Financial Briefing for the Second Quarterof the Fiscal Year Ending March 2022
Including Information about Future
Measures to Increase Corporate Value
November 17, 2021

To achieve our consolidated sales target of 100.0 billion
yen as set forth in the 2030 Vision and strengthen
initiatives under the Medium-term Business Plan,
we’ve formulated a new series of policies to increase
corporate value around the core themes ofstrengthening growth investments,
shareholder returns, and governance.

Kazunori Murao
President and Representative Director2

As part of a larger effort to elevate our business stage so that we can increase corporate
value on an ongoing basis by strengthening our management foundation, primarily throughfinancial improvements, we’ve formulated and are working to implement our long-term vision,the 2030 Vision, and our Medium-term Business Plan, “Challenges for the Future.”
Although we’ve made steady progress towards putting the plan into practice during the year
and a half since it began in April 2020, it will be necessary to further strengthen initiatives
in order to realize our consolidated sales target of 100.0 billion yen under the long-term
vision. From the perspective of increasing our corporate value in a sustained manner, we'reaware of the need to incorporate the standpoint of increasing shareholder value into
the Medium-term Business Plan.
Based on these facts, we’ve formulated a series of policies to increase corporate value
by the fiscal year ending March 2025 around the core themes of strengthening growthinvestments, shareholder returns, and governance. In keeping with these policies, we will
resolutely implement a series of initiatives to realize our long-term vision and increase
corporate value.
We look forward to your continued support and understanding in the future as we pursue
these goals.

3Company Overview
Name

DAISUE CONSTRUCTION CO., LTD.

Head Office

2-5-28 Kyutaromachi, Chuo-ku, Osaka

EstablishedMarch 20, 1947

Capital

4.3 billion yen

Employees

602 (consolidated basis, as of March 2021)

First Section, Tokyo Stock Exchange
6 throughout Japan
Business Sites
Osaka, Tokyo, Nagoya, Sendai, Takamatsu,
Fukuoka
DAISUE TECHNO SERVICE CO., LTD.
Group companies
YASURAGI CO., LTD.
Share listing

4March 1937

Sueo Yamamoto founds the business in thecity of Matsubara, Osaka Prefecture.

March 1947

Daisue Gumi Co., Ltd. is established inOsaka Prefecture.

October 1961

The Company is listed on the Second
Section of the Osaka Securities Exchange.

April 1963

The Head Office is relocated to Yamatocho
in Osaka’s Minami Ward.

July 1963

The Company is listed on the Second
Section of the Tokyo Stock Exchange.

May 1967

The Company is listed on the First Sectionof the Osaka Securities Exchange and theTokyo Stock Exchange.

March 1970

The Company changes its name to DAISUECONSTRUCTION CO., LTD.

September 1991

The Head Office is relocated to Fukushima
in Osaka’s Fukushima Ward.

May 1999

The Head Office is relocated to
Minamisenba in Osaka’s Chuo Ward.

September 2009

The Head Office is relocated to
Kyutaromachi in Osaka’s Chuo Ward.

Earning Customers’ Trust through Good Faith

Daisue Construction marked the 85th
anniversary of its founding in March 2022.

Our Businesses
We operate three businesses: our flagship condominium business, which boasts an industry-leading
construction track record; our construction business, which accepts contracts for a wide range ofbuildings; and our renovation business, which expands and renovates existing structures.

Condominium business

Construction business

Renovation business

Construction of condominium and apartmentbuildings, public housing, company housing,
employee dormitories, etc.

Construction of office buildings, distribution
warehouses, factories, healthcare and social
welfare facilities, ceremonial venues, cultural andeducational facilities, etc.

Repair and expansion, and renovation of existing
structures as well as the performance of building
diagnostics, seismic resistance diagnostics,
seismic resistance reinforcement, and otherservices

Having constructed numerous condominium buildings
throughout Japan, particularly in the country's threelargest cities, we boast an industry-leading construction
track record. Expertise accumulated through thisextensive track record and the high level of trust ourcustomers place in us comprise our core strengths.
We’ve been involved with a broad range ofcondominium and apartment building projects that meetcustomers’ wishes, from compact buildings in urban
settings to large, multi-building developments.

We've participated in numerous building projects thatrun the gamut of categories, including officebuildings, distribution warehouses, factories, medical
and social welfare facilities, commercial facilities, andeducational facilities. We also have an extensive
track record for ceremonial venues like wedding halls
and funeral homes, particularly in the Tokyo area. In
recent years, we’ve been working to earn orders for
distribution warehouses, a segment of the market
where demand is growing.

