Medium-term
Business Plan
2027
（FY2025–FY2027)

August 9, 2024
Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

0IndexPhilosophy

p.02

Comprehensive Maintenance System

p.03

Review of the Previous Medium-term Business Plan
Summaryp.04

Financial Targets

p.06

Capital Policy

p.08

Non-financial Targets

p.09

Medium-term Business Plan 2027
Business Environment

p.11

Basic Policy & Main Measures

p.12

Financial Targets

p.14

Capital Policy

p.16

Business Strategy

p.18

Strengthening the Foundation

p.22

Appendixp.28

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1

Philosophy
Corporate Philosophy

With a sense of mission of “inheriting and passing onsocial infrastructure to the next generation in goodcondition,” we will contribute to the realization of asafe and affluent society by utilizing our advanced
technological development capability as a leading
company in the structure maintenance business.

The purpose of SHO-BOND is to “inherit and pass on social
infrastructure to the next generation in good condition.” Guided bythis purpose, we dedicate ourselves to the mission of utilizing ourpower of technology and contributing to a better society throughour core business of comprehensive maintenance.

Our vision represents the ideal status of the group and the
Our Vision

enduring endeavors we will keep pursuing. It has been passed down
for several decades and its importance has not faded even as theFuｌfill our mission as a company specializing in maintenancetimes change. We are committed to continue refining the strengths
we have accumulated from the past and pass them on to the next

Place priority on profitability and efficiency
Be a technology-oriented organization that combines chemical
and civil engineering technologies to create new materials andconstruction methods

Corporate Credo•

Make thoughtful decisions• Take responsibility for your actions

generation.

Corporate Credo is the values we share as a group. It is born fromthe beliefs of our founder and has deepened its significance overtime, based upon which we act and make decisions at work.

Based on the above philosophies, we set forth the basic policy of
the Medium-term Business Plan as “Enhancing corporate value inpursuit of economic efficiency and social progress.” To meet the
expectations of multiple stakeholders, we aim for further profit• Unify the workplace

growth while committing to resolving social issues through• Contribute to society

infrastructure maintenance that goes beyond the current main field.

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2

Comprehensive Maintenance System
The SHO-BOND Group is a comprehensive maintenance company which specializes in repairing and reinforcing social infrastructures. We provide extensive
support in social infrastructure maintenance, with a focus on design and construction services as a construction company, together with services ranging

from R&D of materials and construction methods, to manufacturing and sales of developed materials and construction methods. The country’s foremost andcomprehensive maintenance system. This is SHO-BOND’s characteristic, our strength.

Construction Work
Construction system that can handle all types of
construction

Investigation/Diagnosis/Design
Exact proposals based on accurate investigation

SHO-BOND CORPORATION handles large-scale,
high-difficulty construction works, whileconstruction subsidiaries (the KAKO-Group),
which have their head offices in various locations,handle small and medium-scale construction
works. We undertake maintenance works
nationwide, regardless of scale or whether we area main contractor or a subcontractor.

DesignWe propose optimal design and construction
methods by investigating and diagnosing,combining abundant knowledge and state-ofthe-art technology in response to various
structural damage problems.

ConstructionWork

SHO-BOND CORPORATION/KAKO-Group/Kyna-Tech

Maintenance Technology Inc.

Global

調査・診断
Investigation/Diagnosis

Technology Development

Comprehensive
Maintenance System

Bringing Japanese maintenance technology overseas
We take on the challenge of solving the social issue of
aging infrastructure faced by many countries bycombining our technological expertise in
infrastructure maintenance with the network andbusiness development capabilities of MITSUI & CO.,LTD.

Technology
Development

Development of new construction methods andmaterials required by the times
We have a wide array of state-of-the-art
research equipment specialized in repair andreinforcement. Our researchers specializing inchemistry and civil engineering work together
with external research institutes to develop new
construction methods and materials that meetthe needs of the coming age.

Sales
SB&M

Technical Research Institute (SHO-BOND CORPORATION)

Sales
Sales of a wide variety of repair and reinforcement
products

Manufacturing
Production system utilizing our factories and contract
manufacturing
While manufacturing resin-based materials, which
are our roots, in our factories, we develop anddesign structural construction materials in theTechnical Research Institute and contract
manufacturing to partner companies (fabless).
We have an efficient and asset-light production
system.

Manufacturing

Product sales and construction work are the twopillars of our businesses. With a lineup of organic,
inorganic, and structural materials, our groupcompanies approach a wide range of customers to
expand our sales channels.

Group companies

SHO-BOND MATERIAL CO., LTD.

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3

Review of the Previous
Medium-term Business Plan

Summary

Financial
Targets

Capital
PolicyNon-financial
Targets

Following the Medium-term Business Plan 2021 that resulted in a significant increase in operating income over three years, during the Medium-term Business
Plan 2024, we have been working to strengthen our construction, technological, and sales capabilities and maintain high levels of profitability, financial

soundness, and shareholder returns under the basic policy of “Honing our inherent strengths what it is that makes us SHO-BOND.” Although there are still
issues to be addressed in strengthening the sales capabilities of construction materials as well as overseas operations, we successfully achieved our profit
targets by increasing orders for large-scale construction projects and improving the gross profit margin of construction work.

Medium-term Business Plan 2024
Basic Policy"Honing our inherent strengths
what it is that makes us SHO-BOND"

1

Further initiatives for large-scale construction by reinforcing organizational capabilities

2

Develop new technologies ahead of other companies and take on the challenge of a new
product sales strategy

3

Increase orders through human resource development that can respond to market changes andthe increase of productivity

4Manage both profitability and financial soundness and enhance shareholder returns

5

More ESG activities and contributions to SDGs

Construction
work
Technologicaldevelopment｜New construction methods
and product development

Productsales｜More competitive forreceiving orders｜Maintain advanced construction
capability｜Full-scale start of operations of SB&M
｜Diversification of sales channels｜Effective use of training centers

A company specializing in maintenance
Financialsoundness｜Shareholders’Shareholder
returns

Profitability｜Dividend payout ratio: 50%｜Total return ratio: 75%

equity ratio: 82%｜Operating margin: 19%｜ROE: 12%

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4

Review of the Previous
Medium-term Business Plan

Summary

Financial
Targets

Capital
PolicyNon-financial
Targets

Business Strategy

Strengthening the Foundation

1

1

Upgrade the order receipt strategy utilizing the in-house company
structure
The order receipt strategy has been upgraded under the in-house company
system by strengthening the information sharing scheme, thoroughly selecting
bidding projects, allocating optimal personnel, and confirming construction
management capability including partner companies.

２

More activities for large projects and construction work capability

We started practical training for young employees and partner companies at the
Tsukuba Training Center. We also have strengthened support for acquiring
qualifications, specialized education programs for technical employees, andunique human resource development measures for each in-house company.

２

Challenge a new product sales strategy by SB&M

３

More joint activities by increasing cooperation among group companies
and other companies

4
Use of the digital transformation (DX) for higher productivity

We strengthened relationships with partner companies and expanded the numberof distributors. Collaboration progressed in both the fields of construction andsales. In addition, earnings from Kyna-Tech and other affiliated companies haveincreased.

