Consolidated Financial Results for the Year Ended March 31, 2025 NEW!

Consolidated Financial Results for the Year Ended March 31, 2025

[Japanese GAAP]

May 14, 2025

Company name: OKUMURA CORPORATION Listing: Tokyo Stock Exchange Securities code: 1833

URL: https://www.okumuragumi.co.jp/

Representative: Takanori Okumura President and Representative Director

Inquiries: Shunsuke Okuda General Manager of Finance & Accounting Department, Administration Headquarters Telephone: +81-6-6621-1101

Scheduled date of annual general meeting of shareholders: June 27, 2025 Scheduled date to commence dividend payments: June 30, 2025 Scheduled date to file annual securities report: June 27, 2025 Preparation of supplementary material on financial results: Yes

Holding of financial results briefing: Yes

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2025 (April 1, 2024 to March 31, 2025)

   1. Consolidated Operating Results (Percentages indicate year-on-year changes.)

      	Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent
      Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen 298,222 288,146	% 3.5 15.5	Millions of yen 9,731 13,708	% (29.0) 15.7	Millions of yen 8,926 14,878	% (40.0) 15.3	Millions of yen 2,722 12,493	% (78.2) 10.9

      (Note) Comprehensive income:	Fiscal year ended March 31, 2025:	¥	(6,374) million	[	-%]
      	Fiscal year ended March 31, 2024:	¥	26,897 million	[	137.3%]

      	Basic earnings per share	Diluted earnings per share	Rate of return on equity	Ordinary profit to total assets ratio	Operating profit to net sales ratio
      Fiscal year ended	Yen	Yen	%	%	%
      March 31, 2025	74.01	-	1.5	2.3	3.3
      March 31, 2024	339.30	-	6.9	4.1	4.8

      (Reference) Equity in earnings (losses) of affiliated companies:	Fiscal year ended March 31, 2025:	¥	- million
      (2) Consolidated Financial Position	Fiscal year ended March 31, 2024:	¥	- million

      	Total assets	Net assets	Capital adequacy ratio	Net assets per share
      As of March 31, 2025 March 31, 2024	Millions of yen 393,466 384,750	Millions of yen 172,455 191,573	% 45.1 49.0	Yen 4,894.08 5,123.61

      (Reference) Equity: As of March 31, 2025:	¥	177,285 million
      As of March 31, 2024:	¥	188,691 million

      (3) Consolidated Cash Flows

      	Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at the end of period
      Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen (11,828) (17,139)	Millions of yen (1,492) 1,458	Millions of yen 12,070 (4,304)	Millions of yen 27,440 28,917

2. Dividends

   	Annual dividends					Total dividends	Payout ratio (consolidated)	Dividends to net assets (consolidated)
   	1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
   Fiscal year ended March 31, 2024 March 31, 2025	Yen - -	Yen 77.00 113.00	Yen - -	Yen 160.00 103.00	Yen 237.00 216.00	Millions of yen 8,793 7,953	% 70.4 292.1	% 4.9 4.3
   Fiscal year ending March 31, 2026 (Forecast)	-	110.00	-	110.00	220.00		70.4

   Note: The total amount of dividends includes dividends on the Company's shares held in the trust account of Employee Share Award Plan (¥59 million and ¥65 million in the fiscal years ended March 31, 2025 and 2024, respectively). The payout ratio is calculated by dividing the total amount of dividends by profit attributable to owners of parent, while the dividend on net assets ratio is calculated by dividing the total amount of dividends by the average amount of consolidated net assets during the period. Please refer to "1. Overview of Operating Results, etc. (5) Basic Policy on Distribution of Profits and Dividends for the Year under Review and the Following Year" on page 6 of the Attachment for details of the status of dividends.

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2026 (April 1, 2025 to March 31, 2026)

(Percentages indicate year-on-year changes.)

1. Changes in accounting policies, changes in accounting estimates, and restatement

   1. Changes in accounting policies due to revisions to accounting standards and other regulations: None

   2. Changes in accounting policies due to other reasons: None

   3. Changes in accounting estimates: None

   4. Restatement: None

2. Number of issued shares (common shares)

   1. Total number of issued shares at the end of the period (including treasury shares): March 31, 2025: 38,665,226 shares

      March 31, 2024: 38,665,226 shares

   2. Number of treasury shares at the end of the period:

      March 31, 2025: 2,440,729 shares

      March 31, 2024: 1,837,409 shares

   3. Average number of shares outstanding during the period:

Fiscal Year ended March 31, 2025: 36,791,922 shares

Fiscal Year ended March 31, 2024: 36,820,129 shares

Note: The Company has introduced the Employee Share Award Plan. Shares of the Company held in the plan's trust account are included in the number of treasury shares at the end of the period (273,700 shares and 275,000 shares as of March 31, 2025 and 2024, respectively). Shares of the Company held in the plan's trust account are also included in the number of treasury shares deducted when calculating the average number of shares outstanding during the period (274,225 shares and 275,000 shares in the fiscal years ended March 31, 2025 and 2024, respectively).

