The Kumagai Gumi Group Corporate Report 2022

The artwork on the cover comprises works by children from Tsukudo Elementary School, adjacent to the Kumagai Gumi
Headquarters in Shinjuku, Tokyo, on the theme of the environment.
* Kumagai Gumi supports opportunities to foster a mindset that treasures nature and environment in the children who will lead the next generation.
Our work with Tsukudo Elementary School includes environmental learning and cleanup of the local area.

Kumagai Gumi Co., Ltd.
2-1 Tsukudocho, Shinjuku-ku, Tokyo 162-8557
https://www.kumagaigumi.co.jp
Inquiries
Management Strategy Office Corporate Communication Department
TEL 81-3-3235-8114 FAX 81-3-5261-9665
E-mail info@ku.kumagaigumi.co.jp

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Insight, Onsite, Farsight

The Kumagai Gumi Group
Corporate ReportWhen a big wall stands in your way,
the way isn't between going forward or turning back.
We will think about how to leap to higher ground.
Unafraid, we take on the challenge of difficult projects in difficult places,
even if everyone says impossible.
We build it, to support today and tomorrow for someone else.

Believe in yourself, your friends,
and your ability to make it happen.

These are our thoughts on.

When we build a structure, we are building a community together with the people who will use that space.

Information disclosure scheme

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Our Company's Code of Conduct (Mission Statement)
TRUST: To develop client trust and earn their confidence.
CONSISTENCY: To be consistently professional and responsible.
CO-OPERATION: To promote cooperation and mutual prosperity.

Management Philosophy● ENVIRONMENT: We aim to use our breadth of expertise to design and construct projects which areenvironmentally friendly and which will improve quality of life and satisfy the needs of society.
● CLIENTS: We aim to be an innovative and dynamic company, one that can provide our clients withcomprehensive service of consistently high standards, tailored to satisfy clients' individual requirements.
● STAFF: We strive to be a progressive and nurturing company, offering each individual the opportunity for
personal growth, pride, and satisfaction in his or her work.
● REPUTATION: We strive to be a responsible corporate citizen, recognized for our business integrity andsocial awareness.

4

The Kumagai Gumi Group Corporate Report
Financial Information●S hareholder
Correspondence●F inancial Statement
Explanation Material●F inancial Result●S ecurities Report

SimpleNon-financial information●C ompany Information●K UMAGAI UPDATE●K umagai News●G
 overnance Report

Detailed

Our Value Creation Story

Insight, Onsite, FarsightThis Corporate Report is issued with the goal of communicating
the Kumagai Gumi Group's management policies, businessstrategies, and value creation initiatives to all of our stakeholders.
It showcases the involvement of our ESG-based businessactivities with the SDGs, and communicates our contribution to
the formation of a sustainable society.
The report meets the expectations of stakeholders for information
disclosure, and makes reference to various guidelines in order toensure objectivity and transparency.

Medium-term Management Plan
Sustainability Strategy
Stakeholder Dialog
Sustainability Initiatives
ESG/SDGs Matrix
Business Strategy: Civil Engineering
Building Construction
Overseas Projects
Construction-related
Peripheral Businesses
Financial Analysis

29
30
32
34
36

Diverse Human Resources

42

Technologies of solvingsocial Issues

22
24

38
40

Promotion of DX

46
49

Special Feature 1

50

Kumagai Gumi website

Period of Reporting
FY2021 (April 1, 2021 to March 31, 2022)
The information in this report also incorporates examples of activities
and other information from April 2022 or later, as required.
Scope of Reporting
The scope of this report covers Kumagai Gumi Co., Ltd. and its
seven group companies, six of which are in Japan and one of whichis in Taiwan. References in this report to "Kumagai Gumi" or "ourcompany" are used in reporting on Kumagai Gumi Co., Ltd. only.
Reports on Group companies mention the specific companies.

Special Feature

Kumagai Gumi Group Vision Statement

Editorial Policy

Issue Date
September 2022 (Previous edition: August 2021; Next edition:
Scheduled for September 2023)
Referenced Guidelines● GRI Sustainability Reporting Standards● Environmental Reporting Guidelines (2018 Edition) from the Ministryof the Environment● International Integrated Reporting Framework (2021.1) from the IIRC
Notes on the Outlook for the Future
Opinions and other forward-looking statements in this report are
based on data currently available to us and certain assumptions
that we believe are reasonable. Actual results may, therefore, differ
materially from these statements for various reasons.

Social Infrastructure Requiring
Perfect Quality
Construction of a Large-scale
Final Disposal Site
Special Feature 2

52

Aware of our connection to society,We make the site more "sightly"
Presenting "the Kuma Seminar",where students learn on-site

Environment
ESG Initiatives

Management Planning Process
Based on the Group Vision

Value Creation History
6
The Kumagai Gumi Group's Business 8
The Kumagai Gumi Group'sStrengths
10
The Kumagai Gumi Group's Value
14
Creation Process
Financial and Non-Financial
Highlights
16Interview with the President
18Management Foundation

As a leader in the construction services that society requires,the Kumagai Gumi Group is committed to contributing to the creationof an ideal community in which people would want tolive by solving social issues to the best of our ability at all times.