5

New technologies for preventive infrastructure maintenance
We have shortened delivery time and reduced costs for existing products, as wellas made resin-based products non-deleterious. We also have begun to develop
organic materials using plants and shells as the raw material. Lithium nitrite gel
and an AI diagnosis system are implemented into practical use.

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A strong safety culture and rigorous on-site training
We have promoted an action plan to create a safety culture throughout thecompany and launched new initiatives such as e-learning. The LTI frequency andseverity rate was lower than the national average, and in FY2023, we achieved
zero fatal accidents and zero LTI frequency and severity of occupational
accidents.

Despite the impact of the COVID-19 pandemic, we continued sales activities inThailand and the USA. Results achieved in Thailand on receiving construction
orders and selling products through JICA projects. In the USA, we invested in an
infrastructure repair company.

4

Personnel system reforms that reflect the changing businessenvironment
In preparation for revising the personnel system, we deepened internal
discussions based on social conditions and employee needs. We also
implemented work style reforms, institutionalized flexible work styles inconsideration of female employees, raised wages, and improved compensation
for senior employees.

To strengthen our construction capabilities, we have had existing partnercompanies work in larger areas within each in-house company as well as selected
new ones. We have established a group-wide inner consultation scheme forprojects of 2 billion yen or more.

３

To become more competitive for capturing orders by developing humanresources capable of adapting to changing markets

On-site DX has progressed, and the introduction of construction management
apps and 3D design software is expanding nationwide. We have also completed
the acquisition of basic 3D CAD techniques by technical employees at eachbranch office and the conversion of in-house developed devices into 3D data.

5
Build a framework for responding to ESG issues

We have established the Sustainability Committee for the entire group. In
addition to calculating CO2 emissions and formulating various policies and nonfinancial KPIs, we have enhanced disclosure by issuing an integrated report.

5

Review of the Previous
Medium-term Business Plan

Summary

Financial
Targets

Capital
PolicyNon-financial
Targets（Billion Yen）

FY2021

FY2024

ChangeMid-term
Plan 2024

10th Consecutive Year of Increased Sales and Profits◼ Net income for FY2024, the final year of the mid-term plan, was 14.3 billion
yen. Profits increased by 26.3% over the last three years, marking the 10th

Sales

80.1

85.4

＋6.7%

87.5

consecutive year of increased sales and profits.

◼ Due to sluggish sales of construction materials, including overseas sales, net

Operating
Profit15.7

19.7+25.0%

sales fell short of the target at 85.4 billion yen. On the other hand, we were17.5

close to achieving the construction sales plan thanks to the steady progressin large-scale projects. This progress is a result of strengthening ourProfitAttributableto Owners of
Parentconstruction capabilities, including partner companies.

11.3

14.3

+26.3%

12.0◼ The last three-year average of construction orders was around 83.2 billion
yen/year, despite the fluctuation from year to year, and the current
accumulated order backlog is at a new record level.

ROE

13.0%

14.2%

+1.2%

12.0％
（Billion Yen）

Operating Profit
Operating Margin
23.0%

Construction Orders, Sales
and Order Backlog
80

19.6%

Operating Profit
19.7

15.7

Order
Backlog
90.2

Orders
50
65.4

Sales

10% 205FY2015FY2018

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

FY2021

FY2024FY2015FY2018FY2021

FY2024

6

Review of the Previous
Medium-term Business Plan

Financial
Targets

Summary

Capital
PolicyNon-financial
Targets

Construction Sales◼ In terms of construction sales by client, the share of expressway companies rose to 66% in FY2024, far exceeding the 50% expectation in the mid-term
plan.

◼ The number of engineers with the skills to take charge of large-scale construction work has steadily increased due to active recruitment and theenhancement of training supported by our aggressive investment in human capital.

◼ An upsurge and subsequent leveling in sales figures have been observed quarterly, as a result of the strategic order-taking and the strengthening of
construction capabilities.

Sales by Client

Quarterly Construction Sales（Plan）

100%

FY2024（Billion Yen）

Private sector
FY202320

Expressway
companies
40%

FY2022

47%

50%

60%

66%

66%
FY2021

50%
15
Local
governments
31%

27%

FY202024%

FY201922%
18%
National
government
23%

18%
FY2024

21%

20%

14%

13%

13%

FY2023

FY2024101Q

0%
FY2020

FY2021

FY2022

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2Q

3Q

4Q

(FY2024)

7

Review of the Previous
Medium-term Business Plan

Financial
Targets

Summary

FY2021

FY2024

Capital
PolicyNon-financial
Targets

Total Return Ratio 75%◼ Under the Medium-term Business Plan 2024, we kept a dividend payout ratio of

Dividend
Payout Ratio

50.1%

Total Return
Ratio

50.1%

50.8％

50% and implemented a share buyback of 10 billion yen in total, thereby
maintaining a total return ratio of 75% or more each fiscal year.

◼ ROE in FY2024 has risen to 14.2%, as earning power improved due to the increase

75.0％

in the gross profit margin of expressway projects. By securing equity spreads, PBR
remains at a high level of about 3 times.

Purchase ofTreasury Shares（3-year total）

Reducing Crossshareholdings（3-year total）

10◼ We sold approximately 1.5 billion yen worth of cross-shareholdings in the last threebillion yen

years as planned, but the ratio to net assets increased due to the rise in the stock-

market.

1.5-

FY2022-FY2024 Result

Sale*billion yen
30.0

PBR・ROE・PER

9

20%

12%

8

21.0
15%

+1.6 billion yen

Cross-shareholdings
The ratio of cross-shareholdings
to net assets

25.0

PER

20.0
8.5%

14.2%

8.0%

7
3
10%

-1.5 billion yen

Changes in＋3.1 billion yen
market value

ROE

8%

15.0
8.9billion yen

6
10.0

Crossshareholdings

7.3billion yen

4%

2.9

5%
PBR

0
0%
FY2015
15/6期 16/6期 17/6期 FY2018
18/6期 19/6期 20/6期 FY2021
21/6期 22/6期 23/6期 FY2024
24/6期

5.0

5

0.0

4

0%
FY2015FY2018FY2021

FY2024* Based on the market value as of June 30, 2021

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8

Review of the Previous
Medium-term Business Plan

Summary

Financial
Targets

Capital
PolicyNon-financial
Targets

Non-financial Targets
We established the non-financial KPIs and disclosed the details in August 2022. In the selection process, we intended to include both defensive items related
to risk management and compliance, as well as offensive items that are closely related to the improvement of business performance, while taking into accountthe characteristics of SHO-BOND, which is dedicated to infrastructure maintenance business and emphasize the value of quality, safety and human resources.