(Reference) Overview of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2025 (April 1, 2024 to March 31, 2025)

   1. Non-consolidated Operating Results (Percentages indicate year-on-year changes.)

      	Net sales		Operating profit		Ordinary profit		Net income
      Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen 290,359 274,460	% 5.8 13.3	Millions of yen 13,416 12,918	% 3.9 6.9	Millions of yen 13,910 14,895	% (6.6) 7.4	Millions of yen 6,956 12,568	% (44.7) 6.8

      	Basic earnings per share	Diluted earnings per share
      Fiscal year ended	Yen	Yen
      March 31, 2025	189.08	-
      March 31, 2024	341.35	-

   2. Non-consolidated Financial Position

   	Total assets	Net assets	Capital adequacy ratio	Net assets per share
   As of March 31, 2025 March 31, 2024	Millions of yen 360,065 342,384	Millions of yen 169,795 180,119	% 47.2 52.6	Yen 4,687.32 4,890.84

   (Reference) Equity: As of March 31, 2025:	¥	169,795 million
   As of March 31, 2024:	¥	180,119 million

2. Non-consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2026 (April 1, 2025 to March 31, 2026)

(Percentages indicate year-on-year changes.)

• Financial results reports are exempt from audit conducted by certified public accountants or an audit firm.

• Proper use of earnings forecasts, and other special matters

At the meeting of the Board of Directors held on February 12, 2025, the Company resolved on matters concerning the purchase of treasury shares based on the provisions of Article 156 of the Companies Act as applied mutatis mutandis pursuant to Article 165, Paragraph 3 of the Companies Act. The amounts shown in "Fiscal year ending March 31, 2026 (Forecast)" under "2. Dividends" and "Basic earnings per share" under "3. Consolidated financial result forecasts for the fiscal year ending March 31, 2026" and "[Reference] Overview of non-consolidated financial results 2. Non-consolidated financial result forecasts for the fiscal year ending March 31, 2026" take into account the effect of this purchase of treasury shares.

The performance forecasts and other forward-looking statements contained in this document are based on information available at the time of publication and certain assumptions considered reasonable by the Company. The Company does not provide any guarantee that these forecasts will be achieved, and actual results may differ significantly due to various factors. Please refer to "1. Overview of Operating Results, etc. (4) Future Outlook" on page 5 of the Attachment for details of the conditions assumed in the financial results forecast and precautions regarding the use of the financial results forecast.

The Company plans to hold a financial results briefing for analysts and institutional investors on Thursday, May 15, 2025. The materials used in this briefing will be posted on the Company's website today(in Japanese only).

The Company's FACT BOOK (financial results supplementary materials) will be disclosed through TDnet and posted on the Company's website today.

Table of Contents - Attachments

1. Overview of Operating Results, etc 2

   1. Overview of Operating Results for the Fiscal Year under Review 2

   2. Overview of Financial Position for the Fiscal Year under Review 4

   3. Overview of Cash Flows for the Fiscal Year under Review 4

   4. Future Outlook 5

   5. Basic Policy on Distribution of Profits and Dividends for the Year under Review and the Following Year 6

2. Basic Policy on Selection of Accounting Standards 6

3. Consolidated Financial Statements and Principal Notes 7

   1. Consolidated Balance Sheet 7

   2. Consolidated Statements of Income and Comprehensive Income 9

   3. Consolidated Statement of Changes in Equity 11

   4. Consolidated Statement of Cash Flows 13

   5. Notes to Consolidated Financial Statements 15

      (Notes on going concern assumption) 15

      (Additional information) 15

      (Consolidated Balance Sheet) 15

      (Consolidated Statement of Income) 17

      (Segment information, etc.) 19

      (Per share information) 22

      (Significant subsequent events) 22

4. Non-consolidated Financial Statements 23

   1. Non-consolidated Balance Sheet 23

   2. Non-consolidated Statement of Income 26

   3. Non-consolidated Statement of Changes in Equity 28

1. Overview of Operating Results, etc.

   (Results and Impact of the Investigation by the Internal Investigation Committee)

   As disclosed on October 24, 2024, in "Notice Concerning the Establishment of an Internal Investigation Committee" (in Japanese), an incident of improper cost management (hereinafter the "Incident") has come to light in which costs incurred in a construction project contracted to the Company were not recorded under the relevant construction project but transferred to another project (cost reassignment). The Company therefore established an internal investigation committee composed primarily of external experts for purposes including determining the facts of the Incident, checking for any similar incidents, clarifying the causes, and formulating measures to prevent any recurrence. The committee proceeded to engage in investigations.

   As disclosed on January 15, 2025, in "Notice Concerning the Receipt of the Investigation Report by the Internal Investigation Committee and the Establishment of Measures to Prevent Recurrence" (in Japanese), the Company received the report of the internal investigation committee on January 15, 2025. The Company has examined the committee's findings, together with recommendations for preventive measures based on the analysis of the facts and causes, very earnestly. At the meeting of the Board of Directors held the same day, the Company resolved to implement measures to prevent recurrence, while also deciding to reduce executive compensation to clarify management responsibility.

   As the Incident has no material impact on past consolidated financial statements, the Company has decided not to amend its annual securities reports, quarterly securities reports, internal control reports, or consolidated financial results disclosures for prior periods. Please refer to "3. Consolidated Financial Statements and Principal Notes (5) Notes to Consolidated Financial Statements (Additional information) (Impact of improper cost management)" for the impact on the consolidated financial statements for the fiscal year ended March 31, 2025.

   The Company regards this matter very seriously and will work to restore the trust of its shareholders and other stakeholders by steadily implementing these measures to prevent recurrence and further strengthening compliance through guidance and training for officers and employees.

