Forinstance,theCompanyseeminglyhas In thefirstyearofMedium-Term BusinessPlan,we It nowappearsthatTaisei Corporationwillpotentiallytap Based onthisunderstanding,ourbasicpolicydraws Piling workdatafalsificationincidentshave resulted inan ManagementGoals 2016/08/12 20:18:34 011_0356501372808.indd 10 contracts foraged-infrastructure renewal projects. Expressway, wemustessentiallyendeavortoacquire large infrastructure buildingprojects suchasTokyo Gaikan sized projects peakout. contracts formedium-sizedprojects after thosesuper- what isimportanthowbesttoacquire andmanage sized projects are currently cominginoneafteranother, potentially decrease from thecurrent level.Whilesuper- market from 2020onwards, butoverallbusinesscould conditions, aphenomenonwhichwouldunderpinthe projects isnowbeingdelayed toavoidthecurrent busy 2020 OlympicandParalympicGamesisstilluncertain. The outlookfortheconstructionmarketafterTokyo to longterm. and byachievingstronger competitivenessinthemedium New NationalStadiumandtheLinearChuoShinkansen, demand, suchasforstate-levelprojects includingthe targets byappropriately cateringtostrong current Corporation willdoitsutmosttoachievethenewfinancial capabilities uniquetosupergeneralcontractors.Taisei ■ A Q Image of“BusinessStructure forCreation ofHigherAddedValue” In thecivilengineeringsegment,aftercompletionof The awarding ofcontracts forsomeconstruction 4 4 investment subsiding. the currentlystrongconstruction focused categoriesinpreparationfor capturing constructiondemandin We willstrivetogrowfurtherby 2020 OlympicandParalympicGames? the constructionmarketafterTokyo Could youtellusaboutyouroutlookfor

Low Market growth High Image ofconventionalbusinessstructure Low construction Overseas projects construction Domestic projects Profitability Development projects High whole, whichmustbesolvedasserioussocialissues. can applyitsstrength; and3)the“Energy”area asa Southeast Asiaandotherregions where theCompany “Urban developmentfield”;2)“Overseasbusiness”in Power field,”“Environment field,”“Engineeringand Plan, namely, “Renewalandreplacement field,”“Nuclear in: 1)fivetargetfieldsundertheMedium-Term Business added valuebusinessstructure through variousprojects this way, wewillstrivetogrow furtherbypursuingahigh working environment. reform workingpracticesusing ICT, andimprove the develop newtechnologiesandconstructionmethods, productivity. Inamovetoaddress thissituation,wewill of securinganddevelopingworkforces andimproving construction companiesfacetheveryimportantchallenges low birthrateandagingpopulationissuescontinue, Pondering thefuture, whilethepopulation decreases, and A Q

Low Market growth High Based ontheassumptionofdemandweakeningin 5 5 Low of coreDeep businesses, cultivation Image ofbusinessstructure for Creationcore businesses,of higher creation ofhigheradded value sustained manner. hand inwithsocietyanda future, therebystrivingtogrowfurther innovation, developingtheindustry’s is takingtheinitiativetopursue the constructionindustry.TheCompany population isalsoamajorchallengefor Japan’s decliningworking-age with society? growth, whatrelationsshouldithave Taisei Corporationachievessustainable While constructionindustryleader added value construction Domestic Profitability projects construction Overseas projects Environment Nuclear power Renewal work Engineering TAISEI ANNUAL REPORT2016 Development projects Construction business -related

High

Governance

development Technological Technological 2016/08/12 20:18:34 10

Financial and Corporate Data Environmental Report Social Report Governance Report CSR Business Overview Management Strategy TAISEI Snapshot 011_0356501372808.indd 11 11 Management Strategy TAISEI ANNUAL REPORT2016 society inasustainedmanner. future, whileseekingtogrow furtherhandinwith Taisei Corporationwillexplore theconstructionindustry's power tomakeproducts inthefuture. proposed innovationsassoonpossible,retaining the In myopinion,industryplayersmustlaunchthese worker development,andworkingpracticetransformation. innovation activities,engineerandskilledconstruction leading research anddevelopmenttechnological to changethisindustrystructure withgeneralcontractors been partlylefttotheirdiscretion. Ibelieveitistimeforus developing workforces andimproving skillshavesofar reliant onspecializedcontractorsequippedwithskills, Interview withthePresident requirements with increased rigor, wewillbolstermeasures toprevent arecurrence. conducted sufficiently strictly. So,from nowon,inadditiontoensuring thattheentire Taisei Group, including Taisei Rotec, obeyscompliance employees. Regarding arecent caseofTaisei Rotecbeingchargedwithbid-rigging,wedeeplyregret thatthetrainingandguidancefailedtobe (Taisei Rotec),akeygroup company, hasalsobeendevelopingasystem toprevent bid-rigging,whileproviding relevant trainingandguidanceto To date, theCompanyhasbeensupervisinggroup companiesunderapolicythatensures bid-riggingisprevented. TAISEI ROTECCORPORATION Bid-Rigging byTAISEI ROTECCORPORATION By takingtheinitiativefortheseproposed innovations, Although constructioncompanieshavebeenheavily of all stakeholders. resolving socialchallenges,thereby meetingtheexpectations efforts tocreate valuethrough innovationsaimedat Members ofSociety.” TheCompanywillmaketheutmost philosophy of“To Create Environment aVibrant forAll continue todeliveruniversalvalueundertheGroup specialist experienceanduniqueviewpoints. directors auditorsbasedontheir external andexternal business decision-makingbyleveragingtheopinionsof appropriateness, andtransparency fairness, in our Regarding wesecure corporategovernance, understanding abouttherulesandobeyingthemstrictly. management toindividualemployeessharingan established withtheentire organization from top Forcompliance,clearruleshavebeen governance. compliance requirements andenhancecorporate of thosemanystakeholders. services, wewillbeunabletoobtaintheconfidence the essentialtaskofdeliveringhigh-qualityworkand control asaconstructioncompany. Ifwefailtocarryout aspects ofbusiness,nottomentionperformperfectquality sincerely engageincorporateactivitiesallpossible a positioninwhichitisrequired bysocietyasawholeto the Company. Atthesametime,Taisei Corporationisin employees, andotherentitieshavingdirect interests in and investors,ourcustomers,businesspartners, an extremely widerangeofentities,includingshareholders infrastructure are madepossiblethankstosupportfrom Our corporateactivitiesforconstructingsocial A Q In response tosocialchange, Taisei Corporationwill To solidifytheirconfidence,werigorously obey 6 6 Environment forAllMembersofSociety.” philosophy of“ToCreateaVibrant pursue activitiesundertheGroup the confidenceofstakeholders,wewill To meettheirexpectationswhilevaluing stakeholders? Lastly, mayIhaveyourmessageto 2016/08/12 20:18:37 011_0356501372808.indd 12 Message fromExternalBoardMembers Fumio Sudo Member) (External Members oftheBoard Sustained Manner All Stakeholders,andContributingtoCreatingValueina Overseeing BusinessAdministrationfromtheStandpointof Toru Tsuji Member) (External Members oftheBoard a TopManagerofanIntegratedTradingCompany Stepping upRiskManagementfromthePerspectiveof sustained mannerwhileworkingcloselywithmanagement. solidifying theCompany’s riskmanagement. experience asatopmanagerofanintegratedtradingcompany, thereby further wish tooffer advicefrom apracticalandmulti-facetedperspectivebasedon manage themeffectively andflexibly, insteadofmerely seekingtoavoidrisks.I growth inthefuture, theCompanymustappropriately assessrisksand that differ from thoseindomesticbusinessemerging.To achievefurther Company’s medium-tolong-termgrowth. outbound infrastructure exports,inmyview, isanintegralelementforthe expand businessopportunitiesforJapanesecompanies.Addressing such exports asacomponentofitsgrowth strategy, amovethatislikelytohelp stipulatedoutboundinfrastructurecountries, theJapanesegovernment In addition,Iwishtobearthefollowingpointsinmind. speak, abrake)from thestandpointsofashareholder andotherstakeholders. perspective andprovide recommendations onrestraint (applicationof,soto advice onthesustainedgrowth ofTaisei Corporationfrom amacroeconomic MembersoftheBoardI understandthatexternal are inapositiontooffer of commitmenttohelpingTaisei Corporation’s sustainableValue Creation. stakeholders, includingshareholders, andperformdutieswith astrong sense faithfully overseeandmonitorexecutiveofficers from thestandpointofall memberoftheboard,business administration.Inmycapacityasanexternal I board members’roles andresponsibilities are importantfortheCompany’s Company’s personnelisbecomingincreasingly aware ofthefactthatexternal various businessrisksinadvancebefore addressing themappropriately. left aparticularimpression on mewasthefactthatboard membersconsidered improvements toshareholder returnsandannualemployeecompensation.What butalsothedesirable distributionofprofit, not onlyearnings involving andfurtherupgrading theBoard ofDirectors'corporate governance functions. based onmyownknowledgeandexperience,includingenhancing advice andrecommendations ontheCompany'sbusinessadministration member oftheboard,with thatpassion,asanexternal Ihavebeenproviding passion ofthemanagement'sattitudeinpursuingthoseefforts. Insympathy profitability andfinancialpositionunderitsstatedgoals.Iwasstruckbythe In recent years,Taisei Corporationhasbeenendeavoringtoimprove its I willcontinuetocontributeraisingtheCompany’s corporatevalueina The overseasbusinesspotentiallyfacesnewchallenges,withvariousrisks In 2013,expectingenormousinfrastructure demandinemergingmarket With the Corporate Governance BasicPolicyestablishedinfiscal2015,the theCorporateGovernance With At theCompany’s Board ofDirectors meetings,membersactivelydiscuss TAISEI ANNUAL REPORT2016 2016/08/12 20:18:37 12

Financial and Corporate Data Environmental Report Social Report Governance Report CSR Business Overview Management Strategy TAISEI Snapshot Corporate Value of the Taisei Group Value Creation Model of the Taisei Group The major objective of the Taisei Group’s corporate activities is to contribute to advances in society in a sustained manner by developing a safe and comfortable living environment under the Group philosophy of

Management Strategy “To Create a Vibrant Environment for All Members of Society.” With the aim of creating new value to be passed on to the next generation, we faithfully seek to resolve social challenges and implement a new business model featuring sustainability and growth potential.

❶ The Taisei Group’s Mission to Realize a “Sustainable and Better World.”

“Sustainable and Better World” ● Environment for healthy living Various ● Sustainable energy *1 global-level ● Society offering stable employment social challenges ● Disaster-resistant infrastructure Planet ● Co-existence and co-prosperity with People Global the nature, etc. Japan’s low environment birth rate issues Prosperity Peace Partnership and aging society

Design and engineering Issue of Issue of Japan’s decreasing A team of creative global energy Ro population bu depletion experts offers st co an optimal plan rp or at e go ve rn a n Work-Site c Strategy, e planning, and Capabilities development n Technologies a Three Develop l P Devise strategies and

next-generation Promote diversity s plans by leveraging Strengths s engineers e Work n unique knowhow We Possess i s implementation

u B

Provide a high-quality

Significant challenges which m r building using

Securing high quality e

Develop next-generation the Taisei Group takes lead T the newest technologies

and improving - Challenge-Tackling

technologies in tackling p.15 m and forms of work

technologies i Capabilities

d implementation

e M Maintenance Promoting a safe and and preservation secure society Improve asset value Operation through renewal and management Ch alle stry Streamline building nge indu s req ction management duties uired t onstru o be tackled proactively by the c Reco gniti Mission on of risks and opportunities Our Vision towards a Sustainable Future Society and What the Taisei Group Must Do Now to Turn It into a Reality In 2015, the United Nations unveiled its “Sustainable Development Goals” (SGDs) with 2030 as the deadline year, holding the 21st Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) as an international meeting. All of us desire to realize a “Sustainable and Better World.” In what ways can the Taisei Group contribute to society through its corporate activities? The Group will continue to fulfill its mission for society aggressively as a leading company in the construction industry.

*1 Five aspects that symbolically integrate 17 objectives and 169 targets under the SDGs (from the preamble of the 2030 Agenda for Sustainable Development)

13 TAISEI ANNUAL REPORT 2016

011_0356501372808.indd 13 2016/08/12 20:18:37 Value Creation Model of the Taisei Group ❷ Value-Creating Business Model Integrity

Seek to Resolve Social Challenges Faithfully and Develop in a sustained manner Snapshot TAISEI Grow Hand in Hand with Society while Enhancing to grow hand in hand with Our Growth Potential society under the Taisei Group Philosophy of “To Create a The Taisei Group supports the entire construction life cycle from planning and design to work implementation and Vibrant Environment for All from operation and management to maintenance and Members of Society” preservation, and works continuously with customers to

pursue capacity building*2. Management Strategy We help society develop sustainably by making social contributions through business activities, while seeking to resolve social challenges and promoting the three strengths we possess. Business Overview

Design and engineering A team of creative R ob

u CSR experts offers st co an optimal plan rp or at e go ve rn a n Work-Site c Strategy, e planning, and Capabilities p.47 p.23 development n Technologies a Three l P Devise strategies and

Governance Report s plans by leveraging Strengths s e Work n unique knowhow We Possess i s implementation

u B

Provide a high-quality

r building using

e T the newest technologies

- Challenge-Tackling

m and forms of work

i Capabilities d implementation e

Social Report M Maintenance and preservation Improve asset value Operation p.25 through renewal and management Streamline building p.29 management duties p.33 Reco gniti on of risks and opportunities Environmental Report Financial and Corporate DataFinancial

*2 Capacity building: An activity to form, improve, and build organizational capabilities and basic capacity

TAISEI ANNUAL REPORT 2016 14

011_0356501372808.indd 14 2016/08/12 20:18:37 ❸Resolve Social Challenges through Business Activities Building Construction Build a secure and comfortable environment and highly convenient Create a Vibrant Environment for All Members of facilities through constructing and renovating buildings such as airports,

Management Strategy Society and Develop Hand in Hand with It office buildings, commercial facilities, factories, and hospitals, the housing Civil Engineering business, and research and in a Sustained Manner Using superior development and technologies, construct engineering infrastructure such as technologies that each tunnels, bridges, roads, “Deep cultivation contribute to a and dams, and build of our primary low-carbon and social infrastructure business of recycling society that supports citizens’ construction” lives and industries

Real Estate Development Tangible and intangible assets Propose urban renewal by fully using methods and knowhow accumulated to date with regard to diverse business schemes such as redevelopment, PFI, property management, and condominium sales projects

Develop Next-Generation Engineers Promote Diversity Clients/ Suppliers Pass reliable technologies on to Become a flexible organization that End-Users the next-generation and achieve capitalizes on diverse personalities Sustained further advances One indispensable element for Building safe, secure, co-existence and It is an essential activity to have our sustained growth is to use diverse and comfortable co-prosperity manufacturing spirit passed on to the personalities without being bound by infrastructure next generation. nationality and gender

Secure High Quality and Develop Next-Generation Technologies Improve Technologies Continue to develop technologies that create Significant Challenges the society of the future Win unwavering confidence on the basis of which the Taisei Group stable quality and advanced technologies We attach importance to developing technologies with an eye on the future, in Takes Lead in Tackling The foundation of our quality and Value for order to create a sustainable and better world. technologies is our commitment not only to customers but also to end-users down the supply chain stakeholders Promote a Safe and Secure Society Shareholders/ Employees OUR STORY Investors Aim to Penetrate Market- Create a society where everyone can OUR SOLUTION Results of work ❶ live safely and securely Research and Development Oriented ZEB Sound ﬁnancial position remain on the map. p.17 Our greatest mission is to continue to Activities A proud life create a vibrant society for all its p.21 and improving members and contribute to the post- corporate value earthquake reconstruction project.

OUR STORY ❷Decontamination Project The Environment/ Progressing Steadily Future Generations p.19 A sustainable and Solution healthy planet Use Accumulated Technologies for Resolving Social Challenges

We believe that, to contribute to resolving diverse social challenges, it is important to continue to endeavor to “deep cultivation of our primary business of construction,” in a sustained manner. The Taisei Group will endeavor to resolve social challenges through its business activities by maximally exercising its strengths in the Building Construction, Civil Engineering, and Real Estate Development business segments.

15 TAISEI ANNUAL REPORT 2016

011_0356501372808.indd 15 2016/08/12 20:18:38 ❹ Value to Be Delivered to Society Create a Vibrant Environment for All Members of Society and Develop Hand in Hand with It in a Sustained Manner Snapshot TAISEI Management Strategy

Tangible and intangible assets Business Overview

Clients/ Suppliers CSR End-Users Sustained Building safe, secure, co-existence and and comfortable co-prosperity infrastructure Governance Report Value for

Shareholders/ stakeholders Employees Investors Results of work Sound ﬁnancial position remain on the map. Social Report and improving A proud life corporate value

The Environment/ Future Generations A sustainable and Environmental Report healthy planet Value Resolve Social Challenges while Maximizing Value Provided We are involved in projects from single family housing to social infrastructure, while facing social challenges. We will turn the Taisei Group Philosophy into reality by

delivering value to our stakeholders, while communicating with all of them. and Corporate DataFinancial

➡ For our sustainability activities, see “Taisei Group CSR” on Page 41.

TAISEI ANNUAL REPORT 2016 16

011_0356501372808.indd 16 2016/08/12 20:18:38 OUR STORY ❶ Seeking to Promote the Penetration of Market- Oriented ZEB with Our Pioneering Technologies

Energy consumption in Japan is concentrated in urban areas with high population densities. As a construction company, our mission is to contribute to solving global environmental issues by pursuing the Urban Net Zero Energy Building (ZEB) initiative, which is a rare type of program, even worldwide. Taisei Corporation can help reduce the nation’s energy consumption by pursuing this initiative across the country, based on urban ZEB-realizing technologies accumulated to date. The following paragraphs outline a new definition of ZEB stipulated by the Agency for Natural Resources and Energy (ANRE) in 2015 and its background, as well as Taisei Corporation’s activities to promote the penetration of market-oriented ZEB.

The Penetration of ZEB Finally Accelerates in consumption reduction of 50% or more from the standard level as Japan on a Full-Scale Basis a ZEB Ready building; 2) one achieving a consumption reduction of 75% or more through the combination of energy conservation A ZEB is a building aimed at bringing its net annual energy and generation as a Nearly ZEB building; and 3) one achieving a consumption to zero through a reduction in energy consumption, consumption reduction of 100% or more as a ZEB building. coupled with power generation such as solar energy. This move points to the Japanese government’s intention of Japan’s Strategic Energy Plan, approved at a Cabinet Meeting achieving a building energy consumption reduction of 50% or more in 2014, includes the goal of achieving “ZEB for newly constructed as the first step before bringing building net energy consumption to public buildings by 2020 and for all newly constructed buildings on as close to zero as possible, in a road map for promoting the average by 2030.” penetration of ZEB. Fig. 1 A look at the nation’s energy consumption shows that, while Behind the move lies the fact that the power generation rate is consumption by the transport and industrial sectors has been on limited depending on locational conditions. In the case of a the decline, consumption by office, school, and hospital buildings suburban building, it is possible to install diverse power generation has been growing markedly. Japan must promote its building equipment in its spacious premises. Regarding an urban building energy-saving activities, which are essential for the nation to achieve under a premises size constraint, experts must introduce maximally its greenhouse gas reduction targets resolved by the 21st efficient power generation technologies according to locational Conference of the Parties (or “COP”) to the United Nations conditions, while importantly pursuing energy-saving activities to the Framework Convention on Climate Change (UNFCCC), held in greatest extent possible for any power generation insufficiency. 2015 as an international meeting. Therefore, as an important policy, experts must continue to pursue In December 2015, the ANRE stipulated a new definition of ZEB penetration in urban areas containing a predominant number ZEB, which classifies: 1) a building achieving an energy of buildings, as well as across the country.

Fig. 1 New Definition of ZEB Reduction of As the definition of ZEB for its 100% or more (net zero) quantitative judgment criteria released by the ANRE on December Energy saving (1) Rein in load 17, 2015, the agency specified the (advanced heat insulation and following ZEB levels. Energy self-sufﬁciency sunlight shielding) 4) Introduce (2) Use of natural energy Reduction of (excluding renewable energy) Building achieving renewable energy 75% or more an energy consumption (3) Efﬁciency enhancements for reduction of 100% or more equipment systems

Building achieving Energy Supply Volume an energy consumption reduction of 75% or more Reduction of 50% or more Building achieving an energy consumption Standard primary reduction of 50% or more Reduction of energy consumption 50% or more volume

Energy Comsumtion Volume Reference Building

17 TAISEI ANNUAL REPORT 2016

012_0356501372808.indd 17 2016/08/10 13:38:44 012_0356501372808.indd 18 buildings onZEB-seekingacross Japan. building, andconsideringtheeffects oflocationandnearby be consumedifenergy-savingtechniquesare usedforaplanned geothermal aswellotherpowergenerationandthatofenergyto thenetenergybalanceofquantitysolar,patterns, wind, and developed theT-ZEB Simulator, atoolforexamining,invarious energy balanceonasinglebuildingbasis. operation inJune2014,thisbuildingachievedanannualzero Demonstration BuildingwithinitsTechnology Center. Afterentering technologies andnewtechnologies,establishedtheZEB Taisei Corporationhasbeen developinganeffective combinationof Advocating theconceptofUrban-styleZEBatanearlystage, Building BasisintheUrban-StyleZEB BalanceonaSingle Achieved aZeroEnergy ■ ■ a SeriesofDemonstrations Initiative, WinningSocialConfidencethrough Strategic EnergyPlan—April2014Cabinet decision ZEB attainment Introduction ofOurOwnTechnology Taisei Corporation’s RoadMap forZEBPenetrationwithGovernment’s Target T-ZEB Simulator ZEB PlanningandAssessmentTool Based on demonstration data, in 2015 we independently Based ondemonstrationdata,in2015weindependently planning andsolutionproposals. level ofselectivity. From nowon,wewillusethedemonstrationresults foroffice enabling physicalmovement*,aswellequipmentandspaceoffering ahigh contributes toone’s mentalandphysicalhealth,allowingnature tobefeltand an environment foraSmartWellness Office. We demonstratedastructure that In fiscal2015, Taisei Corporationlaunchedademonstrationofstructure tobuild ■ that wehaveachievedZEBasanadvancesimulation. organic thinfilmpanel-basedsolarpowergeneration.Asa result, itwasconfirmed next-generation high-efficiency fuelcell;and2)powergenerationbasedon the effects of:1)taskandambientair-conditioning systemsusingheatfrom a measurement dataonvarioustechnologiesusedforbuildingssuchas concept oflightingenvironment. We alsosuccessfullygathered andanalyzed inducing equipment,aswelllightingcontrol technologiesbasedonanew comfort basedonitsuniquesensingtechnologiesandnewlydevelopedlight Taisei Corporationverifiedtheachievementofbothsuperenergysavingsand ■ ZEB DemonstrationBuilding Technology attheTaisei Proven Technology Center Comfort, andIntellectualProductivity Improvements Wellness Office thatisConducivetoPromoting Health, Launched aDemonstrationoftheConceptSmart Proved theEffects ofZEBAdoptionTechnology Wind Generation Condition Solar

Ground thermal energy Initial cost Sophisticated ZEBshifttechnologies Complete theT-ZEBSimulator Cost study and costsavings Running cost insulation Electricity Equipment design Building design Thermal *Joint research project withKeioUniversity Lighting Consumption Building for lighting/ventilation Heating /cooling Water supply Window ®

Ventilation Shading Elevator Promoting ZEBinnewpublicbuildings

Developing tailored

Attain proposals project towhichtheT-ZEB Simulatorwasapplied. building ofKinkiSangyoCredit Union,whichwasthefirst-ever running costsatdifferent levelsinthelightofnewdefinitionZEB. making itpossibletoestimatethecost-benefitprofile forinitialand from theprevious oneof2020. oriented ZEBPenetrationby2018,”thenewtargetyearrevised accelerating ouractivitiesunderthegoalof“AchievingaMarket- track record, thereby winningfurthercustomerconfidence. We are penetration ofZEBacross thecountryandsteadilyaccumulatea market-oriented be completedin2018. with ahigh-risebuilding.Constructionofthebuildingisscheduledto requirements, whichwere previously thoughttobedifficult tomeet definitionofZEB,whilemeetingurban-styleZEB governmental building, specificallyattainingthestatusofZEBReadyundernew ZEB penetration Taisei Corporationwonan order forthenewhead office In January2016,acoststudyfunctionwasaddedtothistool, This buildingaimstobecometheKansaiarea’s first-ever ZEB In thecomingyears,Taisei Corporationwillpromote the ● ● ● Sangyo Credit Union Head office buildingownedbyKinki

Location: Designer: Taisei Corporation Project client: Concept ofSmartWellnessOfﬁcetheZEBDemonstrationBuilding Adaptation toindividuality T-Radiant Slab Air-conditioning technology T-Zone Saver Sensing technology Proper levelsofexercise Formation ofinternal and diverseworking Physical health Mental health biorhythm styles Osaka, Japan Chuo-ku, OsakaCity, launch ofZEB Full market Union Kinki SangyoCredit Lighting andnaturalventilation Environment /equipment Structure toallownature Personal air-conditioning high levelofselectivity Equipment offeringa and lighting tobefelt Promoting ZEBupgradeaveraged design Popularizing and solar powergeneration Organic thinfilmpanel-based Power generationtechnology T-Light Cube Day-lighting technology spreading ZEB TAISEI ANNUAL REPORT2016 for newbuildings high levelofselectivity Construction design Structure enabling Comfortable stairs Diverse workplace Space offeringa body movement 2016/08/10 13:38:45 18

Financial and Corporate Data Environmental Report Social Report Governance Report CSR Business Overview Management Strategy TAISEI Snapshot OUR STORY ❷ Five Years on from the Great East Japan Earthquake Decontamination Project Progressing Steadily

The year 2011 saw Japan hit by the Great East Japan Earthquake and a resultant accident at the Tokyo Electric Power Fukushima Daiichi Nuclear Power Plant. Five years on from that unprecedented national misfortune, decontamination work in many areas has been completed through the steady service of a huge number of workers, but some areas have yet to be fully decontaminated. The following paragraphs outline Taisei Corporation’s activities to provide cooperation for the objective of restoring disaster victims’ lives to a pre-earthquake level, based on an understanding that decontamination work first and foremost is the initial step of rebuilding Fukushima.

Why Taisei Corporation is Taking on Wide-Area A decontamination project represents a long series of extremely and Large-Scale Decontamination Work that Is laborious tasks. In housing decontamination work, for example, a Unprecedented in the World worker must manually wipe the roof and wall, removing highly- radioactive fallen leaves in gutters, on a house-by-house basis. In The government investigated the state of contamination in woodland areas, where heavy equipment cannot be used, workers over 100 local municipalities in eight prefectures designated as mostly manually lop off branches, mow grass, and remove fallen “Decontamination Special Areas” and “Intensive Contamination leaves and other residual matter. In farmland areas, they not only Survey Areas” due to the 2011 Fukushima Nuclear Power Plant remove topsoil and replace it with new soil, but also mix it with soil accident. This was followed by policymakers establishing a improvement materials before plowing the land. decontamination work implementation plan stipulating target To engage in these tasks in an extremely wide range of areas areas, as well as decontamination operators and methods. as quickly as possible, while giving top priority to safety, requires Based on this plan, the Japanese government and local the project operator to be equipped with the ability to manage a municipalities have been engaging in decontamination activities. large number of workers at each site. This is where good use is Under these circumstances, Taisei Corporation was commissioned made of Taisei Corporation’s experience developed to date by to implement decontamination work as a representative of a implementing large-scale work projects, experience unique to joint venture. general contractors.

Introduction of Our Own Technology

Eco Press Pack

Decontamination work results in the gathering of large volumes of flammable material such as highly radioactive tree branches and fallen leaves and grass, which are put into large-size sandbags called Flexible Containers before being stored at provisional storage places. In an effort to efficiently use storage space, Taisei Corporation uses the Eco Press Pack, (flammable matter special compressing bag), a product developed jointly with Nippi, Inc., and Nakamoto Packs Co., Ltd. This product Before compression compresses a large volume of flammable material, such as grass gathered in decontamination work, into a size one third or half of the original size. Using the Eco Press Pack has also allowed us to avoid malodors from flammable material, while enjoying cost-saving benefits for transportation.

After compression

19 TAISEI ANNUAL REPORT 2016

012_0356501372808.indd 19 2016/08/10 13:38:46 Progressing Steadily Earthquake DecontaminationProject Five Years onfromtheGreatEastJapan 012_0356501372808.indd 20 where eachworkerworksaccording toradiationexposure. Ministry oftheEnvironment, wetakemeasures suchasaltering Moreover, consideringtheresults ofradiationmonitoringbythe workers, aswelldailyandcumulativeradiationexposure levels. dosimeter, wecentrallymanagetheattendanceofindividual Specifically,a inadditiontoensuringthatallworkerscarry radiation. AtTaisei Corporation, westrictlymanageradiationlevels. some respects. decontamination worksitesdiffers from generalconstructionsitesin several thousandoutdoorworkers.However, workmanagementat General contractorshavesuperiorknowhowtomanageover Victims’ LivesasSoonPossible from GeneralSitesandHelpRebuildDisaster Flexibly AddressCircumstancesThatDiffer Morning meetingsareMorning heldatindividualworksites From Fukushima work project mura decontamination Manager oftheIitate- Shuji Takasaki Differences forexample,managinglevelsofinvisible concern, carefully withoutbecomingcomplacent. residents toreturntheirhomeswithpeaceofmind,wewillbesure tohaveourstaff engageinwork disaster failedtobeachieved,theywilllikelyseeevacuationinstructionsterminatedin2017.To enablelocal requests inmind.Forus,thehappiestmomentcomeswhenaword ofthanksisgivenbylocalresidents. that are invisible,staff membersmakeconsciousefforts tocontinue doingworkcarefully, bearingthose word toaskourstaff toperformworkcarefully withoutrushing.Whilethisworkhandlesradioactivematerials heeded byourstaff engaginginthework. tree thatisfullofmemoriesfortheirfamilymembers.Thefeelingsthoseindividualresidents mustbewell with localresidents. but alsoprivatehousingandfarmlandtowork,meaningitisessentialforthemhaveclosecommunication persons’ premises. Workers mustenternotonlypublicproperties, suchasmunicipalityoffices and roads, wheel chairsbeinggiftedtothelocalcommunity. can-gathering program inwhichIworkedtogetherwithourworkerstocollectcans.Thiswasfollowedby patrols tomaintainsecurity, wehavecarriedout,forthebenefitoflocalcommunity, analuminum showing photosofthefacesdecontaminationworkersinarea. Inadditiontoconductingvoluntary our staff paycourtesyvisitstolocalarea representatives andproperty owners,whiledistributingflyers still inevacuationcenters. Currently, weare engagedindecontaminationworkforIitate-mura,Fukushimawhere alllocalresidents are Local Residents Careful Work ThatConsiderstheFeelings of Although Iitate-muraresidents’ originalgoalofreturning totheirhomeswithinfiveyearsafterthe In Fukushima,there isalocaldialectword “madei”meaning“carefully.” Localresidents oftenusethis On occasion,localresidents makeindividualrequests toourstaff suchasonefornotcuttingacertain Difficulties involvedindecontaminationworkliethefactthatalargeportionofitisconductedonother We havebeenworkingtogaintheirconfidenceasmuchpossiblebyhaving,priorlaunchingwork, for rebuilding lives. decontamination itselfisnotthegoal,butstartofaprocess target areas, butnotinallofthem.Fordisasterevacuees, progress steadilywithworkhavingbeencompletedinsomeofthe of accidents. inventively usephotosandillustrationstovisualizefrequent cases to helpinexperiencedworkersgainknowledgeeasily, we we ensure safety and sanitationlevelsare improved. Moreover, workers. Inaddition,byproviding basicsafetytrainingrepeatedly, work sitestorigorously communicateworkprocedures to projects, weensure thatasafetyofficer isassignedtoindividual training workersdemandmore care thaningeneralconstruction a valuableworkforce. Becausesafetyandsanitationcontrol and manual processes, whichalsomakesworkerswithnoexperience to employalabor-intensive approach involvingpredominantly heavy equipmentandspecializeddevicesare used,itisnecessary involved havenoprevious experienceofconstruction.Although work isalsocharacterizedbythefactthatmanyofworkers to helpthemachievetheirgoalsassoonpossible. Taisei Corporationwillcontinuetopursuetheproject steadily These activitieshavecausedthedecontaminationworkto Compared togeneralconstructionprojects, decontamination TAISEI ANNUAL REPORT2016

2016/08/10 13:38:46 20

Financial and Corporate Data Environmental Report Social Report Governance Report CSR Business Overview Management Strategy TAISEI Snapshot OUR SOLUTION Our Research and Development Activities

Aiming to develop innovative technologies for resolving social challenges

ICT Construction Work and Contributing to Post-Disaster Reconstruction and Restoration Efforts Streamlining Work Implementation

Development Development New Mountain Tunneling Work Technology Next-Generation Unmanned Construction Demonstration ® Demonstration “T-SPD” “T-WELL_PLANNER” Application System “T-iROBO Roller & Breaker” Application We developed and demonstrated the next-generation unmanned construction We developed and demonstrated tunnel face front exploration system T-iROBO Roller & Breaker, a system equipped with automated fill soil technology called T-SPD, a technology for accurately identifying pressure-changing and big rock-crushing functions. This system performs geological conditions at a site up to 500 meters ahead of the tunnel construction work automatically with the surroundings evaluated by a machine face utilizing an ultra-long controlled boring. Moreover, we developed unit equipped with sensors equivalent to a human being’s five senses, and with the drainage countermeasure planning tool called T-WELL_PLANNER, an independently-developed control algorithm. The system can also be used a tool that enables automatic data processing, such as for installing for post-disaster reconstruction and restoration projects. Having been selected drainage borings, alignment plan, and displaying groundwater flow for the Construction Technology Research & Development Subsidy Program prediction analysis results. This tool allows the user to handle the

by the Ministry of Land, drainage Sound Rocks Fractural Zone Infrastructure, Transport and countermea- Tourism, the T-iROBO Roller & sure effectively. Breaker system is likely to Main Tunnel Pilot Tunnel Medium-long Boring Short Boring have a variety of new applications. T-iROBO® Roller T-iROBO® Breaker T-SPD T-WELL_PLANNER

Measures for Improving Convenience and Saving Energy Work Streamlining and Labor-Saving

Air Curtain-Making Clean Space Development Survey Navigation System Development Demonstration Demonstration ® ® “T-Clean Air Wall” Application “T-Mark. Navi ” Application We developed and demonstrated an air curtain-based clean booth Based on a combination of an eyeglass-based wearable device and system called the T-Clean Air Wall, a booth designed for clean rooms at surveying gear, we developed T-Mark. Navi, a technology that allows a production facilities. Without any physical walls, the user can enter the user to perform surveys unaided, a process that previously required a booth while keeping hands on a pair of workers. This technology is applied at our construction work moving cart, which greatly improves sites, and will streamline convenience. The air curtain-based air work and save labor at wall is made only for the space our construction and civil required for a task, offering superior engineering work sites. energy-saving benefits.

The air curtain reduces amount of dust by at least 99% Work status using “T-Mark. Navi®”

Effective Use of Energy and Resources Streamlining Work, Anti-Earthquake Measures, and Renewal

Wireless Power Transmission Technology Development Column Part Seismic Retrofit Method Development Demonstration Demonstration for Moving Electric Vehicles Application “CF Panel Work Method” Application We developed Wireless Power Transmission Technology, a technology Jointly with Seiwa Renewal Works, we developed and demonstrated for sending high-frequency electric energy to a road, allowing Electric the CF Panel Work Method, a column part seismic retrofit work method Vehicles to tap electricity wirelessly. After building an asphalt road on that uses a carbon fiber combined panel (CF panel) composed of a the premises of Toyohashi University of Technology, we conducted continuous carbon fiber sheet and a flexible board. Being light weight manned driving trials with a and able to be installed within a short time, batteryless electric vehicle (EV). In the the panel is effective for reinforcing seismic Field connection part foreseeable future, we aim to isolation levels at a work space-constrained commercialize this technology for site and for Field connection part

delivery systems used at factories a project Carbon fiber sheet and logistics centers. with a short Flexible board work term. (Fiber reinforced cement board) Flexible board (about 3mm thick) Carbon fiber sheet CF panel Flexible board (about 3mm thick) Column retrofit using the CF panel CF Panel Work Method

21 TAISEI ANNUAL REPORT 2016

012_0356501372808.indd 21 2016/08/10 13:38:48 012_0356501372808.indd 22 with fourcategories. *2 *2 *1 solution technologiesforresolving socialchallengesare outlinedbelow, based based essentiallyonourcommitmenttocustomers,aswellendusers.Taisei Corporation’s developing technologies that help enhance the society in the future. Our quality and technologies are Our missionistobuildasocietywhere allcitizenscanlivesecurely andsafely, andtocontinue Taisei Corporation’s SolutionTechnologies for Addressing SocialChallenges Using OurAccumulatedTechnologies

parts, are currently designated assubstancessubjecttoenvironmental regulation because these substanceshavebeenfoundtobeharmful. Chlorinated ethylene:A typeofliquidcreated bycombiningethylenewithchlorine. Trichloroethylene andtetrachloroethylene, havingbeen usedwidelyasadetergentandsolventfor metal body, anditdoesnotreadily degradeinanaturalenvironment. 1,4-dioxane: Designatedasasubstancesubject toenvironmental regulation, itisachemicalsubstance thatissuspectedofbeingcancer-causing, amongothereffects onahuman “Post-Head-Anchor isolation performance. exercising optimalseismic tremor level,thereby according toearthquake to switchresistance level buildings, basedonafunction buildings tosuper-high-rise of newandexistingseismicisolationbuilding,from low-tomid-rise Infrastructure, Transport andTourism, thissystemcanbeusedforalltypes seismic isolationmaterialcertificationfrom theMinisterofLand, Demonstration BuildingoftheTaisei Technology Center. Havingacquired urban sitetobemaximallyutilized.ThissystemisusedfortheZEB System, apassiveswitchingoildamperthatallowsspace-constrained We developedtheUrban-styleSmallDisplacementSeismicIsolation Small DisplacementSeismicIsolationSystem” Passive SwitchingOilDamper “Urban-Style targetting seafront plants. liquefaction, especially countermeasures against safer andmore effective this technologytoconsider accurate manner. We willuse liquefaction inahigh- likely tosinkdue technology allowsausertoquicklypredict towhat extentabuildingis deformation withathree-dimensional staticanalysismethod.This We developedatechnologythateasilypredicts liquefiedground Dimensional StaticAnalysisMethod Liquefying GroundwithThree- “Residual DeformationTechnology” for or renovation. building extension be filedfor Act isrequired to application undertheBuildingStandards in buildingsforwhichbuildingcertification Japan, thisworkmethodcanbeusedeven certification from theBuilding Centerof buildings. Havingacquired general for seismicretrofits andstructuralextensionsofexistingconcrete post-installed bondedanchorwithasmallheadplate,whichisdesigned We developedthePost-Head-Anchor workmethod,basedona Anchor withaSmallHeadPlate Based onaPost-Installed Bonded Anti-Earthquake MeasuresandRenewal Anti-Earthquake MeasuresandRenewal Anti-Earthquake MeasuresandRenewal Work status Work ® ” Work Method Urban-Style Small Displacement Seismic Isolation Isolation Seismic Small Displacement Urban-Style System (Switching oil damper) oil (Switching System (thickness :11m) Liquefied ground Earthquake Disastersimulation Great of Japan East < Settlement> -30cm • •The househassankandtiltedtoward thecenterofarea. observed inanactualdisaster. The analyticalresult hasreproduced theground deformation Overview of the Post-Head- of Overview Anchor 60cm Two-story house(8buildings) ® work method work Demonstration Demonstration Demonstration Development Development Development Application Application Application much shortertimethanbefore. regulation intheprocess andwithina substances subjecttoenvironmental incidents, withoutgeneratingharmful underground watercontamination 80% ofvolatileorganiccompoundsin contamination, accountingforover chlorinated ethylene-based technology cansafelypurify ground water. UsingRHA1strain, this degrading chlorinatedethylene* Technology, apurificationtechnologytoinjectRHA1straincapableof We developedanddemonstrated ChlorinatedEthyleneDegrading substance 1,4dioxane.* containing theenvironment-polluting processing underground water bacteria D17forefficiently Technology, Japan’s first-everpurificationtechnologytousedegrading We developedanddemonstratedthe1,4-DioxaneDegrading “1,4-Dioxane DegradingTechnology” Contaminated Water Microorganism-Based Purificationof We developedtheT-Silent “T-Silent Noise-Reduction Technologies “Chlorinated EthyleneDegradingTechnology” Contaminated GroundWater Microorganism-Based Purificationof overseas projects. aim touseitfordomesticand University andKitasatoUniversity, we by Taisei Corporation,Osaka technologies. Through jointresearch cost thanconventionalpurification technology canbeusedatalower close torailroad tracks. complexes, aswellbuildings technologies forhousing future, wewillusethese conditions ofabuilding.Inthe them, according tothevarious work methods,oracombinationofmethodschosenfrom among noise byemployinganoptimalworkmethodchosenfrom amongfour reduce sound.Thisseries floorimpactsoundandsolid-borne reduces technologies usingadouble-floorstructure, amongothers,togreatly Purification ofContaminatedWater Comfort andEnvironmentalRiskMeasures Purification ofContaminatedWater on aclassification ® Series” 1 This ® Series,aseriesofnoise-reduction 2 in TAISEI ANNUAL REPORT2016 1,4-dioxane degrading bacteria bacteria 1,4-dioxanedegrading 2015 Nikkei Global Environmental Environmental 2015Global Nikkei Won an award of excellence at theWon excellence at an award of Technology Awards Microscope photo of RHA1strain of photo Microscope environment For acomfortable For securityandsafety Improve productivity technologies ofadvanced Applications Demonstration Demonstration Demonstration Development Development Development Application Application Application 2016/08/10 13:38:49 22

Financial and Corporate Data Environmental Report Social Report Governance Report CSR Business Overview Management Strategy TAISEI Snapshot 013_0356501372808.indd 23 23 Business Overview TAISEI ANNUAL REPORT2016 in the construction business and differentiate and from business other construction the in methods and and ICT,methods specialist with strengthening and cooperation existing public infrastructures.and private quakeproofing of buildingsthe wooden and with packed densely construction competitors. construction competitiveness our boost further in orderto beyond and 2020 and technologies differentiationfor toward with an eye theyear such as projectssuch preventingas of spreadthe fires of in areasurban strengths, our leverage can wherewe fields group the in companies sector. private the and government the both of demand robustconstruction the meet appropriately order in to capabilities improving further procurement our as well as sub-contractors using workforce, labor-saving our construction energy-saving and

■ We are promoting the development of construction technologies technologies construction We are of promoting development the ❸ promoted andtheprivatesector. bythegovernment projects, suchasparticipationininfrastructure exportjointly projects utilizingourtechnologicalstrengths, andoverseas Stadium andtheChuoShinkansenProject, largeprivate-sector and beyond,includingnationalprojects, suchastheNewNational We willfocusontheprojects withaneyetoward theyear2020 ❶ higher addedvalue.” year. We willcontinuetomakeeveryeffort toachievea“transformation toabusinessstructure forcreation of In thefirstyearofMedium-Term BusinessPlan,weachievedthebusinessandfinancialtargets ofthefinal Progress ofMedium-TermBusinessPlan(2015-2017) Our BusinessActivities We will create higher synergy effects through cooperation among through among effects cooperation Wewill synergy create higher ❼ increasing by capabilities construction improve our Wefurther will ❺ Form ThatTAISEIVISION2020Aimsfor...Conversionto a BusinessStructureforCreationofHigherAddedValue 2010 Period ofreview Regarding FocusedProjects the Taisei Group Projects Next-Generation Technologies Improving theTotalImproving Strengthof Strengthening DomesticConstruction Promoting theDevelopmentof Undertaking StrategicApproaches reconstruction △ the pastand Phase 1 Rebuild systems 2011 ▲ 2012 Establish foundationofnew Previous Medium-Term △ （FY business structure Business Plan after founding Phase 140 years 2012-2014 2013 △ Get inpositiontorealize ２ 2014 ） ▲ 2015 Medium-Term BusinessPlan

creation ofnewbusiness △ More stronglypromote (FY 2015–2017)

Phase 3 structure 2016 △ Steady progresstosustainabledevelopment 2017 ▲ projects aimed at making the country more resilientcountry the making at aimed projects development infrastructure social and projects reconstruction management as mid-term challenges of the construction industry, construction the of challenges mid-term as management profitability business.overseas our of social infrastructure. social Japan’s of development the to contributing disasters, against establishthe structure toward securingwith an eye earnings its such as enhancement of the use of female workers and foreign and workers female of use the of enhancement as such the needs of the times. In addition, we are actively tackling diversity diversity tackling times. are the In addition, actively we of needs the 2020andsteady the beyond, year to thetopattaching priority its workers, and changing working styles by using ICT. by styles working changing and workers,

Wewill continue in participateto actively earthquake disaster ❷ can offer highaddedvaluetoourcustomers. environment, engineering,andurbandevelopment,where we focused fieldsof renewal and replacement, nuclearpower, establishing highlyvalue-addedbusinessmodelsinthefive We willincrease ourmid-tolong-termcompetitivenessby ❹ We have established a corporate governance system that meets meets that system governance corporate a established We have ❽ and business overseas our growth of gradual the Wewill achieve ❻ Models intheFocusedFields Infrastructures Actively Contributing to Improving Actively ContributingtoImproving Developing theBusiness Developing theStructureforHealthy Establishing Next-Generation Business Foundation Growth ofOverseasProjects 2018 Final stagetorealizethe △ Deep cultivationofour form aimedfor primary businessof Phase 4 2019 Basic Policy construction △

2020 Continuous sustainabledevelopment ▲ as weapproach150yearsafter founding andbeyond Sustainable development 2021 △ 2022 △ after founding 150 years 2023 ▲

2016/08/12 20:20:38 Progress of Medium-Term Business Plan (2015-2017) TAISEI Snapshot TAISEI ■ Numerical Targets in Fiscal 2017, the Final Year of the Medium-Term Business Plan (2015–2017) Business and Financial Targets Announced on March 2015 Revised on May 2016 Consolidated Non-Consolidated Consolidated Non-Consolidated

Net sales ¥1,610 billion ¥1,280 billion ¥1,660 billion ¥1,340 billion

Operating income 75 billion 57 billion 115 billion 96 billion Management Strategy Net income* 47 billion 36 billion 75 billion 64 billion

Interest-bearing debt Less than 300 billion ― No change

*Consolidated net income is presented as net income attributable to owners of parent.

Capital Policy and Guidelines for Return to Shareholders

Dividend payout 25% or more ― No change Business Overview Business Overview ROE 8.0% or more ― No change

Note: Taking into consideration future changes in the business environment, some numerical targets were changed.

