Financial · November 1, 2018

Summary of Consolidated Financial Results: Second Quarter of Fiscal Year Ending March 31, 2019

Published by Takamatsu Construction Group Co.

Summary

Takamatsu Construction Group’s consolidated financial results for the first half of the fiscal year ending March 31, 2019, reflect a period of strategic expansion despite a challenging domestic construction market. The company reported net sales of 114,311 million yen, a 2.0% increase compared to the same period in the previous year, marking the seventh consecutive year of growth for the first-half period. However, operating income declined by 34.2% to 3,564 million yen, and net earnings attributable to controlling interests fell by 30.5% to 1,954 million yen. These profit contractions were attributed to a year-over-year decline in high-margin completed projects and increased selling, general, and administrative expenses resulting from aggressive hiring and the integration of new subsidiaries. The company’s performance across segments was mixed. The architecture segment saw a significant 31.1% surge in orders received, though net sales and operating profit for the segment decreased. Conversely, the real estate segment experienced substantial growth, with sales increasing by 79.8% and operating profit rising by 141.6%. Civil engineering orders declined by 18.2%, while net sales in that segment grew by 5.7%. Geographically focused on the Japanese market, the group is currently executing its "TRY! NEXT CENTURY 2020" mid-term plan. To bolster future growth, the company expanded its corporate structure through the acquisition of Mibu Corporation and the establishment of Takamatsu Construction Group USA, Inc. As of September 30, 2018, the group maintained a solid financial position with an equity ratio of 56.5%. Management has maintained its full-year consolidated forecast, aiming for 268,000 million yen in net sales and 15,000 million yen in operating income.

From the report

November 14 , 2018 Summary of Consolidated Financial Results For the Second Quarter of Fiscal Year Ending March 31, 2019 [Japan GAAP] Company: Takamatsu Construction Group Co., Ltd. Stock exchange listing: Tokyo Stock Exchange (First Section) Stock code: 1762 ke, T URL: https://www.takamatsu-cg.co.jp/ Representative: Nobuhiko Yoshitake, President and Representative Director of the Board Contact: Hiroyuki Izutsu, Senior Director of Group Integration Division Contact: 06-6303-8101, [email protected] Date of filing of quarterly securities report: November 14, 2018 Date of commencement of dividend payment: December 11, 2018 Supplementary explanatory documents: Yes (for analysts) Earnings presentation: Yes (for analysts) (Yen in millions, rounded down, figures in parentheses indicate negative amounts or percentages) 1. Financial results for the first half of the fiscal year ending March 2019 (April 1, 2018 – September 30, 2018) (1) Consolidated result of operations (year-to-date) (Percentage figures represent year on year changes) Net sales Operating income Ordinary income Net earnings attributable to controlling interest Million yen % Million yen % Million yen % Million yen % First half ended September 2018 114,311 2.0 3,564 (34.2) 3,588 (33.7) 1,954 (30.5) First half ended September 2017 112,022 12.6 5,419 (9.9) 5,410 (10.2) 2,810 (10.6) Note: Comprehensive income: First half of FYMar.2019:2,299 million yen (34.9%) ,First half of FYMar.2018:3,531million yen（1.1%） Earnings per share Earnings per share (diluted) Yen Yen First half ended September 2018 56.12 － First half ended September 2017 78.24 －

9 (9.9) 5,410 (10.2) 2,810 (10.6) Note: Comprehensive income: First half of FYMar.2019:2,299 million yen (34.9%) ,First half of FYMar.2018:3,531million yen（1.1%） Earnings per share Earnings per share (diluted) Yen Yen First half ended September 2018 56.12 － First half ended September 2017 78.24 － (2) Consolidated financial position Total assets Net assets Equity ratio Million yen Million yen % As of September 30, 2018 177,666 114,532 56.5 As of March 31, 2018 184,895 113,992 53.9 (Reference) Shareholders' equity As of September 30, 2018:100,401 million yen As of March 31, 2018: 99,625 million yen 2. Dividends Dividend per share End of End of End of End of Annual 1Q 2Q 3Q FY Yen Yen Yen Yen Yen FY3/18 － 20.00 － 36.00 56.00 FY3/19 － 22.00 FY3/19 (Est.) － 38.00 60.00 Note: Change in the estimation of divided from the latest announcement: No 3. Consolidated forecast for the fiscal year ending March 31, 2019 (April 1, 2018 – March 31, 2019) (Percentage figures represent year on year changes) Orders Net sales Operating income Ordinary income Net earnings Net earnings received attributable to per share controlling interest Million yen % Million yen % Million yen % Million yen % Million yen % Yen Full year 280,000 9.9 268,000 9.3 15,000 10.1 15,000 9.5 8,300 4.3 238.38 Note: Change in the forecast from the latest announcement: No

