Fiscal Year Ended March 31, 2022

Financial Results Briefing Materials

June 3, 2022

ICHIKEN Co., Ltd.

Bringing the future to you through innovative living spaces～For Your Living Space～Table of Contents
page

I. Overview of Financial Results

3

for the Fiscal Year Ended March 31, 2022
II. Progress of the Medium-Term Business Plan

14

III. Compliance Plan to Meet Continued ListingCriteria Under New Market Segments

182Overview of Financial Results for the Fiscal Year Ended March 31, 2022

I.
Overview of Financial Results

for the Fiscal Year Ended March 31, 2022

3

Business Environment & Corporate Efforts

Business Environment
1. Although there were signs of recovery amidst the effects of the COVID-19 pandemic as a result ofvarious policies taken, the business outlook remains uncertain due to concerns surrounding
geopolitical risks arising from the situation in Ukraine and other factors

2. The construction industry continues to face a tough business environment resulting fromincreasingly intense competition for orders, soaring labor costs due to a shortage of skilled workers,
and rising prices for construction materials amid economic uncertainty caused by the COVID-19
pandemic and other factors

Corporate Efforts
1. Maintained precautionary measures against the spread of COVID-19 to continue our businessactivities
2. Aggressively sought orders to meet the demand for new construction, interior design, andrenovations for stores and other businesses by leveraging upon our know-how from our corecommercial facility construction business as well as our planning and proposal expertise. Also engaged
with a wide range of private sector businesses, including condominiums, logistics facilities, medical
and welfare facilities, etc.
4Financial Results for FYE March 2022
Summary
1. [Decreased Revenue] Completed construction contracts decreased in the current fiscal year
(ended March 2022) due to a decline in orders in the previous fiscal year
(ended March 2021) and less contracts being carried over into thecurrent fiscal year
2. [Decreased Profit] Profit declined due to a decrease in completed construction contracts(Millions of yen)FYE March 2021
AmountFYE March 2022
AmountYOY Change

Change (%)

Targetvs. Target

AmountChange (%)

Orders

84,96893,969

9,001

10.6%

-

-

Contracts
carried over

73,516

84,16910,652

14.5%

-

-

Net sales

88,624

83,776(4,848)(5.5%)

85,000(1.4%)

Gross profit

7,661

7,387

(274)

(3.6%)

-

-

SG&A

2,903

2,712

(190)

(6.6%)--

Operating profit

4,758

4,674

(83)

(1.8%)

4,390

6.5%

Ordinary profit

4,673

4,636

(36)

(0.8%)

4,290

8.1%

Extraordinary
income or loss

(28)

(419)

-

-

-

-

3,161

2,985

(176)

(5.6%)

2,960

0.9%

Profit5

Breakdown by Category(Millions of yen)OrdersCompleted Construction
Contracts

Contracts Carried Over

AmountShareAmountShareAmountShare

49,772

52.9%

49,17859.0%

34,747

41.3%

Retailstores43,31646.1%

39,21547.0%

28,76034.2%

Lodgingfacilities

4,838

5.1%

5,378

6.5%

5,883

7.0%

Amusement
facilities

1,167

1.7%

4,584

5.5%

103

0.1%

Residential

27,86929.7%

22,19326.6%

35,51942.2%

Offices

924

1.0%

2,424

2.9%

695

0.8%

12,933

13.8%

4,400

5.3%

9,927

11.8%

2,155

2.3%

3,143

3.8%

3,249

3.9%

Other

313

0.3%

1,976

2.4%

30

0.0%

Total

93,969100.0%

83,316100.0%

84,169100.0%

-

-

-

-

-

-

93,969100.0%

83,316100.0%

84,169100.0%

Commercial
facilities
Breakdown

Construction Business

Factories &warehouses
Medical & welfare
facilities

Civil Engineering Business Total
Total

6

Major Completed Projects & Orders Received• Major Projects Completed
ClientProject Name

Location

ES-CON JAPAN Ltd.

Tsukuba CREO Renovation

IbarakiKING-KANKO Co., Ltd.

Meieki 4-chome New Construction Plan
(tentative name)

Aichi

Minato City, Tokyo

Shiba 5-chome Multipurpose Complex New
Construction

Tokyo

NISSHO ESTEM Co., Ltd.

Estem Court Amagasaki-shi Konakajima 1chome New Construction (tentative name)Hyogo

APA Home Co., Ltd.
APA Mansion Co., Ltd.

APA Hotel Ueno Ekimae Project New
Construction (tentative name)Tokyo

Central General Development
Co., Ltd.

Clare Homes Hassamu 5-8 Buildings A & B New
Construction (tentative name)

SMFL MIRAI Partners Co., Ltd.

Minami Semba Hotel New Construction Plan
(tentative name)Hokkaido
Osaka

Meieki 4-chome New Construction Plan

• Major Orders Received
ClientProject Name

Location

NITORI Co., Ltd.

Nitori Shin-Kobe DC New Construction(tentative name)

Hyogo

Mitsubishi Estate ResidenceCo., Ltd.