Nuclear Power Field Ventilation CSR vertical shaft

In the nuclear power field, we are focusing on the design and construction of various nuclear power facilities such as West vertical East vertical nuclear power plants. We are further promoting technologies and knowhow accumulated through extensive shaft shaft 140-m exami- experience in such operations while delivering support for a wide range of services from planning to de-commissioning. nation shaft Regarding services for resuming operations of nuclear power plants, we assist operators by conducting 250-m exami- design and safety assessments. Moreover, we continue to upgrade our design and assessment skills, while nation shaft striving to achieve greater safety. 350-m exami- In the decommissioning service area, we commercialize remote-control, dismantling, and cutting nation shaft

technologies in preparation for full-scale plant termination measures. Governance Report Construction work completed Meanwhile, in the area of the geological disposal of radioactive waste, we This conceptual diagram is subject to change according to the results of continue to upgrade our construction information, monitoring, and long-term safety future examinations and research assessment technologies, based on experience gained at the Underground Concept of Underground Research Center Research Center in Horonobe, Hokkaido, and elsewhere. Japan Atomic Energy Agency In the medical and industrial areas, we provide total solution technologies (Drawing provided by the Japan Atomic Energy Agency) ranging from safety assessments of radiation-using facilities, including heavy ion Kyushu Electric Power Company’s radiotherapy facilities, to their construction. Sendai Nuclear Power Plant Social Report

Engineering Field

In the engineering field, we are pursuing many activities with the aim of improving customer value and expanding our construction business area. Starting from the project-planning stage, we capture the actual needs of our customers as partners, while enhancing our ability to propose solutions from a customer’s perspective. Regarding facility construction, we realize optimal facilities in various fields that meet the needs of the times, based on collaboration among business units involved in fields such as civil engineering,

construction, engineering, design, technology, and sales. Environmental Report In the pharmaceutical facility area, we deliver facility engineering, PIC/S-GMP*1-related consulting, and facility inspection services as service Kitasato Daiichi Sankyo Vaccine Co., Ltd. offerings leveraging knowhow backed by a wealth of achievements. Buildings B and C In the industrial facility area, we expand our business to various fields in the following segments to construct high-quality facilities that meet customer needs: 1) consulting services for reconstructing a food-processing factory, including logistics functions; 2) consulting services for PIC/S-GDP*2 compliance by pharmaceutical logistics facilities; 3) proposal on customer traffic generation for Sendai Umino-Mori Aquarium an aquarium; 4) consulting services for establishing an information system. Financial and Corporate DataFinancial

*1 PIC/S stands for Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme, two inspection institutions on global standards of pharmaceuticals, which Japan joined in July 2014. GMP stands for Good Manufacturing Practice, a manufacture and quality control standard *2 GDP stands for Good Distribution Practice, a quality control standard for transportation and storage processes

TAISEI ANNUAL REPORT 2016 24

013_0356501372808.indd 24 2016/08/12 20:20:39 013_0356501372808.indd 25 25 Business Overview TAISEI ANNUAL REPORT2016 to ¥50.7billiondueanimprovement ingross profit margin. consolidated subsidiaries,whileoperatingincomejumped53.1% year, to¥455.7billion reflecting lowersalesin the Companyandits Sales intheCivilEngineeringsegmentdecreased 3.3%yearon (Down 3.3%YoY) ¥455.7 Message from theChiefofCivilEngineeringDivision Shigeyoshi Tanaka Deputy ChiefofCorporatePlanningOffice Chief ofCivilEngineeringDivision; Member oftheboard; Senior ManagingExecutiveOfficer, Civil Engineering * i-Construction:Anewinitiativeforimproving construction siteproductivity byleveragingICTcomprehensively, unifying standards andworktiming. ● 200 400 600 (Billions ofYen) 土木事業売上高

The above figures above The include intersegmenttransaction. Overview ofSegment 0 Sales Sales /Operatingmargin 448.1 2013 7.3

billion 471.0 2014 7.0 7.0 Operating margin: ■ (Up 53.1%YoY) ¥50.7

Sales Operating income ●

Operating margin 455.7 11.1 11.1 2015 11.1

billion （％） (FY) % 10 20 30 0 infrastructure development. works, post-earthquakereconstruction worksandpublictransport convenience ofthepublic,includingelectricalpower-related activities thatcontributetoimproving thesafety, securityand operated byKyushuElectricPowerCo.,Inc. cooperated withtherestart oftheSendaiNuclearPowerstation generation projects. InFiscal2015,Taisei Corporationalso supply, includingnuclearpowerplantrestarts andthermalpower pursue operationsacross thecountry. environment byestablishinganICTsupervisingdepartmentto Civil EngineeringDivisionwillactivelyrespond tothenewbusiness construction workerssuchasthereduction ofworkinghours.The i-Construction initiative*andimprovement ofthetreatment of wide endeavorsare nowunderway, includingpromotion ofthe newindustry- construction laborbecomingacauseofconcern, Waterway). Paralympic Games(theBajikoenHorseParkandtheSeaForest Section) andfacilitiesrelated totheTokyo 2020Olympicsand AlpsTunnelthe LinearChuoShinkansenSouthern (Yamanashi been acquiringworkorders formainlylargeprojects suchasfor ongoing national-levelprojects, andTaisei Corporationhassteadily The domesticmarkethascontinuedtoenjoyaboomdue and RespondingtotheNewBusinessEnvironment Actively Participating inNational-LevelProjects Opportunities Risks Going forward, theCompanywillcontinuetopursuebusiness A great dealofattentionispaidtoprojects forstablepower Meanwhile, withtheshortageofengineersandskilled

and renewable energy projects including nuclear power plants, thermal power plants, An increasing numberofworksonenergy fieldprojects potentially compromise theCompany’s credibility Risk oftheoccurrence of a qualityincidentthatmay surging laborcosts Risk ofconstructiondemanddiminishingdueto shortage Risk ofproduction capacitydecliningduetolabor aging ofexpressways and othersocialinfrastructure Rising renewal andreplacement demandduetothe nologies suchastheLinearChuoShinkansenproject A growing numberofprojects requiring advancedtech- 建築事業売上高 1,200 (Billions ofYen) 400 800 Fig. 1 0

Fig. 2 (0.9) (0.9) 956.0 2013 1 ,017.2 2014 2.4 2.4 ■

Sales ●

Operating margin 1 ,015.4 2015 5.6 5.6 2016/08/12 20:20:39 その他事業売上高（％） (FY) （億円） 10 20 30 0 2,500 5,000 0

0,000 2011 0,000 022013 2012 0,000 (Billions ofYen) 160 240 開発事業売上高 80 0 （年度） 188.4 14.8 2013 143.4 2014 8.5 8.5 ■

Sales ●

Operating margin 127.6 2015 7.47.4 （％） (FY) 10 20 30 0 Civil Engineering TAISEI Snapshot TAISEI

Our Efforts on Three Challenges towards Seeking to Become Number One Player by Achieving Further Growth Developing Technologies and Building Business

In the Civil Engineering Division, we have been making efforts on Models for the Next Generation

challenges specified as: 1) production capacity expansion; 2) profit- In line with the Medium-Term Business Plan, we are continuing to Management Strategy ability enhancement; and 3) overseas business earnings stabilization. develop technologies and build business models with an eye To expand production capacity, it is essential to secure and towards the next generation. The Company has been developing develop diverse human resources and allocate the right person in differentiated technologies such as for shield tunnel branching and the right place. We utilize experienced employees and assign joining sections. In the coming years, we will exercise and further junior employees to revitalize the organization and achieve further improve our comprehensive technologies for highly challenging growth. Moreover, we seek to raise project productivity by works such as in national-level projects. Business Overview pursuing labor- and energy-saving efforts through the introduction To help resolve social challenges, the Company will focus its Business Overview of techniques such as information-based work implementation, efforts on social infrastructure reinforcement initiatives such as the precast work methods, and further mechanization. measures to address the aging of expressways and other In an effort to enhance our profitability, we arrange for a infrastructure as well as the frequent occurrence of natural disasters.

project team to be set up early on a project-by-project basis, and In the renewal and replacement fields, we will engage in research and CSR the team works closely with the sales side to conduct an order development on large-scale renovation of expressways and their acquisition strategy designed to deliver maximum value-added to life extension, thereby capturing new demand. In addition, we will the customer. Moreover, in addition to bolstering our procurement pursue a sales strategy on a group-wide basis, including joint capabilities by maximally leveraging the Company’s size, we technology development with group companies. devise price-competitive work implementation plans by utilizing Through the endeavors discussed above, we aim to become safety and other technologies, thereby enhancing our profitability. number one in more respects and achieve higher recognition and With regard to overseas business earnings stabilization, the presence in the market. Governance Report Company established the Overseas Business Strategy Committee in Fiscal 2015, developing a foundation on which to grow soundly. We will continue to engage in order acquisition activities with a focus on regions and fields where our strengths can be leveraged. We will improve our project management methods, seeking to stabilize our earnings. Moreover, we will strive to foster Social Report international workforce with an eye on the future.

Fig. 1 Chuo Shinkansen Southern Alps Tunnel New Construction Fig. 2 Sea Forest Waterway (Yamanashi Section)

Tunnel construction [including main line tunnel Chuo Shinkansen (approximately 7.7 km), plan route other advancing tunnels, Environmental Report emergency exits, etc.]

Koshibu River Construction site

Southern Alps Tunnel: approx. 25.0 km

Nagano Shizuoka Yamanashi Prefecture Prefecture Prefecture Hayakawa Image courtesy: Tokyo Metropolitan Government / Conceptional drawing of the site at the Game (As of October 2015) River Courtesy: JR Central Japan Railway

A long rowing and canoeing (sprint) basin for the 2020 Tokyo Olympics is being and Corporate DataFinancial Our JV is engaged in construction for the Linear Chuo Shinkansen project designed and constructed by a cross-industry JV consisting of Taisei, Toyo employing a SCMaglev (maximum speed: 500 km/h) at a 7.7 km site between Construction, Swing Corporation, and Hitachi Zosen. the Yamanashi Prefecture side and the Yamanashi-Shizuoka border. Because parts of the site are 1,000 m or more beneath ground level, work is expected to be very challenging.

TAISEI ANNUAL REPORT 2016 26

013_0356501372808.indd 26 2016/08/12 20:20:40 013_0356501372808.indd 27 27 Business Overview TAISEI ANNUAL REPORT2016 Major Projects (CivilEngineering) while reducing theconstructionperiod. embankment, aswellthesafetyofworkers, analysis method,weensured thequalityof of localmountainsandapplyingtheprediction Wakayama Prefecture. Byobserving thedynamics of theKinkiExpressway intheKinanRegion, approx. 90m)atSusamiIContheKiseiMainLine Taisei completedmajorembankmentwork(height: Kisei LineEsumiandOtherSections workforKinkiExpressway Improvement District No. 1) Expressway (Okegawa-Kitamoto Box CulvertConstructionofKen-O improve theenvironment intheTokyo area. National Highway17.Theexpressway bypassescentralTokyo, andisexpectedtoeasetraffic congestionand it wascompletedinashortperiodusingthe“HarmonicaTunneling Method*”attheintersectionwithGeneral the Metropolitan Inter-City Expressway (Ken-OExpressway). To avoidadverseimpactsonthesurroundings, We haveconstructed1,130mofthe4.7kmsectionbetweenOkegawa-KitamotoICandOkegawa-Kanoon for UndergroundInterchanges We AreIntroducingaNewTechnology Calledthe “Harmonica Tunneling Method*” To Relieve Traffic theEnvironmentinCentral CongestionandImprove Tokyo, *Harmonica Tunneling Method:A tunneling methodforlarge-tunnelsthatcombinesseveralsmallershieldtunnels. year construction. severe coldweatherwascompleted afterafull concreting worktoensure thequalityrequired for Road 143(length:192m).Cold-weather Hokkaido Expressway bridge overPrefectural We constructedthesuperstructure oftheTrans- Bridge Superstructure Kuneppu-Daiichi Ponketonai River Trans-Hokkaido Expressway Location Year completed Client, Designer Location Year completed Designer Client Location Year completed Client, Designer Kansai Chapter, JapanSocietyofCivilEngineers Recipient ofInnovative Technique Award from Recipient ofInnovative Technique Award from Japan SocietyofCivilEngineers Wakayama Prefecture Susami Town, NishimuroDistrict, 2015 Kinki RegionalDevelopmentBureau Transportand Tourism. ofLand,Ministry Infrastructure, Prefecture Kitamoto City,to OkegawaCity, Saitama 2015 Bureau, TaiseiCorporation and Tourism. KantoRegionalDevelopment ofLand,Ministry Infrastructure, Transport Tourism. KantoRegionalDevelopmentBureau ofLand,Ministry Infrastructure, Transport and Kunneppu Town, TokoroDistrict,Hokkaido 2015 Transport HokkaidoDevelopmentBureau ofLand,Ministry Infrastructure and

2016/08/12 20:20:40 Sri Lanka Expressway Construction is Relieving Traffic Congestion and Supporting Local Economic Development Taisei constructed the 8.9 km main line and 1.9 km interchange at the north section of the 29km long outer circular road connecting the Colombo-Katunayake Expressway, which links downtown Colombo and the airport to the Southern Expressway. Completion of a four-lane road is expected to relieve traffic congestion Snapshot TAISEI in Colombo, as well as support local economic development in Sri Lanka.

Outer Circular Highway (OCH) to the City of Colombo Project Northern Section 1 from Kadawatha to Kaduwela（Greater Colombo Urban Transport Development Project） Management Strategy

Client THE GOVERNMENT OF DEMOCRATIC SRI LANKA MINISTRY OF PORTS AND HIGHWAYS, ROAD DEVELOPMENT AUTHORITY Designer Oriental Consultants Co., Ltd., Taisei Corporation Year completed 2015 Location Kadawatha to Kadwela, Western Province, Republic of Sri Lanka Business Overview Business Overview CSR

Bosphorus Strait Crossing Railway Tunnel In Turkey, we completed the world’s first Asia- Governance Report Europe intercontinental undersea tunnel, which was a national-level mega-project. Using the sunken tube method in one of the fastest ocean currents in the world, we successfully formed the world’s deepest immersed tunnel (depth from the surface: 60 m).

Recipient of JCI Technology Award from Japan Concrete Institute Social Report

Client General Directorate of Railways Ports and Airports Construction (DLH), Turkish Ministry of Transport Designer Taisei Corporation, Gama, Nurol JV Year completed 2014 Location Istanbul City, Republic of Turkey

Singapore Downtown Line (907) Taisei has constructed the stage 1 section 907 portion of Downtown Line, the longest Mass Rapid

Transit line in Singapore, with a length of 40 km Environmental Report and 33 stations. The lump-sum construction contract, which included Downtown Station and the cut and cover tunnels to the west and east sides, helps to enhance Singapore’s rail network.

Client Singapore Land Transport Authority and Corporate DataFinancial Designer AECOM Singapore Pte Ltd Year completed 2013 Location Marina Bay area, Republic of Singapore

TAISEI ANNUAL REPORT 2016 28

013_0356501372808.indd 28 2016/08/12 20:20:41 200 400 600 (Billions ofYen) 土木事業売上高 0 448.1 2013 7.3 471.0 2014 7.0 7.0 ■

Sales ●

Operating margin 455.7 11.1 11.1 2015 （％） (FY) 10 20 30 0 013_0356501372808.indd 29 29 Business Overview TAISEI ANNUAL REPORT2016 建築事業売上高 billion duetoanimprovement ingross profit margin. Company, whileoperating incomeexpanded130.6%to¥56.4 year onyear, to¥1,015.4 billionreflecting lowersalesinthe Sales intheBuildingConstructionsegmentdeclined0.2% (Down 0.2%YoY) ¥ Message fromtheChiefofBuildingConstructionDivision Norihiko Yaguchi Deputy ChiefofCorporatePlanningOffice Chief ofBuildingConstructionDivision; Member oftheboard; Managing ExecutiveOfficer, Building Construction ● 1,200 (Billions ofYen)

400 800 The above figures above The include intersegmenttransaction. Overview ofSegment Sales Sales /Operatingmargin 0 1,015.4 (0.9) (0.9) 956.0 2013

billion 1 ,017.2 2014 2.4 2.4 Operating margin: ■ (Up 130.6%YoY) ¥56.4

Sales Operating income ●

Operating margin 1 ,015.4 2015 5.6 5.6

billion % 5.6 その他事業売上高（％） (FY) （億円） 10 20 30 0 2,500 5,000 0 0,000 2011 and nuclearpowerplantrestarts. we willworkactivelyonprojects forenlargingthermalpowerplans term, thusstrivingtowingreater trustandconfidence. meet customerneedsrelated tobothconstructioncostandwork strengthen itsproduction systemasanurgent taskandsteadily that ofengineersandskilledconstructionlabor. are overapotentialshortageofworkcapacityincluding concerns peaking inashortperiodoftimefrom thenextfiscalyear, there area. However, withtheimplementationoftheselargeprojects redevelopment projects are plannedfortheTokyo metropolitan projects includinglargehotelrebuilding projects andlarge-scale project fortheTokyo 2020OlympicsandParalympicGames. construction worksofnewNationalStadiumJapan,anational-level preferential negotiationrightholderforthedesignworksand In December2015,Taisei Corporationwasselectedasa Strengthening OurProductionSystem Participating inNational-LevelProjectsand Opportunities 0,000 022013 2012 Risks In aneffort tocontribute tosupplyingpowerstablyinJapan, For thisreason, the BuildingConstructionDivisionwill Our workorder acquisitionenvironment isfavorableasmany

or anaccidentaldeath of thepublicduetoanoccurrence ofaqualitydefect Risk oftheCompanylosingtrustandconfidence cost surging afterworkstart becomingpressuredRisk ofourearnings bylabor skilled constructionlabor deteriorating duetoashortageofengineersand Risk ofourproduction capacity potentially infrastructure exportprojects obtaining greater opportunitiestoparticipatein preparation forthepost-2020years,thereby Improve ouroverseasbusinessoperationsin through strengthening ourproduction systemfurther Growing domesticdemandremaining highuntil2020 projects andfocuseddeals technologies through participatinginnational-level Utilize ourknow-howanddevelopneworiginal 0,000 (Billions ofYen) 160 240 開発事業売上高 80 0 （年度） 188.4 14.8 2013 143.4 2014 8.5 8.5 ■

Sales ●

Operating margin 127.6 2015 7.47.4 Fig. 1 2016/08/12 20:20:41

（％） (FY) 10 20 30 0 Building Construction TAISEI Snapshot TAISEI

Furthermore, we will actively contribute to forming safe and secure national land through the post-Great East Japan Seeking to Become the Construction Industry’s Earthquake and post-2016 Kumamoto Earthquake restoration Leading Company by Developing Technologies and reconstruction works. for the Next Generation and Strengthening Our Production System Further Management Strategy Under the policy of the Medium-Term Business Plan, now in its Working on Focused Challenges towards second year, as well as our long-term vision TAISEI VISION 2020, Realizing Further Growth we strive to establish planning technologies (environmental The Building Construction Division has designated as three priority technologies, wood material use and lawn cultivation technology) challenges, and is working on: 1) the strengthening of our and work implementation technologies [shift to precast concrete production system described above; 2) the enhancement of (PCa), promotion of new frame building technology and ICT with a Business Overview Business Overview profitability; and 3) the complete elimination of serious quality focus on Building Information Modeling, or Building Information defects and accidental deaths. Modeling (BIM*)] as part of our next-generation technology Regarding the strengthening of our production system, we development, thereby strengthening our production system make strong efforts to streamline operations further by using ICT, further. At the same time, we work harder to establish next-

develop energy-saving work methods, and collaborate with generation business models in the renewal and replacement fields, CSR “Souyu-kai,” the organization of the Company's main cooperating representing our focus fields. Fig. 2 Fig. 3 companies in preparation for the production site potentially In the domestic construction business, we seek to ensure becoming even busier. high quality and safety as well as high added value and strengthen To achieve the enhancement of profitability, we deliver high our production system, thus building a new production system. In value-added by steadily meeting customer needs, including for the overseas construction business, we work to improve our renewal works. operational processes, acquire and develop overseas personnel in

With regard to the complete elimination of serious quality a well-planned manner, and establish and promote training Governance Report defects and accidental deaths, we strengthen and perform quality programs for local staff, in preparation for the years after 2020, a and safety control processes with increased rigor, solidifying period in which it is feared that domestic demand will diminish. customer confidence at a time when Taisei Corporation attracts Furthermore, we will collaborate and cooperate with Taisei heightened customer attention as an enterprise participating in Group companies in an enhanced manner to meet a wide range national-level projects. of customer needs on the back of the Group’s comprehensive capabilities. We aim to become the construction industry’s leading Social Report company through the above-mentioned endeavors.

Fig. 1 Design Works and Construction Works Fig. 2 TSUMURA&CO. Shizuoka Plant Fig. 3 COCOON3 of New National Stadium Japan (Example of BIM) (Renewal work) Environmental Report

Our JV (Taisei Corporation, Azusa Sekkei, Co., Ltd. and Using a building information model (BIM) to visualize We refurbished Cocoon 3, a commercial facility in Kengo Kuma and Associates) was chosen as an entity structure, design, and facilities, which were previously COCOON CITY, which Katakura Industries Co., Ltd. has with priority negotiating rights for the development handled independently of each other, in 3D, we can been developing as an urban development project at project of the New National Stadium—the main stadium now reduce the labor and hours it took previously to the east side of Saitama-Shintoshin Station. The former and Corporate DataFinancial of Tokyo 2020 Olympic and Paralympic Games. check for inconsistencies in drawings. general merchandise store (GMS) was upgraded to a large commercial complex facility with a construction period of just four months.

*Building information modeling (BIM) is to an intelligent 3D model-based process that enables to use the information across the whole building life cycle such as design, construction, and maintenance.

TAISEI ANNUAL REPORT 2016 30

013_0356501372808.indd 30 2016/08/12 20:20:42 013_0356501372808.indd 31 31 Business Overview TAISEI ANNUAL REPORT2016 centered onOsakiFukutoshin. area finalizedanurbandevelopmentproject the lastsectionoflargecomplexredevelopment Major Projects(BuildingConstruction) inside themall,contributingtolocaldevelopment. an urbanspacewithasophisticatedambience station viaapedestrianskybridge.We alsocreated façade atitsentrance,whichisconnectedtothe where three majorrailroads links,weappliedaglass Ebina StationincentralKanagawaPrefecture, For ashoppingcenterlocatedattheWest Exitof Lalaport Ebina prepare formajorearthquakes. control devicewasinstalledinthebuildingto adopted forthefirsttimeinarea, andvibration The intermediateseismicisolationstructure was center supportinglocaldevelopmentsince1951. BUILDING, whichhadplayedapartasbusiness We engagedinreconstruction workfortheTEKKO TEKKO BUILDING seven buildingswith250,000m front oftheOsakiStation.Completionatotal A largeoffice buildingcomplexwasopenedin Osaki BrightTower analyses, practical,experimentation,etc. organically combiningmultiplefunctions—training, developed acreative business spaceby sophisticated environmental technologies.Taisei technology company, whichappliesavarietyof T-CUBE istheresearch institute ofahigh- Saito ResearchInstitute(T-CUBE) Co.,Earth EnvironmentalService Ltd. Location Year completed Designer Client Location Year completed Designer Client Location Year completed Designer Client Location Year completed Designer Client Ibaraki City, OsakaPrefecture 2015 Taisei Corporation Co.,Earth EnvironmentalService Ltd. Ebina City, KanagawaPrefecture 2015 Taisei Corporation Mitsui FudosanCo., Ltd. Chiyoda-ku, Tokyo 2015 Mitsubishi JishoSekkeiInc. TEKKO BUILDINGCO., LTD. Shinagawa-ku, Tokyo 2015 Nihon Sekkei, Inc., Redevelopment Consortium Kita-Shinagawa 5-Chome1DistrictUrban 2 offloorspaceat 2016/08/12 20:20:43 Todoroki Athletics Stadium, Main Stand As part of the Todoroki Green Park restructuring project, we engaged in reconstruction work for the main stand at Todoroki Athletics Stadium, which was integrated with the park. The building’s features

include an upper stand that tilts forward to bring Snapshot TAISEI spectators closer to the field. Solar panels installed on the roof and other environmental technologies make the stadium environmentally friendly.

Recipient of the 18th Good Painting Color Special Award

Client Kawasaki City Designer Nihon Sekkei -Taisei Corporation Design JV Year completed 2015 Management Strategy Location Kawasaki City, Kanagawa Prefecture

G. Itoya Taisei reconstructed the Ginza stationery store, which first opened in 1904. While inheriting the presence of the existing building in Ginza, new hallways, which are now open to the street, update the image of the old store brilliantly. The store, used to be characterized as a store where Business Overview people would go only to buy goods. By offering Business Overview various experiences, it has been reborn as a store where people can pass time. CSR

Client ITO-YA Ltd. Designer Taisei Corporation Year completed 2015 Location: Chuo-ku, Tokyo

Taichung Cheng Ching Hospital, New Building (Jing Yi Building) We constructed a new building on a lot adjacent Governance Report to the Chung Kang Branch of Cheng Ching Hospital in Xitun District, Taichung City (center- western Taiwan), which had been designed and constructed by Taisei in 1996. The building is equipped with facilities for general surgery, as well as MRI and CT examinations for health checkups, which will enable the hospital to accommodate VIPs, etc. Social Report

Client Yu Yong Co., Ltd. Designer Yeh Tsung-Heng Architect & Associates Year completed 2015 Location Taichung City, Taiwan

Hanoi, Vietnam No.2 Terminal Building Noi Bai International Airport We constructed new terminal buildings, fuel supply

facilities, airport information systems, and other Environmental Report structures for Noi Bai International Airport in Hanoi, the capital of Vietnam. The airport started operating on the day following its delivery, which was an unprecedented early opening.

Recipient of JICA President Award

Client Airports Corporation of Vietnam (ACV) and Corporate DataFinancial Designer Japan Airport Consultants, Inc. Year completed 2014 Location Hanoi City, Socialist Republic of Vietnam

TAISEI ANNUAL REPORT 2016 32

013_0356501372808.indd 32 2016/08/12 20:20:45 200 400 600 (Billions ofYen) 土木事業売上高 0 448.1 2013 7.3 471.0 2014 7.0 7.0 ■

Sales ●

Operating margin 455.7 11.1 11.1 2015 （％） (FY) 10 20 30 0 建築事業売上高 1,200 (Billions ofYen) 400 800 0 (0.9) (0.9) 956.0 2013 1 ,017.2 2014 2.4 2.4 ■

Sales ●

Operating margin 1 ,015.4 2015 5.6 5.6 その他事業売上高（％） (FY) （億円） 10 20 30 0 2,500 5,000 0 013_0356501372808.indd 33 0,000 2011 33 Business Overview TAISEI ANNUAL REPORT2016 0,000 022013 2012 0,000 (Billions ofYen) decreased 22.9%to¥9.4billiondueadeclineinsales. and itsconsolidatedsubsidiaries,whileoperatingincome on year, to ¥127.6 billionreflecting lower salesintheCompany Sales intheRealEstateDevelopmentsegmentfell11.0%year (Down 11.0%YoY) ¥127.6 Message fromtheChiefofUrbanDevelopmentDivision Katsuyuki Kanai Chief ofUrbanDevelopmentDivision Senior ManagingExecutiveOfficer Real EstateDevelopment ● 160 240 開発事業売上高 80

The above figures above The include intersegmenttransaction. Overview ofSegment 0 Sales Sales /Operatingmargin （年度） 188.4 14.8 2013

billion 143.4 2014 8.5 8.5 Operating margin: ■ (Down 22.9%YoY) ¥9.4

Sales Operating income ●

Operating margin 127.6 2015 7.4 7.4

billion

% 7.4 （％） (FY) 10 20 30 0 the post-2020years. business fieldstowards achievingsustainedgrowth withaneyeon the yearsafter2020,wewilltakeonchallengeofnew serve asdevelopertoimplementadevelopmentproject. provide strong supportforcustomers’development plansand mentioned socialdevelopmentsandvariouschallenges,we density ofoldtimberbuildings. Japan’s high-growth eraaswellresolution ofareas withahigh aging-induced reconstruction ofbuildingsconstructedduring with challengesfacedbyitsurbanareas, includingdemandforthe others. Meanwhile,thecountryhasnotimetowasteindealing strategy involvingtheNationalStrategicSpecialZones,among Paralympic GamesaswelltheJapanesegovernment’s growth infrastructure developmentfortheTokyo 2020Olympicsand increasingly more activelyunderwayonthebackofnation’s In centralTokyo, large developmentprojects are currently Confronting Various Challenges StrongSupporttoCustomersWhile Providing Opportunities Risks Given thatthere is ariskofconstructiondemanddecliningin In theUrbanDevelopmentDivision,whiletacklingabove-

the yearsafter2020 Risk ofconstructiondemandpotentiallydecliningin redevelopment projects Risk ofworkcostpotentiallysurging for Risk ofInvestmentinoverseasdevelopmentprojects development skills accumulating andutilizingsophisticated Developing variousdevelopmentschemesby during Japan’s high-economicgrowth era Need forreconstruction ofagedbuildingsconstructed Tokyo 2020OlympicsandParalympicGames central Tokyo asinfrastructure developmentforthe Large developmentprojects activelyunderwayin

2016/08/12 20:20:45 Real Estate Development TAISEI Snapshot TAISEI

Pursuing Urban Development Business by Taking on the Challenge of New Business Fields Leveraging Accumulated Know-How towards Achieving Sustained Growth

and Experience In the field of development projects in which we are one of the

Taisei Corporation has been contributing to building local project owners, Shinagawa Season Terrace was newly opened in Management Strategy community environments by becoming involved in approximately 2015. This project is thought to have created a new model for 20% of the nation’s entire city center redevelopment projects, the urban spaces, through effective utilization of the upper spaces of key field for urban redevelopment. Although the spike in work the Shibaura Water Reclamation Center (Tokyo Metropolitan costs that occurred in the last few years occasionally made Government Bureau of Sewerage) as offices, shops and large operations difficult to run, coordinating carefully with the parties green blocks. We will achieve increased earnings stability by involved enabled the Company to realize relevant construction utilizing knowhow accumulated to date, including property Business Overview starts. We will continue to provide support for the implementation management experience gained in relation to Ochanomizu Sola Business Overview of projects in many locations with a focus on the Tokyo City, a building opened in 2013. Fig. 3 metropolitan area, including the Meguro Station Front In the future, to achieve continuous growth, we intend to Redevelopment Project. Fig. 1 respond to the requests of our customers and the needs of

Moreover, while leveraging know-how accumulated through society by accumulating and utilizing higher level development CSR redevelopment projects, we are pursuing initiatives for resolving skills while actively investing with the aim of enlarging our overseas areas with a high density of old timber buildings in close collaboration development areas such as ASEAN countries and taking on the with group companies such as Taisei-Yuraku Real Estate Co., Ltd., challenge of new business fields such as concessions.*

TAISEI U-LEC CO., LTD. and TAISEI HOUSING CORPORATION. *Concession: Refers to an arrangement in which a public-sector entity such as a government sells the operation right of an airport or water supply business, for Furthermore, we have leading experience in conducting PFI example, to a private-sector enterprise while retaining ownership. Concessions allow projects, which are being steadily recognized as a new method of the central government or municipality to achieve a reduced funding burden for infrastructure maintenance and development, and provides the private-sector enterprise with the commercial opportunity of running the infrastructure. developing public facilities. In December 2014, we accomplished Governance Report the grand opening of the Ehime Prefectural Central Hospital, a hospital PFI project involving not only the development of the facility but also its operation. In March 2017, the construction of the Nagasaki Harbor Medical Center City Hospital is scheduled to be completed. Fig. 2 Social Report

Fig. 1 Meguro Station Front Fig. 2 Nagasaki Harbor Medical Center Fig. 3 Ochanomizu Sola City Redevelopment Project City Hospital Environmental Report

This urban redevelopment project is in the area in This 18-year PFI project involves constructing the This development project carried out by Taisei front of Meguro Station where JR Yamanote Line and city hospital and providing maintenance operations. applies all of our planning, designing, leasing, and other lines link. Our proposal to build a local base hospital that can PM expertise. Employing cutting-edge seismic base

After a group of companies including Taisei won the serve as a disaster center hospital, based on our isolation and environmental technologies, the and Corporate DataFinancial bid for the project (cooperation), we formed a consensus expertise acquired through past experience with building has a high occupancy rate. among landowners and leaseholders, and consulted other hospital PFI projects, was highly evaluated. Recipient of 2015 City Planning Institute of with the administration with the aim of developing a Japan Design Project Award “forest,” offices, commercial buildings, and residential buildings that are open to the local community.

TAISEI ANNUAL REPORT 2016 34

013_0356501372808.indd 34 2016/08/12 20:20:45 013_0356501372808.indd 35 35 Business Overview TAISEI ANNUAL REPORT2016 Major Projects(RealEstateDevelopment) feasibility were highlyevaluated. the long-termproject. Theproposal’s contentsand more visitors,aswellensuringthesecurityof soliciting conventionsandeventsthatcanattract specific detailsaboutadministrativeoperationsfor For Hachioji’s firstPFIproject, weproposed Esforta ArenaHachioji open space. connects nature andhumanactivitiesinawide the facilityforanenvironmentally friendlyproject that and commercial complexbuildinginaspaceabove sewage treatment facilityandconstructedanoffice We renovated theTokyo metropolitan government’s SeasonTerraceShinagawa creating alivelyarea withmanyactivities. station bylocatingtheKeioLinetrackunderground, area andrejuvenation ofthecommunityaround the We coordinated developmentofthecentralurban building locatedattheNorthExitofChofuStation. The project isacommercial facilityandcondominium A-Parking Bldg. GRACIA Chofu/PARCO the latestmedicaltechnologieswithfunctions. efficiently, effectively, andconsistentlybyincorporating delivers high-qualityhospitalmanagementservices administration servicesuntilMarch 2033.Theproject ongoing PFIproject thatprovides maintenanceand demolished andreconstructed thebuildingforan While maintaininghospitalfunctionsatthesite,we Ehime PrefecturalCentralHospital Space AssociationofJapaninUrbanParks Concour Redevelopment Location Year completed Designer Project owner Client Location Year completed Designer Project owner Client Location Year completed Designer Client Location Year completed Designer Client Development Recipient ofPresidentAward fromParks &Open Engineers ofJapanTechnology Department, Recipient ofthe27thElectricalInstallation PFI PFI Facility EncouragementAward Matsuyama City, EhimePrefecture 2014 Taisei Corporation-NikkenSekkeiJV Ehime Prefecture Ehime HospitalPartners City,Hachioji Tokyo 2014 Azusa-Taisei DesignJV Hachioji City Hachioji Yumeori SupportK.K. Minato-ku, Tokyo 2015 Nihon SuikoSekkeiCo., Ltd. NTT UrbanDevelopmentCorporation, NTT Facilities, Taisei Corporation, Government BureauofSewerage Development Co. Ltd., Tokyo Metropolitan Corporation, HulicCo., Ltd., Tokyo Urban NTT UrbanDevelopmentCorporation, Taisei City,Chofu Tokyo 2015 Parking facility: Taisei Corporation TAKAHA Condominium: UrbanDynamicsInstitute B-Area RedevelopmentIndividualExecutor Parking facility: ChofuStationNorthFirst A-Area RedevelopmentUnion Condominium: ChofuStationNorthFirst 2016/08/12 20:20:48 Group Companies

Providing New Value to Meet the Various Needs of Society TAISEI Snapshot TAISEI As members of the Taisei Group, Taisei Corporation and each of the companies have established and share the Group philosophies and the Group Action Guidelines. Through this shared foundation, each company plays its own role to fulfill its responsibility to society, and contributes to the formation of a society where people can live with peace of mind and good health.

Main Domestic Group Companies Overseas Group Companies Taisei Corporation Indonesia PT.PP-TAISEI INDONESIA CONSTRUCTION

TAISEI ROTEC CORPORATION Thailand TAISEI (THAILAND) CO., LTD. Management Strategy SEIWA RENEWAL WORKS CO., LTD. Vietnam VINATA INTERNATIONAL J/V CO., LTD. TAISEI U-LEC CO., LTD. Myanmar TAISEI MYANMAR CO., LTD. TAISEI SETSUBI CO., LTD. China CSCEC-TAISEI CONSTRUCTION, LTD. TAISEI HOUSING CORPORATION The Philippines TAISEI PHILIPPINE CONSTRUCTION INCORPORATED Taisei-Yuraku Real Estate Co., Ltd. Indonesia PT. INDOTAISEI INDAH DEVELOPMENT Business Overview Sales composition (Fiscal 2015) Business Overview

Taisei Corporation / group companies Breakdown ● TAISEI ROTEC CORPORATION 6% ● Taisei-Yuraku Real Estate Co., Ltd. 6% Taisei Corporation 79% Group companies 21% ● Other 27 companies 9%

TAISEI ROTEC CORPORATION CSR ■ Pavement and civil engineering

Environmental Technologies Contributing to Building a Sustainable Society TAISEI ROTEC CORPORATION engages in business activities comprising three pillars: 1) design, implementation and management of road pavement and civil engineering works; 2) manufacture and sales of asphalt mixtures; and 3) recycling of construction materials.

In April 2015, the company opened the Jonanjima Recycle Center, a facility that uses recycled Governance Report concrete waste and other industrial waste to produce road pavement materials. All of the center’s equipment is installed indoors to prevent the dispersion of dust, noise and vibrations to the surroundings. At a time when the growing construction demand in the coming years will likely lead to an increasing volume of waste in the Tokyo metropolitan area, the Jonanjima Recycle Center will play an important role for resolving the problem. Representative Director and President Our environmental technologies comprising water-retaining and thermal-barrier pavement Yoshinori Nishida restrains the rise in road surface temperature, helping alleviate the heat island phenomenon. Social Report (Appointed on June 28, 2016) Moreover, we will pursue many environmental technologies that curb road surface noise, extend pavement life, create a comfortable pedestrian space, and create landscapes. The company will continue to work on these initiatives utilizing these environmental technologies, thereby contributing Corporate Data (Civil Engineering) to building an ecologically-friendly and sustainable society. ● Sales Recently, TAISEI ROTEC CORPORATION was charged by authorities with engaging in bidding ¥108.1 billion collusion on a road pavement and post-disaster restoration work project. We deeply regret that, ● Number of employees despite our previous efforts to develop a structure to prevent collusion and provide relevant training 962 and guidance for employees, the training and guidance were not conducted with a sufficient level of Environmental Report ● Established rigor. Thus, going forward, we will ensure an increased level of compliance and strive to prevent any June 15, 1961 comparable incident from occurring again. http://www.taiseirotec.co.jp/ Opportunities Risks

Rising demand for pavement works in Risk of industrial waste processing relation to the development of the Tokyo facilities potentially affecting the Gaikan Expressway and aged expressways external environment

Growing construction waste recycling in Risk of cost potentially rising due to the the Tokyo Metropolitan area due to rising development and performance

construction demand upgrading of recycling facilities and Corporate DataFinancial

Increasing demand for water-retaining and Risk of cost potentially rising in a scenario thermal-barrier pavement in response to where restrictions are imposed on the heat island phenomenon in urban areas procurement of asphalt mixture materials

● Sales in each company represent sales recorded before intersegment transactions are eliminated.

TAISEI ANNUAL REPORT 2016 36

013_0356501372808.indd 36 2016/08/12 20:20:49 013_0356501372808.indd 37 37 Business Overview TAISEI ANNUAL REPORT2016 ■ TAISEI U-LECCO.,LTD. http://www.taisei-yuraku. co.jp/ ● ● ● Takashi Hayashi DirectorandPresident Representative ■ Taisei-Yuraku RealEstateCo.,Ltd. Group Companies meaning itisamethodthatfriendly tothesurrounding environment. vibration anddustlevelstobekept low duringtheworkterm, to involvingashortworkterm,ourPCa methodenablesnoise, method, andallowswoodresource wastetobeavoided.Inaddition reduced byapproximately 40%compared to theconventionalwork wooden framesenablesindustrialwasteemissionvolumetobe factory before assemblingthemattheworksite.Usingalmostno industrialized methodinwhichbuildingpartsare manufactured ata concrete (PCa)condominiums.Thecompany’s PCamethodisan TAISEI U-LECCO.,LTD. isapioneerintheconstructionofprecast Environmental Load Reinforced ConcreteMethodLowering Contributing toSocietywiththePrecast Takaaki Kobayashi DirectorandPresident Representative

Corporate Data(RealEstateDevelopment) Construction ofhousingcomplexes Real estatedevelopmentandfacilitymanagement

October 1,1971 Established 2,929 Number ofemployees ¥97.0 billion Sales http://www.u-lec.com/ ● ● ● Corporate Data(BuildingConstruction)

August 1,1963 Established 435 Number ofemployees ¥34.4 billion Sales product andserviceofferings thatmeettheincreasingly diverseneedsofcustomersandsociety. functionality improvement todesignprofile upgrading. provide assetvalue-enhancingrenewal servicefrom energy-savingfacilityreplacement tofacility leverage ourstrength ofbeingwell-informedaboutthebuildingasitsmanagementcompany, and retaining theirpublicservicequality. PPP business,whichallowsmunicipalitiestoimprove workefficiency andsavecosts,contributesto entire setoffacilitiesbyprioritizingamongthemenablesustomaintainfacilityfunctionsefficiently. Our municipality onafacility-by-facilityanddepartment-by-departmentbasis.Managingrepairing an facilities. We centrallymanagefacilityadministrationoperationspreviously performedbythe engages inauniquemethod-basedPPP*businessforthemanagementofmunicipality-ownedpublic provides optimalsolutionsforeverylifestageandbuildingcycleofthecustomer. As acompositereal estateandfacilitymanagementcompany, Taisei-Yuraku RealEstateCo.,Ltd. Management Company OptimalSolutionsasaCompositeRealEstateandFacilityProviding *PPP: “Public-PrivatePartnership,”atypeofschemeinwhichpublic-andprivate-sectorentitiescollaboratetoprovide publicservices Opportunities Going forward, byutilizingourbroad operationalcategories,wewillcontinuetocreate new The companyalsofocusesitsefforts onthebuildingandcondominiumrenewal business.We In recent years,theagingofexistingbuildingshasbecomeasocialproblem. Thecompany

becoming environmentally friendly Growing energy-saving needsfor the agingofexistingbuildings An expandingrenewal marketdueto TAISEI SETSUBICO.,LTD. responsibility asanenterprise. environment-prioritizing society, wewillfulfilloursocial comfortable livingenvironment towards realizing aglobal the managementpolicyofdeliveringasafe,secure and company hasbeenworkingoninnovationandinvention.Under founding, basedonitshalf-centuryofresults andexperience,the and workimplementationforgeneralfacilityprojects. Sinceits TAISEI SETSUBICO.,LTD. isacompanyspecializingindesign by Society Seeking toRemainanEnterpriseTrusted Takashi Takashima DirectorandPresident Representative ■

General buildingservicesconstruction Risks

aging society occurring owingtolowbirthrateand Risk ofaworkforce shortagepotentially decreasing duetopopulationdecline Risk ofreal estatedemandpotentially http://www.taisei-setsubi.jp/ ● ● ● Corporate Data(BuildingConstruction)

April 1,1965 Established 432 Number ofemployees ¥32.9 billion Sales 2016/08/12 20:20:49 TAISEI HOUSING CORPORATION SEIWA RENEWAL WORKS CO., LTD. ■ Order-made individual housing construction ■ Mechanical equipment, renewal of foundations and ground works

Corporate Data (Building Construction) Corporate Data (Civil Engineering) TAISEI Snapshot TAISEI

● Sales ● Sales ¥25.3 billion ¥13.9 billion ● Number of employees ● Number of employees 551 200 ● Established ● Established November 19, 1997 October 1, 1956 http://www.palcon.jp/ http://www.seiwarw.co.jp/ Management Strategy

Representative Director and President Representative Director and President Shinichi Hirajima Fuminori Mashiko

Contributing to Society by Promoting Contributing to Building a Safe Social the Spread of “Palcon” Infrastructure Business Overview TAISEI HOUSING CORPORATION succeeded to the philosophy Since its founding in 1956, SEIWA RENEWAL WORKS CO., LTD. Business Overview and technologies of the wall type reinforced concrete housing has been meeting society’s needs while deeming the contribution “Palcon,” which was developed previously by Taisei Corporation toward building a safe social infrastructure as its mission. Going by applying its high-rise building construction technologies to forward, the company will seek to remain an enterprise that single-family house building. We thus strive to advance the constantly contributes to society on the basis of its sophisticated penetration of disaster-resistant single-family houses. We will skills and reliable quality by leveraging its characteristics as a CSR contribute to building a disaster-resistant society by promoting the composite engineering company that has fundamental, machinery, further spread of the “Palcon” housing which has been providing environment and renewal business lines as well. customers with a secure and comfortable living environment over many years since its market rollout in 1969.

PT.PP-TAISEI INDONESIA CONSTRUCTION VINATA INTERNATIONAL J/V CO., LTD. Governance Report ■ Contributing to creating affluent lifestyles overseas ■ Total support of customers entering overseas markets

Corporate Data (Overseas subsidiary) Corporate Data (Overseas subsidiary)

● Sales ● Sales ¥5.2 billion ¥4.7 billion ● Number of employees ● Number of employees

443 370 Social Report ● Established ● Established May 8, 1974 June 2, 1993 http://www.vinata.com.vn/

Director and President Director and President Yukio Matsuno Seiichiro Kuwabara

Creating Safe Living Space with Skills and Contributing to Developing and Modernizing Environmental Report Confidence Identical to Those in Japan the Fast-Growing Vietnam Since its founding in 1974, PT.PP-TAISEI INDONESIA Since its founding in 1993, VINATA INTERNATIONAL J/V CO., LTD. CONSTRUCTION has been continuing to engage in construction has been in operation with major local general constructor Vinaconex works on high-rise buildings and public buildings as well as as its partner, and celebrated its 22nd anniversary in 2015. factories and offices of Japanese-owned companies across Over the years, we were involved in 400 projects mainly for Indonesia, with leading local general contractor PP (PT. factories while growing in tandem with Vietnam’s development. Pembangunan Perumahan) as its partner. We use skills and Currently, we cater widely for Japanese-owned companies’

confidence developed over our 42-year history to deliver safe various investment projects such as for schools, serviced and Corporate DataFinancial living space to customers. apartments and infrastructure works.

TAISEI ANNUAL REPORT 2016 38

013_0356501372808.indd 38 2016/08/12 20:20:50 013_0356501372808.indd 39 39 Business Overview TAISEI ANNUAL REPORT2016 Topics support isprovided byTaisei-Yuraku RealEstateCo.,Ltd.and real concerning estatemanagementandbrokerage services, building earthquake-andfire-resistant houseswhereas, CO., LTD andTAISEI HOUSINGCORPORATION are utilizedfor arms. Forinstance,theproduct capabilitiesofTAISEI U-LEC delivers servicesfullycapitalizingthestrengths ofitsindividual capabilities are required fortheservice. and conversionintocondominiums,meaningcomprehensive family houserebuilding; renovation intofire-resistant building; search fortentativehousingorrelocation destination;single diverse, consistingof:landandbuildingappraisalsale; construction, asservicestohelprebuild theirdailylives,is be provided toresidents required torelocate duetonewroad buildings incooperationwithlocalresidents. Serviceneededto refurbish housesinareas withahighdensityofoldtimber Promotion SectionofTaisei Corporationcontinuestohelp this developmentinitiative,UrbanResidenceRedevelopment as disasterpreparedness-purpose roads. Inaneffort tosupport developing SpecifiedDevelopmentRoutesdesignedtoserve timber buildings,isnowintheprocess offireproofing areas and Fireproof SpecialZonesinareas withahighdensityofold The Tokyo Metropolitanhavingdesignated Government, Promoting LocalResident-FriendlyHousingRenewal and theentire Taisei Group launchedtheinitiative. established theUrbanResidenceRedevelopmentPromotion SectionwithintheUrbanDevelopmentDivision, house rebuilding andurbaninfrastructure development. In aneffort tohelpresolve thisissue,Taisei Corporation event ofadisaster, expertsare nowstrivingtoimprove disasterresistance levelsforsuch areas bypromoting Towards resolving areas withahighdensityofoldtimberbuildings,locationsthatare highlydangerous inthe of OldTimber Buildings towards ResolvingtheSocialIssueofAreaswithaHighDensity Applying GroupCompanies’KnowhowandTotal Capabilities consultation service. Former employeestakeactiverole in planning taxinconnectionwithconversionintovacantlandor demolition costandreductions inreal estatetaxandcity scheme inwhichtheyare givenasubsidyforthebuilding for disasterpreparedness. asaservicetosupportpeople involvedinroads Government Redevelopment Promotion SectionbytheTokyo Metropolitan operations were entrustedtotheUrbanResidence accompanied bytheLivingRebuildingPlannerDesk,ofwhich Oimachi LineTogoshi-koen Station.Thisconsultationcenteris Desk setupbythecityoffice inalocationclosetothe Tokyu operation oftheDisasterReadinessRebuildingConsultation commissioned bytheShinagawaCityOffice torunthe The UrbanResidenceRedevelopmentPromotion Sectionwas Old Timber Ward BuildingsinShinagawa Running CommissionedOperationofConsultationCenterinanAreawithaHighDensity Activity Highlight In response totheabove-mentionedneeds,Taisei Group Residents inFireproof SpecialZonesare eligibleforanaid considering using the considering usingthe Desk, localresidents Rebuilding Consultation Disaster Readiness resistance house.Atthe rebuilding intoafire- fire-resistant precastconcrete(PCa) pursue itsendeavorsbasedontheGroup’s totalcapabilities. can livewithapeaceofmind,Taisei Corporationwillcontinueto combination ofthem. means of aspecialty-basedsegregation ofroles anda catersforhousingrenewal needscomprehensivelythus by Taisei-Yuraku RealEstateSalesCo.,Ltd.TheTaisei Group TAISEI U-LECCO., LTD. greater peace of mind. greater peaceofmind. of buildinglocalcommunitieswhere citizenscanlivewitha to therealization ofadisaster-resistant urbanenvironment and total capabilitiesoftheTaisei Group withtheaimofcontributing at Taisei Corporationwillcontinueourendeavorsbasedonthe minds oflocalresidents consistinglargelyofseniorcitizens,we residents. Whileseekingtobeconsultantssympatheticthe extensive knowledgetogivewell-thought-outservices condominium orotherdevelopmentbusiness,whousetheir Group employeeswithover40yearsofexperiencein Living RebuildingPlannerDeskisstaffed byformerseniorTaisei the landacquisitionandsecure relocation destinations.The service thatisdesignedtoresolveabout doubtsandconcerns required torelocate duetoroad developmentwithaconsulting Rebuilding Plannerservice,expertsprovide localresidents estate leasing,inheritanceandrebuilding. IntheLiving in variousrespects, includingthrough consultationonreal services atnocharge.Theseprofessionals assisttheresidents Accountants andfirst-classqualified architects withconsultation scheme inquestionare provided withlawyers, Certified Tax strength liesinearthquake-and A constructioncompanywhose With the aim of building local communities where people theaimofbuildinglocalcommunitieswhere people With medium- tohigh-rise A housebuildersupplyingPalcon-brand housing complex homes basedonearthquake- and fire-resistantwalltype TAISEI HOUSING CORPORATION reinforced concrete statutory urbanredevelopmentprojects statutory Is involvedinandsupports20%ofthe Taisei Corporation across thecountry Group Taisei housing-related service suchasproperty housing-related service Real EstateSalesCo., Ltd. A realtorthatprovidesvarioustypesof sale, leasebrokerage, renovationand lease management services lease managementservices Runs widerangeofoperationsfromsales Taisei-Yuraku condominium management service; condominium managementservice; of OBERbrandcondominiumsto Real EstateCo., Ltd. Has awealthofexperience in equivalentexchanges Taisei-Yuraku 2016/08/12 20:20:50 Corporate Social Responsibility of the Taisei Group towards Realizing Sustainability

Under its group philosophy of “To Create a Vibrant Environment for All Members of Society,” the Taisei Group strives to build safe and secure local communities and makes efforts to resolve social challenges in earnest, thereby contributing to building a sustainable society.

In the Otemachi Tower redevelopment project, a joint initiative by Tokyo Tatemono Co., Ltd. and Taisei Corporation, we Taisei Group of Companies CSR p.41 created a woodland space in Otemachi of approximately Governance Report p.47 3,600 square meters in central Tokyo under a program called Pre-Forest in which to create a woodland space in an Social Report p.61 environment comparable to the planned site and develop it Environmental Report p.71 over three years before transplanting it to the target location.

TAISEI ANNUAL REPORT 2016 40

013_0356501372808.indd 40 2016/08/12 20:20:51 Taisei Group of Companies CSR GRI G4-34、G4-36 G4-48、G4-56

Aiming to Implement the Taisei Group Philosophy of Sustainable Development Together with Society

CSR & Our Structure of Values and Policies

In order to pursue the Group Philosophy of “To create a vibrant environment for all members of society,” all officers and employees of the Taisei Group share in the Taisei Spirit, and we aim to implement sustainable development and deliver new value to society by leading the business on the basis of the Overall Principles of Conduct (Group Action Guidelines, Individual Policies) and the Overall Management Perspective (TAISEI VISION 2020, Medium-term Business Plan).

Taisei Group Philosophy Taisei Spirit To create a vibrant environment for all members of society Active and Value Evolution of Objectives to be Pursued by the Taisei Group (Goals) Transparent Culture Creation Tradition

Action Guidelines for Taisei Personnel Key Concepts That All Taisei Group Officers and Employees Must Adhere to in Order to Pursue and and the Taisei Group as a Whole Realize the Taisei Group Philosophy Active and Transparent Culture (1) Cultivating an open corporate culture (2) Securing a pleasant working environment Overall Overall TAISEI VISION 2020 (3) Respect for fundamental human rights and diversity Principles of Management Conduct Perspective Taisei Group Medium-Term Value Creation Business Plan (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 Individual Policies Evolution of Tradition ● Quality Policy ● Risk Management Policy (8) Respect for traditions ● Health and Safety Policy ● Policy on Intellectual Property

(9) Promoting partnerships with subcontractors and suppliers ● Environmental Policies ● Procurement Policy (10) Promoting environmental conservation and creation ● Declaration of TAISEI on Biodiversity Preservation ● Human Rights Policy (11) Communication with local communities ● Policy on the Protection of Personal Information ● Fundamental Corporate Governance Policy (12) Conduct in the international community (13) Appropriate disclosure of information ● Policy on Business Continuity in Times of Disaster ● Fundamental Policy to Enhance Operational Compliance Systems

(14) Fulfilling social responsibilities ● Information Disclosure Policy ● IR Policy

System for Promoting CSR

A CSR committee has been established to Diagram of CSR Promotion System promote CSR activities within the Taisei Group. Board of President CSR Committee The CSR Committee includes 5 Taisei Directors board members and officers. The CSR Promotion Section educates and Compliance Committee Corporate Communication gives guidance on CSR, and exchanges opinions Technology Committee Department of with the various departments and Group Corporate Planing Office Central Safety Committee CSR Promotion Section companies to promote the Group’s CSR activities. Environment Committee Risk Management Committee Each Central Labor Affairs Committee Department Group Companies

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CSR Management

The Taisei Group implements CSR management in line with the ISO 26000 international standard for corporate social responsibility at organizations. In order to implement the Group Philosophy, we identify the CSR issues based on both

the Overall Principles of Conduct and the Overall Management Perspective and make every effort to improve CSR Management Strategy activities through the P-D-C-A (Plan-Do-Check-Act) cycle.

