This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between the English translation and the Japanese original, the original version shall prevail.

May 14, 2024

Company name： Kumagai Gumi Co., Ltd.
Representative ：Shin Ueda, President(Code: 1861, Prime Market in the Tokyo Stock Exchange)

Formulation of Kumagai Gumi Group Mid-term Management Plan (FY2024-2026)

Kumagai Gumi Co., Ltd. (the "Company") announces that the Kumagai Gumi Group has formulated its Mid-termManagement Plan (FY2024-2026): A new path toward sustainable growth for the next three years starting in fiscal
2024.
Under the new Mid-term Management Plan, the Group has adopted a basic policy of (1) strengthening theconstruction business, (2) accelerating initiatives for peripheral businesses and (3) reinforcing the Group’s
management foundation, while adhering to the long-term vision called for in the previous plan for the Group toachieve sustainable growth.
Under this basic policy, the Group will strive to strengthen its earnings capabilities and ability to be the companyof choice to ensure solid business performance in the core construction business, to diversify earning sources byaccelerating initiatives for peripheral businesses to prepare for an uncertain management environment, and tofurther improve its management foundation.
For FY2026, the final year of the plan, the Group has set targets for consolidated net sales at 500 billion yen,consolidated ordinary income of 30 billion yen, ROE of no less than 10%. It will pursue a range of businessinitiatives, investments and efforts to optimize capital efficiency.
With the aim of realizing a society in which limited resources are recycled, and people, the community, and nature
continue to be enriched, the Group as a whole will make a fresh start to take on the new challenge of sustainablegrowth, based on a determination to support its customers and society throughout the ages as a leader of theconstruction service industry that is sought by society. The Group expresses its gratitude to its stakeholders fortheir continuing support and understanding.

The Kumagai Gumi Group
Mid-term Management Plan
FY2024-2026
A New Path toward Sustainable Growth
May 14, 2024

1． Introduction________________________________________P.1

2． Review of the Previous Mid-term Management Plan ________P.2
3． Overview of the Mid-term Management Plan ______________P.5
4． Business Strategy ___________________________________P.11

Table of Contents

4-1. Strengthening the Construction Business ____________P.12
4-2. Accelerating the Peripheral Business _______________P.15
4-3. Alliance with Sumitomo Forestry ___________________P.17
4-4. Group Strategy ________________________________P.20
4-5. Reinforcement of the Management Base ____________ P.22
5． Kumagai Gumi Group’s ESG/SDGs Strategy _____________ P.25
6． Outside Evaluations and Participation in Initiatives ________ P.27

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Introduction

The Kumagai Gumi Group has developed its Mid-term Management Plan (FY20242026), beginning from FY2024.
This plan follows the long-term vision and the management policy set out in the previous
Mid-term Management Plan (FY2021-2023), geared toward 2030 and beyond. It represents
the Kumagai Gumi Group's efforts to realize a society in which limited resources arerecycled and people, society, and nature continue to prosper.
Although the financial targets set out in the previous plan were not achieved tosatisfaction, the Group has reaffirmed its basic policies of boosting the construction business,accelerating peripheral businesses, and enhancing the management base. It is aiming for a
consolidated ordinary income of 30 billion yen by FY2026, and consolidated ordinary
income of 50 billion yen in FY2035 under the long-term vision.

The Kumagai Group aims to prioritize customers, factoring in a “Quality for Happiness,”
and as a player in the construction service industry providing essential services to the
public, it will sincerely face social issues of both today and the future, striving to realize its
vision for society.

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Review of the Previous Mid-term Management Plan (FY2021-2023): Financial Targets⚫ Consolidated sales and consolidated recurring income did not reach the targets due to a slowdown in the progress of major construction projects.
and rising material prices.
⚫ ROE remained low as profits did not reach estimated heights.
⚫ Dividends of JPY120 per share (FY2021) and JPY130 per share (FY2022) were paid out in line with the policy of stable shareholder returns.
A dividend of JPY130 per share will be paid for FY2023.
⚫ JPY10 billion worth of treasury shares were retired during the plan period.

SloganFinancial Targets

Proactive Measures for Sustainable Growth
Looking ahead to 2030 and beyond, the first step
toward realizing our long-term vision:

Budget＊Estimate

Consolidated Sales

Consolidated
Ordinary Income

ROE

Dividend Payout Ratio

JPY470 Billion

JPY33 Billion

12% or more

Target:30%

FY ended Mar-23

FY ended Mar-23

JPY443.1 Billion

JPY13 Billion

4.8％＊ 67.6％

Four Basic Policies
Boosting Construction Contract Business
Strengthen and improve efficiency to increase
profitability by strengthening our core business ofconstruction contracts.

ActualFY2023 ended
in Mar-24

Achievement Rate

94.3％

Achievement Rate

39.4％

（ in Billion Yen ）Enhancing Construction Peripheral Businesses

284

4,431

4,252

257

72.4
67.6

13.7

4,035

58.4%

237
11.5

5.9

6.3

Developing New Business Fields

9.5

5.6

130

Create business opportunities to increase adaptability bytargeting the development of areas that can contribute to therealization of the society we aspire to.

3.0

122

2.9

28.8

FY2019ended
in Mar-20

FY2020ended
in Mar-21

Consolidated Sales

FY2021
ended
in Mar-22

FY2022ended
in Mar-23

FY2023ended
in Mar-24

Consolidated Ordinary Income

35.1

31.2

Previous Mid-term Management Plan Period

Strengthening the Management Capability
Further strengthen the ability to execute specific projects
in accordance with our business plan.

Period Average

（%）
4,502

4,361

Create a solid income stream through prioritizing growth of
construction-related peripheral businesses.

6.3%

Period Average

4.8

4.7

Previous Mid-term Management Plan Period

FY2019ended
in March

FY2020ended
in March

Ordinary Profit Margin (%)

FY2021
ended
in MarchROE

FY2022ended
in March

FY2023ended
in March

Dividend Payout Ratio

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Review of the Previous Mid-term Management Plan (FY2021-2023): Non-financial Targets[[

Environment
Society

Governance
ESG
Perspective

E

S
G

•

We worked to achieve our CO2 emissions (Scope 1 and 2) targets through the active use of green power.

•

Target mixed waste emission achieved through the active promotion of 3R activities.

•

In FY2024, we will establish the Green Innovation Group within the Corporate Strategy Headquarters to incorporate
environmental initiatives into our management strategy.

•

Safety frequency rate fell short of the target due to an increase in accidents resulting in lost time. In FY2024, we will
convert/restructure the Safety, Quality & Environment Division into the Safety Headquarters to further strengthen thesafety management system.

•

The goal for employees’ overtime working hours was achieved through promoting the Action Plan for Workplace
Reform and leveraging digital technology to improve business processes in our workplace. We will continue our efforts
to reduce overtime work.

•

There were no serious legal or regulatory violations.

