WAKACHIKU CONSTRUCTION CO., LTD.

Medium-Term Business Plan

2024-2026

May 14, 2024
Notice:This document is an excerpt translation of the original Japanese document and is only for reference purposes.
In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Long-term Vision 2030 — Ideal Target in 10 Years

Serve as a company that meets the expectations of all of its stakeholders
Corporate philosophy “内外一致 同心協力”“We engage in business enlisting a like-minded, cooperative approach both within andoutside the Company with a focus on the public good.”(Sentiment voiced about the harbor construction business when the Company’s first president Kanpei Ishino founded the Company)

Customers

Partnercompanies• Safe worksite
environments• Sound partnerships

Educational andresearch
institutions

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

• Shareholder returns,
financing• Appropriate disclosureof information• High-quality structures• Safe construction

Shareholders
Financial
institutions

Local• Employment stabilization,enhanced remuneration• Job satisfaction and sense ofachievement• Healthy and safe workplaces• Student support• On-site educational
tours, etc.
• Joint researchcommunities• Infrastructuredevelopment• Support for restorationof natural disasters• Environmental
consideration• sustainable society

Employees

Working
together toachieve asustainable
society“Leave no one behind”
serves as a principle
underpinning the Sustainable
Development Goals (SDGs)

International
community2Long-term Vision 2030

Pursuing sustainability: Looking toward
Wakachiku Construction’s 140th anniversary
Pursuing three components of sustainability underpinned byconstruction centered on quality and safety

Sustainability I

Market sustainability
Sustainability II

Organizationalsustainability
Sustainability III

Social sustainability• Increase corporate value• Achieve consistent shareholder
returns• Ensure business continuity inthe after-corona era• Increase employee satisfaction• Social contribution tocommunities• Address global environmental
challenges

Medium-Term Business Plan
Phase1 (2021-2023)
Strengthen businessfoundations and promote
ESG management
Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Phase2 (2024-2026)

Serve as a company
that meets the
expectations of all of
its stakeholders

Wakachiku
Construction’s
140th anniversary

Phase3 (2027-2029)

Pursuing sustainability throughgreater coordination withstakeholders
3

Review Up to Previous Medium-Term Business Plan
On average, past Medium-Term Business Plans (FY2015 to FY2023) achieved target profits,
but we recognize issues and room for growth in terms of orders.
2015-2017
Further strengthenbusiness foundations

Units: million yen

OrdersOperating profit

Target100,000

2,970

Results

2018-20202021-2023

Embark on a new stage on
the 130th anniversary since
foundation in 2020

Strengthen businessfoundations and promote
ESG management

Target

91,400100,000

3,312

4,200

Results

TargetResults

95,417100,000

100,873

4,450

5,000

6,534

2,798

−

4,968

9.7%

9%

12.1%

(2019)(2019)

ProfitROE

2,400

Around 10%

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

2,679

−

10%

Around 9%(2019)

4

Basic Strategies of Previous Medium-Term Business Plan

Review of Previous Medium-Term Business Plan (FY2021 to 2023)
1
•
•
•
•

2
•
•
•

3
•
•
•
•
•

4
•
•
•
•

•

Strengthen business foundations
Enhance planning and proposal capabilities toaddress customer needs
Increase productivity
Enhance human resources
Strengthen financial standing

Environment (E)Achievements

Promoting ESG management

Manage risks based on new approaches
Strengthen governance practices
Ensure thorough compliance
Strengthen IR

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Achievements

Promoting ESG management

Provide safe and top-quality infrastructure
Achieve rewarding workplace environments in theafter-corona era
Develop professionals for the construction industry
Achieve coexistence with partner companies
Contribute to local communities

Governance (G)•Promoting ESG management

Focus on field of renewable energy
Reduce CO2 emissions in construction work
Improve marine environments through efforts that
include those involving blue carbon ecosystems

Social (S)Achievements

•
•
•
•
•

Achievements

Established new Technical Planning Department for increasing
proposal capabilities
Achievements with ECI projects (Mageshima, Tanga Market)
Renewable energy facilities: participation from basic design
VE proposals for private projects
Increased efficiency with ICT construction
Increased numbers of female engineers and ratio of male
employees taking childcare leave
Increased equity ratio (50.5% in March 2024)

