To Our Shareholders and Investors

We will steadily
implement the strategies set out in
our medium-term business plan,
OYO Advance 2023,
with the aim of achieving
sustainable management and
maximizing our three values.

Business Overview and Performance for the Fiscal Year 2022

While orders and sales both increased, operating incomes fell due to material shortages and soaring prices.

I would like to express my sincere gratitude to all of our shareholders for their continued support. I am Hirofumi Amano, and was appointed the new president. I will firmly inherit the efforts of the former president and promote the measures of the medium-term business plan to improve corporate value.

The Group's performance for the fiscal year ended December 31, 2022, was greatly affected by both tailwinds and headwinds. The tailwinds were the expansion of the renewable energy market towards carbon neutrality amid growing global concern over climate change. In addition, in Japan's domestic public market, there were also solid demands in the fields of disaster prevention and mitigation and infrastructure maintenance accompanying the national resilience policy. On the other hand, the headwinds were shortages of materials and soaring prices due to supply chain disruptions centered on semiconductors and an increase in design change costs due to the use of alternative materials, as well as rising energy prices due to the deterioration of the situation in Ukraine.

Under these circumstances, both orders and net sales for the fiscal year exceeded those of the previous fiscal year due to steady growth in offshore wind power generation-related services and a recovery trend in the shortage of materials in the second half.

However, profits fell below the results of the previous fiscal year due to the above-mentioned soaring component prices, the occurrence of design change costs, and an increase in SG&A expenses such as personnel expenses.

Progress of medium-term business plan and future initiatives

Creating new corporate value through four services and the promotion of digital transformation (DX).

The previous fiscal year marked the end of the second year of the medium-term business plan, "OYO Advance 2023." The following is an overview of the status of initiatives under the medium-term business plan to date.

1. Sales of the four services created and expanded in the previous medium-term business plan

In underground visualization services, although sales to national and local governments expanded, sales to private companies were sluggish. We aim to increase sales while improving the services to meet the needs of private companies. Sales of hazard mapping sensor solutions and services related to disaster waste disposal plans are growing steadily, and we expect to achieve our medium-term business plan targets in 2023. Our offshore wind power generation services are achieving growth that far exceeds our medium-term business plan targets, including the acquisition of multiple large-scale orders and the steady growth of related services at overseas subsidiaries.

2. DX strategy

We have been promoting initiatives for each of the three measures of "creation of new business services," "deepening of existing business models," and "improvement of work style reform and productivity." Up to last year, we have already invested a total of 770 million yen against the DX strategic investment amount of 1 billion yen set in the medium-term business plan. As a result of these efforts, in 2022, we were selected as a "DX Brand 2022" operated by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange. This year, the final year of the plan, we plan to invest 460 million yen, and will eventually invest a total of 1.2 billion yen.

3. R&D strategy

We will continue to invest in the development and sophistication of three-dimensional geotechnical technology and research and development of various measuring instruments. We plan to exceed the investment amount of 4.5 billion yen set in the medium-term business plan.

4. Structural reform

In addition to promoting "Business Portfolio Reform," we have also promoted "Business Service Reform" through technology fusion among group companies and open innovation with other companies. Furthermore, in terms of work style and governance reforms, we have been working to improve the work environment, such as promoting remote work, formulating systems and policies for sustainable management, and strengthening the governance system of the Board of Directors.

We would like to ask our shareholders for their continued understanding and support of our business.

March 2023

Representative Director, President & CEO

Hirofumi Amano