KPIs Related to Sustainability
Number of violations of environmental laws andregulations
CO2 emissions (Scope 1 and 2)(vs. FY2022 [5,238t])(CO2 emissions intensity*)

KPIs

Target year

FY2022

FY2023

FY20240Every year

0

0

0

3,929t[-25%]

FY２０315,238t[±0.0%]

5,474t[+4.5%]（Under calculation）(6.5 t-CO2 / 100 million yen)

(6.5 t-CO2 / 100 million yen)

MLIT： 80.0
NEXCO： 86.0

MLIT： 80.6
NEXCO： 86.5

(4.9 t-CO2 / 100 million yen)

Average scores for contractor performance evaluationin construction industry

MLIT： 78 or higher
NEXCO： 80 or higher

Every year

Percentage of construction sites where “8 days off in 4
weeks” is achieved (according to the Japan Federation of Construction Contractors)

100%

FY２０２４

85.9%

94.3%

96.3%

0

Every year

0

0

0

0.7 or lower

Every year

0.67

0.00

1.13

Achievement rate of annual overtime limit of 720 hours

100%

FY２０２４

100%

100%

100%

Percentage of female employees in regular recruiting

15％ or more

Every year

9.5%

16.2%

25.8%

38

FY２０２４2630

36

2.4% or more

Every year

3.3%

3.1%

4.3%

Childcare leave rate of new fathers

100％

FY２０２４

100％

74.0％

66.0%

Rate of response to safety confirmation

100%

Every year

100%

100%

100%

Compliance training participation rate

100%

Every year

98.8%

100%

100%

0

Every year

0

0

0

100%

Every year

90.3%

100%

100%

Number of fatal accidents

Lost Time Injury (LTI) frequency rate

Number of female engineers
Percentage of employees with disabilities

Number of serious violations of laws and regulations
Information security training participation rate

MLIT： 80.1
NEXCO： 86.5

* (Reference value) CO2 emissions per consolidated net sales (100 million yen)
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9

Medium-term Business Plan 2027
FY2025–FY2027

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10

Business Environment
Social Issues
Realization of adecarbonized society

Declining birthrate,
aging population, anddeclining working
population

Accelerated aging of
infrastructure

Increasingly severe
and frequent natural
disasters

Countermeasures against ageing infrastructure

Heightened geopoliticalrisks andnational/international
economic changes

Disaster prevention measures

Sasago Tunnel Ceiling Collapse

The Great East Japan Earthquake

Basic Plan for Extending Service Life of Infrastructure (action plan)

Fundamental Plan for National
Resilience

Mandatory inspection / 5 years
National Gov./Local Gov.

Three-year emergency response
plan

Infrastructure repair based on the
Basic Plan for Extending Service
Life of Infrastructure (action plan)￥7 trillion

Expressway companies

Expressway Renewal
Project￥5.5
trillion

Shifting from corrective maintenance topreventative maintenance

Additional plans￥1.5
trillion

Implementation of
infrastructure
management tomaximize stock
effects

See the appendix for more details
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Increasing digitalization

Kumamoto Earthquake

Emergency transportation roads’
quake resistancePreventing missing links when an
earthquake occurs
Roadadministrator

Implementation
statusExpressway
companies

78%

National Gov.

87%

Local Gov.

80%

Total

81%

Five-year acceleration plan

Strategic Managementfor Revitalization ofRegional InfrastructureGroupsInfrastructure MaintenancePhase2￥15 trillion

Expressway companies’
earthquake retrofitting plan
Accelerating seismic
retrofitting of bridges
102 bridges/year → 290 bridges/year

Act revision
Budget assured & mandatory（Source： Prepared by SHO-BOND based on MLIT data, etc.）11Basic Policy
In the Medium-term Business Plan 2027, we will strengthen sustainable profit growth while simultaneously addressing social issues under the basic
policy of “Enhancing corporate value in pursuit of economic efficiency and social progress.” We will further capture large-scale construction orders by
allocating resources optimally for the entire group, and continue the trend of increasing sales and profits. In addition, we will take on the challenge of
new business areas in maintenance and work on projects outside of the domestic road field to diversify our revenue sources and strengthen profitability.
In addition to more shareholder returns, we will further enhance our corporate value through both financial and non-financial capital policies, including

the utilization of non-financial capital such as continued investment in human capital.

Basic Policy of the Medium-term Business Plan 2027

Enhancing corporate value in pursuit ofeconomic efficiency and social progress.

2

Restructuring overseas business models

35

Action to implement management that is
conscious of cost of capital and stock price
Further enhancement of corporate value throughthe utilization of non-financial capital×

Socialprogress

Sustainable Profit
GrowthBusiness and capital alliance withother companies
Participation in new initiatives ofnational and local governments in
Japan

Sales
GrowthCurrent

4

Improving productivity and promoting work stylereform through DX

NewStrengthening competitiveness to increase orders
for large-scale construction

Economic
efficiency

Insourcing of special construction
work by affiliated companies

Business

1<Business Strategy >Stronger Profitability

Diversification of
Revenue Sources

Optimal allocation of resources
across the company

Entry into the overseas maintenancemarketStrategic backlog formation

Peripheral areas other than roads

Improvement of construction
capabilities including partnercompanies

Repair of historic structures

Domestic Roads

Other Fields
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12

Main Measures
Business Strategy
1Group-wide strategy for order receiving consciousof order backlog

Strengthening the Foundation
1

In the next three years, we will invest more than 5 billion yen in humancapital. We will continue our active recruitment policy and aim to increase
the number of employees to 1,100 while increasing construction, technology,
and overseas staff in line with our business strategy. We will also continue toraise wages and further enhance education for our employees and partnercompanies.

We will allocate resources focusing on total optimization and work to further
enhance our order strategy. This allows us to maintain high and consistentquarterly construction sales by adapting flexibly to changes in order trends
and forming an abundant order backlog.

２

Restructuring of business models for overseas
business

２

We established a new overseas business department at SHO-BOND
CORPORATION to approach foreign markets through various channels
including SB&M. In addition, we will expand our business model from
specializing in selling construction materials to technical cooperation andconstruction management, by mobilizing the group’s collective strengths.

３

Participation in new initiatives of national and local
governments in Japan

Strengthening peripheral areas and opening up newmarkets in maintenanceIn addition to our main target area of roads, we will take an active approachto maintenance demand in peripheral areas such as railways and ports, led by
the KAKO-Group (construction subsidiaries). Meanwhile, we are exploring thepossibilities of expanding into new markets by insourcing special
construction work and forming business and capital partnerships with otherfirms.

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Retention management through the new personnel
systemWe launched a new personnel system that emphasizes fulfillment, growth, asense of security, and a sense of satisfaction. Under this personnel system,
we aim to improve employee engagement and reduce the turnover rate.

３

Achieving a higher level of safety culture
We will continue the Initiatives for Creating a SHO-BOND Culture of Safety toestablish a safety culture closer to an interdependent type. We will strive toensure that safety culture permeates every corner of all sites by developing
educational content that is easy to access from remote locations andconducting safety culture training that includes partner companies.

A trend of multiple wide-area and cross-border ordering by the national andlocal governments has emerged out of the lack of technical staff to manage
the facilities they own. We will utilize our cultivated know-how andcustomizable construction materials to meet their needs.

４Further investment in human capital (securing anddeveloping human resources)４

Improving productivity and promoting work stylereform through DX
We will further advance the transformation of business flows through on-siteand administrative DX. On-site DX includes construction management, safety
patrols, and daily inspections. Administrative DX means introducing IT tools
for approval procedures and expense reimbursement to realize paperless
operations and improve efficiency.

13

Financial Targets（Billion Yen）

Mid-term Plan
2027

FY2024

Net Sales: 100 Billion Yen◼ We aim to achieve net sales of 100 billion yen in FY2027.

85.4

Sales

100

＋17.1%◼ In addition to further increasing the ratio of large-scale orders through thesophistication of our order strategy, we plan to significantly increase sales of
construction materials by restructuring our overseas business, strengthening

Operating
Profit19.7

22+11.9％

seismic reinforcement work at expressways, and initiatives in peripheral areas
other than the road field.

