FYE June 2023 (65th Term)
Financial Results
2023.09.15

https://www.kke.co.jp/

https://www.kke.co.jp/
Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Agenda1. Overview of Financial Results
2. Overview of Results by Segment
3. To Continue to Provide Value That Is Useful to Society
4. Forecast for Fiscal Year Ending June 30, 2024 (66th term)

Note pertaining to this data:- In principle, monetary amounts included in this document are rounded down to the nearest million yen.
- The forward-looking statements included in this document are based on information currently available to the Company and on certain preconditions
that the Company deems reasonable. The Company provides no guarantee that what is stated will actually be realized.
- The names of companies, systems, and products included in this document are, as a general rule, trademarks or registered trademarks of companies,
including KOZO KEIKAKU ENGINEERING Inc.

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Overview of Financial Results

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Income Statement(Million yen)FYE June 2022
(64th term)

FYE June 2023
(65th term)

Change fromprevious FY

Rate ofchange fromprevious FY

14,748

16,580

1,832

12.4%

7,025

8,048

1,022

14.6%

Gross profit

7,723

8,532

809

10.5%

(Gross margin)(52.4%)(51.5%)

SGA expenses

5,746

6,342

596

10.4%

Operating profit

1,976

2,189

212

10.8%

(Operating margin)(13.4%)(13.2%)

-29

-88

-59

－

Ordinary profit

1,947

2,101

153

7.9%

(Ordinary margin)(13.2%)(12.7%)

-80

-25

55

－

1,866

2,075

208

11.2%

507

462

-44

-8.8%

Profit

1,359

1,613

253

18.7%

(Net margin)(9.2%)(9.7%)Net sales
Cost of sales

Non-operating expenses (income)Extraordinary loss (income)
Profit before income taxes
Income taxes

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

4

Trends in Results
営業利益
Operating profit

Profit (Million yen)

経常利益
Ordinary profit

当期純利益
Profit

売上高
Net sales

Net sales (Million yen)

2,700

18,00016,5802,400

14,74813,432

2,100
1,800

11,852
10,64811,003

10,947

11,50013,631

11,966

16,00014,00012,0001,500

10,000

1,200

8,000

900

6,000

600

4,000

300

2,000

0

June FYE
June FYE
June FYE
June FYE
FYE
June FYE
June FYE
June FYE
June FYE
June FYE
June'14/6期'15/6期'16/6期'17/6期'18/6期'19/6期'20/6期'21/6期'22/6期'23/6期
2018
2019
2020
2021
2014
2015
2016
2017
2022
2023
（第56期）（第57期）（第58期）（第59期）（第60期)（第61期)（第62期)（第63期)（第64期)（第65期)
(60th
term)
(61st
term)
(62nd
term)
(63rd
term)
(56th term) (57th term) (58th term) (59th term)(64th term) (65th term)
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

05Balance Sheet(Million yen)Item

FYE June 2022
(64th term)

FYE June 2023
(65th term)

Cash and deposits

2,560

2,399

Notes and accounts receivable trade, and contract assets

2,689

2,780

22

22

1,486

1,751

Work in process
Other

FYE June 2022
(64th term)

FYE June 2023
(65th term)

ー

ー

ー

896

958

61

0 Advances received

1,056

1,197

140

264 Accrued expenses

1,434

1,750

316

2,047
5,434

1,791
5,697

-255
262

ChangeItem-160 Short-term borrowings
Current portion of long-term

90 borrowings / corporate bonds

Other

Change[Current assets]

6,759

6,954

195

Property, plant and equipment

5,538

5,427

-111 payable

1,215

650

-565

Intangible assets

361
4,562
2,097

378
5,547
2,777

16 Provision for retirement benefits
984 Other680 [Non-current liabilities]

2,252
289
3,756

2,316
342
3,308

64
52
-447

Shares of subsidiaries andassociates

836

1,109

273

9,191

9,006

-185

Investments in capital ofsubsidiaries and associates

55

56

0 Share capital

1,010

1,010

ー

1,156
416
10,462

1,177
425
11,353

21 Capital surplus
8 Retained earnings
890 Treasury shares

1,325
6,154
-623

1,353
7,121
-613

27
966
10

164

430

266

8,030
17,221

9,301
18,307

1,271
1,086

Investments and other assets
Investment securities

Deferred tax assets
Other[Non-current assets][Current liabilities]
Long-term borrowings / bonds[Liabilities]

Valuation difference on
available-for-sale securities[Net assets][Assets]

17,221

18,307

1,086[Liabilities and net assets]* Impact of introducing ESOP: FYE June 2022: 83 million yen is included in Other of current assets, 203 million yen in treasury shares, and 206 million yen in current portion of long-term borrowings.
FYE June 2023: 38 million yen is included in Other of current assets, 410 million yen in treasury shares, and 393 million yen in current portion of long-term borrowings.
* Capital ratio
FYE June 2022: 46.6%; FYE June 2023: 50.8%
https://www.kke.co.jp/