   1. Overview of Operating Results for the Fiscal Year under Review

      During the fiscal year ended March 31, 2025 (the "fiscal year under review"), the Japanese economy continued to recover moderately amid progressive improvements in the employment and income environment, with an upturn in capital investment and an increase in inbound demand.

      The construction industry faced a difficult business environment, due partly to the upward pressure on construction costs due to factors such as persistently high material and equipment prices and the tight supply of labor, despite strong construction investment in both the public and private sectors.

      At the Group, net sales increased by 3.5% year on year to ¥298,222 million, due mainly to steady progress in the Building Business on projects carried over from the previous fiscal year.

      Gross profit increased year on year in Building, with the completion of large-scale, high-profit projects. However, gross profit decreased in Civil Engineering, due mainly to the impact of recording a substantial provision for loss on construction contracts, as soaring construction material and equipment prices and labor expenses led to higher total estimated costs in specific large-scale projects in Japan, with no prospect of an improvement in profitability. Gross profit fell significantly in Investment Development, etc., due primarily to the explosion that occurred in the power generation equipment at ISHIKARI BIO ENERGY GODO KAISHA, a consolidated subsidiary of the Company, in July 2024, resulting in the suspension of commercial operation and an increase in expenses required to maintain and manage the power generation equipment. As a result, the Group's operating profit decreased by 29.0% year on year to ¥9,731 million. Non-operating expenses included losses on the mark-to-market valuation of forward exchange contracts concluded to hedge the risk of foreign exchange rate fluctuations in fuel purchase transactions by ISHIKARI BIO ENERGY GODO KAISHA. This was partially responsible for a 40.0% decline in ordinary profit, to ¥8,926 million. The Company also recorded extraordinary losses, including impairment losses on the non-current assets held by ISHIKARI BIO ENERGY GODO KAISHA, reducing the book value of these assets to the estimated future recoverable amount, resulting in a decrease of 78.2% in profit attributable to owners of parent to ¥2,722 million.

      As a result of several careful discussions with the Accounting Auditor, Deloitte Touche Tohmatsu LLC, regarding the interpretation of cash flow arising from forward exchange contracts under the Accounting Standard for Impairment of Fixed Assets, it was concluded that the Company should record impairment losses associated with explosion at ISHIKARI BIO ENERGY GODO KAISHA as extraordinary losses.

      After the explosion, ISHIKARI BIO ENERGY GODO KAISHA established an accident investigation committee with the participation of outside experts. The committee has investigated and analyzed the causes of the accident, compiled measures to prevent recurrence, and is currently working toward restarting operations. The Company believes that the business of ISHIKARI BIO ENERGY GODO KAISHA is potentially profitable in the long term, and after the restart of operations, operating profit is expected to improve significantly due to the decrease in depreciation expenses resulting from the impairment losses recorded this time. This, in turn, will boost the Group's performance.

      Operating results by segment are as follows. (Civil Engineering)

      Net sales decreased by 4.0% year on year to ¥99,024 million. While the profitability of the backlog of projects from the previous fiscal year improved with orders awarded for additional work overall, substantial losses were incurred on specific large-scale projects in Japan. As a result, operating profit decreased by 50.6% to ¥4,722 million.

      Orders received increased by 82.2% year on year to ¥192,888 million due mainly to orders for large-scale projects overseas.

      (Building)

      Net sales increased by 12.3% year on year to ¥185,551 million due to progress largely as planned on the backlog of projects from the previous fiscal year. Operating profit increased by 624.3% to ¥6,623 million due mainly to orders awarded for additional work overall and higher profitability resulting from lower costs, in addition to the completion of large-scale high-profitability projects.

      Orders received decreased by 20.5% year on year to ¥183,756 million. (Investment Development)

      The Investment Development Business comprises business related to the sale and leasing of real estate and the renewable energy business. Net sales decreased by 44.6% year on year to ¥7,875 million, and the segment recorded an operating loss of ¥2,109 million (compared to an operating profit of ¥2,605 million in the previous fiscal year). The decline in operating profit was mainly due to a decrease in net sales associated with the suspension of commercial operation by ISHIKARI BIO ENERGY GODO KAISHA, a consolidated subsidiary, as well as costs incurred to investigate the cause of the explosion and maintenance and management expenses for the power generation equipment.

      (Other)

      Other business refers to the manufacture and sale of construction machinery, equipment, etc. Net sales increased by 3.2% year on year to ¥5,771 million, and operating profit decreased by 25.9% to ¥455 million.

   2. Overview of Financial Position for the Fiscal Year under Review (Assets)

      Current assets amounted to ¥241,135 million, an increase of ¥20,717 million from the end of the previous fiscal year. This was due mainly to an increase in notes receivable, accounts receivable from completed construction contracts and other, despite a decrease in cash and deposits.

      Non-current assets amounted to ¥152,330 million, a decrease of ¥12,001 million from the end of the previous fiscal year. This was due mainly to decreases in machinery, vehicles, tools, furniture and fixtures, and investment securities.

      As a result, total assets amounted to ¥393,466 million, an increase of ¥8,716 million from the end of the previous fiscal year.

      (Liabilities)

      Current liabilities amounted to ¥174,967 million, an increase of ¥28,599 million from the end of the previous fiscal year. This was due mainly to increases in short-term borrowings.