Identification of KPI 1* In Overall Principles of Conduct, we categorize the Group Action Guidelines according to the seven core subjects *2 covered by the ISO 26000 to identify the main issues. In the Overall Management Perspective, we set out management

issues in line with the external environment. We consider the relevance and impact of the issues identified based on the Business Overview Overall Principles of Conduct and the Overall Management Perspective on society and the Group when we determine the CSR issues. Since FY2011, we have identified Key Performance Indicators (KPI) to confirm and improve these items.

Overall Management Perspective Social Background CSR P Importance of impact on Taisei Group management TAISEI VISION 2020 Taisei Group Medium-Term Business Plan (2015-2017) Management Task • Response to D C Governance (G) A • Social (S) issues P • Environmental (E) issues Overall Principles Establish main issues KPIs of Conduct Importance to

stakeholders Governance Report Identify KPI

P Establish CSR issues • SDGs

P Identify Important Factors Corporate actions • ISO 26000 Classify under seven core based on the Group • Stakeholder subjects covered by ISO 26000 Action Guidelines engagement, etc.

● For details, see p.43-44. Social Report

Identify Important Factors (Materiality) Important Factors To identify important factors, the CSR issues and KPI ● Respect for human rights, prohibition ● Development of a safe and secure identified in the process described above are reevaluated of discrimination society from the dual perspectives of the importance to ● Development of local communities ● Ensuring quality and improvement of ● Promotion of compliance technology

stakeholders and the importance of the impact on Taisei ● Thorough risk management ● Technological development and corporate governance for the next ● Promotion of supply chain Group management. For a perspective on the importance management generation ● Cultivation of next generation ● Thorough management of labor safety to stakeholders, we consult the level of interest in creating and welfare engineers

● Promotion of diversity Environmental Report 3 ● Support for employment and career a sustainable society based on social trends (SDGs* , ISO formation ● Establishing corporate governance 26000, etc.). ● Dialog with and information disclosure ● Protecting intellectual property to stakeholders ● Proper management and use of In the future, we intend to take into account the ● Response to environmental risks information ● Creating a workplace where it is easy ● Mitigation of and adaptation to climate opinions of external experts on methods of evaluating to work change Importance to stakeholders ● Conservation of biodiversity and ● Sustainable use of resources important factors and the result of identification and make contributions to the environment important factors clearer in collaboration with the CSR ＫＰＩ s Committee and the relevant in-house departments.

Importance of impact on Taisei Group management Financial and Corporate DataFinancial

● Important factors in the interview with top management are shown in bold.

*1 KPI： Key Performance Indicator *2 ISO 26000 themes 7 core subjects: 1.Organization Governance 2.Fair Operating Practices 3.Consumer Issues 4.Community Involvement and Development 5.Human Rights and Labor Practices Social Dialogue 6.Labor Practices 7.The Environment *3 SDGs: The acronym of Sustainable Development Goals. At the “United National Sustainable Development Summit 2015,” member countries adopted SDGs comprising 17 objectives and 169 targets to accomplish on a global basis.

TAISEI ANNUAL REPORT 2016 42

014_0356501372808.indd 42 2016/08/09 9:50:28 Taisei Corporation KPIs

P D

ISO 26000 themes 7 core subjects Main issues CSR issues KPI s FY2011 results FY2012 results FY2013 results FY2014 results FY2015 targets / results FY2016 targets

● Rate of implementation of e-learning regarding the 1.Organization Governance ● ● 90.5% 97.8% 91.1% 87.9% 100% / 94.1% 100% Corporate governance and internal controls Spreading and consolidating the Group philosophy Group philosophy

● Risk management ● Initiatives for business continuity planning (BCP) ● Rate of participation in the Large-Scale Disaster Drill 99.6% 100% 100% 100% 100% / 100% 100%

● Stakeholder engagement ● Dialog with stakeholders ● Number of dialogs 5 times 5 times 7 times 8 times 5 times / 3 times 5 times

2.Fair Operating Practices ● Promotion of compliance ● Improvement in compliance awareness ● Compliance training participation rate 100% 100% 100% 92.3% 100% / 90.8% 100%

● Number of branches training executed for compliance 12 branches 12 branches 12 branches 12 branches 12 branches / 12 branches 12 branches to the sub-contractor

1 ● Supply chain management ● Promotion of CSR procurement ● Number of companies monitored for CSR procurement * — — 160 companies 364 companies 10 companies / 10 companies 100 companies

● Measures for information security ● Measures to prevent information leakage ● Number of major information security accidents 0 cases 0 cases 1 cases 0 cases 0 cases / 4cases 0 cases

● Number of times education in information security ● 12 times 16 times 13 times 19 times 15 times / 26 times 15 times Improvement in information security awareness implemented in all companies

3.Consumer Issues ● Ensuring quality and raising customer satisfaction ● Thorough familiarization with quality control standards and procedures ● Customer satisfaction surveys (Civil Engineering) 100% 100% 100% 100% 100% / 100% 100%

● Customer satisfaction surveys (Building Construction) 80% 60% 65% 71% 100% / 75% 100%

● Innovation management ● Obtaining rights to technologies that solve social issues ● Number of patent applications filed 256 cases 297 cases 273 cases 297 cases 270 cases / 307 cases 290 cases

● Number of patents right 193 cases 224 cases 272 cases 249 cases 230 cases / 192cases 230 cases

● Number of media announcements regarding technical ● 66 cases 75 cases 84 cases 61 cases 70 cases / 58 cases 70 cases Development and providing technologies to solve social issues development and application projects ● Number of environmental and social contribution 4.Community Involvement and Development ● ● 779 cases 1,048 cases 1,076 cases 1,308 cases 800 cases / 1,116cases 1,000 cases Contributions to local communities Promotion of community contribution activities activities

● Expansion of employee volunteers ● Number of employees participating as volunteers 258 people 247 people 176 people 189 people 150 people / 199 people 200people

● Respect for human rights 5.Human Rights and Labor Practices ● Human rights education activities ● Rate of attendance at human rights training 100% 100% 100% 100% 100% / 93.8% 100%

● Numbers attending female leadership development ● ● 26 people 26 people 47 people 65 people 60 people / 66 people 60 people Diversity Initiatives Promotion of diversity training

● Number of female managers — 30 people 31 people 39 people 45 people / 53 people 56 people

● Number of female supervisors or above — 133 people 159 people 183 people 220 people / 232 people 265 people

● Rate of employment of handicapped persons 1.88% 1.95% 2.05% 2.07% 2.00%/2.08% 2.00%

● Creating a pleasant workplace ● Supporting the balance between work and life ● Number of re-employed 676 people 582 people 643 people 654 people 670 people / 673 people 670 people

● Numbers taking leave for childcare (male) 2 people 1 people 4 people 2 people 2 people / 4 people 5 people

● Rate of returning to work from childcare leave 93.8% 95% / 100% 95% (female)*2 （27 people）（37 people）（31 people） Social Report (S) ● Numbers taking leave when their spouse gives birth 70 people 76 people 97 people 88 people 80 people / 89 people 85 people

● Numbers taking nursing care leave (male) 30 people 36 people 46 people 49 people 50 people / 68 people 60 people

● Numbers taking nursing care leave (female) 85 people 82 people 107 people 99 people 100 people / 111 people 100 people

● Number of participants at care giving seminars — — — 239 people 250 people / 358 people 350 people

● Rate of paid leave utilization 32.6% 34.2% 29.0% 32.4% 35.0% / 34.6% 35.0%

● Rate of refresh leave utilization 88.9% 88.4% 86.7% 84.6% 85.0% / 86.3% 85.0%

● Rate of milestone leave utilization 78.2% 74.1% 70.3% 68.0% 75.0% / 95.3% 95.0%

● Promotion of human resource development ● Support for employees’ career development ● Training hours per person 40.0 hours 42.1 hours 42.2 hours 43.8 hours 43.0 hours / 44.6 hours 43.0 hours

● Number of trainees at overseas sites, etc. 26 people 16 people 12 people 6 people 10 people / 11 people 10 people

● Number of trainees at overseas training organizations 17 people 10 people 11 people 4 people 10 people / 5 people 10 people

3 6.Labor Practices ● Improvement in safety and health standards ● Improvement of Safety and Health Standards ● Number of fatal accidents* 4 cases 2 cases 3 cases 4 cases 0 cases / 2 cases 0 cases

3 4 ● Horizontal propagation of accident and damage prevention ● Thoroughgoing occupational health and safety management ● Frequency rates* （0.58） 0.81 0.84 0.97 0.95 or below / 0.56 0.85 or below

● Rate of reduction of predicted CO2 emissions in the 7.The Environment Environmental management activities ● 37.5% 43.6% 35.3% 37.5% 35% or above / 41.7% 35% or above Contribution to realizing a low carbon society building operation stage

● Response to global warming ● Rate of reduction CO2 emissions in construction stage 50.8% 55.9% 48.0% 56.8% 42% or above / 52.7% 45% or above

5 ● Efficient utilization of resources ● Promotion of 3R activities ● Decrease construction waste final disposal rate* （94.9%）（95.6%）（95.6%）（95.2%）4.8% 4.7% or below / 4.7% 4.0% or below

● Conservation of biodiversity ● Promotion of green procurement ● Rate of green procurement 39.1% 30.6% 33.4% 36.1% 30% or above / 28.7% 30% or above

● Response to environmental risk ● Proper management of construction waste ● Rate of use of Electronic Manifest System 81.7% 85.9% 86.4% 91.6% 85% or above / 93.9% 90% or above

● Number of media announcements regarding environmental ● ● 32 cases 30 cases 30 cases 41 cases 20 cases or above / 39 cases 20 cases or above Promotion of technical development Providing environmentally friendly technologies technology development and application projects Environmental Report (E) Environmental

● Comprehensive environmental activities (See p.72 Taisei Agenda 2016)

*1 Until 2014, the coverage of the survey is Taisei Corporation (domestic). From 2015, the coverage of the survey is Overseas Business offices (Taiwan). *2 Until 2013, Numbers taking leave for childcare (female). From 2014, change to rate of returning to work from childcare leave

43 TAISEI ANNUAL REPORT 2016

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C A

ISO 26000 themes 7 core subjects Main issues CSR issues KPI s FY2011 results FY2012 results FY2013 results FY2014 results FY2015 targets / results FY2016 targets

● Rate of implementation of e-learning regarding the 1.Organization Governance ● Corporate governance and internal controls ● Spreading and consolidating the Group philosophy 90.5% 97.8% 91.1% 87.9% 100% / 94.1% 100%

Group philosophy Snapshot TAISEI

● Risk management ● Initiatives for business continuity planning (BCP) ● Rate of participation in the Large-Scale Disaster Drill 99.6% 100% 100% 100% 100% / 100% 100%

● Stakeholder engagement ● Dialog with stakeholders ● Number of dialogs 5 times 5 times 7 times 8 times 5 times / 3 times 5 times

2.Fair Operating Practices ● Promotion of compliance ● Improvement in compliance awareness ● Compliance training participation rate 100% 100% 100% 92.3% 100% / 90.8% 100%

● Number of branches training executed for compliance 12 branches 12 branches 12 branches 12 branches 12 branches / 12 branches 12 branches to the sub-contractor

1 ● Supply chain management ● Promotion of CSR procurement ● Number of companies monitored for CSR procurement * — — 160 companies 364 companies 10 companies / 10 companies 100 companies

● Protection, management and use of intellectual property ● Practice of intellectual property strategy ● Number of training regarding intellectual property rights 31 times 36 times 40 times 32 times 30 times / 30 times 30 times Management Strategy ● Measures for information security ● Measures to prevent information leakage ● Number of major information security accidents 0 cases 0 cases 1 cases 0 cases 0 cases / 4cases 0 cases

● Number of times education in information security ● 12 times 16 times 13 times 19 times 15 times / 26 times 15 times Improvement in information security awareness implemented in all companies

● Customer satisfaction surveys (Building Construction) 80% 60% 65% 71% 100% / 75% 100%

● Innovation management ● Obtaining rights to technologies that solve social issues ● Number of patent applications filed 256 cases 297 cases 273 cases 297 cases 270 cases / 307 cases 290 cases

● Number of patents right 193 cases 224 cases 272 cases 249 cases 230 cases / 192cases 230 cases Business Overview

● Expansion of employee volunteers ● Number of employees participating as volunteers 258 people 247 people 176 people 189 people 150 people / 199 people 200people

● Respect for human rights CSR 5.Human Rights and Labor Practices ● Human rights education activities ● Rate of attendance at human rights training 100% 100% 100% 100% 100% / 93.8% 100%

● Numbers attending female leadership development ● ● 26 people 26 people 47 people 65 people 60 people / 66 people 60 people Diversity Initiatives Promotion of diversity training

● Number of female managers — 30 people 31 people 39 people 45 people / 53 people 56 people

● Number of female supervisors or above — 133 people 159 people 183 people 220 people / 232 people 265 people

● Rate of employment of handicapped persons 1.88% 1.95% 2.05% 2.07% 2.00%/2.08% 2.00%

● Creating a pleasant workplace ● Supporting the balance between work and life ● Number of re-employed 676 people 582 people 643 people 654 people 670 people / 673 people 670 people

● Numbers taking leave for childcare (male) 2 people 1 people 4 people 2 people 2 people / 4 people 5 people Governance Report

● Rate of returning to work from childcare leave 93.8% 95% / 100% 95% (female)*2 （27 people）（37 people）（31 people）

● Numbers taking leave when their spouse gives birth 70 people 76 people 97 people 88 people 80 people / 89 people 85 people

● Numbers taking nursing care leave (male) 30 people 36 people 46 people 49 people 50 people / 68 people 60 people

● Numbers taking nursing care leave (female) 85 people 82 people 107 people 99 people 100 people / 111 people 100 people

● Number of participants at care giving seminars — — — 239 people 250 people / 358 people 350 people Social Report

● Rate of paid leave utilization 32.6% 34.2% 29.0% 32.4% 35.0% / 34.6% 35.0%

● Rate of refresh leave utilization 88.9% 88.4% 86.7% 84.6% 85.0% / 86.3% 85.0%

● Rate of milestone leave utilization 78.2% 74.1% 70.3% 68.0% 75.0% / 95.3% 95.0%

● Number of trainees at overseas sites, etc. 26 people 16 people 12 people 6 people 10 people / 11 people 10 people

● Number of trainees at overseas training organizations 17 people 10 people 11 people 4 people 10 people / 5 people 10 people

3 Environmental Report 6.Labor Practices ● Improvement in safety and health standards ● Improvement of Safety and Health Standards ● Number of fatal accidents* 4 cases 2 cases 3 cases 4 cases 0 cases / 2 cases 0 cases

● Response to global warming ● Rate of reduction CO2 emissions in construction stage 50.8% 55.9% 48.0% 56.8% 42% or above / 52.7% 45% or above

● Conservation of biodiversity ● Promotion of green procurement ● Rate of green procurement 39.1% 30.6% 33.4% 36.1% 30% or above / 28.7% 30% or above

● Response to environmental risk ● Proper management of construction waste ● Rate of use of Electronic Manifest System 81.7% 85.9% 86.4% 91.6% 85% or above / 93.9% 90% or above Financial and Corporate DataFinancial ● Number of media announcements regarding environmental ● ● 32 cases 30 cases 30 cases 41 cases 20 cases or above / 39 cases 20 cases or above Promotion of technical development Providing environmentally friendly technologies technology development and application projects

● Comprehensive environmental activities (See p.72 Taisei Agenda 2016)

*3 Year Key Performance Indicators (KPIs) Targets *4 Until 2011, 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 *5 Until 2013, rate of recycling of construction waste. From 2014, change to Decrease construction waste final disposal rate TAISEI ANNUAL REPORT 2016 44

014_0356501372808.indd 44 2016/08/09 9:50:28 Group Company KPIs

TAISEI ROTEC CORPORATION ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Ｇ 2. Fair Operating Improvement in compliance awareness Compliance training participation rate 100% 100% 100% / 100% 100% Practices Thorough familiarization with quality control Ratio of achievement of target score in 3. Consumer Issues construction evaluation (number achieved / 34.0% 43.0% 50.0% / 50.0% 50.0% standards and procedures total number) Ｓ Rate of taking refreshment leave 5. Human Rights and Supporting the balance between work and life 44.4% 53.2% 100% / 88.2% 100% Labor Practices (Acquisition time limit 2 years) Thoroughgoing occupational health and 6. Labor Practices safety management Frequency rates 0.8 0.5 0.6 or below / 0.3 0.5 or below Ｅ Number of times training for prevention of 7. The Environment Proper control of construction waste industrial waste accidents was implemented ーー 9 times / 9 times 9 times

Taisei-Yuraku Real Estate Co., Ltd. ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Initiatives for business continuity planning Rate of participation in the Large-Scale 1. Organization 100% 100% 100% / 100% 100% Governance (BCP) Disaster Drill Ｇ Improvement in compliance awareness Participation rate for e-learning on compliance ーー 100% / 100% 100% 2. Fair Operating Practices Rate of implementation of Information Measures to prevent information leakage security measures ー 100% 100% / 100% 100% Ｓ 5. Human Rights and Support for employees’ career development Participation rate for training 98.2% 98.6% 100% Labor Practices ー / 99.0% Rate of reduction of electrical power usage (office)* 13% 8.4% 1.0% / 9.2% 1.5% Ｅ Providing environmentally friendly 7.The Environment technologies Number of projects proposing improvement in energy effi ciency at customers’ facilities 25 cases 47 cases 24 cases / 65 cases 40 cases

TAISEI U-LEC CO., LTD. ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Ｇ 2. Fair Operating Improvement in compliance awareness Compliance training participation rate 100% Practices ーー－ / 97.2％ Thorough familiarization with quality control 3. Consumer Issues Rate of return of customer questionnaires 82% 81% 75% / 87% ー* Ｓ standards and procedures Thoroughgoing occupational health and safety Number of fatal accidents 0 cases 0 cases 0 cases / 0 cases 0 cases 6. Labor Practices management Frequency rates 0.84 0.00 0.70 or below / 0.55 0.70 or below Ｅ Promotion of 3R activities Rate of recycling of construction waste 98% 96.8% 98% / 98.2% 98% or above 7. The Environment Proper management of construction waste Rate of adoption of Electronic Manifest 93% 99.4% 98% / 99.4% 98% or above

TAISEI SETSUBI CO., LTD. ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Ｇ 2. Fair Operating Improvement in compliance awareness Compliance training participation rate 100% 100% 100% / 100% 100% Practices Measures to prevent information leakage Rate of attendance at information security education 99.3% 99.7% 100% / 100% 100% Rate of return to work from mental health 5. Human Rights and Supporting the balance between work and life 100% 100% 100% / 100% 100% Ｓ Labor Practices leave Comprehensive environmental activities Rate of attendance at environment related education 74% 87% 100% / 95.7% 100% 7. The Environment Ｅ Providing environmentally friendly technologies Percentage of energy efficiency proposals to customers 100% 98.7% 100% / 76.8% 100%

TAISEI HOUSING CORPORATION ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Initiatives for business continuity planning Rate of participation in the Large-Scale 1. Organization 100% 100% 100% / 100% 100% Ｇ Governance (BCP) Disaster Drills 2. Fair Operating Improvement in compliance awareness Compliance training participation rate 100% 100% 100% / 100% 100% Practices Thorough familiarization with quality control 3. Consumer Issues Customer satisfaction surveys (promoter survey) 95% 95% 100% / 95% 100% Ｓ standards and procedures Promotion of community contribution Number participating in social responsibility 4. Community Involvement 15 people 20 people 20 people / 23 people 20 people and Development activities activities Ｅ Rate of adoption of electronic manifest 99.3% 99.2% 99.5% / 98.3% 99.5% 7. The Environment Proper management of construction waste Rate of mixed waste in construction waste 12.6% 10.8% 10.5% / 11.8% 12%

SEIWA RENEWAL WORKS CO., LTD. ISO 26000 themes 7 core subjects CSR issues KPIs FY2013 results FY2014 results FY2015 targets / results FY2016 targets Initiatives for business continuity planning Rate of participation in the Large-Scale 1. Organization 100% 100% 100% / 100% 100% Ｇ Governance (BCP) Disaster Drills 2. Fair Operating Improvement in compliance awareness Compliance training participation rate 100% Practices ーーー / 100％ 5. Human Rights and Supporting the balance between work and life Numbers taking nursing leave and caregiving leave 1 people 2 people 3 people / 3 people 4 people Labor Practices Ｓ Thoroughgoing occupational health and 6. Labor Practices safety management Number of labor accidents (4 or more days off work) 4 cases 1 cases 0 cases / 1 cases ０ cases 3. Consumer Issues Development and providing technologies to Ｅ Number of technical proposals submitted 8 cases 11 cases 16 cases / 11 cases 12 cases 7. The Environment solve social issues

*As to the rate of return of customer questionnaires, amendment to the targets for fiscal 2016 shall be deliberated

45 TAISEI ANNUAL REPORT 2016

014_0356501372808.indd 45 2016/08/09 9:50:28 ISO 26000 and CSR Activity Report The 2015 CSR activities based on the seven core subjects covered by the ISO 26000 are reported here. We will promote the Overall Principles of Conduct and Overall Management Perspective in an integrated manner and we will aim for the sustainable development of society and to improve corporate value through our business activities.

Governance Report（G） p.47 Snapshot TAISEI 1. Organization Governance 2. Fair Operating Practices (Overall Principles of Conduct) Basic Conceptual Approaches (Overall Principles of Conduct) Basic Conceptual Approaches In order to secure the trust of society and at the same time to develop as a sustainable corporation, Taisei recognizes corporate ethics and compliance as the fundamentals of our business the Taisei Group regards swift, accurate, fair and transparent decision-making in management as operations. We not only make this clear in our Action Guidelines to TAISEI personnel and the the fundamental idea for corporate governance. [Group Action Guidelines (1)-(14)] TAISEI Group as a whole, but also engage in a variety of measures to encourage self control and self-awareness of each and every executive and employee on this matter. [Group Action “Overall Management Perspective” Medium-Term Guidelines (9)(12)(13)(14)] Business Plan (2015-2017) Management Goals “Overall Management Perspective” Medium-Term Developing the business foundation Management Strategy ● Business Plan (2015-2017) Management Goals ・ Establishing corporate governance for the next-generation ● Developing the business foundation ・ Establishing corporate governance for the next-generation Social Report（S） p.61 3. Consumer Issues 4. Community Involvement and Development (Overall Principles of Conduct) Basic Conceptual Approaches (Overall Principles of Conduct) Basic Conceptual Approaches The Taisei Group aims to contribute to society as a whole and to develop sustainably as a Taisei Group, as a good corporate citizen, will build sound relationships with local Business Overview corporate group. communities and promote dialog and harmony with society. We will also contribute to the For such purposes, we will continue to provide our customers and society as a whole development of society as a whole. [Group Action Guidelines (8)(11)] with ensured quality in our products and services as well as such technologies as necessary for the resolution of social issues. [Group Action Guidelines (4)(5)(6)(7)] “Overall Management Perspective” Medium-Term Business Plan (2015-2017) Management Goals

“Overall Management Perspective” Medium-Term CSR Business Plan (2015-2017) Management Goals ● Actively contributing to improving ● Establishing next-generation infrastructures business models in the focused ● Actively contributing to ● Promoting the development of next- fields improving infrastructures generation technologies ・ Actively contributing to earthquake disaster reconstruction projects ・ Promoting introduction of smart ・ Participating in development of ・ Upgrading technologies for earthquake-related communities in large-scale the major infrastructures for problems redevelopment projects, etc. public security, safety and convenience ● Improving the total strength of the Taisei Group ・ Participating in projects for a steady supply of electricity ・ Strengthening joint cooperation among the Group for urban housing renewal and development of new renewal technologies for infrastructures Governance Report 5. Human Rights and Labor Practices 6. Labor Practices (Overall Principles of Conduct) Basic Conceptual Approaches (Overall Principles of Conduct) Basic Conceptual Approaches At the Taisei Group, we create a corporate climate with good communication and respect for Taisei’s basic concept on our Health and Safety Policy is that all work-related accidents basic human rights and diversity. We do not condone discrimination based on ethnicity, are preventable. religious beliefs, gender, nationality, social position, disability, or sexual orientation. It is a Safety must be our top priority as a member of the construction industry. To this end, matter of basic policy to respect cultures and customs and to comply with local laws at our we call for a safety first posture in the workplace, endeavoring to provide a safe, anxiety- overseas businesses. [Group Action Guidelines (1)(2)(3)] free working environment. [Group Action Guidelines (1)(2)(3)] Social Report “Overall Management Perspective” Medium-Term “Overall Management Perspective” Medium-Term Business Plan (2015-2017) Management Goals Business Plan (2015-2017) Management Goals ● Developing the business foundation ● Strengthening domestic construction ● Developing the business projects foundation ・ Promoting diversity management to support further active roles of women, foreigners, and elderly ・ Improving construction capabilities ・ Utilizing ICT ・ Nurturing and improving human resources ・ Strengthening safety management systems Environmental Report（E） p.71 7. The Environment Environmental Report (Overall Principles of Conduct) Basic Conceptual Approaches The taisei Group is formulating Environmental Policies aimed at the formation of an environmentally friendly society. We will determine objectives and measures for taking action, strive for “preservation and creation of the environment” and promote “advanced environmental business.” [Group Action Guidelines (10)] “Overall Management Perspective” Medium-Term Business Plan (2015-2017) Management Goals ● Actively contributing to improving infrastructures ● Establishing next- generation business ・ Actively contributing to earthquake disaster reconstruction projects models in the focused

fields and Corporate DataFinancial Promoting the development of next-generation ● ・ Strengthening biodiversity technologies offset management ・ Upgrading environment & smart community related proposals technologies

➡ The management issues for the Medium-Term Business Plan (2015-2017) are reported in detail in the section on Financial Information (see p.91-92) including the medium- to long-term corporate business strategy, the eight tasks (positive contributions), and the business risks (12 items) (avoidance of negative factors).

TAISEI ANNUAL REPORT 2016 46

014_0356501372808.indd 46 2016/08/09 9:50:29 015_0356501372808.indd 47 47 Governance Report TAISEI ANNUAL REPORT2016 ■ and itsofficial website. such GeneralMeetingofShareholders through theTDnetsystem Company shallannounceelectronically theinformationrelevant to rights appropriately. Inaddition,priortodispatchingeachnotice,the such GeneralMeetingofShareholders andexercise theirvoting provide itsshareholders timetosufficiently considertheagendaof scheduled dateofsuchGeneralMeetingShareholders inorder to its GeneralMeetingofShareholders atleastfourweekspriortothe The Companyshallendeavortodispatchtheconvocationnoticeof ❶ Sustainable Development Foundations for Fundamental Corporate Governance Policy* Fundamental CorporateGovernance Taisei Corporation(the“Company”)hasestablishedthis Basic Policy andManagementSystems forGovernance system across thewholeGroup. independent andeffective auditsandtostrengthen theauditing Departments, thein-houseAuditingDepartmenttoimplement close collaborationwiththeAccountingAuditorsandAuditing independently oftheBoard andtheoperatingdivisions,worksin Audit&SupervisoryBoardExternal Members),operating affairs. Inaddition,theAudit&SupervisoryBoard (includingfour important managementdecisionsandthesupervisionofcorporate MembersoftheBoard)External togiveitsundividedattention Committees oftheBoard toallowtheboard (includingtwo introduced asystemofExecutiveOfficers andestablishedseveral Culture”, "Value Creation" and"Evolution of Tradition." Spirit”, whichembodiesourcommitmentto“ActiveandTransparent society" (the“Taisei Group Philosophy”)andtheso-called“Taisei Group, being"tocreate avibrantenvironment forallmembersof the “Taisei Group”) inaccordance withthephilosophyofTaisei value oftheCompanyanditssubsidiariesaffiliates (collectively, sustainable developmentandimprovement inthemid-tolong-term ｅｂＷ ISO 26000 Accounting Auditors Governance system Governance General MeetingofShareholders(heldonJune29, 2016) Group Companies In linewiththebasicpolicy, theTaisei Corporationhas Corporate Governance and Internal Controls andInternal Corporate Governance Corporate Governance ReportsubmittedtotheStockExchange. Corporate Governance Please refer tohttp://www.taisei.co.jp/english/profile/Fundamental_Corporate_Governance_Policy.pdf Policyat for FundamentalCorporateGovernance Taisei Corporation andthe Audit

Collaborate Appoint ❼❼ OrganizationGovernance Collaborate Audit &SupervisoryBoardMembers/ Board Members’Department Audit &SupervisoryBoard Collaborate Audit &Supervisory Support Appoint 1 inorder toachieve ❹❹ ❺❺ Internal Audit General MeetingofShareholders Auditing Department Operating Division Audit Collaborate ❻❻ the Board’s operationsmaybeeffectively carriedout. that theindependentandobjectiveoversightofexecution MembersoftheBoardIndependent External inorder toensure Committee establishedwithintheBoard. after thecompletionofdeliberationsbyExecutivePersonnel election ofanExecutiveOfficer shallbedeterminedbytheBoard Standards fortheBoard RegulationsoftheCompany. Articles ofIncorporation,theBoard Regulations,andtheApplication business decisionsasprovided forinthelawsandregulations, the and shallmakedecisionsregarding theexecutionofmaterial appropriateness, andtransparency fairness, forthemanagement, function oftheCompany'soveralloperatingactivities,thusensuring preceding paragraph,theBoard shallexercise itssupervisory in themid-tolong-term. Company inasustainablemannerandimprove itscorporatevalue structurecorporate governance tofacilitatethegrowth ofthe shall beresponsible formaintaininganefficient andeffective for thecommonbenefitofCompanyanditsshareholders, and The Board, entrustedbytheshareholders, shallpursueactivities ❷ Officers; 3)theFinanceCommittee responsible fordeliberatingon the remuneration oftheMembersBoard andExecutive theRemunerationCommitteeresponsible fordeliberatingon 2) matters oftheMembersBoard andExecutiveOfficers; Committee responsible fordeliberatingonthepersonnelrelated committees withintheBoard: 1)theExecutivePersonnel by theBoard, theCompanyhasestablishedfollowing For thepurposeofexpeditingdeliberationsanddecision-makings ❸ Members oftheBoard/(convened13timesinFY2015) Committees oftheBoard At leasttwo(2)oftheMembersBoard shallbe Nomination ofaprospective MemberoftheBoard and Forthepurposeoffulfilling responsibility describedinthe ❶❶ Members oftheBoard/ Chief ExecutiveOfﬁcer Operating Division President and Appoint Appoint /Supervise Operations Committee Prior Consultation and Reporting ❷❷ Report /Advice Committees oftheBoard Operating Division ❽❽ Special Committee ❸❸ ❾❾ 2016/08/12 20:26:38 ISO 6.2.3 GRI G4-35、G4-48、G4-39 TAISEI Snapshot TAISEI

経営戦略

the potential acquisition and holding of significant assets; 4) the ❽ Operations Committee CSR Committee responsible for deliberating on matters to We have set up a range of operations committees including the Management Strategy enhance the entire Group's CSR-based business management. Technology Committee, the Central Safety Committee, the ❹ Audit & Supervisory Board Members / Environment Committee, the Risk Management Committee, and Audit & Supervisory Board (convened 14 times in FY2015) the Central Labor Affairs Committee to deliberate matters that As an entity independent of the Board and the Operating involve consultations with the President. Divisions, and in accordance with the Audit Policy established by ❾ Special Committee the Audit & Supervisory Board, the Audit & Supervisory Board We have set up the Compliance Committee chaired by an external Members audit the performance of the Member of the Board

expert as a Special Committee to respond to consultations with the Business Overview including attending the meetings of the Board and hearing of President and we endeavor to reinforce the promotion of compliance. reports on business conditions from the Members of the Board. The Audit & Supervisory Board Members and the Chief Promotion of Internal Controls Executive Officer, the Auditing Department and the Accounting At Taisei Corporation, the Board has established a “Basic Policy

Auditors hold regular meetings to arrive at mutual understanding CSR and to improve the effectiveness of the audits. for Development of a System for Ensuring Appropriate Business Operations”*2 and implemented a range of measures to ensure the ❺ Audit & Supervisory Board Members’ Department credibility of financial reporting and systems for conducting In order to assist the Audit & Supervisory Board Members in the operations in an appropriate and efficient manner as a Group. performance of their duties, the Audit & Supervisory Board In April 2015, the policy regarding development of the “System for Members’ Department has been set up independently of the Ensuring Appropriate Business Operations in the Whole Group” and the Board as a dedicated organization to support the Audit & “System for Ensuring Effectiveness of the Audits by Audit & Supervisory Supervisory Board Members with the collection of appropriate Board Members” were put into practice based on the amendment to the Governance Report information and other tasks. Companies Act in May the same year. Through these systems, we will deliver improved risk management and compliance. ❻ Auditing Department ➡Please refer to p. 50 for Risk Management and p. 53 for Compliance. Based on the annual auditing plan, the Auditing Department also conducts internal audits of administrative and management Ensuring Credibility of Financial Reporting systems, as well as the legality and rationality of the management of Internal controls on financial reporting based on the Financial corporate affairs at all in-house departments and Group companies. Instruments and Exchange Act are recognized as one of the most important issues for a corporation. We have set up the internal Social Report ❼ Accounting Auditors systems including daily monitoring to ensure the credibility of the The Accounting Auditors submit reports on the audit plan and the financial reporting disclosed to the public. The effectiveness of the audit results to the Audit & Supervisory Board, the Accounting system is evaluated by the Audit Department and audited by Department and other internal control departments as needed. KPMG AZSA LLC. The results are disclosed in the Internal Control To ensure the external accounting auditors conduct fair and Report and in the Audit Report of Internal Controls. We will fulfill appropriate audits, the management of the Company, Audit & our social responsibility as a corporation by continuing to ensure Supervisory Board Members and the Auditing Department shall the effectiveness of these internal controls.

have meetings on a regular and as-needed basis, and exchange In order to continue to operate the internal control systems relating Environmental Report their opinions with the external accounting auditors. Further, the to financial reporting in a sound manner, we are also publishing Board shall respond appropriately if external accounting auditors messages from the President, implementing e-learning, and other detect dishonest practices and request that appropriate action be campaigns to raise awareness among officers and employees. taken, or indicate errors or problems. Financial and Corporate DataFinancial

*1 Formulated in November 2015 *2 Formulated in May 2006. Final revision in April 2015.

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015_0356501372808.indd 48 2016/08/12 20:26:38 015_0356501372808.indd 49 49 Governance Report TAISEI ANNUAL REPORT2016 ■ with theAudit&SupervisoryBoard. Supervisory Board Membersshallbedetermineduponconsultation ahead ofboard meetings, whileremuneration forAudit& Remuneration Committee,whichcarriesoutpreliminary reviews and willbedeterminedbytheBoard afterdeliberationbythe thesystemofremunerationconcerned, shallreflect performance Supervisory Board Membersshallnotexceed12millionyen. June 29,1994,thesumtotalofmonthlyremuneration forAudit& passed atthe134thAnnualGeneralMeetingofShareholders on the Board shallnotexceed70millionyen.Basedonaresolution 2006, thesumtotalofmonthlyremuneration fortheMembersof at the146thAnnualGeneralMeetingofShareholders onJune27, specifications and responsibilities. Basedona resolution passed performance ofourbusiness,aswellindividualjob comprehensive perspectivethatincludesthescale,content,and Remuneration fortheMembersofBoard isdeterminedfrom a Remuneration forOfficers Member Board Supervisory Audit& Member Board Supervisory Audit& Member Board Supervisory Audit & the Board Member of the Board Member of Classification ISO 26000 Major activities of external Members of the Board and External Audit & Supervisory BoardMembers Major activitiesofexternal Members oftheBoardandExternalAudit&Supervisory the Corporate Governance Code. Course attendance rate was 94.1%. Code.Courseattendanceratewas94.1%. the CorporateGovernance conducted atrainingcoursetodeepen understandingoftherelationship betweentheGroup philosophy and Group PhilosophysinceFY2011.Afterreconfirming thecompositionofGroup PhilosophyinFY2015,we To spread andconsolidatetheGroup Philosophy, coursesaboutthe wehaveoperatedannuale-learning ● Spreading andConsolidatingtheTaisei GroupPhilosophy Further, where remuneration fortheMembersofBoard is

Corporate PlanningDepartment, CorporatePlanningOffice Kiwamu Miyakoshi Shigeru Morichi Terunobu Maeda Fumio Sudo Toru Tsuji OrganizationGovernance Name and offered opinionsregarding theexecutionofdutiesaudit&supervisoryboard member. offered hisopinionsasandwhenappropriate basedonthedeepinsightsobtainedfrom hisexperienceasapoliceofficer, He attendedalloftheboard meetingsandaudit&supervisoryboard meetingsheldduringthecurrent fiscalyear. He duties ofaudit&supervisoryboard member. deep insightsobtainedfrom hisexperienceasauniversityprofessor, andoffered opinionsregarding theexecutionof supervisory board meetingsheldduringthesameperiod.Heoffered hisopinionsasandwhenappropriate basedonthe He attended12outofatotal13board meetingsheldinthecurrent fiscalyearand13ofatotal14audit& opinions regarding theexecutionofdutiesaudit&supervisoryboard member. offered hisopinionsasandwhenappropriate basedonhisbroad knowledgeoffinanceandaccounting,offered He attendedalloftheboard meetingsandaudit&supervisoryboard meetingsheldduringthe current fiscalyear. He system andstrengthen corporategovernance. member oftheboard, heoffered usefulopinionsto theCompany’s managementinorder control toestablishaninternal obtained from hisexperienceasamanagerindifferent industryandfrom hisneutralpositionandviewasanexternal He attended12outofatotal13board meetingsheldduringthecurrent fiscalyear. Basedonthedeepinsights strengthen corporategovernance. board, heoffered usefulopinionstotheCompany’s managementinordercontrol toestablishaninternal systemand experience asamanagerindifferent industryandfrommemberofthe hisneutralpositionand viewasanexternal He attendedalltheboard meetingsheldinthecurrent fiscalyear. Basedonthedeepinsightsobtainedfrom his ■ Board Member ofthe Board Member Supervisory Audit & Category for listingmarketablesecuritiesontheTokyo StockExchange. and are registered asindependentofficers basedonthe regulations the standards forindependencedeterminedbystockexchanges Audit&SupervisoryBoardExternal Members).Allsixofficers meet officers MembersoftheBoardappoints sixexternal (External and In order toimprove Taisei corporategovernance, Corporation OfficersAppointment ofExternal the Board and Audit & Supervisory BoardMember the BoardandAudit&Supervisory Amounts ofremunerationandotherspaidtoMembers Major activities Number of aesAmountPaid Payees 13 8 Total 106 498 94.1 the Taisei GroupPhilosophy e-learning regarding Rate ofimplementation External BoardMember Audit &Supervisory Number of ISO GRI aesAmountPaid Payees External MembersoftheBoardand 4 2 G4-35、G4-48、G4-51 6.2.3 KPIs ％ 39 26 2016/08/12 20:26:38 ISO 6.2.3 GRI G4-46、G4-47 TAISEI Snapshot TAISEI

Risk Management 経営戦略

Company-wide Risk Management Initiatives for Business Continuity Planning (BCP) At Taisei Corporation, we have formulated a Risk Management Taisei Corporation has established the Policy on Business Management Strategy Policy *1 and built systems to implement risk management across Continuity in Time of Disaster *3 to meet our responsibilities as a the whole company in order to respond to risk escalation following general construction company supporting the infrastructure for changes in the business environment. economic activities. We aim to become a company earning the In terms of handling risk management, we identify and select trust of society by contributing to business continuity at central and risks that influence business activities every year. Depending on local government and corporations as maintaining our business their importance, we classify them into categories such as functions through Business Continuity Planning (BCP) drills. “important company-wide risk” or “risk within the jurisdiction of Based on the premise for the Business Continuity Planning Business Overview head office”. As well as preparing countermeasures, we also (BCP), we carried out the FY2015 Large-Scale Disaster Drill on implement pragmatic risk management by clarifying supervisory November 14, 2015. The scenario for the drill assumed a large- roles and jurisdictions among the departments. scale earthquake occurring on a public holiday and its impact on Specifically, information on incidents and accidents with the the head office and branch locations in Japan as well as the

potential to have a serious impact on the management of the impact on one overseas location (Taiwan). CSR corporation is centralized at the CRO *2 Secretariat. We The focus of this drill was to verify the effectiveness of external implement effective risk management across the whole company cooperation and initial training at backup locations. Based on the including measures to prevent any reoccurrence by sharing this estimates for damage incurred in case of a large-scale earthquake information with the Risk Management Committee and the Risk published by central and local governments for all areas of Japan, Management Council. the BCP drills were implemented simultaneously at the head office, all branch offices, as well as Group companies, on the ■ Company-wide risk management system assumption that each participant was afflicted in a disaster. President 平時 Specifically, where verification of the effectiveness of external Governance Report

CRO cooperation is concerned, this drill marked the first time for a Countermeasures and construction company to implement a BCP drill in cooperation Incident / accident response Prevention of Reoccurrence with the head and branch offices of the Japan Federation of Construction Contractors (JFCC). Risk Management Committee

CRO Secretariat Risk Management Council Social Report Head Ofﬁce Risk Management Promotion Committee

Head Office Branch Offices Branch Offices Risk Management Promotion Committee

➡Please refer to the business risks on p. 92 for the main issues that may have a major Ｗｅｂ Please refer to http://www.taisei.co.jp/english/profile/Business_Continuity.pdf for impact on investor decisions. Policy on Business Continuity in Times of Disaster

Ｗｅｂ Please refer to http://www.taisei.co.jp/english/profile/Risk_Management.pdf for the Risk Management Policy. Environmental Report

Initiatives for Business Continuity Planning KPIs

● General Affairs Department, Business Administration Division Rate of participation in the Large-Scale Disaster Drill The FY2015 Large-Scale Disaster Drill was implemented with a focus on verifying the effectiveness

of external cooperation and initial training at backup locations. A total of 17,800 officers and and Corporate DataFinancial employees at head office, 13 branch offices, and 23 Group companies participated. 100％

*1 Formulated in September 2004 *2 CRO: Chief Risk Management Officer *3 Formulated in November 2005

TAISEI ANNUAL REPORT 2016 50

015_0356501372808.indd 50 2016/08/12 20:26:39 015_0356501372808.indd 51 51 Governance Report TAISEI ANNUAL REPORT2016 constructive dialogthrough businessreport briefingsbythe distributed atresults briefings. We alsostrivetopromote in additiontotheMedium-termBusiness Planandmaterials the mainquestionandanswersessions (JapaneseandEnglish) where wepublishsummariesofthePresident’s speechesand management ranks. stakeholders inthecourseofeverydaydialogare fedbacktothe constructive, theopinionsandcontentofourdiscussionswith structures andinitiativestopromote constructivedialog. November lastyear, weestablishedtheIRPolicy* constructive dialoganddiscussionswithshareholders. In value inthemedium-tolong-term,Taisei Corporationengagesin In order toachievesustainablegrowth andimprove corporate Dialog withShareholdersandInvestors * Disclosure Policy* activities. In2006,Taisei CorporationestablishedtheInformation importantinformationaboutcorporate to stakeholdersconcerning as acorporation,itisvitaltomaketimelyandaccuratedisclosures To thetrustofsociety deliversustainabledevelopmentandtoearn Information Disclosure Policy practice ofproactive informationdisclosure. Thesepoliciesformthebasisforour corporate governance. information disclosure andtransparency inthebasicpoliciesof 1 FormulatedinMay2006 ISO 26000 3. 2. 1. with thefollowingNormsofConductforinformationdisclosure. obtaining thepublic’s proper evaluationofouractivities. both encouragingpublicunderstandingofourcompanyand contributes tooursustainabledevelopmentasabusinessentityby about ourcorporateactivitiesinatimelyandappropriate manner We recognize thatthebroad disclosure ofimportant information We alsostriveforfairinformationdisclosure viaourwebsite To makethedialogwithshareholders andinvestorsmore Stakeholder DialogandInformationDisclosure the nature oftheinformation. on ourwebsiteandsothrough themethodsappropriate to disclosures tostockexchanges, press releases, andpostings We willdiscloseinformation suchasannouncements,timely accurate andfairdisclosure ofinformation. We systemstoensure willfurtherenhanceour internal the appropriate manner. disclosure ofothertypes corporateinformationinatimelyand laws andregulations. Inaddition, wewillstriveforthevoluntary We willdisclosecorporate informationasrequired bytherelevant To thisend,wewillconductourcorporateactivitiesinaccordance Information Disclosure Policy OrganizationGovernance 1 andstatedprinciplesforensuringappropriate Norms ofConduct 2 regarding * business andESG(Environment, Society, initiatives. Governance) shareholder newsletterasofDecemberandtoreport onkey activities atTaisei Corporation,wealsointendtorenew English inourannualreports andonourEnglishwebsite. with shareholders. meeting ofshareholders, themainvenueforimportantdialog President andquestionanswersessionattheannualgeneral 2 FormulatedinNovember2015 2. 1. In order tofurtherdeepenunderstandingofthecorporate In addition,wediscloseinformationtooverseasinvestorsin

necessary basedonthenatureofrequest. necessary the Companyinanycommunicationsormeetingswillbeconsideredifitis investors asappropriate. Insuchinstances, participationofthemanagement (the “Responsible Officers”)shallcommunicatewithsuchshareholdersand officer(s) andemployee(s)selectedbytheofficersspecifiedinsub-section2(1) meetings withshareholdersandinvestors, and, asageneralrule, anappropriate The IRSectionisthecontactpointforrequestscommunicationsand investors Fundamental policyforcommunicationsandmeetingswithshareholders (5) Policyforthemanagementofinsiderinformationincommunicationsand (4) Appropriate reportingofthecommunicationsandmeetingswith (3) Methodsofcommunicatingwithshareholdersandinvestorsotherthan (2) Policiesforinter-departmental cooperationoftheCompanytofacilitate (1) NominationofandtheResponsibleOfficers Guidelines fortheImplementationofIRpolicy meeting regardingfinancialresultswillbeconducted. announced willbea"silentperiod"duringwhich nocommunicationor accounts ofeachquarterandendingonthedate whenfinancialresultsare Company’s stock. The periodcommencing onthedayaftercloseof material non-publicinformationthatwouldaffectthevaluationof trading, theCompanywillnotdiscloseinanycommunicationsormeetings, To ensurefairandappropriateinformationdisclosurepreventinsider meetings least twiceperyear. The IRSectionwillalsoreportonthestateofactivitiestoBoardat executives oftheCompany. meetings. monthtoseniormanagement This willbereportedevery shareholders andinvestors, andthecontentofsuchcommunications shareholders asunderstoodviacommunicationsandmeetingswith The IRSectionwillcreatemonthlyreportssettingforththeopinionsof shareholders andinvestors should bedevelopedwillregularlyconsidered. investors willbeimplemented, andwhetherothercommunicationmethods In addition, IRforforeigninvestorsandtheprojectsitetoursinstitutional related tothereleaseofMid-termBusinessPlanwillbeheld. Annual andsemi-annualbusinessresultbriefingmeetingsIRworkshops communications andmeetings be heldtosupporttheResponsibleOfficers. Department, the Accounting Department, andtheFinanceDepartmentwill Communication Department, theGeneral Affairs Department, theLegal A regularliaisonmeetingamongtheIRSection, theCorporate communications andmeetings oversight supporttoChiefofBusiness Administration Division. theCorporatePlanningDepartmentandIRSection,supervising provides communications andmeetings, andtheChiefofCorporatePlanningOffice, Chief ofBusiness Administration Division, MemberoftheBoard, oversees IR Policy ISO GRI G4-24、G4-26 6.2.3 2016/08/12 20:26:39 ISO 6.2.3 GRI G4-24、G4-26、G4-27 TAISEI Snapshot TAISEI

Stakeholder Engagement 経営戦略

Engagement with Our Stakeholders From August 18 to 20, 2015, we Every year since 2002, Taisei Corporation has engaged in various

contributed to a course about Management Strategy dialogs with the aim of considering our business activities in a private enterprise for school new light. We strive to improve our engagement based on the teachers organized by the Keizai issues and our relationship with stakeholders. Koho Center and we implemented a private enterprise course for Dialog in action elementary school teachers. ➡ Please see p. 15-16 for the relationship between Solutions to Social Issues through Business and Value for Stakeholders. Business Overview

■ Opportunities for dialog with major stakeholders Major Stakeholder Value offered by and Responsibilities of Taisei Corporation Opportunities for Dialog Related pages

Clients, Creating a safe, secure, and comfortable society ● Conduct customer satisfaction survey p. 61

End-Users ● Provide good-quality, safe and secure construction products and ● TAISEI QUALITY activities (quality management system) p. 62 CSR related services ● Publish WEB.LIBRARY.TAISEI, the Taisei information magazine, and Website ● Support customer business continuity at times of disaster solutions for earthquake countermeasures on Taisin Net ● Provide appropriate information about construction products and ● Organize step up forums on healthcare management, seminars on related services earthquake resistance ● Manage customer information appropriately ● Publish TAISEI CORPORATE REPORT (annual) ● Guidelines for Management of Customer Information

Shareholders, Improve financial health and raise corporate value ● General meeting of shareholders p. 47 investors ● Raise corporate value ● Publish the Taisei Circle shareholder newsletter, the TAISEI CORPORATE Website ● Secure stable profits and appropriate returns REPORT, TAISEI ANNUAL REPORT, Corporate Governance Report (once a ● Disclose timely and appropriate corporate information year respectively) ● Implement appropriate corporate governance and internal controls ● Organize results briefings (twice a year), teleconferences Governance Report Suppliers Sustainable harmony and benefit ● Organize CSR Procurement briefings p. 54 (cooperating ● Fair and impartial transaction ● Implement CSR Procurement monitoring (once a year) p. 70 companies, ● Collaborate and cooperate toward productivity, safety improvement ● Set up the Taisei Health, Safety, and Environment Cooperation Association p. 53 specialist and environmental protection ● Conduct compliance training p. 56 subcontractors) ● Improve working conditions at construction sites ● Distribute the Information Security Pocket Book, the Human Rights Website Handbook ● Free use of personal computer security diagnostic website ● Taisei Occupational Health and Safety Management System (TAISEI OHSMS)

Employees Putting my work on the map. A life of pride ● Internal recruitment system p.65-68 ● Sustain and secure employment ● Corporate Ethics Helpline p.69-70 Social Report ● Respect for human rights and diversity ● Consultation desks (mental health, nursing care) Website ● Provide a pleasant working environment ● Implement training ● Train and utilize human resources ● Consultation between labor and management ● Publish company newsletter TAISEI (four times a year) ● Taisei Occupational Health and Safety Management System (TAISEI OHSMS) ● Implement employee satisfaction surveys (every 2 years, 2014 evaluation result: 86.3%)

The Environment, Sustainable and affluent planet ● Guided tours of the Technology Center and vicinity of construction sites p. 62 Future Generations ● Measures to counter global warming ● Conduct dialog Website ● Effective use of resources ● Cooperate with Metropolitan Tokyo, NPO research associations, and Tokyo p. 77 ● Protect biodiversity Greenship Action (Satoyama Preservation Project) Website ● Build good relations with local community ● Taisei Corporation Public Trust of Funds for Natural and Historic Environmental Report ● Pay taxes Environments ● Operating Galerie Taisei

Dialog with Stakeholders KPIs

● CSR Promotion Section, Corporate Communication Department, Corporate Planning Office

In FY2015, we organized a course about private enterprise for elementary school teachers; the Co-Creation Forum, a dialog-style Number of dialogs, etc. session between corporations, associations, individuals and employees; the Eco First Sustainable Café, an exchange between the Eco First Corporation and students who belong to environmental groups of universities. In the future, we intend to implement and Corporate DataFinancial dialog with external experts, as well as verification and review of the importance of CSR issues. 3 times

Ｗｅｂ Please refer to http://www.taisin-net.com/solution/event_seminer/index.html (Japanese) for details about the Co-Creation Forum.