Evaluation index

TargetFY2021 Actual

FY2022 Actual

FY 2023Actual
In Progress*

CO2 emission reduction rate (Scope 1& 2) in FY2030 compared to FY2019▲25％▲17.3％▲12.2％

Mixed waste emission rate (total mixed waste emissions as a percentage of
total construction waste emissions)

2.0％ or less

1.8％

1.9％

1.3%

Safety frequency rate (number of deaths and injuries due to work-related
accidents per million total actual working hours)

0.5 or less

0.63

0.69

0.98

Amount of Employees’ overtime working hours (average number of overtime
hours per month)

30 hours
or less

Number of serious violations of laws and regulations (including administrative
penalties and administrative actions)25.5 hours
0

19.7 hours

21.4 hours
00

0＊The final calculation will be available in June 2024.

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Review of Mid-term Management Plan: Summary• Low-profit construction projects commissioned under the harsh environment of the COVID-19, slowdown in investment progress, and soaring construction material prices, anddelivery delays caused by the situations in Russia and Ukraine also affected construction progress, resulting in lower sales and profit.
• Although ESG initiatives were promoted throughout the company, the failure to achieve the safety frequency ratio target and the incident of inaccurate report, such as the
Hokkaido Shinkansen Yotei Tunnel (Arishima) and Others Project—became a major point for reflection and of regret. In FY2024, we will improve our safety system andfurther strengthen our management abilities for the safety and quality of our projects.
• We have actively taken profit recovery measures, and although the impact from the previous years is likely to remain even in FY2024, we will see a full-fledged recovery fromFY2025.
Improvement of the Construction Contracting Business in Performance and Efficiency
Domestic Civil Engineering: Sales did not increase due to slowdowns in the progress of large-scale construction projects, which led to more work. Although profits were low, gross profit on completed projects

is on a recovery trend due to stricter pre-order screening and the establishment of an organization specializing in cost control.
Domestic Construction: We successfully completed the projects within the specified periods that were comissioned during the time of intense competition of the coronavirus pandemic and post-Tokyo Olympics. Due todifficulties in securing equipment subcontractors and the rapidly rising prices of construction materials and equipment, these projects were not profitable. We have come to realize the need to pass on rising costs to prices,and there is a recovery trend in ensuring profitability at the outset of a project. Future sales and profits can be expected.
Overseas Construction: In the construction business in Taiwan, there has been high demand for large-scale construction projects including a landmark building, and both sales and profits have been trending

steadily. We have been commissioned for a large-scale civil engineering work (sewage construction in Indonesia) for the first time in 15 years. We will continue to increase orders for civil engineering andconstruction work throughout Asia.

Evolution of Construction Peripheral Businesses• Due to changes in the social environment and lack of resources for executing growth strategies, actual investments during the period fell short of the JPY 40 billion target.

• The launch of the following peripheral businesses has been completed, and progress has been made in our efforts to diversify revenue sources from a medium- to long-term perspective. This includes real estatedevelopment, technological product manufacturing and sales of Black Bark Pellets, sale of cotter-type fittings, and renewable energy businesses such as SEP vessel ownership and the Iitate biomass power generation
project.
*See page 17 for details on collaboration with Sumitomo Forestry.

Development of New Business Areas• The Company launched the New Business Creation Project and selected multiple projects for commercialization. Among these, we have started capital investment and demonstration experiments related to smart primaryindustries.

Reinforcement of Management Base
• Establish a digital transformation promotion system, renovate the existing core system, and promote standardization of information and communication technology at workplaces.
• Promote development of environmentally-friendly technologies. We have commercialized medium- and large-scale wood construction technologies in cooperation with Sumitomo Forestry.

• Regarding the ‘new normal,’ we have implemented various changes to work structure. (e.g. the flextime system at workplaces, staggered work hours, and telework)

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The New Mid-term Management Plan (FY2024-2026): Addressing the Current Issues

Social Background• Shortage of labor force and shrinking domestic demand due to population decline,
falling birthrate, and aging population• Increasing social demands for realizing a carbon-neutral society• Risk of economic downturn and uncertainty in price trends due to increased
geopolitical risks such as the war in Ukraine, the U.S.-China conflict, and thesituation in the Middle East
• Improvement of earning potential, including wage hikes through public-private
collaboration. Expectations for economic growth led by private demand due to theboosting of corporate capital investment.

Issues To Be
Addressed byConstruction Company

Promotion ofConstruction Businesses

Business Portfolio
Optimization

Environmentally-friendly
Market Initiatives andTechnologies

Ensure a Continuous
Construction Workforce• Construction investment in the Tokyo metropolitan area is expected to be on the same
scale as in previous years.

Slogan for the Mid-term Management Plan
(FY2024-2026)

A New Path toward
Sustainable Growth
Thoroughly strengthen earning power andcustomer appeal, while accelerating peripheralbusinesses, aiming for the management withmultiple income streams.

• Expansion of the maintenance and repair market backed by increased stock• Expanding markets related to disaster prevention/mitigation, national resilience, andmajor infrastructure renewal• Domestic construction investment remains flat at the same scale as the previous years.
• Economic growth in overseas regions where populations are expected to growMarket Environment
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3Mid-term Management Plan - Systematic Planning◆ Under the Group Vision, we will steadily implement our long-term management plan.
Universal Thoughts

Enhance our unique on-site versatility*1
Create our unique value called Quality for Hapiness*2
and continue to support customers and society going forward.

Group Vision
What the Kumagai Group Aims to Be*1. The onsite power produced by combining superior technical skills and excellent humancapabilities.
*2. In addition to the external and functional quality of the building, we provide high qualitythat ensures the continued satisfaction of the people who gather and use the building.
We provide Quality for Happiness at every stage from sales, design, and construction to theafter-sales service stage.

Roles to Play

Long-term Vision

Contribute to creating a society in which limited resources arerecycled and people, society, and nature can continue to prosper.
To be a highly sought after leader in the construction industry.

Management Policy in the Next 10 Years
Basic Policies

1

2

3

Strengthening
construction
business

Accelerating
peripheralbusinesses*3

Enhancingmanagement
base

Mid-term Management Plan
Policies, Strategies, and Goals for FY2024 - FY2026

A New Path toward Sustainable Growth*3 Creation of new businesses
included.
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3Mid-term Management Plan (FY2024-2026): Financial Targets◆ We have set numerical targets for the five financial indicators during the plan period.

Consolidated Sales

Consolidated Income(FY2026 ending in March-27)(FY2026 ending in March-27)

JPY500billion

JPY30
billion

The Mid-term Management Plan
Financial Targets andIndicators
ROE(FY2026 ending in March-27)

10% or more

Equity Ratio(FY2026 ending in March-27)

Dividend Payout
Ratio

Approx.
Approx.
45% 40%(FY2026 ending in March-27)

Approx. 45%
Striving to balance financial
soundness and capitalefficiency

Our basic policy is to return
profits in a reasonable andstable manner.

