In this briefing session material, “AP” denotes asphalt plants and “BP” denotes concrete
plants of our business.
Our president, Masaru Tsuji, will explain the progress in the 10‐year long‐term plan andin the final year of the Medium‐Term Management Plan, and our initiatives to promotesustainability. Our senior managing director, Hiroshi Fujii, will then explain the financial
results.

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Let me explain the progress in the Medium‐Term Management Plan and the 10‐year
long‐term plan.
We summarized it in the table. In 2019, when we marked our 100th anniversary, weformulated Long‐term Basic Policies for 10 years, and in order to ensure its steady
implementation, we launched the Medium‐Term Management Plan, which is into its
third and final year.
Let me review the medium‐term plan including the progress in Long‐term (10 years)
Basic Policies and outlook for the current fiscal year.
□1. Strengthen revenue base in Japan
Our plan is to achieve 10% in operating margin in 10 years.
For the current fiscal year, it is expected to be 6.0%.
It was 6.0% in FY 2019 compared with 4.5% a year earlier. It was 6.5% in FY 2020, and is
expected to be 6.0% for the current fiscal year. There are various factors and I will
explain them later.
□2. Establish overseas sales
We want to spread our technologies not only in the domestic market but also overseas,
and we are implementing initiatives to spread them especially in the ASEAN region.
The target is to double overseas sales, from the current 4.5 billion yen to 9.6 billion yen.
Net sales in FY 2019 were 4.39 billion yen, while it was 3.73 billion yen in FY 2020. The

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outlook for the current fiscal year is 4.9 billion yen. We were unable to properly carry out
our activities overseas due to COVID‐19 and our Shanghai Factory could not operate forone month, which together affected sales.
In Thailand in particular, we signed a sales agent agreement with TIPCO, a Thai company
that is top in asphalt sales, and we are expecting sales of five APs in the current fiscal year.
We are also currently building a Thai factory, which will be completed in December. We
would like to drive forward production activities there from next year.
□3. Promote new businesses (including M&A)
It means we will take on new businesses, allocate management resources, and create abase of new products in the fields of industrial machinery and construction machinery.
We aim to generate 10 billion yen in sales in these new business fields. Specifically, we
have mentioned the mobile plant business and waterproof board business, which havejust begun to grow. The mobile plant business, led by mobile crushers, had sales of 90
million yen in FY 2018. Sales were 500 million yen in FY 2019, exceeded 1,000 million yen
last year, and are doing very well in the current fiscal year with a forecast of 1,600 million
yen.
Waterproof boards are products that prevent damage from floods, such as those causedby the recent guerilla rainstorms. Sales, which were 210 million yen in FY 2018, exceeded
800 million yen in FY 2019, reached 900 million yen last year, and we expect 900 million
yen in sales again in the current fiscal year. We believe the business still has room forlarge growth.
□4. Put work‐style reform into practiceThis item is to improve the efficiency of our operations and productivity, and we arepromoting the centralization of office work and the utilization of IoT and AI.
We are promoting speedy information sharing that is not restricted by time as well as
business improvement utilizing the internet, and have made tremendous progress in
improving our operations, partly pressed by COVID‐19.
Remote maintenance service is worthy of special mention. This is a business where weoffer plant maintenance service remotely to our customers, and have been doing this foralmost 20 years. The contract rate of remote maintenance, which was 46% as of the endof January 2020, rose to 67% in August and to 73.8% as of the end of May 2021, andcurrently more than 75% of the customers have signed the contract. With the ratio ofcustomers who have signed for the service rising, we believe that we are shifting fromafter‐incident maintenance to predictive maintenance and then to preventive
maintenance. Instead of acting after a failure, we are promoting a fixed annual rate
maintenance contract to take measures based on prediction before a failure occurs.
Currently we have received orders for five plants, and we can further improve thebusiness efficiency of maintenance services as well as customer satisfaction by expanding
this business.
□5. Make ROE a KPI
It means we are aiming for 50.0 billion yen or more in market capitalization and ROE of
8% or more. It is also an initiative to offer returns to our shareholders by setting thepayout ratio at 60% or more.
Market capitalization was 19.25 billion yen as of the end of FY 2018, 24.3 billion yen as ofthe end of FY 2019, 29.2 billion yen as of the end of FY 2020, and 26.6 billion yen as of3the end of September 2021. Our ROE is stagnating after reaching 5.2%, but we expect tosee some scope for improvement. The figure has been unexpectedly sluggish due to thesudden rise in price of supplies, partly due to COVID‐19, but we believe that there isenough room for taking measures.
As for listing our shares on the Prime Market in April 2022, we have fulfilled all criteria
and would like to shift to activities on the Prime Market.