Misato-shi Misato 1-chome Planned New
Construction

Saitama

AEON MALL Co., Ltd.

Jiyugaoka 2-chome Planned New
Construction(tentative name)Tokyo

Joshin Denki Co., Ltd.

Shin Nipponbashi Ten New Construction(tentative name)

Osaka

Ginza Holdings Co., Ltd.

Mukogaoka-Yuen GH Multipurpose Complex
New Construction (tentative name)

Daiichi Realtor Co., Ltd.

Kyoto Nishikujo Hotel Planned New
Construction (tentative name)

NISSHO ESTEM Co., Ltd.

Estem Court Hiroshima-shi, Naka-ku,
Kokutaijimachi 2-chome New Construction(tentative name)

Kanagawa
Kyoto

Hiroshima

Shiba 5-chome Multipurpose Complex

7Changes in Net Sales by Project Type
(Hundreds of millions of yen)

1,000

Commercial
Gross profit margin

Residential
Ordinary profit margin

Net sales¥93.8billion

94
（10%）

Net sales¥86.5billion

114

800

Net sales¥88.6billion

90

Other (incl. logistics facilities)

14.0%

Net sales¥83.7billion

（10%）

124

（13%）

（15%）

237
（25%）

177
（21%）

600

8.4%

12.0%

190
（22%）

8.6%

Net sales
forecast¥90 billion

8.8%

10.0%

8.0%

221
（26%）

7.6%

6.0%
400

4.9%
200

606
（65%）

4.9%

5.3%

5.5%
4.0%

572

604

491

（66%）

（68%）

（59%）

2.0%

0

0.0%

FYE March 2019

FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

8

Changes in Net Sales[Commercial facilities: new construction vs. interior design work / renovations](Hundreds of millions of yen)

700

16.0%

New construction

Interior design / Renovations

Profit margin (New construction)

Profit margin (Interior design / Renovations)

14.1%
600

14.0%

101

12.8%

（17%）

500

11.4%

190

11.3%

（32%）

400

300

224

199

（39%）

（41%）

30% ofcommercial
facility
sales

12.0%

10.0%

9.8%

8.7%
8.2%

8.0%
200

100

6.8%

504

348

414

291

（83%）

（61%）

（68%）

（59%）

FYE March 2019

FYE March 2020

FYE March 2021

FYE March 2022

6.0%

0

4.0%

FYE March 2023

9

Comparative Balance Sheet[Assets] Increased by ¥3,589 million(Millions of yen)

Total assets

FYE March
2021

FYE March2022

YOY Change

54,02857,617

3,589

Current assets

44,60648,324

3,718

Non-current
assets

9,421

9,292

(129)

(Main increases)
・Notes receivable - trade+¥5,477 million
・Accounts receivablefrom completed construction+¥851 million
contracts
・Electronically recordedmonetary claims - operating+¥276 million(Main decreases)
・Costs on construction
contracts in progress
・Buildings & structures
・Land(¥2,704 million)(¥348 million)(¥282 million)[Liabilities] Increased by ¥1,410 million

Total liabilities
Current
liabilities

29,40823,17030,81924,613

1,410
1,443

Non-current
liabilities

6,238

6,206

(32)

Total net assets

24,61926,7982,178

Owners’ equity

24,592

26,775

2,183

Share
acquisitionrights

27

22

(4)

(Main increases)
・Accounts payable forconstruction contracts
・Electronically recorded
obligations - operating+¥2,109 million+¥1,474 million(Main decreases)
・Notes payable - trade(¥652 million)・Accrued consumption taxes(¥232 million)
・Advances received on construction
contracts in progress(¥154 million)[Net assets] Increased by ¥2,178 million(Main increases)
・Profit(Main decreases)
・Fiscal year-end dividends
・Valuation and translation
adjustments+¥2,985 million(¥652 million)(¥153 million)

10Changes in Net Assets and Total Dividends

Net assets (hundreds of millions of yen)350

Net assets(Equity ratio)

Total dividends (millions of yen)

Total dividends(Dividend payout ratio)

652
300

579

¥90 per share(22.4%)

652

725

725

¥100 per share¥100 per share(24.3%)(24.2%)

800¥90 per share

700(20.6%)¥80 per share(18.4%)
600
250

500

Around
200

246

267

290

（46.5%）(45.5%)
150

197（33.7%）

400

300

218
（41.5%）
200

100

100

FYE March 2019

FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

11

Comparative Statements of Cash Flows(Millions of yen)

[CF from operating activities]

FYE
March 2021

FYE
March 2022

Cash flows fromoperatingactivities

543

757

Cash flows frominvestingactivities

(63)

(136)

[CF from investing activities](799)

・Proceeds from sale ofinvestment securities
・Purchase of investment securities
・Purchase of intangible assets

Cash flows fromfinancing
activities(797)

・Profit before income taxes+¥4,217 million
・Increase in trade payables+¥2,931 million
・Decrease in costs on construction
contracts in progress+¥2,704 million
・Increase in notes and accounts
receivable-trade and others(¥6,602 million)
・Decrease in accrued consumption taxes (¥232 million)
・Income taxes paid(¥1,608 million)[CF from financing activities]