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6

[Reference] Changes in Net Interest-Bearing Debt
Interest-bearing debt unrelated to the ESOP trust
Net interest-bearing debt

Interest-bearing debt related to the ESOP trust
Interest expenses(Million yen)

10,000200

As of FYE June 2023 (excluding ESOP)- Net interest-bearing debt: -791 million yen(-1,184 million yen)
* Excess cash
- Interest-bearing debt: 1,608 million yen(1,215 million yen)

8,000

120

4,000

80

2,000

40

0

△2,0000

FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(41st term) (42nd term) (43rd term) (44th term) (45th term) (46th term) (47th term) (48th term) (49th term) (50th term) (51st term) (52nd term) (53rd term) (54th term) (55th term) (56th term) (57th term) (58th term) (59th term) (60th term) (61st term) (62nd term) (63rd term) (64th term) (65th term)

https://www.kke.co.jp/

Interest expenses

Interest-bearing debt/Net interest-bearing debt

6,000

160

ESOP
393 million yen
Not attributable
to ESOP
1,215 million yen-40

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

7

Cash Flow Statement Highlights(Million yen)FYE June 2022 FYE June 2023
(64th term)

Change(65th term)

Balance at the beginning
of FY

2,120

2,560

440

CF from operating
activities

2,105

1,797

-308

CF from investing
activities

-700

-865

-164

1,404

932

-472

CF from financing
activities-964-1,092-128

Balance at the end of FY

2,560

2,399

-160

Free CFhttps://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

8

Cash Flow Statement Highlights(Million yen)

1,797

Breakdown of CF from operating
activities

-865

2,560

2,399
-1,092- Profit before income taxes
2,075- Depreciation
298- Increase in provision for share-based payments
55- Increase in provision for retirement benefits 64- Increase in trade receivables-90- Increase in inventories-53- Increase in accrued expenses
316- Decrease in trade payables-123- Income taxes paid
-907

Breakdown of CF from investing
activities- Purchase of property, plant and equipment -80- Purchase of intangible assets-134- Purchase of investment securities-448- Purchase of shares of subsidiaries andassociates-181- Loan advances-14

Breakdown of CF from financing
activities

Cash and deposits at CF from operating
the beginning of FY
activities
https://www.kke.co.jp/

CF from investing
activities

CF from financing
activities

Cash and deposits at
the end of FY- Net decrease in long-term borrowings- Purchase of treasury shares- Disposal of treasury shares- Dividends paid

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

-403
-910
972
-647
9

Overview of Results by Segment

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Engineering Consulting (EC) Structural design and structural analysis consulting
Structural design of high-rise buildings and structural analysis oflarge buildings

 Environment assessment and disaster risk reduction
consulting
Ground motion assessment, wind condition analysis and disasterrisk assessment

 IT system development for housing and construction
System development including CAD, BIM and structural
calculation

Automation of design (automatic disposition)

Calculation of flooding status

Scenario setting
Designating flooding parts, evacuationsites. etc.

Flooding simulation
Statuses of flooding andevacuation

Evacuation simulation

 Decision-making support consulting
Social simulation and optimization

 Information and communication technology consulting
Communication network, radio wave propagation, andelectromagnetic field simulation
https://www.kke.co.jp/

Radio propagation analysis
Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

11

Overview by Segment(Engineering Consulting: Changes over the past two terms)(Million yen)FYE June 2021 FYE June 2022 FYE June 2023 Year-on-year(63rd term)(64th term)(65th term)
ChangeNet sales

Gross profit

Gross margin

12,00060.0%

10,000

50.0%

8,000

40.0%

Orders

10,254

10,315

10,772457

Net sales

9,937

10,141

10,714

573

6,000

30.0%

Gross profit

5,730

5,893

6,273

379

4,000

20.0%

(Gross margin)(57.7%)(58.1%)(58.5%)

2,000

10.0%

0

0.0%

Backlog oforders

5,624

5,212

5,269

57

FYE June 2021
(63rd term)

FYE June 2022
(64th term)

FYE June 2023
(65th term)

Analysis Steady implementation of projects carried over from the end of the previous fiscal year and neworders received during the term under review
 The use of a wealth of empirical knowledge that has been accumulated led to a steady
improvement in added value with high profitability.

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

12

Product Service (PS)Market segment

Examples of package-sales type

Examples of cloud service-provision type*

Manufacturing-related
markets
CAE, thermal flow analysis,
particle-based simulation, granularsimulation, sales support solutions,etc.

*

Architecture- and civilengineering-related markets*

Architectural building analysis,ground analysis, etc.