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Mid-term Management Plan Overview: Roadmap to Realizing Our Vision for the Future◆ The Kumagai Gumi Group will work under three new basic policies in the next three years in order to build a solid
framework for realizing its long-term vision.
Strengthening construction
business

Basic Policy-1

Accelerating peripheralbusinesses

Basic Policy-2

Accelerate construction peripheralbusinesses positioned as a growth area
and create solid revenue sources.

Strengthen the core construction
business and increase profitability.

Basic Policy-3

Enhancing management
base

Further strengthen the foundation that
supports management and enhance theeffectiveness of business development.

100

Thoroughly strengthen profitability and customer appeal while accelerating
peripheral businesses. Aim for management with multiple revenue streams.

Consolidated
Ordinary Income(FY2035 ending in Mar-36)

A Start toward Realizing
Long-Term Vision
Previous Midterm-termManagement Plan
2021-2023

Issues270

50
Current Mid-termManagement Plan
2024-2026

25

JPY50 billion
130

Consolidated
Ordinary Income(FY2026 ending in Mar-27)

JPY30 billion

40 Consolidated
Ordinary Income

Construction Business(FY2023 ended in Mar-24)

JPY13 billion
8

225
82

Peripheral BusinessGroup Companies• Profitability estimated at the time of receiving orders will improve significantly from FY2023 onward. The positive impact on business performance will be seen by FY26. The
negative impact of unprofitable construction works is expected to be mostly resolved by the end of FY2024.
• Investment returns in the peripheral business will be realized during the Plan period. We will continue to strengthen our strategy review and monitoring functions to accelerate thepositive impact of investment.
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Medium-Term Management Plan (FY2024-2026): Capital Allocation and Shareholder Returns⚫ In order to enhance corporate value, we strive to optimize capital efficiency while maintaining financial integrity with an equity ratioof approximately 45%. Our basic policy is to consistently and reliably return profits to shareholders.
⚫ We are targeting a payout ratio of 40%, but will flexibly consider additional returns, including the purchase of treasury shares,
depending upon changes in the business environment and the progress of individual business strategies and investments.

Cash Outflow

Cash Inflow

Capital Investment:
JPY9 billion scale

Cash on Hand andUtilization of Interestbearing Debts:
JPY20 billion scale

JPY67 billion
scale

Investment Recovery:
JPY4 billion scale

Enhance
Corporate Value
through efficient investment ingrowth areas and stableshareholder returns.

Investment in
Peripheral Businesses:
JPY40 billion scale

Cash Flow from Sales:
JPY43 billion scale
Shareholder Return:
JPY18 billion* scale*Dividend amount based on financial results from 2023 through 2025.
Dividends for the last year of the plan (FY2026) are not included.
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3Mid-term Management Plan (FY2024-2026): Investment Portfolio⚫ We plan to invest JPY40 billion in peripheral businesses and JPY9 billion in capital expenditures during the plan period.
⚫ Returns from the previous investment will be partially realized during the period.
⚫ An Investment Strategy Committee chaired by the Kumagai Gumi president will be set up as a management council starting in FY2024 to study,
formulate, and monitor company-wide investment strategies, while inviting outside advisors as committee members who can provide guidance.
⚫

Investments will also be expanded in order to enhance the management infrastructure.(See p.24 - p.26)

FY2021 ended in Mar-22 –FY2023 ended in Mar-24

Investment in Peripheral Businesses: JPY17 Billion

Investment Amount

JPY17 Billion

Real Estate Development：
JPY10.5 Billion

Renewable Energy:
JPY6 Billion

Other
Businesses:
JPY500MillionCapital Expenditures+

JPY5 Billion

Recognized Income• Real Estate Development: JPY100 Million

JPY400 Million
FY2024 ending in Mar-25 –FY2026 ending in Mar-27• Renewable Energy: JPY50 Million• Other Businesses: JPY250 Million

R&D, human capital, digital transformation: JPY13 Billion

Investment in Peripheral Businesses: JPY40 Billion

Investment Amount

Plan Period

JPY40 Billion◆ Investments in other management infrastructure

Real Estate Development:
JPY25 Billion

Renewable
Other
Energy:Businesses:
JPY10 Billion JPY5 Billion

Capital Expenditures+

JPY9 Billion

Recognized Income• Real Estate Development: JPY3 Billion

JPY4 Billion*Income recognized during the period
for cumulative investments

FY2027 ending in Mar-28 –FY2035 ending in Mar-36• Other Businesses: JPY1 Billion◆ Investments in other management infrastructure
R&D, human capital, digital transformation: JPY21 Billion

To realize our long-term vision, we will continue to invest even beyond the plan period, and will aim for anannual income of JPY13 Billion by FY2035.
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Business Strategy
Basic Policy-1

Strengthening construction business
Reinforce our core construction
business and increase profitability.

Basic Policy-2

Basic Policy-3

Accelerating peripheral businesses

Enhancing management baseAccelerate construction peripheralbusinesses positioned as growth areasand create solid sources of earnings.

Further strengthen the foundation that
supports management and increasebusiness development efficiency.

Domestic Civil Engineering Business

Real Estate Development BusinessResearch and Technology Development• Major Infrastructure Renewal/Improvement• General Real Estate Investment• Renewable Energy• Diversified Real Estate Investment• Innovate construction technology to create aprosperous society, and develop human resources• Prevention/Mitigation, National Land Resiliency• Resource Circulation

Domestic Building Construction• Environmentally Friendly Building• Development Projects in Europe, U.S., and Southeast Asia
• Reginal Revitalization Projects in Japan• The Iidabashi Redevelopment Project in Tokyo• Further enhance construction technology throughdigital and robot technology• Develop environmentally friendly technologies tohelp realize a sustainable society

Renewable Energy Business• Offshore Wind Power Generation using SEP
vessels(Construction, Operations, and Maintenance)

Human Capital Infrastructure• Various Plants• Medium- and Large-scale Wooden Construction• Overseas Power Generation Projects• Boost Organizational PowerTechnological Products Business

Digital Transformation• Decarbonized Biomass Fuel Production and Sale

• Digital Experts Management• Cotter-type joint Sale

• Streamline Construction Management• Maximize Human Resource Value• Urban Redevelopment• Data centers

Overseas Construction• Infrastructure Development in Southeast Asia

• Digital Solutions• Commercial Facilities in Vietnam

New Business Creation and Other Businesses• Construction Business in Taiwan• Environmentally Friendly Hybrid Agriculture• Renewable Energy Source Sharing & EMS Package Businesses• Domestic PPP/PFI Projects• Road Tunnel MOM Projects

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4-1
Strengthening Construction Business: Domestic Civil Engineering

Market Trends• Both public and private investment remained strong due to recovery in capital investment.
• Solid investment in highway renewal projects.
• Increase in maintenance projects for aging infrastructure facilities.
• Expansion of renewable energy-related markets toward carbon neutrality.

Tomei Expressway (specific renewal work)
Sakawagawa 2 bridges floor slab replacement work

Our Strengths
Targeted Numbers (in Billion Yen)

1.