Total cash flow

Cash and cash
equivalents at end of
period

(317)

(178)

¥757 million
increase in funds¥136 million
decrease in funds+¥201 million(¥200 million)(¥77 million)¥799 million
decrease in funds

・Proceeds from long-term borrowings
・Repayments of long-term borrowings
・Dividends paid

11,835+¥978 million(¥1,089 million)(¥651 million)

11,65712FYE March 2023 Financial Results Forecast• Fiscal year ending March 2023 marks the final year of the medium-term business plan
• We will achieve our targets and establish the foundation for the next medium-term business plan
(Millions of yen)FYE March 2022
Results

AmountFYE March 2023 Forecast

AmountYOY Change

Change (%)

Net sales

83,77690,000

6,223

7.4%

(Gross profit margin)（8.8%）---

Operating profit

4,674

4,440

(234)

(5.0%)

Ordinary profit

4,636

4,340

(296)

(6.4%)

Profit

2,985

3,000

14

0.5%

Fiscal year-end dividends
per share

¥100

¥100

-

-

*Regarding the financial results forecast
The prolonged or worsened spread of COVID-19 could potentially impact business performance. However, as it is difficult to predict how the virus will spreadmoving forward, we have not factored such potential impacts into our forecast at this time. We will carefully evaluate future developments and promptly provide
a revised forecast should it be deemed necessary.

13Medium-Term Business Plan (FYE March 2021 - FYE March 2023)

II.
Progress of the Medium-Term Business Plan
(FYE March 2021 - FYE March 2023)

14

Overview of Financial Results - Sales Fall Short but Profit Exceeds Target • Construction contracts carried over into the next fiscal year increased by approximately¥10 billion YOY as of the end of FYE March 2022

• Aiming to achieve our FYE March 2023 target figures, the last year of the current medium-termbusiness plan

Changes in net sales and ordinary profit(Millions of yen)

(Millions of yen)

95,0005,500

85,000

4,673

4,636

80,000

4,240

4,290

75,000

Net
sales
¥88
Resultsbillion¥88.6(Target) billion

Net sales
Results¥89¥83.7
billionbillion(Target)70,00065,000

4,340¥90
billion(Target)Aiming to hit bothsales and profit targets

90,000

5,000
4,500
4,000

3,500

60,0003,000
FYE March 2021
Sales (target)FYE March 2022
Sales (results)

FYE March 2023

Ordinary profit (target)

Ordinary profit (results)(Millions of yen)FYE March 2021
TargetProfitmarginFYE March 2022

Results

Profit Achievement
rate
margin88,624100.7%

89,000TargetProfitmarginFYE March 2023

Results

Profit Achievement
rate
margin

83,77694.1%

90,000TargetProfitmarginNet sales

88,000Operating profit

4,340

4.9%

4,758

5.4%

109.6%

4,390

4.9%

4,674

5.6%

106.5%

4,440

4.9%

Ordinary profit

4,240

4.8%

4,673

5.3%

110.2%

4,290

4.8%

4,636

5.5%

108.1%

4,340

4.8%

Profit

2,930

3.3%

3,161

3.6%

107.9%

2,960

3.3%

2,985

3.6%

100.9%

3,000

3.3%

15

Progress of Each Policy Measure (Overview)
Priority
Measures
Measure 1

Our basic strategy is to differentiate and establish the superiorityof our core construction business

Enhance our technical proposal skills• Certified for our “one pillar-one pile method” performance, an industry-academia
collaborative initiative• Promoted storefront building information modeling (BIM) projects; promoted projects selected for ZEB
verification subsidies

Measure 2

Strengthen efforts focused on profitability and productivity in our construction business• Increased ratio of design–build projects• Promoted digitalization of on-site administrative work, etc.
Measure 3

Expand real estate business• Examined exit strategy for real estate holdings and acquisition of new income-generating
properties• Promoted initiative for planning and development projects related to real estate

Measure 4

Engage in new business - Building a new foundation for growth • Established and began operating a Vietnamese subsidiary in April 2022
• M&A an ongoing subject

Measure 5

Improve management skills• Strengthened corporate governance system / Transitioned to a company with an audit andsupervisory committee• Developed human resources through systematic training
16

Established Overseas Subsidiary in Vietnam

ICHIKEN VIETNAM CONSTRUCTION CO., LTD.
Explored overseas markets in response to thediminishing domestic construction market as part of ourefforts to “engage in new business,” a priority measurefrom our medium-term business plan
(Issues faced)• Decline in the total population of Japan• Fewer new builds expected to start construction• Increasingly severe shortage of skilled workers[2030 Corporate Vision]“We aim to contribute to the sustainable
development of society while achieving stable growth”[Business scale] Over ¥100 billion in net sales

Established overseas subsidiary for further
business expansion
Operations began April 1, 2022

Company Profile[On-site employee structure]

Operating Officer of the Company serving
as Representative
Began operations as three-person
team including two local Vietnamese
hires[Business overview]
1. Contract construction management
services(Consulting services on building
construction)
2. BIM subcontracting services
3. Contract construction work for Japanese
corporations andinformation broker/intermediary services[Prospects]
We will establish a track recordin collaboration with the support system inJapan, expand our scope of business,and consider additional staff as businessprogresses
17Compliance Plan to Meet Continued Listing Criteria Under New Market Segments

III.
Compliance Plan to Meet Continued ListingCriteria Under New Market Segments

18

ICHIKEN Co., Ltd.
Stock code: 1847

Compliance Plan to Meet Continued ListingCriteria Under New Market Segments
December 24, 2021

Bringing the future to you through innovative living spaces
For Your Living Space19

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Table of Contents(Page No.)
1.