TAISEI ANNUAL REPORT 2016 52

015_0356501372808.indd 52 2016/08/12 20:26:39 015_0356501372808.indd 53 53 Governance Report TAISEI ANNUAL REPORT2016 Implementation Structure Administrative structure ➡ *3 Allheadsofdepartmentsare appointedcomplianceimplementers.Theheadsofeach *2 Promotes andembedscomplianceawareness amongofficers andemployees.Also *1 CP:abbreviation ofcompliance ■ A CorporationTrusted bySociety Compliance Committee. compliance basedontheopinionsandrecommendations ofthe install thein-housecompliancepromotion systemandtostrengthen Corporation hasdeployedmanagers,promoters, andimplementersto employees oftheTaisei Group. sincerity. Thisisthebasisofcomplianceforallofficers and promises withcustomers,suppliers,orthelocalcommunityinall that thecompanymustactingoodfaithandfulfillcontracts various companyrulesandregulations). Theguidelinesalsostate administrative guidance,customsandothersocialrules, adhere tolawsandregulations, etc.(lawsandordinances, bylaw, order tofulfillitssocial responsibilities, the Taisei Group shall The Group ActionGuidelinesfortheTaisei Group statethatin Compliance Policy andSystems ISO 26000 Head Ofﬁce Please refer top.48fordetailedinformationabouttheCommittee. Head Ofﬁce Compliance promotionsystem for specializedcontractorsatalltwelve domesticbranchoffices. participation ratewas90.8%.We alsoorganizedcompliance training compliance trainingforallofficers andemployees. The average formattoorganizethreeIn FY2015,weusedthee-learning ● inComplianceAwarenessImprovement CP Implementers* Administration Division) about compliance. department educateandinformallofficers andemployeesintheirowndepartments functions asasecretariat fortheComplianceCommittee As indicatedinthediagrambelow, eachdepartmentatTaisei Promotion ofCompliance CP GeneralManager (GeneralManagerInChargeofAdministration) (Chief ofBusiness

Compliance PromotionSection, GeneralAffairs Department, BusinessAdministrationDivision Division CPManager(ChiefofDivision) All ExecutivesandEmployees Division CPPromoter 3 (AllDepartmentGeneralManagers) President Business AdministrationDiv. General AffairsDepartment)

CP GeneralPromoter Fair OperatingPractices (General Managerof Branches Division CPPromoter(AdministrativeManager) (All DepartmentGeneralManagers) Division CPManager(ChiefofBranch) All ExecutivesandEmployees CP Implementers* Secretariat CP PromotionSection* CP* 1 Committee 3 2 *4 Aconference thataimstoinformspecialtyconstructorsaboutsafetymanagement. and exchangeofopinionsregarding issuesrelated tolegalaffairs. domestic Group companiesasasystemforinformationsharing conferences forstaff whoare responsible forlegalaffairs atthe endeavor tostrengthen group compliancebyorganizingperiodic and employees,aswellspecializedcontractors.We also systematically implementseducationandtrainingforallofficers In order toraiseawareness ofcompliance,Taisei Corporation are reported tothein-houseAuditingDepartment. Business ActandtheSubcontractorsProtection Act.Theresults branch offices andcheckscompliancewiththeConstruction year, thelegaldepartment verifiesthelegitimacyofbidsatall confirm, produce thedocuments,andkeepallbidsonfile.Every operates anin-housesystemwhereby theheadsofbranchoffices In order toensure thelegitimacyofbids,Taisei Corporation Verification andRegulations(Guidance) ofCompliancewithLaws order tonipawiderangeofillegalactivitiesinthebud. prohibited. SinceApril2016,weare acceptinganonymoustipsin and anyadverseactionasadirect result ofanywhistle-blowingis Act, allinformationaboutthewhistlebloweristreated asconfidential organization (alawfirm).BasedontheWhistleblowerProtection We haveestablishedconsultationdesksin-houseandatanexternal contravene lawsandordinances ortheGroup ActionGuidelines. a systemforwhistle-blowingandconsultationwhere acts At Taisei Corporation,we havesetuptheCorporateEthicsHelpline, Whistle-blowing andConsultationSystem Raising Awareness ofCompliance Corporation Taisei Souyu-kai contractors Specialized Group company Organization 90.8 Compliance trainingparticipationrate ● ● ● ● ● ● (onceayear/12branchoffices)

Promote CSRprocurement(seep. 54) Compliance trainingattheSafetyConference* Guidance onKPIestablishmenttosixcompaniesinJapan(seep. 45) Implement e-learning(3timesayear) Publish theCompliancenewsletter(12timesayear). The themes Group companiesinJapan(onceayear) workers andproperconstructionsystemsetc. employees, propersubcontracting, andhealthcaremanagementfor addressed inFY2015includeemploymentmanagementofforeign Organize conferencesforstaffwithresponsibilitylegalaffairsatten

％ Description (all domesticbranchoffices) 12 implemented forspecializedcontractors Branches wherecompliancetrainingwas ISO GRI

SO11 SO4、SO5、SO7、SO8、G4-37、G4-57、G4-58、 6.6.3、6.6.4、6.6.5 branches 4 KPIs 2016/08/12 20:26:39 ISO 6.6.6 GRI SO3、SO4、SO5、SO7、SO8 SO9、SO10、LA14、LA15 HR1、HR4、HR6、HR10、 HR11 TAISEI Snapshot TAISEI

Supply Chain Management 経営戦略

Procurement Policy and System Implementation of CSR Procurement Taisei Corporation adopted Promoting Partnerships with Supply In FY2015, we implemented the concept of CSR in procurement Management Strategy Chains, as well as formulated the Procurement Policy* in 2013, as activities in Taiwan as part of efforts to promote CSR Procurement part of the Group Action Guidelines. We promote CSR activities overseas. Our business partners in Taiwan deepened their with business partners and across the whole supply chain based understanding of CSR Procurement at Taisei Corporation. on the Procurement Policy. From 2013 to 2014, we monitored the member companies of We have established the CSR Procurement Committee the Souyu-kai, which is an organization set up for the key suppliers composed of the Corporate Planning Department, the Corporate among our business partners. In FY2015, we visited some of the Communication Department, the Safety Administration Division, suppliers where we had identified Business Overview the Building Construction Division, the Civil Engineering Division, deficiencies during the monitoring and the Procurement Division as the structure for promoting the process to confirm that initiatives had concept of CSR in procurement activities. been put in place to improve the situation with CSR Procurement since

the monitoring exercise. CSR Procurement Policy (excerpt) Implementation of CSR Procurement in Taiwan Under the TAISEI Group philosophy, “To create a vibrant environment Overseas CSR procurement monitoring for all members of society,” we are committed to carrying out our ■ procurement activities in accordance with this Procurement Policy in No. of Summary companies Guidance order to create safe and attractive spaces, as well as work and living Companies to be monitored 10 environments of exceptional value, with the aim of providing ● Compliance with laws and regulations Companies responding to and social norms ● products and services that are in harmony with nature. monitoring form 10 Health and safety initiatives ● Environmental protection initiatives

1. Compliance with Laws, Regulations and Social Norms Companies issued with guidance 2 ● Ensure safety and quality Governance Report 2. Fair Business Dealings 3. Respect for Human Rights Future Initiatives for CSR Procurement 4. Promotion of Safety and Hygiene 5. Commitment to Environmental Conservation The focus of attention is on CSR Procurement initiatives across 6. Ensuring and Improving Safety and Quality the whole supply chain such as the formulation of a procurement 7. Information Disclosure code for the Tokyo Olympics. 8. Commitment to Information Security Since FY2016, we intend to carry out awareness campaigns Social Report 9. Activities Contributing to Society and monitoring at the Souyu-kai member companies with the aim 10. Business Continuity in Times of Disaster of providing more information about CSR procurement. We will 11. Promotion of CSR (Corporate Social Responsibility) Procurement also implement awareness campaigns at international branch offices and procurement departments. Together with our business * Formulated in April 2013 partners, we plan to improve the quality of the supply chain and ➡ Please refer to p. 76 for the article about green procurement. contribute to building a sustainable society. In order to promote CSR Procurement in the name of the Taisei Group, we are implementing initiatives to formulate

procurement policies at all major Group companies. Environmental Report

Promotion of CSR Procurement KPIs

● CSR Promotion Section, Corporate Communication Department, Corporate Planning Office Number of companies monitored for In FY2015, we monitored CSR Procurement at ten of our major business partners in Taiwan where CSR Procurement we are involved in a comparatively large number of construction projects. The implementation rate was 100%. and Corporate DataFinancial 10 companies

TAISEI ANNUAL REPORT 2016 54

015_0356501372808.indd 54 2016/08/12 20:26:39 015_0356501372808.indd 55 55 Governance Report TAISEI ANNUAL REPORT2016 *Formulated inJanuary2007.Partlyrevised in2012. and tostrengthen corporatecompetitiveness. strategic useofintellectualproperty toincrease corporatevalue Intellectual Property Policy*inJanuary2007.Itisouraimtomake corporate attitudetointellectualproperty, weformulatedthe own intellectualproperty whichisanimportantasset.To clarifythe companies whilerecognizing andmakingappropriate useofour Taisei Corporationrespects theintellectual property ofother Intellectual PropertyPolicy ISO 26000 6. 5. Improve group-wide intellectualproperty capabilities 4. Thoroughly enforce intellectualproperty riskmanagement 3. Promote strategicutilization 2. Establishastructure forstrategicacquisitionandmanagement 1. of intellectualproperty risks, strategicutilizationofbrands,etc. the creation, protection, andutilizationofintellectualproperty, reduction companies, anintellectualproperty strategyisimplementedthatcovers In order tofurtherimprove theintellectualproperty powerofgroup Taisei Group and wereleased information aboutfourmajorinformationsecurityaccidents. infringement. We organize26coursesoninformation securityatallcompaniesinthe the utilizationofapplicationrights and aseriesofawareness campaignsabout head office, operationaldepartmentsinbranchoffices, andconstructionsitesincluding In FY2015,weconductedthirtyintellectualproperty coursesfortechnical departmentsin ● ● InformationSecurity /Improve Practice IntellectualPropertyStrategy Intellectual Property Protection, ManagementandUtilization Policy onIntellectualProperty(excerpt)

Improvement ofbrandvalue through theuseofintellectualproperty Promote intellectualproperty-based businessandR&Dstrategies Corporate PlanningSection, InformationPlanningDepartment, CorporatePlanningOffice Intellectual PropertyDepartment, Taisei Technology Center

Fair OperatingPractices Norms ofConduct At atrainingcourse business information. order toprevent leaksoftechnicalknow-howorotherconfidential established RulesforHandlingIntellectualProperty Informationin tightened thehandlingofclassifiedinformationandwehave patents. Asapartofourinformationsecuritymeasures, wehave for ourownpatentsandpreparing adatabaseformanaging improve operationalefficiency through buildingasearch function management thatisfocusedonintellectualproperty. copyright, constructionandbusinessknow-howtopromote manage andutilizeallintellectualproperty includingpatents, practice basedontheIntellectualProperty Policy. We strategically Taisei CorporationhasputtheIntellectualProperty Strategyinto Implementing theIntellectualPropertyStrategy Regarding managementofintellectualproperty, weintendto .Introduction tosearch tools 6. Trademark branding 5. Examplesofinfringement 4. Introduction toconstructionandcivilengineeringpatents 3. Secrets ofpatentcreation 2. BasicknowledgeaboutthePatentAct 1. Intellectual Property CourseContent property rights regarding intellectual Number oftraining 30

times ISO GRI SO8 6.6.7 4 security accidents information Number ofmajor KPIs

cases 2016/08/12 20:26:40 ISO 6.6.7 GRI SO8、PR8 TAISEI Snapshot TAISEI

Information Security Measures 経営戦略

Appropriate Information Management and Management Rules Measures to Prevent Information Leakage

Taisei Corporation has formulated policies and action guidelines in ● Prevent Information Leakage Management Strategy order to protect and make appropriate use of company Under the slogan “ICT Safety First!,” Taisei Corporation information. We have also systematically built rules and regulations implements a range of information security measures. Together concerning company-wide information security systems and with all Group companies, specialized constructors, and other information management. We established Taisei-SIRT in order to partner companies, we aim for zero incidents related to strengthen the system for responding to security incidents information security. In FY2015, we prepared the environment and involving electronic information. We have been actively involved in structures for log file inspection by means of log analysis tools to the Nippon CSIRT Association since joining in March 2013.

swiftly detect cyber attacks. Business Overview

■ Overall perspective on the system of information control rules ● Appropriate Information Transmission

Group action guidelines Organizational basic rules In 2012 we developed the Code of Behavior for Using Social Basic rules of Standard for establishing emergency Media and Guidelines for Social Media Usage to provide information disclosure response headquarters, etc.

Basic rules regarding business employees with guidance on information transmission that is CSR continuity during disasters based on sensible behavior. 1st layer Basic rules regarding control of company information 2nd layer Regulations regarding handling company information ● Robust Customer Information Management and Personal Information Management 3rd layer Rules Rules Rules Rules Rules Standard for regarding regarding regarding regarding regarding implementing To manage information required by customers based on the control of protection of management storage of control of information customer personal of intellectual documents insider security for information information property information, electronic Guidelines for Managing Customer Information, we set security information and prevention information of insider levels according to the confidentiality level of each project, trading transmitting information to the relevant in-house departments, and

4th layer Guidelines, manuals, etc. implementing appropriate customer information management. In Governance Report Guidebooks (regulation guidelines) FY2015 we also ran a campaign to reinforce information security and we made sure employees were aware of the ban on taking Raising Awareness of Information Security photographs on company premises. Personal information is The Information Security Pocketbook, compiled by Taisei handled by a designated manager in line with the Personal Corporation and used for group training, sets out the absolute Information Manual. In case of a request for data disclosure, the minimum in terms of rules that all officers designated manager will respond in consultation with the Social Report and employees must observe. competent department for handling the personal information. The Intended to ensure robust management manual also specifies the purpose of collecting personal of customer information, the Pocketbook is information when partner companies register to use the distributed to specialized construction SagyoshoNet information sharing website or the SUPER-TRIO companies and other partner companies for procurement website.

education and guidance. It is also used on ➡ Please refer to p. 55 for the number of information security incidents. the information sharing website for ● Improving Information Security Levels across construction sites (SagyoshoNet). the Construction Industry Environmental Report We aim to improve information security levels across the whole construction industry, not only Taisei Corporation, by providing partners and other companies in the same industry with free access to a personal computer security diagnostic website jointly developed with a security vendor. Financial and Corporate DataFinancial

* Electronic information security incidents: Incidents and accidents including information leaks that threaten information security or have an impact on business operation.

TAISEI ANNUAL REPORT 2016 56

015_0356501372808.indd 56 2016/08/12 20:26:40 015_0356501372808.indd 57 57 Governance Report TAISEI ANNUAL REPORT2016 Masahiro Sakai Kazuhiko Dai Takashi Yamauchi Members oftheBoard Executive Officers, ExecutiveFellows Members oftheBoard, Audit&SupervisoryBoard Members, Yasushi Yoshinari ISO 26000 OrganizationGovernance 050 MemberoftheBoard [Present Position] ManagingExecutiveOfficer [Present Position] 2015.06 ExecutiveOfficer 2015.04 JoinedtheCompany 2011.04 1979.04 SeniorManagingExecutiveOfficer 2015.04 ManagingExecutiveOfficer ManagingExecutiveOfficer 2013.06 ExecutiveOfficer 2013.04 JoinedtheCompany 2012.04 1977.04 President ExecutiveVice (Representative Director) 2015.04 SeniorManagingExecutiveOfficer SeniorManagingExecutiveOfficer 2013.06 ManagingExecutiveOfficer 2011.04 ExecutiveOfficer 2010.04 JoinedtheCompany 2007.04 1974.04 Representative Director Chairman(Representative Director) 2015.04 President andChiefExecutiveOfficer 2007.04 SeniorManagingExecutiveOfficer SeniorManagingExecutiveOfficer 2005.06 ManagingExecutiveOfficer 2004.06 ExecutiveOfficer 2002.04 JoinedtheCompany 1999.06 1969.06 Chairman, Representative Director (Member oftheBoard) [Present Position] (Member oftheBoard) [Present Position] (Member oftheBoard) [Present Position] (Representative Director) (Member oftheBoard) Shigeyuki Sakurai Yoshiyuki Murata Norihiko Yaguchi Shigeyoshi Tanaka (As ofJuly1,2016) 050 SeniorManagingExecutiveOfficer 2015.04 ManagingExecutiveOfficer ManagingExecutiveOfficer 2013.06 ExecutiveOfficer 2013.04 JoinedtheCompany 2011.04 1979.04 Representative Director President andChiefExecutiveOfficer 2015.04 ManagingExecutiveOfficer ManagingExecutiveOfficer 2013.06 ExecutiveOfficer 2013.04 JoinedtheCompany 2011.04 1977.04 President, Representative Director 050 MemberoftheBoard [Present Position] ManagingExecutiveOfficer [Present Position] 2015.06 ExecutiveOfficer 2015.04 JoinedtheCompany 2012.04 1978.04 MemberoftheBoard [Present Position] 2015.06 SeniorManagingExecutiveOfficer ManagingExecutiveOfficer 2015.04 ExecutiveOfficer 2013.04 JoinedtheCompany 2011.04 1979.04 (Representative Director) [Present Position] (Member oftheBoard) (Representative Director) [Present Position] (Member oftheBoard) [Present Position] 2016/09/13 9:39:05 GRI G4-35 TAISEI Snapshot TAISEI Audit & Supervisory Board Members

Misao Akune Audit & Supervisory Board Member (full-time) Takashi Matsuyama Audit & Supervisory Board Member (full-time)

1973.04 Joined the Company 1975.04 Joined the Company 経営戦略 2004.04 Executive Officer 2008.04 General Manager of Auditing Department 2007.04 Managing Executive Officer 2015.06 Audit & Supervisory Board Member 2007.06 Managing Executive Officer, [Present Position] Member of the Board 2009.04 Senior Managing Executive Officer, Member of the Board 2010.04 Senior Managing Executive Officer, Management Strategy Representative Director 2015.04 Member of the Board 2015.06 Audit & Supervisory Board Member [Present Position]

External Board Members & External Audit & Supervisory Board Members Business Overview Toru Tsuji Member of the Board Fumio Sudo Member of the Board

1961.04 Joined Marubeni Iida 1964.04 Joined Kawasaki Steel Corporation 1991.06 Member of the Board of Marubeni Corporation 1994.06 Member of the Board 1995.06 Managing Executive Officer, 1997.06 Managing Executive Officer, Member of the Board Member of the Board 2000.06 Executive Vice President, Representative Director

1996.04 Managing Executive Officer, 2001.06 President and Chief Executive Officer, CSR Representative Director Representative Director 1997.06 Senior Managing Executive Officer, 2002.09 Member of the Board of JFE Holdings, Inc. Representative Director (Part-time) 1999.04 President and Chief Executive Officer, 2003.04 President and Chief Executive Officer, Representative Director Representative Director of JFE Steel Corporation 2003.04 Chairman of the Board, Representative Director 2005.04 President and Chief Executive Officer, 2004.04 Chairman of the Board, Member of the Board Representative Director of JFE Holdings, Inc. 2008.04 Corporate Advisor, Member of the Board 2010.04 Director 2008.06 Corporate Advisor 2010.06 Honorary Advisor 2011.06 Member of the Board of Taisei Corporation 2011.06 Member of the Board of Taisei Corporation [Present Position] [Present Position] 2012.04 Honorary Executive of Corporation Appointed Director Emeritus of Marubeni Corporation Governance Report

Terunobu Maeda Audit & Supervisory Board Member Shigeru Morichi Audit & Supervisory Board Member

1968.04 Joined Fuji Bank, Ltd. 1966.04 Joined Japan National Railways 1995.06 Director 1987.03 Professor of Civil Engineering, School of 1997.05 Managing Director Engineering, Tokyo Institute of Technology 2001.05 Vice-president 1996.04 Professor of Social Infrastructure Engineering, Graduate School of Engineering, University of 2002.01 Director of Mizuho Holdings, Inc. Tokyo 2002.04 President and Chief Executive Officer,Director 2004.04 Professor, National Graduate Research Institute 2003.01 President and Chief Executive Officer of for Policy Studies Mizuho Financial Group

2004.04 Vice Chairman, Institution For Transport Policy Social Report 2009.04 President Emeritus Studies, and President, Institution For Transport 2011.06 Audit & Supervisory Board Member of Taisei Policy Studies Transport Policy Studies Corporation [Present Position] 2011.04 Director of Policy Research Center; Academic Fellow; Adjunct Professor 2012.06 Audit & Supervisory Board Member of Taisei Corporation [Present Position]

Kiwamu Miyakoshi Audit & Supervisory Board Member Kunitoshi Saito Audit & Supervisory Board Member

1977.04 Joined National Police Agency 1977.04 Joined Board of Audit of Japan 1987.06 First Secretary, Embassy of Japan in Germany, 2009.12 Director General of 3rd Bureau, Board of Audit Ministry of Foreign Affairs 2011.05 Director General of 5th Bureau, Board of Audit 1998.03 Police Commissioner, 2013.03 Secretary General, Board of Audit Tokushima Prefectural Police 2016.06 Audit & Supervisory Board Member of Taisei Environmental Report 2004.07 Auditor-Secretary, Corporation [Present Position] Hanshin Expressway Company Limited 2005.09 Police Commissioner,Ibaraki Prefectural Police 2010.03 Chief of Police,Chugoku District 2011.03 Chief of Police,Kanto Distric 2012.06 Audit & Supervisory Board Member of Taisei Corporation [Present Position]

Notes 1: Toru Tsuji and Fumio Sudo are Outside Directors as defined by the Companies Act,Article 2-XV. 2: Terunobu Maeda, Shigeru Morichi, Kiwamu Miyakoshi and Kunitoshi Saito are Outside Company Auditors as defined by the Companies Act, Article 2-XVI. 3: Toru Tsuji, Fumio Sudo, Terunobu Maeda, Shigeru Morichi, Kiwamu Miyakoshi and Kunitoshi Saito are independent directors in accordance with the rules of Tokyo Stock Exchange and Nagoya Stock Exchange. Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 58

015_0356501372808.indd 58 2016/08/12 20:26:42 015_0356501372808.indd 59 59 Governance Report TAISEI ANNUAL REPORT2016 Takeo Horinouchi Tamotsu Umehara Masahiro Oshima Hirofumi Kamata Hiroshi Kanazawa Kazuhiko Hombu Shigeki Watanabe Managing ExecutiveOfficers Katsuyuki Kanai Yoshinobu Shigeji Masahiro Sakai Shigeyuki Sakurai Shigeyoshi Tanaka Shigeru Konnai Junichi Ikeguchi Senior ManagingExecutiveOfficers Kazuhiko Dai Toshio Tominaga Satoru Ogata Executive VicePresidents Yoshiyuki Murata President andChiefExecutiveOfficer Executive Officers ISO 26000 Supervising International OperationsHeadquarters Supervising International Development Division; Marketing&Business Supervising International Chief ofMarketing&Sales(West Japan)Division In chargeofSafetyAdministration Deputy ChiefofCorporatePlanningOffice; Chief ofMarketing&Sales(CivilEngineering)Division; Chief ofMarketing&SalesDivision(Integrated); Deputy ChiefofCorporatePlanning Office Chief ofMarketing&SalesPromotion Division; Chief ofTokyo Branch In chargeofOlympicProjects Division; Deputy ChiefofMarketing&Sales(CivilEngineering) Chief ofNuclearFacilitiesDivision In chargeofTechnology In chargeofTechnology In chargeofCivilEngineering Chief ofUrbanDevelopmentDivision Marketing &SalesDivision(Integrated) In chargeofMarketing&Sales(BuildingConstruction), Deputy ChiefofCorporatePlanningOffice Divisions; Supervising Marketing&Sales(BuildingConstruction) Deputy ChiefofMarketing&SalesDivision(Integrated), Deputy ChiefofCorporatePlanningOffice Chief ofBusinessAdministrationDivision; Deputy ChiefofCorporatePlanningOffice Chief ofCivilEngineeringDivision; Division II Chief ofMarketing&Sales(BuildingConstruction) Marketing &SalesDivision(Integrated) In chargeofMarketing&Sales(BuildingConstruction), OrganizationGovernance Tatsuhiko Matsui Makoto Imasaka Masaaki Ito Keiji Hirano Yoshiro Aikawa Jirou Taniyama Takeshi Kagata Hiroshi Suzuki Masao Yoshikawa Masaharu Okada Tsuyoshi Nakanishi Hiroshi Shirakawa Takao Kanai Norihiko Yaguchi Shoji Kondo Tetsuya Shibayama Yasushi Yoshinari Yoshitaka Inoue Masafumi Anami Satoru Tsutae Haruhiko Kono Chief ofTaisei Technology Center Chief ofEnvironment Division Chief ofTohoku Branch Chief ofCorporatePlanningOffice Marketing &SalesDivision(Integrated) In chargeofMarketing&Sales(BuildingConstruction), Civil EngineeringDivision General ManagerofNextGenerationProject Department, General ManagerofCivilEngineeringDepartment; Deputy ChiefofCivilEngineeringDivision; Deputy Chief,InchargeofCivilEngineering,KansaiBranch Division Marketing&BusinessDevelopment Chief ofInternational Marketing &SalesDivision(Integrated) In chargeofMarketing&Sales(BuildingConstruction), Division III Chief ofMarketing&Sales(BuildingConstruction) Chief ofEngineeringDivision Chief ofYokohama Branch Chief ofKansaiBranch Deputy ChiefofCorporatePlanningOffice Chief ofBuildingConstructionDivision; Chief ofArchitecture &EngineeringDivision (Integrated); Chief ofNagoyaBranch In chargeofOlympicProjects Chief ofProposal &SolutionsDivision; Chief ofMedical&Welfare BusinessDivision OperationsHeadquarters Chief ofInternational Headquarters Projects, Operations In chargeofInternational International Development Division,inchargeofCivilEngineering Marketing&Business Deputy ChiefofInternational Operations Headquarters; Deputy, inchargeofCivilEngineering,International Chief ofDesignDivision 2016/08/12 20:26:42 Executive Officers Snapshot TAISEI Kyo Murai Atsuo Ogawa Chief of Procurement Division; In charge of Technology Deputy Chief of Corporate Planning Office Nobuyuki Hayashi General Manager of Design Department, Civil Engineering Shinichi Takeda Division Chief of Shikoku Branch 経営戦略

Hiroshi Tsuchiya Shun Kitano Chief of Marketing & Sales (Building Construction) Division I Chief of Safety Administration Division Hiroshi Kimura

Shimpei Oguchi Management Strategy Deputy Chief of Marketing & Sales (West Japan) Division; Chief of Chugoku Branch General Manager of Marketing & Sales (Building Jo Iwata Construction) Department Chief of Chiba Branch Susumu Morita Fumihiko Sudoh Chief of Hokushin-etsu Branch Chief of Kanto Branch Taku Yamamoto Yuichi Kitaguchi In charge of Marketing & Sales (International Building In charge of New National Stadium Project, Tokyo Branch Construction), Marketing & Sales Division (Integrated) Business Overview

Noriaki Kon Hiroshi Harada Chief of Sapporo Branch In charge of Chuo Shinkansen Project, Tokyo Branch

Atsushi Yamamoto Atsushi Suzuki Deputy Chief of Business Administration Division Chief of Mechanical & Electrical Division CSR Tetsuya Hanyu Shunichi Sonoda Deputy Chief of Marketing & Sales (Building Construction) Deputy Chief of Marketing & Sales (Building Construction) Division I Division III; General Manager of Marketing & Sales Department Masatoshi Yamakami Deputy Chief, in charge of Civil Engineering, Tohoku Branch; General Manager of Reconstruction Project Department (Civil Engineering) Governance Report

Executive Fellows

Osamu Hosozawa Deputy Chief of Design Division Social Report Satoshi Imamura Deputy Chief of Taisei Technology Center

Kazuyuki Shimamura Deputy Chief of Environment Division

Kazuro Sato Executive Engineer, Environment Division Environmental Report Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 60

015_0356501372808.indd 60 2016/08/12 20:26:42 015_0356501372808.indd 61 61 Social Report TAISEI ANNUAL REPORT2016 management standards andprocedures withintheentire group. ensure thorough awareness andapplicationofthequality “TAISEI QUALITY”activitieshavebeenimplementedsince2009to Additionally, inconjunctionwiththequalitymanagementsystem, products andafter-sales servicewithsafetyandcomfort. to afterhandoverinorder toprovide customerswithconstruction quality managementsystemcoveringfrom designandconstruction the Japaneseconstructionindustry. We operatesandestablisha the “QualityPolicy,”* ourcorporateactivities. whichgoverns in theGroup ActionGuidelines,Taisei Corporation Group formulates Under thesloganof“ensuringandimproving safetyandquality”stated Quality Policy andSystem *Formulated inJuly2005. Our PrideinQuality ISO 26000 the followingNormsofConduct. inanefficientandstablemanner.construction productsandrelatedservices to evolvecontinuouslyasacompany. by developingasafeandcomfortableinfrastructurelivingenvironment, and vibrant environmentforallmembersofsociety.” We aimtocontributesociety underthe and engineeringservices Taisei GroupPhilosophyof “to createa We pursuebusinessactivitiescenteredaroundourcorestrengthsinconstruction 4. 3. 2. 1. Ensuring QualityandImprovingCustomerSatisfaction questionnaires at75%. Construction Divisionshowedtherate ofreturncustomersatisfactionsurvey satisfaction conductedafterbuilding handoverwas100%.TheBuilding in theformofCSinterviews.Theimplementationratesurveycustomer The CivilEngineeringDivisionconductedsurveysofcustomersatisfaction 74times ● ofCustomerSatisfactionQuality ManagementSystemforImprovement We obtainedISO9001certi

quality managementsystem. maintained andimproved, wewillcontinuetomaintainandenhanceour To is ensurethatthequalityofourconstructionproductsandrelatedservices throughout thelifecycleofproducts. products onalong-termbasis, services wewillprovidethenecessary To maintainandimprovethequalityperformanceofourconstruction terms, laws, regulations, andstandards. requirements ofourclientswhilecomplyingwiththerelevantcontractual In providingconstructionproductsandrelatedservices, wewillmeetthe future socialneeds. promote researchanddevelopmentofadvancedtechnologiesthatanticipate To providehigh-quality, high-performanceconstructionproducts, wewill Civil Engineering Division / BuildingConstructionDivision / Civil EngineeringDivision To achievethismission, wewillpursueourbusinessactivitiesaccording to Our keymissionistoprovideourclientsandsocietywithhigh-quality

Consumer Issues Norms ofConduct Quality Policy fi cation in1996forthe fi rst time in rst timein

● ● Related Services ofHigh-QualityConstructionProductsand Provision ➡ among theheadquartersandbranches. construction meetingstoeliminatecomplaintsinconcertedefforts after deliveryandtheresults thereof are reflected infollow-up Division conductsurveysofcustomersatisfaction Construction Taisei Corporation’s CivilEngineeringDivision andBuilding the demandsofcustomersandsociety.” ‘high-quality constructionproducts andrelated services’meeting “customer satisfactionandtrustshallbesecured byproviding are dedicatedtoconstructionauditingunderthebasicpolicythat from April1with70expertsindesign,structure andfacilitieswho construction auditingoperations.Theoffice starteditsoperations established theoffice offirst-class architects whichspecializesin auditing indesignandbuildingprojects, Taisei Corporation To ensure higherqualityandsafety, andobjectiveconstruction relevant divisions. and eliminateanydefectsinquality, incooperationwiththe interviews andquestionnaires toensure proper qualitymanagement contact withcustomers,alsogivesCS(customersatisfaction) Implementation ofSurveyCustomerSatisfaction Establishment oftheConstructionAuditingOffice For theactionstoensure customerinformationmanagement,pleaserefer topage56. In addition,theMarketing&SalesDivision,whichhasdirect 100 Civil Engineering Customer satisfaction surveys* * questionnaires (BuildingConstruction) handover (CivilEngineering)andrateofreturncustomer satisfactionsurvey ofcustomersatisfactionconductedafterbuilding Rate ofimplementationsurvey ％ 75 Building Construction ISO GRI PR7、PR8 6.7.3、6.7.4 ％ KPIs 2016/08/12 20:26:42 ISO 6.7.3、6.7.4 GRI LA10 TAISEI Snapshot TAISEI

“TAISEI QUALITY” Activities

Hitozukuri (development of human resources) for Monozukuri (precise, superb craftsmanship) Management Strategy ● Educational Supporter System ● Building Meister System / HQ Staff’s Coaching System The Civil Engineering Division strengthens the employees’ The Building Construction Division strengthens the productivity and management capability to reinforce the productivity and the the production system based on the lessons learned from their production system, in addition to “improvement of the working experiences in the busy time during the period of the economic environment” and “securing of human resources.” Specifically, under bubble, when the young employees assigned to the construction the goal of “increasing the employees’ capabilities of production sites were pressed with work in construction management thereby sites,” the “On the Job Training (OJT) education” and the “educational acquisition of skills and expertise were inadequate. Accordingly, it is

supporter system” are introduced and operated to enhance the commonly recognized that efforts should be focused on the Business Overview capabilities of process management, design, estimation, negotiation education and development of young employees, in addition to the and action, among others. securing of human resources. To securely hand over our technologies Under the “educational supporter system” introduced from and know-how, the “meister system” and the “HQ staff’s coaching 2009, the educational supporters appointed from among the system” were put into practice from 2009 as part of the “TAISEI CSR employees with experience as construction site managers check the QUALITY” activities. progress of OJT education of young employees and provide support The employees appointed as meister and the executive staff of and guidance. In addition, through the supporters’ interviews with the the Building Construction Division, with abundant on-site experience, construction site managers, advice on the method of guidance and make actual visits to the sites and provide education and guidance the content of education for the construction site workers is provided on the skills and quality/site management and other capabilities to remove any differences in education among the construction through OJT, in close contact with the young and middle-aged sites, standardize the contents of guidance and improve the employees. In addition, our efforts are also focused on training for capabilities of education and guidance of the construction site the education of the on-site staff who work with the employees. Governance Report managers. Furthermore, through follow-up with the construction site managers with less experience, toughness of the construction site managers, which is required for the on-site leaders, is developed. Social Report

➡ For the articles on the actions for development of human resources, please refer to page 68. Environmental Report TOPICS

For “Hitozukuri (development of human resources)” Supporting the National Economic Development Taisei Corporation accepts foreign technical intern trainees, whom shortage of skilled construction workers for the specialist contractors. specialist contractors employ, as the prime contractor. Especially for In addition, through the active recruitment of foreign engineers and the Vietnamese technical intern trainees, we visit, inspect and evaluate the assignment of the engineers from the overseas group companies the local sending organizations, make recommendations to the (TAISEI (THAILAND) CO., LTD., TAISEI PHILIPPINE CONSTRUCTION specialist contractors together with the partner supervising groups and INCORPORATED) to domestic construction sites, the working

actively accept the trainees at specified model sites. The purpose of environment of foreign technical intern trainees is improved and and Corporate DataFinancial this activity is to promote the overseas transfer of the Japan’s competent engineers who play a core part in the overseas business construction technologies and to address and aid in the issue of the are developed.

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015_0356501372808.indd 62 2016/08/12 20:26:43 015_0356501372808.indd 63 63 Social Report TAISEI ANNUAL REPORT2016 ■ pages 21and22. billion. Ourresearch anddevelopmentactivitiesare describedon and tomeetincreasing advancedanddiversetechnicalneeds. to enhancetheinvestmentefficiency intechnologicaldevelopments industries, andothercompaniesinthesameindustry, etc.,inorder various universityresearch organizations,companiesindifferent technological developments,weactivelypromote allianceswith the socialinfrastructure andpromotion ofnextgeneration Plan, whichemphasizesactivecontributiontotheenhancementof safety andquality.” “pursuit ofcustomersatisfaction”and“ensuringimproving Action Guidelines,whichsetforth“challengetovaluecreation,” as wellobtaininghighcustomersatisfactionundertheGroup the solutionofsocialissuestoward stableandsustainablegrowth, Taisei CorporationGroup implementstechnologicaldevelopmentfor Policy onResearchandDevelopmentActivities * Ranking:thescaleofpatentassetsisanindex tojudgetheoverallcapabilitiesofpatents(whosepatentregistration isapproved by thePatentOffice without lapseorexpiryandwaiver) unvr¥,1. ilo 1534blin¥,7. ilo ¥1,545.8billion ¥1,573.2billion ¥1,533.4billion ¥1,416.4billion Turnover costs development Research and in thepossessionofcompaniesandidentified asthe“patentassets.” ISO 26000 Trend inresearchanddevelopmentexpenditure obtained therightstothem. sites were visitedtoidentifypatentabletechnologies attheseconstructionsitesand technological developmentforsolutions tosocialissues.InFY2015,36construction The Technology Centerobtainstherightstotechnologiesandimplements ● Obtaining RightstoTechnologies thatSolveSocialIssues Innovation Management Expenditure onresearch anddevelopmentinFY2015was¥11 In addition,undertheTaisei Group Medium-Term Business

Intellectual Property Department,Technology Center 90blin¥. ilo 1. ilo ¥11.0billion ¥11.0billion ¥9.5billion ¥9.0 billion 0221 042015 2014 2013 2012

Consumer Issues Results ofResearchandDevelopmentActivities and through ourutilizationofintellectualassets,etc. strategy, through technologicalsupportforourconstructionsites, research anddevelopmentstrategy, andourintellectualproperty new technologiesbasedontheunityofourbusinessstrategy, our company. one yearuntiltheendofMarch 2015intheformoftotalpointsby shows thedegree ofattentionindividualpatentsregistered for general contractorindustry”*ofPatentResultCo.,Ltd.,which consecutive years)inthe“rankingofpatentassetsscalefor Annual Report2015). types ofindustryforFY2014(according totheJapanPatentOffice 91%, ascompared totheactualrateofregistration of69.3%forall strategy. Therate of registration ofpatent applications is veryhigh at research anddevelopment,basedonourintellectualproperty property assets,suchasinventionsandbrandsassociatedwithour We activelypursuetheprotection andutilizationofintellectual We aimtocontributesocietythrough thedevelopmentof In addition,Taisei Corporationwasrankedthefirst(forthree Integration ofthethree strategiesisproceeding. Research and development strategy 192 Number ofPatents Right Business strategy 307 Patent ApplicationsFiled Number of ISO GRI Intellectual PR1、PR2 6.7.5 property strategy KPIs 2016/08/12 20:26:43 ISO26000 Community Involvement and Development ISO 6.8.3、6.8.4、6.8.5、6.8.7 GRI SO1

For the Benefit of Community and Society Snapshot TAISEI

Contributions to Local Communities

Promotion of Social Contribution Activities Examples of Social Contribution Activities

Taisei Corporation sets forth “communication with the local ● Donation of ¥20 million in total as relief funds for the 2016 Management Strategy communities” under the Group Action Guidelines to establish a Kumamoto Earthquake, which were offered at will from the good relationship with the local communities and contribute to officers and employees of Taisei Corporation and its group development of the society as a good corporate citizen. companies, including the former officers and employees thereof Taisei Corporation actively participates in social contribution and Taisei Corporation. (Whole Corporation) activities as a member of local communities, including ● Grant of a subsidy of ¥15 million for projects conducive to the environmental beautification and other various activities at the preservation of the natural environment and historic buildings (to headquarters, the Technology Center and individual branches and

503 organizations in total) using the “Taisei Corporation Public Business Overview construction sites. The number of social contribution activities that Trust of Funds for Natural and Historic Environments” every year we participated in for FY 2015 was 1,116 (total for previous fiscal from 1993. (Head office) year 1,308). Taisei Corporation Group will continue to participate in social ● Spreading construction culture through the works of contribution activities by making the most of our strengths. CSR Le Corbusier at Galerie Taisei (Yokohama City). ■ Number of social contribution activities FY 2015 (Head office) Activity item Example of main activities Number of activities ● Participation in the “Tokyo Cleaning and snow removal in the local region 207 Green Ship Action” Galerie Taisei (Yokohama City) Development of “eco-cap” organized by the Tokyo Local campaigns 274 contributions Metropolitan Government, Participation in local events, etc. 181

cooperation in the natural environmental conservation of the Mt. Governance Report Others (including disaster 152 recovery support) Nanakuni green preservation area in Machida City, with Ecosystem conservation volunteers 26 involvement from the employees of Taisei Corporation Group Environmental conservation Environmental conservation and their family members. (Head office) activities such as CO2 reduction, 113 etc. ● Participation in creating nest boxes for dormice (tree-dwelling Academic, Holding visits to construction sites 81 rodents), a protected species, with employees and their family cultural and providing lecturers, etc. activities members, and cooperation with the Animal-Pathway Research

Acceptance of interns 82 Social Report Total 1,116 Society (general incorporated association) and the Animal- pathway & Wildlife Association. (Head office)

● Installation of automatic vending machines with a donation function and donation of part of the proceeds thereof (approximately ¥20 million in aggregate) to the Borneo Conservation Trust Japan (BCTJ) which is a nonprofit organization to support the activities for the protection of Borneo elephants, which are a threatened species. (Whole Corporation) Environmental Report

Promotion of Social Contribution Activities / Expansion of Employee Volunteers KPIs

● CSR Promotion Section, Corporate Communication Department, Corporate Planning Office Number of Environmental and Number of Employees In FY 2015 social contribution activities have been carried out at construction Social Contribution Activities Participating as Volunteers sites, etc., in close contact with their communities, in accordance with set targets,

including visits to construction sites, etc. for promotion of our business activities. and Corporate DataFinancial In addition, our employees and their families are provided opportunities for 1,116 cases 199 people participation in volunteer activities to contribute to the environment and society.

TAISEI ANNUAL REPORT 2016 64

015_0356501372808.indd 64 2016/08/12 20:26:44 015_0356501372808.indd 65 65 Social Report TAISEI ANNUAL REPORT2016 Our HumanRightsPolicy Consultation Services forHuman RightsandMonitoring Consultation Services consideration totheprotection ofwhistle-blowers. blowing system(helpline)andinvestigatingthefactswhilegiving human rightspromotion posteratbusinesssites. services ineachdepartmenttheCompanyandpostinga in eachworkplacebyassigningapersonchargeofconsultation occurring, weengageinhumanrightspromotion activitiesrooted To prevent abusesofhumanrightsandharassmentfrom bargain collectively. occupation andguaranteetherightofassociationto compulsory laboranddiscriminationinemployment CodeofConductstoprohibitas theInternational childlabor, LabourOrganization(ILO)andtheISO26000aswell International Human Rights,theeightfundamentalconventionsof human rightsstandards suchastheUniversalDeclarationof Human RightsPolicy*lastyearwithreference tointernational the Group ActionGuidelines.TheGroup alsodevelopedthe rights byincluding“respect forbasichumanrightsanddiversity”in The Taisei Group hasexpressed itscommitmenttobasichuman ➡ *Formulated inOctober2015. Where EveryoneEnjoysTheir Work Creating aWorkplace ISO 26000 Seep.54forthemonitoringofsuppliers. 5. 4. 3. 2. 1. Fundamental PrinciplesandRightsatWork andISO26000. Universal DeclarationofHumanRights,ILO'son Group ActionGuidelines.We baseourHumanRightsPolicyonthe this wehavecreated aHumanRightsPolicybasedontheTaisei building acorporateculture thatrespects humanrights.To achieve for allmembersofsociety’theTaisei Corporationcommitsto To fulfillthe Taisei Group Philosophy‘tocreate avibrantenvironment Respect forHumanRights We alsorespond appropriately toproblems through awhistle- We provide humanrightstrainingandworktoraiseawareness of We respect localculture andcustoms.We prohibit childandforced We strivetocreate anemployeefriendlyworkplaceandwillnot We respect fundamentalhumanrightsandthediversityof We strivetocreate anopen-minded,nondiscriminatory human rightsamongstourexecutivesandstaff onacontinuousbasis. are free from discriminationineachcountrywhere weoperate. labor. We strivetoensure ourworkingandemploymentpractices tolerate anyformsofharassment. harassment orabuseofauthority. allow anyactioninviolationofhumanrights,suchassexual gender, sexuality, nationality, socialstatusordisability, nordowe individuals. We donotdiscriminateonthebasisofrace,religion, corporate culture.

Human RightsPolicy Human RightsandLaborPractices ■ on agroup-wide basis. at theCommittee,weaimtoimprove awareness forhumanrights year are reported. Through theinitiativesdeliberatedandapproved are created andreviewed, andachievementsintheprevious fiscal human rights.IntheCommittee,basicpolicesandactivityplans employees todeveloptheircharacterandahigherawareness of office andallthebranchesin1984forpurposeofencouraging of thePromotion Committeemembersineachdivisionatthehead Human RightsAwareness Promotion Committee”whichconsists As asystemtopromote humanrights,weestablishedthe“Taisei Human RightsManagementSystem Human RightsPromotionActivities rights educationprograms, includingtalksfrom outsidespeakers. with 809employeestakingthetraining.We alsooperatedhuman employees. Thenumberofgroup trainingsessionsheldwas25, education systemforeachlayeranddepartmentofthe employees byincorporatinghumanrightstraininginthebasic In fiscal2015,weprovided andgroup e-learning trainingforall Japan Overseas department office ■

Taisei CorporationHumanRightsAwareness Committee Promotion Committee All employees assignment Employees before overseas specialist contractors(Taiwan) Overseas worksitesand family members the Group companiesandtheir All employees,employeesof ■ committee ■ committees

Head office Branch office Targets ● ● ● ● ●

Committee Deputy Chairperson Committee Chairperson members chairperson members in-house newsletters rights promotion articlesin and thepostingofhuman groupe-learning, training procurement (seep.54) Promotion ofCSR rights slogansandessays commendation ofhuman The solicitationand before overseasassignment Human rightstraining ISO GRI ● ● ● ● ● Human rightspromotion

Managers ofadministration Manager ofpersonneldepartment Officers Managers ofeachdepartment Manager ofadministration department ofeachdivision department HR5、HR9 6.3.3、6.3.4、6.3.5 activities 2016/08/12 20:26:44 ISO 6.3.6、6.3.9、6.4.4 GRI G4-11、LA-4 TAISEI Snapshot TAISEI

Creating a Pleasant Workplace

Promotion of Work-Life Balance Health of Employees We are pursuing a number of measures to encourage all As a method for promoting the health of employees, we Management Strategy employees to recognize diversity and enjoy their work. We are encourage workers who displayed symptoms in a health checkup seeking to make effective use of limited time and the realization of to see a doctor. We also ensure that overworked employees meet work-life balance. with a doctor. As a measure for mental health, we encourage meetings by special staff and support the return to work by setting Promoted Content of activities 1 items up EAP* consultation offices within the Company and external organizations so that the employees and their family members are ● Adoption of company-wide “no overtime days” ● Implementation of action plans to achieve the target for the number of able to consult fully with expert staff on their problems. Shorter leave days taken Business Overview working ● Implementation of business improvement activities by establishing the hours shorter working hours conference in April 2015 Labor-Management Relations ● Working with the employees’ union to develop ideas for shorter working hours Taisei Corporation has a Union Shop Agreement*2 with its

● Development of a childcare and family-care leave system and a employees union, and all 7,279 employees, except for short-time working system beyond the legal requirements management, belong to the union. The Company conducts CSR ● Support for the smooth return to work of employees on childcare leave: holding of a meeting and a skills improvement course for employees on various questionnaires and dialogues between labor and childcare leave and the implementation of a three-person meeting Childcare management every year for the purpose of facilitating labor- before the leave and the return to work support ● Implementation of work-life balance support seminars to build a management relations and the business activities of the Company. cooperative framework for household chores and childcare at home Changes in working conditions are determined in advance through ● Creation of a temporary day-care center during training and seminars ● Acquisition of the Kurumin Mark four times for our sustained efforts in discussion between labor and management. childcare support Details of major initiatives between the labor and management ● Provision of information by implementing nursing-care seminars

Nursing- ● Individual consulting meetings with outside organizations where Governance Report ● Holding of a workshop to understand the leave system of the Company in preparation care professional consultation is available for nursing care support ● Distribution of leaflets for the purpose of providing information on ● Running of a campaign to promote the leave system for all employees systems and consultation services ● Business improvement activities for shorter working hours and working-style reforms

● Promotion of taking of annual paid leave, refreshment leave and ● Education and promotional activities to deepen understanding of the corporate Vacations long-service leave pension system

● Enhancement of the welfare program Personnel data in fiscal 2015 ● Retirement benefit system (lump sum grants and defined contribution ■ Others pension) 2012 2013 2014 2015 ● Employee stock ownership plan Social Report Number of employees (non-consolidated) 7,945 7,951 8,007 8,072 Number of female 1,238 1,230 1,228 1,270 Initiatives for Childcare Support for Male Employees employees Number of foreign 37 41 66 75 To encourage the participation of employees males in childcare, we have Average age 42.7 42.8 42.9 42.8 published the Papa News six Average service years 19.1 19.1 19.0 18.8 times in total since September Average annual salary 8.70 8.78 8.91 9.18 2015, distributing it to about (million yen) 4,000 male employees with small Turnover rate of new Joining the Joining the Joining the Joining the Environmental Report Company Company Company Company children and their supervisors. graduates employed after 3 years (%) in 2009 in 2010 in 2011 in 2012 8.2 7.6 6.9 4.0

Human Rights Promotion Activities / Promotion of Work-Life Balance KPIs

● Personnel Department, Business Administration Division Rate of Attendance at Rate of Returning to Work from In fiscal 2015, we implemented e-learning training and group training on the subject of “‘Company Human Rights Training Childcare Leave (female) and Human Rights,’ the History of Human Rights Promotion Activities of Taisei Corporation” for all the

employees. With respect to the number of users of leave and vacations for childcare, the number of and Corporate DataFinancial female and male employees who took childcare leave was 91 and 4, respectively, with the number of 93.8 ％ 100％ male users increasing, and the rate of return to work of female employees was 100%.

*1 EAP: Employee Assistance Program *2 Union Shop: A system that requires all employees to join the labor union upon their employment with the company.