3□This is a graph that incorporates what I have explained till now.
Our 10‐year market capitalization target is 50.0 billion yen and our initial net
sales target was also 50.0 billion yen. We are in the process of establishing a
structure to achieve these targets and expect to raise the 10‐year sales target to55.0 billion yen, reflecting the progress in the three years of the medium‐term
plan.

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□The Thai factory is expected to be completed this year with a completion ceremonyscheduled for December 16.
We want to strengthen our local competitiveness, lowering costs by raising the ratio of
local production with this factory. The plan is to increase local production to 70% by FY
2024, compared to approx. 30% in FY 2021, in order to improve our costcompetitiveness. The site area of the Thai factory is 40,000 m2 and its production
capacity is planned to be 30 units per year. We are planning to have an annual
production above 30 units by building a structure that would include this factory andlocal outsourcing. We are expecting to sell the 30 units a year in Thailand, and would
also like to use the plant as a production base for the ASEAN region, including Indonesia
and Vietnam where we have sold our products.

5□As for the sales and delivery record of Nikko Asia (Thailand), it has sold one newasphalt plant. In the second quarter, it delivered one recycling unit and will record thesale in the third quarter. The bottom right is a picture showing its current status. We
would like to introduce plants like these throughout Thailand. When we look at the
number of plants imported by Thailand and Nikko’s sales, there were two plants
supplied in 2016 and three in the first half of 2019, and we are expecting to supply fivein the current fiscal year. At present, we have launched an initiative to sell at least 10 ormore units per year. Having a production base with a production capacity of 30 units ormore signifies our determination to not just being content with our existing record, but
to further popularize our products.

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□We publish the integrated report of Nikko Group.
It is already available on our website. The brochure will also be completed soon.

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スライド 8
A1

統合レポートから流⽤作成者, 2021/12/01

As an initiative related to climate change, Nikko on October 22 expressed its support for
the Task Force on Climate‐Related Financial Disclosure (TCFD) recommendations.
Subsequently, we joined the TCFD Consortium on October 26.
This is not only our whole approach but also a declaration that we will attach
importance to combat climate change and focus on it.
We will closely cooperate with customers to develop products that contribute to the
reduction of CO2 emissions so that we can achieve carbon neutrality, including
emissions from Nikko plants acquired by customers as well as emissions at Nikko, when
we construct a plant. We will disclose information based on the TCFD recommendationsin the integrated report, and on our website as necessary.

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10Promotion of sustainability□It is a fact that APs use fossil fuels and produce approximately 1.3 million tons ofgreenhouse gas emissions per year in Japan. We own a 70% share of the plants, whichmeans that 900,000 tons of CO2 is emitted from our products. In light of this fact, werecognize decarbonization as a major issue and will work to reduce emissions.
□In terms of recycling waste materials and the establishment of recycling‐oriented
society, 99% of asphalt manufactured using APs, our mainstay business, is recycled andreturned to roads, making it an honors student of recycling. Seventy‐five percent ofasphalt mixture consists of recycled materials. We would like to drive development
forward so that our products can contribute to the recycling of materials and ensure thisstructure does not fail.
□As part of new initiatives, plants that manufacture ready‐mixed concrete are also ourmainstay business, but the process of manufacturing cement emits large amounts of
CO2. We are jointly working on an initiative with Nippon Concrete Industries Co., Ltd. to
use the concrete sludge, produced in manufacturing concrete, to absorb CO2 byleveraging the property of manufactured concrete and concrete sludge to absorb CO2.
Details are explained on the website of Nippon Concrete Industries, but briefly, calcium
carbonate is obtained by making the calcium contained in the sludge react with CO2.
Nippon Concrete Industries, Nikko, and the University of Tokyo have been jointly
developing the technology to absorb CO2 in a visible manner. This has recently comeinto the spotlight. Not limited to this technology, we will continue to focus on othermeasures to absorb CO2 in the processes related to concrete manufacturing.