■ Sales

Utilization of various technologies in existing construction
types, including tunnels and shield tunneling.
Extensive construction experience in large-scale toll roadrenewal projects. (e.g. The Cotter Slab Method)
Disaster recovery-related technologies, including unmanned
construction and ICT technologies.
High-precision underwater positioning system such as Aqua
Marionette Technology.
Roboticization initiatives for mountain tunnels, including
remote robot and automatic spraying machine systems.

2.

■ Gross Revenues from Completed Construction Contracts
50.0%

1400

● Profit Margin

3.

45.0%
1200

1000

1,100
994

1,050

4.
40.0%

1,000
35.0%

5.

Focus Areas
1.

Major Infrastructure Renewale.g. Large-scale toll road renewal and infrastructure facilities

2.

Renewable Energy
e.g. Hydroelectric power, onshore and offshore wind power

3.

Disaster prevention/mitigation and national land resiliencee.g. Disaster restoration and watershed flood control construction

4.

Resource Recycling
e.g. Industrial waste disposal site and biomass power generation

30.0%

800

25.0%
600

20.0%

Priority of Implementation
1.

Improve Order System

5.

Reinforce company-wide bidding system to increase commissions for public
400

12.4%

11.0%

11.5%

12.0%

15.0%

works projects.
2.

10.0%

Target profit of 12% through thorough cost estimation at the time of bidding

200

and formation of a design review team.

5.0%

123

110

120

132

FY2023
ended inMar-24FY2024Ending in
Mar-25(Plan)FY2025ending in
Mar-26(Plan)FY2026
ending in
Mar-27(Plan)

3.
0.0%

0

6.

Improve Profit Margin
7.

Strengthen the Design Department for Floor Slab Replacement Work
Reinforce the design division through M&A, etc.

4.

Approach to Renewable Energy Projects
Establish the preliminary study method and system for EPC projects.

8.

Promote Digital Transformation
Differentiate from competitors by actively developing unmanned
construction technologies.
Reform Production Processes
Create a new system to focus on safety and quality control byshifting on-site peripheral work into in-house work.
Pass on Knowledge and Skills Systematically
Promote knowledge management by training and developing
curriculum to enable workers to acquire the knowledge and skills of aforeman after 10 years with the company.
Strengthen Relationships with Subcontractors
Secure a stable supply of construction workers and work load.

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4-1
Strengthening Construction Business: Domestic Building Construction

Market Trends

Sanda Station C Block Area Type 1 Urban Redevelopment
Project Hyogo Prefecture, Japan

Targeted Numbers (in Billion Yen)

1.

● Profit Margin
2,470

2500

2,500

2,400

45.0%
40.0%

2,247

35.0%

2000

30.0%
25.0%

1500

20.0%
1000

9.5%
500

5.3%

11.0%

15.0%
10.0%

7.0%

5.0%
0

2.

50.0%

3000

119

169

235

275

FY2023
ended inMar-24FY2024Ending in
Mar-25(Plan)FY2025ending in
Mar-26(Plan)FY2026
ending in
Mar-27(Plan)

0.0%

Housing market: steady growth, especially in the Tokyo metropolitan area•

Healthcare-related markets: restructuring and expansion of local healthcare systems•

E-commerce market: increased investment in logistics facilities due to the “logistical issues in 2024”•

Accommodations market expansion due to recovery of inbound travel demand•

Data center market: high volume data processing capacity and increased investment in data centers•

Markets related to decarbonization and carbon neutrality due to growing social consciousness regarding recycling

Our Strengths■ Sales■ Gross Revenues from Completed Construction Contracts

•

3.
4.
5.
6.

Versatility based on our extensive track record in awide range of markets
A wealth of experience in medical facilities, high-rise residences, and educational facilities
Initiatives for medium- and large-scale wooden
construction geared toward carbon neutrality
High special order/design-build ratio
Business alliance with Sumitomo Forestry
Strong collaboration between our civil engineeringand building departments

Focus Areas• 1. Environmentally Friendly Building• 2. Various Plants• 3. Medium- to Large Scale Wooden Buildings• 4. Urban Redevelopment• 5. Data Centers

Priority of Implementation
1. Recovery of profitability
Eliminate low-profit construction work by carefully examining estimates andcontract conditions.
Early setup of a construction system using front loading at the sales stage.
Ensure profit by strict cost management, guidance and support after the start ofconstruction.

4. Development of technologies that contribute to a recycling-oriented
society
Efforts to develop environmentally friendly construction technology,
building sophistication technology, and competitiveness enhancement
technology

2. Enhancement of company-wide comprehensive capabilities
Step up collaboration and management of a company-wide system that
integrates sales, design, and construction.

5. Initiatives toward next-generation comprehensive earthquakeresistant technology
Develop high-standard building technology with further consideration forearthquake resistance and habitability.

3. Strategic acquisition of markets and clients to enhance expertise
Increase track records in ZEB, DC, medium/large-scale wooden buildings,
public facilities (environment, waste treatment facilities, funeral halls) byfurther strengthening proposal capabilities.

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4-1
Strengthening Construction: Business Overseas Construction

Market Trends• Infrastructure exports to Southeast Asia for SDGs’ purposes are on the rise.

• Increase in commercial facilities in Vietnam where a demographic bonus is expected.
• Active investment in gasoline, EV, and biogas-related businesses in India.
• Expansion of the real estate development market in the Asian region.
Taipei Twin Tower C1.D1 New Construction Project

Our Strengths
1. 【Civil Engineering 】

Targeted Numbers (in Billion Yen)

Infrastructure development capabilities using
shield and propulsion technologies■ Sales■ Gross Revenues from Completed Construction Contracts
50.0%

600

● Profit Margin

2. 【Building Construction 】
Technical capabilities honed throughexperience in constructing super high-risebuildings, large-scale shopping centers, andhigh-end residential buildings

45.0%
500

460

480

500

431

Focus Areas

40.0%
35.0%

400

1. Infrastructure Development in Southeast Asia
2. Shopping Mall Development in Vietnam
3. Construction Business in Taiwan

Unparalleled brand power in Taiwan
30.0%
25.0%

300

20.0%
200

15.0%

100

6.5%

6.6%

6.0%

6.0%

10.0%
5.0%

0

28

30

29

30

FY2023
FY2024FY2025
FY2026
ended in Mar- Ending in Mar- ending in Mar- ending in Mar24
25
26
27(Plan)(Plan)(Plan)

0.0%

Priority of Implementation【General】
1.
2.

Develop and penetrate overseas markets in preparation forshrinking domestic market
Increase the skill of overseas staff by training them in Japan.

【Building Construction】
1.

【Civil Engineering】
1.
2.

Reinforce the existing construction system:
Reinforce the construction system for ODA projects in Indonesia
Establish New Construction Systems:
Establish construction systems in the Southeast Asia (other than Indonesia)

Reinforcement of Construction System
Reinforce construction system for commercial facility projects in
Vietnam.
Strengthen partnerships with local construction companies in Vietnam.
Further strengthen sales and construction systems for high-end
condominiums in Taiwan.

