CHUDENKO CORPORATION
Financial Results Briefing for the Fiscal Year Ended March 2024
May 29, 2024

Event Summary[Company Name]CHUDENKO CORPORATION[Company ID]

1941-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2024

[Fiscal Period]

FY2024 Annual[Date]

May 29, 2024

[Number of Pages]

29[Time]

10:00 – 10:48(Total: 48 minutes, Presentation: 28 minutes, Q&A: 20 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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Takafumi Shigeto

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Presentation
Shigeto: Hello, everyone. I am Shigeto, President of CHUDENKO. Thank you for taking the time to participate
in our FY2023 financial results presentation.

Today, I would like to begin by explaining our business results forFY2023, followed by our forecast for FY2024,
then the progress of our mid-term management plan, the CHUDENKO Group 2030 Vision, and the measures
we are taking to achieve a management that is conscious of the cost of capital and stock price, which wereannounced in conjunction with the financial results announcement and awareness of the cost of capital andstock price. Thank you very much for your cooperation.

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I would like to start with the results for FY2023.
First, let me give you an overview of the business environment and our group's performance in FY2023.
In the construction industry, public capital investment remained firm and private capital investment
continued to pick up due to the revitalization of socioeconomic activities following the COVID-19
reclassification to Class 5, but energy and raw material prices remained high due to the impact of foreignexchange rates and other factors.
Against this backdrop, the Group aggressively pursued the various measures in its medium-term management
plan and was able to recover from the deteriorating performance of FY2022.
In addition, in recognition of our efforts to promote the advancement of women and to maintain and promote
the health of our employees, we were awarded the Eruboshi Grade 2 certification last September. We werealso recognized as an excellent corporation for health management in the large corporation category in Marchof this year, the second year in a row.

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In FY2023, we reported an increase in both sales and profit.
Net sales increased JPY8.9 billion YoY for CHUDENKO on a non-consolidated basis and JPY3 billion forconsolidated subsidiaries.
The consolidated total was JPY201 billion, an increase of JPY11.9 billion from the previous year and the firstincrease in sales in two fiscal years.
Next, operating profit increased JPY3.5 billion to JPY11.9 billion, the first increase in two fiscal years, due toan increase in gross profit from higher sales, thorough cost control, and efficient construction.
Ordinary profit was JPY12.7 billion, a significant recovery of JPY14.6 billion from the previous year, due in partto a rebound from last year's loss in overseas business investments.
Profit attributable to owners of parent also increased by JPY14.8 billion to JPY7.9 billion.
Next, I will explain the main items.

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First, here is a breakdown of the JPY11.9 billion increase in sales from the previous year.
On a non-consolidated basis, CHUDENKO saw an increase of JPY8.9 billion YoY due to a JPY7.1 billion increase
in indoor electrical, despite a decrease in the air-conditioning piping. Consolidated subsidiaries reported anincrease of JPY3 billion over the previous year due to sales growth in both metropolitan areas and overseas,
including the Chugoku region.
As a result of the above, consolidated net sales were JPY201 billion, exceeding JPY200 billion for the first timesince JPY211.9 billion was recorded in FY1994.

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Next is a breakdown of the JPY3.5 billion increase in operating profit from the previous year.
On a non-consolidated basis, CHUDENKO’s general work businesses, including indoor electrical, increased by
JPY3.1 billion due to higher sales and thorough cost control. The electric power business, including the
distribution line, kept a stable level and was almost the same as the previous year. As for the consolidated
financial processing, operating profit of consolidated subsidiaries increased by JPY0.3 billion, resulting in a YoY
increase of JPY0.4 billion.
As a result, the consolidated operating profit was JPY11.9 billion.

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Next is the balance sheet.
Total assets increased JPY8 billion to JPY280.5 billion, mainly due to an increase in accounts receivable fromcompleted construction contracts.
Total net assets increased JPY11.8 billion to JPY213.9 billion, mainly due to a JPY7.8 billion increase in valuationdifference on available-for-sale securities and a JPY2.8 billion increase in accumulated retirement benefit
adjustments.
The equity ratio increased 2 percentage points to 75.2% from 73.2% at the end of the previous fiscal year due
to an increase in shareholders' equity.

