OYO Corporation
FY Ending December 2018
Financial Results
February 28, 2019

President & CEO

Masaru Narita

Content
1. Overview of FY2018 Financial Results
2. Forecast of FY2019 Financial Results
3. Status of Progress in each Business Segment
4. Efforts for Next Growth
5. Progress in Medium-Term Business Plan,“Jump 18”

© 2019 OYO Corporation, All rights reserved.

2

FY Ending Dec.2018
Financial Results

1. Overview of FY2018 Financial Results© 2019 OYO Corporation, All rights reserved.

3

Profile of OYO GroupThe four segments selected in the previous medium-term plan, “Step14,” will resolve social issues
and expand the OYO Group business.
Non-consolidated divisions
Domestic subsidiaries
Overseas group companies

Building a sustainable society

Social issues

Harmonizing between the Earthand Human Society

Role of OYO Group

Segment 1

Segment 2

Segment 3

Segment 4

Infrastructure Maintenance,
Management andRenovation

Natural Disaster
Prevention and Mitigation

Environment

Natural Resources
and Energy

Provide solutions and systems to support
the maintenance, management andrenovation of social infrastructures

Provide solutions and systems to support
the resilient society against natural
disasters, etc.

Provide solutions and systems to support
environmental conservation (reduce theimpact to environment)

Provide solutions and systems to support
the development, conservation, andeffective use of resources and energy

Infrastructure Maintenance Biz Div.
Regional & Global Aqua Eng. Div.

Sabo Business Division
Earthquake Risk Mgt. Div.

Global Environment Biz Div.

Energy Business Divison

TohokuBoring,KCS, KoeiConsultant,
OceanEngineering,
OYOGeo-MonitoringService,etc.

OYO Seismic Instrumentation
OYO RMSOYO International

GSSII (US) , OYO Pacific (US, Guam)

Kinemetrics (US)© 2019 OYO Corporation, All rights reserved.

NS Environment
Geometrics (US)NCS SubSea (US)Robertson Geologging (UK)4

Highlights of FY2018 Financial Results(Unit: JPY M)

FY 2017

YoY Changes

FY 2018

Changes

Ratio (%)

Ordinary income

45,80545,957
13,213855
1,220

46,262
45,232
14,152
1,481
1,913

456
(724)
939
625
693

101.0
98.4
107.1
173.2
156.8

Net income attributableto owners of parent

747

804

57

107.6

OrdersSales
Gross profit
Operating income

Sales decreased. Operating income increased by 73.2% and Ordinary income increased by 56.8%
Topics Driven by Infrastructure and Maintenance Biz and Natural Disaster Prevention and Mitigation
Biz (Due to demand for infrastructure renewal, Heavy Rain Event in western Japan, etc.)
 Sales from large-scale projects (JPY 1.7 billion) in the previous fiscal year decreased in theEnvironment business.
 In the Natural Resources and Energy business, the operating loss in the resource exploration
field was reduced.
© 2019 OYO Corporation, All rights reserved.

Positive factor
Negative factor
Positive factor

5

Financial Results by Business Segment
Infrastructure
Maintenance

Sales(JPY M)

20,00019,634

19,216

Operatingincome(JPY M)

1,200
1,000

15,000800

10,000

600
400

5,000

200

0

0

2017
Sale

2018
Operating income

Natural Disaster Prevention Operatingand Mitigation
incomeSales(JPY M)

9,217

10,000

7,993

8,000

(JPY M)

Sales(JPY M)500

12,000400

10,000

300

4,000

200

2,000

100

2,000

0
2018
Operating income

0

2017
Sales

9,605

8,000

6,000

0

Environmental

6,000
4,000

Operatingincome(JPY M)

700

8,512

600
500

Sales
(JPY M)

10,000Natural Resources
and Energy

8,723

8,287

8,000

400

6,000

300

4,000

0

2017
Sales

-400
-600

2,000

-800

0

2018
Operating income

0
-200

200
100

Operatingincome(JPY M)

2017
Sales

2018
Operating income

Efforts in FY2018

Achievements

Infrastructure
Maintenance,
Management andRenovation- Cooperation between offices and business divisions has little effect.
- Progress the conversion from technology providing service to solution
providing service- GSSI recorded the highest results by focusing markets and products- Domestic group companies clarifying core business increased both sales and profits- Non-consolidated sales and profits decreased due to focusing conventional investigationand equipment sales