      Non-current liabilities amounted to ¥46,043 million, a decrease of ¥765 million from the end of the previous fiscal year. This was due mainly to a decrease in non-recourse borrowings, despite an increase in deferred tax liabilities.

      As a result, total liabilities amounted to ¥221,010 million, an increase of ¥27,833 million from the end of the previous fiscal year.

      (Net assets)

      Total net assets amounted to ¥172,455 million, a decrease of ¥19,117 million from the end of the previous fiscal year. This was due mainly to a decrease in retained earnings resulting mainly from payment of dividends, as well as a decrease in valuation difference on available-for-sale securities.

   3. Overview of Cash Flows for the Fiscal Year under Review

      Regarding cash flows during the fiscal year under review, financing activities provided net cash of ¥12,070 million, but operating activities and investing activities used net cash of ¥11,828 million and ¥1,492 million, respectively. As a result, cash and cash equivalents at end of period amounted to ¥27,440 million, a decrease of ¥1,477 million from the end of the previous fiscal year.

      (Cash flows from operating activities)

      Net cash used in operating activities amounted to ¥11,828 million, due mainly to an increase in trade receivables. (Net cash used in operating activities was ¥17,139 million in the previous fiscal year.)

      (Cash flows from investing activities)

      Net cash used in investing activities amounted to ¥1,492 million, due mainly to purchase of property, plant and equipment and intangible assets, against an increase due mainly to the sale and redemption of short-term and long-term investment securities. (Net cash provided by investing activities was ¥1,458 million in the previous fiscal year.)

      (Cash flows from financing activities)

      Net cash provided by financing activities amounted to ¥12,070 million, due mainly to increases in borrowings, against a decrease due to dividends paid. (Net cash used in financing activities was ¥4,304 million in the previous fiscal year.)

      (Reference) Trends in cash flow indices

      Year ended March 31,		2021	2022	2023	2024	2025
      Equity ratio	(%)	51.4	50.2	50.0	49.0	45.1
      Equity ratio, based on market value	(%)	33.8	32.9	33.5	48.7	39.1
      Ratio of interest-bearing debt to cash flow	(%)	129,402.4	194.9	222.5	-	-
      Interest coverage ratio	(times)	0.1	65.8	47.7	-	-

      Notes: 1. The formulae for calculation of trends in cash flow indices and the numerical bases used in those calculations are as follows:

      Equity ratio	Shareholders' equity / total assets
      Equity ratio, based on market value	Total market value of shares / total assets * Total market value of shares = Closing share price at the balance sheet date x (number of shares issued - number of treasury shares)
      Ratio of interest-bearing debt to cash flow	Interest-bearing debt / operating cash flows
      Interest coverage ratio	Operating cash flows / interest expenses

      "Interest-bearing debt" refers to all those debts recorded on the Consolidated Balance Sheet on which the Company pays interest.

      For "operating cash flows," cash flows from operating activities in the Consolidated Statement of Cash Flows are used. For "interest expenses," "interest paid" in the Consolidated Statement of Cash Flows is used.

2. Ratio of interest-bearing debt to cash flow and interest coverage ratio are not stated for the fiscal years ended March 31, 2024 and March 31, 2025 as cash flows from operating activities were negative amounts in those years.

1. Future Outlook

   The Japanese economy is expected to show a gradual recovery trend backed by improvements in the employment and income environment. However, the situation will remain unpredictable, as business conditions come under pressure from rising prices and the impact of policy trends in other countries.

   Construction investment is expected to remain firm in the construction industry. However, we anticipate that the business environment will remain less than optimistic amid concerns over rising construction costs.

   Under these circumstances, the Group's full-year forecast for orders received in the construction business is a decrease of 25.7% year on year to ¥280,000 million. Consolidated net sales are forecast to increase by 0.1% year on year to ¥298,500 million, while operating profit is forecast to rise by 11.0% to ¥10,800 million and ordinary profit to rise by 42.3% to ¥12,700 million. Profit attributable to owners of parent is forecast to increase by 315.0% year on year to ¥11,300 million.

   Valuation gains and losses on forward exchange contracts recorded by ISHIKARI BIO ENERGY GODO KAISHA, a consolidated subsidiary, are not included in non-operating income and expenses in the consolidated financial results forecast. The Company's consolidated financial result may be significantly impacted by movements in foreign exchange markets in the future.

2. Basic Policy on Distribution of Profits and Dividends for the Year under Review and the Following Year The Company aims to increase medium- to long-term corporate value by working to improve return on equity (ROE), while maintaining a sound financial condition.

The Company recognizes the distribution of profits as one of the most important managerial issues, and has adopted the following shareholder return policy.

Basic Policy

To distribute profits in line with business performance and flexibly implement the purchase of treasury stock, premised on the continuation of stable dividends.

Policy during the Medium-Term Business Plan (FY2022-2024)

Consolidated payout ratio of 70% or more

(Dividend on equity (DOE)* ratio of 2.0% or more, regardless of business performance.)

* DOE = Total annual dividends (interim + year-end) / equity

During the fiscal year under review, the Company has recorded substantial extraordinary losses on both a consolidated and non-consolidated basis. However, considering the Company's strong non-consolidated financial results apart from the deterioration in profitability in specific large-scale civil engineering projects in Japan, as well as the background to these extraordinary losses and the Company's basic policy for shareholder returns, the Company plans to pay an annual dividend of ¥216 per share (consolidated payout ratio: 292.1%) for the fiscal year under review. Subtracting the interim dividend of ¥113 from this amount, the year-end dividend will be ¥103.

