For FYE June 2023

AnnualShareholders
Newsletter
From July 1, 2022 to June 30, 2023

Contents
To Our Shareholders 

1FeatureDisaster Response Through Real-Time
Prediction and Estimation Technology 

3Financial Highlights / Segment Review 

9Financial Data 

10Corporate Profile / Stock Information  Back coverCreating systems that advance society by integrating
human, physical, and intangible resources.

Top
Message

To O u r S h areh ol d ers
I would like to extend my heartfelt gratitude to ourshareholders for their continued interest in and support for
KOZO KEIKAKU ENGINEERING Inc. (KKE).
First, I would like to report on our situation in FYE June
2023.

Overview of FYE June 2023
In FYE June 2023, we managed our business inaccordance with the following core management policies:“Steadily promote existing businesses based on improved
added value and high quality,” “Develop new businesses
aimed at increasing medium and long-term corporate
value,” and “Recruit and develop talented collaborative
professionals who can lead future businesses.”Financial Results for FYE June 2023
In FYE June 2023, we finished the year with both recordhigh net sales and profit, with net sales of ¥16,580 million,
operating profit of ¥2,189 million, and profit of ¥1,613
million. I believe that these results were attributable tosteady growth in new businesses and continued investment
in collaborative professionals, who are the source of our
growth. In addition, we met our target for total added value(operating profit + personnel expenses + fringe benefits), a
management indicator for which we have set an ambitious
7.9% growth target.
Looking at each segment, in the Engineering Consulting
segment, net sales and profits both increased as we
steadily implemented projects such as structural design
consulting, analytic solutions, and systems development
projects in the residential and construction industries.
In the Product Service segment, our new businesses,
specifically our cloud-based email delivery service (Twilio
SendGrid), cloud-based room entry and exit management
service (RemoteLOCK), and indoor digitalization platform(NavVis) continued to grow by more than 150% year on year,
driving growth in this segment. In these new businesses,
we have made additional investments of approximately

Shareholder Returns
Basic Policy on Profit Distribution
The Company recognizes that returning
profits to its shareholders is an importantmanagement issue, and makes it a basic
policy to pay continuous and stabledividends while taking into accountthe needs for internal reserves for thestrengthening of management base andfuture business development.

1

Trends in Dividends
First-quarter dividend
Year-end dividend

Second-quarter dividend(Unit: ¥)Dividend Yield

(Unit: %)Third-quarter dividend

140

Special dividend

120

120

120

20

20

20

40

40

40

20

20

20

20

60

4.7

4.6
4.3

4.1

20

20

20

20

20

20

20

20

20

‘20/6

‘21/6

‘22/6

‘23/6

‘20/6

‘21/6

‘22/6

‘23/6

US$970,000 in RemoteLock, Inc., the developer of theRemoteLOCK business, and €3 million in NavVis GmbH ofGermany, the developer of the NavVis business, in orderto further strengthen collaboration with each partner. In
addition, from June 30, 2023, we have begun providing
sales and technical support for SimScale, the industry’s firstcompletely cloud-based CAE platform newly developed by
SimScale GmbH of Germany.
Regarding the effective utilization of human capital, we
have expanded collaboration not just within KKE, but also to
our Group companies. We established KKE Smile Support
Inc. for employees who, for a variety of reasons, want tobe able to freely choose their workstyles without being
constrained by workplace, time, or other circumstances.
Establishing this company has enabled us to provide
employees with a larger stage to realize their full potential.
Furthermore, PARA-SOL, Inc., which has been responsible
as a partner company for providing support for our cloudbased e-mail delivery service and other operations, becamea subsidiary of KKE. We are working to further strengthen
our collaborative partnership with this company.

To Be True Professionals Capable ofProviding Beneficial Value to Society
Growing Severity of Social Issues
Japan has experienced a variety of natural disasters.
This year marks the 100th anniversary of the Great Kanto
Earthquake, which was one of the most destructive
earthquakes in Japan’s history in terms of the extent ofdamage inflicted by the disaster. In addition, it has been
12 years since the Great East Japan Earthquake and 7
years since the Kumamoto Earthquake. People’s memory
and interest in these seismic disasters have waned, andthere are fewer opportunities to reflect on them. However,
it is essential to continue making preparations for urgent
anticipated seismic events, such as earthquakes in the
Nankai trough or directly under Tokyo. Furthermore, thedamage from natural disasters such as river flooding,landslides, and storm surges has become more severe due
to an increase in the intensity and frequency of heavy rainfall
and typhoons associated with global warming in recent
years. Measures to address these types of storm and flood
damage have also become an urgent priority.
The use of digital technology and related measures is
crucial to efforts to minimize the damage caused by thesenatural disasters to human lives and the economy, as wellas efforts to achieve restoration and recovery from suchdisasters as early as possible. Advances in new technologies
that could affect how society functions, such as the Internetof Things (IoT), robotics, artificial intelligence (AI), and big
data are expanding the possibilities for generating innovative
solutions to these issues.
Additionally, society as a whole has shown a growinginterest in sustainability, such as the SDGs and ESG