Natural Disaster
Prevention and
Mitigation- Respond to the Heavy Rain Event in western Japan- Convert to solution providing services- Increased both sales and profits due to non-consolidated and overseas operations- Some domestic companies showed low performance due to conventional-styled
business- Aggressively cultivate disaster waste market- Expand social issues-conscious business(Asbestos countermeasure, Energy Audits, Green Infrastructure)- Both sales and profit declined (non-consolidated) due to lack of large-scale orders- Disaster waste business and Fukushima environment support project showed strong
performance (Non-consolidated)- Asbestos countermeasure and Energy Audits are strong (in Japan)

Environment

Natural Resources
and Energy- Cultivate customers and sales areas, changed development processes - Despite unstable resource prices, operating loss decreased- Develope new markets to replace the shrinking nuclear power business - Nuclear power plant related sales significantly decreased (90% year-on-year)- Expande offshore wind-power generation related sales- Offshore wind power generation related orders expanded© 2019 OYO Corporation, All rights reserved.

6

Clarified Achievements and Challenges
Growth trend in businesses with clarified markets and products lines
・ Accelerated growth by clarifying focused market and objective of products
・ Increased market opportunities through product conversion to solution-based systems
・ Continued strong performance by clarifying the company‘s core business and providing
solution services / packaged services
・ Steadily expanded market share by differentiating services centered on superior
technologies
e.g. disaster waste disposal planning service, erosion control support system,
removed soils transportation control systems, etc.

GSSI
Kinemetrics

KCS

NS environment
Tohoku Boring
Global Environment
Business Divisionetc.

Non-consolidated base growth is Group’s challenges
・ Without stopping the trend of decreasing sales and profits in the conventional business depending on
public works* which accounts for more than half of sales and personnel* Business that passively implements the works specified by government / public offices

・ Conventional consciousness and the Branch System obstruct business growth© 2019 OYO Corporation, All rights reserved.

7

FY Ending Dec.2018
Financial Results

2. Forecast of FY2019 Financial Results© 2019 OYO Corporation, All rights reserved.

8

Forecast of FY2019 external environment
Overseas・ Trade friction between the US and China
・ Unstable resource prices (economic slowdown in China and expansion of protectionism)
・ Crude oil prices are unstable, but development of oil fields started.
・ Increased worldwide awareness of disaster prevention and environmental conservation
・ Sustained growth of the global economy and steady expansion of infrastructure development
and renovation demand・ Concerns about the Brexit (no-deal Brexit)
・ Continued demand for renewable energy development in EU

Risk
Risk
Tailwind
Tailwind
Tailwind
Risk
Tailwind

Domestic
・ Shrink of the nuclear power plant and expansion of demand for renewable
Risk
energy・ Increased opportunities for infrastructure, disaster prevention and mitigation projects
in line with the expansion of public works budgets
・ Rush demand due to the increase in the consumption tax
・ Increasing demands for disaster prevention and mitigation due to frequent and intensified
natural disasters
・ Demand for improving efficiency and productivity through ICT© 2019 OYO Corporation, All rights reserved.

Tailwind
Tailwind
Tailwind
Tailwind
Tailwind9Forecast of FY2019 Financial Results
YoY changes
FY 2018

FY 2019
Change s(Unit: JPY M)

Ratio (%)

Sale

45,23249,500

4,267

109.4

Operating income

1,481

1,900

418

128.3

Operating income
ratio

3.3%

3.8%

ー

+0.5%

Ordinary income

1,913

2,300

387

120.2

Net income attributableto owners of parent

804

1,300

496

161.6

© 2019 OYO Corporation, All rights reserved.

10

FY Ending Dec.2018
Financial Results

3. Status of Progress in each Business
Segment© 2019 OYO Corporation, All rights reserved.

11

Infrastructure Maintenance, Management,
and Renovation
Expectation

25,00020,00019,634FY2019: Sales inc., Profit inc.

Operating income

Sales
JPY M

FY2018: Sales dec., Profit inc.

22,20019,216

JPY M

Expectation

1,104

1,200
1,000

1,130

896

Sales Breakdown

800

15,000FY2018 FY2019

600

10,00042%▶45%

400

5,000

200

0

0

2017

Major Efforts andResults in FY2018

2018

2019

2017

2018

2019

Launched products that meet global infrastructure renewal demand
Struggled in the National Resilience field(negative effect of coexistence of Division System and Branch System)
Focused on water infrastructure and urban redevelopment projects
M&A for overseas expansion of infrastructure business (Fong Consult, FCI)

Major Efforts
in FY201945%

Consolidate Singapore companies. Expand business by leveraging group synergies
Expand inspection and renewal works in response to strengthened budget
for the National Resilience

GSSI: 9% increase in sales
11% decrease in sales(non-consolidated)
Domestic G: 5% increase in sales
Contribute from FY2019

TargetSales: 115.5 %(compared to 2018)

Invest in 3D mapping of underground facilities through 3D geophysical exploration© 2019 OYO Corporation, All rights reserved.

