Konoike Transport : Group Integrated Report2021

Konoike Transport Co., Ltd.

Website: https://www.konoike.net/en/

KONOIKE GROUP videos: https://www.konoike.net/company/library/

Osaka Head Office

4-3-9 Fushimimachi, Chuo-ku, Osaka 541-0044, Japan Phone: [phone] (General Affairs Department)

Tokyo Head Office

6-10-1 Ginza, Chuo-ku, Tokyo 104-0061, Japan Phone: [phone] (General Affairs Department)

KONOIKE GROUP

Integrated Report 2021

Published December 2021

Securities Code : 9025

Brand Promise

Our Promise

Striving to Go Beyond Expectations

Going beyond the expectations of people and society, advancing lifestyles and creating new value. At KONOIKE, this has been our job for over 100 years.

We promise to continue to evolve, unwaveringly, over the next 100 years.

At all of our locations, from where we got our start, you can find a true and unmatched dedication.

People are trained, and grow in order to help other people. Our dedication is one of relationships, where we sometimes must be responsible for the lives of other individuals.

We challenge ourselves to achieve what society asks of us. Our dedication is one of innovation, where we sometimes change the lifestyles of our country.

Let us exceed expectations, break through our boundaries, and defy conventional wisdom.

Going beyond what you were yesterday is the first step towards becoming who you will be tomorrow.

Corporate Philosophy

Our Mission

We pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust

Treating people as important, and being loved by the people. We know the precious value of these things. Customers, consumers, employees, families, shareholders, and investors.

We work to build true bonds by always thinking of these important people to whom we are connected. These bonds enable us to truly push ourselves, surpassing the expectations of both individuals and society. Let us bring innovation to the foundations of society, and create new value for people's lives.

Brand Promise

Our

Promise

KONOIKE

Brand

Corporate Philosophy

Our

Mission

Our

Goals

Principle

Our

Value

Striving to Go

Beyond

Expectations

We pursue innovation at the foundations

of our society that creates unique value,

driven by respect for humanity and

relationships of trust

Management Indicators for

Accomplishing Our Mission

Safety | We take responsibility for life Passion | We are dedicated to quality Growth | We go further than yesterday

C O N T E N T S			Future and Strategy			International General Headquarters	33
		TOP MESSAGE			Airport Division	35
			Message From the President	13		Environmental & Engineering Division	37
			2030 Vision and Medium-Term Management Plan	15		Business Development Division	39
Our Promise and Our Mission	1					MESSAGE
			Outcomes of Strategies			Message From the Chief International Officer and
						Chief Technology Innovation Officer	41
			KONOIKE Group Business Strategies	21		TOPICS
Who We Are			MESSAGE
					Konoike Institute of Technology Innovation Center	44
			Message From the Chief Sales Officer
More Than 140 Years of Respecting Humanity and		22
Building Relationships of Trust	3		Steel Division	23
		Foundation of Strategy
The KONOIKE Group Strengths That Create Value	7		Food Division	25
				KONOIKE Group and Sustainability	45
Value Creation Process	9
	Food Products Division	27
				MESSAGE
The KONOIKE Group Business Segment Structure	11		Life Related Division	29		Message From the Chief Administrative Officer	46
			Medical Division	31

G Governance		Data Section
Management Structure	47	Financial Highlights	77
Corporate Governance	49	Analysis of Business Status/Corporate
Sustainability Implementation Structure	55	Performance, Etc.	79
S Social		Consolidated Financial Statements	81
Safety and Quality	59	ESG Data	85
Human Resources	63	Company Data	86
Shareholders/Investors	69
Society	70
E Environment
Environment	71

Period

FY 3/2021 (April 1, 2020 to March 31, 2021)

Certain information includes activities conducted during FY 3/2022.

Scope

Konoike Transport Co., Ltd. and all consolidated subsidiaries (49 companies).

• Any activities or data outside the scope noted are clearly indicated.

