Initiatives to Enhance Corporate Value

Management that is conscious of cost of capital and stock price

The Company recognizes that our most important management mission is to achieve sustainable growth and enhance corporate value over the medium to long term.
In our medium-term management plan ending in FY2026, we have set financial targets of ROE of 10% or more, an equity ratio of around 45%, and a payout ratio of around 40%, and we are working to achieve a good balance between financial soundness and capital efficiency.

In business investment, we make optimal business decisions based on the cost of capital as a hurdle rate, and we also pay appropriate and stable dividends and purchase and retire treasury stock to increase shareholder returns and improve capital efficiency, while being conscious of the stock price.

Contents

Initiatives to Enhance Corporate Value

Statues of Dialogue with Shareholders and Institutional Investors, etc.

Based on the "Disclosure Policy" (established in March 2024), which includes a policy on constructive dialogue with shareholders and investors, Kumagai Gumi is committed to disclosing information related to management and business activities in a timely, appropriate, and fair manner, while also striving for constructive dialogue with stakeholders, including shareholders and investors. Additionally, from the perspective of fair disclosure, financial results information and timely disclosure information are simultaneously disclosed in English.

In FY2025, we engaged in dialogue with domestic and international shareholders and investors through various means, such as individual and small meetings utilizing online tools, financial results briefings, site tours, and participation in investor conferences. We disclosed the status of these activities in the corporate governance report, integrated report, corporate website, and financial results briefing materials. Additionally, we transferred the IR dedicated department to the corporate planning department to strengthen the framework for promoting constructive dialogue with shareholders and investors by enhancing collaboration with the management and corporate planning divisions.

In recent times, as interest in ESG investment continues to grow, we are striving to enhance the disclosure of non-financial information in addition to financial information. We have set "active dialogue with investors" as one of the individual issues in our ESG commitment policy, and actively exchange opinions on performance trends, management strategies, shareholder returns, as well as efforts toward environmental and social issues and governance. We analyze the opinions and requests of shareholders and investors gathered through dialogue, and feedback them into management by discussing them in meetings with directors. This serves as a reference for shareholder returns, capital policy, and investment strategy, thus enhancing corporate value.

Going forward, in order for shareholders and investors to understand the likelihood of sustainable growth of our group and for appropriate shareholder value to be formed, we will continue to actively promote IR activities.

Dialogue with shareholders and investors

Domestic and foreign institutional investors and analysts

Dialogues held

FY2025	Number of times	Main communicators
Small meetings	6 times	President, and departments in charge
Individual meetings	138 times	President, officers in charge, and departments in charge
Shareholder relations meetings	10 times	Officers in charge, and departments in charge
Financial results briefing	2 times	President, officers in charge, and departments in charge
Conference hosted by a securities company	2 times	President, officers in charge, and departments in charge
Construction site tour	2 times	Departments in charge

Main Issues/Topics

Item	Main themes of the dialogue
Construction business environment	Order overview and order-time profitability Medium- to long-term top-line and target margin levels Continuity of profit margin levels in domestic Civil Engineering Causes of profit margin decline and outlook in domestic Building Construction Causes of loss projects and completion timing Impact of oil price surge and other performance effects due to worsening Middle East situation Status and outlook of construction cost surge such as material and labor costs Price transfer of surged costs and incorporation of sliding clauses into contracts Status of securing partner companies and supply-demand balance Business environment recognition and future outlook
Construction-related peripheral businesses	The status of the Iidabashi redevelopment project and real estate investments Investments in SEP vessels and initiatives for offshore wind power generation Progress of investments and outlook for revenue recognition timing
Business and capital tie-up	Status of efforts in medium- to large-scale timber building construction Change in equity stake ratio with Sumitomo Forestry Co., Ltd. Direction of capital partnership with Sumitomo Forestry Co., Ltd.
Capital policy and returns to shareholders	Progress of the Mid-Term Management Plan and examination status of the next Mid-Term Management Plan Ideas on the optimal capital structure Ideas on the equity ratio level and additional returns Background for determining the scale of treasury stock acquisition and use of funds
Sustainability and governance	Human capital management Response and impact regarding the 2024 issue (application of overtime work limit regulations) ZEB, GX market, decarbonized biomass fuel "black bark pellets" Background of transition to a company with an audit committee Status of reduction in policy-held stocks and the policy for further reduction

Feedback of stakeholder meetings

Views and opinions from shareholders and institutional investors obtained through the meetings are shared with management as appropriate, and are used as references for future strategy and policy planning.

Investor Relations

Disclosure Policy