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Next is CHUDENKO's orders and sales by business.
The left-hand side shows orders received for each business, which were strong, exceeding the high level ofthe previous year by JPY15.5 billion. Particularly large growth was seen in the indoor electrical and airconditioning piping related to factories and condominium-related work associated with redevelopment
projects, totaling JPY183.3 billion.
Net sales of each construction sector, on the right side, totaled JPY157.1 billion, an increase of JPY8.9 billion
from the previous fiscal year, mainly due to an increase in construction of factories and distribution
warehouses in indoor electrical.

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8Next are orders and sales by region.
As part of its growth strategy for some time, the Company has been working to maintain sales in the Chugoku
region and expand sales in the metropolitan areas.
Orders and sales in the Chugoku region, shown in blue, have been maintained at around JPY120 billion to
JPY130 billion. However, orders received increased significantly to JPY147.1 billion in FY2023.
Meanwhile, orders and sales in the urban area have also been steadily increasing, with a remarkably high levelof JPY36.2 billion in orders received in FY2023.
Sales have declined since FY2022, but they have steadily increased from 11% three years ago to 16%.
We will continue to focus on expanding orders in metropolitan areas while increasing our market share in the
Chugoku region, which is our base.

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9Next is the trend of orders received, sales, and carryover by individual sectors on a non-consolidated basis.
Orders received totaled JPY183.3 billion, JPY15.5 billion higher than the previous year's peak and the highest
level in the last five years.
Net sales were JPY157.1 billion, the highest in the past five years.
Due in part to the significant increase in orders received over the past two years, the carryover amountincreased sharply, reaching a record of JPY142.1 billion. The increase in the general division, including indoor
electrical and air-conditioning piping, was particularly large.
For the region, both the Chugoku region and the metropolitan areas saw substantial increases, which we
believe will contribute significantly to our sales in FY2024 and beyond.

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10Next is our forecast for FY2024.
We expect to increase sales and profit on a consolidated basis in FY2024.
Net sales are expected to increase by JPY6.8 billion on a non-consolidated basis and JPY2.1 billion forconsolidated subsidiaries. We expect a total of JPY210 billion, an increase of JPY8.9 billion from the previous
year.
Operating profit is expected to increase JPY0.5 billion YoY to JPY12.5 billion, mainly due to an increase in grossprofit from higher sales.
Ordinary profit is expected to increase JPY1.5 billion YoY to JPY14.3 billion due to an increase in operating
profit and a decrease in non-operating expenses.
Profit attributable to owners of parent is also projected at JPY8.8 billion, up JPY0.8 billion from the previous
year, mainly due to an increase in ordinary profit.
FY2024 is the final year of the current Medium-term Management Plan 2024. The original target for the final
year of the medium-term plan was JPY210 billion in consolidated net sales and JPY12 billion in consolidated
operating profit. In light of our performance in FY2023 and other factors, we have decided to increase
operating profit by JPY500 million to JPY12.5 billion as a new target.

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11Next is CHUDENKO's orders and sales by business.
The left-hand side shows orders received for each sector. As explained earlier, we are entering FY2024 withan exceptionally large amount of work carried over. Based on the current construction system and others, we
expect a reactionary decline in all sectors, including air-conditioning piping, which increased significantly in
FY2023. Therefore, we are projecting a decrease of JPY22.3 billion from the previous year to JPY161 billion.
On the other hand, since the abundant carryover amount will contribute to each construction revenue on theright side, we expect an increase in construction work in the general businesses, such as indoor electrical andair-conditioning piping, to reach JPY164 billion, an increase of JPY6.8 billion from the previous year.