Referenced Guidelines

International Integrated Reporting Framework for the International Integrated Reporting Council (IIRC)

GRI Sustainability Reporting Standards of the Global Reporting Initiative (GRI)

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WHO WE ARE

More Than 140 Years of Respecting

Humanity and Building Relationships of Trust

The Birth of Our Founder, Chujiro Konoike,

Origin of the KONOIKE Spirit

The Founding of Konoike Transport

Respect for Humanity and Relationships of Trust in Our DNA

In 1880, Chujiro's company began a worker placement business and transport business under the name, Konoike Gumi. This is the year that we recognize as the founding of

the modern Konoike Transport Co., Ltd. In Denpo, which is located at the mouth of the Yodogawa River, floods

have occurred frequently since ancient times. But Chujiro demonstrated his natural leadership ability, mobilizing great numbers of people for reconstruction work and cargo handling at various factories in the aftermath. In anticipation of the expansion of factories in the area, he established a lumberyard and engaged in the lumber business. In this and other ways, Chujiro demonstrated his entrepreneurial spirit from a young age. In 1900, Konoike took on cargo

handling and transportation work at Japan's first privately	Group Photo Taken on June 18, 1921
owned steel mill, which had been established in Denpo the
previous year with the aim of producing steel domestically.
This was the very beginning of the on-site contract
operations that we continue to this day.

ARE WE WHO

Our founder, Chujiro Konoike, was born in 1852 in Kitadenpo, Nishinari County, Osaka Prefecture (currently Denpo 4-chome,Konohana-ku, Osaka City). Located near the mouth of the old Nakatsugawa River in the vicinity of the Yodogawa River in Osaka,

Denpo was the birthplace of Japan's barrel transport ship business in the 17th century. Many ships,

including large Japanese junks, came and went in the area, making it a busy gateway to open water transportation. In 1871, Chujiro took over his father's wholesale shipping business from his father, Toshichi.

In parallel with the shipping business, which had begun to face difficulties keeping up with the new

wave of modernization, Chujiro began a so-called

worker placement business. Here, he provided

workers to civil engineering and construction works, as well as to the manufacturing industries.

Map of the Denpo Area During the Meiji Era

Work on the National Directed Shin-Yodogawa River Excavation Project

The Yodogawa River basin had long been an important political, economic, and

cultural center. But the river itself suffered tremendous damage from repeated flooding and inundation. Therefore, foreign ships gradually moved away from the

port of Osaka, which became inundated with large amounts of earth and sand

after every major flood. However, although work had been attempted sporadically

to repair the Yodogawa River, these efforts were never very effective and the

river continued to suffer from massive flooding. Therefore, the Meiji government

decided to implement an improvement project on the Yodogawa River under the direct control of the government. One of the greatest challenges was where to procure materials and secure a large work force.

Chujiro Konoike was the one selected for the task, receiving a contract to construct a 16 kilometer section. He invested a large amount of labor, based on his personal connections and trust built up over many years, spending the five-year period from

1898 to 1903 to complete construction on the Shin-Yodogawa River. The areas

previously plagued by flooding from the old Yodogawa River in central Osaka

Tenmabashi Bridge on the old Yodogawa River washed away in the Great Flood of 1885

(Image courtesy of the Yodogawa River Office, Ministry

of Land, Infrastructure, Transport and Tourism)

Yodogawa River Improvement Work

(Image courtesy of the Yodogawa River Office, Ministry of

Land, Infrastructure, Transport and Tourism)

Portrait of Mr. Chujiro Konoike (Digital Reproduction)

included the areas of Tenmabashi and Yodogawabashi. It is not exaggeration to

say that this project laid the foundation for the prosperity of central Osaka in the modern era following the Meiji era.

In 1917, when the Yodogawa River basin was severely flooded due to a series of

typhoons, the Osaka prefectural government launched a reconstruction project.

Konoike worked with the Army Corps of Engineers and the Ministry of Home

Affairs in completing the work. At the time, Chujiro was already 65 years old, but with an indomitable spirit and unparalleled leadership skills, he inspired his subordinates and surprised everyone by completing the work the following year, with even more vigor than shown by the army. As a result, this KONOIKE Spirit became widely known for working with integrity and honesty, never giving up until the work is done.