Initiatives for sustainable landmark projects in Taiwan

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4-2
Accelerating Peripheral Businesses: Real Estate Development◆ Real Estate
Development Business

Investment Amountduring the Mid-term Plan Period

JPY25 Billion

Estimated Income
during the Mid-term Plan Period*

Domestic Real Estate

JPY3 Billion* Estimated income from cumulative investments
recognized during the period

General Real Estate Investment• We plan to participate in construction projects for future redevelopment projects as well as generate rental
income from real estate investments, mainly in the Tokyo metropolitan and the Kansai areas.

Regional Revitalization Projects• Full-scale efforts will be made for the redevelopment, management and operation of Katsuyama Dinosaur Forest(Nagaoyama Comprehensive Park) in Fukui Prefecture (Park-PFI project).

Diversification of Real Estate Investment• Diversify real estate investments by utilizing non-recourse loans and collaborating with other companies.
Iwaki Station Namiki Street Area Type 1 Urban Redevelopment Project

We are actively promoting redevelopment projects around Iidabashi Station.

The Iidabashi
Redevelopment ProjectIn the Shimomiyabi-cho district, where we are participating as a project partner, the "Shimomiyabi-cho District Urban
Area Redevelopment Preparation Association" was established. In April 2023, we further established the "Iidabashi
Station Area Infrastructure Development Policy", and the momentum for redevelopment is growing.
We have also begun preparatory activities for the establishment of a council in the Ageba-cho district, and individual
explanations to all rights holders have begun.

Overseas Real EstateParticipation in real estate development projects in Europe, the U.S.,
and Southeast Asia, leveraging our alliance with Sumitomo Forestry.
The Hoa Lanh Township Development Project, Vietnam• The township development will be launched in collaboration with Sumitomo Forestry, NTT Urban
Development, and Kim Oanh Group, a major local real estate developer.

Real Estate Fund Investment
Hoa Lanh Township Development Project, Vietnam• We plan to participate in profitable projects and development projects in Southeast
Asia, which is experiencing remarkable growth, and in Europe and the United States,
where environmental awareness is high.
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4-2
Accelerating Peripheral Businesses: Renewable Energy, Tech Product, and New Business Creation⚫ Renewable Energy

Investment Amountduring the Mid-term Plan Period

JPY10 Billion

Estimated Income
during the Mid-term Plan Period*-*Estimated income from cumulative
investments recognized during the period

Entry into Offshore Wind Power Generation Business using our owned SEP vessels –Construction, and Operations & Maintenance
The operation is scheduled to begin in the fall of 2025. This machine is capable of accommodating 15MW-class super-large wind turbines, and canbe installed at great depths below sea level due to its long legs, which allows for construction work in deep water in both fixed and floating fields.
• A large-scale investment in the construction of large SEP vessels is expected to boost earnings in FY2027 and beyond. We will also aim forsynergy with orders for offshore wind power construction projects.

SEP vessels jointly owned by six consortiumcompanies including Kumagai Gumi
JWFC SUNRISE⚫ Tech Products Business

Overseas Power Generation Business• Aiming to participate in renewable energy power generation projects such as offshore wind and solar power, mainly in
the Southeast Asia.
Investment Amountduring the Mid-term Plan Period

JPY4 Billion

Estimated Income
during the Mid-term Plan Period*

JPY800 Million

Production and Sales of Decarbonized Biomass Fuels• Since 2023, we have been working on a business of manufacturing and selling "Black Bark Pellet” (BBP, domestic bark wood raw materials).
• We aim to make a decarbonized society with reduced CO2 emissions, and contribute to a stable power supply by revitalizing the domestic
forestry industry and using co-fired materials for coal-fired power generation.
We also aim to diversify our earnings by exporting our semi-carbonization technology to other countries.

Cotter-type Joints Sales Business – cumulative sales reached 10,000 by 2023
Saijo Pellet Plant Rendering our first BBP production base

⚫ New Business Creation• In collaboration with our partner companies, we have started selling “cotter-type joints” used in the cotter slab construction method, which is our
specialty, in expressway renewal construction. We will further promote and expand the sales of this product to large-scale expressway renewal
and repair projects carried out by companies like NEXCO East, Central, and West.
Investment Amountduring the Mid-term Plan Period

JPY1 Billion

Estimated Income
during the Mid-term Plan Period*

Environmentally Friendly Hybrid Agriculture• We will promote an environmentally friendly hybrid agriculturebusiness that combines aquaponic and algae culture, i.e. land-based
aquaculture and hydroponic cultivation.

JPY200 Million

Domestic PPP/PFI Projects• We will continue to participate in PPP/PFI projects with the aim ofcontributing to the construction business.

Road Tunnels MOM Projects
Renewable Energy Power Supply and EMS Package BusinessAlgae Cultivation Equipment -photobioreactor• We will participate in the project to build an energy management
system (EMS) by supplying power derived from renewable energy andutilizing PPA, storage batteries, etc.

• Kumagai Gumi operates four road tunnel management, operations,and maintenance (MOM) projects in Hong Kong.
• Leveraging our experience in the MOM business and tunnel
construction, we will further expand and develop our infrastructure
MOM business in Hong Kong.
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4-3
Alliance with Sumitomo Forestry: Review
Overall Summary
Since the start of the business and capital alliance in 2017, we have built up experience focusing on medium- and large-scale wooden construction projects andenvironmentally friendly real estate investments.
During this period, we have expanded the medium- to large-scale wooden construction business, the main target of our alliance, halfway toward our goal. We haveprimarily considered cost competitiveness, including the effects of what is called “wood shocks” and inflation, as well as compliance with regulations regarding fire
proofing and earthquake resistance. (*1)
Meanwhile, social expectations for the active use of wood resources and the spread of wooden buildings are increasing year by year as a path toward a decarbonizedsociety. Based on the cooperative achievements in other business fields that we have gradually built up, we are now at a stage where further proactive collaboration isnecessary.
*1 Wooden construction rate in 2018: 47.0% for the overall building market, 14.1% for low-rise nonresidential (3 floors or less), and 0.06% for mid-rise buildings (4 floors or more).
Wooden construction rate in 2022: 45.5% in the overall building market, 14.0% in low-rise non-residential buildings (3 floors and below), and 0.08% in mid-rise buildings (4 floors and above).
Source: Statistical Survey of Construction Starts 2022 by Ministry of Land, Infrastructure, Transport and Tourism

Summary by Division⚫ Renewable Energy⚫ Lignification and Green Building Projects
Marketing the two types of value-added proposals: the "with TREE" brand, mediumto large-scale wooden buildings, and environmentally friendly green architecture, we
won collaborative projects by leveraging the strengths of both companies.

Ehime Prefectural
Government
Second Annex
Reconstruction*2 Biomass fuel made from bark wood (tree bark)WE⚫ Overseas Business

Major Orders Received
New Construction for
the KAGA Project

We established a company to manufacture and sell "Black Bark Pellets*2 " andstarted construction of a manufacturing plant.