Continued Listing Status

21

2.

Establishment of Basic Policy

21

3.

Reduction of Company Shares Held for Cross Holding
Purposes

22

4.

Current Stock Price Analysis

23-25

5.

Measures to Improve Stock Price

26

6.

Management Policy

27

7.

Business Measures28

8.

Growth Strategy

29

9.

Investment Plan

30

10.

Capital Measures and Enhancement of Corporate
Governance System

31
20

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Continued Listing Status & Establishment of Basic Policy
Continued ListingCriteria

Company Figures

Compliance
StatusNo. of Shareholders

-

-

-

No. of Tradable Shares

At least 20,000 units

42,213 units

Yes

Tradable Share Market Cap

At least ¥10 billion¥8,009,430,095

No

Tradable Share Ratio

At least 35%

57.9 %

Yes

Trading Value/Day

At least ¥20 million¥35,534,710

Yes

Market Cap

-

-

-

Compliance with Prime Market
continued listing criteria
We received notice from Tokyo Stock Exchange,
Inc. that the Company has not met part of thecriteria for the market restructuring to be
implemented on April 4, 2022, as of the cutoff
date (June 30, 2021)<Our goal is to increase our tradable share market cap to meet the continued listing criteria>
The Company will work to meet the continued listing criteria by the end of the fiscal year ending March 2023, the final yearof our medium-term business plan (FY2020-FY2022) by working on the initiatives outlined in this Compliance Plan in addition
to those already set out in our medium-term business plan.
Basic Policy for Compliance with Continued Listing Criteria
Defining “tradable share market cap” as the number of tradable shares multiplied by the stock price, our basic policy is toincrease the number of tradable shares by reducing Company shares held for cross holding purposes and improve our stock
price by implementing various measures.

[Approach to improving tradable share market cap]
Tradable Share Market Cap
No. of Tradable Shares

Stock Price

Increase

Improve
Measures

Reduce Company shares held for cross holding purposes

Enhance corporate value through various measures21

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Reduction of Company Shares Held for Cross Holding Purposes
We will work to encourage a reduction in Company shares held for cross holding purposes and thereby
increase the number of tradable shares by carefully explaining our measures to increase said tradable shares
while respecting the policies of companies who hold them.
[Changes in shareholder composition]<FYE March 2023><FYE March 2021>

Shares held by major shareholders (at least 10% ownership)
Shares held by Officers
Treasury shares
Shares held by commercial banks, insurance companies, business corporations, etc. (domestic)
Tradable shares*The Company will remain flexible in considering and implementing other measures to increase thenumber of tradable shares in addition to the initiative described above.

22

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Current Stock Price Analysis (Stock Price Trends & Theoretical Price)
We conducted an analysis of our current stock price in an aim to improve it by first calculating the theoretical price using our PER
and PBR values, typically used to calculate tradable share market cap, and then assessing any gap between the theoretical priceand the current price. As a result, we confirmed that there is an overall gap between the theoretical price and our current shareprice, making our stock “undervalued” so to speak.

5-Year Price History
Average price: ¥1,954
3,000
2,500
2,000
1,500
1,000
500
0

Mar. 2016

Sep. 2016

Mar. 2017

Sep. 2017

Mar. 2018

Sep. 2018

Mar. 2019

Sep. 2019[Theoretical price based on PER/PBR]

PBR

Sep. 2020

Mar. 2021*Theoretical price = PER x EPS or PBR x BPS¥3,390.14

Theoretical price5-year historical average

4.93x¥2,1495-year historical average for the construction industry(1st Section, TSE)

10.62x¥4,6295-year historical average

0.92x¥3,1195-year historical average for the construction industry(1st Section, TSE)

0.97x

¥3,288EPS (Profit / Total number of issued shares)
PER

Mar. 2020¥435.86

BPS (Net assets / Total number of issued shares)

PER (Price Earnings Ratio) = Stock price / Profit per share (EPS)<An index to determine if a stock’s price is overvalued or undervalued relative to the company’s profit level>
PBR (Price-to-Book Ratio) = Stock price / Net assets per share (BPS) <An index to determine if a stock’s price is overvalued or undervalued by looking at the ratio
between the stock price and net assets per share>(Assumptions)
1. EPS and BPS calculated from May 18, 2021 figures
2. 5-year historical averages for PER and PBR based on our own research (partially sourced from TSE statistics)