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I will continue by explaining the Medium-term Management Plan 2024 based on the current status of ourefforts.
The medium-term management plan, which started in FY2021, is a four-year plan targeting further growth in
FY2024, the 80th anniversary of our founding. This year is the final year of the plan, and as the culmination ofthese four years, we are eager to achieve our final-year goals.
The theme is “Change and growth for all,” and the two sub-themes are “Strengthening sales and construction
systems and expanding profits” and “Promoting DX and decarbonization.”

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Next, we are working on five major measures to achieve the medium-term plan, with some modifications.
Firstly, in expanding orders and reinforcing the construction system, our efforts to expand prime contracting
and plant construction have resulted in a significant increase in orders received. In the current fiscal year, we
will work to increase our market share in the Chugoku region, maintain a high level of orders in the Tokyo
metropolitan area, and expand orders in the Kansai and Chubu regions.
In the second area, securing and expanding profits and strengthening competitiveness, in order to secure andexpand profits from large-scale construction projects, we will strengthen pre-order review meetings to ensure
thorough cost control and work to secure and expand further profits by securing medium-size and additional
construction projects.
In the third area, strengthening human resources retention and development, we will focus on humanresources development to enhance construction management and related functions, as will be explained later.
Additionally, we aim to improve employee engagement by creating a rewarding workplace environment.
The fourth area is quality improvement. To contribute to a stable supply of electric power, we arestrengthening cooperation with The Chugoku Electric Power network and working to respond quickly toemergencies. We will also continue our efforts to improve the quality of our facilities to meet the needs andexpectations of our customers at all stages of the construction process, as well as the workmanship of the
facilities we install.
In the fifth area, business expansion through growth investments, we are considering investments in M&A,
renewable energy, and other areas. We will continue to promote environment-related businesses, such as
on-site solar PPA projects and ZEB conversion, to support decarbonization for our customers.
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Next is the numerical targets of the medium-term management plan.
As I explained earlier, for the final year of FY2024, we have set a consolidated net sales target of JPY210 billion,
a consolidated operating profit target of JPY12.5 billion, up from the initial JPY12 billion, and a new ROE targetof 4.2%.
Although performance declined in FY2022, it recovered firmly in FY2023 thanks to favorable order conditions
and cost reduction efforts. In particular, operating profit was JPY11.9 billion, close to the initial target of JPY12
billion for the final year of the medium-term management plan.
In FY2024, as the final year of the medium-term management plan, the Group will work as one to achieve therevised performance targets.

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I would like to continue by explaining the status of our recruitment and human resources training situation.
Although recruiting has been challenging in recent years, we continue to hire 120 to 130 workers each fiscal
year and plan to hire 170 regular employees in FY2025.
To be responsible for CHUDENKO's future, we have traditionally invested a lot of effort into recruitment
activities. This year, we have started a scholarship refund support system. In the annual wage talk this spring,
we responded fully to the labor union's demands and raised wages by more than 5%, including base increases
and regular salary increases.
Furthermore, we will continue to focus on attracting excellent human resources and improving theircompensation, including a more substantial increase in starting salaries than in previous years.
We are also committed to human resources development. As you can see from the pie chart, young people
under the age of 30 account for nearly 30% of the total. We believe that nurturing these young people willlead to the strengthening of our construction capabilities in the future.
Through these efforts, the number of certified personnel is increasing. Along with advancements intechnology and construction capabilities, this is a driving force behind the increase in sales.

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Next, specific measures for capital policy.
We have set aside room for investment of about JPY40 billion for sustainable growth. Specifically, we are
expanding our business through M&A, investing in renewable energy, decarbonizing our own operations, andworking on PPA projects to help our customers decarbonize their operations.
With respect to shareholder returns, we emphasize providing sustainable and stable dividends and willcontinue to target a consolidated dividend-on-equity ratio of 2.7%. In addition, we will repurchase our own
shares as necessary, considering the overall business environment and other factors.

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Next, we look at shareholder returns.
Based on the policy I just explained, we pay an annual dividend of JPY104 per share, with a DOE of 2.89% anda payout ratio of 71.5% for FY2023. Since we repurchased our own shares on November 30, 2023, the total
return ratio is 89.8%.
We also repurchased treasury stock every year, totaling 1.6 million shares, or JPY3.6 billion, over a three-year
period.