Detached New School
Building forMidorigaoka
Elementary School

We invested in development projects and real estate funds in the U.S. andIndonesia.
H1O Shiba Park

T-LOGI Akiruno
Nishi-Shinjuku
5-chome Project

Wood Design Award⚫ Joint Research and Development
We developed the “KS Wood Buckling Restrained Brace".
We developed “PRISM”, a generic type of design technology.

Joint Achievements（over the past six years）
Orders Received *3

JPY97 billion

Sales

JPY71 billion*3 Includes projects which both companies were involved in from the design stage andcontributed to the orders received by our Group companies.

Gross Profit
fromCompleted JPY4.4 billion
Construction

Amount Invested *4 JPY7.3 billion*4 Our investment in the project in which both companies
participate.

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4-3
Alliance with Sumitomo Forestry: Achievements Made Since Our Business and Capital Alliance

Joint Efforts
Launch of the "with TREE" Brand• Jointly launched a medium- to large-scale wooden construction brand in March 2021.
➡ As a result, together we won several wooden construction contracts, including the H 1 O
series of office buildings and public facilities, through JV formation and cooperation inmaterial procurement.

Introduced "One Click LCA"
CO2 Calculation Software• Visualizing the benefits of reducing environmental impact and receiving orders for joint
projects.

Value-added Proposals for Building Green• We jointly made environmentally value-added proposals for building design and green
space planning by our architectural design and construction professionals and green
planners.
➡ As a result, we won orders for environmental green building projects for residences,
university facilities and office buildings (PREX series) through our joint efforts.

Local Energy System Corporation,a business operating company,
set up for production and sales of"Black Bark Pellets” (BBP)• The operating company was established in May 2023 and upon the construction of theirfirst plant, located in Saijo City, Ehime Prefecture, began to manufacture BBP (Black
Bark Pellet). The raw material, will be procured mainly from Sumitomo Forestry Forest
Service Co., Ltd.
BBP is also used as co-firing material for coal-fired power plants to reduce CO2 emissions.

Study on Biomass Power
Generation in Japan• Due to lack of profitability after a detailed review, it was decided not to commercialize theproposed project.

Structure ESG-friendly real estate
and wood building development
projects in the U.S., Australia andEurope• Kumagai Gumi invested in the ESG-friendly real estate fund structured by Sumitomo
Forest and Crescent Communities.
• We also participated in the development project of an ESG-friendly wooden rental officein Dallas, U.S.

Joint participation indevelopment projects in Southeast Asia - Indonesia andVietnam• We jointly participated in commercial complex development projects in Indonesia.

Joint Development of"KS Wood Buckling
Restrained Brace”• The KS wood buckling-restrained brace reinforces a steel core using a combination of
LVL and plywood to provide stable deformation performance without loss of bearing
capacity even in compression, achieving seismic performance equivalent or superior tothat of conventional buckling-restrained braces.

Development of general-purpose design technology forhigh-rise wooden buildings to increase demand forwood (PRISM).

• Building Research Institute, (National R&D Agency) has contracted Sumitomo Forestry
to prepare a primary design example of a glued laminated timber structure using a wooden
frame construction method with buckling-constrained braces. Kumagai Gumi will
collaborate on this task.

Lignification and Green Building Projects
Cumulative Orders
Received
JPY97 Billion
Cumulative Sales
JPY71 Billion

Renewable Energy
Accumulated
Investment
JPY300 Million

Overseas
Business
Accumulated
Investment
JPY7 Billion

Joint Research and Development

Joint Achievements

Research on labor saving through automation offorestry machinery systems (the operations of thissystems will be applied on the moon)• Conducted study and conceptual design of an unmanned and automated overhead line
collection system by integrating forestry technology, unmanned construction technology,
plant and temporary construction engineering, and winch technology.
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Alliance with Sumitomo Forestry: Future Policy• In the medium- to large-scale wooden construction business, Kumagai Gumi aims to further increase orders by leveraging the knowledge
and project proposal capabilities it has accumulated through its collaboration with Sumitomo Forestry, as well as Sumitomo Forestry's

Policies

brand power in wooden construction.

• We also aim to expand our business domain both by continuing to invest in overseas real estate development, which is one of Sumitomo
Forestry's fortes, and by considering participation in environmentally friendly real estate businesses in Japan.

⚫ Construction• Strive to further reinforce the two pillars of our alliance: the "with TREE" brand, and environmentally green building
construction.
• Strengthen proposals for various CO2 reduction technologies to meet customer needs.
Orders Received
The Kumagai Gumi Group

Three-Year Goals

Net Sales

Net Profit from
Completed Projects

JPY100 Billion

JPY9 Billion*1

Medium- and large-scale wooden buildings,
sustainable buildings, and others.

JPY120 Billion*1Aim for a profit margin of 9% or more.

⚫ Investment• Continued investment in overseas real estate development businesses and domestic real estate development business.
• Establishment of "Black Bark Pellet Business" base, manufacturing and sales business.
• Participation in overseas renewable energy projects.

The Kumagai Gumi Group

Amount Invested

Recognized Revenue
during the Plan Period *2

Three-Year Goals

JPY10 Billion Scale

Approx. JPY3 Billion*2 Revenue recognized during the period on the cumulative investments.

⚫ Technological
Development• Promote technological developments that can help create a decarbonized society, including the development of wood-based
construction technologies.
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4-4
Group Strategy•

Enhance the potential of the entire Kumagai Gumi Group by further strengthening collaboration within its group companies and enhancing it through M&As and other means.

All
Operations

Flow

Planning and Development

Design & Engineering

Procurement and construction

Maintenance and Repair

Operations and Management• Research & Marketing• Product Planning• Business Planning• Urban Development• Survey & Design• Technology Development &Applications• Patent Policy• Construction Planning• Construction Management• Safety and Health Management• Quality Assurance• After-sales Maintenance System• Periodic Inspection• Building Management• Quality and Environmental
Management• Patrol Inspection• System Auditing

Kumagai Gumi Co., Ltd.
Gaeart Co., Ltd.
Taiwan Kumagai Co., Ltd.
K&E Co. Ltd.

Existing
Areas

TECHNO SPACE CREATES CO., LTD.
TECHNOS CO., LTD.
FATEC Corporation
Technical Support Co., Ltd. Administrative services/Insurance agency

Areas
to Be
CoveredReal Estate Development
Business

Architectural Design

Facility Management

Bridge Design
Talent Development Management/Human Resource Dispatch Business IT/DX

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4-4
Strategy by Group Company: Policies and Priority Measures

Group Companies

Policies and Priority Measures
Receive orders forlarge-scaleconstruction projects.

・Take measures to improve our corporate rating score.
・Enhance technical proposal capability and cost estimation accuracy.
・Bolster technical sales force and expand our client base.
・Strengthen technical sales geared toward consultants.
・Proactive involvement in industry-government-academia
collaboration.

Create and manage
sales offices more
efficiently.

・Improve our office environment for more efficient construction
management.
・Ensure an appropriate level of construction gross profit.
・Assert control over valuation requirements.

