March 27, 2014 Kaneko's regular meeting

[Moderator]

Thank you for waiting. The 93rd regular meeting will now begin.

[President Kaneko]

Thank you for gathering your busy place.
Today, we have about 5 topics.

[Business status (February 2014)]

Please see document 1.

Toll revenue in February was 33,912 million yen, a decrease of 3.8% from the same month of the previous year, and the average number of traffic per day was 1,692,000 units, a decrease of 4.6% from the same month of the previous year. ..
Due to the record heavy snowfall in the Kanto and Koshin regions, the Tomei Expressway and the Chuo Expressway Expressway were closed for two weeks, causing trouble for a long period of time. ..

The following is the situation of the construction.

For the progress of the 2014 fiscal year scheduled to open road, we are promoting the business in collaboration with the Ministry of Land, Infrastructure and Transport Ken-O Road of Sagamiharaaikawa IC～Takaosan IC For 15km, the aim of opening of June this year, the takeover from the Ministry of Land, Infrastructure and Transport It received, sequentially, we are promoting the pavement construction and construction equipment.
In addition, SamukawakitaInterchange IC For ~ Ebina JCT4km, current, along with the advance of the construction work in some of the bridges, we started to prepare, such as paving and various equipment.

Shin-Tomei Expressway of Hamamatsu-Inasa from junction Toyota-higashi 55km between the junction, but there are some challenges, continue to the understanding and cooperation of local residents, will continue to work towards the opening goal of the 2014 fiscal year.
Maizuru-Wakasa Expressway of Obama IC from Tsuruga JCT 39Km between is, will continue to work towards the earliest possible opening day of the 2014 fiscal year.

Next is the usage status of ETC. The average daily usage rate in February was 91.6%.

Next is the situation of the service area.
Sales in the service area in February were 11,171 million yen, a decrease of 3.9% year-on-year.
Sales of the Food and Beverage Sales Division were down 11.6% year-on-year. We believe that this is due to a significant decrease in sales on major routes such as Tomei Shin-Tomei Expressway and Chuo Expressway due to the heavy snowfall in the Kanto and Koshin regions.
Sales in the “Gasoline Division” did not increase significantly due to the heavy snowfall, but the gasoline unit price increased by ¥ 7, resulting in an increase of 14.0% year-on-year.

[3-Year Plan for Improving Safety]

First, we would like to talk about the new business execution system that will shift from April. Please see Document 2.

On November 1, last year, we announced that we will review our business execution system by the first quarter of fiscal 2014. We have established an organizational reform promotion committee chaired by me as the chairperson, and have been proceeding with detailed examination of the organizational structure and other matters. At this time, we are aiming to more steadily implement the “3-Year Plan for Improving Safety”. , We have decided to review the business execution system from April of this year.

Regarding the contents of the review, the first point is a business related to the construction and maintenance of Expressway order to quickly and accurately solve on-site issues centered on safety, and to clarify the instruction and command system and authority and responsibility. among the features that conservation and service business headquarters and construction Division, which is responsible has currently, the business executive functions, such as business planning and executive management, a regional base Regional Head Office aggregate to, Regional Head Office was the main shaft of the organizational structure will do.

The head office is responsible for formulating basic management policies and plans / regulations, including safety, screening and adjustment to prevent regional differences in service levels, support for Regional Head Office, and external coordination with countries. To facilitate these activities, the Construction Business Headquarters and the Environment and Technology Department will be integrated into the Technology and Construction Headquarters, and the Maintenance and Service Business Headquarters will become the Maintenance Planning Headquarters.

Regarding the head office organization related to the Expressway business, we initially thought about integrating the organizations related to the construction business and the conservation business and reorganizing it into the “Expressway Department”, but after that, we have a large framework for long-term conservation plans, etc. It became clear that in order to ensure smooth introduction and implementation, it is necessary to build a system for planning, guidance and support company-wide at the head office along with strengthening the on-site system.

Furthermore, with construction projects such as the Tokyo Outer Ring Road still to be completed in the near future, integrating the headquarters' construction and maintenance organizations will result in a fairly large organization, which is why we decided to make this announcement in this manner. Furthermore, as further strengthening cooperation between construction and maintenance is essential to improving safety, we will strengthen communication regarding safety through measures such as holding joint construction and maintenance meetings.

Second, in order to strengthen our management capabilities for operations ranging from inspection to maintenance and repair, we will establish an Environmental and Technology Planning Department, a Technology Management Department, and a Structural Technology and Support Department within the Technology and Construction Headquarters, thereby strengthening our system for improving our technical capabilities.
The Environmental and Technology Planning Department develops technology and human resources to improve inspections, the Technology Management Department formulates technical standards that take maintenance into consideration, and the Structural Technology and Support Department uses its specialized knowledge to provide technical support for aging deterioration and potential risks, and we work to strengthen the management capabilities of the entire organization to implement the PDCA cycle.

Third, while we have always focused on thorough compliance, in line with this review of our business execution structure, we will appoint a new Chief Compliance Officer (CCO) to further strengthen and enhance our compliance promotion system across the Group. Furthermore, we will integrate the Business Creation Department, which is responsible for research and development of new businesses, into the Related Business Division, with the aim of further strengthening collaboration between revenue-generating divisions and more efficient business execution.

