ASANUMA CORPORATION
Q2 Financial Results Briefing for the Fiscal Year Ending March
2020
November 22, 2019

Event Summary[Company Name]ASANUMA CORPORATION[Event Type]Earnings Announcement[Event Name]

Q2 Financial Results Briefing for the Fiscal Year Ending March 2020

[Fiscal Period]

FY2019 Q2[Date]

November 22, 2019

[Number of Pages]

21[Time]

09:00 – 09:31(Total: 31 minutes, Presentation: 26 minutes, Q&A: 5 minutes)[Venue]Kabutocho Heiwa Building 3F 3rd Seminar Room
3-3 Kabutocho Nihonbashi, Chuo-ku, Tokyo 103-0026(Hosted by The Securities Analysts Association of Japan)[Venue Size]

145 m2[Participants]

20[Number of Speakers]

4
Makoto Asanuma
Morio Yamakoshi
Seiichiro Ishihara
Yoshimichi Yagi

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Presentation
Moderator: Now, we will hold a briefing on ASANUMA CORPORATION's financial results for the first half ofthe fiscal year ending March 31, 2020.
First of all, I would like to introduce four people from the Company. Mr. Makoto Asanuma, President andChief Executive Officer.
Asanuma: Asanuma. Thank you very much.
Moderator: Mr. Morio Yamakoshi. Representative Director, Senior Managing Officer, Head of President's
Office.
Yamakoshi: Yamakoshi. Thank you very much.
Moderator: Seiichiro Ishihara, Executive Officer and General Manager of Technical Research Institute.
Ishihara: Ishihara.
Moderator: Mr. Yoshimichi Yagi, General Manager of Corporate Communications Department.
Yagi: Yagi. Thank you very much.
Moderator: Today, Mr. Asanuma and Mr. Yamakoshi will explain to you. After the explanation, we will holda question and answer session.
Please start now.
Asanuma: I’m Asanuma, President. Thank you for attending.

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Please refer to page three of the material. First, I will explain the environment surrounding us.
Although the uncertainty surrounding overseas economies is increasing, private construction investment
remains firm due to an increase in capital investment resulting from a recovery in personal consumption andimprovement in corporate earnings, while government construction investment is expected to remain
steady, supported by the government’s economic stimulus measures and the steady implementation ofrelated budgets.
Nevertheless, attention should be paid to such downward pressures as the postponement and restraint of
capital investment by Japanese companies due to the slowdown of the Chinese economy caused by thetrade friction with the United States.
The graph below shows the latest trends in construction investment. Public investment is trending upward
as private investment recovers. Construction investment in FY2019 is forecast to increase 2.1% year-on-year
to 62.2 trillion yen as both public and private investments are expected to remain firm. Construction
investment is also expected to stay firm in FY2020, totaling 62.7 trillion yen.

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Please refer to page four. I will introduce some recent topics on the Company that have been reported innewspapers.
We held the 12th technology presentation meeting on August 1. This event is held every year to improve
technologies, and a newspaper covered the event.
On October 16, an Ai-MAP SYSTEM under development was featured in the same newspaper. The Ai-MAP
SYSTEM is a system that quickly and efficiently passes down the skills of skilled workers. This system wasadopted by the Ministry of Land, Infrastructure, Transport and Tourism for two consecutive years as aproject to introduce and utilize innovative technologies that improve productivity at construction sites.
We also held the first presentation meeting on the initiative for worksite productivity improvement on
October 30. This initiative was launched this year, with the aim of strengthening relationships with partnercompanies. From among productivity improvement measures taken by partner companies and our
employees through trial and error at the workplace, we select one President's Award and three OutstandingAwards once a year. This award ceremony was highlighted in the same newspaper.
On November 8, we announced our financial results for the first half of the fiscal year ending March 31,
2020. Yamakoshi will explain our financial results and the progress of the current three-year business plan.

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4Yamakoshi: Please open page five. I will explain the order receipts in the first half. Looking at the tablebelow, the second column from the right shows our order receipts in the first half.
There are three categories: construction, civil engineering, and total. The total amount was 69.88 billion yen.
I think this was a moderate result. As shown in the year-on-year changes on the right, the total order
receipts increased around 360 million yen year-on-year.
Our full-year estimate for order receipts is 134.3 billion yen, down 19 billion yen from the previous fiscal
year. I believe that we will be able to achieve the full-year forecast considering the current situation and theaccumulation of current projects.

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Please refer to page six, which shows a list of major projects received during the first half. We were able towin orders for shopping facilities, condominiums, factories, hotels, etc.
Although the breakdown is not shown in the table, housing accounts for about 30% of our orders, followedby factories, which account for about 10%, hotels, 9%, and stores, 8%.

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Please refer to page seven, which shows consolidated P/L figures. In the table below, the left end figures
show the results in the first half of the previous fiscal year. The column in orange shows the planned figures
for the first half in review.
Comparisons with the year-before period and the planned figures are also included. As shown in the yearon-year comparison, we achieved year-on-year rises in sales and profits and achieved also the planned
figures.
We made more progress in the construction of large-scale projects than we had planned, and a rise in thevalue of finished projects led to an increase in net sales and profits.