Telecommunication-related
markets
Radio propagation analysis***

Others/Cross-industrial
markets*

Social simulation, risk assessment,
cloud-based entry/exit control
platform, and others

https://www.kke.co.jp/* Products developed in-house and sold externally

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

13

Overview by Segment(Product Service: Changes over the Past Two Terms)(Million yen)
10,000Net sales
売上高

Gross
profit
売上総利益

Gross margin
利益率

50.0%

FYE June 2021 FYE June 2022 FYE June 2023 Year-on-year(63rd term)(64th term)(65th term)
ChangeOrders
Net sales
Gross profit(Gross margin)

3,796
3,694
1,501
(40.7%)

5,044
4,607
1,829
(39.7%)

6,132
5,866
2,259

8,000

40.0%

6,000

30.0%

4,000

20.0%

2,000

10.0%

1,087
1,258
430

(38.5%)
0

Backlog oforders

1,222

1,659

1,926

266

0.0%
FYE'21/6
June
期2021
(63rd
term)
(第63期)

FYE'22/6
June
期2022
(64th
term)
(第64期)

FYE'23/6
June
期2023
(65th
term)
(第65期)

Analysis Three cloud service-provision-type businesses -- a cloud-based e-mail delivery service (Twilio
SendGrid), a cloud-based entry/exit control system (RemoteLOCK), and a 3D site data
platform (NavVis) -- grew more than 50% year on year, accounting for roughly 70% of theincrease in sales from Product Service.
 Continued proactive investment in business expansion, including an increase in the number ofcollaborative professionals and additional platform development, in expectation of further growth.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

14

Changes in Orders by Quarter
Orders by quarter(Million yen)

18,00016,905
15,36016,00013,581

14,00012,823
11,653

12,00011,512

11,892

11,69910,4292,820

10,000

2,925

3,188

8,000

4,000
2,000

2,302

2,808

2,960

3,139

2,970

2,857

3,134

2,643

3,139

2,604

4,298

3Q

3,966

2Q

4,057

1Q

4,420

3,562
3,103

3,455
3,311

3,046
2,971

2,549

4Q

3,700

3,242
2,836

4,581
4,516

3,526

2,606

6,000

14,050

2,846

2,243

3,288

2,730

3,841

3,726
3,182

3,136

3,661

0
FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(56th term) (57th term) (58th term) (59th term) (60th term) (61st term) (62nd term) (63rd term) (64th term) (65th term)
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

15

Changes in Net Sales by Quarter
Net sales by quarter(Million yen)

18,00016,58014,74815,00013,432
12,0009,000

11,852
10,6482,349

11,003

10,947

11,50011,966

3,571

4,146

4,039

5,240

4Q

4,722

3Q

3,835

2Q

2,781

1Q

4,774
5,021

3,318

13,631

4,787

3,916
4,422

6,000

3,000

4,563

3,645

3,703

3,720

2,092

2,043

1,877

1,872

1,642

1,995

1,794

2,113

3,439

3,856

3,868

3,754

2,056
1,650

2,861
1,748

2,008

3,064

2,546

1,909

3,170

2,382

0
FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(56th term) (57th term) (58th term) (59th term) (60th term) (61st term) (62nd term) (63rd term) (64th term) (65th term)
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

16

Trend in Order Backlog(Million yen)Backlog of orders
10,000

8,000

6,000

4,000

2,000

3,965

4,615

5,180

5,221

5,420

6,277

6,427

6,846

6,871

7,196

0
FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June FYE June
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(56th term) (57th term) (58th term) (59th term) (60th term) (61st term) (62nd term) (63rd term) (64th term) (65th term)

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

17

Year-End Dividends for the 65th Term

Decided amount
Record dateJune 30, 2023

Dividends per share

Year-end dividend: 60 yen
Special dividend: 20 yen
Total:
80 yenTotal dividends

436 million yen

Effective date

September 8, 2023

Source of dividends

Retained earnings

Dividend payout ratio

45.6%

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

18

To Continue to Provide Value
That Is Useful to Society

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

The Future Vision We Aim to Share and Achievewith Society (“Thought”)“We want to create a wise future society with our
stakeholders by disseminating useful technologies
based on our engineering knowledge.”

A wise future society, where humans are proactive inconsideration and co-creation, is what KKE believes
to be a sustainable society.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

20

The Future Vision We Aim to Share and Achievewith Society (“Thought”)“We want to create a wise future society with our
stakeholders by disseminating useful technologies
based on our engineering knowledge.”

It is the efforts of collaborative professionals whocreate knowledge that serve as the source of thesustainability of society and KKE.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

21

The Future Vision We Aim to Share and Achievewith Society (“Thought”)

Our vision
A knowledge-intensive company that represents Japan in the 21st century

Participation of diverse collaborative professionals and their growth

https://www.kke.co.jp/

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22

Towards Sustainable Businesses Growth

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Approach to Sustainable Businesses GrowthBusiness
investment

Great growthpotential

Taking on new
challenges

Newbusinesses

Existing
businesses
Steady profit

Invest in business to continue to take on new challenges looking
five to ten years into the future by leveraging steady profit fromexisting businesses and the major growth of new businesses
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