On page 2 of Document 2, we have provided Organization Chart of the organizational structure I have just explained. Also, on page 3, we have attached a reference document with additional functions. In Organization Chart, we have clearly defined the lines of business execution and the staff who review and support these lines while clearly indicating company-wide policies, making the chain of command clear.

Furthermore, in order to ensure the steady progress of the "3-Year Plan for Improving Safety," we have been increasing the number of maintenance personnel at maintenance and service centers and other locations by 90 people. As of January 1, this will increase to 101 people, and by July of this year, we will have approximately 130 people, completing the strengthening of our operations, from inspections to maintenance and repairs.

Additionally, the new Member of the Board of Directors and Managing Officer structure corresponding to the newly announced business execution structure is shown on page 4 of Document 2. Under the new execution structure, Member of the Board of Directors Senior Managing Officer Takahisa Takamatsu will be responsible for Tokyo Director General and in charge of the Tokyo Olympic and Paralympic Games.

The Tokyo Director General will be tasked with vigorously promoting large-scale projects such as the Tokyo Outer Circular Route, which are technically advanced and require coordination across multiple sectors. Furthermore, the Tokyo Regional Head Office, which is an important business base, needs to further strengthen its governance locally. Furthermore, responding to the 2020 Tokyo Olympic and Paralympic Games is an issue not just for a single Regional Head Office but for the entire company. Therefore, we have appointed one of our Member of the Board of Directors Senior Managing Officer to be stationed in Tokyo, the host city, to ensure that we can respond promptly and appropriately.

Under the new business execution structure I have just explained, we will continue to fulfill the missions assigned to the Group, including 3-Year Plan for Improving Safety.

Another initiative in the “3-Year Plan for Improving Safety” is the start of technological development that detects abnormalities by image processing while traveling at high speed in a tunnel. Please see Document 3.
This technology automatically detects anomalies based on the difference between the image taken by a high-speed camera on the wall surface in the tunnel and the image taken last time. Since only a small and inexpensive high-speed camera is used, it can be mounted on our vehicles that are patrolling on a daily basis. It will be possible to discover the progress of the crack.

This time, we are collaborating with Professor Masatoshi Ishikawa of the University of Tokyo who is researching and developing high-speed image processing technology. Professor Ishikawa is one of Japan's leading researchers in high-speed image processing, including the development of robots that always beat rock-paper-scissors. Through the experiments so far, we have succeeded in obtaining clear images even at 100 km / h, and in the future, we will improve the accuracy of the equipment and photograph various damage cases to improve the judgment accuracy.

We introduced that we started joint research on inspection technology using a "laser" at a regular conference last December, but we are also proceeding with research toward practical application.
We believe that the introduction and mechanization of such ICT technologies in addition to conventional inspections can be expected to improve the efficiency and sophistication of maintenance and management, which will lead to the strengthening of management from inspection to maintenance.

[World's first successful visualization of brain activity while driving on a Expressway]

See Appendix 4.

We conducted an experiment on the Shin-Tomei Expwy before opening in collaboration with Professor Suda Yoshihiro of the Institute of Industrial Science, University of Tokyo, and Brain School Co., Ltd. We have succeeded in visualizing the brain activity of a driver of a vehicle traveling on a Expressway by mounting it on a vehicle.

With this technology, it is possible to objectively express how the driver feels about external stimuli. By understanding the driver's near-miss situation, discomfort, and other factors, it is possible to understand the factors that cause traffic accidents and the effects of traffic safety measures. Utilizing this technology, for example, on the second page of the document, we will introduce more effective "traffic safety measures" such as speed control and speed recovery enlightenment by flashing lights installed in Shin-Tomei Expressway Tomei and Tomei. It is possible to objectively evaluate "congestion countermeasures", signs and information boards that are easy to see and understand, and it is possible to implement more effective measures.

Based on the results of this, we will set up a committee with experts, and from the viewpoint of brain science, we will proceed with research aiming at safe and easy to Expressway.

[Special measures that can be transferred to the extraordinary quotation consultation method in the event of a bad bid]

See Appendix 5.

In the construction work ordered by our company these days, as a result of competitive bidding, the lowest bid price exceeds the contract limit price and the successful bidder is not determined, or there is no bid participant even if competitive bidding is performed. Bad bids ”are increasing.
As shown in the table in Appendix 5, the number of unsuccessful bids is increasing year by year, with 71 cases as of the end of January this year, which is about 2.5 times that of FY2010. In addition, the rate of bad bids is about 25%, more than three times the fiscal 2010 level.

If the bid fails, we will revisit the content of the announcement and the design documents and then repeat the bidding procedure.However, in the case of a general competitive bidding, it may take several months before the re-bidding procedure, or due to construction work. In some cases, even if the tender procedure is performed again, there are cases where the tender will be unsuccessful, and there is concern that it may hinder business execution.