ProfitAttributable to
Owners of Parent◼ We anticipate an increase in personnel cost mainly due to continuous wage

14.3

15.6

+8.9％

increases and assume an operating profit of 22 billion yen in FY2027, with theoperating profit margin declining slightly.

◼ Profit attributable to owners of parent is planned to be 15.6 billion yen, including
Approx.

ROE

14.２％

gains on the sale of cross-shareholdings. We aim to increase sales and profits for14.5％

the 13th consecutive year.

Sales
23.0%

100 billion yen

Operating
Profit22 billion yen
19.6%

OperatingMargin
17.5%

80.1

19.7

85.4
15.7

59.7
52.1

30

FY20159.1

FY2018FY2021

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18.1%

FY2024FY20275FY201510.8

FY2018FY2021

FY2024FY202710%

14

Financial Targets◼ On a three-year average, the amount of construction orders received will be higher than the previous mid-term plan, and the order backlog will remain at ahigh level. Our target for FY2027 is about 90 billion yen. While we expect a slight decline in FY2025 due to the exceptionally large construction orders in
FY2024, we are committed to achieving this goal within the next three years.

◼ Construction sales in FY2027 are expected to be 89 billion yen due to an increase in the number of engineers, securing construction capabilities, andimproving productivity at construction sites by introducing digital equipment. Although the gross profit margin of construction work is expected to decline
slightly after a significant increase in FY2024, we will achieve sustainable growth by steadily increasing construction sales through construction andtechnological capabilities that we have strengthened in the previous mid-term plan.

◼ Sales of construction materials for FY2027 are planned to be 11 billion yen. In Japan, we expect to strengthen sales in peripheral areas other than roads toincrease sales of existing products such as couplings. Meanwhile, we hope for the sales of new products that we have been developing recently. In addition,
by restructuring our overseas business, we will increase sales through multiple sales channels.

100

100

Construction
Orders90

83.2

Sales of Construction
Materials
28.8%

10
80

3-yearaverage 71.1

（Billion Yen）

12 35%

Construction
Sales

45%

30%
MarginMargin

40%

37.0%

25%

70
8
60

35%
20%

50

30%

6
11.0

89.0

40
72.2

30

73.0

75.1

15%

76.7

61.1

8.9

4

7.8

10%

55.1

8.2

20%

6.5

5.7

2

15%

5%
10%

10
0
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

FY2027

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

25%

8.8

20

0

50%

0 0%
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

FY2027FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

5%
FY202715

Capital Policy

Basic Policy 4 Action to implement management that is conscious of cost of capital and stock priceMid-term Plan
2027

FY2024

Dividend
Payout Ratio

50.8％

50％

◼ We will enhance shareholder returns in the Medium-term Business Plan 2027. We aim toconsistently provide a steady profit return by keeping the dividend payout ratio at 50%
and strive to enhance dividends for 18 consecutive years.

◼ We aim to raise ROE to approximately 14.5% in FY2027 by acquiring 15 billion yen of

Total Return
Ratio

75.0％

Purchase ofTreasury Shares（3-year total）
Reducing Crossshareholdings（3-year total）

80％

10

15

billion yen

billion yen

1.5

3billion yen

billion yen

treasury shares over the next three years and achieving a total return ratio of 80% or
more.

◼ Although the long-term interest rate in Japan is expected to rise, we will maintain a high
PBR by lowering the cost of equity through strategic IR activities and timely information
disclosure to communicate with shareholders and investors the social nature of ourbusiness and the foreseeability of our operation.

◼ The policy of reducing cross-shareholdings will continue and about 30% of it will be soldby FY2027, worth approximately 3 billion yen based on the market value at the end ofJune 2024. Assuming the stock market remains unchanged, the percentage of net assets
is expected to decrease from 8.5% to 5.5%.

Approx. 14.5%
14in FY2027

15%
14%

Total Return Ratio: 80%

ROE・PBR

13.7%

5.00
12

Total Dividends/
Total Return Ratio

70%

10
4.00

11.6%

12%

5.0

Total Return Ratio
46.1%

ROE
(3-year average)

50.1%

3.5

8
3.00

11% 10.2%（Billion Yen）
80%

Purchase ofTreasury Shares

13%

5.0

5.0

60%

3.5
50%

3.0

40%

10%

6
2.00

9%

4

8%

80％ or more
75.0%

Total
Dividends

30%
20%

1.00
2

PBR

7%
6%
FY2018FY2021

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

FY2024FY2027

10%

0.00
0

0%
FY2018FY2021

FY2024FY202716

Basic Policy 4 Action to implement management that is conscious of cost of capital and stock price

Capital Policy

Basic Policy 5 Further enhancement of corporate value through the utilization of non-financial capital

Maintaining High Profitability through the
Enhancement of Non-financial Capital

ROE

＞ COE

⇒ PBR＞1

The source of the group’s high gross profit margin of construction work lies in the nonfinancial capital. We aim to enhance this further to generate sustainable profits. Meanwhile, wewill improve the foreseeability of our operation through enhanced information disclosure andcommunication with shareholders and investors, aiming to lower the cost of equity and increase
corporate value.

Financial
CapitalReinvestment

Non-financial Capital

Human
CapitalHigh-level engineers who generate profits by utilizing their abundant knowhow to propose and implement precise construction plans and appropriate
repair and reinforcement methods.
Integration of HR management into business strategy / Personnel
system revision

Intellectual
CapitalAdvanced technological development capabilities at the Technical ResearchInstitute to create construction methods and materials specialized in repair
and reinforcement; accumulation of knowledge through the development andconstruction cycles.
Strengthening intellectual property management / Passing ontechnology and know-how through data aggregation

Social and
Relationship
CapitalCOE

Higher
profitability

A strong network with partner companies with experienced people covering
diversified construction skills.
Cultivate and develop new partner companies / Business and capitalalliances with other companies

Manufactured
CapitalLower cost ofequityROE

Comprehensive capabilities to improve construction efficiency and reduce
costs by reflecting the ideas and needs received from actual sites to create
on-demand construction methods and materials.
BCP measures and new plant construction / Collaboration with
manufacturers

NaturalCapitalReduction of environmental impact throughmaintenance work

Foreseeability of operation

Social Progress

Dividend increase for 15 consecutive years

Contribution to national resilience

10th consecutive year of increased sales and profits

Repair and reinforcement of historic structures

Information
Disclosure

Volume of new materials(concrete, reinforcing bars, wooden forms, adhesives, etc.)