We meet the full array of customer needs with regard
to existing structures, from repair and improvement torenovation, expansion, seismic resistance diagnostics,
and seismic resistance reinforcement. We also havethe ability to accommodate comparatively large-scale,difficult update projects, for example renovations andconversions. We're helping realize a sustainable
society by recycling and extending the service life ofbuildings.

6Financial Information

1. Summary of results
Sales rose 20.0% from the corresponding quarter of the previous fiscal year
thanks to factors including an increase in the construction balance carried overfrom the previous fiscal year.
Consolidated completed construction balance: 32,290 million yen(Millions of yen)
120,000

Medium-term Business Plan

Previous Medium-term
Business Plan

31,56335,02527,88132,29028,776

26,91280,00059,99867,216

66,489Fiscal year ended March 2021

2021/960,96740,000Fiscal year ended
March 2020

2020/9■Carried-over construction balance ■Order balance ■Completed construction balance

Reference: Construction balance carried over from previous fiscal year + order balance from current fiscal year completed construction from current fiscal year = Construction balance carried over to next fiscal year

8*Figures have been rounded down to the nearest million yen.

1. Summary of results
Operating income rose 13.2% from the corresponding quarter of the previous fiscal year to 1,124
million yen thanks to factors including an increase in the completed construction balance.
The operating margin fell 0.2 points from the corresponding quarter of the previous fiscal year to 3.4%.
Consolidated operating income: 1,124 million yen / Consolidated operating margin: 3.4%
*There has been no change to the full-year consolidated business outlook of sales of 69,000 million yen and operating
income of 2,500 million yen as announced on May 7, 2021.
(Millions of yen)Previous Mediumterm Business Plan

Medium-term Business Plan
6.0%

2,000

4.3%
3.6%

3.4%
3.0%

1,380
993

1,124

2020/92021/900.0%
2019/9Operating income

Operating margin*Figures have been rounded down to the nearest million yen.

92. Trend in consolidated sales
Consolidated sales rose 19.8% from the corresponding quarter of the previous fiscal year
to 32,713 million yen amidst growth in our flagship construction business.

Medium-term Business Plan

Previous Medium-term Business Plan

69,00065,1672,126
6,650

13,785

3.3％

1,900
5,397

56,49010.2％

1,8657.8％
3.3％

5,000

21.2％
65.3％

14,49425.7％

32,225

6,214

19,7838.9％

3.4％

27,311

11.8％

946
2,053
42,605

19.3％

7,528

62.1％
3.5％

32,713
647
2,089
8,986

7.5％

65.5％

20,99016,782

2019/9Fiscal year ended
2020/3期
March 2020

2.0％
6.4％
27.5％

35,13027.6％
21,089

28.7％
60.7％

(Millions of yen)

1,103
3,817

2.8％

41,919

64.1％

61.4％

Fiscal year ended
2021/3期
March 2021

2020/9■Condominium business ■Construction business ■Renovation business ■Affiliates, etc.

102021/9

Fiscal year ending
2022/3期（予想）
March 2022 (outlook)*Figures have been rounded down to the nearest million yen.

3. Factors affecting consolidated operating income
Profit rose 130 million yen from the corresponding quarter of the previous fiscal year
thanks to factors including growth in the completed construction balance.

(Millions of yen)

993

▲7464

Operatingmargin
3.6％

▲121

1,124

Other

▲204

Construction
profitOperatingmargin3.4％

Selling, generaland administrative
expensesCompletedconstruction
balance

Increase in selling,
general andadministrative expenses:▲121Increase in gross margin
on sales: +252

Operating income: +130
2020/92021/9*Figures have been rounded down to the nearest million yen.

11

4-1. Principal completed andordered construction

April 2021 to September 2021

Completed construction*In order of prefectural code

ClientBuilding

Prefecture

Use

Tokyo Metropolitan
Government

Governmentbuilding/offices

Meieki Taiko Doriguchi Building

Aichi Prefecture

Governmentbuilding/offices

Sakai City

Sakai Health Center and Municipal Parking
Garage*Osaka Prefecture

Governmentbuilding/offices

Eslead Corporation

Eslead Tsurumi Ryokuchi Koen Forest
Eslead Tsurumi Ryokuchi Koen Breeze

Osaka Prefecture

Condominiums andapartments

Kyoei Steel Ltd.

Kyoei Steel Ltd. Hirakata Office ProductWarehouse

Osaka Prefecture

Distribution warehouseand plant

Anabuki Kosan Inc.