24

Changes in Sales by Segment
With Engineering Consulting at the base, Product Service has also been
growing.
Changes in composition of sales(Million yen)

18,00016,00014,00012,000

Product Service

10,0008,000
6,000

Engineering Consulting

4,000
2,000
0
55th
term
https://www.kke.co.jp/

56th
term

57th
term

58th
term

59th
term

60th
term

61st
term

62nd
term

63rd
term

64th
term

65th
term

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25

Mutually Expansive Segments
Engineering
Consulting

Building of software
Consulting reports

Createsolutions

Problems of customers
https://www.kke.co.jp/

Use them as a tool

Supplyingknowledge

Product Service

Software packages
Cloud services

Engineeringknowledge

Supplyingknowledge

Advanced technologies
in Japan and overseas
Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

26

Growth of New Businesses (Cloud Services)
Growth of Product Service is driven by three new businesses:
SendGrid, RemoteLOCK, and NavVis
Changes in sales from cloud services

65th term
52.6% growth
Ratio of sales from cloud services
to sales at the entire Company
End of 65th term: 16.0%

55th term

56th term

https://www.kke.co.jp/

57th term

58th term

59th term

60th term

61st term

62nd term

63rd term

64th term

65th term

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

27

Basic Policies on Medium- to Long-term Growth

Existing
businesses

Engineering Consulting

Maintain high profitability

Newbusinesses

New Product Service

Expand businesses and improve
profitability

Business
investment

Development of nextgeneration businesses

Search for and foster businesses

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

28

Engineering Consulting

Existing
businesses

Engineering Consulting

Maintain high profitability

Newbusinesses

New Product Service

Expand businesses and improve
profitability

Business
investment

Development of nextgeneration businesses

Search for and foster businesses

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

29

Basic Policies on Engineering Consulting

Existing
businesses

Engineering Consulting

Maintain high profitability

 Thorough avoidance of deterioration
 Experience curve effect Making new proposals by improving added value

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

30

Risk of Deterioration

Engineering Consulting

Main services: • System development• Structural design services• Consulting services
Orders for many of them are received undera service contract.

Deficiencies in contract details and project management
In the case of an increase in person-hours andthe deterioration of quality of deliverables
Significant decrease in profitability
https://www.kke.co.jp/

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31

Thorough Avoidance of Deterioration
We will prevent the occurrence of issues by identifying and sharing risks andcountermeasures through company-wide collaboration on a process-byprocess basis.
Receipt of order

Project in progressCompletionand delivery

Identifying andsharing risks

Management ofprogress, risks and quality

Inspection

Sales and marketing teamOperation team
Quality assurance team

Collaboration
between related
departments

Legal & Intellectual Property Strategy Section
System collaboration that starts in the upstream stage
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

32

Steady Growth with Experience Curve EffectAim for a business model for acquiring appropriate compensation by
applying engineering knowledge with added value.
Value offered
Improvement made throughthe accumulation ofexperience

Efficiency improvement made throughthe accumulation of experience

https://www.kke.co.jp/

Costs

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

33

Development of Systems for Housing Manufacturers
Founding period
Structural calculations• Started as a structural design office

Reconstruction of the main
keep of Kumamoto Castle

×

Computers• The Company introduced the first digitalcomputer in Japan's construction andarchitectural design industry.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

34

Development of Systems for Housing Manufacturers
Accumulation through experience➡ Increase in value to provide➡ Lower costs

1985Development ofsystems for housing
manufacturers
Winning morecustomers

Understanding
common issues

Engineeringknowledge

×Industryknowledge

Providing solutions
IT-basedsolutionsShare thesolutions

Building trust
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

35

Development of Systems for Housing Manufacturers
At present
Development ofsystems for housing
manufacturers

Applying technologies
from different fields- AI-based image analysis- OR (mathematical optimization), etc.

Increase of means

Increase of settings
for applying them

Develop and expand new solutions with high added value
through combination with the existing empirical knowledge.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

36

Wind Power Generation Business
Founding period 2008
A wealth of experiencein the design ofsuperhigh-rise buildings Initiatives on onshoreand buildings withwind power generation
seismic isolation andLaunch ofdamping systems
fundamental design
services for wind
power generation

2014
Shift to a new system
Safety assessments ofsupporters for wind power
generators began to bemade exclusively by METI.

Entrusted withsupport for
institutional design
by METI
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

37

Wind Power Generation Business
Founding period -Initiatives on
onshore wind
power generation

Accumulation through experience➡ Value provision in new fields
Technologies andorganizational strength enabling
to be entrusted with operations
from analysis to design in an allinclusive manner

Expertise in safety assessment
and response to committees

https://www.kke.co.jp/

Entrusted with support
for institutional design

Organizational
diversity
Active participation ofmany non-JapaneseTechnologies
andKKE membersorganizational
strength enabling
built with
toRelationshipbe entrusted
withoverseas wind turbine
operations
frommanufacturers
analysis to design inan all-inclusive
manner

Application to
offshore wind power
generation

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

38

Awards Granted by the Ministry of Land, Infrastructure,
Transport and Tourism -- IoE Business Dept.
Excellent work and excellent engineer awards granted for the Considerations
for Ensuring High Equipment Design Quality Using AI. etc. for Government
Facilities in FY2022
Content of
implementation• Consideration of details and verification of effects towards introduction of AI andother tools• Organization of tasks and consideration of roadmap towards introduction of AI, etc.
• Assistance in running expert review meetings, etc.