CO2 emissions（Scope3）

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

Estimated CO2 emission reduction effect of
the Showa Ohashi bridge repair work we
operated in 1964

Repair

Disposal andReplacement

163.1t2011.2t

43.7t-CO2

404.2t-CO2

17

Business Strategy
1

Basic Policy 1 Strengthening competitiveness to increase orders for large-scale construction

Group-wide strategy for order receiving consciousof order backlog◼ In order to sustainably increase construction sales, it is important◼ As of the end of December 2023, the six expressway companies haveto maintain high productivity throughout the group by efficientalready signed a total of about 2,640 billion yen (about 48% of their total

personnel allocation. We aim to strategically build up an abundantplan) for the Expressway Renewal Project, among which about 2,010

order backlog to ensure consistent quarterly sales over the years.

billion yen (about 49% of their plan) for the three NEXCOs, and a simple
average of about 300 billion yen of construction orders/year has been

◼ In FY2027, expressway companies are expected to account forplaced.

about 70% of construction sales. Over the past few years, the◼ The figure below estimates the placed order value of the three NEXCOs

number of engineers with the skills to take charge of highway

over the past five years. The order of each company fluctuates from year

projects has increased. As the number of people with experience into year, and such fluctuations are expected to continue during ourlarge-scale construction has increased, we have accumulated know-

Medium-term Business Plan 2027. We aim to increase the orders for

how on management, and more engineers are encouraged to takelarge-scale construction by efficiently allocating resources guided by ouron new projects.

analyses and predictions based on published order placement plans andother information.

State of Progress(as of December 2023)

Expressway Renewal Project
Ordered Amount of Each NEXCO

Construction Sales by Client (Proportion)（Billion Yen）
BudgetContracted
amount

4,120

2,010

49%

Metropolitan
Expressway

930

440

47%

Hanshin
Expressway

420

170

41%

27

12

46%

3 NEXCOs

Honshu-Shikoku
BridgeExpressway
Total

100%

Progress

66%
50%

Expressway
companies
70%

WEST

CENTRAL
5,500

2,640

48%

（Source: MLIT）

EAST
FY2019FY2020

FY2021

FY2022

FY20230%
FY2021 FY2022 FY2023 FY2024

FY2027（Based on SHO-BOND’s estimates）（For illustrative purposes）
Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

18

Business Strategy
2

Basic Policy 2 Restructuring overseas business models

Restructuring of business models for overseas
business◼ Since the inception of the business, we have primarily focused on thesale of construction materials with a proven track record in Japan.

◼ Our group’s overseas business began with the establishment ofHowever, there is a growing demand for comprehensive services,

SHO-BOND & MIT Infrastructure Maintenance Co., Ltd. (SB&M: 51%

including on-site supervision and technical support, particularly inowned by us, 49% by MITSUI & CO., LTD.) in April 2019 and we have

Thailand and other ASEAN countries. Therefore, we established an

been operated mainly in Thailand and the USA. In November 2020,

overseas business department within SHO-BOND CORPORATION in

we established a joint venture company, CPAC SB&M Lifetime

April 2024 to restructure our business model. This will enable us to

Solution Co., Ltd. (hereinafter CPAC SB&M), with a local company inprovide a wide range of services, from investigation and diagnosis to

Thailand. In July 2023, we invested in the U.S. infrastructure repair

design and on-site supervision, by leveraging the full strength of ourcompany Structural Technologies, LLC (hereinafter ST).

group.

◼ By dispatching our engineers to overseas individual sites, we will get
feedback on the needs and challenges identified, leading to the supply
New Business Modelof optimal products and collaboration with other companies. ThroughSHO-BOND CORPORATION

this new business model, we aim to expand our business area andOverseas Business
Department

manage our supply chain, while pursuing business opportunities inregions beyond Thailand and North America by leveraging MITSUI's

Feedback on
local needs andchallenges

network and business development capabilities.

Product Sales

Collaboration with Other
Companies

Provide optimal construction

Service diversificationmaterials customized to theneeds and challenges

Dispatch ofengineers

Consulting andconstruction

and supply chain
management

Services Provided by SHO-BOND Overseas

Consulting◼ Investigation and inspection ◼ On-site supervision and training◼ Diagnosis and analysis◼ Maintenance proposal

Infrastructure
maintenance sites invarious countries

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

Construction◼ Construction planning

Product sales◼ Product procurement and supply◼ Development of new products
customized to local needs

19

Business Strategy
2

Basic Policy 2 Restructuring overseas business models

Restructuring of business models for overseas
business◼ In the United States, we aim to help expand ST’s sales in the bridge repair◼ In the next three years, we plan to increase staff in themarket by introducing Japanese repair and reinforcement technologies. We

overseas business department from 7 to 15 by recruitment

will continue to support ST’s marketing efforts with state governments andand internal transfers. Additionally, we will increase theengineering firms to increase the chances of our solutions being chosen.

number of projects involving on-site supervision and◼ In Thailand, about 96% of our projects are in the private sector (such astechnical support to 10, and the number of products andjetties, factories, and buildings). However, we will also leverage the network

construction methods, including the introduction of overseas

we have built with local academic institutions and public corporations totechnologies domestically, to 25. Through these efforts, wesecure orders in the public sector (such as roads, ports, and airports).

aim for ordinary profit related to the overseas business of 1

Additionally, we will dispatch SHO-BOND engineers to Thailand to participate

billion yen in a 3-year total.

in various projects by providing on-site supervision and technical support. This
will not only enhance the construction capabilities of our local partnercompanies and their workers but also accumulate overseas experience for our
engineers, which we aim to use as a driving force for further businessexpansion.

Ordinary profit¥1 billion(3-year total)

15 people

Public sector

11 people
Repair7 people

UnitedStatesThailand3

5

12

Private sector

◼

10

5

FY2025
FY2026◼ Number of projects

OthersCopyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

25

Overseas businessdepartment members

FY2027

Number of products and construction methods

20Business Strategy
3Participation in new initiatives of national and local
governments in Japan◼ To manage multiple types of facilities scattered in a broad area more

4

Strengthening peripheral areas and opening up newmarkets in maintenance◼ Other than roads, our core business field, there are many other types

efficiently and effectively, national and local governments areof aging infrastructure in need of maintenance. We will strengthen

promoting a new strategy to place wider-area and cross-bordering

approaches on railways and private facilities mainly by KAKO-Grouporders, focusing on managing infrastructure as a cluster. SHO-BOND

companies to diversify our revenue sources.

is well-equipped to address evolving such needs, with refinedcomprehensive expertise over time.

◼ For renewed attempts such as new types of maintenance works wehaven’t taken so far and insourcing of special construction work, we◼ The serious shortage of technical staff is one of the factors thathinder national and local governments from implementing effective

will consider business and capital alliances with other companies on ascale of 5 billion–10 billion yen.

infrastructure maintenance. We will try to solve these issues bylending our AI Shindanshi, an AI-based concrete deterioration
diagnosis system, and developing simple DIY methods for facility
managers.

