To Our Shareholders and Investors

A major achievement was that all employees of our group were able to share our Group's value, future outlook, and strategies for future value creation.

At present, a variety of social and environmental issues related to the future of people and the Earth are emerging worldwide. We must address these issues and resolve them carefully, one by one, to achieve a sustainable society. We have reached a challenging turning point in our times.

In our domestic business, various social issues exist, including the aging infrastructure built on complex terrain and geological formations, actions to increasingly severe and frequent natural disasters, and the transition to renewable energy that contributes to carbon neutrality. As infrastructure that supports other infrastructures, the services we provide are always required to accurately analyze and evaluate uncertain underground conditions, and to provide that output in an easily understandable format.

In our international business, which develops and sells survey and exploration equipment, there is high demand for the construction of offshore wind farms in Europe, infrastructure development in the United States, the Middle East, and Southeast Asia, as well as the market for infrastructure management solutions. That being said, problems have also arisen, including geopolitical risks, unstable international situations, rising material and equipment prices, and intensifying price competition. Even under these circumstances, we believe it is essential to meet the expectations of clients worldwide by further enhancing usability and promoting innovation in survey and exploration.

In this situation, 2024 has allowed us to share a clear vision and strategy among all Group employees regarding the value we create for society, marking the beginning of our journey toward future value creation. I recognize this as our most significant achievement.

In addition, we view the quantitative and qualitative targets set in our long-term vision and medium-term business plan as important commitments not only to our employees but also to all stakeholders, including our shareholders and investors, and we will report our progress promptly. Through this, I am confident that our management approach, which emphasizes value co-creation with stakeholders, will be deepened even further.

The OYO Group upholds the management vision "Find the Best Answer to the Future of People and the Earth." Building on our founding philosophy of "Creating Geological Engineering," we intend to continue pursuing optimal solutions to difficult challenges through deep insights based on geoscience, abundant data, and innovations in digital technology.

In the first year of the medium-term plan, we could achieved significant increases in both revenue and profit, marking a favorable start to the plan.

The fiscal year ended December 2024, the first year of the OYO Medium-Term Business Plan 2026, got off to a good start. In terms of business performance, we achieved year-on-year increases in both revenue and profit, exceeding our initial forecasts. Specifically, order volume increased 19.6% to 79.9 billion yen, net sales rose 12.9% to 74.0 billion yen, and operating income surged 54.1% to 4.3 billion yen, marking significant profit growth.

With all three business segments consistently delivering results, the factors behind the revenue increase can be attributed to the following three main points. The first is the sudden emergence of work related to the Noto Peninsula Earthquake that occurred on January 1, 2024. The second is the contributions made by Sanyo Techno Marine, Inc., which joined our Group in February 2024, to our performance. The third is the substantial growth in offshore wind farm-related work. In particular, offshore wind farm-related work, where survey contract fees per project are high, and fluctuations in the number of projects significantly impact performance, produced order results that exceeded expectations in fiscal 2024, thus contributing to improved performance.

One of the reasons for revenue growth during this period is our disaster prevention and mitigation business. This initiative is built on nearly 60 years of voluntary survey and is the highest-priority mission that our Group must strive to fulfill.

As with the Noto Peninsula earthquake-related work in fiscal 2024, when natural disasters such as earthquakes, typhoons, or heavy rains occur, our Group's activities begin immediately. We are confident that promptly heading to disaster-affected areas, thoroughly surveying and analyzing the sites, and applying the results to disaster prevention and mitigation measures contribute to the safety and security of local communities.

Our initiatives in the disaster prevention and mitigation field date back approximately 60 years. Immediately after the 1964 Niigata Earthquake, we dispatched a voluntary survey team at our own discretion and created and published a survey report. Investigations into the relationships between geotechnical conditions, seismic wave transmission, and liquefaction are usually limited to the brief period between an earthquake's occurrence and the start of recovery operations. Over the past approximately 60 years, our Group has continued to undertake voluntary initiatives and accumulated intelligence knowledge about earthquakes that have occurred worldwide. This valuable data is now making significant contributions to next-generation disaster prevention and mitigation measures through the utilization of cutting-edge technologies in the DX era.

Against the backdrop of such voluntary initiatives, we have come to regularly receive requests from government agencies for disaster recovery support work when disasters occur. We operate under the motto of "never refuse, always make it a priority, and take immediate action." Since human capital is limited, all employees coordinate shifts to establish a system that can provide the best possible response to disaster-affected areas.

Our Group's approach to disasters will remain unchanged for eternity

The rapid recovery in profit margins was largely contributed to by the efficiency gains from the fundamental organizational and structural reforms conducted in early 2024.