•
•
•
•
•

Developed the wind-blade-install construction method
Improved the offshore wind power division
Used GTL fuelAdopted green power
Proposed measures to management local governments
to protect against rocky-shore denudation

•
•
•
•
•
•

Disaster response (removal of pumice stone and drifting
objects, transport of relief supplies)
Flexible workstyles in response to COVID-19 pandemic
Enhanced scholarship program
Supported regional promotion efforts (Kitakyushu area)
Supported introduction of CCUS
Certified as Excellent Corporation for Health Management

•
•
•
•
•

Implemented workplace COVID-19 vaccinations
Supported influenza vaccinations
Achieved structure with 1/3 external directors
Ensured thorough harassment training
Increased disclosure in English

5

Environment Concerning the Construction Industry

Acceleration of response
to climate change
Increasing intensity of weather
hazards and earthquake disasters

Opportunities and Issues
Increased expectations and needs of theconstruction industry, such as building
national resilience, enhancing defense
functionality, developing GX infrastructure,and developing DX foundation.

Unstable internationalsituations

Environment
Concerning theConstruction
Industry

Labor shortages due
population decline

2024 Problem

Globalization of thebusiness environment
Development of digitalizationand information society

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Increasing productivity and securing
workforce are urgent matters due to thedrop in working population and labor
regulations.

Increased importance on matters suchas capital cost-conscious management,
development of compliance, andstrengthening corporate governance.

6Medium-Term Business Plan <2024 to 2026> Basic Policies
Phase 2: Strengthening
foundation for growthPursuing sustainability through greater coordination with stakeholders

Ideal vision in 10 years

Serve as a company that meets the expectations of all of its stakeholders
Partnering withinvestors/financial
institutions

Financialstrategies

Human capitalmanagement

Health management
Increased engagement
Empowerment of female
employees
Ensuring diversity
Workstylereforms

Capital costs
Shareholder return
policyInvestment plans

Strengthen
IR

Strengthen
supplychainsStrengthen
governance

Increaseproductivity

Businessstrategy

Government civil
works/construction
Private civil works/
construction
Overseas business
Real estatebusiness

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Provide safe
and top-quality
infrastructure

Response to building
national resilience
Disaster response
capability

Partnering withlocal communities

Contribution
to communities

R&D basedon market
needs
Partnering withall stakeholders

Partnering witheducational andresearch institutions

Partnering with
employees/partnercompanies

Organizationalsustainability

Partnering withcustomers

Market sustainability

Securing
workforce forconstructionindustry

Carbonneutrality

Social sustainability

7

Sustainability I Enhance Market Sustainability

Business Strategy — Achieve larger scale and greater profitability of projects throughbusiness development that leverages the strengths of each division

Government

PrivateGreater technical proposal capabilities
Greater response to ECI systems
Greater comprehensive evaluation proposal
capabilities

Greater design proposal capabilities
Business development centered on the
renewable energy sector

Civil works••

Government
civil works

Cover a wide range of infrastructuredevelopment projects with a focus on
harbors and airports (including defense
applications)Greater response to large-scale onshore
works (rivers, roads, rail, land improvement
projects, etc.)

Government
construction

Construction•••

Cater to defense-related facility businessExpressway facilities (service areas, etc.)
Construction of environment-related facilities
such as waste processing plants

Privatecivil works

6 Key
Business
Strategies

Civil works•••

Privateconstruction

Construction••

Overseas business••••

Focus on ODA projects
Increase sales to private Japanese companies
in the new energy sector, etc.
Develop new markets such as coastal regionsof Africa
Build employee system for expanding business,
including education of management personnel
and training of local engineers and supervisors

Partnerships

Customers

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Overseasbusiness

Real estatebusinessStrengthen organization by creating newenergy division
Cover extensive renewable energy businesssuch as offshore wind power, onshore wind
power, biomass, and small hydroelectric
power businesses
Provide comprehensive engineering, fromsurveys, design and construction tomaintenance•

Proactive approach to large-scale projects
such as logistics facilities and renewableenergy facilities
Greater planning proposal capabilities
leveraging BIM, etc.
Expand design division with a view toincreasing projects