23

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Current Stock Price Analysis (5-Year Historical PER & PBR)
When comparing our PER and PBR (over the past five years) with the construction industry on the 1st Section of the TSE as well as allcompanies listed on the section, we found that there is also a gap here that they are below where they should be, as is the case with our stock
price.
-> PER & PBR have been low despite steady profit (indicating a lack of adequate explanation on our future prospects)• PER

ProfitIchikenConstruction industry average (1st Section, TSE)

Market average (1st Section, TSE)

(Millions of yen)
4000

(Ratio) 30

3500

25

3000

20
15

2000

1500

10

(Profit)(PER values)

2500

1000
5

500

0
Mar. 2016

0
Sep. 2016

Mar. 2017

Sep. 2017

Mar. 2018

Sep. 2018

Mar. 2019

Sep. 2019

Mar. 2020

Sep. 2020

Mar. 2021• PBR(Ratio)1.8(Millions of yen)
4000

1.6

3500

1.4

3000
2500

1

2000

0.8

1500

0.6
0.4

1000

0.2

500

0
Mar. 2016(Profit)(PBR values)

1.2

0
Sep. 2016

Mar. 2017

Sep. 2017

Mar. 2018

Sep. 2018

Mar. 2019

Sep. 2019

Mar. 2020

Sep. 2020

Mar. 2021

24

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Current Stock Price Analysis (Simulation)
If our PER and PBR were to reach the same level as the construction industry average on the 1st Section of the TSE, we would
achieve the ¥10 billion tradable share market cap criteria as shown in the table below. In order to improve both figures, we will
promote investor engagement regarding our growth potential and implement the measures described in the following
pages.
PER x Forecast profit
PBR x Forecast net assets
PER

Forecast Profit

x Tradable Share Ratio =Tradable
Share Ratio

4.71x
Calculated based on
March 31, 2021 closing price *1

Tradable Share
Market Cap

Compliance
Status¥8,167 million

No¥8,548 million

No¥18,414 million

Yes

Tradable Share
Market Cap

Compliance
Status¥10,337 million

Yes¥15,590 million

Yes¥16,438 million

Yes

Tradable Share Market Cap
Tradable Share
Ratio

Tradable Share
Market Cap

Compliance
Status¥9,168 million

No¥9,596 million

No¥20,672 million

Yes

Tradable Share
Market Cap

Compliance
Status¥11,605 million

Yes¥17,502 million

Yes¥18,453 million

Yes

4.93x
5-yearhistorical average¥2,995
million *3

57.9%
*4

65%

10.62x5-year historical average for theconstruction industry (1st Section,TSE) *2PBR

Forecast Net
AssetsTradable
Share Ratio

0.61x
Calculated based on
March 31, 2021 closing price *1

0.92x
5-yearhistorical average¥29,268 million

57.9%

*5

*4

Tradable Share
Ratio

65%

0.97x
5-year historical average for theconstruction industry (1st Section,TSE) *2*1 Calculated based on May 18, 2021 figures*2 Sourced from TSE statistics*3 Forecast profit of ¥2,995 million = FYE March 2023 forecast ordinary profit from the medium-term business plan (¥4,340 million) x 69% (assuming a 31% effective tax rate)*4 As of March 31, 2021
*5 Forecast net assets of ¥29,268 million = FYE March 2022 net asset forecast (¥26,926 million (calculated based on May 18, 2021 figures)) + FYE March 2023 forecast
25
profit (¥2,995 million) - dividends (¥653 million)

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Measures to Improve Stock Price - Increase Awareness of Equity Story As per the previous slides, our analysis shows that ourstock is undervalued, including in price estimatesincorporating forecast figures, as highlighted by the gap
between our PER/PBR values and the construction industry
averages on the 1st Section of the TSE.
In order to improve our stock price, we will take measures
to increase our market cap and expand our investor
relations (IR) activities relating to our equity story in an effort
to enhance our corporate value and thereby increase ourstock price.
Measures to Improve Stock Price
Items for Consideration

Item

1. Disclose and provide information in English foroverseas investors with a view to achieving sustainablegrowth and enhancing corporate value over the medium
to long term.
2. Increase awareness of our equity story through regularIR briefings for institutional investors
3. Promote investor engagement by meeting withinstitutional investors in a prompt and flexible manner

Efforts to Enhance
Corporate Value

Mar.

Feb.

Jan.

Year-end dividend paid
Annual General Meeting of
Shareholders
Annual Securities Report released
Annual shareholder newsletter
sent

Dec.

[See right]

Q1 Financial
Results
Summary released

Nov.

[See P8-P12]◎ Expand IR activities

Oct.

( E q u i t y s t o r y)

Sept.

management policy
and businessmeasuresAug.

flexibly while keeping
an eye on profit/loss
for the period

July◎ Carefully explain our

IR Briefing(Interim)

IR Briefing

June◎ Implement measures[IR Activity Schedule]May▼ Strengthen profitability▼ Invest in growth areas▼ Improve capitalefficiency▼ Raise dividends▼ Strengthen corporate
governance system

Apr.