The Founder’s philosophy is inscribed in a commemorative stone presented by former Kumamoto
Prefecture Governor Morihiro Hosokawa.

management. The approach of working to address various
social issues and thereby increasing corporate value hastransformed the behavior of many companies. It has createda highly favorable environment for companies to addresssocial issues more actively.
To Remain True Professionals
As a “Professional Design & Engineering Firm” thatbridges the academic and industrial worlds, KKE hascontinued to engage in businesses that solve social issues
by applying academic knowledge together with the private
and the public sector. KKE has contributed to the solutionof social issues by providing customers with the means
to address the issues they face, such as safe structuraldesign and seismic impact assessments on structures,assessments of wind and flooding conditions and riverwater-level prediction for measures to address typhoonand significant heavy rain, and simulation-based support
for developing evacuation plans for residents during
natural disasters. In this issue of the Annual Shareholders
Newsletter, we introduce some of the scenarios in which
our real-time prediction and estimation technology fordisaster response is put into use.
These activities are underpinned by the philosophy of
our Founder Dr. Makoto Hattori, who believed that “Thegreatest luxury in life is to work as hard as you can forothers, and to take pleasure in seeing their delight with yourwork unbeknownst to them.” KKE is supported by not justits long history since its founding, and its extensive trackrecord and experience, but also by every employee whogathers here to work. Looking ahead, as indicated by ourFounder’s philosophy, each employee will achieve personal
growth so that we can address and contribute to thesolution of ever-changing social issues. By doing so, we willremain a group of true professionals capable of providing
beneficial value to society.
Therefore, we ask our shareholders for their continued
encouragement and support.

Tamon Watanabe
Representative Executive Officer and President
2Feature

Disaster Response Through Real-Time
Prediction and Estimation Technology

The term “unforeseeable” has been used frequently and repeatedly to describe the Great East Japan Earthquake. With amagnitude of 9, this mega earthquake was the most powerful seismic event ever recorded in Japan. It created a tsunami thatcaused significantly more flooding damage than had been predicted by hazard maps.
The massive tsunami of 3.11 arrived in surges that crested over breakwaters and engulfed everything in its path, including
pre-designated evacuation shelters. It reminded us of the reality that there is a limit to what we can protect, no matter how
many physical infrastructure measures we take to reinforce structures in preparation for disasters. However, while people may
be helpless in the face of nature’s destructive force, we have learned that the magnitude of the damage will vary depending
on how people respond.
To protect more people’s lives, safety and property from the destructive power of nature, we must take immediate disaster
response measures while also mobilizing all intangible disaster response measures such as the utilization of various data
related to natural phenomena and disasters. For natural disasters that occur over time, such as typhoons, there is a growing
awareness of the importance of measures to predict the event’s future course and secure lead times for evacuations, whereas
for natural disasters that strike suddenly, such as earthquakes, there is growing awareness of the importance of assessing thesituation at the earliest possible stage after the disaster strikes, in addition to undertaking physical infrastructure measures inadvance.
As storm and flood damage intensifies and becomes more frequent as a result of climate change, and as the risk of megaearthquakes such as those directly under Tokyo and in the Nankai trough increases, the experience of the Great East Japan
Earthquake emphasizes the need for incorporating real-time prediction and estimation technologies into disaster responses.
These technologies should help to answer questions such as “How high will the water levels rise as a result of a developing
typhoon?” and “Where should we send rescue crews, survey teams and support?.”
In 2016, the Cabinet Office proposed Society 5.0 as a blueprint for a future society that Japan should aspire to throughsystems that achieve a high degree of convergence between cyberspace and physical space. In the disaster prevention field,
Society 5.0’s vision for the future lays out a clear framework for realizing safe evacuation, prompt rescue, and optimal deliveryof supplies by analyzing damage data and other information based on regional characteristics. In order to mitigate the damage
on society as a whole and achieve a speedy recovery, it is crucial to increase the sophistication of technology development andthe technology required to predict damage and losses in advance and estimate them promptly after a natural disaster. There is
growing momentum behind collaborative efforts by the public and private sectors to address disaster responses.