Real estate business••Continue investment into rental properties
with stable income
Effective use of existing assets

Partner companies

8Sustainability I Enhance Market Sustainability

Business Strategy — Business development in new energy sector
As a key player in offshore wind power generation business

Other renewable energy businesses

JWFC SUNRISE

Wind-blade-install construction method• Preparing to respond to 2nd round and 3rd round of the project based on•

Onshore wind power generation — development of wind-blade-installconstruction method, capability for replacement work•

Small hydro power generation, biomass power generation, etc. — businessdevelopment based on construction achievements• Studies for construction and ownership of offshore wind power jack-up
vessels•

Ocean thermal energy conversion, wave power generation, tidal power
generation, geothermal power generation, etc. — extensive R&D and support• Streamlining and cost-cutting construction

Initiatives as a renewable energy business operator

extensive achievements such as development of wind hub ports andundersea seabed surveys• Joint ownership between 6 companies of jack-up vessel “JWFC SUNRISE”• GI Fund: Participation in floating offshore wind power projects•

Participation in Akita small hydro power generation business

Extensive
construction achievements

Offshore wind
power hub ports
Partnerships

Onshore wind power
Customers

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Partner companies

Mega solar

Biomass

Small hydro power

Local communities

9Sustainability I Enhance Market Sustainability

Increase productivity

For further increases in productivity
Instill and enhance worksite ICT• Development of ICT infrastructure foundation (LPWA,
expansion of on-site IoT)
• Standardization of remote site live system• Full-scale roll-out of BIM/CIM, etc.
• Digital transformation of construction management(data sharing with system utilization)

R&D for streamlining construction••••

Concrete AI compaction management system
Fine-tuning pre-cast technology
R&D for autonomous/automated work vessels
Further advances in ICT construction (automation,
semi-automation, etc.)• Reduction in man-hours by utilizing metaverse
technology

System operating conditions (tablet)

Example of CIM utilization
Partnerships

Customers

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Example of BIM utilization
Partner companies

Estimating worker body frames

Installation progress

Concrete AI compaction
management system

Educational andresearch institutions
10

Sustainability I Enhance Market Sustainability

R&D based on market needs
Greater advanced design
capabilities

Reduction of
construction
costs• Seismic analysis,
3D analysis, etc.

Streamlining durability studies of port facilities

MarketNeeds• Development of inspection and diagnosis tools based on
non-contact, remote technologies(flying drones, unmanned boats, ROVs)

Aging
infrastructure
facilities

R&D for offshore wind power generation projects• R&D for ship vibration control mechanisms• Expansion of applicable scopeof undersea sensing

Increased
maintenance of
GX infrastructurePartnerships

Employees

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

• Development of “Semi-active
vibration correction gangway”
lifting device capable ofabsorbing vibrations

Customers

Vibrationcorrection
lifting device

Large
work
vesselTransport
ship

Educational andresearch institutions
11

Sustainability I Enhance Market Sustainability

Financial Strategies/Strengthen IR

Financial strategies
Capital Efficiency
Achieve “consistent and active shareholder returns” and “effective investments” to secure operating profits, with the aim ofmaintaining a reliable ROE of 9%

Cash Allocation
2024-2026
Interest-bearing
liabilities* Excess amount

Balancebrought
forward2021-2023
Increased
cash
reserves

6.1 billion yen

Shareholder
returns
5 billion yen
or moreIncreasedworking capital
2.5 billion yen

Shareholder
return policy

16.1

billion yen

billion yen
Shareholder
returns

3.8

billion yen

Generated CF

15 billion yen
or moreInvestment

15 billion yen

Investment

or more6.2

billion yen

IR• Financial briefing by top management• Hold active dialogue with investors
and provide feedback to the Board of
Directors KPI• Comprehensive corporate report• Enhance information disclosed in English

Partnerships

Completely abolish notes payable, and change all payments to cash.
(notes for subcontracted work already abolished in 2019)

Investment results 2021-2023

Investment plans 2024-2026

3-year total 6.2 billion yen

3-year total 15 billion yen

Investment
R&D
DX
HR, branding

Enhanced IR activities

Strengthen

consistent shareholder returns.
Also acquire treasury stock in flexible manner (with clear intentions such as
introducing equity investment plans or educational support funds).