Regarding dividends for the next fiscal year, based on the Group's environment and the "Vision toward 2030" announced in April 2019, the Company has revised its shareholder return policy for the period of the Medium-Term Business Plan (FY2025-2027), beginning in the fiscal year ending March 31, 2026, as described below. The Company plans to pay an annual dividend of ¥220 per share (including an interim dividend of ¥110 per share). The consolidated payout ratio of the annual dividend of ¥220 will be 70.4% against the full-year financial results forecast.

Basic Policy

To distribute profits in line with business performance and flexibly implement the purchase of treasury stock, premised on the continuation of stable dividends.

Policy during the Medium-Term Business Plan (FY2025-2027)

Consolidated payout ratio*1 of 70% or more

(Dividend on equity (DOE)*2 ratio of 2.0% or more, regardless of business performance.)

*1: Consolidated payout ratio = Total annual dividends (interim + year-end) / profit attributable to owners of parent

[Excluding the impact of one-off special factors (valuation gains and losses on forward exchange contracts)]

*2: DOE = Total annual dividends (interim + year-end) / equity

1. Basic Policy on Selection of Accounting Standards

   The Group's policy is to prepare its consolidated financial statements based on Japanese standards for the time being, considering the comparability of consolidated financial statements among periods and among companies. Regarding the application of the IFRS (International Financial Reporting Standards), its policy is to respond appropriately, considering the various conditions inside and outside Japan.

2. Consolidated Financial Statements and Principal Notes

   1. Consolidated Balance Sheets

      (Millions of yen)

      As of March 31, 2024 As of March 31, 2025

      Assets

      Current assets

      Cash and deposits *5 30,248 *5 28,714

Notes receivable, accounts receivable from

completed construction contracts and other

*1,*9

172,323

*1 190,568

Property, plant and equipment

(Millions of yen)

As of March 31, 2024 As of March 31, 2025

Liabilities

Current liabilities

Notes payable, accounts payable for construction contracts and other

52,074

56,999

Short-term borrowings 16,701 43,801

Income taxes payable 3,385 2,083

Advances received on construction contracts in progress

*2 19,161

*2 18,133

Provision for warranties for completed

construction

Provision for bonuses for directors (and other officers)

627 662

39 21

Net assets

1. Consolidated Statements of Income and Comprehensive Income

   Consolidated Statements of Income

   For the fiscal year ended March 31, 2024

   (Millions of yen)

   For the fiscal year ended March 31, 2025

   Net sales

   Net sales of completed construction contracts 268,340 284,575

   Net sales of real estate investment, development business and other

   19,805

   13,647

   Total net sales

   *1 288,146

   *1 298,222

   Cost of sales

   Cost of sales of completed construction contracts

   *2 238,012

   *2 253,369

   Cost of real estate investment, development business and other

   14,942

   13,165

   Total cost of sales 252,954 266,534

   Gross profit

   Gross profit on completed construction contracts		30,328		31,206
   Gross profit on real estate investment, development business and other		4,863		481
   Total gross profit		35,191		31,688
   Selling, general and administrative expenses	*3,*4	21,483	*3,*4	21,956
   Operating profit		13,708		9,731
   Non-operating income
   Interest income		73		95
   Dividend income		1,226		1,361
   Foreign exchange gains		351		-
   Other		243		302
   Total non-operating income		1,894		1,759
   Non-operating expenses
   Interest expenses		606		807
   Foreign exchange losses		-		368
   Loss on valuation of forward exchange contracts		-		701
   Other		118		686
   Total non-operating expenses		724		2,563
   Ordinary profit		14,878		8,926
   Extraordinary income
   Gain on sale of investment securities		3,205		3,599
   Other		710		24
   Total extraordinary income		3,915		3,624
   Extraordinary losses
   Impairment losses	-		*5	13,234
   Other	622			742
   Total extraordinary losses	622			13,977
   Profit (loss) before income taxes	18,171			(1,426)
   Income taxes - current	5,770			4,957
   Income taxes - deferred	237			160
   Total income taxes	6,008			5,118
   Profit (loss)	12,163			(6,545)
   Loss attributable to non-controlling interests	(329)			(9,268)
   Profit attributable to owners of parent	12,493			2,722

   Consolidated Statements of Comprehensive Income
   		(Millions of yen)
   	For the fiscal year ended March 31, 2024	For the fiscal year ended March 31, 2025
   Profit (loss)	12,163	(6,545)
   Other comprehensive income
   Valuation difference on available-for-sale securities	10,175	(4,763)
   Deferred gains or losses on hedges	4,020	3,112
   Remeasurements of defined benefit plans, net of tax	538	1,821
   Total other comprehensive income	14,734	170
   Comprehensive income	26,897	(6,374)
   Comprehensive income attributable to
   Comprehensive income attributable to owners of 25,217 1,337 parent

   Comprehensive income attributable to non-controlling interests

   1,680 (7,711)

2. Consolidated Statements of Changes in Equity

For the fiscal year ended March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

(Millions of yen)

Increase (decrease) in provision for warranties for completed construction

Increase (decrease) in provision for bonuses for directors (and other officers)

122 35

1 (17)

Loss (gain) on valuation of forward exchange contracts

- 701

Cash flows from investing activities

-

205

Net decrease (increase) in time deposits

securities

long-term investment securities intangible assets

(Millions of yen)

(5) Notes to Consolidated Financial Statements (Notes on going concern assumption)

Not applicable.