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Carbon‐neutral initiatives□These are initiatives to clarify the current status of CO2 emissions of the Nikko Groupestimated in terms of Scope1, 2, and 3 and to strive for its reduction.
□The amount of CO2 emitted in the manufacturing process at our factories is about
5,000 tons per year, but take it seriously that 900,000 tons of CO2 are emitted every
year from AP, and intend to focus on achieving carbon neutrality. We consider
development of products to decarbonize as the most important management issue.

12□The strategy for achieving carbon neutrality is to first recognize the emissions andthen reduce, recover, and offset them in steps.
Seven approaches we would like to incorporate into the initiatives are: fuel shift;
innovation of mixture delivery system; reform of plant system; CCU, which is atechnology to absorb and solidify CO2; use of warm‐mix, which helps to maintain thequality of the asphalt mixture at low temperatures when it is manufactured; innovationof material storage system that enables moisture removal; and electrification as part of adry heating system.

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We put together our product‐related initiatives in a time‐series table and categorized
them using colors.
The ones that have already been completed and commercialized are blue. Those in thevalidation phase are orange, those being considered are red, and the ones in green do
not have any concrete form yet. We would like to reduce emissions from our products by
50% in 2030. We will work on development with the aim of offering products that allow
us to achieve 80% emission reductions by 2040 and carbon neutrality of virtually zero
emissions by 2050.

14□This graph shows how much impact decarbonization initiatives are expected to haveon our business.
We will introduce products that will allow us to reduce CO2 emissions 50% and 80% by
2030 and 2040 respectively. As a result, products that can contribute about 4.0 billion
yen in sales to our business would be introduced by 2030.
To achieve this, as per our analysis, the most essential and largest factor of course is tosolidify our business. We would like to focus on staffing, as it is necessary for us toenhance human resources at divisions engaged in initiatives related to environmentallyfriendly products, which when compared to current staffing levels will require 140% in
the design division, 130% in the sales division, and 225% in the development division in
2030.

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□In terms of enhancing shareholder returns, we expect to pay 30 yen per share inannual dividend, 15 yen in interim dividend and 15 yen in year‐end dividend, for the
fiscal year ending March 31, 2022, and we expect a payout ratio of 67.5%.
In our Medium‐Term Management Plan, we have a policy of 60% or more in dividend
payout. We would like to push forward in such a way as to achieve this without fail.
We will strive to maintain this payout ratio figure in the new Medium‐TermManagement Plan starting in the next fiscal year partly because in the 10‐year plan
launched in 2019 we aim for a business operation where the course can be corrected
upwards but not downwards.

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Here are the highlights of the financial results for the first half.
□Sales increased while profits declined.
As for factors behind profit decline, since the beginning of the fiscal year we were
expecting a certain level of cost increase in raw materials such as steel, but the costsrose faster than we had anticipated. The impact was more than expected, andconsequently operating income was also lower than the forecast figure.

18Here I will explain the key figures.
□Sales came to 19,008 million yen. They were up 4.3% year on year.
However, operating income declined compared with the previous fiscal year.
Investors are probably paying attention to the current order status. New orders
received were almost unchanged. Regrettably, it fell slightly compared with the first halfof the previous year, but on no account does it mean that the business environment is
bad or has especially worsened.
To indicate the business environment we have listed the mixture shipment volume for
AP and ready‐mixed concrete shipment volume for BP. The figure for the mixture for AP
was 100.3%, which is a slight increase from the previous year. Ready‐mixed concrete
was 97.9%, a slight decline.