TAISEI ANNUAL REPORT 2016 66

015_0356501372808.indd 66 2016/08/12 20:26:44 015_0356501372808.indd 67 67 Social Report TAISEI ANNUAL REPORT2016 continuing toprovide foreign engineerswithopportunities. human resources whowillplayakeyrole inoverseasoperationsby individual projects are switchedtolong-termemployment.We develop October 2015,inwhichforeign engineerswhowere employedfor consultation andsupporttoencouragetheirretention. work, suchassignlanguageandsummaryscripts,provide irrespective ofdisability, andwegivethemconsiderationfortheir employees takeanactiverole invariousfieldsafteremployment, higher thanthestatutoryemploymentrate,infiscal2015.These social responsibility andachievedanemploymentrateof2.08%, continue toplayanactiverole. who canpassontheirknow-howtothenextgenerationand senior personnelwithawealthofknowledge,experienceandskills based ontheGroup ActionGuidelinesandlawsregulations. Taisei Corporationsecures theworkingconditionsofemployees Physically ChallengedEmployees Supporting ActiveRolesforSeniorPersonnel and values, thewayofworkingandcareer. terms ofsex,nationality, disability, taking advantageoftheirdiversityin to takethemostactivepossiblerole, workplace inwhichemployeesare able management, focusingoncreating a Medium-term BusinessPlan,weaimtoencouragediversity As oneoftheevolutionsmanagementinfrastructure inthe Promotion ofDiversityManagement ISO 26000 VOICE and technicalcapabilitiesoftheCompany inacomprehensivemanner. high degreeoftrustin Taiwan. proud thatourofficeisthemostlocalizedbaseamongoverseasbasesof Company. which sales, administration andconstructionareindependentbutatthesametimemutuallycomplementary, andIfeel customers seekingourconstructionaremainstaybusiness. Japaneseand Taiwanese jointlyworkunderasystemin the reputationforqualityofJapaneseproductsiswellestablished, the Taisei Brandhastakenroot, andlocal earned theconfidenceofcustomersbyrespecting Taiwanese culture andcustomsprovidinghighqualityasaJapanesegeneralcontractor. In Taiwan where During thistime, wehavebuiltmajorstationbuildingsalongthe Taiwan HighSpeedRail, largeprivate hotels, condominiums and officebuildingsandluxury In 1988whenIjoined Taisei Corporation, the Company movedinto Taiwan inearnest. ofthestartitsoperationsin This yearmarksthe28thanniversary Taiwan. Diversity Management We alsointroduced theGlobalHumanResource Systemin We alsoemployphysicallychallengedworkersaspartofour We worktoenhancethereemployment system everyyearfor I aimtoprovideahighlevelofcustomersatisfaction andcontributeto Taiwanese societybyusingthe know-how Playing aroleasbridgebetweenJapanand Taiwan willremainessential fortheCompanytocontinueearna Contributing tobusinessdevelopmentinTaiwan, takingadvantage oftheidentityTaisei Corporation

Chung Wei-Yu Human RightsandLaborPractices

Sales Manager, Taipei Office in 2015. Management Selection100 We received theDiversity ■ summarizes know-how, aimingtodeepenmutualunderstanding. communication methods.We alsodistributeaguidebookthat training tounderstandvaluesandculture specific andlearn achieve thetargets. in theWorkplace. We willcontinuetopursuevariousinitiatives the ActonPromotion ofWomen’s ParticipationandAdvancement engineers to10%ormore by2025”asanactionplanbasedon managers by2020”and“raisingthepercentage offemale April 2016,wesettargetsof“triplingthenumberfemale pleasant workplaceforfemaleemployeessincefiscal2006.In Taisei Corporationhasbeencontinuouslyworkingtocreate a Their ActiveRoles Support ofFemale andForeignEmployeesfor ● ● ● ● ● ● ● for balancingworkandlifestyleallemployees, anduseofdiversehumanresources Change ofofficenameto “OfficetoPromote VitalityofHumanResources” Support emphasizingtheuseoffemaleemployees of initiatives Establishment of “Office toPromoteUseof Females” Start Start ofpositiveaction females Decision toundertakepromotionofuse employees, trainingformalemanagershavingfemaleemployeesassubordinates, etc. Participation inwork/lifestyleseminarswithpartner, leadershiptrainingforfemale of systemforshorteningworkinghours) Expansion ofsystems(establishmentnewsystemforchangingworkplace, expansion Appointment offemaletomanagementlevel Management trainingforfemaleemployees. support program) Enhancement ofsystem(establishmentnewjobreturnsystem, startofchildcare Deployment offemaleemployeesinmarketingstaff Start ofpositiverecruitmentfemalesamongnewgraduates employees canworkatease Creating acorporateenvironmentinwhichfemale We provide foreign employeesandtheirsupervisorswith FY 2006 ISO GRI LA1、LA3 6.3.7、6.3.10、6.4.3 FY 2009 FY 2007to FY 2010 2016/08/12 20:26:44 ISO 6.3.8、6.4.7 GRI LA10 TAISEI Snapshot TAISEI

Promotion of the Development of Human Resources

Support for Career-Building Support for Qualification Acquisition We provide employees with comprehensive training in each phase Taisei Corporation helps all employees improve skills in their area Management Strategy after joining the Company to develop self-directed human of work, by supporting their acquisition of qualifications, in order to resources with specialty, creativity and independence. develop engineers and managers with strong specializations.

■ Human resource development image ■ Examples of support for qualification acquisition Construction work Civil engineering work

Leadership ● First-class architect ● Professional engineer development Expertise ● First-class building operation and ● First-class civil engineering works management engineer execution managing engineer Business Overview ● First-class plumbing work operation and ● Chief concrete engineer management engineer ● Certified chief managing engineer Global human Professional ● Building mechanical and electrical engineer for dam construction resource Self- development development development Design International

● First-class architect ● Licensed architect

● First-class architect in structural design ● Professional engineer CSR Support for ● First-class architect in facility design ● Project management professional CSR qualiﬁcation ● US licensed architect ● APEC architect / engineer acquisition Development Engineering

● Professional engineer ● The Association for Real Estate ● First-class plumbing work Securitization certified master General training Department Self- External Human rights / operation and management engineer training development training Corporate ethics ● Redevelopment planner (years old) ● First-class electrical work ● Professional engineer operation and management engineer 65

60 Administration Career use Governance Report period 50 ● Construction industry accountant ● Registered real-estate broker Training for newly appointed general mangers Power-up management training＊1 45 Training for business leaders Advanced Career 40 formation Training for period business leaders Basic 35 Career vision training＊2

8 Social Report

Global training III Dispatch to external training 7 7th year training research institutes, overseas companies, etc.) 6 Department training (skill improvement, etc.) (graduate schools in Japan, overseas universities, public offices, 5 Language (TOEIC), the acquisition of qualifications, etc. Global training II Human rights promotion training (head office, branches) 4

3 When entering the Company Introduction training for new employees / Global training I After informal job offer Education of prospective employees *1 Strengthening of leadership and management as a core manager *2 Step-up training for managerial personnel

➡ See p. 62 for our efforts for the development of human resources on work sites Environmental Report

Promoting Diversity Management / Supporting Employee Career Formation KPIs

● Personnel Department, Business Administration Division Numbers Attending Female We strive to enhance corporate value through the development of employees’ abilities by Leadership Development Training Training Hours Per Person offering a range of training sessions, including annual training for all employees and sessions for global human resources, career vision and the development of leadership for and Corporate DataFinancial 66 people 44.6 hours female employees. Training hours per capita in fiscal 2015 came to 44.6 hours.

TAISEI ANNUAL REPORT 2016 68

015_0356501372808.indd 68 2016/08/12 20:26:44 015_0356501372808.indd 69 69 Social Report TAISEI ANNUAL REPORT2016 and damageprevent third-party accidents. Management System”(TAISEI OHSMS),toeliminateaccidents and organizingthe“Taisei OccupationalHealthandSafety Safety Policy,”* whichthePresident indicatesbysystematizing contractors. We are committedtothisunderthe“Healthand among itsemployees,group companiesandspecialist to ensure safetyinatangibleformdaytoconcertedefforts Based ontheidealof“SafetyFirst,”Taisei Corporationworkshard Health andSafetyPolicy *Formulated inJuly2005.Finalrevision inJanuary2009. Hygienic Working Environment Improvements foraSafeand ISO 26000 TOPICS 3. healthandsafetystandards Improving 2. Preventingthird-party hazards 1. Achievementofzero fatal accidents society atlarge. under themaxim “Safety First”, andaimtowinthetrustunderstandingof employees. management system, as thebasisformanaginghealthandsafetyofour We systematicallyimplement TAISEI OHSMS, ouroccupationalhealthandsafety conservation onoverseasconstructionsites. conservation order tostrengthenthehealthandsafety management andtheresponsetoenvironmental Administration andEnvironmentalDepartmentintheInternationalOperationsHeadquarters in among theconstructionsiteworkers. Taisei Corporation hasestablishedaSafety training foraccidentpredictionwasconductedateachworksitetoraiseawareness ofsafety education” wasprovided. In Vietnam, wherethepracticeofamorningmeetingwasnotseen, achieved thankstothecomprehensivemanagementofsitesandsafetyeducation. which Taisei Corporationconductedoveraperiodof34months, zerofatalaccidentswere During theconstructionworkofNo. 2 Terminal Building, NoiBaiInternational Airport, Zero Fatal Accidents AchievedduringtheConstructionWork oftheNoiBaiAirport, Vietnam Improving HealthandSafetyStandards develop ourhealthandsafetymanagementactivities. Working withtheconvictionthat hazardcanbeavoided”,“every togetherwewillproactively specialty contractorswillcombinetheirexpertiseandcommitmenttosafety. Based ontheprinciplesdescribedabove, allofouremployeesand theemployeesofrelated our healthandsafetystandards. strive toeducatethoseinvolvedwithworksitesabouthealthandsafety, andcontinuouslyimprove resulting fromit. Thus, wewillendeavortodemonstrablyreduceriskintheworkplace, aswell management system, measures andconductariskassessmentaswellany necessary inspection -improvement” inaccordancewiththe TAISEI OHSMSoccupationalhealthandsafety We willproperlyimplementandmanageacycleconsistingof “planning -implementation- prevention ofthird-partyhazardsandthoroughlyenforceit. For constructionprojectsinurbanareasparticular, wewilldrawupaplanfocusingonthe We mustnotcreateanyhazardsforthegeneralpublic. towards achievingzerofatalaccidents. social responsibility. All thoseconcernedwillapplytheirfulleffortswithasenseofresponsibility Achievement ofzerofatalaccidentsisanimportanttaskinorderfortheCompanytofulfillits We are committed to improving the working environment for our employees We arecommittedtoimprovingtheworkingenvironmentforouremployees Utmost cautionwaspaidtothehealthandsafetymanagementatsites “repeated Health andSafetyPolicy Labor Practices ■ actions underthe“HealthandSafetyManagementPolicy.” improved through riskassessmentsoftheresults of“audits”the implemented toprevent accidentsanddamage. platform, thePDCA(plan-do-check-act)cycleisproperly has accumulatedovermanyyears.Usingthissystemasa management techniquesandknow-howwhichTaisei Corporation TAISEI OHSMSisestablishedbasedonthesafetyandhealth TAISEI OHSMSSystem information database Accident Accident investigation and Specific causes of danger and harm TAISEI OHSMS analytical information and specific items to be addressed In addition,thehealthandsafetymanagementstandards are Safety Managementpolicy Internal audits/guidance The weekly safety meeting withsafety weekly The 3,000 the time attendants at peak Implementation andoperation · Headofficeplan · Management · Actionpriorities · Targets President’s Healthand priorities, other Records /storage System review Safety Policy Head office Health and Central SafetyCommittee reoccurrence Prevention of Accident analysis (Guidance) (Warning) Construction sitepatrols Implementation andoperation Branch HealthandSafety · Branchactionplan · Actionpriorities · Branchtargets Records /storage Management Plan Branch SafetyCommittee Branches reoccurrence Prevention of Accident analysis (Guidance) (Warning) · BasicConstruction · EmergencyResponsePlan · HealthandSafety · HealthandSafety On-site inspections/remediation Implementation andoperation Work Plan Management Plan Management Policy Management Policy Construction Health Construction sites Construction Site Records /storage and SafetyPlan Manager’s response Accident 2016/08/12 20:26:44 ISO 6.4.6、6.4.7 GRI LA6、LA8 TAISEI Snapshot TAISEI

Horizontal Propagation of Accident and Damage Prevention

Implementation of Construction Site Safety Patrols Cooperation with the Specialist Contractors (cooperating companies) Construction site patrols are introduced to ensure comprehensive Taisei Corporation closely cooperates with the Taisei Health, Management Strategy health and safety management based on TAISEI OHSMS. In Safety, and Environment Cooperation Association, which addition, to make sure that senior management’s firm resolution consists of specialist contractors all over Japan, to prevent to implement the ideal of “Safety First” and the “prevention of accidents and damage. accidents and damage” is instilled among all the construction In addition, for site workers, the President himself conducted safety patrols of National Safety Week in the building construction and civil engineering sites and July 2015, the President’s encouraged each construction site worker to “protect their fellow award ceremony was Business Overview workers in earnest.” held to recognize specialist contractors’ great contributions to the improvement of health

and safety management. CSR

The President’s award ceremony

Establishment of Various Foremen Systems In the civil engineering field, the system for rewards for excellent civil The President’s patrol engineering skilled workers, under which a reward is paid to the Implementation of Health and Safety Education workers with excellent construction skills who contribute to construction work at the sites of Taisei Corporation, is introduced to In October 2015, Taisei Corporation created a DVD for safety improve the overall capabilities, including quality, safety and skills. Governance Report education with the cooperation of the Taisei Health, Safety, and In the building construction field, a system for the highest Environment Cooperation Joint Association to improve the effect quality foremen was newly established upon partial revision to the of health and safety education and provide it at the same level to a first-class foremen system during FY 2015 to further improve the wide range of workers. The contents of the DVD include visual foremen’s construction management capability, including quality, and audio materials to stimulate understanding and sympathy skills and safety to strengthen the production system. from the perspective of construction site workers, especially

Time for Social Report directed at newcomers and Amount of certification / Start of foremen, and the Category Name of system Number of Subject payment certified system President’s personal persons message calling for Skilled workers who meet the prevention of accidents System for reward Annually specified Civil to excellent civil ¥2,000 (each requirements January and damage at the end of engineering engineering skilled per day December) / 1, 2013 workers (BMT*) 109 workers including the program. qualifications All over Japan System for Building first-class foremen ¥1,000 Each April / Same as April construction (partially revised) per day 742 foremen above 1995 Environmental Report Building System for highest ¥3,000 Each April / Same as November construction quality foremen per day 30 foremen above 2015 *BMT: Best Meister of Taisei

Improvement of the Health and Safety Standards KPIs

● Subcontractor Relations & Safety Administration Department, Safety Administration Division Number of Fatal Accidents Frequency Rates The Company’s safety results for FY 2015 included the occurrence of 98 lost time accidents (including accidents of subcontractors), of which 68 required and Corporate DataFinancial lost time of 4 days or more, and 2 fatalities. Also the frequency rates was 0.56. 2 cases 0.56

TAISEI ANNUAL REPORT 2016 70

015_0356501372808.indd 70 2016/08/12 20:26:46 016_0356501372808.indd 71 71 Environmental Report TAISEI ANNUAL REPORT2016 Environmental Policies andPromotionOrganization *1 Issuedin1996bythenameofCEO. For OurGlobalEnvironment Policies* the environmental risksandimpactsbysettingspecificenvironmental managementtargets(Taisei Agenda)basedontheEnvironmental and weimplementenvironmental managementactivitiesinorder topromote pioneeringenvironmental projects. We are workingto reduce The Taisei CorporationGroup endeavorsto conserveandcreate theenvironment through ourcore businessof theconstructionindustry, we establishedtheDeclarationofTAISEI onBiodiversityPreservation* ISO 26000 4. 3. 2. 1. Projects” inallcorporateactivities. Innovation,” andpromote “PioneeringEnvironmental group companiesstrivefor“Environmental Protection and environmentally sensitivesociety, Taisei Corporationandits management principlesasaguide,andworkingforan of theburden theseenvironmental on the environment. With Taisei Corporation’s businessactivitiesare necessarilyapart Nature. Asenvironmental problems worldwideincrease, improvement ofthelivingenvironment inharmonywith development ofqualitysocialinfrastructure andthe through itsconstructionactivities,strivesforthe environment forallmembersofsociety,” Taisei Corporation, thegroup philosophyof“ToWith create avibrant 6. 5. Environmental ManagementActivities During construction,weshallreduce CO and r conserve energyandresources throughout theirlife-cycle, harmoniously coexistwiththenaturalenvironment, and propose toourclientsthecreation offacilitiesthat pr During bothplanninganddesignphases,weshallgive benefit ourclientsand resolve environmental problems. a recycling-based society, andusethesetechnologiesto conservation ofbiologicaldiversity, andtheformationof contribute totherealization ofalow-carbonsociety, the We shalldevelopenvironmental technologiesthat continually improve environmental conservationactivities. Environmental ManagementSystem(EMS),expandand agreements and,through theeffective applicationofour compliance withenvironmental laws,regulations, and We shallprevent environmental pollutionthrough NGO /NPO'sincreating andprotecting theenvironment. We shallproactively cooperatewithothernationsand conservation ofregional environments. and asaworthycorporatecitizen,contributetothe We shallcommunicateeffectively withlocalcommunities, along withotherenvironmental conservationactivities. 3R ofconstructionbyproducts (Reduce,Reuse,Recycle), contractors andbusinesspartners,weshallpromote the on theenvironment. Incooperationwithspecialty the efficient useof resources, thereby reducing theburden proper considerationtobiologicaldiversity, andpromote oper considerationtoglobalandregional environments, 1 weestablishedin1996.We are alsopromoting biodiversitypreservation andenvironmental contributionactivities,andin2010 educe CO

Environmental Policies Environment 2 emissions. Action Guidelines 2 emissions,give 2 . *5 DivisionEnvironmental Committee:Establishedinsomedivisions *4 CCMO:ChiefCarbonManagementOfficer *3 CentralSafetyCommittee:SinceFY2012, environmental incidents are investigated *2 Issuedin2010bythenameofCEO. ■ and discussedbytheCentralSafetyCommittee.

2. 1. TAISEI proclaims thefollowingactionpolicy. remain from anorganizationthatlearns andcares fornature, environment forallmembersofsociety,” andinorder to Based ontheTaisei Group Ideal“To create avibrant 5. 4. 3. FY 2015EnvironmentalManagementPromotionSystemOrganizationChart Declaration ofTaiseiCorporationonBiodiversityPreservation Headquarters (10divisions,1Center) Branch Offices(13branchoffices) (General ManagerofEnvironmental Central SafetyCommittee Environment Committee divisions andCenter President General managerof impact ofthoseriskstothemaximumextentpossible. environmental managementsystems,andminimizethe pose tobiologicalresources andtheecosystem,utilize Analyze therisksCompany’s constructionactivities and disclosetheaccomplishmentsofthoseactivities. engage inproactive biodiversityconservationactivities, cooperate withdomestic/overseasNGONPO's Promote communicationwithlocalcommunities, subcontractors, inpursuingbiodiversitypr Cooperate withbusinessassociates,includingspecialty proposals thatservetopreserve andincrease biodiversity. coexists inharmonywithnature, andaggressively submit Perform urbandevelopmentandfacilitiesdesignthat clients tosustainecologicalservices. re-create biodiversity, andutilizethosetechnologieswith Develop environmental technologiestopreserve and Branch manager Specific environmental Division: CCMO Representative *4 ) *3 Division EnvironmentalCommittees Division EnvironmentalManager Companywide EMSAdministrationBureau Branch OfficeEnvironmentalManager Branch OfficeEnvironmentalCommittees Environment CommitteeAdministrationMeeting Environment ManagementGroupMeeting Taisei CorporationGroupEnvironmentalPromotionConference Internal environmentalauditteam Global WarmingWG,ResourceRecyclingWG Energy EfficiencyPromotionCommittee,BiodiversityWG *5 Division EMS Bureau Administration Branch OfficeEMS Bureau Administration eservation. 19 teams 7 maingroupcompanies 2016/08/12 20:32:02 ISO 6.5 GRI G4-2,G4-34,EN5, EN29,EC2

EMS TAISEI Snapshot TAISEI

Environmental Risks Environmental Related Technologies High temperatures / insufficient water / Low Carbon concentrated heavy rain / large scale and Initiatives disasters / environmental pollution / loss Society of natural resources/ rapid increase in cost of building materials and equipment / urbanization / deterioration in labor and living environment / environmental laws, regulations, and taxes / changing Annual Environmental demand for buildings and infrastructure / Management Targets evaluation by society Recycling Oriented Nature Co-existing Management Strategy Business Opportunities (Taisei Agenda) Creation of Sustainable Society Society

Objectives Targets for Fiscal 2015

● Reduction in predicted CO2 Reduce CO2 emissions at the operation stage ● Reduction in predicted CO2 emissions in the building of buildings★ KPI

emissions in the building operation stage compared with Business Overview operation stage compared with 1990 (and aim for popularization 1990 (and popularization of of urban-style energy creation Reduce CO2 emissions at the construction stage on urbanstyle ZEBs as top runner buildings as top runner building construction sites and civil engineering sites★ KPI architecture) 40% architecture) Aim for 80%

● Reduction in CO2 emissions in ● Reduction in CO2 emissions in the construction stage the construction stage

Prevent global warming Promote reduction in energy consumption rate in offices compared with 1990 50% compared with 1990 Aim for 80% CSR

Decrease construction waste final disposal rate★ KPI

● Aim for final disposal rate of Reduce mixed waste weight rate of new building ● Aim for final disposal rate of construction projects construction waste of 3% or less construction waste of 0 ● Aim for a recycling index for Reduce the decrease index of construction waste processing ● Aim for a recycling index for construction by-products of amount in intensity, for civil engineering construction projects construction by-products of 80 or more 100

Effectively utilize resources Increase green procurement rate★ KPI Governance Report Support and practice activities & trainings to preserve natural environment★ ● Aim for development of social ● Use and expansion of infrastructure that co-exists with biodiversity evaluation methods nature Develop and promote biodiversity technologies ● Participation in and promotion ● Aim for realizing society that Preserve biodiversity of biodiversity offsets increases biodiversity Promote biodiversity off sets initiative

Manage construction waste, polluted soils, industrial ★ Targets certified as the “Eco-First Commitments” to Japan’s wastewater, harmful and/or chemical substances appropriately Minister of the Environment Social Report Improve electronic manifest diffusion rate★ KPI Reduce environmental risks

Promoting media presentations on research, development and promotion of environmental technologies KPI Promote development of technologies

Putting eco-model projects in practice★ Taisei Agenda Execute environmental management in construction sites, along "Operation manual for prioritized environmental issues” Taisei Corporation operates an EMS in compliance with ISO Promote excellent environmental activities in many fields

14001:2015 and develops the Taisei Agenda, the annual Environmental Report Promptly implementing decontamination and preventing diffusion of radioactive materials environmental management targets on a company-wide basis, under the President’s name every year based on risks and Consideration for the disaster sufferers and ensuring the opportunities that have been identified. safety of the workers engaged in related construction Since FY2014, we have announced “TAISEI Green Target

Contributing to environmentally friendly urban planning and 2020/2050” as our medium- to long-term environmental target in Response to Restoration and Recovery from the Great East Japan Earthquake development of environmental infrastructure view of the role of the construction industry in creating the ideal future of the global environment. Financial and Corporate DataFinancial

● KPI : Key Performance Indicator

TAISEI ANNUAL REPORT 2016 72

016_0356501372808.indd 72 2016/08/12 20:32:02 016_0356501372808.indd 73 73 Environmental Report TAISEI ANNUAL REPORT2016 300 150 150 300 ➡ Seep.83forthecalculationcriteriavalues. ■ carbon reduction ofbuildingsisincreasingly important. emissions from theuseofproducts soldare thehighest,and *3 *2 ■ ● ● *1 the emissionswere approximately 28.7milliont-CO related toourbusinessoutofthetotal15categories,inwhich 2, and3emissionscalculatedutilizingindustryorganizationcriteria. Taisei Corporationreceived third-party assurancefortheScope1, Scope 3 Industry organization criteria* organization Industry ISO 26000

Calculation rangecriteriasetbytheJapanFederation ofConstructionContractors Global standard forcalculation andreporting ofGreenhouse Gas(GHG)emissions (URL:http://www.ghgprotocol.org/) evaluates theiranswers,andpublishestheresults toinvestors. CDP: Anot-for-profit organizationbasedintheU.K.thatsends questionnaires onenvironmental strategies,GHGemissions,etc.toleadingcompanies around theworldandanalyzes and Third-party assured values(independentassurancereport onp.83)are indicatedwiththe The calculatedtotalvaluesmaynotbeconsistent withthetotalvaluesduetodatarounding. (10 CO GHG protocolcriteria 0 CO Construction stageemissions Emissions bysite Using theGHGprotocol criteria,wecalculate10categories Response toGlobalWarming 3 2 t-CO Emissions byscope emissions 2 emissions 26 2 5 ) 2011 104 252 134 119 228 67 ■ ■ 25 16 Construction site(civilengineering) Construction site(building) (10 1990 criterion

2012 206 118 103 216 73 97 3 Environment t-CO * 1 2 2 ) 22 15

2013 229 143 250 163 453 65 92 Construction stageemissionsintensity 18 13 Scope 3(upstream) 2014 108 209 124 186 Category 1–81,700 88 67 214 22 12 ■ Emissions perunitfloorarea 2015 128 122 195 226 22 76 92 Office Target value Target value 2 2016 . The （ 249 227 kg-CO ■ ■ ■ Scope3 Scope2 Scope1 （FY） 274 2 /mil.yen 0 100 200 300 ● ） mark. （ Scope 1and2 100 60 40 20 operation helpsreduce theCO GHG protocol criteria. Category 11(useofproducts sold)inScope3basedonthe CO ■ Reducing theestimatedCO (10 Disclosure ofEnvironmentalInformation environmental information. We willcontinuetoactivelydiscloseour Ministry oftheEnvironment since2013. infrastructure forenvironmental informationdisclosure ledbythe consecutive yearsince2010. the CDP* In FY2015,wewere selectedasaleadingdisclosure companyfor % ● 20 40 60 80 0 ） 3 2 0 t-CO emissions and reductionpercentage Prediction ofCO Predicted CO We alsoparticipatedintheproject forthedevelopmentof 2 ) 204 3 2011 2011 37.5 ClimateDisclosure LeadershipIndex(CDLI)forthesixth 60 41 ■ ■ 38 2 Predicted CO Calculated valuebasedon1990criterion reduction percentage 2012 43.6 2 2012 emissionsinthebuildingoperationstage 37 23 21 2 emissions 2 emissionsatthestageofbuilding 2013 2 35.3 emissionsin 2013 46 Scope 3(downstream) 38 29 Category 11and1227,000 2014 37.5 2014 40 32 2015 Emissions perunitfloorarea 25 41.7 Target value 2016 2015 35.0 34 36 (kg-CO 20 （FY）（FY） 2 /year.m

● 0 10 20 30 40 50 2016/08/12 20:32:03 2 ) ISO 6.5.5 GRI EN15,EN16,EN17, EN18,EN19,EN27 TAISEI Snapshot TAISEI

For the Creation of a Low Carbon Society

In recent years, we have been feeling the impacts of global Taisei Corporation is carrying out our own “CO2 Zero Action” at Management Strategy warming and associated climate change more closely, such as all construction sites including building construction and civil landslides caused by extreme torrential rain. While such factors engineering, which include activities in seven areas such as the create various environmental risks in continuing corporate eco-driving of construction machinery and vehicles and the activities, they may also provide business opportunities by solving effective use of rainwater. and responding appropriately using technology and initiatives. We are also distributing information on the environmental The Taisei Corporation Group is making efforts to reduce initiatives through industry groups and the Eco First Promotion carbon emissions at all stages of the life cycle from planning and Counsel, etc., and we support “COOL CHOICE,” a new national Business Overview design to construction, operation, renovation, and demolition. movement that will continue until 2030 on the theme of climate Carbon reduction through the EMS operation, the development change measures and greenhouse gas reduction in the area of of materials that help reduce carbon emissions such as concrete carbon reduction. using a reduced amount of cement, and the development of Additionally, the “Light-down Campaign” organized by the

zero-energy buildings (ZEB) and other cutting-edge technologies Ministry of the Environment for energy saving has been joined by CSR for energy management and carbon reduction contribute not more than 100 places such as head offices, branch offices, only to the prevention of global warming, but also to the effective construction sites, etc., and from 2016, on the day of the event,

use of natural resources and the reduction of the impact on the CO2 emission offset using green power has been implemented at natural environment. the head office, where the power consumption is the highest.

Key technologies and initiatives (examples)

Planning and design ● T-ZEB simulator Governance Report ● Air-conditioner using geothermal energy ● Liquid cooling air-conditioning system

Construction ● Gravel layer boring using multilayered tip bits ● Upward shield construction method ● T-Root®

Operation, renovation ● T-Green BEMS® and demolition ● T-Green Monitor ● ZEB renewal Social Report

The “CO2 Zero Action” logo sign is affixed to the temporary enclosures of all Application of ● T-BIM cloud system construction sites, and the “COOL CHOICE” logo is posted at some of the R&D technology ● Breeding water recycling system construction sites. Environmental Report

Contribution to realizing Low Carbon Society KPIs

● Environment Division

Taisei Corporation is implementing an environmentally friendly design in an

Reduction Rate of Reduction Rate of CO2 effort to reduce the estimated CO2 emissions at the stage of building Predicted CO2 Emissions Emissions in the operations. We have also set the intensity targets (emissions per in the Building Operation Stage Construction Stage

construction turnover) for the CO2 emissions at the construction stage, and

all construction sites throughout Japan are striving to reduce the and Corporate DataFinancial

environmental impact and CO2 emissions during construction. 41.7％ 52.7％

TAISEI ANNUAL REPORT 2016 74

016_0356501372808.indd 74 2016/08/12 20:32:03 016_0356501372808.indd 75 75 Environmental Report TAISEI ANNUAL REPORT2016 （ 1,000 1,500 2,000 2,500 3,000 ■ ■ ➡ Seep.83forthecalculation criteriaforthevalues. ● ● * 3R:Reduce/ReuseRecycle Concrete remnants Total Miscellaneous Metal scrap Wood scrap Mixed waste Construction sitesludge Asphalt andconcrete remnants 10 ISO 26000 500 Third-party assured values(independentassurancereport onp.83)are indicatedwiththe The calculatedtotalvaluesmaynotbeconsistent withthetotalvaluesduetodatarounding. 3 Quantity ofconstructionwaste Emissions andrecycling ratebyconstructionwastecategory was 28.7%,asaresult ofoperationthe“Green Procurement Guidelines”. from theCompanywas4.7%.Also,green procurement percentage calculatedfrom procurement data In FY2015,thefinaldisposalrateofconstructionwasteexcluding polluted mudandwastenotoriginating ● Promotion of3R*ActivitiesandGreenProcurement ➡ t 0 ） Effective UtilizationofResources

Environment Division Astothegreen procurement quantityofmainconstructionmaterials, pleaserefer to“Taisei CorporationMaterialFlow”onp.81. Construction waste ■ Quantity recycled （1,117）（903）（201） 2011 1,116 1,633 ( )isthequantityexcludingpollutedmudandwastenotoriginatingfrom theCompany 498 （13）

19 Environment （1,522）（1,281） ■ （227） 2012 2,236 1,554 666 Quantity ofintermediateprocessing （14） 17 （1,709）（1,414）（270） 2013 2,695 1,863 797 （25） 35 engineering （1,489）（1,215） Civil （250） 661 335 201 2014 2,355 1,676 33 21 60 636 3 8 ■ （24） 43 Quantity ofdirectﬁnaldisposal （1,503）（1,207）（276） 2015 2,284 1,426 e osrcinDmlto Subtotal Demolition New construction 835 （20） 22 （FY） 857 417 244 46 36 68 38 8 Building construction mark. ■ Construction wastetreatmentbreakdown 766 601 18 10 58 45 28 Amount generated 1,503 6 on-site use,etc. valuable materials, of Sale 53 wide-area certi cation, certi cation, wide-area Contracted disposal amount 1,450 1,623 126 845 445 64 45 84 14 276 amount treatment Intermediate 1,154 facility Recycling Direct naldisposalamount20 2,284 1,046 51 treatment residue Intermediate Recycling oa Recyclingrate Total 158 143 781 67 54 35 1,207 amount recovery Resource 4.7 Construction Waste Final DisposalRateof 225

KPIs 100.0% 99.8% 72.9% 65.4% 99.7% 98.1% ％ーー 71 amount disposal Final 1,432 amount Recycled Unit: 10 (10 2016/08/12 20:32:03 3 3 t) t ISO 6.5.4 GRI EN2,EN23,EN28 TAISEI Snapshot TAISEI

For the Creation of a Resource-recycling Society Guidelines for Green Procurement All materials used in the construction business are produced, in Taisei Corporation’s “Taisei Corporation Green Procurement Management Strategy a broad sense, through the consumption of limited natural Guidelines” were established and operated in 2001 for the resources, and Japan relies on imports for most of the raw purpose of adopting materials and equipment and applying materials. This is susceptible to significant risks in business construction methods with low environmental impact during the continuity such as the interruption of supply due to disasters design, construction, operation, and demolition of buildings. By caused by extreme climate phenomena. The effective use and referring to and reflecting the details of the Green Purchasing recycling of resources require efforts on a global scale, which are Law*2, the items and construction methods (green procurement also included in the Sustainable Development Goals (SDGs)*1 items) are selected every year. In FY2015, the number of items Business Overview announced in 2015. was 85, including construction, equipment, and civil engineering. The Taisei Corporation Group strives to make effective use of The application in the entire company helps not only the resources at all stages from planning and design to procurement recycled use of resources, but also energy saving, the reduction of

to construction. We are contributing to the creation of a recycling CO2 emissions, resource conservation, the non-use of hazardous

society through, for instance, the adoption and use of recycled materials, preservation of the natural environment, etc. CSR materials such as cement and steel materials that are key Adoption of green procurement items (construction design) materials for construction, the adoption of the precast concrete ■ (PCa) construction method, which is resource- and energy-saving Structural items 9% Recycled steel material and effective for reducing the environmental impact, raising the Ultra high-strength concrete, etc. Architectural items 24％ recycling rate by thoroughly sorting construction waste during Breakdown of speci ed Ceramic tiles demolition and disposal, and the active use of resource recycling Equipment items 67% Environmentally friendly items in the thermal insulation material through the sale of valuable materials. Water-saving toilet bowl design stage Thermal insulation sashes Automatic water faucets and doors, etc. LED lighting ﬁxtures Governance Report High-efﬁciency transformers, Key technologies and initiatives (examples) etc.

Planning and designing ● T-RESPO construction method® ● Automatic warehouse rack seismic vibration control system Selecting materials, products, and construction methods with a ● Eco-friendly concrete ● Corrugated air ducts low environmental impact during the design of buildings reduces not only the environmental impact during production and Construction ● E-DAM ● Effective use and re-use of soil construction, but also the environmental impact and operation Social Report generated in construction cost when customers use the buildings. ● Super strong concrete with a compressive strength exceeding 300N In FY2015, 7.7 items on average were adopted per building design project. Many of such items are water-saving hygiene Operation, renovation, and ● Efficient use of concrete debris demolition ● Foundation pillar assessment system equipment, LED lighting, and high-efficiency, energy-saving ® ● Post-Head-Anchor electric appliances. ● Short-stroke seismic isolation system (urban-type) Taking into account the past achievements, we have

Application of R&D ● Super green concrete increased the target number of green procurement items per Technology ● T-WOOD OA floor project to nine or more in our environmental management goals ● Reuse of bits

(Taisei Agenda) from FY2016, and we further encourage Environmental Report environmentally friendly design.

➡ See p.54 for the article on CSR procurement. Financial and Corporate DataFinancial

*1 SDGs: The acronym of Sustainable Development Goals. At the “United National Sustainable Development Summit 2015,” member countries adopted SDGs comprising 17 objectives and 169 targets to accomplish on a global basis. *2 Green Purchasing Law: Law Concerning the Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities TAISEI ANNUAL REPORT 2016 76

016_0356501372808.indd 76 2016/08/12 20:32:03 016_0356501372808.indd 77 77 Environmental Report TAISEI ANNUAL REPORT2016 society withrichbiodiversity. conservation insociety. biodiversity andcontributingtothepromotionof Awards SteeringCommitteeforprovidinganewapproachto Chairperson’s Award(AwardofExcellence)theEco-Products case studiesongreenandwaterplanningforparksbuildings. discussions withtheclient,whichpermitseasyapplicationof conditions oftheplanningzoneusingatabletPCwhilehaving biodiversity fromtheearlystageoffacilityplanning. is madepossiblebysystematicallyadoptingtheperspectiveof such asbirds,butterflies,anddragonflies.Optimalfacilityplanning by estimatingandvisualizingthepossibilityofvisitscreatures which isgenerallynotveryvisible,canbequantitativelyassessed areas andwatersidesthattakebiodiversityintoconsideration, biodiversity-friendly facilityplanning.Theeffectofcreatinggreen Ikimono (livingcreatures)Conciergeisacomputerapplicationfor ● TechnologyBiodiversity Conservation ISO 26000 Ikimono Concierge We areactivelyimplementingavarietyofprojectstocreate This toolreceivedthe2015GoodDesignAwardand Clear resultsappearquicklybyinputtingthegreenarea Conservation ofBiodiversity

Environment Tablet usingIkimonoConcierge ® ® Association. Kamaishi Forest Owner’s the forests operatedbythe purchased acredit for45t-CO Corporation Group, theclub support oftheentire Taisei Minamisanriku Town. the With created atastudioin from thisforest, processed and giveaways madeofthinnedwood the Tohoku Region.Theparticipantswere givenexclusive one coin(500yen)fordisasterrecovery andforest preservation in TAISEI 1tonCLUB Tokyo Greenship Action construction businessandsociallifewiththenaturalenvironment. better understandingoftheimportanceconnection for allofficers andemployees,toprovide ouremployeeswitha offset ontheenvironment managementande-learning undertaken on theenvironment givenbyoutsideexpertsinfuture biodiversity through theforests. maintain thepassageofdormiceonroads whentheymove the constructionofanimalpathwaysincooperationwithNPOto activities, wemakedormousenestboxeseveryyearandpromote thinning activities,etc.Inaddition,aspartofourvolunteer environment andruralcommunitiesthrough nature observation, andbetterunderstandthe employee training,inwhichtheylearn protect ruralcommunities.Suchactivitiesare alsoincludedinnew companies andtheirfamiliesparticipateinvolunteeractivitiesto TwiceGovernment. eachyear, employeesofTaisei anditsgroup Greenship Action,whichisorganizedbytheTokyo Metropolitan Since 2007,Taisei CorporationhasbeenparticipatinginTokyo purchase activityofCO TAISEI 1tonCLUB,whichcommencedin2010withthe blanket promoted thepurchase ofCO activities ledbyvolunteeremployees.InFY2015,theclub has continuedinvariousformsasenvironmental contribution Environmental EducationandActivities Further, weare makingavarietyofefforts, includingseminars 2 emissionrightsbyindividualemployees, 2 2 absorptioncredits availablefrom of Making dormousenestboxes (safety boy) Corporation’s mascot“AnzenBoya” Giveaways withthedesignofTaisei ISO GRI EN13 6.5.6 2016/08/12 20:32:04 ISO 6.5.3 TAISEI Snapshot TAISEI

Reduction of Environmental Risk

Risk Management at Construction Sites and Offices Complaints on Construction Sites and Responses Taken

■ Proportion of site environmental patrol observation items ■ Proportion of complaint types and examples of responses (FY 2015) (FY 2015) Management Strategy ■Education and training, etc. 29% Others 11% ■Site planning Noise 33% 10% Radiowave interference 10% Others* 7% Trafﬁc obstruction 13%

Laws and Business Overview Prevention of ■ health regulations, etc. impairment 61% due to Dust 15% Vibrations 18% asbestos 6% Waste management

54% CSR Construction Law for promotion of Types Response measures (examples) material effective utilization of Air pollution control recycling resources 14% Noise In response to complaints about the noise of dump trucks 9% 10% transporting surplus soil at midnight, an area away from houses was rented in which to keep surplus soil. * “Other” includes Soil Contamination Countermeasures, Local Regulations, and Water Pollution Control, and no issues concerning Noise/Vibration Regulation were identified. Vibrations In response to complaints about vibrations made by regular vehicles passing over the road surface lining, cushioning materials were placed underneath the lining to reduce gaps, Site Environmental Patrols are implemented to survey compliance and the pavement was repaired. with environmental laws and regulations on construction sites Dust In response to complaints about the dust from the cutting of the concrete ditch of the exterior, water was sprayed throughout the company. Corrective actions and preventative during the operation to prevent the dust from flying around. Governance Report measures are taken in response to observations in order to Traffic In response to complaints about traffic jams during traffic achieve continuous improvement. obstruction control, the traffic guides were re-trained for the signs and calls to give, and the locations of the traffic guides and We also provide our employees and sub contractors with information boards were improved. environmental education to help them understand the importance Radiowave In response to complaints about the interference of radio interference waves used by the sub contractors with television waves, of environmental management and prevent environment-related the use of radio waves was prohibited at the construction accidents while raising awareness of the proper management of sites. harmful chemicals such as asbestos and PCBs and to achieve the Taisei Corporation takes the appropriate measures regarding Social Report appropriate management and processing of contaminated soil, complaints related to the environment reported to its construction etc. sites, etc., and maintains records and reports using In FY2015, no accidents or legal violations related to the communication sheets based on the EMS procedures and environment occurred. communicates across the relevant departments and the Company when necessary. Recently, more opinions have been provided by citizen groups, to which we strive to respond appropriately. Environmental Report Proper Management of Construction Waste KPIs

● Environment Division

Taisei Corporation has been promoting the use of the electronic manifest (waste transmittal forms) in cooperation with outsourcing companies for waste processing, collection and transport companies, and waste disposal companies in order to achieve the proper processing of Rate of Using Electronic Manifest construction waste. As a result, its use in major cities such as the metropolitan area is virtually at Construction Sites 100%. While there are some cases where the electronic manifest system cannot be introduced due to the conditions of the construction site or customer or the scale of the companies, we are and Corporate DataFinancial

continuing to make efforts to increase this percentage. 93.9％

● The calculated total values may not be consistent with the total values due to data rounding.

TAISEI ANNUAL REPORT 2016 78

016_0356501372808.indd 78 2016/08/12 20:32:04 016_0356501372808.indd 79 79 Environmental Report TAISEI ANNUAL REPORT2016 Model Project tofurtherimplementCO impact ataparticularlyadvancedconstructionstageasanEco Corporation selectsthoseworkingtoreduce theenvironmental CO effective useofresources suchasthe3R*,andwecontributeto had implementedtheproject byMarch 2016. FY2014, andfrom itscommencementin2002,atotalof139sites This project wasextendedtotheoverseasconstructionsitesin in socialcapitalformation. important role as a companycarryingsocialresponsibility involved connecting deeplywitheachother. Taisei Corporationplaysan natural environment (biodiversity),butaffects alltheareas not onlypartofareas oflowcarbon,resource recycling, andthe development ofsuchenvironmentally friendlytechnologieshelps a stableclimate,andtheprotection ofourlivingenvironment. The resources (resource recycling), whichresults insafeairandwater, natural environment (biodiversity)andstabilizethesupplyof * 3R:Reduce/ReuseRecycle Of alltheconstructionsitesstrivingforCO Eco ModelProject energy consumptionandCO products, forinstance,helpprevent globalwarmingbyreducing on theglobalenvironment. Energy-savingtechnologiesand Taisei CorporationGroup, whichcontribute toreducing theimpact various stagesinthelifecycleofbusinessactivities theenvironmentconcerning are developedandadoptedat Technologies andinitiativestoreduce risksandsolveissues Technologies andInitiativesthatAreUsefulforSolvingEnvironmentalIssues types ofwastematerials. ISO 26000 projects forapplyingsuchtechnologies. presentation toolsandcontaminatedsoilpurification,water quality preservation systems,and concrete forlowcarbonandtheeffective useofresources, technologiesforbiodiversity the smartcommunityandZEB,developmentofmaterialssuchas environmentally friendly In FY2015,wepublished39mediaannouncementsonourtechnologies andsystemsrelated to ● EnvironmentallyFriendlyTechnologiesProviding 2 reduction through thesortingandvolumereduction of100 As partoftheproject, wehavealsobeenworkingforthe Comprehensive ActivitiesfortheEnvironment Environment-related Technology

Environment Division

Environment 2 emissions.Thishelpsprotect the 2 reduction activities,etc. 2 Zero Action,Taisei ｅｂＷ http://www.taisei.co.jp/english/csr/annual_report_online2016/pdf/environmental.pdf See ourwebsiteformore detailsofourenvironment-related technologies. Technology Development Regarding EnvironmentRelated Number ofMediaAnnouncements 39 ISO

Projects 6.5 KPIs 2016/08/12 20:32:06 ISO 6.5 GRI EN31 TAISEI Snapshot TAISEI

Environmental Accounting

■ Environmental conservation cost Units: million yen FY 2015 Management Strategy Investment amount Cost Classification Details of main initiatives Ratio of Ratio of Total previous Civil Building Offices Total previous year engineering year 1. Cost in business areas ー 6,894 15,945 29 22,868 (932)

● Cost of temporary works on sites to prevent air pollution, （ 1） Pollution prevention cost water contamination, noise, vibration, etc. ー 328 31 16 375 (0)

（ 2） Global environmental ● Cost of recovery of CFC and halon, green electricity conservation cost procurement cost ー 0 52 0 53 15 Business Overview

● Waste processing cost on site, resource recycling cost, （ 3） Resource recycling cost asbestos and PCBs recovery and processing cost ー 6,566 15,862 13 22,441 (947)

2. Upstream and ● Personnel costs and management costs for environmentally downstream costs friendly design and engineering ー 0 0 1,774 1,774 49 CSR ● Personnel cost, education cost, and inspection cost for EMS, 3. Administration cost greening around construction sites, cooperation ー 4 3 1,011 1,018 (48) communities, etc.

4. Research and ● Personnel cost and management cost for environmental development cost research and development (includes biodiversity 16 (9) 0 0 1,280 1,280 (123) conservation related cost of 31 mil. yen)

5. Social activity costs ● Donation to environmental NGOs, etc. ー 0 0 8 8 (1)

6. Environmental ● Soil survey and decontamination cost for real estate for sale remediation costs by the Company, cost of land subsidence, and repair of ー 2 0 2 4 (8) roads and other neighboring repairs, etc. Governance Report Total 16 (9) 6,900 15,948 4,105 26,953 (1,064)

■ 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 222

● Reduction in office energy cost due to energy efficiency 38 Social Report Economic Effect Associated with Environmental Conservation Measures (substantial effect) Cost reduction ● Reduction in construction site energy cost 855

● Reduction in waste processing cost associated with resource conservation and recycling 99

Economic Effect Associated with Reduction of environmental impact converted to monetary amount Environmental Conservation Measures (estimated effect) 71

■ Environmental research and ■ Environmental impact ratio ■ Environmental efficiency development cost ratio (only derived from Taisei Corporation)

● Environmental R&D cost / total R&D cost ● Direct ﬁnal disposal quantity / construction amount ● Sales / CO2 emissions (construction + ofﬁce) Environmental Report (%) (kg/million yen) (million yen / t-CO2) 30 30 6 5.5 24.2 5.1 22.4 21.0 4.4 4.5 20.0 19.2 4.1 20 17.2 20 17.0 4 13.4 14.7 14.1

10 10 2

0 0 0 2011 2012 2013 2014 2015 （FY） 2011 2012 2013 2014 2015 （FY） 2011 2012 2013 2014 2015 （FY） Financial and Corporate DataFinancial

● The calculated total values may not be consistent with the total values due to data rounding.

