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 FY2024, dialogue was conducted through various means such as individual meetings, teleconferences, and small meetings with domestic and international shareholders and investors using online tools, as well as holding financial results briefings and participating in investor conferences. Moreover, to facilitate constructive dialogue with shareholders and investors, measures such as enhancing the IR dedicated department to allocate appropriate internal resources were implemented, and the status of these implementations was disclosed on the corporate site and in the Corporate Governance Report.

Amidst increasing interest in ESG investment recently, efforts are being made to enhance not only financial information disclosure but also non-financial information disclosure. One of the individual issues of the ESG initiative policy is set as "proactive dialogue with investors," and active exchanges of opinions are conducted on topics such as performance trends, management strategies, shareholder returns, as well as environmental and social issues, and governance initiatives. Opinions and requests from shareholders and investors, understood through dialogue, are fed back to board members and related departments, and are used as a reference for shareholder returns, capital policy, and investment strategy to enhance 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

FY2024	Number of times	Main communicators
Small meetings	6 times	President, and departments in charge
Individual meetings	107 times	President, officers in charge, and departments in charge
Shareholder relations meetings	16 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	1 times	President, officers in charge, and departments in charge

Main Issues/Topics

Item	Main themes of the dialogue
Construction business environment	Orders received and profitability of the orders Factors for improving the profit margin of domestic Civil Engineering business and its sustainability Factors for a decline in the profit ratio of domestic Building Construction business and improvement measures Background of the earnings revision and accuracy of the revised disclosed values Provision for loss on construction contracts that has been recorded Causes of loss in construction work and completion timing Current picture and outlook of construction costs such as material cost and labor cost The situation regarding the passing on of increased cost and the incorporation of escalation clauses into contracts Status of Securing Partner Companies and Supply-Demand Balance Current picture and outlook of the business environment
Construction-related peripheral businesses	Statuses of the lidabashi Redevelopment Project and real estate investment Prospects for purchase of SEP vessels and offshore wind power generation projects Investment plans and progress, efforts to improve investment execution capabilities
Business and capital tie-up	Initiatives taken on medium- and large-scale wooden construction projects Measures to increase synergy with Sumitomo Forestry Co., Ltd. Approach to cross-shareholdings
Capital policy and returns to shareholders	About Medium-Term Management Plan (FY2024-FY2026) Approach to optimal debt capital structure Approach to the level of equity ratio and additional return Background of the dividend policy and the introduction of the interim dividend system
Sustainability and governance	Human capital management Measures taken against the 2024 problems (application of upper limit on overtime work) and their impact ZEB, GX market, and Black Bark Pellet, a decarbonized biomass fuel Background for transitioning to a company with an audit and supervisory committee The status of the reduction of 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