Effectively utilize
the reservoir capacity of dams
before significant heavy rain

Dam inflow forecast
Increase the efficiency ofrecovery from typhoon damage

Typhoon damage
prediction

Supportthe rapid restoration of daily life

Estimation andprediction ofearthquake damage“We will give academia a social dimension, thereby creating knowledge that is beneficial to society.” This idea has served
as KKE’s bedrock principle since its founding. KKE provides highly accurate prediction and estimation technology for natural
disasters by employing various methodologies, such as cutting-edge mathematical engineering and machine learning, basedon consideration of the complex mechanism of natural phenomena and geographical conditions of each region.

Protect residents’ daily lives
from rising water levels

Real-time storm
surge prediction

In the face of unprecedented natural disasters, is there anything we can do to help?
KKE is committed to advancing toward a safer and more secure future society by tackling the difficult challenge of thenatural world’s unpredictability.

Supportthe economic activity ofcompanies facing flood damage

Evacuate materials
and heavy machinery
in response to risingwater levels

Overview of RiverCast
The real-time flood prediction system RiverCast provided by KKE
was developed in collaboration with the University of Tokyo. Together
with Dr. Kazuyuki Aihara, a distinguished professor/professor emeritusof the University of Tokyo who is a preeminent authority in complex
systems and chaos, RiverCast was developed using cutting-edge mathematical engineering. RiverCast also supports theprediction of floods that may occur on an unprecedented scale, including catastrophic significant heavy rain resulting fromclimate change. In addition, RiverCast can also implement probabilistic water-level predictions by modeling errors in the rainfall
amounts of weather forecasts and integrating this data with river water-level prediction models. The innovative feature ofRiverCast is that it can be introduced speedily at about one-tenth the cost of conventional prediction systems by making useof historical data. Because RiverCast is a cloud-based service, prediction results can be viewed easily on a PC, smartphone ortablet, allowing local conditions to be confirmed outside of the office or from home, without physically visiting sites.

3

Rainfallamounts

River waterlevelsDams

Tide levels

Real-time data acquisition

Cloud

The research accomplishmentsof this prediction technology wereselected for inclusion in “Top 100
in Physics” of Scientific Reports,
a comprehensive science journal
issued by Nature Publishing Group.

4Feature

Disaster Response Through Real-Time Prediction and Estimation Technology

Protect residents’ daily lives
from rising water levels

A storm surge is an abnormal rise in sea level caused by a pressure surge in which the sea level is lifted by the reduced airpressure associated with low pressure systems such as typhoons or developed cyclones, and by a wind-driven surge in whichstrong winds drive sea water toward the shore. Japan’s major cities are located along the coast and encompass many lowlying areas at sea level, making them susceptible to the effects of storm surges.
Floodgates are installed to protect residential areas from storm surges. When tidal levels rise, floodgates can be closed
to prevent a rise in the level of the inner waters (canals). Pumps can also be used after the floodgates have been closed toforce water from the floodgates’ interior to the outside (outer waters). However, if the floodgates are closed, mariners on theouter waters will be unable to return. The floodgates cannot necessarily be operated only for the sake of neighborhood safety(by closing floodgates early). Floodgate operation requires expertise. Proper and timely operation of floodgates has been
supported by operators entrusted by local governments.
Concerns have been raised in the past few years about the difficulties of passing on floodgate operation expertise as theworking-age population has declined and experienced operators have retired. Furthermore, as climate change causes anincrease in extremely powerful typhoons known as “super typhoons,” it is expected that it will become increasingly difficult to
operate floodgates properly to protect residents from storm surges.
RiverCast technology is being applied to ensure flexible and sustainable responses to flood damage that do not rely on
experience, in order to protect the daily lives of residents from storm surges.
RainfallInner harbor protection

Floodgate

River

River construction work is performed at various locations to reduce the risk of flooding caused by rising river water levels asa result of significant heavy rain, and for restoration and recovery work after flood damage occurs. Construction work withinrivers must be conducted even during flooding periods, in order to restore infrastructure at the earliest possible stage andachieve related goals. However, water levels can easily rise during construction work within rivers because the river width isnarrowed due to the installation of construction yards. When water levels rise, materials and heavy machinery are at risk ofbeing carried away by the river.
In order to evacuate materials and heavy machinery, construction work must be suspended. Large trucks and unloading
cranes must be readied and steel pipe piles, heavy machinery and equipment must be moved from materials yards. It takes
approximately 7 hours to complete all of these processes. The work is not difficult if the evacuation is carried out safely andcautiously at an early stage. To prevent construction delays, it is essential to minimize the time between the evacuation andthe resumption of construction work. Following the construction schedule while ensuring safety also means fewer economic
losses. Because the top priority is to protect human lives and people’s daily lifestyles, interest in economic considerations takea back place. As a problem rooted in reality, however, it cannot be disregarded. In these situations, RiverCast is used to predictwater levels 15 hours in advance using only real-time water levels and rainfall data.

