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Top Message

Guided by our mission of solvingsocial problems
Q. SHO-BOND reached its 65th anniversary on June 4,
2023. What are the main elements of the DNA that havedefined SHO-BOND’s operations since its inception?

65 years of growth as a specialist
in infrastructure maintenance
We will steadfastly commit ourselves toan affluent and safe society worldwide
Tatsuya Kishimoto

19

SHO-BOND 2023 Integrated Report

A. Since the establishment of our company in 1958 by
Akira Ueda, we have grown as an organization
specializing in infrastructure maintenance. We are aconstruction company that does not build new
structures. Mr. Ueda was the company’s chairman when
I joined SHO-BOND. I was awed by his powerfulleadership and charisma emanating from his behavior.
Now I am in a position to lead the company aspresident. When I look back on the journey of growth
and think about the sentiments of our founder, I cansense a lot from his motto, “Change in itself is progress,”which he frequently said since the early days of ourcompany. As the world and markets change, SHO-BOND,
which specializes in repair and reinforcement without
new construction work, has been a maverick of theconstruction industry, maintaining its unique style. At
the time, we voluntarily surveyed and inspected bridges
for local governments, reporting on their deterioration
status and providing advice on necessary maintenancework. Governments and other organizations greatly
appreciated our ability to create proposals from theirperspectives, which boosted our growth. On the other
hand, we also encountered challenging situations, suchas unfavorable changes to bidding rules, which may
cause us unable to take on new projects. We must
survive and grow even amid such dramatic changes.
I believe that “change in itself is progress” embodies theunique beliefs of Mr. Ueda who has successfully
overcome many difficulties. Lacking the ability to change
or keenly adhering to the past will make us fall behind.
Now that infrastructure maintenance is in the spotlight,
we must constantly take on new challenges without
overconfidence. Bearing these in mind, this is how I am
leading the management of the Group.
Everyone in our group has a resolute commitment to

the DNA originated from Mr. Ueda of never losing in theinfrastructure repair and reinforcement market. I believe
this spirit is what makes us SHO-BOND. We know morethan our customers about the degradation of thestructures they manage. We also have a comprehensive
maintenance system that makes us a one-stop source ofservices in this sector. Leveraging these resources, we will
respond to all requests from our customers. The
dedication of our people to earning more and more trustfrom customers is the most valuable strength of the
SHO-BOND Group. >P07
Q. What do you think Mr. Ueda would think of theorganization that SHO-BOND has become today?
A. I think he would be happy to see how well we aredoing. I also think he would check to be certain we aremanaging operations properly. He would want toconfirm that we have been taking good care of longtime customers and doing a good job with small
projects because the original characteristics of ourgroup lie in steady sales activities that are close toclients and the accumulation of small-scale construction
projects. Nowadays, our sales and earnings are
increasing steadily mainly because of the large volume
of expressway orders. Conversely, I’m concerned that
our focus on securing large orders creates the risk oflosing relationships with other long-term customers. As
we make changes to cope with shifts in the operating
environment, we must retain our commitment to thedefining characteristics of our company. As the leader in
the infrastructure maintenance field, our mission is tocontinue expanding our operations to cover a broader
range of customers such as local governments and theprivate sectors at home, and even foreign markets,
where the potential needs for structure maintenanceremain to be met. I intend to develop our business witha sense of mission for the benefit of administrators andusers in need, not just in pursuit of profit.
Local governments are responsible for about 80% ofJapan’s infrastructure. As Japan’s population declines,
these governments are having difficulty hiring people

President and Representative Director

20About Us

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and securing sufficient funds for infrastructure
maintenance. As one way to help deal with thisproblem of limited human and monetary resources at
local governments, we recently developed the SBLN
GEL. Applying this gel-like substance, which contains
lithium nitrite, to concrete slows down the rusting ofrebar within the concrete. This innovation is highly
anticipated by infrastructure managers because no
special skills are needed to apply the SBLN GEL. >P36
Infrastructure degrades in many ways. Some repairs
require a major project and others can be completed
quickly and inexpensively. If earnings are the only goal,
the best policy is to take on primarily large repair andreinforcement projects. However, we should be theoptimal maintenance provider who constantly develops
products and makes proposals from the customer’s
perspective. To pass on this thinking, skills, and thefulfillment of work to younger employees, we havetraining programs led by experienced personnel.