12

FY2018: Sales inc., Profit inc.

Natural Disaster Prevention and Mitigation
Sales
JPY M

10,000

7,993

9,217

6,000
4,000
2,000

9,900

JPY M

Expectation

500

400

391

400

Published values

Published values

8,000

Operating income
Expectation

12,000FY2019: Sales inc., Profit inc.

Sales Breakdown

300

Achievementrate
97.3%

0

200
100

FY2018 FY2019

Achievementrate
126
115.9%

20%▶20%
20%

0

2017

Major Efforts andResults in FY2018

2018

2019

2017

2018

2019

Nationwide response to the Heavy Rain Event in western Japan
led by Business Divisions

Sabo Business Div., Regional and Global Aqua
Engineering Business Div., etc. :20% increase in sales

Restored orders by utilizing seismometer system to evacuation guidance services

Major Efforts
in FY2019

Focus on natural disaster prevention and mitigation business in response to thestrengthening of the National Resilience budget
Develop the technologies to reduce slope disasters using 3D models andcreate the new markets

Kinemetrics: 9% increase in sales

TargetSales: 107.4%(compared to 2018)

Establish Earthquake Risk Management Division andstrengthen earthquake-resistant business: Non-consolidated© 2019 OYO Corporation, All rights reserved.

13

FY2018: Sales dec., Profit dec.

Environment
JPY M

10,000

Sales
9,605
8,512

FY2019: Sales inc., Profit inc.
JPY M

Expectation

8,900

8,000
6,000

0

2017

Major Efforts andResults in FY2018

Major Efforts
in FY2019

2018

2019

663

Expectation

550

528

Sales Breakdown

18%

2017

Published values

2,000

Published values

Published values

4,000

700
600
500
400
300
200
100
0

Operating income

2018

FY2018 FY201921%▶18%2019

Decreased sales and profits due to the reaction to large-scale sales (construction) Global Environment Business Div.:
24% decrease in sales
in the previous year
Good performance in such areas as the Fukushima environmental restoration
support project and disaster waste-related services

Global Environment Business Div.:
10% increase in orders

Steady orders from the private sector in asbestos countermeasure service

NS Environment: 4% increase in orders

Enhance environmental assessment service related to wind power generation: NS Environment
Strengthen cooperation within Group in the Fukushima environmental restoration
Improve our superiority by combining with the disaster waste field andearthquake disaster prevention fields© 2019 OYO Corporation, All rights reserved.

TargetSales: 104.6%(compared to 2018)14

FY2018: Sales dec., Profit inc.

Natural Resources and Energy
Sales

JPY M

10,000

Expectation

8,723

8,287

-200
-400

4,000

-600

2,000

-800

0

-1,000Major Efforts andResults in FY2018

2018

2019

17%

0

6,000

2017

Operating income
2017

2018

▲ 543
▲ 799

2019
▲ 150

Sales Breakdown

Expectation

FY2018 FY2019

Published values

8,000

8,500

JPY M

FY2019: Sales inc., Profit inc.

18%▶17%Development of new undersea survey technology in line with expansion of
offshore wind power market
Capital investment into offshore survey steel scaffolds
Earthquake-resistant business related to nuclear power has run its course
Orders are on an increasing trend and operating loss is on a shrinking trend
despite the continuing weakness of the natural resource market conditions

Major Efforts
in FY2019

Improve service capabilities in the offshore wind power market through CAPEX
Expanding demand for 3D offshore exploration services in the crude oil market
Develop 3D ground information services in power generation business© 2019 OYO Corporation, All rights reserved.

Energy Business Division:
Capital investment of 250 million yen
Energy Business Division:
10.1% decrease in sales
NCS Subsea, Inc.

TargetSales: 102.6%(compared to 2018)15

FY Ending Dec.2018
Financial Results

4. Efforts for Next Growth© 2019 OYO Corporation, All rights reserved.

16

Efforts and Results of R&D/CAPEX:
Common with All Segments
Expand next-generation technological base using ICT• Create ICT platforms (create new businesses, improve business efficiency)• Differentiate and add value to our services through ICT• Create new markets in the public sector (disaster prevention and mitigation,
infrastructure maintenance and renovation) and the environmental sector• Increase corporate value by realizing higher profitability and diversity of humanresources through highly efficient work styles

Concluded advisory agreement
on AI with Mizuho Information &Research Institute

Develop 3D physical exploration technologies and BIM• Develop 3D physical exploration technologies that aim to make the ground visible• It is essential fundamental technology for BIM (Building Information Modelling), which is
the mainstream of construction management utilizing ICT• Differentiate and add value to our services which use 3D technologies

Develop monitoring services using satellite images• Develop wide-area ground-transformation monitoring service(Use in infrastructure maintenance business, disaster prevention and mitigation
business and environmental business)• Differentiate and add high value with monitoring accuracy in milliunit© 2019 OYO Corporation, All rights reserved.