Benefits of deploying RiverCast
Conventional evacuation process

TyphoonDrainage pumpstation

Detect the risk offlood damage from rainfall
and upstream water levels

Storm surge
generation
mechanism

In case of a rapid rise in water level, there is a high risk of harm to workers and inundation damage
to materials and heavy machinery.
If the site is damaged, restoration will take time and construction cannot be resumed immediately.

Startevacuation

Approximate time when safety
can be confirmed based on
rainfall and upstream water levels

Flooding damage
occursConfirm status of damage
Begin restoration work

Low air pressure
High waves

Seawall
Storm
surge

Evacuate materials and heavy machinery in
response to rising water levels

Support the economic activity ofcompanies facing flood damage

Real-time storm surge prediction

Water-level
threshold forevacuation

Wind-driven surge
Pressure surge
Normal sea level (tidal height)

Lead timeafter flood event

Lead time
before flood event

Embankment/seawall
Time

Effectively utilize the reservoir capacityof dams before significant heavy rain

Dam inflow forecast

As record-breaking heavy rain disasters occur frequently across Japan, dams play an important role in holding floodwaters
upstream and protecting downstream communities. Dams serve multiple functions, including hydroelectric power generation,
agriculture, waterworks, and flood control. There are multi-purpose dams that provide the functions of both flood control(preventing river floods) and water supply (supplying water needed for purposes such as hydroelectric power generation,
agriculture, and waterworks), and water-supply dams whose sole function is to provide water. The Ministry of Land,
Infrastructure, Transport and Tourism (MLIT) conducts measures to pre-release water from dams at approximately 570 dams
whose purpose includes flood control, and it also implements these measures at approximately 900 dams that serve purposessuch as electric power and agriculture, thereby putting these dams to use in flood control measures.
Normally, water-supply dams need to store water for water supply purposes. However, when heavy rain is forecast, thedam’s stored water can be released to temporarily reduce the dam’s water level, allowing the dam to be used as a flood
control measure. This action is performed under the assumption that the stored water level can be replenished by rain. Whensignificant heavy rain is forecast, the pre-release of water from dams, which allows floodwater to be stored in dams as muchas possible, is effective in preventing the amount ofwater in rivers from increasing.
This is when the prediction of inflow into dams
becomes crucial. Inflow into dams is affected by not
Capacity for flood control
only the amount of rainfall, but also a variety of other
Inflow
factors, including topography. KKE supports water
release operations from dams by providing highly
Capacity for water supply
precise predictions of inflow based on mathematicalengineering technologies developed jointly with the
University of Tokyo.
During heavy rain

5

Detect a rise inflood damage risk fromwater-level prediction

Startevacuation

Completeevacuation

Evacuation process when using RiverCast

ReportApproximate time when safety can be
confirmed based on rainfall and upstream
water level plus water-level prediction

Start restoration work

Detect a rapid rise in water levels with high accuracy, and prevent flood damage by responding earlier.
Construction work can be resumed immediately after the water level decreases.

Social Cooperation Symposium (Event Report)

In June 2023, KKE held the Social Cooperation Program Symposium “Climate Change
Mitigation and Adaptation Led by Data Integration and Mathematics - Engineering
Knowledge Created Together with Universities” at the Ito International Research Centerof the University of Tokyo.
At this symposium, one of the central topics was “Climate Change Mitigation and Adaptation,” and three academic
researchers affiliated with KKE through our Social Cooperation Programs gave lectures. Concurrently, we exhibited 11
activities carried out by KKE in relation to climate change. The exhibit venue was extremely lively and vibrant, as visitorsand managers who are actually leading each activity on display engaged in vigorous discussions and dialogues. We
were able to spend valuable time with visitors to the exhibit. The visitors remarked, among other things, that “KKE
activities are very interesting because they take a different approach to existing research.” and “I felt there is a need toincorporate the latest data science into the traditional field of mathematical optimization.”
RiverCast, which is introduced in this issue of the Annual Shareholders Newsletter, is a service developed throughthe commercialization of the research accomplishments of the Social Cooperation Program “Mathematical Engineering
for Complex Social Systems in Future,” which ran from February 2016 to March 2020.