(Additional information)

(Impact of improper cost management)

With regard to the incident in which costs incurred in a construction project contracted to the Company were not recorded under the relevant construction project but transferred to another project (cost reassignment), the Company received the report of its internal investigation committee on January 15, 2025.

It was determined, upon consideration, that the net sales, cost of sales, and other items recorded in association with the cost reassignment have had no material impact on the consolidated financial statements for past fiscal years or the fiscal year under review. The Company has therefore not made retrospective amendments but has treated the matter in the consolidated financial statements for the fiscal year under review.

(Financial covenants)

The Company has recognized a breach in the financial covenants for non-recourse borrowings by ISHIKARI BIO ENERGY GODO KAISHA, a consolidated subsidiary. The Company has concluded an additional loan agreement with ISHIKARI BIO ENERGY GODO KAISHA to support its day-to-day cash flow. The lender has not exercised its right to demand early repayment.

(Consolidated Balance Sheet)

*1 Of notes receivable, accounts receivable from completed construction contracts and other, the amounts for trade receivables and contract assets generated by contracts with customers are as follows.

*2 The value of contract liabilities included in advances received on construction contracts in progress is as follows.

As of March 31, 2024 As of March 31, 2025

18,799 million yen 17,806 million yen

*3 The value of accumulated depreciation of property, plant and equipment is as follows.

As of March 31, 2024 As of March 31, 2025

23,418 million yen 26,823 million yen

*4 The amounts for non-consolidated subsidiaries and affiliates are as follows.

As of March 31, 2024 As of March 31, 2025

Investment securities 248 million yen 173 million yen

*5 The value of assets pledged as collateral and corresponding collateralized debt obligations are as follows.

The following assets are pledged as collateral for the debt obligations below.

Current liabilities "Other" (Deposits received)

325 million yen 315 million yen

The following assets are pledged as collateral for the contract performance obligations in the PFI business.

Assets corresponding for non-recourse debt obligations are included in "6. Assets corresponding to non-recourse debt obligations."

*6 The value of assets corresponding to non-recourse debt obligations is as follows.

As of March 31, 2024 As of March 31, 2025

Value of business assets of consolidated subsidiaries engaged in the renewable energy business corresponding to non-recourse borrowings

41,865 million yen 26,863 million yen

*7 Costs on construction contracts in progress and work in process related to construction contracts, etc. where losses are expected to occur and provision for loss on construction contracts are presented separately, without offsetting them against each other.

Of costs on construction contracts in progress related to construction contracts, etc. where losses are expected to occur, the value of provision for loss on construction contracts is as follows.

As of March 31, 2024 As of March 31, 2025

1 million yen 237 million yen

8 The Company has concluded commitment line agreements with three banks for the efficient financing of working capital.

The contract limits and outstanding borrowings at the end of the fiscal year are as follows.

*9 Notes, etc. maturing on the last day of the fiscal year are settled as of the note exchange date or the settlement date.

As the last day of the previous fiscal year fell on a financial institution holiday, the following notes, etc. maturing on the last day of the fiscal year were included in the balance at the end of the previous fiscal year.

As of March 31, 2024 As of March 31, 2025

Notes receivable - trade 11 million yen - million yen

Electronically recorded

monetary claims - operating 1 -

(Consolidated Statement of Income)

*1 Revenue from contracts with customers

For net sales, we do not distinguish revenue from contracts with customers from other revenues. The amount of revenue from contracts with customers is stated in "(Segment information, etc.)."

*2 Provision (reversal) for loss on construction contracts included in cost of sales is as follows.

For the fiscal year ended March 31, 2024

For the fiscal year ended March 31, 2025

(99) million yen 2,337 million yen

*3 The major items and their amounts under selling, general and administrative expenses are as follows.

For the fiscal year ended March 31, 2024

For the fiscal year ended March 31, 2025

Employees' salaries and allowances

7,639 million yen 7,571 million yen

Provision for bonuses 1,397 1,022

Provision for bonuses for directors (and other officers)

39 21

Retirement benefit expenses 250 297

Provision of allowance for doubtful accounts

34 5

*4 The total amount of research and development costs included in selling, general and administrative expenses is as follows.

For the fiscal year ended March 31, 2024

For the fiscal year ended March 31, 2025

1,804 million yen 1,774 million yen

*5 Impairment losses

The Group recorded impairment losses on the following asset groups in the fiscal year under review.

The Group is engaged in the biomass power generation business through ISHIKARI BIO ENERGY GODO KAISHA, a consolidated subsidiary of the Company. The Group treats ISHIKARI BIO ENERGY GODO KAISHA as a unit for grouping assets, based on the management accounting classifications by which it monitors revenues and expenses for business-use assets on an ongoing basis.

The impairment losses shown above were recorded, as extraordinary losses, as the result of reducing the book value of the assets of ISHIKARI BIO ENERGY GODO KAISHA and the goodwill recorded upon its acquisition to the recoverable amounts, due to a decline in profitability resulting from the explosion at its power plant.

The recoverable amount was measured as value in use, with future cash flow discounted at 5.0%.

