Top Interview

Innovating for a Wise Future

Q. First, please share with us your general overviewand evaluation of KKE in the 57th term.

Being able to work with wonderful customers as well as partners, we managed to post higher net sales and net income. I believe this is the result of KKE being recognized for its technology consulting services underpinned by engineering knowledge that contributes to designing a better society and systems for the next generation as we advocated, and its simulation technology based on the hybrid combination of human behavior and structures and natural phenomena.

KKE's business performance was driven by projects such as its analysis for disaster prevention and reduction, seismic retrofit for the medium- and long-term preservation of buildings, and development of structural calculation systems for major housing manufacturers. Having been given many work opportunities not only by private enterprises but also by central government offices, it was a fulfilling year in seeking to realize a better society and further boost the company's added value as a publicly-traded firm.

Q. What were the landmark events in the 57th term?

In September 2014, for the purpose of transferring the task of container stowage planning of Nippon Yusen K.K. (NYK) from Singapore to Kumamoto Prefecture, Japan, KKE established a stowage planning center for container shipping jointly with NYK in KKE's Kumamoto Office. In March 2015, the planning center launched operations. This center plays a central role in the stowage planning of NYK's containerships in the Asian region, in addition to cooperation with container terminals at calling ports. The center is attracting a great deal of attention as a model of regional revitalization as hiring competent individuals locally in Kumamoto Prefecture as staff.

Also in September 2014, Prometech Software, Inc.--which is KKE's partner company engaged in the development/marketing of particle-based simulation software for CAE "Particleworks" and fluid analysis consulting--was honored the Minister of Education, Culture, Sports, Science and Technology Award, the highest award at the Award for Academic Startups 2014 sponsored by the Japan Science and Technology Agency, and the University of Tokyo and KKE shared the commendation as the supporting university and supporting company, respectively. Use of this software is increasing not only in relation to disaster prevention and reduction such as in debris flow simulation, but also in a wide range of industries including automobiles, pharmaceuticals, cosmetics and food.Initiatives to stimulate usage by holding user's conference and forums together to share empirical knowledge with each other within the bounds of duty of confidentiality and seek interaction cutting across different industries reflect the ideal on which KKE was founded, that is, to serve as a company that bridges academia and industrial worlds. I believe it is a business model in which KKE's technology consulting efforts have been extremely successful, in terms of serving as a good adviser to the customer, finding issues together, and while providing assistance in reaching a solution, creating new added value based on the relationship of trust that has been built over a long period of time.

Furthermore, KKE invested in the "Kansai Science City ATR-Venture NVCC Investment Limited Partnership", which was established in February 2015 as a venture fund to commercialize seed technologies owned by t h e Advanced Telecommunications Research Institute International (ATR)-- the core research institute of Kansai Science City. KKE has continually introduced academic knowledge and provided engineering knowledge that contributes to the solution of social issues since its establishment as a professional design and engineering firm that bridges the academic and industrial worlds.

Looking ahead, I believe the probability of creation of high value-added businesses will further improve by bringing together ATR's seed technologies and KKE's wealth of experience in spreading technologies.

It goes without saying that it is important to generate sound profits given that KKE is a publicly-traded company; however, profit is merely one of the targets, and I believe KKE's existence value lies also in contributing to a better society through its technology consulting operations. The aforementioned three events are all regarded as examples in which KKE's stakeholders including customer companies, partner companies, local communities, society and employees have realized improvements in added value, and I hope to engage in more socially beneficial initiatives in the future based on such management stance.

Q. What are KKE's growth strategies from a medium- and long-term perspective?

As the business is growing smoothly at present, KKE set "Innovating for a Wise Future" as a Thought, a future vision and direction to be sought together with society. It reflects our desire to create a future society full of wisdom together with our stakeholders by utilizing our technologies based on engineering knowledge.

To this end, I believe the first and foremost assumption is that, as an organization, we must endeavor to consistently maintain quality at a high level that fulfills customers' requirements for products and services. We will continue to make company-wide efforts to create an organizational culture that takes an uncompromising stance with respect to quality.

Preparation for future business expansion will not be neglected either. Envisioning our business portfolio in three to five years time, we are working to create new value build based on engineering in seven new business agendas, namely: building a safe and secure society; realizing and implementing a sustainable society; evaluating policies and designing systems for the future; stimulating economy and industry/creating businesses; bringing about innovative changes in the energy market; taking the initiative in a wireless society; and helping the socially vulnerable.

In the context of global business investment, in January 2015, we established a local subsidiary for conducting marketing activities in Singapore. Our aim is to build a solid networks in the ASEAN region where further expansion of markets is expected in the future, and in July 2015, we held an inauguration ceremony for the subsidiary. We intend to continue putting efforts in human resources development to firmly establish technology marketing, and implementing "Design & Engineering" also in foreign countries by making the most of our experience in bringing about higher added value in Japan as well as our experience in resolving issues in Japan.
Also, the careful management of intellectual property, which is the source of KKE's added value, is becoming increasingly important. We intend to further enhance our preparedness on the legal front not only in terms of securing intellectual property but also in view of clarifying the scope of responsibility and making intellectual property open to the public.

Q. What is your message to the shareholders?

In the fiscal year ending June 30, 2016, I believe it will be important to steadily execute the work derived from good business opportunities that we have developed with customers, and achieve the business performance as planned. We will endeavor to establish businesses that will become the mainstay of new operations initiated by the Business Development Dept. and Marketing Unit.

As I believe human growth is of utmost importance, efforts will be made especially in the development of young, highly capable managers and engineers. Our recruitment activities undertaken in Singapore in June 2014 and February 2015 have led to the hiring of a total of 13 foreign nationals who graduated from top universities of science and technology in Southeast Asia. While the percentage of foreign employees is currently approximately 4%, we will continue to engage in overseas recruitment activities into the future, based on the belief that interaction among diverse employees will lead to the creation of new value. For the future, we hope to expand our networks by placing such foreign employees at the core in Southeast Asia, the Middle East and other regions, and in doing so, bring about further evolution of KKE as an enterprise.

I would like to ask all of our shareholders for their continued support.

September 2015

President, Shota Hattori