Business
Investment

Winner of the excellent engineer award
Manager, IoE Business Dept. (As of thetime when the award was granted)
Akio Ino

Awards ceremony(July 18, 2023, at Ministry of Land, Infrastructure, Transport and Tourism)
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

39

Award Granted by the Japanese Society of MechanicalEngineers -- Next-Generation Business Development Dept.
Development of a new method using compressed sensing, which permits lowcost, easy, high-precision measurement of fast vibration of structures
Simplify vibration analysts with a camera

No need to use an expensive high-speed camera or a special dedicated camera A solution that enables analysis of fast vibration phenomenon simply by attachingan affordable control circuit and commercially available strobe to an off-the-shelfcameraProviding low-cost, easy, high-precision vibration analysis

Patent application
filed in May 2022

• Published in a renowned journal, Mechanical System and Signal Processing, as an achievementfrom joint research with the National Institute of Technology (KOSEN), Hiroshima College• Granted the Audience Award by the Japanese Society of Mechanical Engineers
Moving forward, we will assume expansion to other industries with a view to practical applicationin the automotive industry (improvement of quality and riding comfort, noise control, etc.).
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

40

New Product Service

Existing
businesses

Engineering Consulting

Maintain high profitability

Newbusinesses

New Product Service

Expand businesses and improve
profitability

Business
investment

Development of nextgeneration businesses

Search for and foster businesses

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

41

New Product Service

Newbusinesses

New Product Service

Business expansion andprofitability improvement

 Introducing useful overseas services in Japan
 Forming a capital alliance where appropriate
 Subscription model Continuing investment for business expansion

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

42

New Product Service
Introduce useful overseas services in Japan. Form a capital alliance whereappropriate.

TwilioSendGrid

Cloud-based e-mail delivery service

RemoteLOCK

Cloud-based entry/exit control system

NavVishttps://www.kke.co.jp/

3D site data platform

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

43

New Product Service
KKE provides unique services with added value intended for the Japanesemarket. High growth is achieved through synergy between KKE's impressive
ability to provide value and subscription model.

Useful overseas services

TwilioSendGrid
RemoteLOCKNavVis✔Subscription model

KKE✔

Providing uniqueservices with added
value intended for
the Japanese market(KKE's strength)High retention rate

Exponential growth(Background)
Commitment to winning the highest-level customer satisfaction
as professionals, which has been cultivated at KKE
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

44

Development of New Businesses: RemoteLOCK
Collaborative creation with many different partners through open innovation.

Any Brands, Any credential, Any Software
System collaboration withdifferent types of services

Hardware collaboration
Managing at least• Our lock system• Other companies' lock 100,000 entries per day
systems• Gate into the facility• Gate into the parking place• Lockers, etc.

Expansionof domain• Reservation system• Settlement system• Hotel system, etc.

In collaboration
with more than
50 open services[Examples]- SADIOT ROOM

Customers[Examples]- Midoriya Ryokan (inn) of the Jinya Group- FAV Hotel of Kasumigaseki Capital

Accommodation
facilities
https://www.kke.co.jp/[Examples]- Kobe City, Hyogo

Local governments(Adopted by more than
60 local governments)

Stores etc.

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

45

Development of New Businesses: RemoteLOCK
Example of hardware collaboration
SADIOT ROOM

Examples from local governments
Kobe City, Hyogo
Junior high schools

Meeting place ofmunicipal housing

FY2022
Installed and operated at 50 schools
FY2023To be installed at remaining 32
junior high schools

Examples from accommodation facilities
Midoriya Ryokan of the Jinya Grouphttps://www.kke.co.jp/

FAV Hotel of Kasumigaseki Capital

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

46

Development of New Businesses: NavVis
Expansion in the use of NavVis VLX, a measurement device for acquiring 3D
data, and NavVis IVION, a 3D data web viewer

NavVis VLX

NavVis IVION
SurveyMaintenance

Quickly capturing
3D data of large andcomplex locations

On siteDesignA mobile measurement device thatenables to acquire 3D data of sites
quickly with high quality
https://www.kke.co.jp/

Head office

At homeConstruction

A 3D data web viewer for getting
the picture of and inspecting sites

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

47

Development of New Businesses: NavVis
Providing unique value of KKE with steady progress in the development oftechnology to improve convenience and expand applications

3D site data platform
for further acceleration in the acquisition of 3D site data
Simplified measurementwith a 360-degree camera