Steps

▼ Reduce shares held
for cross holding▼ Pay interim dividend▼ Purchase treasury
shares▼ Split stock

Expanded IR Initiatives

Q3 Financial
Results
Summary
released

Interim shareholder
newsletter sent

Notice of Annual General Meetingof Shareholders
Financial results announced

Q2 Financial Results
Summary released26

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Management Policy
The Company has identified “material issues” (materiality) in achievinga sustainable society as part of our non-financial information. It is ourbelief that promoting our business with an awareness of resolving social
issues through materiality initiatives will help enhance our corporate
value.
We will implement business strategies that are based in ESG
management and bear in mind the SDGs, as well as investment andcapital strategies to achieve these business strategies.
ESG Initiatives
Content of Initiatives
Priority Issues

Reduce CO2 emissions at work sites

Percent reduction in CO2 emission intensity (Scope 1 & 2)

Promote green procurement

Quantity of green procurement

SDGs

Propose ZEBs

Number of client proposals

Promote performance evaluations through CASBEE

Environmental performance efficiency (BEE value)

Curb and reduce waste

Percentage of waste separated

Work sites (number of items)

Address climate change risk

Offices (percent of procurement
value)

Propose environmentally friendly buildings

Build a circular society

Promote emission-free resource recycling

Protect the environment

Serious environmental shortcomings

Strictly prevent pollution

Manage hazardous substances and curb air, water, and otherforms of pollution

Amount of hazardous substances treated (percent properly treated)

Support environmental conservation

Volunteer and donate money

Number of times conducted (number of activities, amount donated reported
in environmental accounting)

Reduce overtime

Percentage of employees working more than 45 hours of overtime per month(annual average)

Increase the amount of paid leave taken

Rate of paid leave taken

Reduce turnover among employees who have been with thecompany less than three years

Turnover rate (less than three years at the Company)

Encourage certification in related national qualifications, etc.

Percentage of employees with technical certifications (those who meet thequalification requirements)

Implement practical trainings

Attendance rate

Conserve biodiversity

Create a healthy and safe work environment

Improve job fulfilment(work life balance)
Develop human resources for a sustainablebusiness

Male
Increase the ratio of employees taking childcare leave (by gender) Ratio of employees taking childcare leave
FemalePromote diversity

Establish a diverse workforce and environment
Increase the number of female employees and mid-career hires inmanagement positions

Promote forward-looking technologicaldevelopment[Our Purpose]

Female employees

Percentage holding management positions

Mid-career hires

Percentage holding management positions

Promote digitalization leading up to DX

Rate of plan progression

Promote BIM initiatives that utilize digital twin technology

Rate of plan
progression

Promote and commercialize useful technological developments
through industry-academia collaboration

Number commercialized

Promote the introduction of the Construction Career Up System

Percentage of employees with working history registered on theConstruction Career Up System

Promote health and safety activities

Frequency rate / Intensity rate

Utilize IT and digital technologies

Facilitate operational efficiency

Foster partnerships

Improve the working environment and train
skilled workers
at our business partners

Strengthen business continuity

Ensure smooth business continuity in the event
Conduct trainings based on our Business Continuity Plan (BCP)
of disaster<Phase 2 (2020-2022)>

Frequency rate
Intensity rateCompile the skills, etc. required of Directors
Improve the function of the Board of Directors

GovernanceTo contribute to society through our construction
business with a focus on commercial facilities
in order to make various establishments
necessary for daily life richer, more comfortable,
and sustainable

Indicators

Specific Items
Build a decarbonized society

Social[2030 Corporate Vision]
We aim to contribute to the sustainable
development of society while achieving
stable growth

SDG & ESG Initiatives

Environment

We will celebrate the 100th anniversary of our
founding in 2030. Through our management
policy, we are working to promote our businessfrom an ESG perspective so that our Company’s
purpose will be better understood.
We also recognize that enhancing corporate
value and attaining a fair market assessment areimportant issues to be addressed in improving ourstock price, and aim to strengthen our IR activities
to do so.
Management Policy[Management Philosophy]
We strive to improve quality and safety, constantly
demonstrate our creativity, and aim to achieve arich and comfortable society through ourcommercial space business.
[Management Vision]
We aim to contribute extensively tosociety by creating richer and more
comfortable living spaces

Strengthen corporate governanceEvaluate the effectiveness of the Board of Directors

Effectiveness evaluations via surveys / Discussions

Strengthen information security

Rate of plan
progression

Improve the effectiveness of our whistleblower system

Reports on operational status at meetings of the Compliance Promotion
Committee

Continuously conduct IR activities

Continued IR briefings

Expand scope of English-language information disclosure

English translation of key parts of convocation notices for general meetingsof shareholders and financial results summary

Enhance information disclosure related to sustainability

Management and disclosure of ESG materiality progress

Promote compliance

Collaborate with stakeholders

Engage in active dialogue with investors

Number of trainings conducted / Response rate during safety confirmation
drills (within one hour)
Disclosure of skills matrix in convocation notices for general meetings ofshareholders(System improvement plan)(Information security training plan)27

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Business Measures
External Factors

Basic strategy is to differentiate and establish our superiority
Opportunities

With BtoB transactions as our main
focus, we will work to differentiate
ourselves and establish our superiority
in the construction industry to further
heighten the perception of Ichiken as a“commercial construction company”
among our clients’ industries.
We will also take on new businesses
both in Japan and abroad, expanding
our business structure which has
historically focused on the domestic
construction segment in an aim toenhance our corporate value.