TAISEI ANNUAL REPORT 2016 80

016_0356501372808.indd 80 2016/08/12 20:32:06 016_0356501372808.indd 81 81 Environmental Report TAISEI ANNUAL REPORT2016 ➡ Seep.83forthecalculation criteriaforthevalues. ■ * Thequantityusedasgreen procurement products outofthemainconstructionmaterials ● ● consumed andthequantityofCO aggregating environmental datasuchasthequantityofenergy We havestandardized andmanualizedthemethodofcollecting Third-party AssuranceoftheEnvironmentalDataTaisei Corporation initiatives forreducing environmental impactandsharinginformation Environmental Promotion Conference withan aimofutilizingin group companiesparticipatingintheTaisei CorporationGroup Total quantity ofthemainconstructionmaterials(following6items) City gas(offices) Total electricity Total fossilfueluse Construction waste Construction soil(transportedoffsite) Quantity ofChlorofluorocarbonandhalonrecovered SO NO Total CO Water (consumption) Total concreteformworkuse Water (discharged) Total CO Total energyuse ISO 26000 Third-party assured values(independentassurancereport onp.83)are indicatedwiththe The calculatedtotalvaluesmaynotbeconsistent withthetotalvaluesduetodatarounding. Aggregates (gravel, crushedstone, etc.) Ready mixedconcrete Offices Construction Site(civilengineering) Construction Site(building) Heavy oil Steel Cement Kerosene Diesel Asphalt Timber Scope3 Scope2 Scope1 Offices Construction Site(civilengineering) Construction Site(building) Alternative formworkpercentage Alternative formwork Tropical plywoodformwork (of whichthegreenprocurementquantity)* Offices Construction Site(civilengineering) Quantity ofdirectfinaldisposal Quantity recycledandgivenintermediateprocessing Construction Site(building) (of which, asbestosquantitydisposed) X X Taisei Corporationmaterialflow Taisei CorporationMaterialFlow 2 2 emissions emissions OUTPUT

INPUT Environment 2 emissionsforthesevenmajor 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 Units Units 10 10 10 10 10 10 10 10 10 10 10 10 3 3 3 3 3 3 3 3 6 6 6 6 t-CO t-CO t-CO t-CO t-CO t-CO t-CO t-CO ％ kWh kWh kWh kWh 9 9 9 9 3 3 3 3 3 3 3 t t t 3 3 3 3 MJ MJ MJ MJ m m m m m m m 3 3 3 3 3 3 3 3 3 3 3 3 KL KL KL KL t t t t t t t t t t t t 3 3 3 2 2 2 3 2 2 2 2 2 2 2 2 Y21 Y21 Y21 Y21 FY2015 FY2014 FY2013 FY2012 FY 2011 Y21 Y21 Y21 Y21 FY2015 FY2014 FY 2013 FY2012 FY 2011 1,054 ,1 273 ,3 3,342 2,333 2,753 1,970 1,717 2,514 1,383 3,473 3,219 5,231 5,085 3,712 1,663 5,640 3,543 3,063 4,407 1,647 3,094 4,741 ,4 666 ,0 1,7 7,638 10,472 7,702 6,676 6,742 ,4 520 ,4 829 4,321 8,249 6,441 5,200 5,440 ,6 211 ,0 296 1,152 2,946 2,701 2,161 1,761 ,1 220 ,6 232 2,261 2,284 2,312 2,355 2,660 2,695 2,220 2,236 1,614 1,633 0.12 2.13 1.71 3.96 34.7 158 134 228 119 104 228 161 164 461 647 0.3 85 26 67 12 99 50 61 26 62 19 ー 5 5 1 4 4 mark. factories. LTD. were inspected byauditorsvisitingtheirheadoffices andmajor performance data.Taisei RotecCorporationandTAISEI U-LECCO., companies received third-party assuranceforthetotalvaluesoftheir on progress. InFY2015,Taisei CorporationandthesevenMaingroup 0.35 1.64 1.56 3.55 19.6 150 143 2 1,215 921 118 216 103 216 6 198 1,866 1,928 864 143 130 870 440 0.9 0.9 16 25 73 97 29 56 58 53 30 55 17 ー 3 6 6 Third-party assured valuesare indicatedwiththe 0.27 2.16 1.41 3.84 34.2 6 189 3,003 1,839 964 140 182 163 250 143 250 110 1 105 2,411 1,095 102 519 606 0.2 0.8 12 15 22 65 92 20 53 37 70 31 71 35 4 8 0.25 1.67 1.34 3.26 36.7 103 139 931 124 209 108 209 115 326 765 0.1 0.7 13 18 67 88 19 56 40 54 27 55 10 43 7 5 0.24 1.93 1.40 3.57 148 989 128 226 122 226 861 959 134 190 690 0.3 0.2 0.6 91 11 12 22 76 92 18 82 33 57 21 58 22 2 8 mark 2016/08/12 20:32:06 ISO 6.5 GRI EN1,EN3,EN8,EN15, EN16,EN17,EN19,EN20, EN21,EN22,EN23,EN25 TAISEI Snapshot TAISEI

■ Material flow for main group companies Third-party assured values are indicated with the mark INPUT Units FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Total energy use 109MJ 1.76 1.74 1.90 1.91 1.73 Management Strategy Sites (construction sites) 109MJ 0.30 0.28 0.32 0.42 0.40 Factories 109MJ 1.33 1.30 1.43 1.33 1.19 Offices 109MJ 0.15 0.16 0.16 0.16 0.14 Total fossil fuel use 103KL 29 30 33 35 30 Diesel 103KL 9 8 9 15 12 Kerosene 103KL 3 2 3 3 3 Heavy oil 103KL 17 17 19 16 14 Gasoline 103KL 1 3 2 2 2 Business Overview Total electricity use 106kWh 44 45 48 46 44 Sites (construction sites) 106kWh 1 1 1 1 1 Factories 106kWh 35 35 38 36 35 Offices 106kWh 8 9 10 9 8 City gas 103m3 3,190 2,853 3,181 2,592 2,888

LPG t 150 133 255 92 58 CSR Water (consumption) 103m3 100 105 138 142 137 OUTPUT Units FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 3 Total CO2 emissions 10 t-CO2 107 107 121 124 111 3 Sites (construction sites) 10 t-CO2 20 18 22 29 27 3 Factories 10 t-CO2 78 81 90 85 75 3 Offices 10 t-CO2 8 8 10 10 8

NOX t ーー 259 325 277

SOX t ーー 153 148 128

Quantity of Chlorofluorocarbon and halon recovered t ーー 2 1 2 Governance Report Total industrial waste emissions 103t 437 278 397 321 391 Quantity recycled 103t 423 267 389 312 365 Final disposal quantity 103t 14 11 8 9 26 Water (quantity discharged) 103m3 ーー 138 142 137

■ CO2 emissions of Taisei Corporation Group (FY 2015) ■ Construction waste amount of Taisei Corporation Group (FY2015) 3 3 units:10ｔ-CO2 units:10ｔ Social Report

Taisei Corporation ■ Taisei Corporation ■ 226 Whole Group 2,284 Whole Group 337 2,675 ■ 7 Main Group Other 5 ■ 7 Main Group Companies Main Group Companies Companies 111 5.5 391 Environmental Report

Taisei Rotec Corporation 100 TAISEI U-LEC CO., LTD. 5.5 Taisei Rotec Corporation Other 5 305 Main Group Companies Ofﬁces Sites Ofﬁces 25 6 20 0.3 TAISEI U-LEC CO., LTD. Sites 61 Factories 3.6 Taisei Rotec 1.6 Corporation TAISEI U-LEC CO., LTD.

100 5.5 and Corporate DataFinancial Factories 74

● The calculated total values may not be consistent with the total values due to data rounding. ● Third-party assured values (independent assurance report on p.83) are indicated with the mark. ➡ See p.83 for the calculation criteria for the values.

TAISEI ANNUAL REPORT 2016 82

016_0356501372808.indd 82 2016/08/12 20:32:06 016_0356501372808.indd 83 83 Environmental Report TAISEI ANNUAL REPORT2016 ■ CalculationStandardforEnvironmentalDataandIndicesFY2015 Objective Resource Prevention of ISO 26000 recycling global warming Material flow-related Estimated CO waste emissions factories] Calculationofconstructionandindustrial [Civil engineering,buildingconstruction(sites),and Calculation ofconstructionsoilemissions [Civil engineeringandbuildingconstruction(sites)] recovered. Calculation ofchlorofluorocarbons andhalon [Civil engineeringandbuildingconstruction(sites)] formworks)purchased.alternative other materials(concrete formworksand Calculation ofthemainconstructionmaterialsand [Civil Engineeringandbuildingconstruction(sites)] Energy-related andwaterconsumption [Civil Engineeringandbuildingconstruction(sites)] consumption [Offices andFactories]Energy-related andwater NOx andSOxemissions CO construction stage construction stage Final disposalrate Calculatedthequantitiesbased onthedesignspecificationsbyEcoSheetCASBEEintroduced tobuildings Results foradoptionofgreen procurement items CO Classification bybusinesstype CO 2 2 2 emissionsandreduction rateinthe emissions emissionsScopeclassification 2 emissionsandreduction rateinthe

Environment Item and factoriesownedbyTaisei CorporationGroup. individual constructionprojects, jointventure construction forwhichTaisei CorporationGroup istherepresentative, Construction by-products (wasteandvaluable resources) emittedatthesitesofTaisei CorporationGroup’s Surplus constructionsoilremoved from constructionsitesofTaisei Corporation. Recovered quantityofchlorofluorocarbon andhalonprocessing commissionedby Taisei CorporationGroup. The samecalculationmethodappliestotheconsumptionofconcrete formworks. formworks andalternative construction ofTaisei Corporationandjointventure constructionforwhichTaisei Corporationis the representative. The quantitiesofthemainconstructionmaterialsandotherpurchased directly through individual fortheyear.turnover Forcivilengineering,thiscalculationisperformedforeachconstructiontype. (basicunit).Annualconsumptioniscalculatedbymultiplyingthisbasicunittheconstruction construction turnover two-month periodinFY2015issampledat166constructionsitestocalculatetheconsumptionperunitof Calculated foreachcompanybasedontheTaisei CorporationGroup environmental datamanual.Consumptionina calculated inmonthlyunits. The annualquantitiespurchased andusedbytheoffices andfactoriesofthe Taisei CorporationGroup are Evaluation Tool forMeasures againstGlobalWarming, Resource Consumption,andWaste -RevisedVersion.” Group. Calculatedusingtheemissioncoefficient oftheArchitectural InstituteofJapan’s “GuidetoBuildingLCA- Calculation ofNOxandSOxemissionsoriginatingfrom diesel,heavyoil,andkerosene oftheTaisei Corporation City gas:Calculatedusingthestandard calorificvalueofthegassupplycompanyandemissioncoefficient ofthe and withatotalarea ofabout550,000m²,Taisei Corporation buildingconstructionprojects. Calculated usingthe“EnergyEfficiency Plan”foreachof29projects, eachwithatotalfloor area of300m²ormore CO CO Scope 1:CO Taisei Corporation) (final disposalquantity/arising)x100(excluding constructionsludgeandquantitiesnotattributableto designed byTaisei Corporation excluded from thecalculation. emissions. Insomecases,temporaryorspecialconstruction thathasamajoreffect onthedatacontinuityhasbeen others), andfactories Classification intocivilengineeringandbuildingconstruction(sites),offices (excludingdevelopment projects and Scope 3:CO Scope 2:Indirect CO Electrical power:Calculatedusingthe2014emissioncoefficient ontheuserendannouncedbyFederationof Act onPromotion ofGlobalWarming Countermeasures. and return transportofsoilfrom construction(off-site emissions) Electrical PowerIndustriesofJapan(before reflecting theKyotocredit), 0.554t-CO actual emissioncoefficient forFY2014according totheelectricalpowercompanyisused. of Diesel,HeavyOil,andEnergytheActonPromotion ofGlobalWarming Countermeasures. Foroffices, the 2 2 emissioncoefficient: Calculatedusingtheemissioncoefficient inaccordance withtheActtoRationalizeUse emissionsatTaisei Corporationconstructionsitesandpercentage ofCO 2 2 emissionsassociatedwiththecombustionoffossilfuels emissionsassociatedwiththetransportofconstructionwasteoff constructionsitesandtheoutward 2 emissionsassociatedwiththeuseofelectricity, steam,andchilledhotwater Calculation Method&Standard Calculation 2 emissionsreduced from FY1990 2 / Mwh. GRI ● ● ● ● NOx andSO In calculationofCO2emissionsand and theGuidetoBuildingLCA,etc. Destruction Act,theGHGProtocol the FluorocarbonsRecoveryand Disposal andPublicCleansingAct, Countermeasures, theWaste Promotion ofGlobalWarming Rational UseofEnergy,theActon complying withtheActon environmental information, manual forthemanagementof environmental datacalculation the TaiseiCorporationGroup’s based onin-housestandardsand Corporation Group. made bytheentireTaisei cover morethan90%ofthesales Japan only.Environmentaldata Co., Ltd.),whichareallwithin WORKS CO.,LTD.,andJ-FAST CORPORATION, SEIWARENEWAL LTD., TAISEIHOUSING CO., LTD.,TAISEISETSUBI Estate Co.,Ltd.,TAISEIU-LEC Corporation, Taisei-YurakuReal Corporation, TaiseiRotec Corporation Group(Taisei Rational UseofEnergy. accordance withtheActon the area of300m designing buildingswithatotalfloor required tobesubmittedwhen conditioning services,etc.,whichis building thermalinsulation,air efficient useofenergysuchas summarizes themeasuresfor equivalent values. consumption andtheirenergy- electrical power,citygas,andLPG oil, diesel,gasoline,kerosene), content isexcluded. Association, fromwhichthefat Construction Mechanization fuel consumptionoftheJapan Corporation usesthevalueof Calculation standard:Calculated Organization covered:theTaisei Energy-saving Plan:Aplanthat Energy-related: Fossilfuels(heavy G4-32,G4-33 x emissions,Taisei 2 ormorein 2016/08/12 20:32:07 Financial and Corporate Data

The corporate information of Taisei Corporation is provided, including an outline of the Company and overseas network.

11-Year Financial and Non-Financial Summary p.85 Explanation and Analysis of Business Results p.87 Medium-Term Company Management Strategy and Issues to Be Dealt with p.91 Risk Information p.92 Consolidated Financial Statements p.93 Independent Auditor’s Report p.121 Third Party Opinion p.122 Corporate Profile p.123 Overseas Network p.125

● In this report, figures less than unit are principally rounded down except for those in “11-Year Financial and Non-Financial Summary” and “Consolidated Financial Statements” that are rounded off to the nearest unit.

TAISEI ANNUAL REPORT 2016 84

017_0356501372808.indd 84 2016/08/10 14:30:49 017_0356501372808.indd 85 85 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Other data: Other Financial position data: Years endedMarch 31,2006through 2016 TAISEI CORPORATION andConsolidated Subsidiaries 11-Year FinancialandNon-FinancialSummary (Non-Consolidated) Non-Financial Highlights (Consolidated) Financial Highlights CO Frequency rates Number of employees with foreign nationality Number offemalemanagers Number ofemployees Number ofemployees(consolidated) *U.S. dollaramountswere translatedfrom yen,forconvenienceonly, attherateofUS$1=¥112.68 Number ofpatentapplications Financial ratios:Financial Per share dataofcommonstock Net income(loss)attributabletoownersofparent Income taxes Income (loss)before incometaxes Operating income(loss) Costs andexpenses: Net sales: Revenue: Shares issued (thousands) assets Net Shareholders' equity Long-term liabilities equipment and plant property, Net Contract backlog at the end of year of end the at backlog Contract Current liabilities Dividends paid as a percentage of net income net of apercentage as paid Dividends revenue total of apercentage as expenses and Total costs Average yearsofservice Average age Net income(loss)attributabletoownersofparent Cash dividends Selling, generalandadministrativeexpenses % changefrom previous year e resrcie uigteya ¥ year the during received orders New Current assets Net assets (in yenanddollars): Cost ofsales parent as a percentage of total revenue total of apercentage as parent of owners to attributable (loss) income Net 2 emissions Real estatedevelopmentandother Construction contracts Total Total (years old) (10 (people) (people) (people) (people) (cases) 3 (years) t-CO 2 ) ac 1 06Mrh3,20 ac 1 08Mrh3,20 March 31,2010 March 31,2009 March 31,2008 March 31,2007 March 31,2006 ac 1 06Mrh3,20 ac 1 08Mrh3,20 March 31,2010 March 31,2009 March 31,2008 March 31,2007 March 31,2006 ¥ ¥ ¥ ¥

,7,0 1787115701 ,4,1 1,318,593 1,545,918 1,567,091 1,708,751 1,576,103 ,4,8 ¥ 1,543,289 ,8,2 1856216288 ,4,3 1,406,348 1,641,838 1,662,858 1,815,652 1,688,820 ,6,0 ,6,0 ,6,0 1,064,803 1,064,803 1,064,803 1,064,803 1,084,333 1,773,996 1,743,994 1,078,787 ,4,7 ,4,7 ,8,5 1,768,950 1,885,554 1,843,576 1,841,774 1,1 106,901 112,717 0,0 9,4 9,4 7,1 152,166 174,112 193,944 199,749 200,705 272,266 292,795 345,151 28,363 28,363 16,576 2.9¥ 324.19 50,098 55,174 19,064 19,064 9,193 26.57 6.00 6.00 96.8% 20.4 43.4 0.51 22.6% 245 278 1.6% 2.1% ------¥ ¥ ¥

1,873,325 ,7,7 ¥ 1,673,576 1,200,945 1,875,127 1,161,870 266,636 270,682 276,923 421,731 16,052 365.72 ¥ 26,222 48,698 57,673 20,248 24.64 9,310 (except forpershare figures) 6.00 96.9% 20.2 43.2 0.53 24.4% 154 317 7.4% 1.4% ------Millions ofYen ¥ ¥ ¥

,1,7 ¥ 1,517,770 1,753,692 ,0,4 1,074,229 1,003,741 1,120,798 1,711,714 373,988 244,594 291,550 283,135 15,460 95,767 1.2¥ 318.12 (38,449) 42,172 48,856 13,878 13,878 24,447 24,447 8,787 22.97 6.00 6.00 20.0 43.1 0.43 (8.6)% 26.1% 192 282 97.1% 1.4% ------¥ ¥ ¥

1,641,182 ,6,7 ¥ 1,467,070 1,082,037 1,524,578 248,400 252,905 236,705 284,713 (24,401) 15,260 95,920 3.7¥ 239.87 (22.93) (9,404) 8,446 100.0% (656) 5.00 19.7 42.9 0.30 (4.1)% 184 282 (1.5)% ------% --- ¥ ¥ ¥

1,289,809 1,090,622 1,244,439 1,441,975 1,571,414 238,534 250,083 894,026 912,895 274,779 297,179 14,461 87,755 35,516 35,627 262.15 21,222 14,462 8,243 19.74 5.00 (12.1)% 19.4 42.7 0.43 25.3% 97.5% 209 245 1.5% ------2016/08/10 14:30:50 ac 1 01Mrh3,21 ac 1 03Mrh3,21 March 31,2015 March 31,2014 March 31,2013 March 31,2012 March 31,2011 ac 1 01Mrh3,21 ac 1 03Mrh3,21 March 31,2015 March 31,2014 March 31,2013 March 31,2012 March 31,2011 ¥ ¥ 5.4¥255.60 ¥ 253.94 ¥ ,2,8 ¥1,404,530 ¥1,321,289 ¥1,254,291 ¥1,171,927 ¥ 1,079,139 ,8,2 ,8,1 ,8,9 ,7,0 1,502,853 1,425,295 1,479,700 1,402,446 1,380,890 1,304,677 1,287,018 1,206,014 1,181,825 1,100,022 1,254,095 , 7390 9 07,3 1,6 ,4,6 ,4,6 ,4,6 1,140,269 1,140,269 1,140,269 1,140,269 1,218,119 808,052 290,598 290,282 232,000 3,8 5,7 6,0 1,8 168,740 212,184 162,205 151,577 138,980 235,607 47,467 8 14,039 19,374 36,294 81,803 10,883 8,086 8,514 (15.5)% 5.00 0.45 19.2 42.6 9.58 52.2% 97.0% 195 219 0.9% ------¥ ¥ ¥ 1,181 (except forpershare figures) ,2,0 ,1,9 ,3,7 1,573,270 1,533,473 1,416,496 1,323,504 ,6,5 1,651,370 1,663,459 1,379,572 292,602 982,931 212,639 284,714 921,196 219,101 Millions ofYen 13,776 16,673 36,486 81,004 15,480 8,087 482.3% 5.00 0.58 19.1 42.5 1.04 97.2% 228 256 8.7% 0.1% 35 28 ¥ ¥ ¥ ¥ 1,404,407 1,012,639 343,300 299,336 206,076 07,281 9 292,514 13,569 32,828 35,606 76,213 9.4¥ 299.84 001¥ 20,051 12,399 7,945 17.60 5.00 0.81 19.1 42.7 28.4% 97.5% 216 297 7.0% 1.4% 37 30 ¥ ¥ 1,645,896 1,763,793 1,076,213 268,802 946,097 384,166 2, 67 327,0 181,051 13,599 46,593 53,773 77,254 3.2¥ 335.42 209¥ 32,089 14,120 7,951 28.17 6.00 0.84 19.1 42.8 96.5% 21.3% 250 273 8.3% 2.1% 41 31 ¥ ¥ 1,956,266 1,136,497 1,765,743 1,171,269 258,373 984,762 169,973 370,140 492,114 13,701 66,980 70,417 77,558 418.61 38,177 28,755 8,007 33.52 8.00 0.97 19.0 42.9 23.9% 95.5% 209 297 2.6% 2.4% 66 39 March 31,2016 ac 1 06March 31,2016 March 31,2016 ¥ 1,671,061 ¥ 1,112,305 ¥ ¥ ¥ 1,545,889 1,428,421 1,348,302 2,081,438 ,9,7 $ 1,394,677 1,171,269 521,278 211,767 927,777 117,797 117,468 151,212 437,533 177,529 13,748 80,119 4.7$ 442.67 705$ 77,045 40,996 8,072 65.85 16.00 92.4% 24.3% 0.56 18.8 42.8 (1.7%) 226 307 5.0% 75 53 $ $ huad of Thousands .. Dollars* U.S. (except forper 12,676,793 13,719,285 share figures) 12,377,325 11,965,762 14,830,148 18,472,116 3,882,969 8,233,733 1,879,366 1,042,492 9,871,361 4,626,180 1,341,960 1,045,412 1,575,515 363,827 683,750 711,031 0.584 3.929 0.142 Thousands of

U.S. Dollars* Snapshot TAISEI Millions of Yen Millions of Yen (except for per (except for per share figures) (except for per share figures) share figures) March 31, 2006 March 31, 2007 March 31, 2008 March 31, 2009 March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 March 31, 2016 Revenue: Net sales: Construction contracts ¥ 1,543,289 ¥ 1,673,576 ¥ 1,517,770 ¥ 1,467,070 ¥ 1,289,809 ¥ 1,079,139 ¥ 1,171,927 ¥ 1,254,291 ¥ 1,321,289 ¥ 1,404,530 ¥ 1,394,677 $ 12,377,325 Real estate development and other 200,705 199,749 193,944 174,112 152,166 138,980 151,577 162,205 212,184 168,740 151,212 1,341,960 Total 1,743,994 1,873,325 1,711,714 1,641,182 1,441,975 1,218,119 1,323,504 1,416,496 1,533,473 1,573,270 1,545,889 13,719,285

% change from previous year 2.1% 7.4% (8.6)% (4.1)% (12.1)% (15.5)% 8.7% 7.0% 8.3% 2.6% (1.7%) Management Strategy

Costs and expenses: Cost of sales 1,576,103 1,708,751 1,567,091 1,545,918 1,318,593 1,100,022 1,206,014 1,304,677 1,402,446 1,425,295 1,348,302 11,965,762 Selling, general and administrative expenses 112,717 106,901 95,767 95,920 87,755 81,803 81,004 76,213 77,254 77,558 80,119 711,031 Total 1,688,820 1,815,652 1,662,858 1,641,838 1,406,348 1,181,825 1,287,018 1,380,890 1,479,700 1,502,853 1,428,421 12,676,793 Operating income (loss) 55,174 57,673 48,856 (656) 35,627 36,294 36,486 35,606 53,773 70,417 117,468 1,042,492 Income (loss) before income taxes 50,098 48,698 42,172 (38,449) 35,516 19,374 16,673 32,828 46,593 66,980 117,797 1,045,412 Income taxes 19,064 20,248 13,878 (9,404) 14,462 8,514 15,480 12,399 14,120 28,755 40,996 363,827 Business Overview Net income (loss) attributable to owners of parent ¥ 28,363 ¥ 26,222 ¥ 24,447 ¥ (24,401) ¥ 21,222 ¥ 10,883 ¥ 1,181 ¥ 20,051 ¥ 32,089 ¥ 38,177 ¥ 77,045 $ 683,750

Per share data of common stock (in yen and dollars): CSR Net assets ¥ 324.19 ¥ 365.72 ¥ 318.12 ¥ 239.87 ¥ 262.15 ¥ 253.94 ¥ 255.60 ¥ 299.84 ¥ 335.42 ¥ 418.61 ¥ 442.67 $ 3.929 Net income (loss) attributable to owners of parent 26.57 24.64 22.97 (22.93) 19.74 9.58 1.04 17.60 28.17 33.52 65.85 0.584 Cash dividends 6.00 6.00 6.00 5.00 5.00 5.00 5.00 5.00 6.00 8.00 16.00 0.142 Financial ratios: Net income (loss) attributable to owners of parent as a percentage of total revenue 1.6% 1.4% 1.4% (1.5)% 1.5% 0.9% 0.1% 1.4% 2.1% 2.4% 5.0% Total costs and expenses as a percentage of total revenue 96.8% 96.9% 97.1% 100.0% 97.5% 97.0% 97.2% 97.5% 96.5% 95.5% 92.4% Dividends paid as a percentage of net income 22.6% 24.4% 26.1% --- % 25.3% 52.2% 482.3% 28.4% 21.3% 23.9% 24.3%

Financial position data: Governance Report Current assets ¥ 1,078,787 ¥ 1,200,945 ¥ 1,120,798 ¥ 1,082,037 ¥ 912,895 ¥ 8 47,467 ¥ 982,931 ¥ 1,012,639 ¥ 1,076,213 ¥ 1,136,497 ¥ 1,112,305 $ 9,871,361 Current liabilities 1,084,333 1,161,870 1,003,741 1,074,229 894,026 808,052 921,196 9 07,281 946,097 984,762 927,777 8,233,733 Net property, plant and equipment 292,795 270,682 244,594 236,705 238,534 232,000 212,639 206,076 181,051 169,973 177,529 1,575,515 Long-term liabilities 272,266 276,923 291,550 248,400 250,083 235,607 219,101 292,514 268,802 258,373 211,767 1,879,366 Shareholders' equity 345,151 266,636 283,135 252,905 274,779 290,282 284,714 299,336 327,0 67 370,140 437,533 3,882,969 Net assets ---- 421,731 373,988 284,713 297,179 290,598 292,602 343,300 384,166 492,114 521,278 4,626,180 Other data: Social Report New orders received during the year ¥ 1,773,996 ¥ 1,875,127 ¥ 1,753,692 ¥ 1,524,578 ¥ 1,244,439 ¥ 1,254,095 ¥ 1,379,572 ¥ 1,404,407 ¥ 1,645,896 ¥ 1,765,743 ¥ 1,671,061 $ 14,830,148 Contract backlog at the end of year 1,841,774 1,843,576 1,885,554 1,768,950 1,571,414 1,6 07,3 9 0 1,663,459 1,651,370 1,763,793 1,956,266 2,081,438 18,472,116 Shares issued (thousands) 1,064,803 1,064,803 1,064,803 1,064,803 1,090,622 1,140,269 1,140,269 1,140,269 1,140,269 1,171,269 1,171,269 Environmental Report

March 31, 2006 March 31, 2007 March 31, 2008 March 31, 2009 March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 Number of employees (consolidated) (people) 16,576 16,052 15,460 15,260 14,461 14,039 13,776 13,569 13,599 13,701 13,748 Number of employees (people) 9,193 9,310 8,787 8,446 8,243 8,086 8,087 7,945 7,951 8,007 8,072 Average age (years old) 43.4 43.2 43.1 42.9 42.7 42.6 42.5 42.7 42.8 42.9 42.8 Average years of service (years) 20.4 20.2 20.0 19.7 19.4 19.2 19.1 19.1 19.1 19.0 18.8 Number of female managers (people) ------28 30 31 39 53 Number of employees with foreign nationality (people) ------35 37 41 66 75 Financial and Corporate DataFinancial Financial and Corporate DataFinancial Frequency rates 0.51 0.53 0.43 0.30 0.43 0.45 0.58 0.81 0.84 0.97 0.56 3 CO2 emissions (10 t-CO2) 278 317 282 282 245 195 228 216 250 209 226 Number of patent applications (cases) 245 154 192 184 209 219 256 297 273 297 307

TAISEI ANNUAL REPORT 2016 86

017_0356501372808.indd 86 2016/08/10 14:30:50 017_0356501372808.indd 87 87 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Total assets Net assets Cash dividendsapplicabletotheyear Net incomeattributabletoownersofparent Contract backlogattheendofyear Net sales New orders received duringtheyear Contract backlogatthebeginningofyear * U.S.dollaramountsaboveandelsewhere inthisAnnualReportwere translatedfrom yen,forconvenienceonly, attherateofUS$1=¥112.68,approximate exchangerateatMarch 31,2016. Kanto RegionalDevelopmentBureau Transport andTourism Ministry ofLand,Infrastructure, Mitsui FudosanCo.,Ltd. ROAD DEVELOPMENTAUTHORITY MINISTRY ANDHIGHWAYS, OFPORTS SOCIALIST REPUBLICOFSRILANKA, THE GOVERNMENTOFDEMOCRATIC TEKKO BUILDINGCO.,LTD. Urban RedevelopmentConsortium Kita-Shinagawa 5-chome1District Client Years endedMarch 31,2015and2016 TAISEI CORPORATION andConsolidatedSubsidiaries Explanation andAnalysisofBusinessResults Major projectscompletedduringFYendedMarch2016 KatsuradaiTunnel Work ofYokohama RingRoadSouthRoute Central JapanRailwayCompany East NipponExpressway CompanyLimited Mitsubishi EstateCo.,Ltd. Mitsui FudosanCo.,Ltd. Tokyo KaikanCo.,Ltd. The Tokyo ChamberofCommerce andIndustry Mitsubishi EstateCo.,Ltd. Development Consortium Nishi-Shinagawa 1-chomeArea UrbanLand Client Major newordersreceivedduringFYendedMarch2016 decreased. sector remained inahighlevelwhileorders from publicinstitutions whole asorders from private-sectorssuchas amanufacturing some partofsectorssuchasemploymentimprove. countries andasthepersonalconsumptionisnotstrong, while due totheslowdownofeconomynewlydeveloping as thebusinessresult ofapartcompanieswasrelatively weak The Japaneseeconomyduringthisfiscalyearweakenedoverall Status ofResults Per share (inyenanddollars) Per share (inyenanddollars) Per share (in yen a yen (in share Per The domesticconstructionmarketwaskeptstrong asa nd dollars) nd (Tentative Name)NewConstructionforTekko BuildingReconstructionProject (Okegawa KitamotoDistrict(No.1)) Box CulvertConstructionofKen-OExpressway (Tentative Name)NewConstructionofLaLaportEbina COLOMBO KADAWATHA TOKADUWELA(NS-1) OUTER CIRCULARHIGHWAY TOTHECITYOF Residential Building“A2” New ConstructionofBuildingFacilitiesforOffice Buildings“A1”“C1”and Kita-Shinagawa 5-chomeArea 1stType UrbanLandRedevelopment Project New Construction of Chuo Shinkansen Southern AlpsTunnelNew ConstructionofChuoShinkansenSouthern (Yamanashi Area) New Construction(Building“A”andHotel) (Tentative Name)TGMM Shibaura Project Underground DemolitionandNewConstruction (Tentative Name)Marunouchi 3-2Project New ConstructionofBuildingFacilitiesandPublic(BlockA) Nishi-Shinagawa 1-chomeArea 1stType UrbanLandRedevelopment Project ¥ ¥ ¥

1,735,249 1,956,266 1,763,793 1,573,270 1,765,743 492,114 2015 418.61 38,177 (except forpershare figures) 9,267 33.52 8.00 Millions ofYen 101.8% increase compared totheprevious fiscalyear. net incomeattributabletoownersofparent of¥77.0billion, decrease, operatingincomeof¥117.4billion,66.8%increase, and to theprevious fiscalyear, netsalesof¥1,545.8billion,1.7% follows: companies reported consolidatedresults ofitsoperationsas Orders received of¥1,671.0billion,5.4%decrease compared Under thesecircumstances, theCompanyanditsaffiliated ¥ ¥ ¥

,6,2 14,739,279 1,660,822 2,081,438 ,5,6 $ 1,956,266 ,4,8 13,719,285 14,830,148 1,545,889 1,671,061 2,7 4,626,180 521,278 2016 18,719 442.67 77,045 16.00 65.85 $ $

18,472,116 17,361,253 huad o US Dollars* U.S. of Thousands 166,125 683,750 2016 (except forpershare figures) 0.142 3.929 0.584 Change (%) 101.8% 100.0 10.9% 90.3 96.4 (4.3) (1.7) (5.4) ➡ p.27 ➡ p.31 ➡ p.28 ➡ p.31 ➡ p.31 6.4% 5.9 5.7 2016/08/10 14:30:50 Results according to reporting segment, etc., are as follows (the 3. Real Estate Development results for reporting segments include internal transactions In the real estate sales market, although in the condominium between segments). market, the supply of rooms was decreasing, the sales was kept strong as it was supported by the low rate of interest and the tax TAISEI Snapshot TAISEI 1. Civil Engineering benefits at the time of purchase of residence. The real estate In our Group, net sales decreased by 3.3% compared with the leasing market continued to recover as the vacancy rate for office previous consolidated fiscal year to ¥455.7 billion, due to a buildings improved and the rent for some buildings exhibited a decrease in net sales for both the Company and its consolidated rising trend. subsidiaries. Also, operating income increased by 53.1% year on In our Group, net sales decreased by 11.0% compared with year to ¥50.7 billion, due to an improvement in gross profit margin. the previous consolidated fiscal year to ¥127.6 billion, due to a decrease in sales for both the Company and its consolidated 2. Building Construction subsidiaries. Also, operating income decreased by 22.9% year In our Group, net sales decreased by 0.2% compared with the on year to ¥9.4 billion, due to a decrease in net sales and Management Strategy previous consolidated fiscal year, to ¥1.0154 trillion, due to a deterioration in the gross profit margin. decrease in net sales for the Company. Also, operating income increased by 130.6% year on year to ¥56.4 billion, due to an 4. Other increase in gross profit margin. In our Group, net sales increased by 2.5% compared with the previous consolidated fiscal year to ¥14.8 billion, and operating income increased by 165.6% year on year to ¥0.9 billion. Business Overview (Consolidated) Orders received

Millions of Yen 2015 2016 Name of reporting segment, etc.: CSR

Civil engineering ¥ 570,219 ¥ 444,462

Building construction 1,048,597 1,101,915

Real estate development 134,477 112,201

Others 12,448 12,482

Total ¥ 1,765,743 ¥ 1,671,061 Governance Report (Consolidated) Sales

Millions of Yen 2015 2016 Name of reporting segment, etc.:

Civil engineering ¥ 448,727 ¥ 433,924

Building construction 974,539 978,176 Social Report

Real estate development 137,555 121,305

Others 12,448 12,482

Total ¥ 1,573,270 ¥ 1,545,889

Note: In Orders received and Sales, transactions between segments have been eliminated. Environmental Report Financial and Corporate DataFinancial Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 88

017_0356501372808.indd 88 2016/08/10 14:30:50 017_0356501372808.indd 89 89 Financial and Corporate Data TAISEI ANNUAL REPORT2016 （ with procurement offinancewas¥254.6billion (adecrease of fiscal year),andthebalanceofinterest-bearing loansassociated ¥34.5 billioncompared withtheendofprevious consolidated this consolidatedfiscalyearwas¥371.7billion(anincrease of As aresult oftheabove,cashandequivalentsatend previous consolidatedfiscalyear). investment securities,etc.(expenditure of¥13.9billioninthe Expenditure of¥25.0billionwasincurred forthepurchase of 2. CashFlowsfrom InvestingActivities the previous consolidatedfiscalyearwas¥24.0billion). term, resulting excessrevenue of¥95.3billion(excessrevenue in Income before inthis incometaxesof¥117.7billionwasearned 1. CashFlowsfrom OperatingActivities Years endedMarch 31,2015and2016 TAISEI CORPORATION andConsolidatedSubsidiaries Explanation andAnalysisofBusinessResults Cash FlowsStatus Cash Flows subordinated loans). was calculatedtakingintoconsideration thevalueasequityof (the D/Eratioattheendofprevious consolidated fiscalyear consolidated fiscalyear),theD/E ratio remained flatat0.5points ¥5.1 billion,thebalancewaszero attheendofprevious ¥18.5 billionto¥254.6(includingnon-recourse loansof interest-bearing loansassociatedwithprocurement offinanceby consolidated fiscalyearto31.2%.Also,despiteadecrease in increased by3.0%compared withtheendofprevious assets increased to¥521.2billion,andratioofcapitalassets a postingofnetincomeattributabletoownersparent, net a declineinaccountspayable,traderesulting from payments,and ROE (return onequity)increased by6.5%to15.3%. billion from theprevious consolidatedfiscal yearto¥77.0billion, net incomeattributabletoownersofparent increased by¥38.8 income, andnetincomeattributabletoownersofparent. Also,as net sales,predictions were achievedfororders received, operating not achievethepredictions atthebeginningoffiscalyearfor Although thebusinessresults forthisconsolidatedfiscalyeardid 1. Overview Analysis ofFinancialPosition andBusinessResults Billions ofYen In additiontoadecrease of¥1.1395trillioninliabilitiesdueto (100.0) (50.0) 100.0 150.0 200.0 50.0 0 ） ■ ■ ■ 105.1 Cash flowsfromfinancingactivities Cash flowsfrominvestingactivities Cash flowsfromoperatingactivities Increase /decreaseincashandequivalents (8.0) 0121 032014 2013 2012 2011 37.4 (58.8) 73.0 (4.7) 24.6 (46.5) 138.7 16.0 88.5 (68.8) (17.2) (13.9) 24.0 (30.4) year waszero). billion (thebalanceattheendofprevious consolidatedfiscal of thisconsolidatedfiscalyear, non-recourse loanswere ¥5.1 bearing loansassociatedwithprocurement offinanceattheend ¥18.5 billionyearonyear).Inaddition,ofthebalanceinterest- consolidated fiscalyear). finance, etc.(expenditure of¥30.4billionintheprevious interest-bearing loansassociatedwiththeprocurement of Expenditure of¥35.1billionwasincurred forrepayment of 3. CashFlowsfrom FinancingActivities was ¥254.6billion(includingnon-recourse loansof¥5.1billion). procurement offinanceattheendthisconsolidatedfiscalyear Note thatthebalanceofinterest-bearing loansassociatedwith with payment. trillion, duetoadecrease inaccountspayable,trade,associated with theendofprevious consolidatedfiscalyearto¥1.1395 Total liabilitiesdecreased by8.3%or¥103.5billion,compared (2) Liabilities previous consolidatedfiscalyearto¥1.6608trillion. decreased by4.3%or¥74.4billioncompared withtheendof construction associatedwithprogress incollections,totalassets As aresult ofadecrease inaccountsdueon completed (1) Assets 2. FinancialPosition 95.3 (25.0) 2015 (35.1) 34.5 (FY) 2016/08/10 14:30:50 (3) Net Assets (2) Operating Income Although there was a decrease in unrealized holding gains on Operating income increased by 66.8% to ¥117.4 billion, securities, net of taxes due to declines in the stock market, etc., compared with the previous consolidated fiscal year, due to an net assets have increased by 5.9% or ¥29.1 billion to ¥521.2 increase in gross profit resulting from the increase in gross margin TAISEI Snapshot TAISEI billion compared with the end of the previous consolidated fiscal rates in Civil Engineering and Building Construction. year, as a result of posting of net income attributable to owners of parent, etc. (3) Net Income Attributable to Owners of Parent Net income attributable to owners of parent increased by 3. Business Results 101.8% compared with the previous consolidated fiscal year to (1) New Orders and Net Sales ¥77.0 billion, due to the improvement in extraordinary loss New orders received have decreased in Civil Engineering and Real (income) resulting from gains on return of assets from retirement Estate Development, decreasing by 5.4% to ¥1.6710 trillion, benefit trust. compared with the previous consolidated fiscal year. Management Strategy Also, net sales decreased in Civil Engineering and the Real Estate Development, decreasing by 1.7% to ¥1.5458 trillion, compared with the previous consolidated fiscal year. Business Overview

Dividend Policy The Company has made it a basic policy to pay long-term stable The Articles of Incorporation of the Company permit an interim dividend to Shareholders. The Company tries to reinforce internal dividend to be allocated, in accordance with Paragraph 5 of Article CSR reserve for the future business operation, and returns the profit to 454 of the Companies Act, with dividends allocated twice every the Shareholders by way of a special dividend and the like when year, at the middle and at the end of the fiscal year. These the business performance of the Company is well. dividends are decided at the General Meeting of Shareholders for Comprehensively taking into account both achievement of the end of term and the Board meeting for the interim dividend. much greater performance than the initial plan, and business Also, it is the policy to utilize retained earnings to promote surroundings in the future, etc., it has been decided to increase next generation technology development, etc. the dividend by ¥6 compared with the last dividend forecast and At the Board meeting on May 13, 2016, acquisition of treasury by ¥8 compared with the previous term, or a dividend of ¥16 per stock, the maximum limitation of which is 30 million shares (¥20.0 Governance Report year per ordinary share is allocated (of which ¥5.00 is allocated as billion), was resolved in order to increase shareholder returns and an interim dividend). to improve the capital efficiency.

Total dividend amount and dividend per share Millions of Yen Yen

Total dividend amount Dividend per share Social Report Resolution meeting date:

Board meeting, November 9, 2015 ¥ 5,849 ¥ 5.00

General Meeting of Shareholders, June 29, 2016 12,868 11.00

Note: The dividends on retained at the record date of this term are as shown above. Environmental Report Financial and Corporate DataFinancial Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 90

017_0356501372808.indd 90 2016/08/10 14:30:50 017_0356501372808.indd 91 91 Financial and Corporate Data TAISEI ANNUAL REPORT2016 force toward achievingourmanagementgoalslistedbelow. beyond the2020OlympicsandParalympics,takingintoconsiderationdecreasing populationandfinancialconstraints. sufficient employeesandlaborstomakeseriousefforts to regain thelostpublictrustinindustry. construction industrycausedbythedatafalsificationofpilingwork. 2020 Tokyo OlympicsandParalympics.Ontheotherhand,weare overthespreading gravelyconcerned publicdistrustintheentire Securing sufficient employeesandlaborsbecomesamajorissuefortheconstructionindustryasisgettingbusiertoward the Medium-Term CompanyManagementStrategyandIssuestoBeDealtwith 8. Developingthebusinessfoundation 7. Improving thetotalstrength oftheTaisei Group 6. Developingthestructure forhealthygrowth ofoverseasprojects 5. Strengthening domesticconstructionprojects 4. Establishingnext-generationbusinessmodelsinthefocusedfields 3. Promoting thedevelopmentofnext-generationtechnologies 2. Activelycontributingtoimproving infrastructures 1. Undertakingstrategicapproaches regarding focusedprojects • To obtainahighlevelofcredibility andappraisalfrom allstakeholders • To promote transformationtoahighvalue-addedbusinessstructure • To pursuegrowth inasteadyandcontinuousmanner • To obtainhighcustomersatisfactionthrough qualityandsafetyassurances Recognizing thesecircumstances, wehavestartedtheMedium-Term BusinessPlan(2015–2017)from FY2015andare workingwithfull Although weexpecttherobust constructiondemandwillcontinueforawhile,weare notoptimisticaboutthemarketenvironment The Taisei Group, asaleadingconstructioncompany, willtaketheinitiativetoimprove workingconditionsandproductivity tosecure 5. UtilizingICT 4. Promoting diversitymanagement 3. Nurturingandimproving humanresources 2. Maintainingandimproving astrong financialbasis forthe nextgeneration 1. Establishingcorporategovernance 3. Strengthening cooperationamongcompaniesintheTaisei Group regarding sales,procurement andconstruction 2. Developingnewrenewal technologiesrelated toearthquakestrengthening andthelike,ofinfrastructures 1. Advancingresidential businessstrategiesoftheTaisei Group 3. Strengthening abusinesssystemofoverseassubsidiaries 2. Advancingprojects focusingontheimportantareas andfields 1. Structuringabusinesssystemforparticipatinginexportationofinfrastructures 4. Improving procurement capabilities 3. Expandingdesignandconstructionprojects 2. Strengthening qualityandsafetymanagementsystems 1. Improving constructioncapabilities 5. Urbandevelopment 4. Engineering 3. Environment 2. Nuclearpower 1. Renewalandreplacement 3. Developingtechnologiesfordifferentiation infieldsofenvironment, nuclearpower, etc. 2. Upgradingtechnologiesforearthquake-related problems 1. Developingconstructiontechnologiesforthenextgeneration 3. Activelycontributingtoearthquakedisasterreconstruction projects 2. Participatinginprojects forasteadysupplyofelectricity 1. Participatinginprojects ofthemajorinfrastructures forpublicsecurity, safety, andconvenience 3. Participatinginexportationofinfrastructures 2. Participatinginlarge-scaleprojects byprivatesectors 1. Participatinginnationalprojects Basic Policy Medium-Term BusinessPlan(2015-2017)(Outline) Deep Cultivation of Our Primary BusinessofConstruction Deep Cultivation ofOurPrimary Management Goals Aims 2016/08/10 14:30:50 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. TAISEI Snapshot TAISEI

1. Trends in the Construction and Real Estate Markets 7. Fluctuations in Interest Rates If the construction or real estate markets suddenly shrink or if the If interest rates suddenly increased, our results could be affected. competitive environment becomes severe, it could affect out results. 8. Defects on Construction Products or Services 2. Risks Associated with Overseas Projects If we become liable for a large amount of compensation based on We carry out projects in many countries throughout the world, so liability for defects caused by the Group's work or product liability, terrorism, war, violence, etc., could occur, the circumstances in our results could be affected. Management Strategy the country could worsen, there could be sudden fluctuations in the economic situation, there could be large fluctuations in the 9. Ancillary Related Project Risks exchange rates, and changes in laws and regulations could The Group operates ancillary projects associated with PFI change without notice, and if it is not possible to hedge these projects, leisure projects, as well as civil engineering, building, and risks through the contract, our results could be affected. real estate development projects. The project period for most of these is long, so if the project environment changes greatly in the

3. Customer Credit Risk future, our results could be affected. Business Overview Normal contracts in the construction industry involve a large contract amount in a single transaction, and in most cases 10. Legal Controls over the Civil Engineering and Building contracts are concluded on the condition that a large amount of Construction Business the construction fee is paid when the constructed object is The civil engineering business and the building construction CSR handed over. Therefore, if the customer runs into credit problems business are subject to legal controls such as the Construction before the construction fee is received, it could affect out results. Industry Act, the Building Standard Act, the Industrial Safety and Health Act, and the Anti-Monopoly Act, etc., and if these laws or 4. Fluctuations in Material and Equipment Prices regulations were amended or abolished, or if new laws or regulations If the price of raw materials suddenly increases, and if it is difficult to were enacted, and if we were subjected to administrative disciplinary reflect this in the contract amount, our results could be affected. action in accordance with these laws or regulations, our results could be affected. 5. Asset Holding Risks Governance Report Assets such as real estate and tradable securities, etc., are held 11. Occurrence of a Major Accident out of necessity for sales activities, so our results could be If a major accident involving human injury or loss or life or damage affected by fluctuations in the present market price. to a structure occurs in the civil engineering or building construction fields, our results could be affected. 6. Retirement Benefit Obligations If there are changes in the assumptions for calculating the 12. Large Scale Natural Disaster, etc., Risk

retirement benefit obligations, such as a drop in the value of If a large scale earthquake, a large scale natural calamity such as Social Report retirement assets, investment yield, discount rate, etc., our results wind or water damage, etc., or if an infectious disease became an could be affected. epidemic, our results could be affected. Environmental Report Financial and Corporate DataFinancial Financial and Corporate DataFinancial

TAISEI ANNUAL REPORT 2016 92

017_0356501372808.indd 92 2016/08/10 14:30:50 018_0356501372808.indd 93 93 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Fixed assets: Current assets: ASSETS March 31,2015and2016 TAISEI CORPORATION andConsolidated Subsidiaries Consolidated BalanceSheets The accompanyingnotesareanintegral partofthesebalancesheets. Investments andotherassets: Intangibles Property, plantandequipment: Allowance fordoubtfulaccounts Other currentassets Deferred incometaxassets(Note8) Other inventories Cost ondevelopmentprojectsinprogress Cost onuncompletedcontracts Cash andtimedeposits(Notes34) Notes andaccountsreceivable,trade(Note4) Allowance fordoubtfulaccounts Other assets(Note6) Deferred incometaxassets(Note8) Net definedbenefitasset(Note10) Investment securities(Notes4,5and6) Accumulated depreciation Construction inprogress Land (Notes6and17) Machinery, vehicles,tools,furnitureandfixtures(Note6) Buildings andstructures(Notes69) �� Total investmentsandotherassets Total currentassets Net propertyplantandequipment �� Total assets Total fixedassets �� ¥ 1,735,249 ¥ 2015 1,136,497 (121,863) 598,752 424,007 348,327 169,973 291,836 115,196 122,391 490,712 338,309 42,763 36,808 53,356 98,618 32,153 95,679 77,331 (4,440) 4,772 4,110 (415) 549 893 Millions ofYen ¥ 1,660,822 ¥ 2016 1,112,305 (121,806) 548,517 366,113 321,320 177,529 299,335 121,155 124,111 107,771 443,635 374,193 36,484 10,944 53,814 70,430 28,072 84,549 (3,263) 4,875 4,009 (354) 628 255 Thousands of U.S. Dollars $ 14,739,279 $ (Note 1) 2016 (1,080,990) 4,867,918 3,249,139 2,851,615 1,575,515 2,656,505 1,075,213 1,101,447 9,871,361 3,937,123 3,320,847 323,784 477,583 625,044 249,130 956,434 750,346 (28,958) 97,125 43,264 35,579 (3,142) 5,573 2,262 2016/08/09 10:05:40 Thousands of U.S. Dollars Millions of Yen (Note 1)

LIABILITIES AND NET ASSETS 2015 2016 2016 Snapshot TAISEI Current liabilities: Notes and accounts payable, trade (Note 4) �� ¥ 489,707 ¥ 442,758 $ 3,929,340 Short-term loans (Notes 4, 6 and 7) �� 104,955 109,081 968,060 Current portion of long-term debt (Notes 4 and 7) �� 15,277 10,260 91,054 Advances received and progress billings on uncompleted contracts �� 137,858 160,172 1,421,477 Income taxes payable �� 20,392 23,633 209,736 Deposits received (Note 4) �� 142,016 120,205 1,066,782

Allowance for warranty on completed contracts �� 3,232 3,316 29,428 Management Strategy Allowance for losses on construction contracts �� 41,237 22,117 196,282 Allowance for losses on order received �� 53 43 382 Other current liabilities �� 30,035 36,192 321,192 Total current liabilities �� 984,762 927,777 8,233,733

Long- term liabilities: Business Overview Long-term debt (Notes 4, 6 and 7) �� 154,046 136,161 1,208,386 Deferred income tax liabilities (Note 8) �� 26,029 8,262 73,323 Deferred income tax liabilities for revaluation of land (Notes 8 and 17) �� 4,430 4,189 37,176 Retirement benefits for directors and corporate auditors �� 437 412 3,656 CSR Allowance for losses on investments in subsidiaries and affiliates �� 273 40 355 Allowance for environmental spending �� 146 119 1,056 Net defined benefit liability (Note 10) �� 56,748 43,926 389,830 Other long-term liabilities �� 16,264 18,658 165,584 Total long-term liabilities �� 258,373 211,767 1,879,366 Total liabilities �� 1,243,135 1,139,544 10,113,099

Net assets (Notes 11 and 20): Governance Report Shareholders’ equity: Common stock Authorized: 2,200,000,000 shares Issued: 1,171,268,860 shares �� 122,742 122,742 1,089,297 Capital surplus �� 104,464 104,465 927,094

Retained earnings �� 143,290 210,721 1,870,083 Social Report Less: Treasury stock, at cost �� (356) (395) (3,505) Total shareholders’ equity �� 370,140 437,533 3,882,969 Accumulated other comprehensive income: Unrealized holding gains on securities, net of taxes �� 111,199 85,161 755,777 Deferred gains (losses) on hedging derivatives, net of taxes (Note 13) �� (4) (214) (1,899) Revaluation reserve for land (Note 17) �� (70) 177 1,571 Foreign currency translation adjustments �� (1,486) (2,158) (19,152)

Remeasurements of defined benefit plans, net of taxes (Note 10) �� 9,974 (2,624) (23,287) Environmental Report Total accumulated other comprehensive income �� 119,613 80,342 713,010 Non-controlling interests: �� 2,361 3,403 30,201 Total net assets �� 492,114 521,278 4,626,180 Total liabilities and net assets �� ¥ 1,735,249 ¥ 1,660,822 $ 14,739,279 Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 94