Alpha States Eirakudori

Tottori Prefecture

Condominiums andapartments

Shimizu Comprehensive Development

VPO Higashi-nihonbashi

Central Japan Railway Company
JR Tokai Real Estate Co., Ltd.

Ordered projects
ClientBuilding (project)

Prefecture

Use

Tokyo Tatemono Co., Ltd.

T-LOGI Kazo

Saitama Prefecture

Distribution warehouseand plant

Nomura Real Estate Development Co.,Ltd.

1 Sakuragicho, Omiya-ku, Saitama

Saitama Prefecture

Condominiums andapartments

Daikyo Incorporated

Lions Chigasaki Ekimae

Kanagawa Prefecture

Condominiums andapartments

Osaka Gas Co., Ltd.

Imazu Athletic Field Gymnasium Ceiling andFloor

Hyogo Prefecture

Education/culture/sports (repair)

Shinko Real Estate Co., Ltd.

Kobe Suma Ward Yasakadai Plan*

Hyogo Prefecture

Distribution warehouseand plant

Anabuki Kosan Inc.

Alpha States Higashinaka

Fukuoka Prefecture

Condominiums andapartments*Joint venture project12

4-2. Principal completedconstruction

April 2021 to September 2021

Sakai Health Center and Municipal
Parking Garage
Meieki Taiko Doriguchi
Building

Alpha States Eirakudori

Kyoei Steel Ltd. Hirakata Office
Product Warehouse135. Revision of (increase in) the end-of-year
dividend outlook

We recently revised our dividend policy in light of newly adopted
measures to increase corporate value and as a result determined toactively return profits to shareholders by adopting a dividend ratio of atleast 50% starting during the fiscal year ending March 2023.
Based on the above policy, we will increase dividends for the fiscal year ending
March 2022 from 20 yen to 40 yen, for a total of 60 yen per share (consisting of a20-yen dividend at the end of the second quarter and a 40-yen dividend at the endof the year).
Going forward, we will work to maintain and improve ROE and ROIC byincreasing profit through growth investments and implementing appropriatebalance-sheet management.

14

5. Revision of (increase in) the end-of-year
dividend outlook
Dividend policy before change
140
We will adopt a total dividend ratio of 30% for the fiscal year ending March 2023 while
maintaining dividends of at least 40 yen.
120

100

AnnualdividendDividend policy after change

We will adopt a dividend ratio of at least 50% starting with the fiscalyear ending in March 2023.

8060

40

200

Fiscal year
2016/3期
ended March2016

Fiscal year
2017/3期
ended March2017

Fiscal year
2018/3期
ended March2018

Fiscal year
2019/3期
ended March2019

Fiscal year
2020/3期
ended March
2020

15

Fiscal year
2021/3期
ended March
2021

Fiscal year
2022/3期計画
ending March2022 (plan)

Fiscal year
2023/3期計画
ending March2023 (plan)

Fiscal year
2024/3期計画
ending March2024 (plan)

Fiscal year
2025/3期計画
ending March2025 (plan)

Information about Future Measures
to Increase Corporate Value1. Status of the Medium-term Business Plan
In May 2020, we adopted our long-term vision, the 2030 Vision, and a three-year
Medium-term Business Plan, “Challenges for the Future.”
Although falling sales and profits in the condominium and renovation businesses put adamper on progress during the plan’s first year (the fiscal year ended March 2021), thegeneral construction business notched increased sales and profits despite the COVID19 pandemic, allowing us to make a certain amount of progress in accelerating thestrengthening of the general construction and renovation businesses, a central
theme of the plan.

17

2. Revision for the Medium-term Business Plan
As we study how to further strengthen the general construction and renovation businesses
based on our performance during the previous fiscal year, we will take advantage of thereorganization of the Tokyo Stock Exchange to reconsider key milestones on the wayto 2030.
We will resolutely address issues as we target prime markets in order to increase
corporate and shareholder value, and we recognize the need to incorporate investors’perspective into the Medium-term Business Plan.
Issues facing Daisue Construction
Accelerating
our responseto the Digital
Transformation(DX)Making bold
growthinvestments

Increasing
profitability

Increasing
marketcapitalization

Deepeningsynergies
with Misawa
Homes

Increasingorders forlarge projects

Strengthening
ESG initiatives

Issues facing the construction industry
Lag inaccommodating
the DX

Aging ofexperienced
engineers

Reducing CO2
emissions18

Accommodating
workstylereforms

Shrinking of thedomestic
construction
market3. Time axis for initiatives (new milestones)
 In order to increase corporate value as we implement the 2030 Vision, we recognize the need toincorporate the perspective of increasing shareholder value into the Medium-term Business Plan tocomplement bolder growth investments.
 Based on this recognition, we’re revising the old milestones and extending the final year of the plan fromthe fiscal year ending March 2023 to the fiscal year ending March 2025. Our goal is to increase our market
capitalization to 10.0 billion yen through new business growth strategy and capital measures.