Completely abolishnotes payable

6.1

GeneratedCF

Set dividend payout ratio to 40% or more (non-consolidated) with aminimum dividend on equity (DOE) ratio of 3.6% and implement active and4 billion yen
1 billion yen
0.6 billion yen
0.7 billion yen

Major
investments
SEP vessels
Real estate forprojects

Environmental-related
information disclosure

Investment 9 billion yen
R&D
1 billion yenDX
2.5 billion yen
HR, branding 2.5 billion yen

Major
investments
New vessels
Employee training
facilities

Actively introduce external sustainability-related evaluations• Continue TCFD
disclosures• Acquire third party
certification for GHG
emissionsShareholder/
Financial institutions

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

12

Sustainability II Enhance Organizational Sustainability

Human capital management

Create arewarding andcomfortableenvironment

Secure humanresources

Nurture humanresources

Partnerships•

Continue promoting health management•

Conduct work engagement surveys•

Increase ratio of male employees taking childcare leave•

Consider rolling out share incentive plan for employees•

Bolster recruitment efforts KPI(develop appealing personnel system, promote corporate branding)•

Promote diversity KPI•

Appoint female managers, employ the physically challenged,
diverse workstyles, etc.

•

Employment system for harnessing “work abilities” of seniors•

Increase recruitment of ship crew for group companies•“Hagukumi” education program(enhance skills of young employees)•

Enhance hierarchy-specific training•

Support acquisition of qualifications•

Develop employee training facilities

KPI
KPI

Employees

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

13

Sustainability II Enhance Organizational Sustainability

Workstyle Reforms/Strengthen Supply Chain Coordination

Strengthen supply chain
coordination

Workstyle reforms
Create comfortable work environment to address
labor shortages and increase productivity

Maintain positive relations with partner companies andcustomers, and strengthen coordination.

Enhance worksite support system

Strengthen coordination withpartner company organizations• Assign operations support supervisor• Remote support through outsourcing• Enhance productivity improvement training• Exchange information by top management• Support skills improvement by implementing
mutual training and group training programs• Increase safety awareness through joint
safety patrols• Initiatives to secure employees, such assupport for registering construction careeradvancement system• Completely abolish notes payable (cash for
all payments)

Streamline operations throughWakachiku DX• Develop Wakachiku data platform• Utilize generative AI company-wide• Thorough reduction of documents

Secure appropriate construction time
• Declaration to secure appropriate
construction time
• Implement full 2 holiday week system

Express stance of solidarity forco-existence and co-prosperity

KPI• Partnership declaration• Create and spread code of conduct for partnercompanies to encourage consideration forhuman rights and environment

Reform awareness for reducing
overtime work
Partnerships• Reminders with PC log system
Employees

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Customers

Partnercompanies

Partnerships

Customers

Partnercompanies
14

Sustainability II Enhance Organizational Sustainability

Strengthen governance
General Meeting of Shareholders
Appoint/Dismiss

Appoint/Dismiss

Board ofAuditorsContinue enhancing
governance to ensure
global capabilities andfulfill social responsibility.

Audit

ReportPartnerships

Supervise

Accounting
Auditor(auditcorporation)

Appoint/
Dismiss

Recommend
ReportRepresentative
Director

ReportReport/Coordinate

AdviseBoard ofDirectors

Management andOperations Committee
Audit

Supervise

Nomination andRemuneration
Committee

Instruct
ReportSustainability
Committee
Crisis Management
Committee

ReportReportInternal
Control Audit
Team

Head Office
Departments

Audit

Risk
management

Crisis Management
OfficeBranches
Sales Offices/Worksites

Strengthen risk
management system•

Update the internal auditing
system, by creating new Risk Control
Department, etc.