(Segment information, etc.) [Segment information]

1. Overview of reportable segments

   The Group's reportable segments are those for which separate financial information is available among the constituent units of the Company and its consolidated subsidiaries and regular reviews are performed by the Board of Directors to determine the allocation of management resources and evaluate earnings performance.

   The Group is mainly engaged in the construction business, comprising the civil engineering business and the building business. As a concurrent business, it also conducts an investment development business including the real estate business and the renewable energy business. Therefore, the Group has set three reportable segments, namely "Civil Engineering," "Building," and "Investment Development."

   Civil Engineering and Building involve civil engineering, building, and other construction overall, and Investment Development involves the sale and leasing of real estate and the renewable energy business, etc.

2. Method of calculation of net sales, income (loss), assets, liabilities and other items by reportable segment The accounting methods for business segments reported are the same as those adopted for the preparation of the consolidated financial statements. Profit figures for the reportable segments are on an operating profit basis. Inter-segment net sales are based on prevailing market prices.

   Assets for the reportable segments are not presented as there are no assets allocated to the business segments.

3. Information on net sales, income (loss), assets, liabilities and other items and breakdown of earnings by reportable segment

   For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

   (Millions of yen)

   	Reportable segment				Other (Note 1)	Total	Adjustment (Note 2)	Amount recorded in Consolidated Statement of Income (Note 3)
   	Civil Engineering	Building	Investment Development	Total
   Net sales
   Domestic public agencies Domestic non-government	61,492 32,743	23,087 142,098	23 10,081	84,602 184,922	66 5,220	84,668 190,143	- -	84,668 190,143
   Overseas	8,918	-	-	8,918	308	9,226	-	9,226
   Revenue from contracts with customers	103,154	165,185	10,104	278,444	5,594	284,039	-	284,039
   Revenue from other sources	-	-	4,107	4,107	-	4,107	-	4,107
   Net sales to external customers	103,154	165,185	14,211	282,551	5,594	288,146	-	288,146
   Inter-segment net sales or transfers	-	-	37	37	2,020	2,057	(2,057)	-
   Total	103,154	165,185	14,248	282,589	7,615	290,204	(2,057)	288,146
   Segment profit	9,552	914	2,605	13,072	614	13,686	21	13,708
   Other
   Depreciation	511	692	3,088	4,292	55	4,347	(7)	4,340
   Amortization of goodwill	-	-	29	29	-	29	-	29

   Notes. 1. The "Other" category is a business segment not included in reportable segments. It includes such operations as the manufacture and sale of construction machinery, equipment, etc.

   1. The segment profit adjustment of ¥21 million is mainly eliminations of inter-segment transactions.

   2. Segment profit is adjusted to the operating profit figure on the Consolidated Statement of Income.

For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025)

(Millions of yen)

Notes. 1. Impairment losses on goodwill of ¥319 million were recorded in the Investment Development segment.

1. The "Other" category is a business segment not included in reportable segments. It includes such operations as the manufacture and sale of construction machinery, equipment, etc.

2. The segment profit (loss) adjustment of ¥40 million is mainly eliminations of inter-segment transactions.

3. Segment profit (loss) is adjusted to the operating profit figure on the Consolidated Statement of Income.

[Relevant information]

For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

1. Information by product and service

   Omitted, as the same information is disclosed in the segment information.

2. Information by region

   1. Net sales

      Omitted, as net sales to external customers in Japan account for over 90% of net sales in the Consolidated Statement of Income.

   2. Property, plant and equipment

      Omitted, as the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant and equipment on the Consolidated Balance Sheet.

3. Information by major customer

Omitted, as there are no counterparties in net sales to external customers that account for 10% or more of net sales on the Consolidated Statement of Income.

For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025)

1. Information by product and service

   Omitted, as the same information is disclosed in the segment information.

2. Information by region

   1. Net sales

      Omitted, as net sales to external customers in Japan account for over 90% of net sales in the Consolidated Statement of Income.

   2. Property, plant and equipment

      Omitted, as the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant and equipment on the Consolidated Balance Sheet.

3. Information by major customer

Omitted, as there are no counterparties in net sales to external customers that account for 10% or more of net sales on the Consolidated Statement of Income.

[Information about impairment loss on non-current assets by reportable segment] For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

Not applicable.

For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025)

Impairment losses on non-current assets of ¥12,915 million were recorded in the Investment Development business segment.

[Information about amortized amount and unamortized balance of goodwill by reportable segment] For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

Amortized amount during the fiscal year ¥29 million Balance as of March 31, 2024 ¥348 million Note: Goodwill is not allocated to business segments.

For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025) Amortized amount during the fiscal year ¥29 million

Balance as of March 31, 2025 ¥- million Notes: 1. Goodwill is not allocated to business segments.

2. Impairment losses on goodwill of ¥319 million were recorded in the Investment Development business segment.

[Information about gain on negative goodwill by reportable segment]

For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024) Not applicable.

For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025) Not applicable.

(Per share information)

Notes. 1. Diluted profit per share is not stated because there are no potential shares.