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Please see page eight. Major projects that include completed construction are listed. The photos below
show the projects that were finished in the first half, but the main projects that include completed
construction work are shown in the table above.
The figures on the right end of the table above show those for the work completed in the first half. On acontract value basis, most of the projects are large-scale ones in our category that total more than 3 billion
yen.
Completed construction work of the projects of more than 3 billion yen on a contract basis accounted for
30% of the total. The progress made in these enabled us to mark the year-on-year increases in net sales andprofits and exceed our forecasts.

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Please refer to page nine. This is the consolidated balance sheet. The figures on the left show the results at
the end of the previous year, and to the right of them there are the figures at the end of September. And
the changes in the six months are shown in the right end.
The sixth box from the top of the comparisons show that total assets decreased about 5.3 billion yen fromthe end of the previous fiscal year. While deposits increased by about 3 billion yen, accounts receivable
decreased by about 8 billion yen, resulting in a decrease of about 5.3 billion yen.
In addition, as shown in the third row of liabilities, total liabilities decreased by around 6.3 billion yen fromthe end of the previous fiscal year. While accounts payable decreased by 5.4 billion yen, income taxes
payable declined by about 900 million yen, resulting in the decrease of 6.3 billion yen.
Net assets increased by approximately 1 billion yen in the six months. Of profit attributable to owners ofparent worth around 2.2 billion yen, dividend payment totaled some 1.1 billion yen, resulting in the increaseof 1 billion yen.

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Please see page 10, the full-year earnings forecasts. The column in orange shows the forecasts for thecurrent fiscal year. To the right there are the half-year results and the progress rates against the full-year
estimates.
As you can see, the progress rates of order receipts, sales, operating income, and net income exceeded 50%of the targets, so we think they are in moderate progress. Considering the current situation, we believe that
we can achieve the full-year targets.

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10Please refer to page 11. The table shows the progress of the targets of proportional indicators in the threeyear medium-term plan. The current fiscal year is the second year of the plan.
The left end side of the table shows the targets for the previous year in the medium-term plan. To the rightthere are the results for the previous year, followed by the comparisons with the targets. As you can see inthe comparisons, we achieved the numerical targets for the previous year.
The column in yellow shows the targets for the current year in the medium-term plan and that in orange
shows the estimates for the current fiscal year. As the right end column of the comparisons shows, theestimates for the current fiscal year are basically in line with the targets in the medium-term plan.
I mentioned earlier that we were able to achieve our full-year earnings targets, and we also believe we will
be able to achieve the targets for these ratios.

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Please see page 12, which briefly shows the progress of measures in the three-year medium-term plan.
There are three pillars in the three-year medium-term plan. One of them is to further strengthen
profitability and competitiveness in the construction business. As President Asanuma mentioned at the
beginning, raising productivity through collaboration with partner companies and strengthening therelations with them are top priorities, and we are currently undertaking a variety of initiatives.
In the lower part of the page, we showed an outline of a plan to strengthen our renovation business. As torenovation, we expect to see stable construction investment going forward. Naturally, other companies in
the industry are focusing their attention on renovation, but we are aiming to secure a competitive edge bylaunching a unique brand as we believe that renovation is the most remarkable field in the construction
business.
Through this brand, we will differentiate, strengthen, and deepen ASANUMA's renovation business, andstrive to gain recognition in the market that places ASANUMA as a representative renovation provider. We
are currently proceeding with a project so that we can announce a concrete plan in April next year.

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Please see page 13. Here are some photos of the improvement in productivity using ICT in the initiative tofurther strengthen profitability and competitiveness in the construction business.
The drawing at the upper left shows a temporary design plan that incorporates BIM, or building information
modeling, and you can see problems that could not be recognized by the drawing alone.
The photo at the bottom left indicates a point data measurement method by a 3D scanner when repairing atunnel, making the measurement much more time-efficient than the conventional human measurement
method.
We are also focusing on virtual reality technologies. By conducting various construction simulations, we
identify problems and make safety management effective in advance. The two photographs on the rightshow the use of virtual reality technologies in a construction simulation for the removal of a shield machine
in a sewerage project in Chiba Prefecture.

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Page 14 shows an example of the second of the three main pillars in the three-year medium-term plan,taking on the challenge of pursuing new technologies and businesses. Special textile sheets, which are usefulin repairing expressways and others in a more efficient way, have been adopted in a public solicitation by
JICA and are currently being prepared for their practical application in Thailand.
As part of this preparation, we exhibited the sheets at the Maintenance & Resilience Asia 2019 exposition,
which was held in Bangkok, Thailand, in October, and the photo shows our booth there. During the threeday exhibition, we received inquiries from various industries and hope to use these opportunities for ourbusiness.