Strong performance in Japan.
Aiming to speed up growth overseas during
the next Medium-term Business Plan
Q. FY2023 was the second year of the current Mediumterm Business Plan. How do you assess last year’s
performance and what are your goals for the plan’s
final year?
A. I believe our operations in Japan have reached afairly high level. Large expressway orders are almost
70% of our business, which is more than we expected.
As a result, construction sales have been leveling off
quarterly. I think our success in strengthening training
programs for our employees and our network withpartner companies were mainly responsible for thisprogress. These accomplishments and the large orderbacklogs give us confidence in determining an outlook
for FY2025 and afterward.
In July 2023, we signed an investment and licensing
agreement with Structural Technologies, LLC, a U.S.
infrastructure repair maintenance company after a21

SHO-BOND 2023 Integrated Report>P44 In addition to expecting
five-year negotiation.    
an increase in profits through profit sharing, we also
hope to increase future earnings by obtaining quality
certification for SHO-BOND products in the UnitedStates, incorporating them into design, and providing
construction guidance through the company.
Addressing the problem of profitability in Thailand
is a pressing concern. Initially, the pandemic restrictedsales activities and caused delays in our plan to meet thedemand for infrastructure maintenance involving
airports, railroads, highways, and other sectors. Now
sales have slowly started to move up, backed partly by
maintenance orders for wharves and silos. While highly
skilled partner companies bring us high profitability inJapan, we have not yet sufficiently developed thesubcontractors’ network in Thailand and this is puttingpressure on profits. While steadily training local
workers, we will also focus on expanding thesubcontractors’ network by cooperating with the Siam
Cement Group, to achieve constant profitability.
To establish a solid base for starting the next
Medium-term Business Plan, we are developing anorganizational structure to speed up growth overseas.

Q. Please explain your strategy for growth based on atime frame of 5 to 10 years.
A. There are good prospects for more growth in the
demand for infrastructure maintenance. Current plansof Japan’s expressway companies indicate that there will
be a large volume of orders for at least the next decade.
Furthermore, the number of bridges in Japan that are
more than 50 years old will continue to increase,creating new sources of demand for repairs andreinforcement. >P13 As the leader in this industry, weare determined to continue growing at a rate thatkeeps us far ahead of all our competitors.
In order to add more sources of revenue, we aresowing the seeds of new business and steadily working
on potential sales and marketing activities. Ouroperations overseas are part of it. We are also paying
attention to the activation of maintenance activities by

local governments and the private sector. The need forinfrastructure maintenance is growing steadilyworldwide. Meeting all of these needs directly is notpossible with the current size of the SHO-BOND Group.
This is why we are exploring ways, including M&A, toexpand our business by leveraging our expertise as amaintenance specialist. In areas that we cannot cover byourselves, I want to deliver our considerable expertiseand cumulated know-how through licensing
agreements with other companies or utilizing AI
technology. We will create more innovative products,
such as our AI Shindanshi packed with know-how ondeterioration diagnosis of concrete structures, forcustomers to rent or purchase and provide support to
the infrastructure managers. I intend to continue taking
on such challenges steadfastly. >P32
Reinforcing our reputation as a technology-orientedorganization is another element of our strategy for
growth. Since our inception, the continuous cycle ofreplacements and updates of our construction materials
and methods has underpinned our growth. A series ofsheet methods preventing concrete from spalling andfalling is one illustration. Initially, a complex process withmanual steps was required. We solved this problem bydeveloping improved products one after another withour customers for more convenience and better
performance. Examples include the HYBRID SHEETMETHOD, which reduces the number of steps, atransparent sheet that makes subsequent inspections
easier, and a spray-type material for finishing work faster.
To ensure greater convenience, we will continue the cycleof developing and updating our materials and methods
based on customers’ needs.