Further promote
outside sales of ouroriginal products.

・Secure sales from large-scale projects through integrated.
engineering, construction, and operations efforts.
・Enhance collaboration among the group companies.
・Devise a program for the sale of proprietary product technologies.

Bolster Sales Force・Set up a system for receiving special orders for large-scaleconstruction work.
・Restructure strategies to win contract orders.
・Consider M&A opportunities and differentiate from competitors.

Gaeart Co., Ltd.
Manufacturing and sale ofroad paving and asphalt
mixtures

K&E Co. Ltd.
Building and Facility
Renovation

TECHNOS CO., LTD.

Group Companies

・Restructure training programs.

Creation of New
Businesses

・Collaboration among the Group Companies beyond boundaries.

Refine Uniquenessand Originality

Construction materials andequipment manufacturing
Increased
Environmental Business
Civil Engineering Renewal Productivity
Secure and Develop
Human Resources

・Implement policies to enhance employee.

Bolster Sales
Force

・Refine order-taking capabilities.
Establish the front-loading system.
・Proactive information dissemination , leveraging the superiority ofthe "Huacuma” brand.It’s not grammatically wrong, but I’m notsure what kind of information they’re disseminating or what theirbrand is superior.

Strengthen
On-siteVersatility

・Restructure training programs.
・Quality assurance through enhanced inspections and feedback ofinspection results.

Secure andDevelop Human
Resources

・Pass on skills and expertise to the new generation and improve
employee training.
・Raise the level of employees through active participation in
outside training programs.
・Enhance employee engagement through institution-wide
improvements.

Bolster Sales Force・Expand trading company functions within the Kumagai Group.
・Promote public relations using advertising media.
・Earn official certifications and accreditations for proprietaryproducts.

Secure and Develop
Human Resources

・Employee training to achieve management goals.
・Improve productivity and employee retention rates.

Commercialize newtechnologies andproducts

・Establish a business scheme for KMLA Sensor.
・Expand sales of materials for cotter slab construction method.
・Identify and commercialize new products.

Secure and Develop
Human Resources

・Shorten the training period by reviewing preexisting training
methods.
・Training and education for managers.
・Create an adaptable system.

Taiwan Kumagai Co., Ltd.
Taiwan Construction
Projects

FATEC Corporation
Secure and Develop
Human Resources

Policies and Priority Measures

Technology Trading
Company

・ Consideration of entering the FM business through M&A.

・Develop new products such as construction survey automation andwood structure support.
・Develop new construction methods for bridge slab dismantlingtechnology and core materials construction accuracy control system.
・Become carbon neutral.
・Promote cross-industrial alliances.

TECHNO SPACECREATES CO., LTD.
Improve Profitability
Construction Drawing
Education Business・Reduce fixed cost through standardization, automation, andinformation technology.
・Improve profitability by further encouraging collaboration amonggroup companies.
・Visualize operations through the use of information technology.
・Strengthen public relations and recruiting activities
・Ensure long term excellence through expert training by craftsmen.
・Assist employees in obtaining professional development
certifications.

Technical Support Co., Ltd.
Administrative Work
Insurance Agent・Promote labor savings through the development of operational
manuals.
・Increase orders received by supporting multiple BIM softwares.

General・Expand the scope of outsourcing.
・Recommend insurance products that contribute to construction
insurance and welfare program.

Human Resource
Development

・Expand employee education, including training and seminars.
・Shape the next generation of leaders.

Practical Aspect

・Support for systems implementation and workstyle reform.
・Expand operations and continue new business initiatives.
・Explore new forms of insurance contracts.

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4-5
Reinforcement of the Management Base : Research and Technology Development

Research &Technology
development⚫ Deepen construction technology and develop human resources to realize a prosperous society.

⚫ Promote digital and robotic technologies geared toward advancing construction capabilities.

Investment Amount:
Research and Technological Development
during the Plan Period

JPY10 Billion Scale *⚫ Develop environmentally friendly technologies that can help create a sustainable society.
* JPY2.5 billion for capital expenditures included

Now (2024)• Human Resource Development and Effective Deployment• Accumulation and Transfer of Group Knowledge and Skills• Collaboration with Outside Organizations
1. Construction Technologythat Contributes to Society
Deepening Existing Domains• Inspection technology;
BIM/CIM• Remote control;
optimization• Construction automation (by AI and robots)→ Improved productivity and safety• Quality control automation (by AI and robots)→ improved accuracy, information sharing andutilization• Mobility support (use of wireless power feeder
boards)→ Transportation revolution; contribution to GX• Data science (utilization of risking)→ advanced information gathering/analysis andapplication• Strengthen BIM collaboration (BIM design, BIM
cost estimation, BIM production, and BIM -FM)

3. Decarbonized Society

3. A De-Carbonized Society

Explore Existing Areas

Exploring New Fields of Business• Medium- to large-scale
wooden construction andmethods• Tree-planting greening
methods• Algae (utilization of innovative
ingredients)• GX technology (utilization of storage
batteries and energy fields)

Building the City of the Future
Magma Power Generation

Realization of a sustainable society

Explore Existing Areas

1. × 2. = Construction Technology Innovation
through Digital Transformation -- Developing New Areas

Realization of carbon neutrality

2. Digitalization and Robotization

The Future We Seek throughTechnological Development

A company that develops with society in a sustainably way• Building construction methods;
Foundations• Civil engineering methods;
disaster prevention technology• Material development, ZEB/
Building sound environments

Distant Future (2050)

Near Future

Microbial Fuel Cells

Renewable Energy
Solar Power Generation

Earthquake-resistantHigh-rise Building

MagneticallyLevitated Train

Acoustic Shield
Tidal Power Generation

Roadside Power Grid

Logistics Robots

Vibration Power Generation

Strengthen the foundation for technological development• Strengthening the technology
research institute's functions• Secure and develop data science
professionals

Toward A Safe andSecure Society

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4-5
Enhancement of the Management Base: Human Resources◆ We will expand investment in human resources, which is the source of sustainable growth and the core of ourInvestment Amount*:
Human Resource Development
during the plan periodbusiness activities, in order to maximize the value of our human resources in terms of both quantity and quality,

JPY 6 Billion Scaleand to build a human capital base that contributes to the enhancement of our corporate value.
*Investment in new policy measures.

In c r e a se in C o r p o r ate Va lu e
Financial Targets

Step up Recruitment Efforts

Create a Sustainable Workforce

Strengthen Human Resource Development
Shape the Next Generation

Non-financial Targets

Maximize
Human Capital Value

Promote Diverse Work Styles
Work-life Balance

Improve
Organizational Ability

Reduce Overtime
Increase Labor Productivity

Create a Wellness Environment

Promote Female Employee Engagement

Well-being through

Increase Ratio of Female Managers

Healthy Management

Improve Compensation for Employees

Enhance Employee Engagement

Increase Motivation

Improve Ratings** Motivation Cloud by Link and Motivation Inc.
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4-5
Enhancement of the Management Base: Digital Transformation Strategy
Kumagai Gumi designated April 2019 as its first year of digital transformation, and has beenpromoting its 2021-2023 Digital Transformation Strategy.
We have developed a Digital Transformation Strategy for 2024-2026, which aims to improve
operational efficiency, improve productivity, solve social issues, and create new value by developing
advanced digital experts, transforming our business to be more data-centric, reinforcing our digital
infrastructure, updating new core systems, and utilizing AI technology.