Efficiency improvement of
walk-through recording

3D-CAD add-in

NavVis IVION
Quickly capturing
3D data of large andcomplex locations

SurveyRealized 3D verification
using photos and CAD

MaintenanceWorking with drones andother equipment

Creating 3D overhead
view data of the location
On siteDesignImproved efficiency of
update measurement of
narrow and high places

https://www.kke.co.jp/

Head officeWorking with other systems

At homeConstruction

Centralized management ofrelated information, including
information from daily
inspections, in a 3D space

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

48

Release of SimScale in Japan
Began to offer the industry's first full-cloud CAE platform, which wasdeveloped by SimScale of Germany, as the first authorized distributor in Japan* CAE: Computer Aided Engineering• The platform does not require the use of hardware, permitting design and development on
web browser, from anywhere.
• It can be used for a wide range of phenomena, including structure analysis, thermal flow
analysis, and analysis of wind conditions.

Example of analysis with SimScale
https://www.kke.co.jp/

We held a service launch seminar in July 2023,
with the participation of more than 80 people.
Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

49

Development of Next-Generation Businesses

Existing
businesses

Engineering Consulting

Maintain high profitability

Newbusinesses

New Product Service

Expand businesses and improve
profitability

Business
investment

Development of nextgeneration businesses

Search for and foster businesses

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

50

Programs and Activities for Creating New Businesses

Business competition

External activities
with universities andother organizations

Opportunities to propose ideas on
new businesses

Participating in committees and study groups,
implementing activities as lecturers, etc.,
presenting academic papers, and publishing books

KKE Best Project

Shadow work

Opportunity to honor excellent projects andshare them in a company-wide manner

Activities that help develop engineers' skills
are actively implemented

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

51

Sowing Seeds for Developing Next-Generation
Businesses
Work to cultivate the seeds of new businesses looking five to ten years into the
futureSeeds

Startup

Early

Initiative using
data assimilation

3MA

RiverCastReal
measurement data
Rainfall River levels Dams

Data
assimilation

Integration

Tide levels

Acquiring real-time data
Cloud

Digital simulation
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

52

Collaborative Professionals as the
Source of Sustainable Growth

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Participation and Growth of Collaborative
Professionals
Growth of businesses
Business
investment

Newbusinesses
Existing
businesses

Development of KKE members

Increase in KKE members (colleagues)

Self-development, work
experience, shadow work,
investment in education,etc.

New graduate recruitment
Mid-career recruitment
Recruitment of foreign
nationals, etc.

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

54

Diverse Collaborative Professionals Supporting
Diverse Business Domains
Value the diversity of collaborative professionals to secure the capabilities toaddress any problem in society
Scope: Existing KKE members at the end of the 65th term
Academic background
5.9%
Masters and PhD
Approx. 60%

Sex
Percentage of employeesthat are women
26.6%

6.4%

26.6%

34.1%
53.6%

PhD

73.4%

Masters

Men
男性
女性
Women

Bachelor
Other

Nationality

Type of recruitment

6.2%

Mid-career recruitment
20.4%

Foreign nationals
6.2%

20.4%
New
graduates

Japan

93.8%
https://www.kke.co.jp/

79.6%

CareerForeign nationals
Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

55

Enhancing Opportunities for Active Participation ofDiverse Collaborative Professionals
Meaningful utilization of human capital through collaboration with groupcompanies
KKE Smile Support Inc.

PARA-SOL K.K.

• Established in August 2022
• Number of employees: 31 (as of September 1,• Made into a subsidiary in April 2023
• Number of employees: 52 (as of September 1,

2023)

2023)

• An alternative place for KKE members
who desire to choose workstyles withmore freedom• A business partner that has been
supporting multiple departments of KKE
as a partner company

Acquired worker dispatch business license
Began dispatching workers to companies
other than KKE

Strengthening the cooperative
relationship further

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

56

Human Resource Development Policy for Achieving
Both Distinctive Quality and Self-Initiative
Distinctive quality of KKE: Availability of environment and systems that link
Corporate Philosophy with the self-actualization target of each individual
Corporate Philosophy
Thought
Vision
KKE WAY

Internal events
Internal
communications

2. Determination and announcementof missions at each department

Missions of the individual departments

Review meetings

3. Determination and announcementof qualitative targets andinitiatives at each department

Four qualitative axes
(Developing collaborative professionals,
improving organizational climate, improving
quality, improving added value)

Qualitative evaluation

4. Formulation of a training plan by
the person in charge of training at
each department

Training plan of each department
Person in charge of training

Release5. Each individual sets targets andformulates a training plan forachieving the targets.