The main factors behind the profit increase in consolidated business performance for fiscal 2024 were the revenue growth effect (approximately 1.5 billion yen) and an improvement in gross profit margin (over 1.2 billion yen). The gross profit margin improved by 1.3 percentage points year-on-year to reach 31.0%. The fundamental factor behind this significant earnings improvement lies in the radical organizational and structural reforms implemented in early 2024. Specifically, the elimination of redundant operations through segment reorganization and the streamlining of administrative departments and sales systems directly led to improved earnings.

In particular, the segment reorganization was a reform carried out based on our first basic policy, "Promote Segment Strategy," which had a significant effect on improvements in earnings. Previously, our sales approach was largely passive, and we would wait for order requests from local governments. This left us unable to conduct proposal-based sales that responded to market needs. To overcome this issue former President Narita abolished the branch office system in 2018 and introduced a business division organization for each market. As a result, employee mindsets evolved, proposal-based sales took root, and the public-private ratio shifted from heavy reliance on the public sector toward an increased private sector share.

However, this also brought to light the issue of inefficiency. Multiple business divisions were individually approaching single customer contact points, and travel expenses to sites nationwide were skyrocketing due to an over-concentration in Tokyo, resulting in waste in terms of both effort and cost. The segment reorganization in early 2024 eliminated this waste, and we believe the current organization features improved efficiency while maintaining its proposal-based approach.

Regarding our core growth strategy, which is the basic policy "Advance Segment Strategy," we will continue to pursue this even further to improve business profitability.

Each of the three segments has established its 2025 Segment Policy and will advance initiatives based on the achievements of 2024.

In the Disaster Prevention and Infrastructure segment, providing customers with a sense of trust and the reassurance that engineers and specialists will come immediately when problems arise is the most crucial factor for securing orders. Therefore, under our policy of building a sustainable growth strategy, we will focus on strengthening three capabilities--our regional presence, our technical expertise capabilities, and Group collaboration--to establish a solid foundation capable of delivering community-based responses.

In the Environment and Energy segment, under our policy of accelerating business expansion and market development, we will strengthen collaboration between OYO Corporation and four of its subsidiaries (NS Environment Corporation, Ocean Engineering Corporation, NihonZitan Co., Ltd., and Sanyo Techno Marine, Inc.). Through this, we will expand our offshore wind farm-related business beyond seabed geotechnical surveys to encompass the entire marine business, including submarine cable route surveys, unexploded ordnance surveys near ports, and marine life and ecological environment surveys. Looking ahead, we aim to establish a new industry position as a marine survey consulting firm.

In the International segment, we are driving transformation on both the manufacturing and sales fronts. First, we are making progress on advancing attractive proposals, such as replacing products with high-profit, high-quality new offerings at our U.S. subsidiary Geophysical Survey Systems, Inc. (GSSI), and expanding our 4D geotechnical analysis monitoring technology (OYO Tracker 4D) overseas. Additionally, through partnerships with external companies, we are strengthening our global sales channel capabilities. Against this backdrop, the segment is forging ahead to implement its policy of entering the Middle Eastern and Singapore markets.

We will directly address contemporary demands for our Group's technologies and services, aiming to co-create new value for the future of people and the Earth together with our stakeholders.

Regarding our second basic policy, "Optimize the Balance Sheet," our goals are to improve and enhance ROE and increase shareholder returns. We strive to always remain an attractive investment opportunity for shareholders and investors.

For our third basic policy, "Strengthen Sustainable Management," future-oriented thinking is a crucial theme.

In our Environment (E) initiatives, as part of decarbonization efforts in our business activities, we have calculated and disclosed the potential contribution to emission reductions provided by our proprietary technologies and services. These technologies include hazard mapping sensor solutions, 3D ambient noise tomography, seabed microtremor array surveys, and 3D acoustic surveys. When other companies use these services, they contribute to reducing their CO2 emissions (Scope 1 and 2), thereby allowing our contribution to emission reductions to be achieved. We will continue to promote initiatives that create market and business opportunities related to climate change.

In our Social (S) initiatives, we are strengthening human capital management to support sustainable growth. By improving employee engagement, reforming our human resources system (starting in fiscal 2026), and promoting health-focused management, we are building a framework that enables employees of all generations to deliver high-quality performance. This will create a virtuous cycle of growth for both employees and the company, to sustain an enhanced corporate value.

Regarding Governance (G), we have transitioned to become a company with an Audit and Supervisory Committee, which aims to strengthen audit and supervisory functions and accelerate decision-making, thereby promoting futureoriented governance enhancement.

The need for our Group's technologies and services deepens year by year, driven by the increasing severity of natural disasters, aging infrastructure, and accelerating ocean development. We will directly address these challenges and work to co-create new value for the future of people and the Earth together with all stakeholders, including employees and local communities.

We look forward to your continued understanding and support of OYO Group's management.