2153.T

5th Mid-Term Management Plan (5th MTP) Summary

• The 5th MTP focused on building and strengthening the foundation for the long-term vision E・J-Vision 2030, with three core basic policies:
  • Policy 1: Strengthen existing businesses and expand service areas
    • Solid order growth in 6 priority fields, with multiple high-profile project awards (double win of the Japan Society of Civil Engineers Tanaka Award, Zenken Award for disaster response projects, and ongoing disaster recovery work after the 2024 Noto Peninsula Earthquake)
    • Challenges remain for overseas expansion and entry into new business areas, but recent M&As have laid groundwork for future growth
  • Policy 2: Strengthen responsiveness to diversifying customer needs
    • Advanced digital solution development including BIM/CIM 3D data utilization, and inspection robots for infrastructure maintenance
    • Progress on public management projects including compact city development and comprehensive infrastructure management for aging new towns
  • Policy 3: Build a flexible management base to adapt to environmental change
    • Core business system migration completed, with SAP and Salesforce as the core to enable more efficient and advanced value chain operations
    • Open innovation partnerships established with Liquitous (Japan) and Mind Foundry (UK) for AI and infrastructure technology development
• Sustainability and Innovation Investment
  • Environmental load reduction targets for 2030 are progressing as planned, but growth in female management and female hiring ratios has stagnated, requiring additional efforts
  • Total innovation investment over the 4-year 5th MTP period reached 3.53 billion yen, slightly below the 4.0 billion yen plan, but was broadly on track in terms of project content
• M&A for Group Capability Enhancement
  • Two new companies added to the group during the 5th MTP: Tokyo Soil Research (full acquisition, domestic, 2024) and Dynamic (35% stake acquisition, Thailand, 2024, now an equity-method affiliate)
  • Tokyo Soil Research brings strong expertise in geological and environmental surveys for high-rise private construction in urban areas, expanding the group's private sector footprint; Dynamic is a well-established Thai construction consulting firm, supporting the group's Southeast Asian expansion
  • Total M&A investment during the 5th MTP reached 8.44 billion yen, with combined total investment (innovation + M&A) of ~12.0 billion yen, which successfully strengthened the group's growth foundation

6th Mid-Term Management Plan (6th MTP, E・J-Plan 2027) Basic Policies

• Positioned as the "Expansion and Evolution" phase for E・J-Vision 2030, with four core basic policies:
  1. Expand core businesses and develop new areas: Grow the 6 priority fields, enter new businesses, and open new markets (focused on private sector expansion)
  2. Challenge to fully scale overseas business: Grow overseas orders from 1.0 billion yen (2024) to 1.5 billion yen by the end of the 6th MTP
  3. Strengthen the full value chain through product, process, and open innovation
  4. Advance sustainability-focused management, with targets of ROE ≥ 10% and PBR ≥ 1.0
• Cash Allocation Policy: Allocate 6.5 billion yen plus additional flexible funding for growth investment (including DX, human capital, and up to 3.0 billion yen plus flexible funding for M&A), and secure at least 3.8 billion yen for shareholder returns, maintaining a target of DOE ≥ 3%

• 2026 May Fiscal Year Full-Year Guidance:
  • Total order received: 47.0 billion yen (slightly above the 2025 fiscal year actual of 44.651 billion yen)
  • Total sales: 47.0 billion yen, driven by early completion of backlog orders and improved lead time management
  • Operating profit: 5.0 billion yen, ordinary profit: 5.1 billion yen, net profit: 3.35 billion yen. Management expects continued cost pressure from wage increases, which will be offset by DX-driven productivity gains and SG&A expense control
  • Dividend guidance: Annual dividend of 69 yen per share (interim 25 yen, year-end 44 yen), continuing the progressive dividend policy with a target of DOE ≥ 3%
• 6th Mid-Term Management Plan (2025-2027) Targets:
  • The long-term vision 2030 target of 50.0 billion yen in sales is moved forward to 2027 (end of the 6th MTP), with end-of-plan targets: sales 50.0 billion yen, operating profit 5.9 billion yen. M&A-driven growth is not included in these baseline targets
  • 6 priority fields total order target: 30.0 billion yen by end of 6th MTP, up from 25.7 billion yen in 2024, with targeted growth across all 6 segments
• The long-term vision E・J-Vision 2030 will be updated and re-disclosed by the end of the 2026 fiscal year, to reflect rapid environmental changes including AI adoption and demographic shift

By business type: 1. Construction consulting business: Order received amount of 37.47 billion yen, 3.47 billion yen higher than the previous fiscal year and 3.57 billion yen higher than the plan. This segment accounts for 83.9% of total group order received amount. 2. Survey business: Order received amount of 7.18 billion yen, 2.43 billion yen higher than the previous fiscal year and 2.58 billion yen higher than the plan. This segment accounts for 16.1% of total group order received amount. By client type: Private sector order share increased 12.2pp (driven by the addition of Tokyo Soil Research, a newly consolidated subsidiary with mostly private clients), while government (central and local) share decreased 11.8pp, and overseas share decreased 0.5pp. By region: Kanto area share increased 3.1pp, while Chugoku area share decreased 2.2pp. The 6 core priority segments accounted for 60% of total order received amount, with total sales of 25.673 billion yen, an increase of 2.88 billion yen year-over-year.

• Rising labor costs from wage increases and revised outsourcing rates have pushed up cost of sales, which cannot be fully offset by current productivity improvements, leading to operating profit coming in below plan despite record top-line results
• Female representation in management and new hiring has grown slower than targeted, creating a human capital sustainability risk
• The group is still in the early stages of overseas expansion, with limited current scale and unproven profitability in new regional markets
• Quarterly performance is highly seasonal, with ~60% of annual sales recorded in Q4, leading to working capital funding needs and net income volatility across quarters
• Public-sector revenue remains dependent on Japanese government infrastructure budgets, which have long-term constraints despite current stable funding levels

The provided transcript does not include a transcribed Question and Answer section, so no content can be summarized for this part.