MBO of each individual

1. Delivery of messages from the
management, inclusion in DNA

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

57

Human Resource Development Policy for Achieving
Both Distinctive Quality and Self-Initiative
Self-initiative: Human resource development policy focusing on individual discretion• Personal development which is not related directly to work can be set as an
MBO target at the desire of individuals.
• Costs of training needed for the development of each KKE member are borneby the Company.
Changes in company-wide costs related to support
for growth and human resource development

Changes in amount of time related to support for
growth and human resource development時間（研修、学会活動含む）
Time (including training and activities in academic societies)
一人当たり人才投資時間
Per-capita amount of time invested in collaborative professionals

費用（研修、図書費、学会活動含む）
Costs (including training, book budget, and activities inacademic societies)
一人当たり人才投資額
Per-capita amount of investment in collaborative professionals(Expenses for training, etc.,:
10 thousand yen)

(Per-capita investment amount:
10 thousand yen)

15,00015(Hours spent on training, etc.: hours)(Per-capita investment amount: hours)

100,000

150

90,00012,0001280,000120

70,0009,000

960,00090

50,0006,000

640,00060

30,0003,000

320,00030

10,000061stterm 62nd
term 63rd
term 64th
term 65th
term
第61期
第62期
第63期
第64期
第65期

0

0

61st
term
第61期

62nd
term
第62期

63rd
term
第63期

64th
term
第64期

65th
term
第65期

0

* Cost of external training, etc. declined due to COVID-19 but recovered.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

58

Creating Opportunities for the Growth ofEach KKE Member
Opportunities to achieve growth by stimulating each other are created, andindividuals keep developing, inspired by the opportunities.
Growth of group

Connection between individuals

Growth of individuals

Cycle

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

59

Creating Opportunities for the Growth ofEach KKE Member
Example initiatives
Growth of individuals

Connection between
individuals• Training programs focusing on individual
discretion• Development through collaborations with
universities, research institutions, and partners• Appraisal system (MBO, MVA)
• Promotion exam,etc.

• A large number of company-wide events• KKE Best Project• Issuing internal newsletters• en cafe (in- house cafe),etc.

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

60

Creating Opportunities for the Growth ofEach KKE Member
Providing self-development opportunities for supporting the growth ofcollaborative professionals• Establishment of Social Cooperation Programs
PeriodFebruary 2016 to
March 2020
April 2020 toMarch 2023

Name
Mathematical Engineering for Complex
Social Systems in the Future

Symposium of Social Cooperation Programs

Mitigation of and adaptation
to climate change led by data
integration and organization~Engineering knowledge shared with
universities~

Cyber-Physical Architecture for the
Sustainable Built Environment

Thursday, June 15, 2023
Ito International Research Center,
University of Tokyo

Reservein advanceFreeadmission• Dispatch KKE members to domestic and overseas locations

Overseas

Domestic

Barcelona

Temporary assignment to an overseas
officeMunichTemporary assignment to NavVis

DenverTemporary assignment to RemoteLOCK

Japan

Public-private exchange (with the Japan
Fair Trade Commission)
Kyushu TLO Company, Limited

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

61

Creating Opportunities for the Growth ofEach KKE Member
Highly convincing and transparent evaluation system
Management By Objectives and Self-Control (MBO):
Evaluation of KKE members for creating autonomous collaborative professionals• Setting targets based on one's own thinking• Targets are classified into business targets, behavioral targets, and skill targets.
• Skill targets are linked to the training plan of each department.
• Personal growth achieved through MBO initiatives and dialogues with managers

MVA (Mission, Vision, and Action): Evaluation of managers• Targets: Officers including Representative Executive Officers, department managers, andsenior engineers• MVA of individuals are disclosed to all KKE members at the beginning of each fiscal year.
• A review meeting, which is open to all KKE members, is held at the end of each fiscal year.
• At the review meeting, evaluations are made by officers in consideration of activities and levelof achievement of individuals.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

62

Creating Opportunities for the Growth ofEach KKE Member
A large number of company-wide events• Fostering shared values among diverse collaborative
professionals by delivering messages from senior management• Activating interactions between KKE members by intentionallycreating opportunities for all of them to gather▼ Company-wide events held in the 65th term
Month

Events

Month

July

Qualitative evaluation meeting

January

JulyIn-house briefing session

AugustIn-house briefing session

October Review meetings
November KKE Best ProjectDecember In-house briefing session
December Year-end party

https://www.kke.co.jp/

EventsNew Year’s message (Firstbusiness day of the year)

January Review meetings
January Hattori Award
March In-house briefing session
April

Welcome ceremony

April

Review meetings

New Year’s message in January 2023

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

63

FYE June 2024 (66th Term)
Forecasts

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

Our Management Indicators
For the company's continuous growth, it is vital to gather anddevelop competent collaborative professionals.

Our management indicators
Total added value =Operating profit + Personnel expenses + Welfare expenses (FB*)* FB = Fringe benefits

Growth ofbusinesses

Employment and growth ofcollaborative professionals

We have adopted a management goal of achieving annual
growth of 5% to 7% on a medium- to long-term basis.
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

65

Initiatives in FYE June 2024
Strengthening businesses for manufacturing industry
Sales Unit

Business Unit

Objective

Objective

Increasing the appeal of businesses
for manufacturing industry forexternal parties

Activating expansion of businesses
for manufacturing industry

Construction DX Marketing Dept.