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The following is a summary of dividends and dividend payout ratios.
The blue bar graph shows the dividend per share, and the red line graph shows the dividend payout ratio.
The dividend for FY2024 will be increased by JPY16 to JPY120 per share. The dividend payout ratio is 73.9%,
and the dividend yield is expected to be 3.8%.
The DOE was adopted in FY2014, initially targeting 2%. The rate was increased to 2.7% in FY2018. During thisperiod, the dividend payout ratio has remained above 70%, except for FY2022, when a net loss was recorded.
FY2024 is the final year of our mid-term plan, which marks the 80th anniversary of our founding. As explained
earlier, since we are on track to achieve our final-year targets, we have decided to increase the dividend by
JPY16 to return the results to our shareholders as well.

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Next, I would like to reiterate the CHUDENKO Group 2030 Vision.
This vision represents our group's aspirations for FY2030. The theme is once again “Change and growth forall,” as we believe that in order for our group to continue to grow amidst an uncertain future, it is essentialthat we respond to change and continue to take on the challenge of transformation.
The three images that we are aiming for as a group are achieving sustainable growth and contributing to therealization of a sustainable society, ensuring all workers are proud and happy to take on the challenge ofmaking reforms, and responding to society's diverse needs with advanced technology and quality.

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The first is the performance target for the final year, FY2030. We target consolidated net sales of JPY250 billion,
an operating profit of JPY17 billion, and an ROE of at least 5%.
Second, to achieve a carbon-neutral society, we are committed to reducing CO2 emissions by 46% or morecompared to FY2013.
Third, we will work to create an environment where diverse human resources can play an active role anddiverse work styles can be realized.

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I would like to continue by explaining the measures we have implemented to achieve a cost-of-capital- andstock-price-conscious management, which were announced alongside last month's financial results.
In the Medium-term Management Plan 2024, we have focused on management while being aware of the costof capital. We are presenting this plan again at the Tokyo Stock Exchange's request.
First of all, as I explained earlier in the medium-term management plan, we are aggressively pursuing thevarious measures set forth in the Medium-term Management Plan 2024. As a result, we believe that ourbusiness performance has improved, with higher sales and operating profit and an improved operating margin.
ROE has also recovered to 3.9%, almost 4%, in FY2023, in line with improved business performance. However,
it is still below our calculated cost of equity of 4.5%. P/B ratio is still below 1 times at 0.79 times, as of March
31, 2024.
Therefore, we hope to improve capital efficiency by further enhancing profitability and capital policies. In
addition, we will engage in IR activities more than ever so that investors can understand these efforts.

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Since FY2024 is the final year of the medium-term management plan, I would like to explain our main
initiatives during the year.
First, we aim to improve our performance targets by firmly implementing the growth strategies set forth in
the Medium-term Management Plan 2024 and by further improving our earning power.
Next, we will strengthen and enhance our capital policy by investing in human capital, expanding business
investments for growth, increasing shareholder returns by raising the dividend by JPY16, as previously
explained, and reducing the number of cross-shareholdings that have diluted the value of our holdings.
Next, we will carefully explain these initiatives to investors through financial results briefings and other means.
We are also available to meet with investors and look forward to hearing from you.
For FY2025 and beyond, we would like to reiterate our commitment to achieving an ROE of 5% or more as
early as possible in the next medium-term management plan, which will be formulated by the end of FY2024.
This concludes our briefing. The following materials are for reference only, and I will skip the explanation.
Thank you for watching.

