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.

Kumagai Gumi established its Disclosure Policy (on March 28, 2024), which includes its policy for constructive dialogues with shareholders and institutional investors.
The Company will appropriately and impartially disclose information about its management and business activities and other information to achieve sustainable growth and increase corporate value in the medium to long term. The Company is committed to engaging in constructive communication with shareholders and other stakeholders.
In FY2023, as in the previous fiscal year, the Company took steps to expand the opportunities for dialogue, such as holding individual meetings and conference calls with shareholders and investors in Japan and other countries using online tools, arranging small meetings, financial results briefings, and construction site tours, and participating in investor conferences.
The Company also built frameworks (on April 1, 2023) and took initiatives to facilitate constructive dialogues with shareholders and institutional investors, such as establishing a new division dedicated to investor relations. Moreover, it disclosed information including the status of implementation of the initiatives via its corporate website and the Corporate Governance Report.

The Company made active dialogues with investors as one of its ESG and SDGs strategies that were revised in FY2024 and proactively exchanges opinions with them about business performance trends, management strategies, and shareholder returns, as well as environmental and social issues and corporate governance initiatives. Opinions, requests, and other information from shareholders and investors obtained through dialogue are fed back to members of the Board of Directors and relevant divisions and used to enhance corporate value.

In FY2023, when formulating the Mid-Term Management Plan (FY2024-FY2026), the Company partly based on opinions obtained through dialogue in the consideration of shareholder returns, capital policy, and investment strategy, among other areas.

Dialogue with shareholders and investors

Domestic and foreign institutional investors and analysts

Dialogues held

Category	Number of times	Main communicators
Small meetings	4 times	President, officers in charge, and departments in charge
Individual meetings	71 times	President, officers in charge, and departments in charge
Shareholder relations meetings	19 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 time	President, and departments in charge
Visits to construction sites	2 times	Departments in charge

Main Issues/Topics

Item	Main themes of the dialogue
Construction business environment	Orders received and profitability of the orders Factors for a decline in the profit ratio of domestic civil engineering business and improvement measures Provision for loss on construction contracts that has been recorded Current picture and outlook of construction costs such as material cost and labor cost 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 Future investment plans
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 Purchase of treasury shares and dividend policy
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 Change of representative director and new management Status of reduction of cross-shareholdings

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