17

Infrastructure Maintenance,
Efforts and Results of R&D/CAPEX: Management and Renovation
Joined in int’l standardization organizationin BIM Markets• Joined the building SMART International• Aim for international standardization of ground modellingin BIM market and establishing the market• Strategic investment with a view of global
BIM market expansion

3D mapping technology for underground facilities• Developed 3D mapping technology for underground facilities,
which is expected to be highly marketable for the safe use ofunderground space• Construction of a dedicated test site on Tsukuba office site
• It can be used as an open facility for outside
Test site will be completed in April

Appy 3D physical exploration technologies into
infrastructure management field• Developed 3D physical exploration technology which covers
from shallow part to deep part (50m)• Completed system development andverification of field experiment• Applied to underground facilities
management market

Developed service utilizing AI• Utilize AI to explore cavities beneath road surface© 2019 OYO Corporation, All rights reserved.

18

Natural Disaster Prevention

Efforts and Results of R&D/CAPEX: and Mitigation
Promoting joint research with universities• Continued the donated course, Disaster Mitigation Research Center in Nagoya
University, for cutting-edge disaster mitigation research• Developed economic damages estimation method and disaster mitigation support
system for wide-area disasters• Developmed economic damage estimation method and verifying its applicability

Promoting joint research with external organizations• Two research tasks were adopted in “Strengthening of National Resilience (disasterprevention and mitigation)” section of the Cross-ministerial Strategic Innovation
Promotion Program (SIP)• Research and development period: from FY2018 to FY2022

Development of next-generation disaster prevention and mitigation services• Together wit KDDI and Toyota Motor, started a study of disaster prevention andmitigation services using big data.
• Disseminate disaster prevention information in real time by combining probe dataobtained through cars, information through mobile phones, and data throughlow-cost sensors© 2019 OYO Corporation, All rights reserved.

19

Environment

Efforts and Results of R&D/CAPEX: Natural Resources and Energy
Environment
Promoting joint research with universities• Donated to the research fields in Hokkaido University:“Social technology system for material cycle and energy” (until May 2018)“Biomass community planning” (form October 2018 to September 2021)• Study of “Appropriate management system for non-native species (EnvironmentalDNA)” (Kobe University)

Expanding the ecological environment business• Developed non-destructive diagnostic system using AI for preventing fallen trees accidents• Developing and introducing technology for greening devastated lands (desert afforestation)
overseas

Natural Resources and Energy
Started pilot operation of geothermal power generation business• Aiming for pilot operation of small-scale geothermal power generation projects, candidate sites are selected and in
preparation• By operating actual geothermal power generation, we aim not only to conduct geological survey business, but also to
expand the scope of our business into consulting services of power generation business.

© 2019 OYO Corporation, All rights reserved.

20

M&A in line with Global Strategies
Purchase of companies in Singapore (January 2019)
Strengthening infrastructure maintenance business (overseas)/Demonstrating Group synergy
Expansion to overseas infrastructure maintenance and management markets

Fong Consult Pte. Ltd

FC Inspection Pte. Ltd

Design, Design review,Construction management
Inspection and checkof construction

Started technical exchange through 3Dtechnologies and construction inspection© 2019 OYO Corporation, All rights reserved.

21

Increasing Corporate Value
Target corporate
image of our Group

Become a company whose value is easily understoodby society
Become a company that is easy to work forCommitments to SDGs goals shall be decided

Improvement of work environment
・ No personnel transfers with relocation in principle
・ Introduction/promotion of satellite offices
・ Expansion of the flexible working system
・ Telecommuting system
・ Development of system to improve efficiency andautomate on-site operations (ICT platform)・ Workplace safety, improvement of work environment• Develop easy-to-understand products and services based on social issues• Clarify the objective and timing of achievement of each business• Implement AI and ICT in products and services, raise added value, and improve operating efficiency© 2019 OYO Corporation, All rights reserved.

FY Ending Dec.2018
Financial Results

5. Progress in Medium-Term Business Plan,“Jump 18”

© 2019 OYO Corporation, All rights reserved.