19□Our initial forecast for sales was 19,000 million yen and the result came roughly inline with it at 19,008 million yen.
□Profit came to 968 million yen compared with the forecast of 1,100 million yen.
The biggest factor was the cost increase in raw materials, such as steel. That had an
impact of about 100 million yen. This, in our calculation, has resulted in the decline ofoperating income. The operating margin was 5.1%. It is hypothetical, but if 100 million
yen is removed from raw material costs, the operating margin would be around 5.6%,
close to the planned 5.7%.
□Regarding ordinary income came to declined 483 million yen year on year comparedto the 31 million yen decline of operating income. Last year, we had a special factor of
special dividends from Maeda Road Construction, which recorded about 340 million yen
in the first half of the previous year. The year‐on‐year decline was large due to this
impact.
□New orders received declined slightly from a year earlier. We were expecting orders
to exceed 20,000 million yen, but they came to 18,800 million yen. Order backlog was
14,155 million yen, which was also below the forecast. However, it was 13,030 million
yen in the same period a year earlier, so the level of order backlog rose more than 1,000
million yen compared with a year ago.

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Next is about segments.
□In the first half, AP‐related business performed slightly poorly in terms of figures.
Meanwhile, BP‐related business did well, even when compared with the previous year,with results exceeding the forecast made at the beginning of the fiscal year. The
environment‐ and conveyor‐related business could carry out almost no sales activities in
the last fiscal year due to the impact of COVID‐19 and it deteriorated significantly in thefirst half, but it has recovered. There were some areas in the other business which
experienced slight sluggishness. In particular, temporary construction materials,
waterproof boards, and crushers fell slightly short of the targets.

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This shows sales and operating income by quarter.
□Our sales vary significantly every quarter.
Every year, sales and profits are concentrated in the second and fourth quarters, while
they are low in first and third quarters. In the current fiscal year, FY 2021, sales wererather high in the first quarter compared with a regular year but profits were not so high,and sales in the second quarter were in line with a regular year and came to 10,000
million yen. When we look at the plan for the full year, the figures for the third quarterare likely to decline as in a regular year. By contrast, they are quite concentrated in the
fourth quarter. We will explain this a little more in detail later, however we currently
have no plan to change our full‐year forecast.

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This shows the changes in new orders received over the past 10 years.
□You can probably see that new orders have basically been growing constantly
although there were some variation.
The 18,800 million yen figure for the current fiscal year is slightly worse than last year
but is the second highest in 10 years. Regarding the trends by segment, the AP‐related
business has been growing at a good rate reflecting the gradual increase in overseas
sales. The BP‐related business had quite high figures from 2014 to 2016, but fell slightly
after that. The figures have since recovered from the FY 2020 and are also progressing
in quite good shape in the current fiscal year. The environment‐ and conveyor‐related
business has been more or less unchanged, while the other business steadily doubled in
the 10 years as it includes new businesses.

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Similarly, these figures show the trend in the order backlog over the past 10 years.
Orders have been increasing and order backlog naturally has been expanding.

24I would like to explain the performance of each segment in more detail.
□Both sales and orders have declined for AP‐related business. Road paving companies,
who are our customers, individually face profit declines due to the impact of high crude
oil prices.
This may have some negative impact on their future investment activities, but so far
there has been no clear sign of investments going down. As for the 8% decline in neworders received compared with the previous year, orders that were expected in the firsthalf were shifted to the second half, and it does not particularly suggest a declining
trend.
Operating profits, unfortunately, declined about 40% compared with a year earlier.

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This is AP‐related business in Japan and abroad.
□The AP‐related business in Japan is as I explained earlier. We feel that theoverseas business has recovered almost to levels before COVID‐19.
In numbers, net sales increased 71% year on year. Exports rose 1,623%. This isbecause it was almost zero last year. Net sales in China also increased 33%. The
business in Thailand, which just started this year, also recorded 75 million yen insales. This year, there are sales for Indonesia and Taiwan, where we had no sales
in the previous fiscal year.

26This is about BP‐related business.
□As discussed earlier, BP‐related business is currently performing very strongly.
The Five‐Year Fundamental Plan for National Resilience might also have an impact, butthere is no change in the situation where customer appetite for capital investment isstrong as the unit price of ready‐mixed concrete has been stable.