Create a comprehensive sustainability
promotion framework across theentire groupQ. W
 hat types of activities are there at the SHO-BOND
Group involving sustainability?
A. Maintenance services for extending the life of

To ensure greater convenience, we willcontinue the cycle of developing andupdating our materials and methods basedon customers’ needs.

infrastructure make a big contribution to the reductionof greenhouse gases and waste materials by eliminating
the need for demolition and reconstruction. Playing arole in combating global warming is therefore anotherreason for our desire to deploy our technologies forrepairing and reinforcing aging infrastructures in every
corner of Japan and overseas.
In FY2024, we transferred the Corporate Planning
Department and ESG Promotion Office to the Holdings
function to comprehensively and cross-sectionallyaddress sustainability issues, not only for the core
operating company SHO-BOND CORPORATION but also
for SHO-BOND MATERIAL and SB&M.
Environment
Japan’s construction industry is developing manytechnologies, such as concrete that absorbs CO2, as partof activities to accomplish the national goal of carbon

22About Us

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neutrality by 2050. On the other hand, we do not use
large quantities of concrete and other materials because
we work on only maintenance projects. To protect theenvironment, we are seeking ways to replacepetroleum-derived materials with biological materials in
resin-based materials that we manufacture and sell.
Lowering our use of water is another goal. We alreadyhave programs at construction sites for the recycling
and reuse of water for washing hands. Demonstration
tests and other activities are underway to determine a

Our younger employees are very active in
improving health and safety levels atconstruction sites, which motivates me toachieve more progress.

23

SHO-BOND 2023 Integrated Report

way to reuse the large amount of water required forthe use of water jets. We will continue to work on
solving the numerous obstacles one by one to create apractical water recycling system.
SocialAll construction companies in Japan are facing thechallenge of a severe labor shortage, including ourpartner companies. To reduce the burden in this respectand make full use of our Tsukuba Training Center, weare offering training programs that cover not only our
employees but also our partner companies. In addition,
we plan to expand the targets of our training programs
to trainees from other countries by coordinating with
JICA (the Japan International Cooperation Agency), andour customers’ engineers.
I also think workforce diversity is very important.
We are taking many initiatives including gender,
nationality, and career path. For our recruiting activities,
we make efforts to maintain at least a 15% regular
recruiting rate of females. We are generally hiring new
graduates as planned, partly due to the increasing
interest of students in infrastructure maintenance.
Furthermore, the number of employees from othercountries, mainly in Asia, is increasing as well. I hope to
see these international staff members filling key
positions in the future to support our global expansion.
Another priority is the continuation of recruiting people
with previous work experience who can be immediately
productive. These mid-career people are already morethan half of our workforce. Hiring people withexperience in large projects and projects in categories
new to our group will allow us to offer customers aneven broader selection of services. We diversify our
workforce actively to challenge new businesses andpromote the dissemination of the knowledge of ouremployees to create an environment where people
motivate each other to improve their skills and advancetheir careers. We use our internal publications,e-learning content, and other methods to make thethinking of outstanding and distinctive people in ourgroup accessible to everyone.

Employee retention and workplace safety are two of
our highest priorities. In the old days, SHO-BOND mainly
took on subcontracted work, and there was a usual
practice to assign one engineer to several different
small job sites to earn more profits, which raised ourattrition rate because of the high volume of work andalso had a negative effect on safety. I experienced suchconditions myself and felt that was unsustainable. AfterI became the president, I declared safety and quality as
our vital issues and took steps to strengthen thedepartments supporting health and safety activities on
the construction sites. Meanwhile, a timely support
system was updated, by which managers attend thehealth and safety patrols to gather information about
issues through dialogues with workers, identify thehidden risks, and respond promptly before it may cause
serious troubles. In the conversation, managers and thesite engineers share various information, such as what
happened that day, what is planned for the next day, if
there are any job site problems, etc. I believe thesecommunications have improved the safety and qualityof our construction and lowered our workforce attrition
rate. I do a safety patrol once every month. Visiting
construction sites and talking with our staff are valuable
for reinforcing my confidence in our operations. In
addition, our younger employees are very active in
improving health and safety levels at construction sites,
which motivates me to achieve more progress.
GovernanceI believe that the Board of Directors has a well-balanced
composition as the whole Group, including outside
directors and directors of major subsidiaries. To assist
with the Group’s management, the three outside
directors frequently provide advice based on their
independent and objective perspectives and many yearsof experience in their professions.
The Group is now taking on a variety of newchallenges with activities that include equity allianceswith companies in Japan and other countries. At theBoard of Directors meeting, the outside directors
examine proposals for new actions and share points,