6

Feature

Disaster Response Through Real-Time Prediction and Estimation Technology
Employee Interview

Support the rapid restoration of daily life

Estimation and prediction of earthquake damage

There are other cases in which real-time prediction and estimation is needed from an economic perspective. It is thecase in which insurance claim payments are made when an earthquake occurs. The extent of damage from an earthquake
is affected by multiple factors, including not just the seismic intensity, but the ground and building conditions at the site of
the earthquake. The seismic intensities reported on the news and other media sources represent data measured at a fixed
point where a seismometer is installed. In addition to this data, we use the seismic observation records measured at fixed
points and databased ground information to estimate the actual seismic intensity and the amount of surface acceleration andvelocity at locations other than those where seismometers are located, and create a precise map of the seismic ground motion
distribution. Insurance companies can use this map to overlay it with nationwide property data and rapidly estimate the extent
of damage to covered property. According to an announcement by the Cabinet Office, the worst-case scenario estimate forthe total number of homes destroyed as a result of a Nankai Trough earthquake is 2.39 million. This number becomes evenlarger when partially destroyed homes and other damaged structures are included. To ensure prompt and accurate payment of
insurance claims for this massive number of damaged homes, insurance companies will refer to the damage estimate results
to rapidly launch a loss assessment system, and contact policyholders who may not have filed a claim for insurance payment.
After protecting lives and safety, the next priority is daily life. Through the prompt payment of insurance claims, KKE’s real-time
estimation data is used to provide behind-the-scenes support to help those affected by earthquake disasters restore theireveryday lives.

Precise seismic movement
distribution data
reflecting ground data

Increase the efficiency ofrecovery from typhoon damage

Estimate the extent ofdamage to covered property

Nationwide property data

Typhoon damage prediction

A rapid recovery from power outages is necessary to restore people’s daily lives. Power outages are mainly caused by highwinds from typhoons. The supply of electricity can be stopped because of damage to utility poles and power lines caused bythings being blown around by high winds. Materials and personnel must be prepositioned to facilities that may be affected by
the stoppage of electricity supply in preparation for recovering from a power outage. If areas at risk of power outages cannot
be predicted, not only will the restoration of power be delayed, but the prepositioned resources will be inefficient, resulting ineconomic losses. The path of the typhoon must be determined in advance in order to predict the areas that will experience
power outages. In our daily lives, when a typhoon is approaching, we frequently see forecasts of the typhoon’s path on thenews and other media sources. To use this data to predict power outages, we need more data encompassing a larger numberof locations on a finer mesh over an expansive area.
KKE’s wind speed simulation enables detailed monitoring of wind speeds nationwide at a mesh resolution of 250 m. We canpredict where power outages may occur based on this wind-speed simulation. After confirming that a typhoon has formed,
KKE’s simulation technology is used at the stage of planning the prepositioning of materials and personnel in areas where there
is a risk of a power outage.
Wind speed prediction

Power outage
probability(m/s)

Typhoon Hagibis of 2019
Power outage prediction based on wind speed calculations with a nationwide 250 m mesh

7(%)

Typhoon path

Serving as a business designer forflood disaster prevention“I’d like to be on the side of people who create the rules for
an ideal society.”
Since transferring to the Sales & Marketing Division from theDisaster Reduction & Environmental Engineering Department five
years ago, Yumiko Yamaguchi has been playing an active role
as a business designer for flood disaster prevention, designingsociety with flood disaster management technology. Ms.
Yamaguchi is motivated by her efforts to tackle the challenges offlood disaster prevention and her strong aspirations for working
at KKE.

Designing rules for society
I have a strong attachment to the word “design.” In general,
I believe that the word “design” conjures up images of graphicalobjects such as blueprints. However, “design” is a word witha broader definition that encompasses characteristics such asplanning, form, intent and goals in addition to visual elements. I
frequently use the word “design” to mean creating a blueprint fora wise future, as well as our determination to construct the rules
for society itself.
I worked on ground and structural analysis for the first 12
years since I joined KKE. However, when considering the futureof the business I was a part of and how to create new business, I
believed it was necessary to understand how project orders werereceived. For this reason, I transferred to the Sales & Marketing
Division five years ago.
I would like to build relationships with customers in new
businesses. With this goal in mind, I’ve been working on
business development of RiverCast, which represents KKE’s
commercialization of the accomplishments of joint researchwith the University of Tokyo. Since its founding, KKE has carriedout successful projects in the disaster prevention field. Many of
its projects can be classified as physical infrastructure support
measures focused on earthquakes. As a new dimension of
KKE’s disaster prevention field, I would like to provide solutions
related to flood disaster prevention.