Challenges for the future
Step 1: Extending the duration ofStep2

the Medium-term Business Plan
Fiscal year ended March 2021 to fiscal
year ending March 2025

¥80.0 billion

Fiscal year ending
March 2026 to 2030

Achieving market capitalizationof 10.0 billion yen¥56.4 billion¥100.0 billion

Implementing the2030 Vision¥40.0 billion¥22.0 billion
Consolidated operating
margin3.9%
April 2020

Fiscal year ended
2021/3期
March 2021

Growth investmentsof 5.0 billion yen

Consolidated operating
margin5.0%
Fiscal year ending
2025/3期
March 2025

Growth investmentsof 5.0 billion yen

20302030年■Consolidated sales ■Consolidated operating income19

4. Initiative basic plan
 Building interconnected business and capital strategies with the goal of increasing shareholder value,
along with government structures to support them
 For the time being, striving to achieve growth and improvement through high-priority investments that help
resolve issues and balance-sheet management
Achieve market capitalization of at least 10.0 billion yen at the end of
the fiscal year ending March 2025 through management that’s aware of
our share price.

Increasing
shareholdervalue

Achieve operating profit of 4.0 billion yen (operating margin of 5.0%)
and net profit of 2.8 billion yen during the fiscal year ending March 2025.

New businessstrategy
Investing 5.0 billion yen to improve core-businessprofitability by the fiscal year ending March 2025

New capital strategy■ Aggressive DX (strengthening core businesses) + defensive DX (increasingproductivity)■ Strengthening our core businesses by capturing large projects■ Investing 5.0 billion yen in peripheral and new businesses from a long-term
perspective that extends to 2030 (Total: 10.0 billion yen)■ Linking business strategies (growth investments), maintaining ROE and ROIC of atleast 10%, and achieving a dividend ratio of at least 50% as a way to return profits
to shareholders based on capital markets’ perspective

Dividend ratio of at least 50% + appropriate balance-sheet
management

ESG■ Moving quickly to build governance structures that put independent outside directors in atleast one-third of all Board positions■ Fostering awareness of the Board of Directors’ skill matrix and taking the need to promote
female officers into account■ Recognizing the need to realize a person- and planet-friendly society as an important issue
as we work to achieve a low-carbon, recycling-oriented society and connecting thatawareness to our business strategy

205-1. New business strategy (1)Maintaining and increasing ROE and ROIC by improving profitability through growthinvestments that are linked to a capital strategy that centers on aggressive and defensive DX
Our return on capital is not low compared to other companies, but there are issues with the level of our operating margin.

We boast a high return on capital and exceed
the average values of other companies in ourindustry for both ROIC and ROE.

However, we do have issues with low
operating margin (high cost rate).

Comparison of EVA spread with other companies in our industry*ROIC

EVAスプレッド
EVA
spreadDaisue当社

Industry
average
同業他
社

1.3%

Daisue当

0.7%

Industry
同 業 他average
社

WACC
当
Daisue社

同業他
社
Industry
average社

社

社

Daisue当

3.9%

Daisue当

Daisue当

5.0%

Industry
同 業 他average
社
14.9%

Industry
同 業 他average社
88.3%

Intangible
fixed asset ratio
無形固定資産⽐率

SG&A
expense ratio
販管費率

2.97

Daisue当0.3%

Daisue当2.11

Industry
同 業 他average
社

0.4%

Industry
同 業 他average
社

Industry
average
同業他
社
10.3%

Industry
同 業 他average社

税率rateTax

投下資本回転率
ROC

6.4%

Industry
average
同業他
社
29.7%

32.8%

Daisue当

Daisue当社

Industry
average
同業他
社

社

社

Industry
同 業 他average
社

ROE

Industry
average
同業他
社-41.0%

売上原価率 ratio
Sales-cost

7.1%

Daisue当-57.2%

有形固定資産⽐率
Tangible
fixed asset ratio

Daisue当社

11.7%

営業利益率 margin
Operating

7.8%

6.5%

Net
DE ratio
ネットDEレシオ
Daisue
当

税前ROIC
Pre-tax
ROIC社

社

2.9%

社90.1%

社

Workingcapital ratio
運転資本⽐率

減価償却費率
Depreciation
ratio

8.7%

Daisue当

Daisue当

7.7%

Industry
同 業 他average
社
13.2%

社

14.3%

社

Industry
同 業 他average
社

5.7%
6.0%

0.2%
0.8%

*Comparison of average values for the fiscal year ended March 2021 with general contractors of roughly the same size (data from Capital IQ)