especially regarding potential risks. I believe that live
discussions, serving not only as an accelerator but also asa brake, are leading to improvements in the effectivenessof corporate governance. Outside directors have alsooffered useful input that we could not obtain internally,such as the public’s expectations of SHO-BOND, and theideal state of companies aspired by students, female
engineers, and others in general. As we aim for growthoverseas, we will consider adding outside directors with
global knowledge and experience as well as othermeasures to make our governance even stronger.

Corporate value growth backed by thespirit of “change in itself is progress”
Q. W
 hat is your message to shareholders and otherinvestors?
A. When I meet investors, I often hear about their
expectations for an even more aggressive stance for
growth as the market for structure maintenancecontinues to expand. Our business policy is to value
both operational and social aspects of our businessguided by the mission that has defined our activities
since our inception. With proper risk management andhuman resource development, we intend to take on
new challenges steadily for the diversification of our
profit structure and growth of business operations.
We are now in the final year of our current Mediumterm Business Plan. Work on formulating the next plan
has started. During this important year, everyone at the
SHO-BOND Group has a firm determination to leverage
our strengths as much as possible. We will focus on
measures embodying the spirit of “change in itself is
progress” to increase corporate value and meet the
expectations of all of our stakeholders. I appreciate yourcontinuing support.

24

About Us

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Medium-term Business Plan
(FY2022 - FY2024)

Medium-term Business Plan (FY2022 - FY2024)

In the Medium-term Business Plan (FY2022 - FY2024), we areworking to achieve sustainable profit growth and enhance corporate
value under the basic policy of “honing the inherent strengths what itis that makes us SHO-BOND.” We defined the “inherent strengths” interms of business as “construction work capability,” “technologicaldevelopment capability” and “product sales capability,” and in termsof management as “profitability,” “financial soundness” and“shareholder returns.” Per the Medium-term Business Plan, we aretrying to refine SHO-BOND’s strengths and build a system ready forthe stage of further accelerated growth. In FY2022, we focused on
proactive measures, including “upgrade the order receipt strategy

utilizing the in-house company structure” and “more activities forlarge projects and construction work capability.” In FY2023, weachieved steady results from measures like “to become morecompetitive for capturing orders by developing human resources
capable of adapting to changing markets,” “personnel system
reforms that reflect the changing business environment,” and “astrong safety culture and rigorous on-site training” as stronger
foundations for growth. In particular, we believe the achievement ofzero fatal accidents, zero frequency rate, and zero severity rate ofoccupational accidents is the result of the company-wide Initiatives
for Creating a SHO-BOND Culture of Safety.

Financial Targets
FY2022 Results

FY2023 Results

FY2024 Forecasts

FY2024 Targets (Mid-term Plan)

Net Sales

81.19 billion yen

83.92 billion yen

86.2 billion yen

87.5 billion yen

Operating Profit

17.26 billion yen

18.12 billion yen

18.6 billion yen

17.5 billion yen

21.3％

21.6%

21.6%

20.0%

12.36 billion yen

12.88 billion yen

13.3 billion yen

12.0 billion yen

13.4％

13.4%

13.0%

12.0%

Operating Profit Margin
Profit Attributable to
Owners of Parent
ROE

Basic policy“Honing our inherent
strengths what it is thatmakes us SHO-BOND”❶ Further initiatives for large-scale construction by reinforcing organizational
capabilities❷ Develop new technologies ahead of other companies and take on thechallenge of a new product sales strategy❸ Increase orders through human resource development that can respond tomarket changes and the increase of productivity❹ Manage both profitability and financial soundness and enhanceshareholder returns❺ More ESG activities and contributions to SDGs

A Stronger Foundation for GrowthBusiness Strategy
Strategic Initiatives

Progress in FY2023

Upgrade the order receipt
strategy utilizing the in-housecompany structure

Each in-house company consolidates information onlarge-scale construction projects within their wide
operation areas, and holds meetings to select projects
for bidding, study measures to reduce construction
costs, and check the workforce framework involving
partner companies. They have taken strategic measures,such as reallocating engineers among regional offices
according to the status of orders in each region.