Percentage of Structural Infrastructures
Built More Than 50 Years Ago2020 ≫ 2030 ≫ 2040
Road bridge

730,000
bridges

30％

55％

75%

New Initiatives by National and Local
Governments

Tunnel

11,000tunnels

22%

36%

53%

Strategic Management for Revitalizationof Regional Infrastructure Groups

Harbor quay

61,000facilities

21%

43%

66％

Sewer pipe

480,000
km

5%

16%

35％

River management facility

46,000facilities

10%

23%

38％

Bridge12,000bridges

55％

71％

85％

Tunnel

5,000
tunnels

66％

83％

91％

95
airports

43％

60％

73％

Comprehensive Private Sector Outsourcing
Optimization of infrastructure stock
through consolidation and reorganization

Responding to the initiativesof national and local
governments by utilizing ourcomprehensive capability

Railway
Challenges Faced by Local Governments
Shortage of technical staff
Budget constraints

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

New initiatives of SHO-BOND
AI
Shindanshi

DIYmethods

Resolution of social issues

Airport(Supplement) As of 2021, 33% of water pipe bridges have been in place for over 40 years（Source: MLIT）

21

Strengthening the Foundation

Basic Policy 5 Further enhancement of corporate value through the utilization of non-financial capital

Further investment in human capital (securing anddeveloping human resources)

Incorporation of HR Management into Business Strategy◼ Our company must continue to secure excellent human resources,◼ We are diversifying our human resources portfolio. Half of our workforce

1even under a permanent workforce shortage that the constructionindustry faces. In the three years of the Medium-term Business
Plan 2027, we aim to increase the number of employees to 1,100
through active recruitment. We are also raising wages continuallyand expanding allowances for a long business trip or a remotetransfer, due to wider-area maintenance work and overseas
business, so that employees and their families can live without

is mid-career hires and human resources with diverse experiences andskills are actively engaged. Over the past three years, we havedeliberately recruited experienced staff in line with our mid-term
strategy and welcomed individuals from diverse backgrounds. Our
recruitment of female new graduates has outperformed the set target.

◼ Rehiring and allocating experienced senior personnel to on-site

worries. Meanwhile, we will strengthen the human capital tosupporting work strengthened safety management and construction

realize our strategies by enhancing support for earning

efficiency. We will continue incorporating such HR management into ourqualifications, increasing allowances for excellent staff, andbusiness strategy for the next three years.

upgrading employee education. We plan to invest approximately
5.4 billion yen over the next three years.

New Graduate Hires(last 3 years)

Number of Employees

1,100
1,019

916

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

4.2 billion yen

4.5 billion yen

FY2027・Increase in personnel expenses due to an increase in the number of
employees and wage hikes
・Recruitment costs
・Education and training expenses, etc.

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

NonJapaneseFromconstructionindustry

39%

9%
From
different
sectors

61%

Alignment with Business Strategy
Mid-term Plan
2024

Strengthening human resources inoverseas business, safety andconstruction supporting departments,
and administrative departments

Mid-term Plan
2027

Strengthening human resources inoverseas business, engineering
departments, construction
departments, and digital departments

Construction

5.4 billion yen

Investment in Human Capital (3-year cumulative)

Female
34%
Male
66%

Job Distribution of
Rehired Retirees

New Graduate
Hires
48％

0

Female
18%
Male
82%

Mid-career
Hires
52％

Mid-career Hires (last 3 years)

Supporting/Engineering
36%

22

Strengthening the Foundation
２

Basic Policy 5 Further enhancement of corporate value through the utilization of non-financial capital

Retention management through the new personnel
system◼ Under the new personnel system, we will improve retention◼ We have reviewed the definition of each grade in the grading system.
Under the new system, employees can more easily envision theircareers in five or ten years because the criteria for evaluations andmanagement and attempt to maximize the value created by humanpromotions are clearly described. In addition, we have establishedcapital. As a result of our efforts to create a comfortable working

clear rules for treatment and course changes for each work track. This

environment by shortening total working hours, encouraging

provides each personnel a sense of satisfaction while securing work-

employees to take paid leave, and expanding childcare and nursing

style flexibility by enabling them to choose styles that adapt to theircare support measures, the turnover rate has improved and remained
at a low level in recent years. To maintain this high-level retention into

lives.

◼ In addition to enhancing the fairness and transparency of personnel

the future, we have revamped our personnel system in line withevaluations linked to grading, we have revised the evaluation systemchanges in the times and environment, emphasizing growth, fulfillment,

to support the improvement actions of employees through appropriate

a sense of security, and a sense of satisfaction based on our

feedback and lead to their fulfillment and growth. We have alsoorganizational analysis. We will expand the enlightenment about

expanded the qualification allowance and reviewed the remuneration

career development and employee education programs to improvesystem so that excellent staff can receive competitive payment.

employee engagement and reduce the turnover rate.

Retention
Improvement◼ Motivator

Personnel
systemJob enrichment

Organizational
culture◼

Clear performance evaluation mechanism◼

Fair implementation of the system◼

Satisfaction with the evaluation

Development
environment
Sympathy for the
corporate philosophy

The factors that yield positive satisfaction

Post-launch phase◼

Support for career development◼

Enhancement of education and training

Working hours◼

Easy to take paid leave◼

Securing manpower

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

Satisfaction towards work;
recognition; achievement;
responsibilities; growth;promotion etc.

◼ Hygiene Factors
Factors that do not give positive
satisfaction or lead to higher motivation,
but their absence lead to dissatisfaction

Keywords of the new
personnel system

GrowthFulfillment
Sense of security
Sense of satisfaction

Salary; work conditions; colleague
relationships; corporate policies;
private life etc.
(Herzberg’s two-factor theory)

23

Strengthening the Foundation
４

Basic Policy 3 Improving productivity and promoting work style reform through DX

Improving productivity and promoting work stylereform through DX
DX in SHO-BOND
Construction sites in Japan

Increasing
productivity

Enhancing safety
management

Accessibility to
information

Office work for all employees

On-siteDX

Technology
transmission

×Administrative

DX

Improving productivity through work style reform

DX Initiatives◼ Our group has defined two main areas for DX (digitaltransformation): on-site and administrative DX. We aim for

Cloud storage

improved productivity, enhanced safety management, andtechnology transmission in on-site DX. In administrative DX, we
Talentmanagement
systemfocus on improving productivity through work style reform.

AI Shindanshi◼ To realize DX and maximize its effects, we recognize the importanceof promoting the digitalization and consolidation of information

Digitalization,
consolidation, andstandardization of
information

while enhancing the confidentiality, integrity, and availability of

VR/ARdata to improve accessibility to information. We are advancing theConstruction
assistant AI

Construction
management
softwareLevel of digitaltechnology

consolidation of dispersed data into the cloud storage and focusing

on creating a secure environment. Additionally, we are actively
incorporating digital technologies in design and construction work,
such as AI, VR/AR, and drone technology. We will keep promoting
on-site DX by combining accumulated data with the latest digital

Paperlesstechnologies and utilizing them effectively.

Remotemonitoring
Drone

Cashless

Safety inspectionApp◼ Meanwhile, about information that does not require secondary use,
we will promote cashless and paperless operations for work-stylereforms in conjunction with reviewing workflows.

DX areas not requiring data consolidation

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

24

Strengthening the Foundation

Basic Policy 5 Further enhancement of corporate value through the utilization of non-financial capital

Efforts for Environment (Climate-related Information Disclosure Based on TCFD Recommendations)◼ In 2022, our group expressed support for the TCFD recommendations and identified and assessed the risks and opportunities related to the transition to a
low-carbon economy and the physical changes caused by climate change. We will continue to steadily implement measures to address the identified risks
and opportunities.
Risks / Opportunities covered
Countermeasures
Changes expected

Changes in reputation
among shareholders andinvestors

Description

Opportunity

Introduction of carbon
pricing
Introduction of moreaggressive targets/policies
for CO2 emissions reduction
by countries around the
world

Risks

Growing severity of weather
disasters⚫

⚫

Increased procurement costs for energy and materials⚫

Decreased transactions due to our inability to adequately respond to customers’ requests for reducing

Disclose information about CO2 emissions(Scope 1, 2,and 3) and initiatives aimed atbeing highly regarded for its low CO2 emissions

reducing CO2 emissions (Scope 1 and 2)⚫

Promote green procurement, including
switching to low-carbon materials⚫

Surges in the purchase prices of resin-based materials and steel materials as a result of decreased⚫

production of naphtha and iron ore⚫

Switch to renewable energy and promote

1energy conservation during construction

Increased demand for watershed flood control and disaster restoration work, rather than seismic
reinforcement work and service life extension work, in the face of growing severity of weather disasters⚫

⚫

Invest in solar power generation for own

2

consumption, etc.