018_0356501372808.indd 94 2016/08/09 10:05:40 018_0356501372808.indd 95 95 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Net incomeattributabletoownersofparent Net loss(income)attributabletonon-controlling interests Amounts pershare ofcommonstock: Net income Income taxes(Note8): Income before incometaxes Other income(expenses): Operating income Costs andexpenses(Note15): Revenue: Years EndedMarch 31,2015and2016 TAISEI CORPORATION andConsolidated Subsidiaries Consolidated StatementsofIncome The accompanyingnotesare anintegralpartofthesestatements. Impairment lossesonfixedassets(Note19) Other, net Gains onreturnofassetsfrom retirement benefitstrust Gains (losses)onsalesofproperty andequipment Gains onsalesofinvestmentsecurities Investment gainonequitymethod Foreign exchangegains(losses) Taxes anddues Interest expenses Interest anddividendincome Selling, generalandadministrativeexpenses(Note18) Cost ofsales(Note18) Net sales(Note15): Cash dividendsapplicabletotheyear Diluted netincome(Note20) Net income(Note20) Deferred Current Real estatedevelopment(andother) Construction contracts �� ¥ ¥ 1,404,530 2015 1,502,853 1,425,295 1,573,270 168,740 ¥ 33.52 (28,755) (22,513) 38,177 38,225 66,980 70,417 77,558 (6,242) (3,437) (1,572) (6,688) (4,095) 1,725 3,767 3,196 8.00 (592) 533 289 (48) Millions ofYen — — Yen ¥ ¥ 1,394,677 2016 1,428,421 1,348,302 1,545,889 117,797 117,468 151,212 (40,996) (33,332) ¥ 65.85 76,801 77,045 80,119 (7,664) (3,018) (4,771) (2,796) 16.00 4,021 4,448 3,652 (566) (727) 244 329 67 19 — Thousands of U.S. Dollars U.S. Dollars $ 12,377,325 $ (Note 1) (Note 1) 12,676,793 11,965,762 13,719,285 2016 1,045,412 1,042,492 1,341,960 (363,827) (295,811) 681,585 683,750 711,031 (68,016) (26,784) (42,341) (24,814) $ 0.584 35,685 39,475 32,410 (5,023) (6,452) 0.142 2,165 2,920 595 169 — 2016/08/09 10:05:40 Consolidated Statements of Comprehensive Income TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2015 and 2016

Thousands of U.S. Dollars Millions of Yen (Note 1)

2015 2016 2016 Snapshot TAISEI

Net income �� ¥38,225 ¥ 76,801 $ 681,585

Other comprehensive income (Note 21):

Unrealized holding gains (losses) on securities, net of taxes �� 51,550 (26,048) (231,168)

Deferred gains (losses) on hedging derivatives, net of taxes �� 177 (3) (27) Management Strategy

Revaluation reserve for land �� 453 233 2,068

Foreign currency translation adjustments �� 633 (342) (3,035)

Remeasurements of defined benefit plans, net of taxes �� 9,853 (12,574) (111,590)

Share of other comprehensive income of associates accounted for by the equity method �� 324 (402) (3,568) Business Overview Total other comprehensive income �� 62,990 (39,136) (347,320)

Comprehensive income �� ¥ 101,215 ¥ 37,665 $ 334,265

Comprehensive income attribute to: CSR

Owners of parent �� ¥ 101,000 ¥ 38,026 $ 337,469

Non-controlling interests �� 215 (361) (3,204)

The accompanying notes are an integral part of these statements. Governance Report Social Report Environmental Report Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 96

018_0356501372808.indd 96 2016/08/09 10:05:40 018_0356501372808.indd 97 97 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Balance atMarch 31,2016 Balance atMarch 31,2015 Restated balanceatbeginningofyear Balance atMarch 31,2014 Balance atMarch 31,2015 Years EndedMarch 31,2015and2016 TAISEI CORPORATION andConsolidated Subsidiaries Consolidated StatementsofChangesinNetAssets The accompanyingnotesare anintegralpartofthesestatements. Balance atMarch 31,2016 Changes otherthanshareholders’ equity, net Changes ofscopeequitymethod Changes ofscopeconsolidation Reversal ofrevaluation reserve forland Acquisition oftreasury stock Sale oftreasury stock Net incomeattributabletoownersofparent Dividends Changes otherthanshareholders’ equity, net Reversal ofrevaluation reserve forland Acquisition oftreasury stock Sale oftreasury stock Net incomeattributabletoownersofparent Dividends Issuance ofnewshares Cumulative effect ofchangesinaccountingpolicies Changes otherthanshareholders’ equity, net Changes ofscopeequitymethod Changes ofscopeconsolidation Reversal ofrevaluation reserve forland Acquisition oftreasury stock Sale oftreasury stock Net incomeattributabletoownersofparent Dividends �� ,8,9 $9706$12164 319 $3,284,878 $(3,159) $1,271,654 $927,086 $ 1,089,297 ,8,9 $9704$18003 355 $3,882,969 $(3,505) $1,870,083 $927,094 $ 1,089,297 Common Common 2,4 0,6 ¥143,290 ¥104,464 ¥ 122,742 ¥ 112,448 2,4 0,6 ¥210,721 ¥104,465 ¥ 122,742 tc CapitalSurplus stock tc CapitalSurplus stock 112,448 10,294 — — — — — — — — — — — — — — — — — — — — — — — ¥ 10,294 94,170 410114,331 94,170 Thousands ofU.S.Dollars(Note1) — — — (11,699) — — — — — — — — — — — — — — 683,750 — (103,825) — — 1 0 8 Millions ofYen Retained Retained annsTreasury stock earnings annsTreasury stock earnings ¥ 120,778 77,045 38,177 17,918 (1,815) (7,403) (6,447) 2,019 (275) 861 (31) 97 — — — — — — — — — — 39 ¥327,067 ¥ (329) 36 ¥370,140 ¥ (356) 35 ¥437,533 ¥ (395) 39 320,620 (329) (355) (40) (27) (11,699) — — — — — — (103,825) — — — — — — — — — — — 683,750 — 1 0 9 shareholders’ shareholders’ 2016/08/09 10:05:40 equity equity Total Total 77,045 38,177 20,588 17,918 (1,815) (7,403) (6,447) 2,019 (275) (355) 861 (31) (40) (27) 97 17 — — — 2 0 holding gainson holding gainson securities, netof securities, netof Unrealized Unrealized ¥85,161 ¥59,650 ¥ 111,199 $ 986,857 5,7 $(,9)$151$(19,152) $1,571 $(1,899) $ 755,777 (231,141) taxes taxes (26,045) 51,549 59,650 61 — — — — — — — — — — — — — — — — — — — 7 Deferred gains Deferred gains net oftaxes net oftaxes derivatives, derivatives, (losses) on (losses) on hedging hedging $(35) ¥ (214) ¥(2,285) ¥(2,338) ¥ (181) ¥(4) (2,263) (181) (255) 399 177 45 — — — — — — — — — — — — — — — — — — — reserve forland reserve forland Revaluation Revaluation ¥(70) ¥177 $(621) (2,338) 2,068 1,815 213 233 453 (10) (89) 24 — — — — — — — — — — — — — — — — Foreign currency Foreign currency Thousands ofU.S.Dollars(Note1) adjustments adjustments translation translation $ (13,188) ¥ (1,486) ¥ (2,158) (2,285) 594 (1,3)(346,272) (111,634) (5,964) 62 1,7)(39,018) (12,579) (672) 799 Millions ofYen — — — — — — — — — — — — — — — — — — — — — Remeasurements Remeasurements of definedbenefit of definedbenefit plans, netof plans, netof $88,516 $ ¥9,974 ¥(2,624) ¥129 taxes taxes (23,287) 9,845 (169) 129 (19) — — — — — — — — — — — — — — — — — — — comprehensive comprehensive accumulated accumulated ,6,2 093 $4,367,360 $20,953 $ 1,061,529 $713,010 1,1 ,6 ¥492,114 ¥2,361 ¥ 119,613 ¥80,342 ¥54,975 income income other other Total Total 62,823 54,975 (2,158) 1,815 (243) (10) (89) — — — — — — — — — — — — — — — — Non-controlling Non-controlling interests interests 021$4,626,180 $ 30,201 ,0 ¥521,278 ¥ 3,403 ,2 ¥384,166 ¥ 2,124 ,4 (37,976) 1,042 ,4 (337,024) 9,248 ,2 377,719 2,124 237 — — — (11,699) — — — — — — — — — — — — — 683,750 — (103,825) — — — — Total net Total net Assets assets 77,045 38,177 20,588 63,060 15,760 (7,403) (6,447) 1,776 (364) (355) 861 (41) (40) (27) 97 17 — 2 0 Millions of Yen Millions of Yen Deferred gains Total Unrealized (losses) on Remeasurements accumulated

Total holding gains on hedging Foreign currency of defined benefit other Snapshot TAISEI Common Retained shareholders’ securities, net of derivatives, Revaluation translation plans, net of comprehensive Non-controlling Total net stock Capital Surplus earnings Treasury stock equity taxes net of taxes reserve for land adjustments taxes income interests assets

Balance at March 31, 2014 �� ¥ 112,448 ¥94,170 ¥ 120,778 ¥ (329) ¥ 327,067 ¥59,650 ¥ (181) ¥ (2,338) ¥ (2,285) ¥129 ¥54,975 ¥ 2,124 ¥ 384,166 Cumulative effect of changes in accounting policies �� — — (6,447) — (6,447) — — — — — — — (6,447) Restated balance at beginning of year �� 112,448 94,170 114,331 (329) 320,620 59,650 (181) (2,338) (2,285) 129 54,975 2,124 377,719 Issuance of new shares �� 10,294 10,294 — — 20,588 — — — — — — — 20,588 Dividends �� — — (7,403) — (7,403) — — — — — — — (7,403) Management Strategy Net income attributable to owners of parent �� — — 38,177 — 38,177 — — — — — — — 38,177 Sale of treasury stock �� — 0 — 0 0 — — — — — — — 0 Acquisition of treasury stock �� — — — (27) (27) — — — — — — — (27) Reversal of revaluation reserve for land �� — — (1,815) — (1,815) — — 1,815 — — 1,815 — — Changes other than shareholders’ equity, net �� — — — — — 51,549 177 453 799 9,845 62,823 237 63,060

Balance at March 31, 2015 �� ¥ 122,742 ¥ 104,464 ¥ 143,290 ¥ (356) ¥ 370,140 ¥ 111,199 ¥(4) ¥(70) ¥ (1,486) ¥9,974 ¥ 119,613 ¥ 2,361 ¥ 492,114 Business Overview Dividends �� — — (11,699) — (11,699) — — — — — — — (11,699) Net income attributable to owners of parent �� — — 77,045 — 77,045 — — — — — — — 77,045 Sale of treasury stock �� — 1 — 1 2 — — — — — — — 2

Acquisition of treasury stock �� — — — (40) (40) — — — — — — — (40) CSR Reversal of revaluation reserve for land �� — — (31) — (31) — — (10) — — (10) — (41) Changes of scope of consolidation �� — — 97 — 97 — — — — — — — 97 Changes of scope of equity method �� — — 2,019 — 2,019 7 (255) 24 — (19) (243) — 1,776 Changes other than shareholders’ equity, net �� — — — — — (26,045) 45 233 (672) (12,579) (39,018) 1,042 (37,976) Balance at March 31, 2016 �� ¥ 122,742 ¥ 104,465 ¥ 210,721 ¥ (395) ¥ 437,533 ¥85,161 ¥ (214) ¥177 ¥ (2,158) ¥(2,624) ¥80,342 ¥ 3,403 ¥ 521,278 Governance Report

Thousands of U.S. Dollars (Note 1) Thousands of U.S. Dollars (Note 1) Deferred gains Total Unrealized (losses) on Remeasurements accumulated Total holding gains on hedging Foreign currency of defined benefit other Common Retained shareholders’ securities, net of derivatives, Revaluation translation plans, net of comprehensive Non-controlling Total net stock Capital Surplus earnings Treasury stock equity taxes net of taxes reserve for land adjustments taxes income interests Assets Social Report Balance at March 31, 2015 �� $ 1,089,297 $ 927,086 $ 1,271,654 $ (3,159) $ 3,284,878 $ 986,857 $(35) $(621) $ (13,188) $88,516 $ 1,061,529 $ 20,953 $ 4,367,360 Dividends �� — — (103,825) — (103,825) — — — — — — — (103,825) Net income attributable to owners of parent �� — — 683,750 — 683,750 — — — — — — — 683,750 Sale of treasury stock �� — 8 — 9 17 — — — — — — — 17 Acquisition of treasury stock �� — — — (355) (355) — — — — — — — (355) Reversal of revaluation reserve for land �� — — (275) — (275) — — (89) — — (89) — (364) Changes of scope of consolidation �� — — 861 — 861 — — — — — — — 861

Changes of scope of equity method �� — — 17,918 — 17,918 61 (2,263) 213 — (169) (2,158) — 15,760 Environmental Report Changes other than shareholders’ equity, net �� — — — — — (231,141) 399 2,068 (5,964) (111,634) (346,272) 9,248 (337,024) Balance at March 31, 2016 �� $ 1,089,297 $ 927,094 $ 1,870,083 $ (3,505) $ 3,882,969 $ 755,777 $ (1,899) $ 1,571 $ (19,152) $(23,287) $713,010 $ 30,201 $ 4,626,180 Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 98

018_0356501372808.indd 98 2016/08/09 10:05:41 018_0356501372808.indd 99 99 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Cash flowsfrom investingactivities: Cash flowsfrom financingactivities: Cash andcashequivalentsatendofyear(Note3) Cash received (paid)duringtheyearfor: Cash flowsfrom operatingactivities: Increase (decrease) incashandequivalentsresulting from changeinscopeofconsolidation Effect ofexchangeratechangesoncashandequivalents Years EndedMarch 31,2015and2016 TAISEI CORPORATION andConsolidated Subsidiaries Consolidated StatementsofCashFlows The accompanyingnotesare anintegral partofthesestatements. Cash andcashequivalentsatbeginningofyear Net increase (decrease) incashandequivalents Other, net Cash dividendspaid,includingthosetominorityinterest Proceeds from issuanceofcommonshar Redemption ofbonds Issue ofbonds Repayment oflong-termnon-recourse loanspayable Purchase ofmarketableandinvestmentsecurities Proceeds from long-termnon-r Decrease (incr Increase (decrease) inallowancefordoubtfulaccounts Decrease (increase) incostonuncompletedcontract Decrease (increase) intrader Repayment oflong-termborrowings Income taxespaid Impairment lossesonfixedassets Write-down ofcostondevelopmentprojects inpr Losses (gains)onsalesofproperty andequipment Proceeds from long-termborr Increase (decrease) intradepayables Investment gainonequitymethod Interest paid Depreciation andamortization Write-down ofinvestmentsecurities Foreign exchangelosses(gains) Increase (decr Purchase ofproperty Decrease (increase) inothercurr Decrease (increase) ininvestmentandotherassets Decrease (increase) innetdefinedbenefitasset Interest anddividendr Income before incometaxes Interest expenses Interest anddividendincome Increase (decrease) innetdefinedbenefitliability Other, net Proceeds from saleofproperty, equipmentandintangibleassets Proceeds from saleofmarketableandinvestmentsecurities Increase (decrease) inadvancesreceived andprogress billingsonuncompletedcontracts Decrease (increase) inotherinventoriesthancostonuncompletedcontract Decrease (increase) ininventoriesotherthancostonuncompletedcontract Increase (decrease) inallowanceforlossesonconstructioncontracts Other, net Increase (decrease) indepositsr Net cashprovided by(usedin)financingactivities Net cashprovided by(usedin)operatingactivities Net cashprovided by(usedin)investingactivities �� ease) inshort-termborrowings ease) intimedeposits �� , equipmentandintangibleassets eceived �� eceivables �� owings �� ecourse loanspayable eceived ent assets �� es �� ogress ��

��

�� 2015 ¥ 337,166 ¥ 354,372 (30,470) (11,200) (17,925) (45,670) (69,772) (38,937) (13,976) (17,206) 20,477 24,079 30,400 22,966 66,980 31,537 19,129 (7,403) (1,180) (3,064) (6,575) (1,725) (4,230) (3,767) (7,032) (6,471) (3,196) (9,444) (3,367) 6,688 8,288 7,368 2,141 3,347 4,095 2,458 8,283 3,161 1,630 7,593 5,811 2,545 (340) (533) 190 668 444 (37) Millions ofYen — — — — 2016 ¥ 371,731 ¥ 117,797 337,166 124,493 (35,172) (11,699) (15,000) (17,257) (48,710) (30,595) (46,801) (10,222) (12,811) (19,119) (25,071) (10,885) (21,806) (13,909) 95,360 47,085 31,100 28,305 25,864 32,807 22,460 (1,319) (1,239) (7,243) (4,448) (2,973) (2,734) (3,652) (2,310) 9,956 1,500 3,018 2,043 5,991 5,938 4,435 4,771 2,796 2,811 1,758 (100) 515 304 101 429 487 (67) — Thousands of U.S. Dollars (Note 1) $ 3,298,997 $ 1,045,412 2016 2,992,244 1,104,837 (312,141) (103,825) (133,120) (153,151) (432,286) (271,521) (415,344) (113,694) (169,675) (222,497) (193,521) (123,438) 846,290 417,865 276,003 251,198 229,535 291,151 199,326 (11,706) (10,996) (64,279) (39,475) (26,385) (24,263) (90,717) (32,410) (20,501) (96,602) 88,356 13,312 26,784 18,131 53,168 52,698 39,359 42,341 24,814 24,947 15,602 4,569 2,698 3,808 4,322 (887) (595) 896 — 2016/09/12 16:02:59 Notes to Consolidated Financial Statements TAISEI CORPORATION and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements of Taisei Corporation (the “Company”) and its consolidated subsidiaries (collectively the “Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are

different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. Snapshot TAISEI The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements but not required for fair presentation, is not presented in the accompanying consolidated financial statements. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was ¥ 112.68 to U.S. $ 1. The translations should not be construed as representations of what the Japanese yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rate of exchange. Management Strategy

2. Summary of Significant Accounting Policies (a) Consolidation and Equity Method The Company prepares the consolidated financial statements including the accounts of the Company and those of its majority-owned subsidiaries, whether directly or indirectly controlled. The consolidated financial statements include the accounts of 29 subsidiaries for the year ended March 31, 2016 (25 subsidiaries for the year ended March 31, 2015). YB HAMACHO KAIHATSU TMK. and other 2 companies are newly included in the scope of consolidation because these companies became material on the consolidated financial statements. TAISEI MYANMAR Co., Ltd. is included in the scope of consolidation because the company was newly established and became a subsidiary. Business Overview Exclusion of certain small-scale subsidiaries from the scope of consolidation does not have material impact on the consolidated financial statements. All significant intercompany transactions, account balances and unrealized gains or losses have been eliminated in consolidation.

The financial statements of non-consolidated subsidiaries, and investments in affiliated companies in which the Group does not have control CSR but has the ability to exercise significant influence, are accounted for by the equity method. The financial statements in 17 subsidiaries, mainly consist of TOKYO ACADEMIC SERVICE Co., Ltd. and EHIME HOSPITAL PARTNERS Co., Ltd., are accounted for by the equity method for the year ended March 31, 2016. These 17 companies are newly included in the scope of the method in the year ended March 31, 2016, as the impact of PFI businesses operated became material. Investments in 43 affiliated companies are also accounted for by the equity method for the year ended March 31, 2016 (8 affiliated companies for the year ended March 31, 2015). R 40 LLC. and 32 companies, and PLUM EAST LLC. and 1 company are newly included in the scope of the equity method for the year ended March 31, 2016, for the increase of impact and the establishment, respectively. Exclusion of certain small-scale non-consolidated subsidiaries (SESOKO BEACH PROJECT LLC. and others) and the affiliated company (NAGOYA FUSHIMI PROJECT LLC.) from the scope of equity method does not have material effect on the consolidated financial statements. All consolidated subsidiaries other than 9 consolidated overseas subsidiaries have the same balance sheet date, March 31, Governance Report corresponding with that of the Company. As for the 9 consolidated overseas subsidiaries whose fiscal year ends are December 31, their financial statements as of December 31 are used in the preparation of the consolidated financial statements. Significant transactions, if any, in the period from January 1 to March 31 have been adjusted in the consolidated financial statements.

(b) Valuation of Assets and Liabilities of Subsidiaries In the elimination of the investments in subsidiaries, the assets and liabilities of the subsidiaries including the portion allocated to non- controlling interests are recorded based on their fair value at the time the Company acquired control of the respective subsidiaries. Social Report (c) Goodwill Significant excesses of investment cost over net equity of consolidated subsidiaries and affiliated companies accounted for by the equity method are recognized as goodwill (negative goodwill, if credit balance), and amortized principally over the estimated useful lives or less than twenty years on a straight-line basis. However, immaterial goodwill charged to income in the year of acquisition. Negative goodwill is credited to income upon occurrence.

(d) Foreign Currency Translation Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end exchange rates. The resulting exchange gains and losses are reflected in the consolidated statements of income. All revenues and expenses associated with foreign

currencies are translated at rates of exchange prevailing when such transactions are made. Environmental Report The financial statements of consolidated foreign subsidiaries and affiliated companies under the equity method are translated into Japanese yen at exchange rates prevailing at the respective year-end dates except for shareholders’ equity accounts, which are translated at historical rates. The resulting foreign currency translation adjustments are presented in accumulated other comprehensive income in the net assets section of the consolidated balance sheets.

(e) Cash and Cash Equivalents in the Consolidated Statements of Cash Flows In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investments with maturities not exceeding three months at the date of purchase and with insignificant risks of change in value are considered to be cash and cash equivalents. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 100

018_0356501372808.indd 100 2016/08/09 10:05:41 018_0356501372808.indd 101 101 Financial and Corporate Data TAISEI ANNUAL REPORT2016 company’s regulations. Retirement benefitsfordirectors andcorporateauditorsofcertainconsolidatedsubsidiarieshavebeen setupinaccordance witheach (q) Retirement BenefitsforDirectors andCorporateAuditors reasonably estimated. Allowance forlossesonorder received isprovided withrespect toorders (excludingconstructioncontracts)forwhicheventuallossesare (p) AllowanceforLossesonOrder Received estimated. Allowance forlossesonconstructioncontractsisprovided withrespect toconstruction projects forwhich eventuallossesare reasonably (o) AllowanceforLossesonConstructionContracts certain periods. Allowance forwarrantyoncompletedcontractsisprovided astheamount estimatedusinganactualratioofrelated lossesduringthepast (n) AllowanceforWarranty onCompletedContracts of certainidentifieddoubtful receivables andtheamountestimatedonbasisofpastdefaultratiofornormal receivables. Allowance fordoubtfulaccountsisprovided toreserve forprobable lossesfrom baddebt.Itconsistsoftheestimateduncollectibleamount (m) AllowanceforDoubtfulAccounts statement basisandthetaxofassetsliabilities. and recognizes deferred taxassetsandliabilities forexpectedfuture taxconsequencesoftemporarydifferences betweenthefinancial The Companyanditswhollyowneddomesticsubsidiariesapplythesystemofconsolidatedtaxreturns. (l) IncomeTaxes interest rateswapcontractsare addedtoordeductedfrom theinterest onliabilitiesforwhichtheswapcontractwere executed. or gainsonhedgeditemsare recognized. subsidiaries deferrecognition ofgainsorlossesresulting from changesinfairvalueofthederivativefinancialinstrumentsuntil related losses instruments are used forhedgingpurposes. Derivative financialinstrumentsare statedatfairvalueandchangesinare recognized asgainsorlossesunlessderivativefinancial (k) DerivativesandHedgeAccounting the straight-linemethodoverausefullifeperiodcorresponding totheleasecontractperiod. plant andequipment.Capitalizedleasedassetswhoseownershipisnottransferred tolesseeare depreciated toaresidual valueofzero by Capitalized leasedassetswhoseownershipistransferred tolesseeare depreciated bythesamemethodofdepreciation appliedtoproperty, Finance leases,exceptforcertainimmaterialorshort-termfinanceleasesinwhichownershipisnottransferred tolessee,are capitalized. (j) AccountingforLeaseTransactions the standard usefullivesprescribed intheCorporationTax Law. Buildingsare principallydepreciated bythestraight-linemethod. Property, plantandequipmentexceptforbuildingsare recorded atcostanddepreciated principallybythedeclining-balancemethodover (i) Property, PlantandEquipment interest expenses. the purchase costofland,incidentalcosts,direct developmentcostsand(inrelation tocertaindevelopmentsbyoneofthesubsidiaries) mainly statedatthelowerofcostbasedonspecific-identificationmethodornet realizablevalue.Forthispurpose,thecostincludes The Companyanditscertainsubsidiariesdevelopreal estateprojects ontheirownaccount.Costdevelopmentprojects inprogress are (h) Inventories end ofthereporting periodisdeterminedbythepercentage ofthecostincurred totheestimatedtotalcosts. completion method;otherwisecontractrevenue isaccountedforbythecompleted-contractmethod.Thepercentage ofcompletionatthe Revenue associatedwithconstructioncontractsofwhichtheoutcomecanbereliably estimatedisaccountedforbythepercentage-of- (g) RevenueRecognitionofConstruction average cost. sales ofsuchsecuritiesare computedusingmoving-averagecost.Othersecuritieswithnoavailablefairmarketvalueare statedatmoving- reported asaseparatecomponentofaccumulatedothercomprehensive incomeinthenetassetssection.Realizedgainsandlosseson market valuesare statedatfairmarketvalue.Unrealized gainsandlossesonavailable-for-sale securities,netofapplicableincometaxesare not consolidatedoraccountedforbytheequitymethodare statedatmoving-averagecost.Available-for-sale securitieswithavailable fair categories (hereafter “available-for-sale securities”). (b) equitysecuritiesissuedbysubsidiariesandaffiliated companies,and(c)allothersecuritiesthatare notclassifiedinanyoftheabove Securities heldbytheGroup are classifiedinto(a)debtsecuritiesintendedtobeheldmaturity(hereafter “held-to-maturitydebtsecurities”), (f) Securities TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) The Companycomputestheprovision forincometaxesbasedonthepretax incomeincludedintheconsolidatedstatementof If interest rateswap contractsare usedashedgeandmeetcertainhedgingcriteria,netamountstobepaidorreceived underthe If derivativefinancialinstrumentsare usedashedgesandmeetcertainhedgingcriteria,theCompanyitsconsolidateddomestic Cost onuncompletedcontractsismainlystatedatcostbasedthespecific-identificationmethod. Held-to-maturity debtsecuritiesare statedatamortizedcost.Equitysecuritiesissuedbysubsidiariesandaffiliated companies thatare 2016/08/09 10:05:41 (r) Allowance for Losses on Investments in Subsidiaries and Affiliates Allowance for losses on investments in subsidiaries and affiliates is provided for estimated losses from certain subsidiaries and affiliates in liquidation.

(s) Allowance for Environmental Spending Snapshot TAISEI Allowance for environmental spending is provided based on estimated costs for disposal of Polychlorinated Biphenyl (“PCB”) waste, which is obligated to dispose by the Act on Special Measures Concerning Promotion of Proper Treatment of PCB Waste.

(t) Accounting Method for Retirement Benefit Net defined benefit liability is provided for severance and retirement benefits for employees and executive officers of the Company’s certain consolidated subsidiaries based on estimated amounts of projected benefit obligations and plan assets at the year-end. In calculating projected benefit obligations, the method of attributing estimated amounts of retirement benefits to the period until this fiscal year is based on the benefit formula basis. (In some consolidated subsidiaries, the straight line basis is used.) Past service costs are amortized using the straight-line method (some consolidated subsidiaries use the declining-balance method) over

1-10 years, which is not longer than an average remaining service period of the employees when the costs are incurred. Management Strategy Actuarial gains and losses are amortized from the subsequent fiscal year (some consolidated subsidiaries amortize actuarial gains and losses from the current fiscal year) using the straight line method (some consolidated subsidiaries use the declining balance method) over 1-10 years, which is not longer than an estimated average remaining service period of the employees when the gains or losses are incurred.

(u) Net Income and Cash Dividends per Share Net income per share is calculated by dividing net income available to common shares by the weighted average number of common shares outstanding during the year. Cash dividends per share shown for each year represent dividends declared as applicable to the respective years. Business Overview

(v) Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on previously reported results of operations or retained earnings.

(w) Change in Accounting Policy CSR Application of Accounting Standards regarding Business Combinations Effective from the fiscal year ended March 31, 2016, the Group adopted “Accounting Standard for Business Combinations” (ASBJ Statement No.21, September 13, 2013; hereinafter “Business Combinations Accounting Standard”), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22, September 13, 2013; hereinafter “Consolidation Accounting Standard”), “Accounting Standard for Business Divestitures” (ASBJ Statement No.7, September 13, 2013; hereinafter “Business Divestitures Accounting Standard”) and other standards. Accordingly, the accounting method has been changed such that the differences associated with changes in equity in subsidiaries remaining under the control of the Group are recorded as capital surplus, and acquisition-related costs are recorded as expenses for the fiscal year of incurrence. For business combinations implemented from the beginning of the fiscal year ended March 31, 2016, the accounting method has been changed so as to reflect the adjustments to the allocated amount of acquisition costs on the finalization of Governance Report provisional accounting treatment in the consolidated financial statements for the year containing the date of combinations. Additionally, presentation method of “net income” was amended and description of “minority interests” was changed to “non-controlling interests”. The Group has applied the standards mentioned above from the beginning of the fiscal year ended March 31, 2016, following the transitional treatment prescribed in article 58-2 (4) of the Business Combinations Accounting Standard, article 44-5 (4) of the Consolidation Accounting Standard and article 57-4 (4) of the Business Divestitures Accounting Standard.

(x) Accounting Standard Issued but Not Yet Adopted

Revised “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016 (hereinafter Social Report the“Guidance”)

(1) Overview Following the framework in Auditing Committee Report No. 66 “Audit Treatment regarding the Judgment of Recoverability of Deferred Tax Assets”, which prescribes the estimation of deferred tax assets according to the classification of entity by one of five types, the following treatments were changed as necessary: 1. Treatment for an entity that does not meet any of the criteria in types 1 to 5; 2. Criteria for types 2 and 3; 3. Treatment for deductible temporary differences which an entity classified as type 2 is unable to schedule;

4. Treatment for the period which an entity classified as type 3 is able to reasonably estimate with respect to future taxable income before Environmental Report consideration of taxable or deductible temporary differences that exist at the end of the current fiscal year; and 5. Treatment when an entity which meets the criteria for type 4 is classified as type 2 or 3.

(2) Date of application The Group expects to apply the Guidance from the beginning of the fiscal year ending March 31, 2017.

(3) Effects of application of the Guidance The Group is currently in process of measuring the impact of application on the consolidated financial statements. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 102

018_0356501372808.indd 102 2016/08/09 10:05:41 018_0356501372808.indd 103 103 Financial and Corporate Data TAISEI ANNUAL REPORT2016 below). 2016, were asfollows.Itemsforwhichitisextremely difficult tocalculatethefairvaluewere notincludedinthefollowingtable(see“Note2” Book valuesofthefinancialinstrumentsincludedinconsolidatedbalancesheet,fairsaiditemsasMarch 31,2015and (2) Fairvalueoffinancialinstruments for conducting,evaluatingtransactionsandmanagingrelated risks. solely withreliable financialinstitutions. international of themare hedgedbythecorresponding transactions.Theyconsiderthecredit risktobelow, becausetheyconductderivativetransactions exposed tothefluctuationriskininterest ratesandtheforeign exchangerisk.However, theGroup isexposedtolimitedrisk,becausemost reduce financingcosts,andderivativetransactions related tocurrency inorder tomitigatetheforeign exchangerisk.Thesetransactionsare rate fluctuationrisk,theriskishedgedbyderivativetransactions(interest rateswapcontracts). working capital,andhavematuritydatesoffiveyearsorless.Althoughtheloansbondsissuedatvariableratesare exposedtointerest for held-to-maturitydebtsecurities)consideringtherelationship withthem. partners, theGroup regularly monitorsthefairvaluesorfinancialpositionsofinvestedcompanies,and revises theportfoliotimely(except credit risksearly. strict credit examinationswhenorders are received, andafterward managethereceivables individuallyandmakeeffort todetect reduction of Receivables: tradenotesandaccountsare exposedtothecredit risksofcustomers.Inorder toreduce suchrisks,theGroup conducts to speculate. well asbythedirect financesuchasissuingcorporatebondsorcommercial papers. The Group restricts investmentstothelowriskassetssuchasdeposits,andraisefundsbyindirect financesuchasloansfrom bankas (1) Policiesforusingfinancialinstruments 4. FinancialInstruments Cash andcashequivalentsatMarch 31,2015and2016consistofthefollowing: 3. CashandEquivalents TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Investment securities: Notes andaccountsreceivable, trade Cash andtimedeposits Less: Time depositswithmaturitiesexceedingthree months Less: Time Cash andtimedeposits Cash andcashequivalents Long-term loans Straight bonds Deposits received Straight bondsduewithinoneyear Short-term loansandlongtermduewithinoneyear Notes andaccountspayable,trade [Derivative financialinstruments(*)] ASSETS LIABILITIES Available-for-sale securities Debt securitiesintendedtobeheldmaturity The Group executesandmanagesderivativetransactionsinaccordance rules.TheirFinanceDepartmentsare withinternal responsible The Group primarilyutilizesderivativetransactionsrelated tointerest ratesinorder tomitigatethefluctuationriskininterest ratesorto Debts, tradepayables:notesandaccountsare debtsmostlyduewithinoneyear. Loans,commercial papersandbondsare primarilyfor For investmentsecuritieswhichare mainlyheld-to-maturitydebtsecuritiesandshares heldtokeeptherelationship withbusiness Derivative financialinstrumentsare employedmainlyforhedgingfluctuationininterest rateandforeign currency exchange,andnotused �� Book Value 2015 ¥ 338,309 ¥ 337,166 ¥ 338,309 287,515 490,712 113,334 142,016 104,955 489,707 40,000 15,000 (1,143) Millions ofYen (245) 735 Millions ofYen Fair Value 2016 2015 ¥ 338,309 ¥ 371,731 ¥ 374,193 287,515 490,685 114,411 142,016 105,177 489,707 40,782 15,047 (2,462) (245) 744 Thousands ofU.S.Dollars Difference 2016 $ 3,298,997 $ 3,320,847 ¥ (21,850) (1,077) (782) (222) (27) (47) — — — — — 9 2016/08/09 10:05:41 Millions of Yen 2016 Book Value Fair Value Difference

ASSETS Snapshot TAISEI Cash and time deposits �� ¥ 374,193 ¥ 374,193 ¥— Notes and accounts receivable, trade �� 443,635 443,621 (14) Investment securities: Debt securities intended to be held to maturity �� 682 703 21 Available-for-sale securities �� 249,879 249,879 — LIABILITIES Notes and accounts payable, trade �� 442,758 442,758 —

Short-term loans and long term loans due within one year �� 108,981 109,392 (411) Management Strategy Short-term non-recourse loans payable �� 100 163 (63) Straight bonds due within one year �� 10,000 10,030 (30) Deposits received �� 120,205 120,205 — Straight bonds �� 40,000 40,787 (787) Non-recourse bonds payable �� 500 512 (12) Long-term loans �� 90,564 91,627 (1,063)

Long-term non-recourse loans payable �� 4,550 4,617 (67) Business Overview [Derivative financial instruments (*)] �� (2) (2) —

Thousands of U.S. dollars

2016 CSR Book Value Fair Value Difference ASSETS Cash and time deposits �� $ 3,320,847 $ 3,320,847 $— Notes and accounts receivable, trade �� 3,937,123 3,936,999 (124) Investment securities: Debt securities intended to be held to maturity �� 6,053 6,239 186 Available-for-sale securities �� 2,217,599 2,217,599 — Governance Report LIABILITIES Notes and accounts payable, trade �� 3,929,340 3,929,340 — Short-term loans and long term loans due within one year �� 967,173 970,820 (3,647) Short-term non-recourse loans payable �� 887 1,447 (560) Straight bonds due within one year �� 88,747 89,013 (266) Deposits received �� 1,066,782 1,066,782 —

Straight bonds �� 354,988 361,972 (6,984) Social Report Non-recourse bonds payable �� 4,437 4,544 (107) Long-term loans �� 803,727 813,161 (9,434) Long-term non-recourse loans payable �� 40,380 40,974 (594) [Derivative financial instruments (*)] �� (18) (18) — (*) Note: The assets and liabilities are reported as net amounts. Any items for which the total becomes a net liability are indicated in parentheses.

Note 1: The calculation method of the fair values of financial instrument and securities, derivative transactions

ASSETS Environmental Report · Cash and time deposits and Notes and accounts receivable, trade The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of receivables due after one year are based on the present values of discounted cash flows reflecting the interest rate, the estimated collection terms and credit risks with respect to each receivables categorized by collection terms. · Investment securities The fair values of marketable securities are based on the quoted market value, and bonds are based on the market value, the price indicated by a third party such as broker or the present value of discounted cash flows. See the notes on “5 Securities” for notes pertaining to securities categorized by the purposes for which they are held. Financial and Corporate DataFinancial LIABILITIES Dat a/ CorporateFinancial Data · Notes and accounts payable, trade, Short-term loans and Long term loans due within one year, Commercial papers and Deposits received The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of long-term loans due within one year is based on the same method as that for long-term loans.

TAISEI ANNUAL REPORT 2016 104

018_0356501372808.indd 104 2016/08/09 10:05:41 018_0356501372808.indd 105 105 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Others Others Others Time deposits Time Time deposits Time Time deposits Time maturities asofMarch 31,2015and2016were asfollows: Note 3:Scheduledredemption amountsaftertheconsolidatedbalancesheetdateformonetaryclaimsandsecuritieswithperiodof the fairvaluesbecausetheyhavenoquotedmarketpricesandfuture cashflowscannotbeestimated. Investment securities: Receivables: Trade notesandtradeaccounts Investment securities: Receivables: Trade notesandtradeaccounts TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) respectively) are notincludedinthe Nonmarketable securities(bookvalueamountto¥60,077millionand70,759($627,964thousand)atMarch 31,2015and2016, Note 2:Financialinstrumentsforwhichitisdeemedtobeextremely difficult tocalculatethefairvalue See thenoteson“13DerivativeTransactions”. [Derivative financialinstruments] present valueofdiscountedcashflowsbytheinterest rate reflecting theestimated redemptiontermsandissuer’s credit risk. The fairvalueofmarketablebondsisbasedonthequotedmarketvalue,otherwisenonmarketableare basedonthe · Bonds the samekindofloansisconducted. The fairvalueoflong-termloansisbasedonthepresent valueofdiscountedcashflowsbytheinterest ratewhichmaybeapplicablewhen · Long-termloans consolidated balancesheetdate. Note 4:Seethenoteson“7.Borrowings andLoans” fornotespertainingtotheaggregate annualmaturitiesoflongterm debtafterthe Receivables: Trade notesandtradeaccounts Investment securities: Available-for-sale securities: Available-for-sale securities: Available-for-sale securities: Debt securitiesintendedtobeheldmaturity: Debt securitiesintendedtobeheldmaturity: Debt securitiesintendedtobeheldmaturity: Government bonds Government Government bonds Government Government bonds Government Government bonds Government Government bonds Government Government bonds Government �� Total Total Total �� Assets �� Investmentsecurities–Available-for-sale securitiesabove,asitisextremely difficult tocalculate Due withinoneyear Due withinoneyear Due withinoneyear $ 7,238,135 $ 3,316,818 ¥ 824,955 ¥ 815,593 ¥ 337,447 ¥ 373,739 3,919,835 487,401 441,687 266 222 112 994 45 30 25 62 — Thousands ofU.S.Dollars Due afteroneyearbut Due afteroneyearbut Due afteroneyearbut within fiveyears within fiveyears within fiveyears Millions ofYen Millions ofYen 2015 2016 2016 $ 22,364 $ ¥ 4,018 ¥ 2,520 ¥ ¥ 17,297 2,405 2,662 3,311 1,949 276 271 401 300 30 — — — — — Due afterfiveyearsbut Due afterfiveyearsbut Due afterfiveyearsbut within tenyears within tenyears within tenyears $ $ 2,396 ¥ 273 ¥ 270 2,396 ¥ ¥ 273 270 — — — — — — — — — — — — 2016/08/09 10:05:41 5. Securities (1) Following tables summarized acquisition costs, book values and fair values of securities with fair values available as of March 31, 2015 and 2016: (a) Held-to-maturity debt securities:

∙ Securities with fair values exceeding book values Snapshot TAISEI Millions of Yen 2015 Type Book value Fair value Difference Government bonds �� ¥ 732 ¥ 741 ¥ 9

Millions of Yen Thousands of U.S. Dollars 2016 2016 Type Book value Fair value Difference Book value Fair value Difference Management Strategy Government bonds �� ¥ 682 ¥ 703 ¥ 21 $ 6,053 $ 6,239 $ 186

∙ Other securities Millions of Yen 2015 Type Book value Fair value Difference Government bonds �� ¥ 3 ¥ 3 ¥ (0) Business Overview

Millions of Yen Thousands of U.S. Dollars 2016 2016 Type Book value Fair value Difference Book value Fair value Difference Government bonds �� ¥ — ¥ — ¥ — $ — $ — $ — CSR

(b) Available-for-sale securities: ∙ Securities with book values exceeding acquisition costs Millions of Yen 2015 Type Book value Acquisition cost Difference Equity securities �� ¥ 276,637 ¥ 111,179 ¥ 165,458 Government bonds �� 292 283 9

Others �� 1,174 742 432 Governance Report Total �� ¥ 278,103 ¥ 112,204 ¥ 165,899

Millions of Yen Thousands of U.S. Dollars 2016 2016 Type Book value Acquisition cost Difference Book value Acquisition cost Difference Equity securities �� ¥ 239,171 ¥ 113,612 ¥ 125,559 $ 2,122,568 $ 1,008,271 $ 1,114,297

Government bonds �� 296 286 10 2,627 2,538 89 Social Report Others �� 1,216 742 474 10,792 6,585 4,207 Total �� ¥ 240,683 ¥ 114,640 ¥ 126,043 $ 2,135,987 $ 1,017,394 $ 1,118,593

∙ Other securities Millions of Yen 2015 Type Book value Acquisition cost Difference Equity securities �� ¥ 9,370 ¥ 11,033 ¥ (1,663)

Government bonds �� 28 28 (0) Environmental Report Others �� 15 15 (0) Total �� ¥ 9,413 ¥ 11,076 ¥ (1,663)

Millions of Yen Thousands of U.S. Dollars 2016 2016 Type Book value Acquisition cost Difference Book value Acquisition cost Difference Equity securities �� ¥ 9,182 ¥ 12,524 ¥ (3,342) $ 81,488 $ 111,147 $ (29,659) Government bonds �� 1 1 (0) 9 9 (0) Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data Others �� 13 14 (1) 115 124 (9) Total �� ¥ 9,196 ¥ 12,539 ¥ (3,343) $ 81,612 $ 111,280 $ (29,668)

TAISEI ANNUAL REPORT 2016 106

018_0356501372808.indd 106 2016/08/09 10:05:41 018_0356501372808.indd 107 107 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Losses onsalesofavailable-for-sale Losses onsalesofavailable-for-sale Losses onsalesofavailable-for-sale Gains onsalesofavailable-for-sale Gains onsalesofavailable-for-sale Gains onsalesofavailable-for-sale Total amountofavailable-for-sale Total amountofavailable-for-sale Total amountofavailable-for-sale Write-down ofinvestmentsecurities TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Secured liabilities (2) (1) 6. PledgedAssets Asset pledged Write-down ofinvestment securities The Group recognized impairmentlossesonthefollowingsecuritiesforyearsendedMarch 31,2015and2016asfollowings: (3) Impairmentlossesonsecurities Machinery, vehicles,tools,furniture andfixtures(net ofaccumulateddepreciation) Short-term non-recourse loanspayable Non- recourse bondspayable Short-term loans Long-term loans Long-term non-recourse loanspayable Land Buildings andstructures (netofaccumulateddepreciation) securities securities securities securities securities securities securities sold securities sold securities sold development) included incostofsales(Realestate The followingassetswere pledgedasliabilitiesatMarch 31,2015and2016: Total salesofavailable-for-sale securitiesandtherelated gainsandlossesfortheyearsendedMarch 31,2015and2016were asfollows: �� Total Total �� Type Type Type Type ��

�� qiyscrte Others Equity securities qiyscrte Others Equity securities qiyscrte Others Equity securities 2015 $ 1,642 ¥ ¥ 457 ¥ 185 287 439 Millions ofYen 11 98 5 1 9 3 Thousands ofU.S.Dollars �� Millions ofYen Millions ofYen 2015 2016 2016 2016

¥ ¥ 176 $ 106 �� ¥ 12 304 71 — — — — 2 8 Thousands of U.S. Dollars 2015 2015 Total Total Total 2016 $ 1,748 $ ¥ 633 ¥ 197 2,698 289 169 19 ¥ 3,906 ¥ — 5 1 9 ¥ 840 3,906 ¥ Millions ofYen Millions ofYen 840 — — — — — — 2016 2016 ¥ 14,266 ¥ ¥ 7,380 ¥ 4,550 1,600 8,143 6,103 100 500 630 20 Thousands ofU.S.Dollars Thousands ofU.S.Dollars 2016 2016 $ $ 126,606 $ 65,495 $ 40,380 14,200 72,267 54,162 4,437 5,591 887 177 2016/08/09 10:05:41 (2) The following assets were pledged principally as collateral for loans of companies which were not consolidated at March 31, 2015 and 2016: Millions of Yen Thousands of U.S. Dollars 2015 2016 2016 TAISEI Snapshot TAISEI Investment securities �� ¥ 2,191 ¥ 2,105 $ 18,681 Other assets �� 1,907 1,589 14,102 Total �� ¥ 4,098 ¥ 3,694 $ 32,783

7. Short-term Loans and Long-term Debt Short-term loans at March 31, 2015 and 2016 mainly consisted of short-term notes and overdrafts from banks. The weighted average interest rates of short-term loans at March 31, 2015 and 2016 were 0.6%. Management Strategy

The Group has had no difficulty in renewing such notes and overdraft facility agreements, when they considered such renewal advisable.

Long-term debt at March 31, 2015 and 2016 consisted of the following: Millions of Yen Thousands of U.S. Dollars 2015 2016 2016 Bonds and notes:

Issued by the Company: Business Overview 1.49% yen bonds due in 2015 �� ¥15,000 ¥— $— 0.80% yen bonds due in 2016 �� 10,000 10,000 88,747 1.58% yen bonds due in 2017 �� 10,000 10,000 88,747 1.146% yen bonds due in 2018 (*1) �� — 500 4,437 CSR 0.66% yen bonds due in 2018 �� 10,000 10,000 88,747 0.67% yen bonds due in 2020 �� 10,000 10,000 88,747 0.527% yen bonds due in 2022 �� — 10,000 88,747 Loans, principally from banks and insurance companies: Secured loans (*2) �� 840 7,380 65,495 Unsecured loans �� 160,374 142,474 1,264,413 Capital lease �� 989 807 7,161

217,203 201,161 1,785,241 Governance Report Amount due within one year �� (63,157) (65,000) (576,855) Total long-term debt (due after one year) �� ¥ 154,046 ¥ 136,161 $ 1,208,386 Notes 1: This bonds are non-recourse liabilities for the Group. 2: These loans as of March 31, 2016 include ¥ 4,650 million ($ 41,267 thousand) of non-recourse loans payable for the Group.

The annual interest rates applicable to long-term loans due within one year averaged 1.8% and 1.3% as of March 31, 2015 and 2016,

respectively, and the annual interest rates applicable to long-term loans due after one year averaged 1.2% and 0.9% as of March 31, 2015 Social Report and 2016. The aggregate annual maturities of long-term debt (including current portion) at March 31, 2016 were summarized as follows: Year ending March 31, Millions of Yen Thousands of U.S. Dollars 2017 �� ¥65,000 $576,855 2018 �� 50,885 451,589 2019 �� 26,625 236,289 2020 �� 21,631 191,968 2021 �� 26,994 239,563 Environmental Report 2022 and thereafter �� 10,026 88,977 Total �� ¥ 201,161 $ 1,785,241

The Company has a commitment line provided by co-financing consisting of several correspondent financial institutions for the purpose of securing financing in case of an emergency. The commitment line amounts as of March 31, 2015 and 2016 were ¥ 75,000 million and ¥ 50,000 million ($ 443,734 thousand), respectively, although there was no amount of corresponding loans as of March 31, 2015 and 2016. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 108

018_0356501372808.indd 108 2016/08/09 10:05:41 018_0356501372808.indd 109 109 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Deferred incometaxliabilities: Per capitainhabitanttaxandothers Effect ofenactedchangesintaxlawsandratesonJapanese Statutory taxrate Permanent differences: TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Significant componentsofdeferred incometaxesatMarch 31,2015and2016were asfollows: financial statementpurposesfortheyearendedMarch 31,2015and2016. million ($2,067thousand)andrevaluation reserve forlandincreased by¥233million($2,067thousand). decreased by¥61million($541thousand).Inaddition,deferred incometaxliabilitiesforrevaluation reserve forlanddecreased by¥233 available-for-sale securities,netoftaxesincreased by¥2,084million($18,495thousand)andremeasurements ofdefinedbenefitplans decreased by¥452million($4,011thousand),deferred incometaxesincreased by¥2,475million($21,965thousand),unrealized gainson to beeliminatedonandafterApril1,2018. changed from 32.3%to30.9%forthoseexpectedbeeliminatedfrom April1,2016toMarch 31,2018andto30.6%forthoseexpected rates usedtomeasure deferred income taxassetsandliabilities(limitedtothoseexpectedbeeliminatedonafterApril1,2016)were on PartialAmendmentoftheLocalTax ActandOthers”were passedintheDiet.Asaresult oftheseamendments,theeffective statutorytax On March 29,2016,amendmentstotheJapanesetaxregulations “ActonPartialAmendmentoftheIncomeTax ActandOthers”“Act The adjustmentofdeferred taxassetsandliabilitiesduetothereduction ofcorporationtaxrates Taxes onincomeconsistofcorporation,enterpriseandinhabitantstaxes. 8. IncomeTaxes Deferred incometaxassets: March 31,2015and¥4,189million($37,176thousand)atMarch 31,2016were includedintheconsolidatedbalancesheets. In additiontothedeferred incometaxesshownabove,deferred revaluation taxliabilitiesconcerning oflandamountingto¥4,430millionat Share ofprofit ofentitiesaccountedforusingequitymethod Effective taxrate Others Unrealized holdinggainsonsecurities Valuation allowance Unrealized profits Tax losscarryforward Others Non-taxable income Non-deductible expenses Net definedbenefitasset Disallowed portionofexpensesandlosses: Gains onsecuritiescontributiontoemployeeretirement benefittrust Others Bad debtexpensesandallowancefordoubtfulaccounts Fixed assets Accrued bonuses Net definedbenefitliability Inventories The followingtablesummarizedthesignificantdifferences betweenthestatutorytaxrateandCompany’s effective taxratefor Due tothesechangesintheeffective statutorytaxrates,amountofdeferred incometaxassets(netofdeferred incometaxliabilities) �� Total Sub-total Net total Total ��

�� 2015 2015 ¥ ¥ (53,013) (84,656) (11,831) (18,695) 91,329 95,621 23,116 43,164 35.6% 42.9% (4,292) (1,117) (2.4) (0.6) (0.9) 7,424 8,224 3,523 6,673 4,627 4,702 0.8 2.5 7.9 Millions ofYen 841 2016 2016 ¥ ¥ (37,525) (60,768) (17,711) 81,206 85,271 20,438 38,420 18,567 33.1% 34.8% (4,065) (1,061) (4,471) (1.8) (0.6) (1.3) 7,433 8,461 1,934 5,035 5,261 0.5 2.8 2.1 160 Thousands ofU.S.Dollars 2016 $ $ (333,023) (539,297) (157,179) 720,678 756,754 181,381 164,776 340,966 (36,076) (39,679) 65,965 75,089 17,164 44,684 46,690 (9,416) 1,420 2016/08/09 10:05:41 9. Investment and Rental Property (1) The Company and certain consolidated subsidiaries hold some office buildings for rent in Tokyo and other areas. The rental income on office buildings for rent was ¥ 2,734 million and ¥ 2,696 million ($ 23,926 thousand) at the year ended on March 31, 2015 and 2016, respectively. Rental income is mainly booked in Net sales: Real estate development and other, and rental cost is mainly booked in Cost of

sales. Snapshot TAISEI

(2) The amounts of investment and rental property which booked in consolidated balance sheets, the amounts of increase or decrease, and fair value at March 31, 2015 and 2016 were as follows: Millions of Yen 2015 Book value Fair value April 1, 2014 Increase (decrease) March 31, 2015 March 31, 2015 ¥ 59,135 ¥ (7,997) ¥ 51,138 ¥ 57,284 Management Strategy

Millions of Yen 2016 Book value Fair value April 1, 2015 Increase (decrease) March 31, 2016 March 31, 2016 ¥ 51,138 ¥ 10,192 ¥ 61,330 ¥ 69,220 Business Overview Thousands of U.S. Dollars 2016 Book value Fair value April 1, 2015 Increase (decrease) March 31, 2016 March 31, 2016 CSR $ 453,834 $ 90,451 $ 544,285 $ 614,306

Notes 1: The carrying amount is stated at cost of acquisition less accumulated depreciation and impairment losses. 2: The main reasons of decrease for the years ended March 31, 2015 were the amounts regarding impairment loss on fixed assets ¥ 4,883 million, reclassification to inventories (real estate) ¥ 1,959 million, and sales of fixed assets ¥ 686 million. The main reasons of increase for the years ended March 31, 2016 were the amounts regarding the change in scope of consolidation ¥ 7,686 million ($ 68,211 thousand) and purchases of fixed assets ¥ 3,474 million ($ 30,831 thousand). 3: The book value at March 31, 2015 and 2016 included asset retirement obligations of ¥ 233 million and ¥ 226 million ($ 2,006 thousand), respectively.