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Question & Answer
Moderator [M]: We will now move on to the question-and-answer session. Let me read the first question.
Participant [Q]: Could you please elaborate on the outlook for each of your construction sectors?
Shigeto [A]: Regarding the outlook for business performance centered on future orders, socioeconomic
activities have become more active since the last fiscal year after COVID-19 was reclassified to Class 5. Thatbeing said, we believe that active redevelopment projects, especially in urban areas, or the construction of
distribution centers are progressing smoothly.
In terms of the general construction business, we expect that redevelopment projects, logistics centers, andfactory construction, especially semiconductor plants, will continue to be active for the time being and thatthe situation will remain very favorable.
In the electric power business, we have been receiving stable orders from the network divisions of electric
power companies in recent years, and we expect this situation to continue for some time, so we believe wecan achieve a certain level of sales.
Moderator [M]: Thank you. Now, we move on to the next question.
Participant [Q]: What is the impact of the maximum working hours limit? In particular, what is the impact onorders received and profit margins?
Shigeto [A]: First of all, regarding the maximum overtime work hours, this regulation will be applied fromFY2024, which was scheduled five years ago. We have set up an internal committee for work style reform andhave been working on this initiative.
For example, we are working to improve work efficiency and productivity by allowing employees to go directly
to the construction site and return home, lending them smartphones to complete management tasks at thesite, and supplementing the work with construction managers throughout the business unit. We will continue
to implement measures that contribute to reducing overtime work.
At the same time, the new working hours regulation has resulted in many construction sites adopting an eightday-per-four-week closure. As mentioned in your question, it is possible that the extension of the construction
period will have a slight impact on orders and sales, as a delay in the recording of revenues, but it is unclear
at this time what specific impact this will have on our business performance.
We will continue to closely monitor situations and take appropriate action.
Moderator [M]: Thank you very much. This is all for the questions from the Q&A function so far.
Now, we would like to answer the questions received from investors.
Participant [Q]: The first one, what is your assessment of the current financial results?
Shigeto [A]: As I explained earlier, our performance in FY2023 was better than last year, both in sales andoperating profit. In particular, net sales exceeded JPY200 billion for the first time since the JPY211.9 billion
recorded in FY1994. Ordinary income and profit rebounded strongly, mainly due to the absence of losses fromoverseas operations recorded in the previous fiscal year.
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Operating profit, ordinary profit, and profit exceeded the initial plan by JPY1.4 billion, JPY0.6 billion, and JPY0.3
billion, respectively. In particular, operating profit reached JPY11.9 billion, nearly meeting the JPY12 billion
target set for the final year of the medium-term management plan, marking a recovery from the previous
year's downturn.
Although sales fell slightly short of our target, in my opinion, the financial results were satisfactory.
That is all.
Moderator [M]: Okay, next question.
Participant [Q]: Orders received in FY2023 further exceeded the upward revision, but does the environment
for orders continue to be quite favorable?
Shigeto [A]: Looking at our non-consolidated orders, we revised upward our initial forecast of JPY160 billion
to JPY168 billion in Q2 and JPY178 billion in Q3. The final figure was JPY183.3 billion, JPY5.3 billion higher than
the forecast as of Q3, and we consider the environment is favorable.
This situation is also seen in other companies within the same industry. We believe it is largely due to theincrease in socioeconomic activities following the reclassification of COVID-19 to Class 5 and the surge inactive redevelopment projects, particularly in urban areas.
We believe that the favorable order environment will also positively impact order profitability. We willcontinue to work together as a group to achieve the performance targets for the final year of the mediumterm management plan.
At the same time, as mentioned in your earlier question, we will closely monitor the overtime cap impact onsales.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: You are forecasting a decrease in orders in FY2024, but is your capacity very tight?
Shigeto [A]: We expect to be operating at full capacity in FY2024, as we will have a record carryover and alsowith the start of the overtime cap in the construction industry that we have been talking about earlier.
Therefore, we will make decisions after carefully considering our construction system, including securingpersonnel, when accepting construction orders, with a focus on ensuring future business performance.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: How do you think the rising price of copper will affect your business performance?
Shigeto [A]: The price of copper in the cables needed for the construction of our work has continued to rise.
It went up from less than JPY700,000 per ton around 2019 to JPY1.3 million at the end of March this year and,most recently, over JPY1.7 million.
Under these circumstances, we estimate costs appropriately at the time of order receipt. By arranging forcables and other equipment early, we can fix costs and mitigate the impact of rising prices.
In addition, we mitigate the impact of sudden increases in copper prices during construction by incorporatinga sliding scale clause at the time of order receipt, thereby protecting our business performance.