23

Financial Results, R&D and CAPEX
Consolidated
net sales(billion yen)

Disaster Prevention & Mitigation

70

Environment

Plans

Natural Resources & Energy

65.0

Operating income ratio

60
50

Forecast

49.5
45.9

45.2

21%

30
20%

20
3.3

0
ROE

17%

20.0

Composition
ratio

1.9

43%

18%

20%

15.0
20%

10.0

10.0

20%

40%

5.0

45%

2017

2018

2019

(1.1%)(1.2%)(1.9%)

Consolidated
net sales

Operating income
ration

10%

20%

3.8

“OYO Jump18"

Target Business Indices(FY 2020)

65 billion yen

18%

40

10

Operatingprofit ratio(%)

Infrastructure Maintenance0.02020 Fiscal Year© 2019 OYO Corporation, All rights reserved.

● Consolidated
operating income
6.5 billion yen● Consolidated
ordinary income
6.9 billion yen● Net income
attributable toowners of parent
4.5 billion yen
Return on Equity(ROE)

6% or more

M&A: 500 million yen(Fong Consult Pte)billion yen

2
1.8

R&D
CAPEX

1.8~

1.7

1.6

1.3~

1.4

Investment plan

(FY2018 to FY 2020)
Total development
investment

20 billion yen
R&D investment

6 to 7billion yen

1.2
1“OYO Jump18”

0.9

0.8

Capitalinvestment

0.6

6 to 7billion yen

0.4
0.2
0

M&A

2018

2019

7 billion yen

Plans※ In addition to the above, development will be carried out using
external funds (R&D for SIP: 400 million yen for 5 years)
24

Achievements of Management Reforms
 Active collaboration with other companies (2018)
 Started building ICT platforms (2018)
 Almost completed the clarification of business of group companies(remaining two companies) (2018)
 Completed replacement of core systems (2018)
 Completed transition to “Division System” (non-consolidated) (January 2019)
 Established IT Innovation Planning Headquarters (January 2019)
Each segment implement management measures for growth and expand its businessBusiness
Expansion
R&D

Products, Services

M&A

Work-style reform

Businesses segment25© 2019 OYO Corporation, All rights reserved.

Shareholder Return
Dividends per Share and Consolidated Dividend Payout Ratio
40

38.0

Year-end dividend

141.4Interim dividend

35

Dividend policy

140

Consolidated
Payout Ratio

30

21.0

20
15

12.5 12.5

15.0
54.9

31.4

5
0

32.1

21.9
19.8
7.4

28.0 28.0

120

91.1

100
80
56

interim 14 yen

10

28.0

year–end 14 yen

25

26.0

89.4

28.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Capital efficiency
Improvement© 2019 OYO Corporation, All rights reserved.

60
40
20
0

Consolidated Payout Ratio (%)

Payout ratio

Commemorative
10 yenConsolidated Dividends per Share (yen)160

30~50%
with the aim forstable dividend

Dividend Forecast for FY 2019
(Per Share)
Interim dividend 14.0 yen
Year-end dividend 14.0 yen
Annual dividend 28.0 yen

Purchase and cancellation of treasury stock (February 2018)
1,000,000 shares (acquisition price: 1,410 million)
26

FY Ending Dec.2018
Financial Results

References© 2019 OYO Corporation, All rights reserved.

27

FY2018 Financial Results and FY2019 Forecasts(Segment Information)(Unit: million yen)

New Orders
Infrastructure MaintenanceDisaster Prevention & Mitigation
Environment
Natural Resources and Energy

Sale
Infrastructure MaintenanceDisaster Prevention & Mitigation
Environment
Natural Resources and Energy

Operating income
Infrastructure MaintenanceDisaster Prevention & Mitigation
Environment
Natural Resources and Energy

Ordinary income
Net income attributable toowners of parent© 2019 OYO Corporation, All rights reserved.

FY 2017

FY 2018

YoY (%)FY 2019

YoY(%)

45,80546,262101.0

49,500107.0

20,439
8,514
8,067
8,784

19,555
9,847
8,870
7,988

95.7
115.7
110.0
90.9

21,000
11,100
9,300
8,100

107.4
112.7
104.8
101.4

45,95745,232

98.4

49,500109.4

19,634
7,993
9,605
8,723

19,216
9,217
8,512
8,287

97.9
115.3
88.6
95.0

22,200
9,900
8,900
8,500

115.5
107.4
104.5
102.5

855

1,481

173.2

1,900

128.3

896
126
663
(799)

1,104
391
528
(543)

123.2
309.9
79.6
-

1,130
400
550
(150)

102.4
102.3
104.2
-

1,220

1,913

156.8

2,300

120.2

747

804

107.6

1,300

161.6
28