4: The fair value of investment and rental property as of March 31, 2015 and 2016 were mainly calculated by the Company according Governance Report to the appraisal standard of real-estate (including those which were adjusted by the land price index, if any).

10. Employees’ Severance and Retirement Benefits 1. The Company and its main consolidated subsidiaries have adopted the defined-benefit pension plans and defined-contribution pension plans. The defined-benefit pension plans adopted consist of defined-benefit corporate pension plans and lump-sum payment plans.

Liabilities and expenses for severance and retirement benefits of the Company and its consolidated domestic subsidiaries are Social Report determined based on amounts obtained by actuarial calculations. The Company may also pay additional retirement benefits which are not subject to actuarial calculation. The Company has established a retirement benefit trust. As a result of the change of retirement benefit system in one of the consolidated subsidiaries of the Company and the integration of pension plans in another consolidated subsidiary which had adopted multiple defined-benefit corporate pension plans, the numbers of companies applying defined-contribution pension plan increased by 1 and defined-benefit corporate pension plan decreased by 1, respectively, during the fiscal year 2016. Besides, during the fiscal year 2015, as a result of the change of retirement benefit system in one of the consolidated subsidiaries of the Company from defined-benefit pension plan to defined-contribution pension plan, the number of companies applying defined-benefit pension plan decreased by 1 and defined-contribution pension plan increased by 1. Accordingly, the numbers of consolidated companies which have adopted lump-sum payment plans, defined-benefit corporate pension plans and defined- Environmental Report contribution pension plans were 20, 7 and 5, respectively, as of March 31, 2016.

Additional Information The Company received a partial reimbursement of the assets contribution to retirement benefit trust at the beginning of the fiscal year ended March 31, 2016, because the Company did not expect to use this part in the future for the condition of the excess of plan assets over retirement benefit obligations have continued from the past. As a result, net defined benefit asset decreased by ¥ 21,969 million ($ 194,968 thousand). The Company amortized the unrecognized actuarial gains and losses in a lump sum and recorded the gains on return of assets from retirement benefit trust in other income of consolidated statements of income amounted of ¥ 4,021 million ($ 35,685 thousand) for the year ended March 31, 2016. The Company reset the amount ¥ 21,969 million ($ 194,968 thousand) of the returned securities contribution to retirement benefit Financial and Corporate DataFinancial trust for lump-sum payment at the same date of the reimbursement. Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 110

018_0356501372808.indd 110 2016/08/09 10:05:41 018_0356501372808.indd 111 111 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Balance atendoftheyear Balance atendoftheyear TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) (3) Related balanceafterreflecting changesinaccountingpolicies: (1) Movementinretirement benefitobligations 2. Defined-benefitPensionPlans (2) Movementsinplanassets Some oftheconsolidatedsubsidiariesusesimplifiedmethodforcalculation retirement benefitobligations. Balance atbeginningoftheyear: Balance atApril1,beginningoftheyear: Net totalatyear-end Net definedbenefitasset Net definedbenefitliability Net totalatyear-end Unfunded retirement benefitobligations Funded retirement benefitobligations (4) Retirement benefitcosts Current servicecost Plan assets Total retirement benefitcostsfortheyear Past servicecostsamortization Expected returnonplanassets Other Net actuariallossamortization Interest cost Other Past servicecosts Other Benefits paid Benefits paid Actuarial loss(gain) Contributions paidbytheemployer Interest cost Actuarial loss(gain) Current servicecost Expected returnonplanassets Cumulative effects ofchangesinaccountingpolicies Reconciliation from retirement benefitobligationsandplanassetstonetdefinedliability(asset) Retirement benefitexpensesintheconsolidatedsubsidiariesapplyingsimplifiedmethod are recorded incurrent servicecost. ��

�� 2015 2015 2015 2015 ¥ ¥ ¥ 149,626 ¥ 129,686 121,653 ¥ ¥ 145,594 (129,686) 155,554 147,187 ¥ ¥ (12,074) (36,808) 10,353 19,940 56,748 19,940 17,501 6,178 (7,997) (1,449) (1,760) (1,699) 3,978 1,616 1,699 9,960 2,439 6,178 8,590 4,218 1,616 Millions ofYen Millions ofYen Millions ofYen Millions ofYen (255) 56 37 — 2016 2016 2016 2016 ¥ ¥ ¥ 147,980 ¥ 114,998 ¥ 129,686 ¥ 149,626 (114,998) ¥ ¥ 149,626 145,375 (2,076) (11,765) (10,944) 43,926 32,982 30,377 32,982 (1,607) (7,333) (8,743) (1,765) (1,786) 4,682 1,209 1,527 6,011 1,786 2,605 6,011 1,527 4,713 733 (25) — (7) Thousands ofU.S.Dollars Thousands ofU.S.Dollars Thousands ofU.S.Dollars Thousands ofU.S.Dollars 2016 2016 2016 2016 $ $ $ 1,313,277 $ 1,020,572 $ 1,150,923 $ 1,327,884 (1,020,572) 1,327,884 1,290,158 $ $ (104,411) 389,830 292,705 269,586 292,705 (18,423) (14,261) (65,078) (77,591) (97,125) (15,664) (15,850) 41,551 10,729 13,552 53,346 15,850 23,119 13,551 53,346 41,826 6,505 (222) (62) — 2016/08/09 10:05:41 (5) Remeasurements of defined benefit plans Items recorded in remeasurements of defined benefit plans, before tax were as follows: Millions of Yen Thousands of U.S. Dollars 2015 2016 2016 Past service costs �� ¥(1,505) ¥(1,740) $(15,442) Snapshot TAISEI Actuarial gains and losses �� 16,020 (16,714) (148,332) Total balance at March 31, 2015 and 2016 �� ¥ 14,515 ¥ (18,454) $ (163,774)

(6) Accumulated remeasurements of defined benefit plans Items recorded in accumulated remeasurements of defined benefit plans (before considering tax effect) were as follows: Millions of Yen Thousands of U.S. Dollars 2015 2016 2016 Unrecognized past service costs �� ¥ (10,216) ¥(8,476) $(75,222) Management Strategy Unrecognized actuarial gains and losses �� (4,497) 12,217 108,422 Total balance at March 31, 2015 and 2016 �� ¥ (14,713) ¥3,741 $33,200

(7) Plan assets 2015 2016 ( i ) Plan assets comprise: Equity securities �� 47% 40% Bonds �� 22 22 Business Overview General accounts �� 20 20 Special accounts �� 3 3 Short-term assets �� 0 3 Other �� 8 12 CSR Total �� 100% 100%

The retirement benefit trust established for corporate pension plans accounted for 35% and 33% of total plan assets, for the fiscal year ended March 31, 2015 and 2016, respectively.

( ii ) Long-term expected rate of return Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term expected rate of return.

(8) Actuarial assumptions Governance Report The principal actuarial assumptions at March 31, 2015 and 2016 were as follows: 2015 2016 Discount rate: The Company and its consolidated domestic subsidiaries �� 0.8∼1.5 0.4∼1.5 Consolidated overseas subsidiaries �� 4.6 5.0∼9.0 Long-term expected rate of return �� 1.0∼3.5 1.0∼3.5 Social Report 3. Defined-contribution Pension Plans Amount payable for defined-contribution pension plans of the Company and its consolidated subsidiaries were ¥ 2,161 million and ¥ 2,330 million ($ 20,678 thousand), for the fiscal year ended March 31, 2015 and 2016, respectively.

11. Net assets Net assets comprise three subsections; which are shareholders’ equity, accumulated other comprehensive income and minority interests. Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,

a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as Environmental Report additional paid-in capital, which is included in capital surplus. Under the Japanese Corporate Law (“the Law”), when a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Law, appropriations of legal earnings reserve and additional paid-in capital generally require a resolution of the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with the Law. The number of treasury stock owned by the Company, consolidated subsidiaries and affiliated companies adopting the equity method as of March 31, 2015 and 2016 were 1,322 thousand shares and 1,371 thousand shares, respectively.

TAISEI ANNUAL REPORT 2016 112

018_0356501372808.indd 112 2016/08/09 10:05:41 018_0356501372808.indd 113 113 Financial and Corporate Data TAISEI ANNUAL REPORT2016 to sellEuro to sellUSdollar Forward foreign exchangecontract(shortcommitment) Forward foreign exchangecontract(longcommitment) Forward foreign exchangecontract(longcommitment) TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Future minimumleasepaymentsasofMarch 31,2015and2016were asfollows: (a) Lessee Operating leases 12. LeaseTransactions Future minimumleasereceipts asofMarch 31,2015and2016 were asfollows: (b) Lesser Due withinoneyear to buyUSdollar ( (1) 13. DerivativeTransactions Due afteroneyear ( Note: to buyUSdollar Due withinoneyear Due afteroneyear to buyUSdollar Forward foreign exchangecontract(longcommitment) (a) Over-the countertransactions · Currency-related transactions The Companyhadnoforward foreign exchangecontractasofMarch 31,2015.InformationasofMarch 31,2016wasasfollows: Main itemshedgedbyforward foreign exchangecontractsare notesandaccountspayable,trade. ∙ Currency related transactions

i ii

)

) Derivative transactionswhichwere notaccountedforbythehedgeaccounting Derivative transactionsoftheCompanyanditsconsolidatedsubsidiariesasMarch 31,2015and2016were asfollows: Derivative transactionswhichwere accountedforbythehedgeaccounting Fair valuewasdeterminedatthequotedpriceobtainedfrom thecounterpartyfinancialinstitutions. �� Total Total Total

�� Total Total Total $ 310,632 ¥ 35,002 ¥ 33,004 2015 2015 Total Contract amount Contract amount Contract amount ¥ 29,276 ¥ 28,848 ¥ ¥ 25,067 25,272 Contract amount 4,209 3,576 Millions ofYen Millions ofYen ¥ 49 ¥ 35 14 Due after Due after Due after one year one year one year Thousands ofU.S.Dollars Due afterone year Millions ofYen Millions ofYen Millions ofYen $ — ¥ — ¥ — 2016 2016 2015 2016 2016 2016 ¥ ¥ ¥ 27,677 ¥ 27,749 23,432 23,472 Fair value Fair value Fair value 4,245 4,277 ¥ — ¥ — — ¥ (245) $ 18 Thousands ofU.S.Dollars Thousands ofU.S.Dollars ¥ 2 Fair value Unrealized gain Unrealized gain Unrealized gain 2016 2016 (loss) (loss) (loss) $ $ $ 245,625 $ 246,264 207,952 208,307 37,673 37,957 ¥ (245) $ 18 ¥ (4) ¥ (3) ¥ 2 (1) 2016/08/09 10:05:42 Thousands of U.S. Dollars 2016 Contract amount TAISEI Snapshot TAISEI Forward foreign exchange contract (short commitment) Total Due after one year Fair value to sell US dollar �� $ 311 $ — $ (26) to sell Euro �� 124 — (9) Total �� $ 435 $ — $ (35)

Note: Fair value was determined at the quoted price obtained from the counterparty financial institutions.

∙ Interest Rate-Related Derivatives:

Main items hedged by interest rate swap contracts are long-term debt. Management Strategy The following interest rate swaps are used as hedges. The net amounts to be paid or received are added to or deducted from interests.

Special treatment of swap Millions of Yen 2015 Contract amount Total Due after one year Fair value Business Overview Interest rate swaps receive floating rate, pay fixed rate �� ¥ 95,064 ¥ 87,630 ¥ —

Millions of Yen 2016 CSR Contract amount Total Due after one year Fair value Interest rate swaps receive floating rate, pay fixed rate �� ¥ 100,910 ¥ 70,590 ¥ —

Thousands of U.S. Dollars 2016 Contract amount

Total Due after one year Fair value Governance Report Interest rate swaps receive floating rate, pay fixed rate �� $ 895,545 $ 626,464 $ — Note: Fair value of interest rate swaps was included in the corresponding hedged long-term debt (long-term debt due within one year was considered as short-term debt) as those interest rate swaps were recorded as an adjustment to the corresponding hedged long-term debt under the special treatment.

14. Related Party Transactions Social Report The Company had no transaction with related individuals, including shareholders and directors, for the year ended March 31, 2015. Information for the year ended March 31, 2016 is as follows: Millions of yen

benefit trust of assets Environmental Report (b) Assets of corporate pension plan (c) — (d) —

Thousands of U.S. dollars

(a) Name 2016 (b) Attribution Transactions during the year ended March 31, 2016 Balance at the end of the year (c) Capital (Million yen) (d) Equity ownership percentage of the Description of Company transaction Amount Account Amount Financial and Corporate DataFinancial (a) Assets contribution to retirement Partial reimbursement $ 194,968 — $ — Dat a/ CorporateFinancial Data benefit trust of assets (b) Assets of corporate pension plan (c) — (d) —

TAISEI ANNUAL REPORT 2016 114

018_0356501372808.indd 114 2016/08/09 10:05:42 018_0356501372808.indd 115 115 Financial and Corporate Data TAISEI ANNUAL REPORT2016 (d) 0.00% (c) — (b) (a) Yasushi Yoshinari (d) 0.00% (c) — (b) (a) Yasushi Yoshinari (d) (c) Capital(Millionyen) (b) Attribution (a) Name Segment informationasfortheyearsendedMarch 31,2015and2016are asfollows: (c) Informationofnetsales,profit orlossandothermaterialitemson reportable segment according totherationalbasessuchasusageofassets. Assets oftheGroup are notallocatedtothesegments.However other generaltransactions. of Income.Inaddition,conditionsintersegmenttransactionsandtransfersare determinedbyconsideringmarketpricesasinthecaseof The profit (loss)ofa reportable segmentisbasedontheoperatingincome(loss)before amortizationofgoodwillinConsolidatedStatements The accountingmethodsforeachreportable segmentare thesameasthatsetforthin“SummaryofSignificantAccountingPolicies”. (b) purchase, saleandrental oflandandbuildings, etc. civil engineering,etc.;“Constructioncontracts”deliveringconstructionofbuildingandhousing,“Realestatedevelopment” engineering,” “Constructioncontracts,”and“Realestatedevelopment”asreportable segments:“Civilengineering”deliveringconstruction of The Group consistsofsegmentsidentifiedbyproducts andservicesbasedontheheadquarters,identifiesthree segments,“Civil comprehensive domesticandoverseastrategieswithrespect toproducts andservices,operatesitsbusinessactivities. The headquartersintheheadoffice are establishedbytheproducts ofconstructionandtheservices.Eachheadquarterproposes business result of eachreportable segment. are reviewed periodicallyattheBoard ofDirectors Meetinginorder todeterminedistributionofmanagement resources andevaluate Each reportable segmentoftheGroup is abusinessuni (a) Generalinformationonreportable segments (1) Segmentinformation 15. SegmentInformation Notes ended March 31,2016.InformationfortheyearendedMarch 31,2015isasfollows: The Company’s consolidatedsubsidiarieshadnotransactionwithrelated individuals,includingshareholders anddirectors, fortheyear TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Net sales: Increase (decrease) inallowancefor Depreciation andamortization Operating income losses onconstructioncontracts Intersegment Customers Corporation Close relative ofthedirector ofthe Corporation Close relative ofthedirector ofthe Company Equity ownershippercentage ofthe Basis ofmeasurement ofnetsales,profit orlossandothermaterialitemson reportable segment

2: 1: (2) (1) Transaction conditionsandpoliciestodecidetransaction Consumption taxeswere notincludedinthetransactionamounts. �� general transactions.Theamountoftransactionaboverepresents thecontractpriceonconstructioncontract. Transaction conditionincludingthecontractpricewasdeterminedproperly onanarm’s lengthbasisasinthecaseofother above represents thepriceoncontractforsalesofreal estate. The purchase priceoflandwasdeterminedonanarm’s lengthbasisconsideringthemarketprice.Theamountoftransaction �� Total �� engineering ¥ ¥ ¥ ¥ 448,727 Co., Ltd. by Taisei Housing Housing construction Estate Co.,Ltd. Taisei Yuraku Real Purchase oflandby Civil 7,5 ,1,5 4,2 44516629(299 1,573,270 (72,949) 1,646,219 14,475 143,429 1,017,257 471,058 2314,1 ,7 ,2 299(72,949) 72,949 2,026 5,874 42,718 22,331 33,128 Transactions duringtheyearendedMarch 31,2015 4,623 (49) Description of transaction Reportable segments Construction ¥ ¥ ¥ ¥ contracts 974,539 t intheGroup, whosediscrete financialinformation isavailable.Reportablesegments 24,453 (9,395) 2,478 , thecorresponding depreciation expensesare allocated tothesegments eeomn Others development Real estate ¥ ¥ ¥ 3,5 ¥12,449 ¥ 137,555 12,243 Amount 1,170 — Millions ofYen ¥ 36 ¥ 64 Millions ofyen 2015 ¥ ¥ ¥ 2015 355 85 — ¥ ¥ 1,573,270 ¥ ¥ Account oa dutet Consolidated Adjustments Total Balance attheendofyear 70,179 (9,444) 8,356 — — ¥ ¥ ¥ ¥ 238 (68) — — Amount ¥ ¥ 1,573,270 ¥ ¥ 70,417 (9,444) ¥ — ¥ — 8,288 — 2016/08/09 10:05:42 Notes 1: ”Others” presented businesses such as incidental business to the construction business, leisure business, and other service businesses, which are not included in reportable segments. 2: Adjustment amount of operating income was ¥ 238 million ($ 1,980 thousand), which included ¥ 317 million ($ 2,638 thousand) of intersegment elimination, etc. and ¥ (79) million ($ (658) thousand) of the amount of amortization of goodwill.

3: Segment operating income was adjusted against operating income of Consolidated Statement of Income. Snapshot TAISEI

Millions of Yen 2016 Reportable segments Civil Construction Real estate engineering contracts development Others Total Adjustments Consolidated Net sales: Customers �� ¥ 433,924 ¥978,176 ¥ 121,306 ¥ 12,483 ¥ 1,545,889 ¥— ¥ 1,545,889 Management Strategy Intersegment �� 21,788 37,307 6,333 2,351 67,779 (67,779) — Total �� 455,712 1,015,483 127,639 14,834 1,613,668 (67,779) 1,545,889 Operating income �� ¥50,717 ¥56,400 ¥9,434 ¥943 ¥117,494 ¥(26) ¥117,468

Depreciation and amortization �� ¥2,694 ¥2,119 ¥1,160 ¥94 ¥6,067 ¥(76) ¥5,991 Increase (decrease) in allowance for losses on construction contracts �� ¥(2,290) ¥(16,829) ¥— ¥— ¥(19,119) ¥— ¥(19,119) Business Overview Thousands of U.S. Dollars 2016 Reportable segments Civil Construction Real estate engineering contracts development Others Total Adjustments Consolidated CSR Net sales: Customers �� $ 3,850,941 $ 8,681,008 $ 1,076,553 $ 110,783 $ 13,719,285 $— $ 13,719,285 Intersegment �� 193,362 331,088 56,203 20,864 601,517 (601,517) — Total �� 4,044,303 9,012,096 1,132,756 131,647 14,320,802 (601,517) 13,719,285 Operating income �� $450,098 $500,532 $83,724 $8,369 $1,042,723 $(231) $1,042,492

Depreciation and amortization �� $23,908 $18,806 $10,295 $834 $53,843 $(675) $53,168

Increase (decrease) in allowance for Governance Report losses on construction contracts �� $(20,323) $(149,352) $— $— $(169,675) $— $(169,675)

Notes 1: “Others” presented businesses such as incidental business to the construction business, leisure business, and other service businesses, which are not included in reportable segments. 2: Adjustment amount of operating income was ¥ (26) million ($ (231) thousand), which included intersegment elimination. 3: Segment operating income was adjusted against operating income of Consolidated Statement of Income.

(2) Related Information Social Report (a) Information about products and services The information about products and services is included in “(c) Information of net sales, profit or loss and other material items on reportable segment” of “(1) Segment Information” for the years ended March 31, 2015 and 2016.

(b) Information about geographic areas ∙ Net sales The information about net sales was not presented for the years ended March 31, 2015 and 2016 since sales to unaffiliated customers in Japan accounted for more than 90% of sales of Consolidated Statement of Income.

∙ Property, plant and equipment Environmental Report The information about property, plant and equipment was not presented for the years ended March 31, 2015 and 2016 since the amounts of property, plant and equipment that located in Japan accounted for more than 90% of the amounts of property, plant and equipment of Consolidated Balance Sheet.

(c) Information about major customers The information about major customers was not presented for the years ended March 31, 2015 and 2016 since net sales to any customer were less than 10% of the amounts of sales of Consolidated Statement of Income.

Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

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018_0356501372808.indd 116 2016/08/09 10:05:42 018_0356501372808.indd 117 117 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Unamortized balanceofgoodwill Amortization ofgoodwill Impairment lossonfixedassets Impairment lossonfixedassets Amortization ofgoodwill Unamortized balanceofgoodwill Impairment lossonfixedassets Unamortized balanceofgoodwill Amortization ofgoodwill TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) (e) (d) Informationaboutimpairmentlossonfixedassetsof reportable segmentfortheyearsendedMarch 31,2015and2016isasfollows: Information aboutgainsonnegativegoodwillfortheyearsendedMarch 31,2015and2016isnotapplicable. (f) Informationaboutgainsonnegativegoodwillofreportable segment 2016 isasfollows: Information aboutamortizationandunamortizedbalanceofgoodwillreportable segmentfortheyearsendedMarch 31,2015and �� Civil engineering Civil engineering Civil engineering Civil engineering Civil engineering Civil engineering ,2 $18,140 $ 6,922 ¥ 463 ¥ 780 ¥ 22 ¥ — ¥ — ¥ — $ — $ — Reportable segments Reportable segments Reportable segments Reportable segments Reportable segments Reportable segments Construction Construction Construction Construction Construction Construction contracts contracts contracts contracts contracts contracts ¥ 1,292 ¥ 2,044 ¥ $ ¥ — ¥ — ¥ — $ — 1 9 eeomn Others development Others development Others development eeomn Others development eeomn Others development eeomn Others development Real estate Real estate Real estate Real estate Real estate Real estate Thousands ofU.S.Dollars Thousands ofU.S.Dollars ¥ 4,946 $ 1,908 ¥ 215 ¥ 57 ¥ — ¥ — ¥ — $ — $ — Millions ofYen Millions ofYen Millions ofYen Millions ofYen 2015 2016 2015 2016 2016 2016 ¥ — ¥ — ¥ — ¥ — ¥ — ¥ — $ — $ — $ — Elimination Elimination Elimination Elimination Elimination Elimination corporate corporate corporate corporate corporate corporate and/or and/or and/or and/or and/or and/or 16 $26,784 $ (186) ¥ (21) ¥ (13) ¥ — ¥ — ¥ — ¥ — $ — $ — Total Total Total Total Total Total ¥ 6,688 ¥ 3,018 ¥ 79 ¥ ¥ $ ¥ — $ — — 1 9 2016/08/09 10:05:42 16. Contingent Liabilities and Commitment The Group was contingently liable as guarantors for borrowings of companies, which were not consolidated, with the amount of ¥ 2,684 million and ¥ 1,037 million ($ 9,203 thousand) at March 31, 2015 and 2016, respectively.

In addition, the Group was contingently liable to invest in the specific purpose companies for their repayment and other obligations of Snapshot TAISEI borrowings with the amount of ¥ 17,280 million and ¥ 15,680 million ($ 139,155 thousand) at March 31, 2015 and 2016, respectively. The amounts indicated their shares of the additional investment obligations.

17. Revaluation Reserve for Land In the year ended March 31, 2002, certain consolidated domestic subsidiaries executed revaluation of their land for business in accordance with the Law Concerning Revaluation of Land (the “Law”). As a result of this revaluation, deferred income taxes concerning the differences between the amounts after revaluation and the book

values before revaluation were stated in the assets and liabilities in the consolidated balance sheets. The differences between these Management Strategy amounts, net of taxes, were stated as “Revaluation reserve for land” in “Accumulated other comprehensive income”. The revaluation was executed in accordance with the method prescribed in the Article 2, Items 3, 4 and 5 of the Law on November 30, 2001 and March 31, 2002. One of the consolidated subsidiaries, which was merged with another consolidated subsidiary on December 1, 2001, executed the revaluation on November 30, 2001. Excess amount of the book values of the revaluated land over the fair values as of March 31, 2015 and 2016 was ¥ 4,500 million and ¥ 4,815 million ($ 42,732 thousand), respectively (including the excess amount of ¥ 1,021 million and ¥ 1,005 million ($ 8,919 thousand) related to investment and rental property at March 31, 2015 and 2016, respectively). Business Overview

18. Research and Development Expenses Research and development expenses, which were included in selling, general and administrative expenses and cost of sales, amounted to ¥

10,665 million and ¥ 10,999 million ($ 97,613 thousand) for the years ended March 31, 2015 and 2016, respectively. CSR

19. Impairment Losses of Fixed Assets Impairment losses on fixed assets for the years ended March 31, 2015 and 2016 consisted of the following: 2015 Use Type of assets Location Assets for business use Land, Building, Machinery and equipment and others Kanagawa and others (33 lots) Dormant assets Land and Building Hokkaido and others (4 lots) Governance Report

2016 Use Type of assets Location Assets for business use Land and Building and others Chiba and others (16 lots) Assets reclassified from business purpose to trading purpose Land and Building and others Yamanashi and others (12 lots)

Dormant assets Land and Building and others Shizuoka and others (6 lots) Social Report

The Company and its consolidated domestic subsidiaries grouped their fixed assets based on units, for which decisions for investments were made. Book values of the fixed assets listed above were reduced to recoverable amounts and impairment losses were recognized as follows: Millions of Yen Thousands of U.S. Dollars 2015 2016 2016 Buildings and structures �� ¥ 1,754 ¥811 $7,197 Land �� 4,016 2,027 17,989

Others �� 918 180 1,598 Environmental Report Total �� ¥ 6,688 ¥ 3,018 $ 26,784

The recoverable amount of the fixed assets for the years ended March 31, 2015 and 2016 were their net realizable values mainly based on amounts determined by valuations made in accordance with real estate appraisal standards. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

TAISEI ANNUAL REPORT 2016 118

018_0356501372808.indd 118 2016/08/09 10:05:42 018_0356501372808.indd 119 119 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Remeasurements ofdefinedbenefitplans: Foreign currency translationadjustments: Revaluation reserve forland: Deferred gainsorlosseson hedgingderivatives: Unrealized holdinggainson securities: Diluted netincomepershare Net assetspershare Net incomepershare TAISEI CORPORATION andConsolidated Subsidiaries Notes toConsolidatedFinancialStatements(cont.) Recycling adjustmentsandtaxeffects foreachcomponentofothercomprehensive incomewere asfollows: 21. Comprehensive Income Net assetspershare andnetincomepershare asofandfortheyearsendedMarch 31,2015and2016were asfollows: 20. PerShare Data Calculation basesforbasicnetincomepershare fortheyearsendedMarch 31,2015and2016were asfollows: dilutive effects. Diluted netincomepershare fortheyearsendedMarch 31,2015and2016were notpresented becausetheCompanyhadnoshares with Basic Netincomepershare: Share ofothercomprehensive incomeofassociates accountedforbytheequitymethod: Recycling: Amount incurred Recycling Amount incurred Tax effect Recycling: Amount incurred Average commonstockoutstanding(inthousandsshare) Recycling: Net incomeavailabletocommonstock Amount incurred Net incomenotavailabletocommonstockholders Net incomeattributabletoownersofparent Amount incurred Remeasurements ofdefinedbenefitplans,nettax Tax effect Before Tax Foreign currency translationadjustments,netoftaxes Unrealized gainsorlosses onhedgingderivatives,netoftaxes Tax effect Before Tax Unrealized holdinggainson securities,netoftaxes Tax effect Before Tax �� Total othercomprehensive income ��

�� Millions ofYen 2015 2015 2015 ¥ ¥ ¥ (20,059) 1,139,057 14,515 12,071 51,550 71,609 71,659 62,990 (4,662) ¥ 418.61 9,853 2,444 38,177 38,177 633 693 453 177 275 257 324 (60) (98) (50) 33.52 18 Millions ofYen — — Yen iloso e ThousandsofU.S.Dollars Millions ofYen 2016 2016 2016 ¥ (41,527) ¥ (39,136) ¥ (12,574) (18,454) (17,450) (26,048) (41,536) 1,169,933 15,488 (1,004) ¥ 442.67 5,880 (342) (337) (402) 77,045 77,045 233 65.85 (5) (3) (4) (9) (9) 1 5 — — Thousands ofU.S.Dollars U.S. Dollars 2016 2016 2016 $ (368,539) $ (347,320) (111,590) (163,773) (154,863) (231,168) (368,619) 137,451 $ 683,750 52,183 (8,910) (3,035) (2,991) (3,568) 2,068 683,750 $ 3.929 (44) (27) (35) (80) (80) 0.584 44 9 — — — 2016/08/09 10:05:42 22. Subsequent Event (1) Acquisition of treasury stock The Company resolved the item related to the acquisition of treasury stock at the board of directors held on May 13, 2016, in accordance with the article 156 of the Japanese Corporate Law (the “Law”), which is applicable as replacement of the article 165, paragraph 3 of the

law, as detailed below. Snapshot TAISEI

( i ) Reason of acquisition of treasury stock The Company decided to acquire its treasury stock in order to enhance the shareholders’ value per share and to improve the capital efficiency.

( ii ) Details (a) Type of stock to be acquired: Common stock of the Company (b) Number of stocks to be acquired: Up to 30,000,000 shocks (2.56% of the total outstanding stocks excluding treasury stock) (c) Total cost of acquisition: Up to ¥ 20,000 million ($ 177,494 thousand)

(d) Period of Acquisition: From May 16, 2016 to September 30, 2016 Management Strategy

( iii ) Other The Company plans to retire the all of the acquired treasury stock by the resolve at the board of directors in accordance with the article 178 of the Law.

(2) Reduction of the legal capital surplus The Company resolved at the board of directors held on May 13, 2016 to submit the proposal on reduction of legal capital surplus to the annual meeting of shareholders held on June 29, 2016 and the resolution was approved by the annual meeting, as detailed below. Business Overview

( i ) Purpose of reduction of the legal capital surplus The Company will reduce a part of legal capital surplus and transfer the same amount to other capital surplus in order to maintain the mobility and flexibility of capital policy. CSR ( ii ) Summary of the reduction of the legal capital surplus The amount to be reduced is ¥ 36,146 million ($ 320,785 thousand) out of the total of legal capital surplus ¥ 66,832 million ($ 593,113 thousand) and transferred to other capital surplus is ¥ 36,146 million ($ 320,785 thousand).

( iii ) Schedule (a) Resolve of the board of directors: May 13, 2016 (b) Resolve of the annual meeting of shareholders: June 29, 2016 (c) Initial date of public notice to creditors for objection: July 1, 2016 (Planned) (d) Final due date for creditors to object: August 1, 2016 (Planned) (e) Effective date: August 31, 2016 (Planned) Governance Report

(3) Cash dividends The following appropriation of retained earnings at March 31, 2016 was approved at the annual meeting of the Company’s shareholders held on June 29, 2016. Millions of Yen Thousands of U.S. Dollars Cash dividends, ¥ 11 ($ 0.098) per share �� ¥12,869 $ 114,208 Social Report Environmental Report Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data

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018_0356501372808.indd 120 2016/08/09 10:05:42 018_0356501372808.indd 121 121 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Independent Auditor’s Report 2016/08/09 10:05:42 Third Party Opinion

Introduction It has been ten years since Taisei Group started issuing CSR Report. Over this period, its contents have been evolving each TAISEI Snapshot TAISEI year. The report is prepared at the final step of the management process, and after receiving feedbacks, it will be put to use for subsequent management activities. The purpose of the report is to clearly disclose to stakeholders how strategies aiming for Professor, Faculty of Commerce, Waseda University responsible business management and sustainable growth are Ph. D., Business Administration implemented and what achievements are made. In preparation of the report, what kind of information, how accurate they are Kanji Tanimoto

aggregated and processed, and how comprehensible they are Management Strategy conveyed are very important issues. Taisei Corporation has tried its best to prepare the report in accordance with the new standards of conduct, rules and disclosure of Japan and abroad This task will also be an important subject in the examination whenever they are released. However, if its internal state does not of the framework for the integrated report. By positioning fit the new systems and terms well, the report will be described above, the meaning of contribution to development of a incomprehensible and its contents will not be conveyed sustainable society through the core business based on TAISEI

adequately either internally or externally. How should the new VISION 2020 will be clarified. The business issues of each division Business Overview concept and the requirements be incorporated in the existing will be more easily understood in this framework. business activities? How should the business activities be As an aid to this, giving feedbacks from specific opinions of evaluated using the same criteria? How should feedbacks be stakeholders is important. In the future stakeholder engagement, prior design (what: economy/environment/society, who, how) and provided? These are the questions always required and the issues CSR that must be assessed every year by all the persons concerned the system linking the discussions taken to management issues from senior management to the on-site staff. will be required. Leadership to realize it will also be necessary and full-scale actions are expected. Another task is disclosing the information of the consolidated Current State and Issues companies. Financial information is subjected to consolidated Taisei Group has made efforts to clarify the connection between settlement covering the entire Group. However, non-financial the business plans/targets and the efforts to address the CSR information is not entirely processed in the same way. This Governance Report issues in its report. It can be said that the report has been steadily problem is commonly seen among many companies, but is an improved and has become more comprehensible. However, it is important point in order to substantially achieve an integrated expected to take a further step toward the development of the report covering both financial and non-financial information. The next Medium-term Business Plan to examine the basic framework Taisei Group sets forth the philosophy and principles of conduct itself for actions to be taken as a management issue. for CSR initiatives, but large part of non-financial information I would like to point out only two points in the following. The disclosed is that of Taisei Corporation. Although the state of

current year’s report defines the high added value business to be actions of Group companies has been gradually disclosed for the Social Report pursued in TAISEI VISION 2020 by using a graph in which the past few years, aggregation and processing of individual vertical axis indicates possible market growth, and the horizontal information as a Group is yet to be adequately implemented. axis indicates possible profitability. As pointed out in last year’s Regarding the environment, Taisei Group has conducted

report, for showing the unique business of Taisei Group, the first coordination for CO2 emissions for the past several years. It has thing to do is to set social issues in a broader sense as the vertical developed a standardized manual for Group data aggregation , axis and the Company’s technologies and know-how as the proceeding with data collection/disclosure as a Group. In the horizontal axis. Then, the priorities in management strategy in other fields as well, steady progress in aggregation and

relation to the matrix of market growth and profitability should be processing of Group data, starting with the possible range, is Environmental Report considered. In determination of the important issues, materiality expected. should be set in terms of both the importance to stakeholders and In other respects, Group companies are requested to develop the importance affecting the management of Taisei Corporation. a policy for procurement, and educational initiatives are being The process of setting such materiality is yet implemented taken by distributing monitoring forms to the members of the separately. In addition, the substance of such importance does cooperating companies “Souyu-kai” formally. In addition, it is not go beyond the general issues of the construction industry. A recognized that activities to ensure awareness among overseas further step should be made in an examination together with a offices have begun through the International Operations Financial and Corporate DataFinancial review of strengths and weaknesses of Taisei Group. It is expected Headquarters. Continuing these steadfast efforts is important and Dat a/ CorporateFinancial Data to examine such matters in the process of development of the these are expected to contribute to risk management. next Medium-term Business Plan.

TAISEI ANNUAL REPORT 2016 122

019_0356501372808.indd 122 2016/08/10 11:54:34 019_0356501372808.indd 123 123 Financial and Corporate Data TAISEI ANNUAL REPORT2016 Code Subsidiaries offices Number of Head office Representative employees Number of Paid-in capital Established Name Corporate Data Outline oftheCompany Transfer Agent Stock Listings Distribution ofshares Number ofShareholders Number ofSharesIssued Number ofSharesAuthorized Status ofShares Share Information Overseas Network (31.08%) 364,060,000 shares Financial institutions North AfricaOffice(Egypt) Istanbul Office(Turkey) Middle EastOffice(Doha) PT. Indotaisei IndahDevelopment (Indonesia) PT. Jakarta Office

PP-Taisei IndonesiaConstruction(Jakarta) (AsofMarch 31,2016) Tokyo 103-8670,Japan 1-2-1, Yaesu, Chuo-ku, Mizuho Trust &Banking Co.,Ltd. 1801 Tokyo, Nagoya by theequity-method 43 affiliated companiesaccountedfor 29 consolidatedsubsidiaries, offices, 12overseasoffices Technology Center, 46domestic Head Office, 15BranchOffices, TEL. 81-3-3348-1111(mainnumber) Tokyo, 163-0606,JAPAN Nishi-Shinjuku 1-chome,Shinjuku-ku, Shinjuku CenterBuilding,25-1, President andChiefExecutiveOfficer Yoshiyuki Murata, 8,072 people(non-consolidated) ¥122.7 billion December 28,1917 TAISEI CORPORATION [Status accordingtoownership] (2.22%) 25,946,000 shares Securities companies

(As ofMarch 31,2016) (Indonesia) (7.66%) 89,749,000 shares companies Ordinary Kuala LumpurOffice(Malaysia) (Islamabad) Pakistan Office (including 1,370,964treasury stock) 99,451 1,171,268,860 2,200,000,000 (Colombo) Sri LankaOffice (New Delhi) India Office (29.86%) 349,762,000 shares Overseas corporations, etc. (29.18%) 341,749,000 shares Individuals, others Taisei MyanmarCo.,Ltd.(Yangon) Myanmar Office(Yangon) CSCEC-Taisei Construction, Ltd.(China) V Vinata InternationalJ/VCo.,Ltd.(Vietnam) ietn am Offices Note: Treasury stock (1,370,964shares) are excludedincalculatingthe Mitsubishi EstateCo., Ltd. The BankofNew York MellonSANV10 Meiji Yasuda Life InsuranceCompany (TrustNo.7) Account Japan Trustee Bank, Services Ltd. State StreetBank West Client-Treaty 505234 Taisei Employees’ShareholdingPlan Taisei Associates’ ShareholdingPlan (MizuhoBank, Ltd.Account) Retirement Benefit Trust inMizuho Trust (Trust Account) The Master Trust BankofJapan, Ltd. (Trust Account) Japan Trustee Bank, Services Ltd. Major Shareholders(Top 10): Domestic Network Taipei Office Philippine Ratio ofShares held. (Han Kobe Office Taisei (Thailand) Co.,Ltd. (Bangkok) oi/ Kyoto Hoch Name ofShareholder Nagoya Hokushinetsu (Niigata) iminh City)

Kyushu (Fukuoka) Kanto (Saitama) Chugoku (Hiroshima) Shikoku (Takamatsu) Business offices Overseas subsidiaries/Affiliatedcompanies Kansai (Osaka) (Unit:shares) Thousand Technology Center (Yokohama) Yokohama Shares held Chiba Number of 2131.04 1.13 1.22 12,133 1.28 13,260 14,238 1.37 15,023 1.97 2.20 15,990 3.36 23,002 25,703 5.74 39,289 7.06 67,151 82,537 Headqu Intern Tokyo Head Office Tohoku (Sendai) Sapporo ation Technology Center Branch Office Head Office arters al Operations (Shinj uku, Shares held Ratio of Ratio Tok (%) yo) 2016/08/10 11:54:34 TAISEI CORPORATION Organization Chart (As of April 1, 2016) TAISEI Snapshot TAISEI Secretarial Dept. ★

Auditing Dept. Engineering Planning Dept. Corporate Planning Dept. Engineering Div. Groups Corporate Planning Office Corporate Communication Dept. Project Management Dept. Information Planning Dept. Technology Strategy Dept. Personnel Dept. General Affairs Dept. Building Construction Dept. Building Construction Div. Technology Control Dept.

Business Administration Div. Legal Dept. Management Strategy Accounting Dept. Estimate Dept.

Finance Dept. Mechanical & Electrical Div. Mechanical & Electrical Dept.

Subcontractor Relations & Safety Administration Dept. Operations Planning Dept. Safety Administration Div. Environmental Administration Dept. Architectural Design Depts.

Planning & Administration Dept. Structural Engineering Depts. Engineering Div.(Integrated) Environmental Development Dept. ＆ Structural Planning Dept. Environment Div. Environmental Planning Dept. M&E Engineering Depts. Business Overview

Soil Remediation & Geo-Environmental Services Dept. Architecture M&E Planning Dept. Design Div. Planning & Design Dept. Technology Planning Dept. Technical Design Dept. Intellectual Property Dept. Construction Administration Dept. Building Engineering Research Institute Taisei Technology Center International Projects Dept. Civil Engineering Research Institute CSR Nuclear Facilities Dept. Building Technology Development Dept. Specific Project Dept. Civil Engineering Technology Development Dept. Civil Engineering Dept. Nuclear Facilities Planning Dept. Construction Engineering Dept.

President Nuclear Facilities Engineering Dept.Ⅰ Machinery Dept. Nuclear Facilities Div. Nuclear Facilities Engineering Dept. Ⅱ Civil Engineering Div. Design Dept. Nuclear Facilities Engineering Dept. Ⅲ Estimate Dept. Nuclear Facilities Construction Planning Dept. Project Analysis & Information Dept. Marketing & Sales Promotion Dept. Governance Report Next Generation Project Dept. Planning & Business Promotion Dept. Marketing & Sales Promotion Div. Coordination & Analysis Dept. Real Estate Information Dept. Procurement Dept.Ⅰ Life Cycle Care Promotion Dept. Procurement Dept.Ⅱ Customer Satisfaction Dept. Procurement Div. International Procurement Dept. Proposal & Solutions Div. Project Solutions Dept. Procurement Dept.Ⅲ Business Solutions Dept. Planning & Administration Dept. Social Report Marketing & Sales(Building Construction) Div.Ⅰ Marketing & Sales Depts.

Marketing & Sales(Building Construction) Div.Ⅱ Marketing & Sales Depts.

Marketing & Sales(Building Construction) Div.Ⅲ Marketing & Sales Depts. Administration Dept. Medical & Welfare Business Div. Marketing & Sales Depts. Safety Administration & Environmental Dept.

Marketing & Sales Div.(Integrated) Planning & Management Dept. Marketing & Sales Depts. Project Development Dept.Ⅰ Branch Building Construction Dept. Project Development Dept.Ⅱ Design Dept． Urban Development Div. PPP Projects Dept. Civil Engineering Dept. Environmental Report Urban Redevelopment Dept.Ⅰ Reconstruction Project Dept. Urban Redevelopment Dept.Ⅱ ＊(Civil Engineering) ＊ Tohoku Branch

Development Business Dept. International Business Strategy Dept. Marketing & Sales (Civil Engineering)Div. Marketing & Sales Depts. Risk Management Dept.

Marketing & Sales (West Japan) Div. Marketing & Sales Depts. Administration Dept. International Operations Headquarters Safety Administration & Environmental Dept. International Marketing & Business Development Div. Marketing & Business Development Depts. Building Construction & Engineering Dept. International Business Promotion Depts. Civil Engineering Dept. Sales Mindset / Skills Training Dept. Nuclear Facilities Projects Dept. Financial and Corporate DataFinancial Financial Dat a/ CorporateFinancial Data ★

Audit & Supervisory Board Member Audit & Supervisory Board Members' Dept.

TAISEI ANNUAL REPORT 2016 124

019_0356501372808.indd 124 2016/08/10 11:54:34 019_0356501372808.indd 125 125 Financial and Corporate Data TAISEI ANNUAL REPORT2016 TEL. 90-216-651-8160FAX. 90-216-651-8180 Bahar SitesiYani, 34662Altunizade-Uskudar Istanbul,TURKEY ISTANBUL OFFICE Barbaros Mah.SeyitAhmetDeresi Sok. TEL. 20-2-2378-3609FAX. 20-2-2380-1362 Cairo, ArabRepublicofEgypt NORTH AFRICAOFFICE25th,Rd.No.10,StationSqr., Maadi, TEL. 94-11-2446194FAX. 94-11-2446198 03, SriLanka SRI LANKAOFFICENo.177,3rd Floor, GalleRoad,Colombo TEL./FAX. 95-1-654-838 Pyay Road,61/2miles,HlaingTownship, Yangon, Myanmar MYANMAR OFFICE2ndFloor, Tokyo EnterpriseBuilding,No.32, TEL. 63-2-886-0670FAX. 63-2-886-0663 MakatiCity,Paseo deRoxas,SalcedoVillage, PHILIPPINES PHILIPPINE OFFICE23rd FloorEquitableBankTower, TEL. 84-8-3932-1759FAX. 84-8-3932-1758 S.R.VIETNAM 7th FL,171Vo ThiSauSt.,Ward7, District-3,HochiminhCity, COMMERCE ANDINDUSTRY, HochiminhCityBranchBuilding VIETNAM OFFICE(HochiminhCity)CHAMBEROF TEL. 84-4-3553-5032FAX. 84-4-3553-5002 S.R.VIETNAM 649 KimMaStreet, NgocKhanhWard, BaDinhDistrict,Hanoi, VIETNAM OFFICE(Hanoi)RoomNo.410,4thFloor, V-Tower, TEL. 92-51-2609655FAX. 92-51-2609656 Islamabad, Pakistan PAKISTAN OFFICE House#16,Street #13,Sector:F7/2, TEL. 91-124-466-9800FAX. 91-124-466-9888 Lines, Gurgaon.Haryana-122001,INDIA INDIA OFFICE4thFloor, SCO-56,OldJudicialComplex,Civil TEL. 62-21-840-3985FAX. 62-21-840-3986 No.57, PasarRebo,Jakarta13760,INDONESIA JAKARTA OFFICEPlazaPP5F, JLLetjendTBSimatupang, TEL. 60-3-2070-6155FAX. 60-3-2070-6010 Jalan SultanIsmail,50250KualaLumpur, MALAYSIA KUALA LUMPUROFFICE9-3,9thFloor, FaberImperialCourt, TEL. 974-4443-4174FAX. 974-4443-7176 47366 Bank Bldg.4thFloor, FacingQNBBldg,Doha-Qatar, POBOX AbdullahBinJassimSt.United MIDDLE EASTOFFICECorner TEL. 886-2-2578-5656FAX. 886-2-2578-8288 Taipei, Taiwan R.O.C. TAIPEI OFFICEZoneB,6F, No.16,Sec.4,Nan-JingE.Road, Overseas BusinessOffices Overseas Network (AsofAugust1,2016) TEL. 63-2-886-0670FAX. 63-2-886-0663 Makati City, PHILIPPINES Floor, EquitableBankTower, PaseodeRoxas,Salcedo Village, TAISEI PHILIPPINECONSTRUCTIONINCORPORATED 23rd TEL. 62-264-351-003FAX. 62-264-351-026 Karihurip, Cikampek,Karawan,JawaBarat,INDONESIA Kawasan IndustriIndotaisei,KotaBukitIndahSectorIA,BlockB PT. INDOTAISEI INDAHDEVELOPMENT(ChikanpeckOffice) TEL. 86-10-6843-1912 Haidian District,BEIJING,P.R.C. 8, Foreign Culture Creativity Park,19ChegongzhuangXiRoad, CSCEC-TAISEI CONSTRUCTION,LTD. 4thFloor, BuildingNo. TEL. 95-1-654-838 MYANMAR Building, No.32,PyayRoad,61/2miles,HlaingTownship, Yangon, TAISEI MYANMAR CO.,LTD. 2ndFloorTokyo Enterprise TEL. 84-4-3553-3839,-3840FAX. 84-4-3553-3788 Dist., Hanoi,S.R.VIETNAMS.R.VIETNAM 3F, SongDaBldg.,PhamHungRd,MyDinh1,NamTu Liem VINATA INTERNATIONAL J/VCO.,LTD. HeadOffice) (Vinata TEL. 66-2-207-0330(MAIN),03250329FAX. 66-2-207-0332 Bangkok 10400,THAILAND 1550 NewPetchburiRoad,KwaengMakkasan,KhetRachtavee, TAISEI (THAILAND)CO.,LTD. 9thFloor, ThanapoomTower, TEL. 62-21-841-6037FAX. 62-21-841-6038 13760, INDONESIA PP, JLLetjendTBSimatupang,No.57,PasarRebo,Jakarta PT.PP-TAISEI INDONESIACONSTRUCTION5thFloor, Plaza Overseas Subsidiaries/AffiliatedCompanies 2016/08/10 11:54:34 To Create a Vibrant Environment for All Members of Society In 1990, the Taisei Group formulated the Group philosophy of “To Create a Vibrant Environment for All Members of Society.” This is a philosophy to create safe, secure, and attractive spaces and high value in harmony with the nature, and

Taisei Spirit

Overall Principles of Overall Management Business Overview Conduct Perspective CSR

The Shareholders/ Clients/ Suppliers Environment/ Investors End-Users Employees Future Generations Governance Report

Photo: Masaaki Aihara

1 TAISEI ANNUAL REPORT 2016 TAISEITAISEI CORPORATE ANNUAL REPORT 2016 2

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［ Inquiries ］ TAISEI CORPORATION ANNUAL REPORT 2016 CSR Promotion Section, Corporate Communication Department, Corporate Planning Ofﬁce TAISEI 2016 REPORT ANNUAL

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