More activities for large projects
and construction work capability

For large construction projects of ¥2bn or more, theLarge-Scale Construction Management Committee isconvened, and each department at the head officeconfirms the details of the project before receiving anorder. Each regional office has made progress in having
existing partner companies work in larger areas andselecting new ones.

Challenge a new product sales
strategy by SB&M

More joint activities by increasing
cooperation among groupcompanies and other companies

New technologies for preventive
infrastructure maintenance

The easing of the behavioral restrictions imposed
under the COVID-19 pandemic has enabled SB&M tocarry on a full-scale operation in Thailand. It hasreceived construction orders of around ¥100mn andsold products through JICA technical projects. In July,
SB&M reached an agreement to invest in Structural
Technologies, LLC, a U.S. civil infrastructure repair
company.
Kyna-Tech's water jet (“WJ”) construction business has
been steadily increasing its performance, and in FY2024,
the aim is to strengthen its construction team engaged
in the WJ works. Maintenance Technology Inc. has also
gradually increased its contribution to the SHO-BOND
Group (the “Group”). SB&M is contributing to theGroup by achieving results in developing clients outside
the road sector. In addition, we have made progress instrengthening ties with various local partner companies.
As a new research theme, we have begun replacingorganic additives with plants and shells in considerationof the environment. The development of lithium nitrite
materials, a preventive maintenance method for concrete
structures, has been completed and advanced to thecommercialization stage.
Devices equipped with “AI Shindanshi,” an artificial
intelligence diagnosis system, were distributed to ourengineers and began to be used in actual operations.

Strategic Initiatives

Progress in FY2023

To become more competitive for
capturing orders by developing
human resources capable ofadapting to changing markets

The workforce reached 985 at the end of June 2023. To
improve the capabilities of engineers, we strengthened
support for getting public qualifications and implemented
educational programs on the themes of 3D CAD and FEA(Finite Element Analysis). Each in-house company
conducted a variety of training programs for young
employees, female engineers, and others.

Personnel system reforms thatreflect the changing businessenvironment

We integrated measures related to work style reforms
and improvement of the work environment for female
employees into in-house systems. In addition, we
implemented a 3% salary increase for two straightfiscal years, as well as improved compensation forsenior employees. We are also preparing for the new
overtime cap that will take effect in the constructionindustry according to the revised Labor Standards Act
in 2024 and further discussing new personnel systems.

Operating profit was ¥18,124 million and profit attributable to ownersof parent was ¥12,887 million in FY2023. Due to this performance, thefinal year targets of the current Medium-term Business Plan wereachieved one year early. More growth is expected in FY2024. However,sales are forecasted to be below the Medium-term Business Plan goal
chiefly because the impact of the COVID-19 pandemic made it difficult
to expand our overseas operations as initially planned, especially thesales of construction materials.
The operating margin was above 21% and the ROE was above
13%, both well above the Medium-term Business Plan targets.
Selectively accepting orders, rigorously managing the cost of
construction, and others make this possible. This accomplishment
demonstrates the continuing progress with the high profitability thatis a defining characteristic of SHO-BOND.

Operating Profit
(¥bn)

(%)

20

21.6

22

21.6

21.3
Plan

18

19.6
16

20

14

19

12

15.7

17.3

18.6

18.1

17.5

18

10

A strong safety culture andrigorous on-site training

Use of the digital transformation(DX) for higher productivity

Build a framework for
responding to ESG issues

Initiatives for Creating a SHO-BOND Culture of Safety
have resulted in zero fatalities, as well as zero LTI
frequency and severity rate in FY2023. Each regional
office is also implementing safety activities frequently,
raising awareness and moving closer to the
independent and mutually enlightening model of safety
culture.
In terms of on-site DX, the use of construction
management applications became more widespread asa result of staff training and each regional office’s
workshops. In addition to the design engineers at eachregional office acquiring 3D CAD skills, the conversionof in-house developed construction devices into 3D
data was completed to comply with the government's
request for the delivery of 3D models.
We have enhanced the disclosure of non-financial
information and established internal systems related to
ESG and sustainability, including the release of related
KPIs, the publication of an integrated report, and theholding of a Sustainability Committee meeting. We will
promote disclosure of information on human capitaland diversity, etc.