(1) Changes in significant subsidiaries (Changes of specific subsidiaries that accompanies scope change of consolidation): Yes Included 1 (company name) Takamatsu Construction Group USA, Inc. Excluded － (company name) (2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: No (3) Changes in accounting principles and estimates, and retrospective restatement (a) Changes due to revision of accounting standards: No (b) Changes other than (a): No (c) Changes in accounting estimates: No (d) Retrospective restatement: No (4) Number of shares outstanding (common stock) (a) Shares outstanding (including treasury shares) As of September 30, 2018: 38,880,000 As of March 31, 2018: 38,880,000 (b) Treasury shares As of September 30, 2018: 4,061,303 As of March 31, 2018: 4,061,303 (c) Average number of shares (quarterly consolidated cumulative period) Period ended September 30, 2018: 34,818,697 Period ended September 30, 2017:35,918,947 * Auditing of financial statements by CPA and/or CPA firm is not conducted to this summary of financial results. * Cautionary statement regarding forecasts and special notes (Note on forward looking statements) Forward-looking statements in these materials are based on the information available to management at the time this report was prepared. Actual results may differ significantly from these statements for number of reasons.

Index for Supplementary Information 1. Results of Operations………………………………………………..……………………………………………… ２ (1) Overview of business performance………………………...…………………………………………………….. ２ (2) Overview of financial condition.………………….………………………………………………………………… ２ (3) Forecast………………………………………………………………………………………………………………. ３ 2. Quarterly Consolidated Financial Statements and Major Notes………………………………………………… ４ (1) Quarterly consolidated balance sheet…………………………………………………………………………….. ４ (2) Quarterly consolidated statements of income and consolidated statements of comprehensive income….. ６ Quarterly consolidated statements of income……………………………………………………………………. ６ Quarterly consolidated statements of comprehensive income…………………………………………………. ７ (3) Notes to consolidated financial statements………………………………………………………………………. ８ (Going concern assumptions)………………………………………………………………………………….…… ８ (Significant change in shareholders’ equity)……………………………………………………………………… ８ (Additional information)……………………………………………………………………………………………… ８ 3. Additional Information……………………………………………………………………………………………… ８ Orders received and net sales (consolidated)…………………………………………………………………….. ８

(1) Overview of business performance During the second quarter of the fiscal year that will end in March 2019, the overall Japanese economy continued to show moderate recovery trend due to favorable corporate earnings and recovery of individual spending. On the other hand, the Japanese construction market turned info slightly negative growth for the private sector, in addition to public sector shrinking versus last year due to backrush of large project orders a year ago. These resulted in -5.7 % vs. April through September of 2017 for overall Japanese domestic construction market. However, although small ups and downs exist, the overall domestic construction market is estimated to show continued tight market trend for the next two to three years. Under these circumstances, Takamatsu Construction Group celebrated its centenary in October 2017. With this commemorative fiscal year of 2017 as the starting year, we kicked off our new Mid Term Plan “TRY! NEXT CENTURY 2020". In the new Mid Term Plan, Takamatsu Corporation, one of our core companies, plans to be the main engine for the growth of the TCG Group by focusing on winning orders to construct condominiums for rental purpose in the Tokyo Metropolitan area, while Asunaro Aoki Construction, the other core company of the Group as well as mid-sized general contractor, will work hard to realize a moderate but steady growth to maintain its high level of profit achieved in the last fiscal year. However, after considering our strong

Tokyo Metropolitan area, while Asunaro Aoki Construction, the other core company of the Group as well as mid-sized general contractor, will work hard to realize a moderate but steady growth to maintain its high level of profit achieved in the last fiscal year. However, after considering our strong results of the last fiscal year as well as our aggressive hiring status to secure future growth, for the fiscal year ending March 2019, which is our 101st fiscal year after foundation, we decided our theme for this fiscal year to be “NEXT CENTURY 101! Let’s Achieve our Mid Term Plan Goals One Year Ahead!” to achieve our Mid Term Plan revenue and profit goals one year in advance. In addition, we plan to change one of our key words of the Plan, “Specialty 18 alpha” to “Specialty 20 alpha” by taking into account that Mibu Corporation Co.,Ltd. and TCG USA Inc. joined our consolidated Group from this fiscal year through M&A and new foundation, respectively, through which, we expect further expansion of our business. With the abovementioned strategies, our Q2 (accumulated) orders soared to record high of 144,631 million yen (+11.2% vs previous Q2(accumulated), with net sales reaching 114,311 million yen (+2.0%vs previous Q2 (accumulated)), which surpassed Q2 (accumulated) of previous years for 7 consecutive years as well as record high for 5 consecutive years. Regarding profit, operating income was 3,564 million yen (-34.2% vs. previous Q2 (accumulated)), ordinary income was 3,588 million yen (-33.7% vs. previous Q2 (accumulated)), and net earnings attributable to controlling interest was 1,954 million yen, a decrease of 30.5% vs.

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