Tackling the challenge of the new field offlood disaster measures

Power outage prediction

Maximum
wind speed

Yumiko Yamaguchi

It is clear that weather disasters will increase due to the impact
of climate change. In Japan, the implementation of flood disastermeasures has lagged behind earthquake measures, which were
put in place first. If I were asked whether RiverCast could be
deployed immediately under the current conditions, I would
have to say that it cannot necessarily be rolled out right away.
Real-time prediction is information that has not been utilized inflood disaster prevention until now. For this reason, we must firstdevelop rules for how prediction data can be utilized in decision
making.
No matter how many predictions are made, if there is a flood,catastrophic damage cannot be avoided. However, nothing
could be better if disaster responses could be improved evenslightly through prior predictions. Based on this belief, we will
move forward by creating the rules themselves, rather than notusing the technology because there are no rules.

My colleagues never gave up on me
In 2018, I transferred from the Disaster Reduction &Environmental Engineering Department to the Public Project
Design & Marketing Department (former name) because I wanted
to create something new in the disaster prevention field. Following
the transfer, I learned the necessary perspectives, actions, andtechnologies for sales through step-by-step practice on the job,with a focus on marketing activities designed to shape a newmarket related to flood disaster prevention. Initially, following
the transfer, I had a limited perspective and my thinking did notextend to the market structure related to operations and the entire
process of customer operations. However, through a series ofexperiences, including research into market needs, classificationof industry participants, narrowing of targets, and building acustomer base I developed a broad perspective and a flexible
mind. I improved my capacity to identify market and customer
needs as well as my ability to act through persistently repeatedcycles of developing and verifying hypotheses. Moreover, I am
now able to develop the necessary plans for an internal systemand coordinate with multiple related divisions in order to makenew proposals that meet customer needs by combining inhouse technologies.
When asked during this interview what motivates her towork hard, Ms. Yamaguchi responded without hesitation, “Mycolleagues who never gave up on me.” I had four children, but I
didn’t want my job requirements to be reduced. My colleagues
continue to trust in me and have not given up on me. This is still amajor source of encouragement and support to the present day.
In the future, I hope to pave the way for KKE to broaden thescope of its activities from a multi-hazard response perspective,
encompassing a variety of disasters, not only earthquakes andflood damage, but also typhoons (strong winds) and landslides,
over a longer period of time and with an expansive viewpoint on
disaster prevention themes.

Interview postscript

The most memorable aspect of this interview was Ms. Yamaguchi’s words, “My colleagues never gave up on me,” which reflected herconsistently kind and gentle demeanor. These words also express her inner strength, which is based on her firm desire to continue her
career without giving up due to child raising. I sensed her strong, unwavering determination to forge a new path in the emerging field offlood disaster prevention by leveraging assets such as her experience as an engineer and the colleagues she has met at KKE.
8

Financ ia l H ig hlig h ts

Financial Data

Net Sales

Operating Profit

Ordinary Profit

Profit(Unit: Million yen)

(Unit: Million yen)

(Unit: Million yen)

(Unit: Million yen)

16,580 million yen 2,189 million yen(Up 12.4% year on year)(Up 10.8% year on year)

16,58013,432

13,631

14,7482,101 million yen(Up 7.9% year on year)

2,189
1,855

1,976
1,797

1,718

1,947

1,613 million yen(Up 18.7% year on year)

2,101

1,764

1,613
1,204

‘20/6

‘21/6

‘22/6

‘23/6

‘20/6

‘21/6

‘22/6

‘23/6

‘20/6

‘21/6

Balance Sheet (Summary)

‘22/6

‘23/6

‘20/6

1,330

‘21/6

1,359

‘22/6

‘23/6

Segm e nt Re v ie w
Engineering Consulting
In the fiscal year under review, net sales and profit
exceeded their levels for the previous fiscal year, following
the steady implementation of projects carried over from theend of the previous fiscal year, and new orders received
during the fiscal year under review. The application ofextensive experience and knowledge gained in the past
led to a consistent increase in highly profitable added
value. As a result, net sales amounted to ¥10,714 million(compared to ¥10,141 million for the previous fiscal year),and gross profit was ¥6,273 million (compared to ¥5,893
million for the previous fiscal year). Additionally, in termsof the backlog of orders for the next fiscal year, we havesecured the same level of backlog of orders as at the endof the previous fiscal year (¥5,269 million as of the end of
the fiscal year under review, ¥5,212 million as of the end of
the previous fiscal year).