21

8

17

FY2018

Capital Policy

FY2019FY2020

FY2021

Operating Profit

FY2022 FY2023 FY2024

FY202416

Operating Margin

FY2022 Results

FY2023 Results

FY2024 Forecasts

FY2024 Targets (Mid-term Plan)

Dividend Payout Ratio

51.1%

52.1%

50.0%

50.0%

Total Return Ratio

75.1%

79.1%

75.0%

75.0%

Our policy is to maintain a dividend payout ratio of 50% as the basis
for the continuous and stable distribution of earnings to shareholders.
In FY2023, shareholders received a commemorative dividend of ¥5 pershare to mark the 65th anniversary of the establishment of SHO-BOND
CORPORATION. The total dividend for the fiscal year was ¥127, with apayout ratio of 52.1%. In addition, the current Medium-term Business
Plan includes the purchase of treasury shares worth ¥10 billion. The
combination of dividends and the purchase of treasury shares will
increase the total return ratio to more than 75%.
Cross-shareholdings with a market value of ¥1,096 million weresold in the past two years. The intention is to reduce these holdings
as a proportion of net assets. However, this percentage has risen due
to the appreciation of the market value of the remaining crossshareholdings.

Cross-shareholdings

FY2022-FY2023 Result

(¥bn)

9

11.3

Sale*

-1.01

Changes inmarket value+1.81+0.8¥bn

(%)

12

8

8.0

7.5

8.2
8

7

Plan

8.4
7.3

6

8.1
7.1
4

5.8

5

4

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Cross-shareholdings0

The Ratio of Cross-shareholdings to Net Assets* Based on the market value as of June 30, 2021

25

SHO-BOND 2023 Integrated Report26About Us

Management Strategies

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Business Foundation

Company Information

CFO Message

CFO Message

Shareholder Returns

Dividends/Purchase of Treasury Shares/Total Return Ratio
Shareholder distributions up
by about 380% over 8 years

(¥bn)

12

Sales and earnings have increased for nine consecutive years and we haveincreased the dividend for 14 consecutive years. I believe this achievement isdue to our steadfast adherence to the basic policy of “emphasizing profitability
and selectively accepting orders” while flexibly changing our internal structure
and ordering strategy in response to the expansion of the maintenance market.
Our policy is not to forcefully pursue sales scale, but rather secure profits bymaintaining high profit margins while considering the proper balance amongshareholder returns, growth investments, and internal reserves.

Distributing earnings to shareholders is one of our highest priorities.
The basic policy is to pay a dividend consistently that is based on the
results of operations. The dividend for FY2023 was ¥127 per share,with a 52.1% payout ratio, which includes a ¥5 commemorative
dividend for the 65th anniversary of the establishment of SHO-BOND
CORPORATION. We have increased the dividend for 14 consecutive
years. After adding the purchase of treasury shares for about ¥3.5
billion, the total return ratio was 79.1%. Over the eight years since
FY2015, when we announced a policy of raising the dividend payout
ratio by 2.5% every year, shareholder distributions have increased byapproximately 380%. In FY2024, the planned dividend payout ratio is50% and the purchase of treasury shares will be ¥3.5 billion, which
will bring a total return ratio to more than 75%.

Yasuhiro Sekiguchi
Managing Director, CFO

Review of Performance
Sales and earnings increased for the ninth consecutive year in FY2023.
Sales increased by 3.4% to ¥83,924 million. The main reasons are
the steady progress of large projects and higher sales of expansion
joints, couplings, and other construction materials. Regarding profit, in
addition to the increase in sales, we were able to maintain a high grossprofit margin of 28%, so profit attributable to owners of parent
increased by 4.2% to ¥12,887 million. However, due to a decrease inorders for large-scale repair work from expressway companies, orders
received decreased by 18.9% from the previous year to ¥77,945 million.
Looking back at the past two years of the Medium-term Business
Plan (from FY2022 to FY2024), the two-year cumulative orders
received are regarded as having generally been in line with our plan,
given respect to the visible fluctuations depending on the status oforders for large-scale projects. Furthermore, the progress of every
three-year average orders in the past shows that we are steadily
upgrading our ability to capture orders. Construction sales have been
about the same as in our plan in each fiscal year but sales of
construction materials were lower than planned mainly because theimpact of the COVID-19 pandemic made it difficult to expand ouroverseas operations as initially planned.
Operating profit and profit attributable to owners of parent haveboth surpassed the plan’s goals for two consecutive years. Moreover,
our construction gross margin has been above 26% for two
consecutive years. Rigorous management of the construction cost andthe ability to receive additional orders for design changes, which is