In order to deal with such a situation, as a special measure, if the initial bid is unsuccessful, replace the "contract limit price" with the "contract target price" and submit the quotation from a specific party such as the lowest price presenter. Even if the estimated price exceeds the contract price, after confirming and discussing items that exceed the design unit price in the estimated price, we will introduce a new bidding contract system that allows you to contract at the price after the consultation. Did.

In particular, we will apply it to construction work that is subject to the 3-Year Plan for Improving Safety. We hope that this measure will alleviate bad bids and ensure proper business execution.

[3rd Highway Gourmet Machinaka large set! ]

See Appendix 6.

The "Highway Gourmet Festival," which was held for the first time in "machinaka" other than the Expressway in May 2011, was well received this year, two days from May 17th (Sat) and 18th (Sun). It will be held at Hisaya Odori Park for the first time in a year.

This event is a gourmet meal where customers who come to the venue enjoy delicious dishes such as snacks and sweets that are popular in Tokai area service areas and parking areas, and vote to decide "No. 1 delicious food". It is a festival.
A large group of local idols from the Tokai area will gather at the venue to make the venue even more exciting as a "Highway Gourmet Support Team." Furthermore, with the cooperation of local governments along the Expressway we are planning an attractive event such as transmitting information on local tourist attractions and local products.

In addition, NEXCO CENTRAL 's original characters will make their event debut. The name of the character is "Michimaru-kun". In order to familiarize our customers and local residents with the "hospitality", "comfort", and "enjoyment" of Expressway spaces such as service areas and parking areas, we have decided to make this "Michimaru-kun" familiar. Was produced. "Michimaru-kun" will welcome the customers who visit us, aiming to be a character loved by everyone.
We are waiting for customers at various events, so please come visit with your family and friends and enjoy the highway Kurume.

These are the topics we have prepared today.

[Moderator]

Now, we are ready to receive your questions.

[Reporter]

Please tell us what kind of construction is in a bad condition regarding special measures that can be transferred to the extraordinary quotation consultation method in the case of a bad condition.

[ Kaneko President ]

It is caused by civil engineering work such as substructure of the bridge.

[Employees]

There were 71 auction failures in 2013. Of these, 24 were civil engineering, 9 were road repairs, and 8 were protective work. The tenders will be unsuccessful, for example, for concrete stripping work for bridges on crossroads or railways, road repair work that contributes to safety, and work that has time constraints or a severe construction environment.

[Reporter]

Are there any concerns about the inability to secure the safety of Expressway due to bad bids, or is there any impact on the opening time?

[ Kaneko President ]

We will carry out a considerable amount of construction by fiscal 2015 to steadily implement the 3-Year Plan for Improving Safety. There should be no cases in which a construction contract cannot be ordered due to a bad bid and the project is delayed for a long time. This measure is a special measure to prevent delays in the progress of such projects. At this stage, there will be no delay in opening due to bad bids, but I think it is important to respond early and early.

[Reporter]

Is there a possibility that this special measure will increase the initial budget? Are you estimating how much the cost will increase each year?

[President Kaneko]

It is difficult to estimate because there is a partner. I think that it will have a big impact if the opening time is delayed without the special measures this time.

[Reporter]

NEXCO WEST has been implementing similar measures since last year, and I think the bad bid has been occurring for quite some time. Please tell us why you will implement this special measure at this time.

[President Kaneko]

There are factors such as the construction conditions and the effects of the Great East Japan Earthquake, and each company will make its own decisions. At our company, we decided to introduce it this time because 25%, which is about a quarter of the number of construction bids executed, is not working.

[Employees]

Out of 71 cases of bad bids, 46 cases are increasing, with no bidders. Since it takes several months to re-order, we would like to make the special measures of this time into a rule to shorten the time until the start of construction and to progress the business.
In addition, since 2008, we have introduced a public offering type quotation consultation method. It is a system in which, in times when there were a lot of bad tenders, the contract limit price was replaced with the contract reference price in limited construction, and even if the contract reference price was exceeded, the contract price was confirmed and examined before the contract was concluded.
The special measures taken this time are to expand the scope of works to be included in the 3-Year Plan for Improving Safety and to those in which a bad bid is expected, and take into account that a contract can be made with a specific company if the bid fails. If the bid is not successful, the procedure for re-bid will not be performed, so the time to select a contract partner can be considerably shortened.

[Reporter]

Is there any place other than NEXCO WEST that is already implementing such efforts?

[Employees]

I don't know about other companies.

[Reporter]

Regarding the business execution system aimed at improving safety, it was announced in November that the system will be revised. Please tell us what has changed.

[President Kaneko]

The organizational structure announced this time is partly revised from the one announced in November last year. As of November, I was thinking of strengthening communication between construction and maintenance, and I was thinking of integrating the construction and maintenance departments into one, called the Expressway Department. However, although a large framework such as a long-term conservation plan has been clarified, and there are few construction projects, there are large construction projects such as the outer ring roads of Tokyo and the Shin-Tomei Expressway In consideration of this, we decided to divide the construction department and maintenance department.
Another change from November is the pursuit of efficiency by unifying the revenue divisions of the related business headquarters and the business creation division, which have jurisdiction over service areas.

[Moderator]

It seems that the question has been interrupted, so this will end the regular press conference.