Product Service
In the fiscal year under review, three cloud service provisiontype businesses, specifically our cloud-based email
delivery service (Twilio SendGrid), cloud-based room entry
and exit management service (RemoteLOCK), and indoor
digitalization platform (NavVis) grew by more than 150%
year on year, accounting for approximately 70% of thesales increase in the Product Service segment. Moreover,although these three businesses are not included in thebacklog of orders because they are primarily subscription
businesses, we expect them to continue to steadily
contribute to net sales. As a result, net sales amounted to¥5,866 million (compared to ¥4,607 million for the previous
fiscal year), and gross profit was ¥2,259 million (comparedto ¥1,829 million for the previous fiscal year).

Net Sales
Gross Profit

10,714 million yen (Up 5.7% year on year)
6,273 million yen (Up 6.4% year on year)

Net Sales

Gross Profit(Unit: Million yen)

(Unit: Million yen)
10,714

10,141

5,893

6,273

(Assets)
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Contract assets
Work in process
Other
Non-current assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets(Liabilities)
Current liabilities
Accounts payable-trade
Current portion of long-term borrowings
Other
Non-current liabilities
Bonds payable
Long-term borrowings
Lease liabilities
Provision for retirement benefits
Provision for retirement benefits
for directors (and other officers)
Provision for share-based payments
Asset retirement obligations
Total liabilities(Net Assets)
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Valuation and translation adjustments
Total net assets
Total liabilities and net assets

FYE June 2022

FYE June 2023

6,759,436
2,560,311
4,891
1,971,970
712,996
22,456
1,486,810
10,462,334
5,538,434
361,173
4,562,726
17,221,770

6,954,771
2,399,906
17,871
2,151,907
610,848
22,6191,751,617
11,353,098
5,427,285
378,091
5,547,721
18,307,870

5,434,865
488,557
796,552
4,149,755
3,756,532
50,0001,165,000
3,762
2,252,064

5,697,546
365,509908,420
4,423,616
3,308,628–
650,000453
2,316,345

20,54020,540170,892
94,2739,191,397

226,508
94,7809,006,174

7,866,026
1,010,200
1,325,209
6,154,516-623,899
164,346
8,030,373
17,221,770

8,870,827
1,010,200
1,353,082
7,121,309-613,764
430,868
9,301,695
18,307,870

FYE June 2023

From July 1, 2021
to June 30, 2022

From July 1, 2022
to June 30, 2023

Net sales

14,748,695

16,580,736

Cost of sales

7,025,512

8,048,089

Gross profit

7,723,183

8,532,647

Selling, general andadministrative expenses

5,746,212

6,342,765

Operating profit

1,976,971

2,189,882

48,736

16,925Non-operating income
Non-operating expenses
Ordinary profit

Net Sales
Gross Profit‘22/6

80,88925,805

1,866,895

2,075,676

Income taxes-current

817,183

601,697

Income taxes-deferred
Profit

5,866 million yen (Up 27.3% year on year)

Net Sales

Gross Profit(Unit: Million yen)

(Unit: Million yen)-139,056
1,613,034(Unit: Thousand yen)FYE June 2022

FYE June 2023

From July 1, 2021
to June 30, 2022

From July 1, 2022
to June 30, 2023

Cash flows from operating activities

2,105,385

1,797,307

Cash flows from investing activities-700,674-865,044

Cash flows from financing activities-964,657-1,092,833

Effect of exchange rate change
on cash and cash equivalents

86

165

Net increase (decrease) in cash
and cash equivalents

440,139-160,405

Cash and cash equivalents at
beginning of period

2,120,171

2,560,311

Cash and cash equivalents at
end of period

2,560,311

2,399,906

Capital Ratio/
Return on Equity (ROE)(Unit: %)Capital Ratio
Return on Equity (ROE) et sales were ¥16,580 million. Operating profit came to ¥2,189 million,Nordinary profit came to ¥2,101 million, and profit came to ¥1,613 million, allexceeding the announced earnings forecasts.

50.8

46.0

46.6

20.6

19.8

17.9

18.6

‘20/6

‘21/6

‘22/6

‘23/6

42.0

Income Statement Highlights

2,259 million yen (Up 23.5% year on year)-309,757
1,359,469

Cash Flow Statement (Summary)

Total net assets increased 15.8% year on year to ¥9,301 million.