Shin-Osaka Station

		-Yodogawa	River
Shin
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			iver	(Og
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Port of Osaka

©2021 Google - Image ©2021 Terra Metrics

Overall View of the Yodogawa River Improvement Work

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WHO WE ARE

Businesses That Have Blossomed

Environmental & Engineering Business

		h
		t
	o	w
G	r

s

E

x

p

a

nsion

in a Variety of Fields, Responding to the Needs of Society

May 2020 of this year marked the 140th anniversary of the KONOIKE Group, founded in 1880 by Chujiro Konoike as a worker placement and transport business. From our earliest days, we expanded from the transport

In 2018, the business was split off from Steel Division based on the technical capabilities and trust cultivated in the steel business. This business now provides engineering for customers across a wide range of industries, including major steel manufacturers and parts manufacturers. The business provides integrated solutions encompassing the manufacturing and processing of various plant equipment and facilities in our own plants, followed by installation and maintenance work. In addition, the business is involved in recycling projects, such as the Perfect Recycling System that recycles industrial waste containing iron, zinc, and carbon

Environmental & Engineering

					e	r
			a	t
		e
G	r

2018

	s
r
e
v
O

e

a

s

B

u

s

i

n

e

s

ARE WE WHO

business into a variety of other industries. As we answered customer requests, we expanded beyond transport, leveraging the expertise we gained along the way to enter new industries. Our Brand Promise, Striving to Go Beyond Expectations, is what has supported the development of the KONOIKE Group. This is the promise that links our past with our future.

generated in steel mills without producing secondary waste.

2013

IPO on the First Section of the Tokyo Stock Exchange

Airport-Related Business

Our first real foray into the airport business was providing a range of

services in preparation for the opening of Kansai International Airport in 1994. KONOIKE integrated services included shipping, landing and loading goods, land transportation, heavy cargo transport, machinery installation, maintenance, and more that became the foundation of our airport-related business. After the opening of the airport, we received orders for the handling of import and export goods, aircraft cleanup services, etc., expanding the scope of our business. In 2010, Japan

Airport-

Related

Medical-

Medical-Related Business

As part of our efforts to develop business in a new industry, we

Airlines transferred three ground handling companies to the KONOIKE Group. With the new additions, KONOIKE began offering customer

service, aircraft operations management, and other services. Today, we serve seven major airports in Japan, including Kansai and Haneda.

1991

1994

Related

launched a medical business division, first providing sterilization services in hospitals. Subsequently, we focused on efficiency issues

related to managing goods within hospitals. Leveraging our expertise in transportation, we began providing services for in-hospital logistics

Life-Related Business

1984

Expansion Into Singapore

systems, which grew steadily over time. In the year 2000, we established Konoike Medical Co., Ltd. Since then, we have continued

to expand by taking over the businesses of other companies and

establishing new locations. We are diversifying even further, aiming to create a comprehensive medical SCM service that includes

Our Life-Related Division, which supports general living, began when we received an order from a gas company for on-site transport and barge transport

Life-

Food-

logistics for medical supplies, instruments, and more.

of coal, coke, ammonium sulfate, and other materials. We provided support through integrated transport operations, and received contracts to

Related

1951

Related	Food-Related Business

conduct warehouse operations in response to customer requests based on our experience. Subsequently, we began our own warehouse operations. Today, we offer services across a wide

range of industries, including apparel, general household goods, and more. As we diversified

from transport to warehouse operations to facility maintenance, we have expanded as a multifaceted provider gaining the support of a broad range of customers. In that time, this business has grown to become a KONOIKE Group core business.

1880 Founding

1939

1900 Steel-

Related

In 1951, we received an order to provide on-site transportation services for a

sugar refining manufacturer. Since that first contract, we have expanded our

food-related business domain steadily over the years, including orders for dairy-related services during the summer off-season as we grew our fertilizer- related business in Tokyo, on-site transportation services for beverage manufacturers as we expanded into the greater Tokyo area, and more. Today, we have leveraged our expertise in maintaining food freshness and quality to perform contract services for temperature-controlled logistics, the receiving and preparation of raw materials, packaging, and a wide variety of other

operations. At the same time, we have expanded into other areas that include factory equipment inspections, manufacturing line efficiency consulting, and

waste processing.