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25Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: With the high carryover, will Q1 of FY2024 exceed that of FY2023?
Shigeto [A]: We have traditionally tended to make little progress in Q1, making it difficult to generate sales
and profits. Q1 tends to be the weakest of the quarters, with an operating loss in FY2023 in particular.
However, we hope to start FY2024 with an operating surplus, as we are starting the year with an abundant
carryover and expect to increase our sales and profit base.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: You have announced a dividend of JPY120 for FY2024. What is your intention with this? Also,
why not increase the DOE rate?
Shigeto [A]: In FY2021, we formulated our medium-term management plan for 2024, targeting the 80th
anniversary of our founding, and we have been working on it for three years. We believe that the
improvement in our performance has given us the prospect of achieving our numerical targets for the final
year.
Therefore, we have increased our annual dividend forecast by JPY16 to JPY120 per share in order to returnthese results to our shareholders.
Although the dividend increase is expected to bring the DOE to around 3.3%, the current DOE of around 2.7%
will remain unchanged during the period of this medium-term management plan. We intend to reiterate ourdividend policy, including DOE and other shareholder return policies, in the next medium-term management
plan.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: Please tell us how you plan to use the more than JPY100 billion in investment securities.
Shigeto [A]: Of our investment securities, about 30% are so-called cross-shareholdings, and the remaining
70% are corporate bonds, mainly domestic.
Regarding cross-shareholdings, we assess their contribution to the maintenance and development of theGroup's transactions and business growth. We keep those that we determine will maintain or enhance ourcorporate value over the medium to long term. Shares that are considered less valuable to hold will be
reduced, as announced in this release.
The bonds are held as a source of funds for the JPY40 billion of growth investments set forth in the mediumterm management plan. We will continue to invest in renewable energy, pursue projects that drive businessexpansion, and engage in M&As related to air-conditioning piping, as well as consolidate companies tostrengthen our business structure, without being constrained by the JPY40 billion limit.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: You have announced a management that is aware of the cost of capital and stock price, but
is there anything new?
Shigeto [A]: To date, in line with our medium-term management plan, we have been striving for sustainablegrowth to improve our business performance. Simultaneously, we have focused on shareholder returns by
paying stable dividends, and we believe this approach has yielded positive results.
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Under these circumstances, since this year is the final year of the medium-term management plan that has
been producing results, we would like to vigorously promote the current initiatives.
In addition, given the prospect of achieving the numerical performance targets initially announced, we expect
to increase the annual dividend by JPY16.
As mentioned in the published material, we will evaluate our approach for the period after FY2025. We would
like to present this information again in the next medium-term management plan.
Moderator [M]: Thank you. Now, for the next question.
Participant [Q]: When will the next medium-term management plan be disclosed?
Shigeto [A]: We will proceed with the discussion during FY2024 and hope to disclose it in April 2025, when
the financial results for FY2024 are announced, at the latest.
Moderator [M]: Thank you. Now, this will be the last question.
Participant [Q]: Will you set a target ROE of 5% or more in the next medium-term plan?
Shigeto [A]: As for the ROE target, the CHUDENKO Group 2030 Vision sets a target ROE of 5% or more for
FY2030, the final year of the vision. We believe that improving capital efficiency is a prominent issue, as
requested by the Tokyo Stock Exchange.
Therefore, in formulating the next medium-term management plan, we consider the early achievement oftargets to be a key issue. However, we will present the timing for achieving the target after further
consideration based on the progress of business performance and the status of capital adequacy.
Moderator [M]: Thank you very much. This concludes the presentation of the financial results of CHUDENKOCORPORATION for FY2023.
Shigeto [M]: Thank you very much for today.
[END]______________
Document Notes
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