Increased price competitiveness with the delivery of low-carbon construction services and products in thefield of repair and reinforcement

Opportunities

Acceleration of national
resilience measures

Increase in averagetemperature

Increased ESG investment in the SHO-BOND Group as an infrastructure maintenance specialist due toCO2 emissions

Changes in customer
behaviors
Rises in raw materials costs⚫

⚫

Due to CO2 emissions regulations, the number of life-extending works of buildings and infrastructures

⚫

Risks

Develop low-carbon and decarbonization
technologies

Increased competitiveness as an infrastructure maintenance specialist offering low-carbon construction,
as low CO2 emissions are highly regarded in tenders and selection of construction methods

Risks

⚫

increases while the amount of overall investments in construction decreases⚫

Develop new technologies that support the 3
preventive maintenance of infrastructure⚫

Develop technologies for improving on-site⚫

Increased demand for infrastructure maintenance to counter natural disasters⚫

Decreased productivity in line with increased heat stroke cases among on-site workers⚫

Increased costs for improving working environment and introducing equipment, etc. to prevent heat stroke

working environments and implement heat⚫

Worsening worker shortages due to deteriorating outdoor working conditions

stroke countermeasures⚫

Increased costs due to process delays at disaster-stricken sites⚫

Supply chain disruption⚫

Damage to or shutdown of operations at disaster-stricken own factories or contracted manufacturing
plants⚫

5Work together with the entire supply chain tostrengthen BCP measures in preparation fordisasters⚫

4

Manage sanitation related to water in asustainable manner

6（See next page for more details）
Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

25

Strengthening the Foundation

Basic Policy 5 Further enhancement of corporate value through the utilization of non-financial capitalSpecific Initiatives for Climate Change
1

Switch to renewable energy and promote energy conservation
during construction

Our group, due to its businesscharacteristics as a maintenancespecialist, has the feature of low CO2

4,000

emissions. However, we will take

CO2 Emissions Reduction Targets(t-CO2)
5,000

3,929

emission reduction target by FY2031.

Our group is promoting the installation of solarbuildings to reduce CO2 emissions. Solar panels

were installed on the rooftop of the Kyoto Branch in

2,669

multiple actions, such as utilizing nonfossil certificates, to achieve our CO2

Invest in solar power generation for own
consumption, etc.

power generation equipment on the rooftops of our

Scope2
2,571

3,000

2

2021 and the Kita-Nihon Regional Office in 2023.
2,000

We will continue to explore and advance the

Scope11,000 2,667

installation.

2,805

0

FY2022

3

FY2024FY2031Develop new technologies that support the preventive
maintenance of infrastructure

Kita-Nihon Regional Office4Work together with the entire supply chain to strengthen BCP
measures in preparation for disasters

As one of our preventive maintenanceOur couplings are designed in our factories and manufactured by partner

technologies, SBLN GEL has been

companies. Although these factories are located in different places, bothdeveloped. This gel contains a high amountare at high risk of flooding and are aging. Therefore, we plan to construct aof lithium nitrite, which has a rust-new factory that consolidates both factories in a location with a lower risk

preventive effect on rebar and can protect

of flooding, thereby improving our business continuity.

rebar simply by applying it to the concretesurface. We will continue to develop suchtechnologies.

5

SBLN GEL

Develop technologies for improving on-site working
environments and implement heat stroke countermeasures

6

Manage sanitation related to water in a sustainable manner

We recognize that interdependent safety activities are important for

Our construction sites use a lot of water for tasks such as concrete chipping

preventing heatstroke. As a result of our group’s efforts to foster mutualand handwashing by workers. To maximize reuse, we are promoting the on-safety awareness, there have been zero heatstroke incidents in the pastsite introduction of circulating handwashing units that reuse handwashing

three years. We will continue these activities.

water.

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

26

“Change in itself is progress” is a mantra often used byour company’s founder Mr. Ueda.
Mr. Ueda used this phrase repeatedly when telling
everyone at the SHO-BOND Group about the importanceof aiming for ambitious goals and constantly making
improvements to achieve progress.

I like the phrase “change in itself is progress.”
Periods with no difficulties at all will always come to an end.
Change produces challenges as well as progress.
History has demonstrated that only companies able to alter
themselves to reflect changes in the business climate areable to compete and survive.
Excerpt of Mr. Ueda’s 1990 New Year message

The publication to celebrate SHO-BOND’s 40th anniversary included
the following reflections of Mr. Ueda in the past four decades.
“For the past 40 years, I have always demanded and put into
practice ‘high expectations’ when it comes to my company. In otherwords, I have set high goals and put them into practice based on thetwo slogans ‘Change in itself is progress’ and ‘company’s benefits

The SHO-BOND Group will continue to take on

are the standard for decision-making.’ I have gritted my teeth andwant to encourage you all.”
By remaining true to his beliefs, Mr. Ueda saw his new company

new challenges with the founder’s spirit ofpassion for constant progress.

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

grow from five people at a single factory to Japan’s leading company
in the field of infrastructure maintenance.
Mr. Ueda giving a speech at the 1972 Division
Managers Conference27Appendix

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

28

Appendix： Overview of Infrastructure Maintenance Policy in Japan （Source： Prepared by SHO-BOND based on MLIT data, etc.）
Disaster prevention measures

Countermeasures against ageing infrastructure
2012

Sasago Tunnel Ceiling Collapse

2011

The Great East Japan Earthquake

Ceiling plates and partition wall fell for about 130 meters, multiple
moving vehicles bumped into accidents and 9 dead.

2013

2015

Revise of Road Act・・・mandatory inspection/5 years as countermeasures against disaster and ageing infrastructure,

Revise of Act on Special Measures Concerning
Road Construction and Improvement

National Resilience Basic Act

Basic Plan for Extending Service Life of
Infrastructure (action plan)

Fundamental Plan for National Resilience

The First Year ofSocial Infrastructures MaintenanceMore than 50 emergency transportation roads were closed→Profound impact on disaster recovery and disaster support→Urgent need to eliminate the missing link in disaster

Expressway Renewal Project
2016￥5.5 trillion
6 expressway companies
2018 Three-year emergency response plan

￥7 trillion
Contract progress
48％
2021

Five-year acceleration plan

2014
2023

Act revision
Additional plans

2030

Estimated thatan additional￥6.8
betrillion will
required

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

2014
2026

￥15 trillion

Act revision2023

5 expressway companies ￥1.5 trillion

Kumamoto Earthquake
Emergency transportation roads’ quake
resistance

Budget assured &mandatoryRoadadministrator

Implementation
statusExpressway
companies

78%

National Gov.

87%

Local Gov.