■ SWOT Analysis
Strengths

Internal Factors

・Track record of constructing buildings for a wide
range of applications
・Know-how from extensive track record ofbuilding and refurbishing commercial facilities
・Virtually debt-free operation

Threats

・Aging and declining domestic population, shortage of skilledworkers
・Increased demand for public works projects due to aging
・Changing social landscape (pursuit of profit + social
infrastructure
responsibility)
・Opportunity to rebuild strategy due to TSE market
・Full-scale efforts toward a decarbonized society<Measures to differentiate that lev erage strengths and turn<Measures to lev erage strengths and seize opportunities>
threats into opportunities>
・Differentiate and establish our superiority in the construction
・Enhance our technical proposal skills
industry
・Develop renovation and remodeling know-how
・Actively promote measures to improve productivity
・Define and expand business investments
・Propose environmentally-friendly buildings

・Growing need for renovation work

・Concentrated in the construction industry
with no complementary business established tohedge risk
・Low stock price (lack of market recognition)

・Increase shareholder return<Measures to address weaknesses and seize
opportunities>
・Strengthen existing business through M&A, etc.
・Strengthen IR activities and invest in raising awareness ofequity story
・Organize response to SDGs and instill ESG management

・Specify investment strategy<Measures to av oid worst-case scenarios stemming fromweaknesses>
・Expand real estate business・Next-gen HR development (headcount, skills,
mindset)・Strengthen corporate governance system and improve
management capabilities

・Strengthen investment in developing humans resources whowill lead the next generation

Weaknesses

・Get Vietnam business off the ground・Expand dialogue opportunities with investors

Positioning Strategy in the Construction Industry
Large scale of construction[Industry overview]¥10 billion
or more👉 Develop a differentiation strategy focused on a specific target
Major
construction
companies

Nationwide
home builders¥10s ofmillions or
less

Local construction companies

Small scale of construction

Strategic Target

Regional affordable
home builders

Ichiken¥1 billion

Lower costthancompetitors

Customerrecognizedspecialty

Entireindustry

Cost leadershipstrategy

Differentiation
strategySpecific
targetCost focus
strategy

Focuseddifferentiation
strategyFor
corporations

Construction
companies
For
individuals

Competitive Advantage

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<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Growth Strategy
Focus on the “three elements of daily life” post-COVID that make up the “living space” we are targeting: E/T/L
Forecast Growth Areas in Target Market• We have expanded our business operations by adapting to the changing “threeelements of daily life” that make up living spaces and building a track record inconstructing buildings for a wide array of applications[Post-COVID growth areas (forecast) ]E: e-commerce, eco (environmentally friendly), ethical consumption(environmental ethics)

T: Hands-on, realistic touch
L: Long lifespan society (lengthening healthy life expectancy)[Expanded since the 2000s]

E/T/L

M/W/F

M: Medical treatment, geriatriccare, wellness facilities
W: Comfortable working
environments (offices,
redevelopment)
F: Psychological fulfilment(entertainment, hotels,
education)[Mainstay prior to 2000]

C/F/H

C: Clothing, retail stores
F: Food (supermarkets), food &beverage stores
H: Housing (condominiums)◎ Oversaturated commercial facilities(shift in building philosophy)• “Click & Mortar” (operation of both e-commercesites and physical storefronts)• Increased demand for deliveries due to rapid ecommerce growth• Changing sales floor layouts• In-store experience (experiential consumption)

Initiatives Under Current Medium-TermBusiness Plan
• Construction business Key Performance Indicators (KPIs)
Item

AnnualtargetCommercial facility
sales ratio

70%

68.8%

59.9%

(Of which renovations)(30%)(31.5%)(36.3%)

Design–build order
ratio

20%

20.2%

29.3%

8.6%

9.6%

Gross profit margin 8% or more

FY2020results

FY2021H1 results• Efforts to complement domestic construction business
Real estate
1. Secure income-generating
business
properties

2. Promote development business
VietnamoperationNewbusinesses

Post-COVID Revenue Opportunities◎ Environmentally oriented trend toward
decarbonized society• Introduction of eco-friendly technologies
such as ZEBs (environmental investment)• Renovation and scrap & build demand toincrease property value and improve energy
efficiency

Promote local business (establish local
subsidiary, etc.)

Leverage M&A◎ Emergence of a long lifespansociety• Declining working population (invest
in manpower optimization)• Employment of seniors, barrier-freeaccess• Health and longevity business• Demand for nursing homes◎ Increased demand for in-person 29
social events

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Investment Plan
Our current medium-term business plan sets long-term goals for FY2030, the 100th anniversary of our founding. We will
restructure our investment plan to achieve these goals and will invest a total of ¥30 billion by FY2030.