‘23/6

105,326
2,101,481

Extraordinary losses

Total liabilities decreased 2.0% year on year to ¥9,006 million.
‘23/6

77,923
1,947,784

Profit before income taxes

Total assets increased 6.3% year on year to ¥18,307 million.
‘22/6(Unit: Thousand yen)FYE June 2022

Balance Sheet Highlights

Changes in Z-score* (‘14/6-‘23/6)
10.0

Allowance level

Safety level

Efficiency I

Efficiency II

Burden levelZ-score

8.8

9.0

5,866

8.0

4,607

2,259
1,829

7.0
6.0

5.3
4.3

5.0
4.0

4.9

4.6

4.9

5.3

Considerably
safe

5.8

3.8

3.1

2.99

3.0

Safe

2.0

1.81

1.0

Considerably
distressed

0.0
-1.0

‘22/6

9

Income Statement (Summary)

(Unit: Thousand yen)

‘23/6

‘22/6

‘23/6

FYE
June 2014

FYE
June 2015

FYE
June 2016

FYE
June 2017

FYE
June 2018

FYE
June 2019

FYE
June 2020

FYE
June 2021

FYE
June 2022

FYE
June 2023*Indicator of financial health. Calculated as a total of five indicators including pressure of short-term cash flow, asset efficiency, accumulated earnings, weight of debt burden, and total assets turnover.

10

Corpo r a t e Pro f ile / S tock In f ormati on
Corporate Data (As of June 30, 2023)

Share Status (As of June 30, 2023)

Name:

KOZO KEIKAKU ENGINEERING Inc.

Total number of authorized shares:

21,624,000 shares

Date of Foundation:

June 6, 1956

Total number of outstanding shares:

5,500,000 shares

Date of Establishment: May 6, 1959
Accounting Term:

June

Listed on:

Tokyo Stock Exchange(Standard Market)

Line of Business:

Engineering Consulting
Product Service

Composition of Shareholders (As of June 30, 2023)

Locations:
Head Office:4-38-13 Hon-cho, Nakano-ku, Tokyo
164-0012, Japan

Central Office:4-5-3 Chuo, Nakano-ku, Tokyo
164-0011

5,801

Number of shareholders:

Total number ofoutstanding shares:
5,500,000 shares

Nakanosakaue Annex: Sumitomo Nakanosakaue Building 10Fl.
1-38-1 Chuo, Nakano-ku, Tokyo 164-0011
Nagoya Branch Office: JP TOWER NAGOYA 25Fl. 1-1-1 Meieki,
Nakamura-ku, Nagoya, Aichi 450-6325

Financial institutions: 9.48%

Foreign corporations, etc.: 3.41%

5 shareholders / 521,565 shares

81 shareholders / 187,473 shares

Midosuji MTR Bldg. 5Fl. 3-6-3 Awaji-cho,
Chuo-ku, Osaka 541-0047

Securities companies: 2.16%

Individuals and others: 73.21%

19 shareholders / 118,730 shares

5,655 shareholders / 4,026,516 shares

Osaka Branch Office:Fukuoka Branch Office: JRJP Hakata Bldg. 8Fl. 8-1
Hakataekichuogai, Hakata-ku,
Fukuoka-shi, Fukuoka 812-0012

Other corporations: 11.74%
41 shareholders / 645,716 shares(Note) The figure for “Individuals and others” includes 47,153 shares of treasury shares.

Kumamoto Office:1315 Muro, Ozu-machi, Kikuchi-gun,
Kumamoto 869-1235

Shanghai Rep. Office:Shanghai World Financial Center, 15Fl.
No. 100 Century Avenue, Pudong New Area,
Shanghai, 200120, China

Fiscal year:

From July 1 to June 30 of the following year

C.d'En Granada,16,43003
Tarragona, Spain

Annual meeting ofshareholders:

Every September

Record dates for
dividends:

March 31, June 30, September 30 and
December 31

Record date:June 30

Spain Rep. Office:Main Group Companies(Domestic)

KKE Smile Support Inc.
PARA-SOL, Inc.
RemoteLock Japan Co., Ltd.

(Overseas)International Logic Corporation (U.S.A.)KKE SINGAPORE PTE. LTD. (Singapore)

Additional Information

Mitsubishi UFJ Trust and Banking Corporation
Administrator ofshareholder registry& Special accountmanagement institution:
Contact information for Corporate Agency Division,
Mitsubishi UFJ Trust and Banking Corporation
the above:
1-1 Nikkocho, Fuchu-shi, Tokyo(Mailing address)
Corporate Agency Division,
Mitsubishi UFJ Trust and Banking Corporation
P.O. Box No. 29 Shin-Tokyo Post Office,137-8081
TEL: 0120-232-711 (Toll free)
Method of public notice: By electronic public notice
URL where public
notice is posted:

https://www.kke.co.jp/(However, public notice is posted on the
Nihon Keizai Shimbun in the event thatelectronic public notice is unavailable due toaccident or other unavoidable reasons.)

Contact: Investor Relations Section e-mail: ir@kke.co.jp