WAKACHIKUCONSTRUCTION CO.,LTD

FY2023 Full Year Results
May 17,2024

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.

Table of Contents

1
2
3

FY2023 Full Year Summary

Medium-Term Business Plan
2024-2026 (Digest)

FY 2024 Full Year Outlook

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

Financial summary

P.4

Highlights by Business Segment（Non-consolidated）

P.5

Changes in Orders Received（Non-consolidated）

P.9

Financial Position（Consolidated）

P.10

Progress of Management Goals and Investment Plans

P.11

Long-Term Vision 2030

P.13

Basic Policies

P.14

Business Strategy

P.15

Financial Strategies/Strengthen IR

P.17

Human Capital Management

P.18

Provide Safe and Top-quality Infrastructure

P.19

Achieve Carbon Neutrality

P.19

Numerical Targets

P.20

FY 2024 Full Year Forecast

P.22

FY2024 Full Year Forecast by Segment (non-consolidated) P.23
Capital Efficiency and Shareholder Returns

P.24
2

1. FY2023 Full Year Summary

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

3

Financial Summary- Status of Profit and Loss -Consolidated
2023/32024/3

ChangeYOY

JPY Million

Sales ratio

JPY Million

Sales ratio

Net Sales

84,004－

94,917－13.0

Gross Profit

12,725

15.1

14,10314.9

10.8

Selling, General and
Administrative Expenses

6,489

7.7

7,126

7.5

9.8

Operating Profit

6,236

7.4

6,976

7.3

11.9

Ordinary Profit

6,546

7.8

7,699

8.1

17.6

Profit Attributable to ownersof parent

5,442

6.5

5,092

5.4

△6.4

Orders Received

90,242

ー

100,873－

11.8

Net Sales

81,194ー

92,126－

13.5

Gross Profit

11,822

14.6

13,316

14.5

12.6

Selling, General and
Administrative Expenses

6,141

7.6

6,782

7.4

10.4

Operating Profit

5,680

7.0

6,534

7.1

15.0

Ordinary Profit

6,084

7.5

7,345

8.0

20.7

Quarterly Net Profit

5,271

6.5

4,968

5.4

-5.7

Non-Consolidated

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

14.2％

12.1％
4

Highlights by Business Segment
Net Sales
2024/3Rate ofchange80,011

91,086

13.8

Civil Engineering

57,13368,025

19.1

Building Construction

22,87723,060

0.8

1,182

1,040

△12.0

81,194

92,126

13.5

Real Estate Businessand other

Total

Gross Profit
CompletedConstruction
Contracts

Civil Engineering
Building Construction
Real Estate Businessand other

Total

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

Sales by Segment（JPY （百万円）
Million）

2023/3CompletedConstruction
Contracts

Non-Consolidated（JPY Million）（百万円）

2023/32024/3Rate ofchange11,598

13,11713.1

11,01812,385

12.4

580

732

26.3

223

198

△11.1

11,822

13,316

12.6

Real EstateBusiness and other
Building
Construction

1.1%

25.0%

Civil
Engineering

73.9%

2024年
3月期

5

Highlights by Business Segment①Civil Engineering

Non-Consolidated

Net Sales

Gross Profit

Maritime civil engineering
Land civil engineering（JPY Million）（JPY Million）

80,00032,994

10,551

28,51740,00033,7602022/3Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

12,385

12,50032,30928,6162023/32024/3

11,01825.0

20.0

10,00019.3
7,500

35,716（％）

30.0

68,025
57,13360,0000Gross profit margin

15,00066,75520,000Gross profit

18.2

15.8

15.0

5,000

10.0

2,500

5.0

0

0.0

2022/32023/32024/3

6

Highlights by Business Segment②Building Construction

Non-Consolidated

Net Sales

Gross Profit（JPY Million）（JPY Million）

30,0002,000

25,00022,877Gross profit margin

20.0

1,399

15.0

18,33815,000

1,000

10.0

7.6

732
580

10,000
500

2.5

5,000

0

（％）

23,0601,500

20,000Gross profit

2022/3Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