Enhanceour technical and workforce
capabilities, and original onsite versatility through digitaltransformation.

•••

Createa “happiness quality” thatutilizes digital technology torespond to user feelings.

•••

customers and society
through digital technologythat transcends thetimes.

•••

Digital Transformation

JPY8 Billion Scale*during the Plan Period* JPY1 billion for capital expenditures included

Digital Experts
Management

Enhance Business
Efficiency

Increase digital literacy of all
employees.
Train and place advanced digital
experts.
Recruit IT talents proactively andincrease digital experts.

• Renew and establish core systems• Develop telecommunications
infrastructure• Reinforce security• Diversify data collection methods andmake rules.

BIM/CIM

Improve Construction
Management Efficiency

Automation & Autonomyof Manufacturing••

Shift to consistent use of BIM/CIM
operations
Establish front-loading.
Combine real-world data andBIM/CIM data.

••

Utilize Digital Twin
Technology

SupportInvestment Amount:

Actively use ICT tools at worksite
offices.
Diversify construction managementwith the use of remote monitoring.
Digitalize to control the quality andexecution of finished products.

Establish to Use
Digital Infrastructure•

Promote use of the KDS *•Promote use of generative AI.

•

Use no-code tools, RPA, and BI.

.

••

Technological
Development

Digital Solutions

For structural simulation and analysis
For real-time sharing of projectprogress
For operations and data applicationin completed projects•••

Reinforce sales force
organization
Life cycle management proposal
Ecosystem Formation

Develop robots and AI in phases andput them into practical use.
Promote digital fabrication.
Expand the scope of unmanned andremote-control construction.

•••

Develop environmentally friendly
technologies and practical application
Develop disaster prevention/recovery
technologies for proposal
Develop digital technology products
for sale and increase profitability*It stands for Kumagai Gumi Deep Smarts, a system that stores current and past worksite data in the cloud andmakes it available to everyone.

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5

ESG Initiative Policy - Key Issues and Specific Issues
As of May 2024, we have revised the key issues and reviewed specific issues.
Key Issues

E

S

G

Response to
Climate Change Risks

Specific Issues
Accomplishment of carbon neutrality.
Further increase renewable energy business.

Promote Environmentally Friendly
Business

Accomplishment of zero emissions.
Boost wooden construction business.
Development of environmentally friendly
technologies.
Accomplishment of Nature Positive.

Creating the well-being workplace
For all employees

Human capital management.
Handing down skills and technologies
Promotion of DX.
Achieve work-life balance.
Promotion of diversity and inclusion.
Securing skilled workers in the constructionindustry.
Create an environment of wellness.
Occupational Health & Safety

Achievement of Sustainable
Communities

Ensure quality and integrity in manufacturing
Attractive communities development.
Development of resilient social infrastructure.
Initiatives to solve social issues.
Initiatives for emergencies such as natural
disasters.

Enhancing of Corporate
Governance

Strengthening compliance.
Strengthening risk management.
Improvements of the effectiveness of the boardof directors.
Respect for human rights.

Proactive Relationships with Multistakeholders

SDGs

Strengthening customer satisfaction.
Strengthening supply chain management.
Strengthening information disclosure.
Active dialogue with investors
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5

Indicators and Targets for Major Efforts to Address Specific Issues

E

S

G

Efforts and Specific Actions
in BusinessIndicators

1.

Activities to reduce CO2 emissions

Reduction Rate for Scope 1+2
Reduction Rate for Scope 3(FY 2019 Standard)

Scope 1+2: 42% reduction
Scope 3: 25% reduction(Target for FY2029)

2.

Enhance of renewable energy
business.

The number of initiatives in the renewableenergy business.

10 or more in Japan;
4 or more in other countries

3.

Mixed waste reduction

Total mixed waste discharge rate

2% or less each FY

4.

Strengthening R&D carbon neutrality

The number of new R & D initiatives

1.

Annual hiring plan achievement
Increase employee engagement

The number of new graduates hired
Engagement rating

Review each fiscal year
Rating: BB

2.

Balance work and private life;
Efforts to efficiency andstandardization operations

Encouraging the use of paid time off;
The number of work overtime.

8 days off in a 4-week(on-site)each FY
30 hours or less each FY

3.

Action plan for supporting women’s
engagement at work place.

Rate of new female managers;
Rate of men taking paternity leave

7% or more each FY
70% or more each FY

4.

Improvement of safety management
standards

Frequency rate

0.5 or less each FY

1.

Establishment of internal and external The amount of serious legal violations
systems to prevent legal violations

0 cases2.

Evaluate and improve theeffectiveness of the Board of Directors Evaluations by internal and outside experts

Improved evaluation

3.

Initiatives to prevent and mitigate
human rights risks

Conduct human rights due diligence

Expansion of target
companies

4.

Proactive dialogue with institutional
investors, etc.

The number of participants in meetings andfinancial results presentations

10% increase from theprevious year

(New projects begun)

Targets
during the Plan Period

6 or more

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6
Participation in Outside Evaluations and Initiatives

Environment

Signed and joined UN
GLOBAL COMPACT

Certified as an ECO FIRST
company

Endorsement ofrecommendations by
Task Force on Climate-related
Financial Disclosures (TCFD)

Joined Japan Climate LeadersPartnership (JCLP)
as a supporting member

Certified as an SBT Initiative
Company

A- List for CDP Climate
Change Division

Selected as a Supplier
Engagement Leader of the
CDP Supplier Engagement
Assessment

Registered as a ZEB
developer

Registered as a ZEH
developer

Selected as a constituent of the
S&P/JPX Carbon Efficient Index

Diversity

Earned the third highest levelof Eruboshi certification

Certified as an Excellent
Corporation for HealthManagement 202 in the large
corporation division.

Awarded “Silver” in the
PRIDE Index for LGBTQ
Initiatives

Certified as a “Company
Supporting Child-Rearing”(Kurumin Certification)

Selected as a Nadeshikobrand.

Selected as one of the 100 New
Diversity Management
Companies.
.

Joined the international
initiative RE100

Endorsed the Keidanren (Japan
Business Federation) Declarationof Biodiversity Initiative

DigitalTransformation

Selected as a component of the
FTSE Blossom Japan Sector
Relative Index

Selected as a “DX Certified
Business” by the Ministry of
Economy, Trade and Industry

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Concerning Presumptive Statements:
Any statements regarding future conditions, including strategies, plans, and numerical targets, contained in thisdocument are based on the information currently available to the Company and certain reasonable assumptions, but are
subject to change due to shifts in the business environment and other factors.