Investment plan through FY2030

Investment Plan Restructuring
Total group sales of• Real estate investments in the medium-termbusiness plan through FY2022 were suspended due over ¥100 billion
to COVID-19
New areas→ To be restructured after FY2022

Establish
foundation

FY2015FY2019

Stabilize
andenhance

FY2023FY2025

FY2020FY2022

100thanniversary(current plan)
FY2021 [present]

Investment
Plan
Restructuring

FY2030¥3 billion

Human resources
development• Train, educate, and secure
personnel¥4 billion

IT/Digital• Fund updates anddevelopments¥3 billion

Cash out(FY2022-FY2030)

Overseas
Promote business development in Vietnam
business
Human resources Foster next-generation leaders, headhunt
development
IT/Digital

Promote digital transformation¥10 billion• Expand business, fund selfsupporting operations

Total investments of ¥30 billion

Fund new property acquisitions throughdivestitures in principle (cyclical investment)
Expand business fields, enhance functionality,
attract human resources, acquire specialized
technologies, develop/master construction
methods¥10 billion

Overseas business

Cash financing

Growthinvestment• Secure income-generating
properties• Develop real estate forconstruction contracts• Allocate funds for M&A• Fund research fortechnological development, etc.

Real estatebusiness

Areas of investment & objective
Real estatebusiness

Scope ofinvestment

Content

Growth investment

Growthandexpansion

FY2026-

Area

Funding newproperty acquisitions
through divestitures(cyclical investment)

M&A
Technologicaldevelopment
Investment in
humans resources
Overseas business

Dividend
payout ratio of
20% or more

Purchase ofreal estate

Investments
in growthstrategy

Shareholder
dividends

Cash in

Sale of realestateTimely andappropriate
substitutions

Interestbearing
liabilities

D/E ratio of
about 0.3x

Business
profitROE of 8-10%30

<Compliance Plan to Meet Continued Listing Criteria Under New Market Segments>

Capital Measures and Enhancement of Corporate Governance System
Balancing financial health and shareholder return
Current
mid-termbusinessplan

By
FY2030D/E ratio

Around 0.25

About 0.3

Equity ratio

About 40%

50% or more

Capitalefficiency

ROE

10% or more

8-10%

Shareholder
returnDividend
payout ratio

20% or more

To be reviewed
when net
assets exceed¥30 billion

FinancialhealthStrengthening of Corporate Governance System
Monitoring and improving the progress of each of the measuresin this Compliance Plan are key governance priorities for theCompany, and we will work on the following matters inaccordance with the contents of the Corporate Governance Coderevised in 2021.
Governance Priorities

Improve the functionof the Board of Directors

Risk management[Management targets to achieve our capital policy]
Current mediumterm plan

By
FY2030(FY2020-FY2022)¥85-90 billion

OperatingprofitAround ¥4.5 billion

Total assets
Net assets¥55-60 billion¥25-30 billion

New medium-term plan

Net sales¥100 billion

Thorough compliance• Compile the skills, etc. required of
Directors• Evaluate the effectiveness of the Boardof Directors• Strengthen information security• Take thorough measures to prevent
data leaks• Conduct compliance training• Improve the effectiveness of ourwhistleblower system

Monitor progress and improve as needed¥5 billion
Compliance Plan measures¥90 billion¥49 billion

Reduction of Company
sharesheld for cross holding

PromoteVarious measures toenhance corporate
value

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Bringing the future to you through innovative living spaces～For Your Living Space～
Corporate
Message

This message to all of our stakeholders, including customers, business partners, community members, aswell as our employees and their families, embodies our corporate commitment to creating and proposing avision for the future through our living space business, aiming to realize a rich and comfortable society andimprove job fulfilment for our employees.

Discover ICHIKEN
with video

PR Manager

I love construction and I’malways around Ichiken’s
work sites, so keep an eye
out for me!

ICHIKEN-kun
A boy dog who’s always wearing his trademark Ichiken
helmet.
He’s cheerful, energetic, and hardworking.
He works hard as Head of Publicity to
let everyone know about Ichiken.

You can watch many videos
about ICHIKEN’s history
and business.

BirthdayICHIKEN Official YouTube channel

June 15 (Gemini)

Favorite phrase Safety first

Please subscribe to our channel.

•
•
•
•

These materials were prepared by ICHIKEN Co., Ltd. (the “Company”) to promote understanding of the Company and are not intended to solicit investment.
While care has been taken to ensure accuracy in preparing these materials, we cannot guarantee their complete integrity.
We assume no liability for any losses or damages incurred as a result of the information contained herein.
The financial forecasts and projections contained within these materials have been made by the Company based on information available at the time of
preparation and involve potential risk and uncertainty. Changes in the business environment and various other factors may thus result in financial performancethat materially differs from the projections referred to or indicated herein.
Takagaki & Watanabe
Finance & Accounting Dept.
ICHIKEN Co., Ltd.
TEL: (+81) 3-5931-5642

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