Steel-Related Business

Corporate Philosophy

We pursue innovation at the foundations of our society that creates unique value, driven by respect for humanity and relationships of trust

KONOIKE became widely known for a spirit that supports the foundations of society based on respect for humanity and building relationships of trust through worker placement and transport businesses. These values have become part of the DNA of the KONOIKE Group.

In 1900, the first-ever privately owned steel foundry was established in Denpo, Osaka, the same district as the founding of the KONOIKE Group. Here, Chujiro Konoike received an

order to load and unload raw materials, provide on-site transport, and perform other work that became the foundation of our steel business. With the subsequent development of the steel industry, we expanded our business to include the installation of machinery, special transportation of heavy items, and machine tools, in addition to unloading and transportation, building a broader base of factory construction work. Today, our Steel Division provides a wide

range of services. These services include logistics-relatedoperations both on-siteand off-site, off-line operations and production refining processes related to blast furnace and converter steel-making, continuous casting, refining, and other processes. The division also offers

engineering services and conducts by-product recycling operations.

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WHO WE ARE

The KONOIKE Group Strengths That Create Value

(FY 3/2021)

The KONOIKE Group has achieved sustainable growth by improving both financial and non-financial capital. In this section, we discuss two types of capital (financial and non-financial) subdivided into the six capitals of financial, services, intellectual, human, social and relationship, and natural. We also describe how the KONOIKE Group has used these capitals to grow.

By strengthening these six capitals further, we continue to strive to grow our corporate value.

WE WHO

Financial Capital

While we are committed to creating

added value and contributing to

our customers, we also strive for capital efficiency in our financial management. As part of this effort,

we are working to follow stricter

investment standards and pursue our profit improvement plan.

Service Capital

Since our founding in 1880, the

KONOIKE Group has endeavored to create new value. Today, we operate branch and sales offices throughout Japan. We have also expanded our business overseas, beginning with Singapore in 1984.

Intellectual Capital

We share the expertise we have

developed over the 141 years since

our founding across business boundaries. In particular, we are

committed to ensuring safety and maintaining quality. We strive to

improve the services we provide by combining our expertise with new technologies.

Human Capital

To embody our corporate philosophy of respect for humanity and relationships of trust, we

not only respect human rights,

but also emphasize investments in education and training. As a

company with global operations,

we also aim to create a corporate culture conducive to diversity.

Social and Relationship Capital

We have built relationships of trust

with our stakeholders through our business activities across a variety

of industries and sectors, and we will continue striving to exceed expectations.

Natural Capital

As a company engaged in the transport business, we address global environmental issues by

striving to conserve resources and energy. We will continue to make

more effective use of natural capital

by introducing technologies and improving performance.

ARE

Total assets	Number of locations by region
¥258,700million	(as of October 1, 2021)
Domestic locations
Cash and cash equivalents,	196
end of period
¥62,200million	Asia
27
	North and Central America
	5
	Capital investment:
	¥13,400million

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Konoike Institute of Technology research expenses

¥110million

Konoike Grand Prize*

Awarded to a total of

131

work sites and employees

• The Konoike Grand Prize is an internal system for recognizing work sites and employees who have made outstanding efforts to improve the safety, quality, performance, and productivity of the KONOIKE Group.

Employees		Net sales by business	CO2 emissions*
(as of September 30, 2021)					170,636t-CO2
Consolidated		Airport	Environmental &
		Division	Engineering Division
24,000				Steel Division	Electricity consumption*
	International			94,700thousand kWh
		General
Non-consolidated		Headquarters
			Food Division
		Medical
15,000		Division
	Life Related		Food Products
	Division		Division	* Total for the non-consolidated company and
				domestic affiliates
Human resources training		Steel Division		Medical Division
¥47,061million ¥19,280million
expenses (non-consolidated)
¥380million		Food Division		International General Headquarters
¥52,472million¥56,177million
		Food Products Division		Airport Division
	¥45,486million¥9,158million
		Life Related Division		Environmental & Engineering Division

¥45,260million¥17,451million

Business partners

5,000companies

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