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This is regarding the environment‐ and conveyor‐related business.
□New orders received were down 6.4% year on year but sales were up 49% year on
year. As sales increased, operating income also rose 26%.

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This is the other business.
□New orders received declined 6.1% year on year. Orders for mobile plants, on which
we are focusing, have been increasing steadily, and rose to 610 million yen in the firsthalf of the current fiscal year from 450 million yen in the same period a year earlier. Net
sales declined 2.7% as a whole. Temporary construction materials, waterproof boards,
and crushers were businesses that declined when compared with the same period of
the previous fiscal year.

29This is the analysis of factors contributing to the changes in ordinary income.
□Ordinary income for the first half of FY 2021 came to 1,105 million yen, a decline ofmore than 400 million yen compared with the 1,588 million yen reported in the same
period last year. Sales increased approx. 800 million yen, contributing about 200 million
yen to profit increase. The negative impact of the sudden rise in raw material costs was
97 million yen. Meanwhile, cost‐of‐sales ratio excluding raw material costs improvedand contributed 116 million yen to profit increase. SG&A expenses increased 256 million
yen in total. What increased greatly were personnel expenses and R&D expenses. As I
explained earlier, there were special dividends of 340 million yen from Maeda Road
Construction last year.

30This is the comparison of the balance sheets as of the same month of the last year.
□As we are proactively making investments, property, plant and equipment increased
approx. 1,500 million yen.
Total assets increased 2,800 million yen. Net assets increased 1,200 million yen, and as
a result of active investing activities, total assets increased approx. 3,000 million yen, or
about 7%, from a year earlier.

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Finally, this is the full‐year forecast.
We did not change the overall full‐year forecast.

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We slightly revised some segment figures.
□Regarding AP‐related business, we revised sales for the second half to 10,000 million
yen. The initial forecast was 9,200 million yen, so the AP sales estimate for the second
half did not change much from the initial forecast. Operating income also is almost
unchanged at 608 million yen. In the second half, we will not be able to make up the
portion we could not achieve in the first half, but the plan is for BP and other segments
to offset the initially planned portion of AP that could not be achieved.
□Regarding BP‐related business, we significantly raised the sales and profit forecast
for the second half compared with the initial figures.
□We increased the sales forecast of the environment‐ and conveyor‐related businessby about 100 million yen, while the planned profits would slightly fall.
□We revised the sales forecast of the other business to 3,600 million yen for thesecond half compared with the initial forecast of 4,000 million yen. We revised thesegment’s operating income forecast for the second half to 683 million yen from 560

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million yen, as crushers and waterproof boards, which have high profitability, contribute more tosales in the second half.

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This is the analysis of factors contributing to changes in ordinary income for thefull year.
□There are still some unforeseeable factors, but what we can say at this point isthat sales will certainly increase over the full year and we can expect profit toincrease from that. Meanwhile, we had forecast R&D expenses of 300 million
yen initially, but they may not reach that level, while there is an increase inpersonnel expenses. At this point, there is no change to the forecast weannounced at the beginning of the fiscal year, as BP can sufficiently offset AP’s
shortfall compared with the initial forecast.

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Finally, I would like to explain some points in the reference materials.
This is Nikko’s overseas net sales.
Our forecast for fiscal year 2021 is 5.2 billion yen.
The graphs on the right show Nikko Shanghai’s figures. The sales estimate for Nikko
Shanghai for the current fiscal year is 3.7 billion yen, which is a slight increase from ayear earlier but not so different. There are two factors behind the increase. One is
Thailand.
The other is exports. The order backlog at the end of the previous fiscal year includes
two projects in Taiwan and we expect an increase because of that.
The right bottom graph shows some increases in plants for recycled materials in China.
In 2011, there was only one plant for recycled materials among the 15 plants weshipped.
In fiscal year 2021, however, one half of the 20 total plants are for recycled materials,
with nine plants for both virgin and recycled materials and one for recycled materials
only.
In China, an increase in the ratio of plants for recycled materials means a very goodbusiness environment for us from the perspective of differentiation with local
manufacturers.

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