To Our Shareholders

On behalf of the Penta-Ocean Construction Co., Ltd. Group, I would like to extend my sincere gratitude for your support.

Although a pickup fueled by recovering exports and production was becoming evident in certain sectors of the Japanese economy, manufacturing activity, the infrastructure supporting peoples’ daily lives and Japan’s social capital have been profoundly affected by the Great East Japan Earthquake. A rapid recovery from the disaster and reconstruction are essential not only for eastern Japan but for the revival of the nation’s economy as a whole, and initiatives are proceeding at full pace throughout Japan’s public and private sectors.

Looking at the business climate surrounding the Penta-Ocean Group, strong economic growth is supporting robust construction demand, primarily in the area of social infrastructure development, in the Group’s key overseas market of Southeast Asia. In Japan, however, public sector investment is on the decline.
And while improved corporate earnings had set the stage for a rebound in domestic private-sector capital investment, a slump resulting from the earthquake is now unavoidable. An oversupply situation persists in Japan’s construction industry. It can be expected that, going forward, we will continue to witness an era of technology competition and price competition in which only firms with superior technological capabilities and project planning skills can survive.

In this kind of climate, the Penta-Ocean Group naturally considers it the mission of the construction industry to contribute to Japan’s recovery and reconstruction. The Group has also established a new medium-term management plan (FY 2011- FY 2013), which commenced in the fiscal year that began on April 1, 2011, in order to advance greater selection and concentration, to shift the Group’s business from one based on a general contractor model to one based on a core business-integrated model, and to achieve further growth as the “No. 1 contractor in coastal and waterfront areas.” The Penta-Ocean Group will join together as one in pursuit of these goals.

“A spirit of accepting challenges that never varies, even as times change, and the power of flexible self-innovation to respond to the needs of each new era” are encoded in our corporate DNA. We will never settle for the status quo and will keep our sights firmly set on going further to enhance our corporate value and continually advance, step by step, as a corporate group. On behalf of the Penta-Ocean Group, I ask for your continued and unprecedented support.