80%

Total

81%

2023
Expressway companies’ earthquake
retrofitting plan
Improvement of bridges’ quake
resistance
Speed up from 102 bridges/year to
290 bridges/year29Appendix： Expressway Renewal Project and Earthquake Retrofitting Plan by Expressway Companies（Source： Prepared by SHO-BOND based on MLIT data, etc.）

Expressway Companies’ Earthquake
Retrofitting Plan

Expressway Renewal Project…Bridge reinforcement plan to ensure the function of emergency transportroads during major earthquakes

・・・Proportion of total length covered by the projectCurrent Renewal
Project

Elimination of missing links during major earthquakes in regionswith occurring probability ①26% or higher ②the other¥4.12
trillion(1,360km)

14%5%Additional
Plans

Trillion

2.9trillion

4,000

Expressway Companies’ Earthquake Retrofitting Plan
(3 NEXCOs + Honshu-Shikoku Bridge Expressway)②3,663

Bridges(512km)

9,729km（Bridges）

26％

¥1.00

The Three NEXCOs

Current Renewal
Project

1,700km3%
AdditionalPlans

Of which, bridges

0.7trillion

2,000
Current Renewal
Project

Current Renewal
Project

420billion

930billion
20%

290
bridges/year①1,555(91km)(64km)

35%
Metropolitan
Expressway

327km

7%

Hanshin
Expressway
AdditionalPlans

306billion(22km)

258km

102
bridges/year

9%
AdditionalPlans

217billion(22km)

0

FY2017

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

FY2022

FY2030
FY2030

FY2038FY203830

Appendix： Status of Domestic Road Infrastructure（Source: MLIT）

Number of Facilities by Category(As of March 2023)◼ Following the revision of the Road Act in 2013, all roadⅣ
0.1%

administrators have conducted close visual inspections onceⅢ8%every 5 years since FY 2014.

I Soundness

IV 0.3%

The function of the structure is intact.

II Preventative The function of the structure is intact, but it isdesirable to take measures from the viewpoint ofmaintenancepreventative maintenance.
stage

III
32%

Ⅰ
42%

BridgesTunnels(Approx. 730,000)

III Early action The function of the structure may be impaired, andmeasures should be taken at an early stage.
stage

Repair Status of Infrastructure in Category III
and IV (subject to corrective maintenance) (As of March 2023)
Repaircompleted

Tunnels(Approx. 11,000)

Ⅱ
50%

II 65%

The function of the structure is already impaired
or is highly likely to be impaired, and measures
should be taken immediately.

IV Emergency
action stage

Bridges

I 3%

19%

35%

Number of Facilities by Administrator
MLIT
5%

Started28%

Not yet started
53%

32%

(As of March 2023)

Expressway
companies
3%
MLIT
15%

33%

BridgesTunnels

Expressway
companies
18%

Local
governments
66%

Local
governments
90%

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31

Appendix： Congressional Budget on Roads in the United States(President Trump)
Public Spending for Highways, 1956–2017 (billions of 2017 dollars)

2019

Agreed with the opposition to start a discussion on a $2 trillion
infrastructure investment bill over 10 years, but the discussion was cut
off due to impeachment proceedings.

2021

Infrastructure Investment and Jobs Act (IIJA)[Approximately ＄1 trillion over 5 years](Billion dollar)

200$400 billion for the repair and reinforcement of roads and bridges
15,000 out of 45,000 bridges in poor conditions are targeted

150
Operation and
Maintenance, R&D,
Public Relations, etc.
100

50(President Biden)2023

It is estimated that more than $319 billion is needed to repair andreinforce approximately 220,000 bridges that require maintenance.
(Source: American Road & Transportation Builders Association 2023 Report)

1983
Surface Transportation
Assistance Act (STAA)(Billion dollar)

Capital expenditures(purchase, construction,and improvement of
infrastructure assets)
1967
Silver Bridge
Collapse

0

1960

1970

Budget Progress (From November 2021 onwards)
Transportation
America in Ruins
published

1980

644.4

300.3

400.0

181.4

66.0

34.7

Public Transportation

91.2

42.5

Airports and Federal Aviation Administration
Facilities

25.0

11.6

Ports and Waterways

16.7

9.7

Safety

38.0

14.3

7.5

6.1

Climate, Energy, and the Environment

126.0

98.3

Broadband

65.0

60.8

※137.6

1.6

973.0

461.1

Roads, Bridges and Major Projects

1981

Passenger and Freight Rail
1990

2000

2010

（Source： Prepared by SHO-BOND based on MLIT data, etc.）

Road Infrastructure Laws and Its
Budgets in the United States$155.3 billion ($31.1 billion/year）

1992 ISTEA

5 years

1998 TEA２１

5 years$218 billion （43.6）

2005 SAFETEA-LU

5 years$244.1 billion （48.8）

2013 MAP２１

2 years$105 billion （52.5）

2015 FAST

5 years$305 billion （61.0）

Other Programs

2021 IIJA

5 years$973 billion （194.6）（Total）（Source： Prepared by SHO-BOND based on Japan Expressway Holding and Debt Repayment Agency data）

Budget Progress（Including repair andreinforcement of roads
and bridges）

Electric Vehicles, Buses and Ferries（Others）（Source： Prepared by SHO-BOND based on White House data）(No expense breakdown is given for some of these items)

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32

Appendix： Examples of Repair and Reinforcement Works (SHO-BOND)

RepairPrevention■Emergency repair ofpavement and road surface

Reinforcement■Prevention of concrete
deterioration■Deck slab replacement■Spalling prevention■Reinforcement method■Cathodic protection(salt damage)■Seismic retrofitting

新設
新設
公共

■Concrete crack repair
建築

民間

新設

新設

■Cross-Sectional restoration
00materials and Adhesives

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33

Appendix： Examples of Repair and Reinforcement Works (SHO-BOND)
Repair or replacement of Bridge
bearing①④④ Expansion joints①⑤ HYBRID sheet for
preventing the peeling off

Sound absorbing plate②

⑤
⑥

②
④
Prevention device for bridge fall③⑥ Winding RC for reinforcement③

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③

⑥
⑤

34

Appendix： Expressways (Example of a Large Renewal Project)｜Highlights of a major renewal projectTwo-waytraffic

Deck slab replacement
sector

NEXCO CENTRAL manages approximately 2,000 km of Expressway such as the Tomei Expwy
and Chuo Expwy. Meishin Expwy has been aging for more than 50 years since the whole line
was opened, and about 60% of the roads have been in service for more than 30 years.

Source: Prepared by SHO-BOND based on NEXCO CENTRAL websites

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35

Appendix： Expressways (Example of a Large Repair Project)｜Highlights of a major repair project
DamagesDamagesPavement
Deck slab
Fatigue cracks in steel girder

Fatigue cracks in steel deck slab

GirderSinking concrete deck slab

Cracks in PC girder

Damages[Girder attachment]

Pier

Cracks in concrete pierCorrosion at steel girder
attachment

Source: Hanshin Expressway

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36

Disclaimer
This document is an English translation of the announcement titled “Medium-term
Business Plan 2027” released in Japanese on August 9, 2024. The Company provides
this translation for your reference and convenience only without any warranty as to its
accuracy. In case of any discrepancy between the translation and the Japanese original,
the latter shall prevail.

Copyright © SHO-BOND Holdings Co., LTD. All Rights Reserved.

37