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Please refer to page 15. This is the third pillar of the three-year medium-term plan.
Under the establishment of a business foundation that contributes to sustainable growth, the first part
focuses on the further strengthening of corporate governance. The first item is the analysis of effectivenessof the Board of Directors. The effectiveness had conventionally been evaluated by the Board of Directors
itself, but this year, a third-party organization conducted the evaluation.
The next item: We increased the number of Outside Directors by one, a female Director, as the general
meeting of shareholders in June approved an increase in the number of Directors. As a result, as shown here,
the ratio of Outside Directors in the Board of Directors accounted for 37.5%, exceeding one third of the total.
As the new Outside Director joined the Nominating and Compensation Committee, Outside Directors in thecommittee surpassed 50%, as shown by the red letters.
The next item is the strengthening of IR, which is, honestly speaking, our weakest point. As shown by the red
letters, we plan to hold a briefing for individual investors in February next year.
Regarding the next part, a fund injection plan promoting cash payment with the aim of strengthening
collaboration with partner companies, we decided to raise the ratio of cash payments further. Currently,
payments in cash account for around 90%, and we have decided to convert all payments into cash fromJanuary next year.
I dare to repeat that reinforcing our ties with partner companies is a top priority, and therefore we will
implement this measure.

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Please refer to page 16. As I mentioned at the last briefing, we reviewed our shareholder return plan andthe target dividend payout ratios in the three-year medium-term plan. As shown in the table, the revised
target of the payout ratio is on the right side.
In FY2018, annual dividend totaled 153 yen per share with a payout ratio of around 30%. In the current fiscal
year, we plan to pay 208 yen per share with a payout ratio of around 40%. Since we were able to achieve
the earnings estimates as I mentioned earlier, we are naturally committed to paying the planned dividend as
well.

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Asanuma will explain our social contribution activities.
Asanuma: Please see page 17. We promote social contribution activities in a variety of fields based on ourbasic policy on social contribution.
I would like to introduce some activities during the current fiscal year.
We sponsor the Japan Dream Baseball League for the physically challenged and the Japan Blind Tennis
Federation.
The Japan Dream Baseball League held a national tournament in Kobe on May 19-20, and a national
selection tournament in Toyooka, Hyogo Prefecture, on November 2-3. The photo on the left shows the
opening ball ceremony in May, where I threw the first ball.
Blind tennis is a sport born in Japan and is currently being played around the world. On June 9, a global
tournament was held in Spain, where Japanese player Ohno won the B1 Class for men.
Next, Naradotto FM is a FM radio station limited to a small area in Nara City. FM stations play an importantrole of securing local communication at the time of disaster. The Company sponsors a program called Nara
Okunooku. Its main personality is Professor Akio Okamoto, who served as deputy chief priest at the Kasuga
Grand Shrine in Nara. We hope that we help activities to communicate the history and culture of Nara andto support local disaster prevention plans.

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17This program was awarded the Prize for Excellence in the Information-Culture Category at the JCBA Kinki
Community Broadcasting Awards for the current fiscal year. The photo at the bottom right shows publicrecording at the Heijokyu Izanai-kan in Nara on April 7.
As a member of society, we will continue to engage in a variety of activities.
Now we will close ASANUMA CORPORATION's financial results briefing for the first half of the fiscal year
under review. Thank you for your attention.

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Question & Answer

Moderator: Thank you. We will start a question and answer session. If you have any questions, please raise
your hand.
This IR Meeting is scheduled to be posted and published in full, including the question and answer section.
Your name and company name will be disclosed if you identify yourself. If you want anonymity, you may
omit your name.
Matsuhashi: Thank you for your explanation. I am Matsuhashi from Strategic Capital.
Please tell us about the shareholder return policy described on page 16. You said the payout ratio will be
40% or more in FY2019. In which case will the ratio be over 40%?
The net income forecast for the current fiscal year is 520 yen per share, and if the dividend payout ratio is40%, I think the remaining 60%, or around 312 yen, will be retained earnings. If per-share net income
exceeds 520 yen and the 312 yen is deducted from the net income for dividend payment, I guess the payout
ratio will be more than 40%.
What do you think about the portion above 40%?
Yamakoshi: The dividend forecast for the current fiscal year was not changed at 208 yen per share. However,
if net income exceeds the target, the dividend amount may change according to the target payout ratio of40%.
As I mentioned earlier, we have a fund injection plan of 20 billion yen over the three years under the threeyear medium-term plan. It is necessary to consider dividend payments in relation to the fund investment
plan.
We believe that it is necessary to use income, cash and funds to be generated by net income for the fundinjection plan. So far, we consider paying dividend of 208 yen per share, or 40% of net income. If net income
exceeds our target, the dividend amount will change based on the 40% payout ratio.
Moderator: Is that all right? Thank you. Does anyone have other questions? Does the Company haveanything to add? No?
Now, we are ending ASANUMA CORPORATION's financial results briefing for the first half of the current
fiscal year. Thank you very much.
[END]______________
Document Notes
1.
2.

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