 Structural Design Group

Manufacturing DX
marketing function

 Analysis Group Housing & Construction Group Telecommunication TechnologyGroup Decision Making Group

Manufacturing DX Marketing Dept.

https://www.kke.co.jp/

 Manufacturing Group

Newly
established

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

66

Forecasts for FYE June 2024 (66th Term)(Million yen)FYE June 2023
(65th term)

FYE June 2024
(66th term)
Forecast

Change fromprevious FY

Rate of change
from previous
FY

Net sales

16,58018,000

1,419

8.6%

Operating profit

2,189

2,350

160

7.3%

Ordinary profit

2,101

2,470

368

17.5%

Profit

1,613

1,700

86

5.4%

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

67

Trends in Results and Results Forecasts
Profit (Million yen)

Net sales (Million yen)

Operating profit

Ordinary profit

ProfitNet sales

18,00018,00016,5802,400

16,00014,7482,100
1,800

13,432
11,852
11,003

10,947

11,50013,631

14,00011,966

12,0001,500

10,000

1,200

8,000

900

6,000

600

4,000

300

2,000

0

FYE June
2015(57th term)

FYE June
2016(58th term)

FYE June
2017(59th term)

FYE June
2018(60th term)

FYE June
2019(61st term)

FYE JuneFYE June
2020
2021(62nd term) (63rd term)

FYE June2022(64th term)

FYE June2023(65th term)

FYE June2024(66th term)0

Forecast

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

68Changes in the Total Added Value
over the Past 10 Years
Personnel expenses + Welfare expenses

Operating profit= Securing and growth ofcollaborative professionals= Growth in business
Plan for FYE
June 2024
5.2% growthMillion yen
12,0009,740

10,000

8,000

6,272

6,594

6,685

6,849

FYE June
2016(58th term)

FYE June
2017(59th term)

FYE June
2018(60th term)

8,388

8,254

FYE June
2020(62nd term)

FYE June
2021(63rd term)

10,250

8,720

7,426

6,000

4,000

2,000

0
FYE June
2015(57th term)

https://www.kke.co.jp/

FYE June
2019(61st term)

FYE June2022(64th term)

FYE June2023(65th term)

FYE June2024(66th term)
Forecast

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

69

Return Policy
Basic Policy on Profit Distribution• Paying continuous and stable dividends while taking into account theneeds for internal reserves for the strengthening of management baseand future business development

Dividend payout ratio

50%

DOE
(dividends on equity ratio)

8%

Rough targets
New

Formula: DOE = Dividend per share divided by net assets per share

Dividend forecast
for the current FY
https://www.kke.co.jp/

140 yen

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

70

Changes in Dividend-related Indicators
Dividend payout ratio
80.0%

65.2%
51.4%

60.0%
37.7%

36.9%

42.7%

42.6%

46.6%

46.4%

45.6%

40.0%
20.0%
0.0%
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
'15/6期'16/6期'17/6期'18/6期'19/6期'20/6期'21/6期'22/6期'23/6期
2018
2019
2020
2021
2015
2016
2017
2022
2023
（第57期）(60th term) （第61期）(61st term) （第62期）(62nd term) （第63期）(63rd term) （第64期）(57th term) （第58期）(58th term) （第59期）(59th term) （第60期）(64th term) （第65期）(65th term)

DOE
20.0%

10.0%

9.9%
7.6%

7.3%

8.2%

8.4%

8.7%

7.9%

7.9%

5.7%
0.0%
'15/6期'16/6期'17/6期'18/6期'19/6期'20/6期'21/6期'22/6期'23/6期
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
FYE
June
2018
2019
2020
2021
2015
2016
2017
2022
2023
（第57期） （第58期） （第59期） （第60期） （第61期） （第62期） （第63期） （第64期） （第65期）(57th term) (58th term) (59th term) (60th term) (61st term) (62nd term) (63rd term) (64th term) (65th term)
https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

71

Start of Consideration Related to Transition to
Holding Company System
To aim for sustainable growth towards the 100th anniversary of
our founding in 2056

• Autonomous, agile decision-making and business operation,
which are aligned with diversification of businesses• Appropriate distribution of management resources focusedon human resources

Start considering transition to holding company system

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

72

To Realize the Future Vision We Aim to Share andAchieve with Society (“Thought”)

Wise Future: With the aim of creating a future society full of human wisdom
Innovating:

We will keep innovating to provide value to society in a sustainable way.

“We want to create a wise future society with our
stakeholders by disseminating useful technologies
based on our engineering knowledge.”

https://www.kke.co.jp/

Copyright© KOZOKEIKAKU ENGINEERING Inc. All Rights Reserved.

73

Contact

Contact:
Investor Relations Section
E-MAIL: ir@kke.co.jp
Website: https://www.kke.co.jp

https://www.kke.co.jp/

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74