2023/32024/302022/32023/33.2

2024/3

5.0

0.0

7

Highlights by Business Segment③Real Estate Business

Non-Consolidated

Net Sales

Gross Profit（JPY Million）（JPY Million）

1,600

300

Gross profit

1,096

（％）

60.0

1,400

1,200

Gross profit margin

223

1,182
1,040

1,000

200

198

45.0

176
30.0

800

600

100

16.1

18.9

19.1
15.0

400

200

0

2022/3Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

2023/32024/302022/32023/32024/30.0

8Changes in Orders Received

Non-Consolidated

Orders Received（JPY Million）

2022/3

Domestic Total

Domestic
Civil
Engineering
Domestic
Building
Engineering

2023/3

ChangeYOY

2024/3Government

47,176

57,46367,047

16.7

Private32,66626,441

31,855

20.5

Total

79,842

83,904

98,902

17.9

Government

39,395

52,10948,642△6.7

Private13,065

13,100

9,162

△30.1

Total

52,46065,20957,804△11.4

Government

7,780

5,353

18,405

243.8

Private19,601

13,341

22,692

70.1

Total

27,382

18,69441,098119.8

11,737

5,667

762

△86.5

691

671

1,208

79.9

92,272

90,242

100,873

11.8

Overseas
Real Estate Business and other

Total

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9

Financial Position

Consolidated

Condensed Consolidated

Condensed Consolidated

Balance Sheet

Statements of Cash Flows（JPY Million）

AssetsLiabilities

Nets
Assets2023/32024/3Current Assets

71,52670,364Non-current Assets

16,80020,411

Total Assets

88,326

90,775Current Liabilities

39,081

38,207

Non-current Liabilities

6,551

5,183

Total Liabilities

45,632

43,391

Shareholder’s Equity

38,22042,037

3,102

3,893

1,370

1,453

42,69447,38488,326

90,775

Accumulated Other
Comprehensive Income
Non-Controlling
Interests
Total Net Assets

Total Liabilities and Net Assets

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

（JPY Million）

2023/32024/3

Net cash flows from operating
activities

15,140△3,964

Net cash flows from investing
activities△1,328△3,606

Net cash flows from financing
activities△2,970△1,38078

523

Net increase in cash and cash
equivalents

10,920△8,427

Cash and cash equivalents at the
beginning of the period

16,39927,319Cash and cash equivalents at theend of the period

27,31918,891

Effect of exchange rate change on
cash and cash equivalents

10Progress of Management Targets
and Investment Plans

Non-financial Information KPIManagement target figures（non-consolidated）
Mediumterm-plan（2021-2023)

Targets by 2030

FY 2021(Result)

FY 2022(Result)

FY 2023(Result)

Orders Received(billion yen)

100

922

902

1,008

Operating Profit(billion yen)

5.0

6.2

5.6

6.5

ROE

９.0％

13.9％

14.2%

12.1%

Dividend payout ratio

30.0％

22.3％

24.2%

30.8%

Capital adequacy ratio

40.0％

45.3％

47.0%

50.5%

Progress of Investment Plans
Investment Areas

R&D

Ground engineering ,Concrete Construction ,Offshore construction
ICT construction related ,Environmental field ,etc.

DX

ICT ,Streamlining of core systems , etc.

HR,
Branding

Hierarchical training , scholarship system ,Strengthened recruitment , etc.
Total

GHG emissions during construction stage
Achievement
TargetCompared to fiscal 2013
40% decrease

17.7％ decrease

Annual cumulative total of power generated
through construction of renewable energyrelated facilities
TargetAchievement

10billion kWh4.1billion kWh

Technical development to boost work
productivity by 20%
TargetAchievement

5projects
or more5 completed
5 under development(Million Yen)

Plan

Investment Marine machinery、real estate for profit ,etc.