1. The basis of calculation of profit per share is as follows:

   	For the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024)	For the fiscal year ended March 31, 2025 (from April 1, 2024 to March 31, 2025)
   Profit attributable to owners of parent (million yen)	12,493	2,722
   Profit not attributable to common shareholders (million yen)	-	-
   Profit attributable to owners of parent available to common stock (million yen)	12,493	2,722
   Average number of shares of common stock during the fiscal year (thousand shares)	36,820	36,791

   (*) The Company has introduced an Employee Share Award Plan. For the purposes of calculating profit per share for the fiscal year under review, the Company's shares held by the trust account under this plan are included in treasury shares, which are subtracted in the calculation of the average number of common shares during the year. The average number of those treasury shares during the year was 1,845 thousand shares in the fiscal year ended March 31, 2024 and 1,873 thousand shares in the fiscal year under review. Of those, the average number of the Company's shares during the year held by the trust account under this plan was 275 thousand shares in the fiscal year ended March 31, 2024 and 274 thousand shares in the fiscal year under review.

2. The basis for the calculation of net assets per share is as follows.

(*) The Company has introduced an Employee Share Award Plan. For the purposes of calculating net assets per share for the fiscal year under review, the Company's shares held by the trust account under this plan are included in treasury shares, which are subtracted from the number of issued shares at the end of the fiscal year. The number of those treasury shares at the end of the fiscal year was 1,837 thousand shares in the fiscal year ended March 31, 2024 and 2,440 thousand shares in the fiscal year under review. Of those, the number of the Company's shares held by the trust account under this plan was 275 thousand shares as of March 31, 2024, and 273 thousand shares as of March 31, 2025.

(Significant subsequent events) Not applicable.

1. Non-consolidated Financial Statements

1. Non-consolidated Balance Sheets

   (Millions of yen)

   As of March 31, 2024 As of March 31, 2025

   Assets

   Current assets

   Cash and deposits	27,063	26,890
   Notes receivable - trade	1,798	0
   Electronically recorded monetary claims - 1,548 2,411 operating
   Accounts receivable from completed construction contracts	165,632	186,158
   Real estate for sale	933	493
   Costs on construction contracts in progress	3,801	5,447
   Costs on real estate investment, development	1,960	2,247
   business and other
   Raw materials and supplies	9	50
   Prepaid expenses	25	23
   Other	10,337	12,218
   Allowance for doubtful accounts	(176)	(198)
   Total current assets	212,933	235,743
   Non-current assets
   Property, plant and equipment
   Buildings	23,812	28,098
   Accumulated depreciation	(10,836)	(11,472)
   Buildings, net	12,975	16,626
   Structures	1,430	1,570
   Accumulated depreciation	(1,100)	(1,128)
   Structures, net	329	442
   Machinery and equipment	4,123	4,329
   Accumulated depreciation	(3,637)	(3,782)
   Machinery and equipment, net	485	547
   Vehicles	67	67
   Accumulated depreciation	(58)	(61)
   Vehicles, net	9	5
   Tools, furniture and fixtures	2,693	3,221
   Accumulated depreciation	(2,203)	(2,421)
   Tools, furniture and fixtures, net	489	800
   Land	30,012	31,159
   Leased assets	8	14
   Accumulated depreciation	(2)	(5)
   Leased assets, net	5	9
   Construction in progress	786	12
   Total property, plant and equipment	45,094	49,603
   Intangible assets
   Patent right	-	6
   Leasehold interests in land	33	33
   Trademark right	-	1
   Software	1,034	1,122
   Other	21	30
   Total intangible assets	1,088	1,194

   (Millions of yen)

   	As of March 31, 2024	As of March 31, 2025
   Investments and other assets
   Investment securities	66,547	58,596
   Shares of subsidiaries and associates	401	326
   Investments in capital	42	42
   Investments in capital of subsidiaries and 2,351 873 associates

   Long-term loans receivable from subsidiaries and associates	8,886	10,286
   Long-term prepaid expenses	660	1,698
   Prepaid pension costs	3,794	4,106
   Other	2,510	2,504
   Allowance for doubtful accounts	(1,939)	(4,933)
   Total investments and other assets	83,268	73,523
   Total non-current assets	129,451	124,321
   Total assets	342,384	360,065
   Liabilities
   Current liabilities
   Notes payable - trade	1,962	2,169
   Accounts payable for construction contracts	47,713	53,420
   Short-term borrowings	19,821	46,454
   Lease liabilities	2	3
   Accounts payable - other	709	1,227
   Accrued expenses	1,859	1,393
   Income taxes payable	3,186	1,963
   Advances received on construction contracts in 19,122 18,096 progress

   Long-term loans receivable 3 15

   Long-term loans receivable from employees 9 7

Deposits received 19,005 10,801

Provision for warranties for completed construction

607

640

Provision for bonuses 3,562 3,024

(Millions of yen)

As of March 31, 2024 As of March 31, 2025

Retained earnings

Reserve for investment loss on developing new business

108

106

Other retained earnings

1. Non-consolidated Statements of Income

For the fiscal year ended March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

Net sales

Net sales of completed construction contracts 268,340 284,575

Net sales of real estate investment, development business and other

6,119

5,784

Total net sales 274,460 290,359

Cost of sales

Cost of sales of completed construction contracts 238,224 253,459

Cost of real estate investment, development business and other

2,785

2,659

Total cost of sales 241,009 256,119

Gross profit

Gross profit on completed construction contracts 30,116 31,116

Gross profit on real estate investment, development business and other

3,334

3,124

Total gross profit 33,450 34,240

(Millions of yen)