21

5-2. New business strategy (2)Step 1 in improving the profitability of our core businesses will be to invest 5.0 billion yen to address topics such as the DX andincreasing the size of orders. We will strive to achieve consolidated operating income of 4.0 billion yen (operating margin of 5.0%) in
the fiscal year ending March 2025.
We will also invest 5.0 billion yen in Step 2 to jump-start efforts to expand our business domain into peripheral businesses and newfields. Although we will give priority to addressing investment topics related to strengthening our core businesses in Step 1, we will
also start to address the investment topics in Step 2 in order to lay the groundwork for the future.
We will make active use of outside resources (M&As, promoting experts, etc.) in order to implement Steps 1 and 2.

Step 1: Fiscal year ended March 2021 to fiscal year ending March 2025
IssuesLag in accommodating the DX
Decline in operating margin (rising cost rate)
Expanding the size of orders

Priority investment topics

Amount of investment• DX focusing on construction sites (defensive DX)• Improving productivity through industrialization, BIM adoption,etc.
• DX in sales-related operations in order to increase orders(aggressive DX)• Entry into super-high-rise buildings and super-large projects
worth at least 5.0 to 10.0 billion yen

5.0 billion yen

Step 2: Fiscal year ending March 2026 to 2030
IssuesExpanding our business domain
Securing sources of profit outsidecontracting
Complying with ESG and SDGs; contributing
to a low-carbon society

Priority investment topics

Amount of investment• Developing and acquiring zero-energy technologies like ZEB,
ZEH, and wood construction techniques in order to achievecarbon neutrality• Reentering the civil engineering business• Entering the real estate business• Entering the environmental business (renewable energy, etc.)5.0 billion yen

226. New capital strategy
 Realizing growth investment on the order of 5.0 billion yen and shareholder returns with a dividend ratioof at least 50% based on funds earned through our core businesses Working to maintain and improve ROE and ROIC by increasing core-business profit through growthinvestments

Cash inflow

Cash outflow

Use of funds on
hand, etc.

Growthinvestments tostrengthen corebusinesses

Free cash flows
from operating
activities

5.0 billion
yen

7.0 to 8.0billion yen

Improving core-businessprofitability throughinvestments to improve
productivity and increase
the size of orders

Dividend ratio of at least
50%

Shareholder
returns

Securing funds forstable investment andshareholder returns
through corebusinesses

3-year cash flow conditions for Step 1 (fiscal year ending March 2023 to fiscal year ending March 2025)
23

7. Strengthening governance Striving to realize a higher level of governance by focusing on implementing principles that will be applied toprime markets under the June 2021 revision of the Corporate Governance Code, for example by appointing
independent outside directors to at least one-third of all Board of Directors positions
 Pursuing ESG-related initiatives and measures to strengthen IR alongside this strengthening of governancePrinciples from the June 2021 revision of the Corporate Governance Codethat will be applied to prime markets

1-2 (4)3-1 (2)3-1 (3)4-8
4-10 (1)Electronic platforms for exercising voting rights should be accessible to institutional investors.
Necessary information contained in disclosed documents should be disclosed and provided in English.
Companies should enhance their disclosure practices in terms of both quality and quantity inaccordance with the TCFD or an equivalent framework.
Companies should appoint independent outside directors to at least one-third (and a majority asnecessary) of the seats on their Board of Directors.
Independent outside directors should hold a majority of seats on nominating committees andremuneration committees, and companies should explicitly define their approach to independence aswell as the authority, roles, and other characteristics of those committee members.

We will work to implement the Corporate Governance Code with a focus on
the above principles.
Additionally, we will strive to address priorities including implementing ESGrelated initiatives, enhancing IR information, and pursuing dialog with investors.
24

A company that creates spaces richin security and joy

Inquiries concerning this document
Management Strategy Department
DAISUE CONSTRUCTION CO., LTD.
E-mail: dai-info@daisue.co.jp