Capital Policy（Profit Attributable to Owners of Parent/¥bn）

15

12.9
80

12

60

9

40

6

83.9
9 consecutive years of sales growth

30

Among several indicators of corporate value, the Group conducts
management with PBR in mind. PBR is described as the product of
PER and ROE. The PER of our company rose to 28.5 in FY2020
because of the growth of Japan’s infrastructure maintenance market
and the increase of SHO-BOND’s sales and earnings. At the end ofJune 2023, PER is approximately 23. When reviewing our capital
policy in line with the Medium-term Business Plan, we establish thegoals for ROE after conducting thorough studies from various
perspectives to ensure a proper balance among shareholder returns,
investments for growth, and the equity ratio, while also considering
movements in the PER. According to the residual income model, ahigh PBR can be sustained by maintaining an equity spread (thedifference between ROE and the cost of equity). We focus on
reducing the cost of equity by enhancing the visibility of our business
operations for shareholders and other investors through proper
disclosure of financial and non-financial information, as well as
conducting sufficient IR activities.

0

4
20
2

0
Dividends

Purchase of Treasury Shares

Total Return Ratio

23.5
13.4

3.07

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
ROE (%)FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Net Sales

40

6

PER·ROE·PBR

11 consecutive years of earnings growth

20

60
8

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

Net Sales/Profit Attributable to Owners of Parent(Net Sales/¥bn)

10.2

10

0

due to our advanced technologies and construction management
skills, are the main reasons for this high profitability.

100

(%)
80

79.1

PER (times)

PBR (times)

Profit Attributable to Owners of Parent

Building a Base for the Next Medium-term Business Plan
Cross-shareholdings

Construction Orders and Construction Sales
(¥bn)

100

As a rule, the SHO-BOND Group does not purchase or hold the stockof suppliers and other business partners with the exception of cases
when purchasing and holding stock helps in conducting business
operations efficiently, maintaining and strengthening business
relationships, and thereby contributing to the medium- to long-term
growth of corporate value. When a company that holds our stock asa cross-shareholding notifies us of the intention to sell this stock, wewill never make any attempt to stop this sale. In the past two years,
we have sold cross-shareholding stock totaling ¥1,096 million basedon market value. As a result, the number of stocks we cross-holddecreased from 22 to 19. In FY2024, we plan to sell an extra ¥500
million in cross-shareholding stock.

79.3

80

71.1
60

75.1

54.9
69.1

40

20

0
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Construction Orders

27

SHO-BOND 2023 Integrated ReportThree-year Average Construction Orders

Construction Sales

The enactment in May 2023 of the Amended Act on Special Measuresconcerning Road Construction and Improvement extended the end of
the collection of expressway tolls in Japan from 2065 to as far away as
September 30, 2115. Toll revenue will be used for repair and renewal
works including the upkeep of aging highways and expanding
expressways to four lanes. According to the Ministry of Land,
Infrastructure, Transport and Tourism, expressway repairs andimprovements between now and 2115 will cost an estimated ¥8,300
billion. This does not include the cost of the large-scale renewal andrepair projects now underway by Japan’s expressway companies.
Meanwhile, Amendments to the Basic Act on National Resilience wereapproved in June 2023 in the Diet, in which the main content is tolegalize the formulation of the “Medium-term Action Plan for National
Resilience.” It means the efforts to build national resilience will bepromoted continuously and stably, even after the Five-Year Acceleration
Plan for Disaster Prevention, Disaster Mitigation, and Building National
Resilience that will end in 2025 with a budget of about ¥15,000 billion.
Furthermore, details and scale of particularly necessary measures areincluded in the “Medium-term Plan for National Resilience,” making it