•

Improve ways to address cyber risks•

Provide regular compliance education•

Strengthen monitoring and supervision
with Board of Directors

Partnerships

Employees

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Strengthen monitoringwith Board of Directors•

Periodic reporting on status of activities
Sustainability Committee
Crisis Management Committee
Internal Control Audit•

Hold period outside board meetings

Strengthen
governance system•

Instill the corporate philosophy•

Increase knowledge through training•

Hire third party institutions to assess
effectiveness of Board of Directors“内外一致 同心協力”

Partnercompanies
15

Sustainability III Enhance Social Sustainability

Provide Safe and Top-quality Infrastructure/Achieve Carbon Neutrality
Contribute to building national resilience with ourbusinesses and resources•

Construct and develop national land conservation infrastructure andbasic industrial infrastructure through businesses•

Respond to disasters by harnessing our technologies and personnel,
such as efforts after the Noto Peninsula Earthquake and pumice
removal work at Unten Port•

Carbon neutrality during
construction

Maintain disaster response capabilities, such as concluding disaster
response agreement, revising BCP functions, and protecting data

Carbon stocks
through use ofrecycled materials

River disasterprevention work

Emergency
reopening work

Disasterrestoration work

Diligent pursuit of safety and quality that
underpins business•Thorough risk management at worksites•

Multi-tiered safety and quality patrols•

Enhance assessments of technical risks by utilizing BIM/CIM•

Meticulous worksite leadership by quality advisors

President patrols

Partnerships

Partnercompany patrols

Employees

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Carbon stocks bycapturing organics

CO2 reduction
through longer
life of structures
CO2 capture
throughseagrass
growthDredging

Use hybrid work vessels and electric
heavy machinery•

Use efficient GTL fuel•Install solar power

R&D for carbon neutrality•

Research into carbon capture andstorage using dredged material andrecycled material•

Quantify effects of LCCO2 reduction
through increased durability andlonger life of port facilities

Carbon neutrality in harbor sector

Activities as an eco-firstcompany

Outside director patrols

Partnercompanies•

Partnerships•

100% use of Shabondama Soap
(soap that is completely free fromchemicals and synthetic additives)•

Aim for 90% acquisition rate ofCertification Test for Environment
Specialists (Eco Test)

All stakeholders
16

Sustainability III Enhance Social Sustainability

Secure Workforce for Construction Industry/Contribution to Communities
Secure Workforce forConstruction Industry

Conduct public relations activities to encourage nurturing
and trigger interest amongst young workers for the future of
the construction industry.

Contribution to communities
Conduct contribution activities to stimulate local communities
through businesses.
Support based on maritime
technologies• Cooperation with blue carbon
business (Iwaizumi Town, Iwakuni
City)• Hold maritime education programs
at Wakachiku Museum

Human resource development
programs for laying thefoundations of a maritime nation• Educational programs enlisting
industry-government-academia
collaboration• Wakachiku Scholarship
Program for technical college
students

Educational programs
enlisting industrygovernment-academia
collaboration

Community communication
through construction• Volunteer activities such as beachcleanups• Support for communities after
natural disasters• Worksite tours for elementary andjunior high school students

School educational support• Enhance internship programs• Hold worksite tours and visiting
lectures
Various publicity to showcase theappeal of the construction industry• Enhance operation of the
Wakachiku Museum• Run exhibits at engineering
exhibitions• Stream videos, run social media
sites, etc.
Partnerships

Educational andresearch institutions

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

Support regional promotion efforts• Support and participate incommunity events such as the
Wakamatsu Port Festival and theBeppu-Ōita Mainichi Marathon

Partnerships

Local
communities
17

Numerical Targets
Targets in 3 Years (non-consolidated)

Non-financial Information KPITargets by 2030

Orders

Net sales

Operating profit

ProfitROE

Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

110 billion yen
or more110 billion yen
or more6.5 billion yen
or more4.5 billion yen
or more9%

or moreGHG emissions
duringconstruction stage

40% reduction

compared to FY2013(17.7% actual reduction)

Annual cumulative
total of power
generated throughconstruction ofrenewable energyrelated facilities

10 billion kWh(4.1 billion kWh)Technical
development toboost work
productivity by 20%

15 projects
or more(5 projects completed,
5 projects underdevelopment)

Targets in 3 Years
Work engagement
score

Ratio of Saturday
closuresNo. of employees
recruited

2.70

100％

80/year(66% in 2023)(61 in 2023)

Ratio of newly hired
female graduates

Ratio of male
employees taking
childcare leave

No. of meetings
with investors
and analysts

30%

100%

30/year(2.63 in 2023)(National average 2.52)(26% in 2023)(25% in 2023)(15 in 2023)

18