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

Non-Consolidated

Consolidated

8,000

FY 2021(result)

FY 2022(result)

FY 2023(result)

Three-year
total

1,330

310

230

3,950

200

250

530

990

260

80

250

600

140

380

170

690

1,930

1,040

3,260

6,240
11

2. Medium-Term Business Plan 2024-2026(Digest)Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

12

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
13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

14

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

15

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

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Partner companies

Mega solar

Biomass

Small hydro power

Local communities

16

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

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17

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

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18

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
19

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)

20

3. FY 2024 Full Year Outlook

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21

FY 2024 Full Year Forecast
Consolidated
2024/3 Results

2025/3 Forecast

JPY Million

Sales ratio

94,917－98,800－

4.1

Operating Profit

6,976

7.3

6,100

6.2

△12.6

Ordinary Profit

7,699

8.1

6,100

6.2

△20.8

Profit Attributable to ownersof Parent

5,092

5.4

4,100

4.1

△19.5

100,873－

100,000－△0.9

92,126－

96,500－

4.7

Operating Profit

6,534

7.1

5,750

6.0

△12.0

Ordinary Profit

7,345

8.0

5,850

6.1

△20.4

Profit

4,968

5.4

4,000

4.1

△19.5

Net Sales

JPY Million

Sales ratio

ChangeYOY

Non-Consolidated
Orders Received
Net Sales

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

22

FY2024 Full Year Forecast by Segment
Sales
FY 2023
resultCompleted Construction
Contracts

Non-Consolidated（Million Yen）

FY 2024
forecast

ChangeYOY

FY 2023
resultGross Profit（Million Yen）

FY 2024
forecast

ChangeYOY

Sales ratio

Sales ratio

91,08695,0004.3

13,117

14.4

12,250

12.9△6.6

Civil Engineering

68,02566,500△2.2

12,38518.2

10,160

15.3

△18.0

Building
Construction
Real Estate Businessand other

23,06028,500

23.6

732

3.2

2,090

7.3

185.3

1,040

1,500

44.2

198

19.1

300

20.0

50.8

92,126

96,5004.7

13,316

14.5

12,550

13.0

△5.8

Total
Real Estate Businessand other

Gross Profit

1.5%

Building
Construction

29.5%

15,000

FY2024
forecast

Civil
Engineering

68.9%

10,00011,822

14.5%
13,31615.0%

12,550
13.0%

5,000

0

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

14.6%

Gross Profit Margine

FY2022

FY2023

FY2024

resultresultforecast

10.0%

23

Capital Efficiency and Shareholder Returns
Capital Efficiency

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

Share Holders Returns
2024/3scheduled

120Yen2025/3

forecast(per share)（non-consolidated）

80(non-consolidated)

Dividend Payout Ratio／ DOE (non-consolidated)

（Yen）
150

100

100

120

126
50.0%

42.2%

Dividend Payout Ratio

22.3%

30.0%

50

DOE
40.2%

40.0%

55

24.1%

2021/32022/3Copyright © WAKACHIKU CONSTRUCTION Co., Ltd. All rights reserved.

2023/32024/32025/3（planned） （forecast）

0.0%

10.0%
8.0%

30.8%

6.0%
4.0%

20.0%
10.0%

0

(per share）

Dividend payout ratio to 40% or morewith a minimum DOE ratio of 3.6%

Dividend payout ratio 30.8％
Dividend per share

126Yen2.3%
2021/33.1%

3.4%

2022/32023/33.7%

3.6%2024/32025/3（planned） （forecast）

2.0%
0.0%

24

Disclaimer
The forward-looking statements, such as performance forecasts, contained in thisdocument are based on information currently available to us and certain assumptions that
we consider reasonable, and are not intended to be a commitment by us to achieve them.
Please also note that actual performance may vary significantly due to various factors.

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

25