possible to secure a budget for multiple years, similar to the current
five-year plan.
Demand for infrastructure maintenance in Japan is certain tocontinue for many more years because of these amendments andother activities. In the next Medium-term business plan, we would liketo strengthen our “sustainable earning power” by leveraging theaccomplishments of business strategies and foundation reinforcementin the current Medium-term (from June 2022 to June 2024). At theend of July 2023, SB&M, which is owned by SHO-BOND and MITSUI &CO., LTD., made an investment in U.S. infrastructure repair
maintenance company Structural Technologies, LLC. SHO-BOND plans
to use this partnership for the introduction of its broad range ofproven maintenance technologies into the United States, where
deterioration of infrastructure is becoming a serious social issue. The
Group also has a jointly-owned company in Thailand. Measures, suchas organizational change, are now being considered for strengthening
overseas operations in order to catch up after the slowdown caused inpart by the pandemic.

28

About Us

Management Strategies

Business Strategies

Business Foundation

Company Information

Financial and Non-financial Highlights

Financial and Non-financial Highlights

Financial

Non-financial

Orders(¥bn)
Constructions

Products(¥bn)

Constructions

Number of Employees

Products

Male

FemaleTurnover Rate
Percentage of Female

8.2

84.4
6.5

74.4

Net Sales

96.1

77.9

74.5

5.7

8.9

7.8

80.1

81.2

7.8

8.2

83.9
855

8.9

91

67.6

881
94

916
98

951
103

124

12.6%

6.5

60.8

985

5.7

68.6

77.9

66.7

87.9

69.1

55.1

61.1

72.2

10.6%

75.1

73.0

10.7%

10.7%

10.8%
3.5%
2.8%
2.2%

FY2019FY2020

FY2021

FY2022

FY2023

FY2019FY2020

FY2021

FY2023

FY2022

764

787

818

848

861

1.5%

FY2019FY2020

FY2021

FY2022

FY2023

FY20191.2%
FY2020

FY2021

FY2022

FY2023(Voluntary turnover rate)

Operating Profit / Operating Profit Margin
Operating Profit

Operating Profit Margin17.3(¥bn/%)

Profit Attributable to Owners of Parent / ROE
Profit Attributable to Owners of Parent

18.1

12.9

11.3
21.3

Average Annual Days Off
134.3

13.4

13.4

129.4

77.1%

130.2

79.5%

127.0

8.1

48.3%

19.6

19.3

94.3%

134.5
85.9%

9.0

11.7

Percentage of Construction Sites where“8 Days Off in 4 Weeks” is Achieved

12.9

13.0

21.6

(days)

ROE
12.4

15.7

(¥bn/%)

19.1
11.1
10.6

FY2019FY2020

FY2021

FY2022

FY2023

FY2019FY2020

FY2021

FY2023

FY2022FY2019FY2020

FY2021

FY2022

FY2023

FY2018FY2019FY2020

FY2021

FY2022(According to the Japan Federation of Construction Contractors)

Net Assets / Equity Ratio
Net Assets(¥bn/%)

Equity Ratio
91.0

94.2

Dividend / Purchase of Treasury Shares /Total Return Ratio

98.1

Dividend(¥bn/%)

Lost Time Injury (LTI) Frequency Rate

Lost Time Injury (LTI) Severity Rate

Total Return Ratio

Purchase of Treasury Shares

10.2

83.6
78.1

9.3
82.8

82.5

3.0

81.4
80.2

75.1

80.2

45.0

47.5

79.1

3.5

50.1
3.29
2.01

3.6

4.3

5.7

6.3

6.7
0.90
0.21

FY2019FY2020

FY2021

FY2022

FY2023

FY2019FY2020

FY2021

FY2022

FY2023

FY2019FY2020

FY2021

0.67

FY20220.00

0.15

FY2023

FY2019(Lost work time of 4 or more days)

29

SHO-BOND 2023 Integrated Report

0.09
FY2020

FY2021

0.12

0.00

FY2022

FY2023(Lost work time of 4 or more days)

30