Strategies for Sustainable Growth

CONTENTS

Occupational Health and Safety
Quality control
Stakeholder Engagement
List of the Board of Directors
Corporate GovernanceCompliance and Risk Management
Round-table with Outside Directors

54
58
59
60
64
66
70
72

Key Financial Data over 10 Year Period

74

Organizational Chart77

Corporate Information and Stock Information 76
Information on the website

https://www.kumagaigumi.co.jp/en/index.html

The Kumagai Gumi Group Corporate Report 2022

5

Our Value Creation Story

WEB ➡ History

https://www.kumagaigumi.co.jp/company/history/index.html

Value Creation History

1946 to 1960

1961 to 1980

1981 to 1990

1991 to 2014

Postwar reconstruction period
Birth of Kumagai Gumi as tunnel experts

Second growth period
Rapid progress and challenges

Third growth period
Active business expansion

Kumagai Gumi started its operationin January 1898 when Kumagai Gumi
founder Santaro Kumagai, who had
worked as a stone mason in Fukui,
undertook aqueduct construction at the
Shikununo Power Station, Kumagai
Gumi has carried forward his words of"If there is any challenging construction
work, let me do it" to take on challenging
construction projects.

After the war, Kumagai Gumi established
its Building Construction Division andcontributed to the reconstruction ofJapan. The Civil Engineering Division
was involved in many tunnel construction
projects. It was quick to adopt mechanized
construction, and dramatically improved
productivity. The division took charge of thehard construction of the Omachi Tunnel at
the Kurobe River No. 4 Power Plant andsolidified the reputation of Kumagai Gumi
as tunnel construction experts.

As the Japanese economy grew rapidly,
Kumagai Gumi's Building Construction
Division made remarkable advances,including the receipt of consecutive BCS
Prizes and the construction of skyscrapers.
The Civil Engineering Division, too, recorded
numerous achievements that include thefirst use in Japan of NATM, which became
a standard tunnel construction method. We
went on to conduct business development
on a global stage, particularly in Hong Kong,
Taiwan, and Southeast Asia.

Starting from Hong Kong, our overseas
projects expanded not only in Asia, but also
to the US, UK, Australia and elsewhere
throughout the world. In Japan, we haveparticipated in numerous large-scale
projects. In 1985, Kumagai Gumi recorded
over one trillion yen in orders along with
the industry's highest ordinary profit of 32.6
billion yen.

Track records and technologies

Our founding and initial growth period
Work on difficult projects in difficult places

1977
Opening of the Joetsu Shinkansen
Nakayama Tunnel
1937 Whole line opening of
Sanshin Railway LineSales

1958 Opening of the Omachi Tunnel at the Kurobe
River No. 4 Power Plant

Establishment of
FATEC Co., Ltd.

billion yen

1945

Establishmentof Building
Construction
Division

1,250

1898

* 1994 Change of company nameto Gaeart Kumagai Co., Ltd.

1958

1974

Opening of
the Toyokawa
Factory

From crisis to reorganization

500

In 2016, Kumagai Gumi made a new startwith the formulation of the Kumagai Gumi
Group Vision Statement. In 2017, the company
entered into a business and capital alliancewith Sumitomo Forestry Co., Ltd. with the aimof building a unique new position extending
beyond its existing business domains. Asa leader in the construction services thatsociety requires, the Kumagai Gumi Group iscommitted to contributing to the realization of asustainable society by solving social issues tothe best of its ability at all times.

2016

Formulation of the Kumagai
Gumi Group Vision

Establishment of Kumagai Techno-Space Co., Ltd.
* 2000 Change of company name to Techno-Space Creates Co., Ltd.

Ordinary profit (dotted line)

1996 S pin-off of the Toyokawa Factory as Kumagai

2017

Technos Co., Ltd.

2001 Establishment of K&E Co., Ltd.

Establishment of Taiwan
Kumagai Co., Ltd.

2000, 2003

2014

Request to
financial
institutions
for aid60

Business and capitalalliance with Sumitomo
Forestry Co., Ltd.

* 2002 Change of company name to Technos Co., Ltd.

1958

1938

2004 TAIPEI 101 completed

New founding period
Aiming for a sustainable company

2017
2018
Aso Ohashi Bridge Area slope
Tao Zhu Yin Yuan (Taiwan)
disaster prevention construction high-rise designer's
condominium completed

1993

Cancellation ofpreferred stocks
completedbillion yen
50

40

2018

120th anniversaryof founding
30

2004

Opening of theOmachi Tunnel at
the Kurobe RiverNo. 4 Power
Plant

Establishmentof Kumagai
GumiCo., Ltd.

Kumagai Gumi was hit by the bursting of
the economic bubble. Facing a financial
crisis triggered by massive real estate
investments, the company requested
financial aid two times. It promoted
thorough business revolution, tackled
new fields of construction such as mobile
communication base stations, and undertook
the development of technologies such as
unmanned construction. In 2014, Kumagai
Gumi completed the cancellation of preferredstocks and achieved its reconstruction.

1992
Start of service of Sydney
Harbour Tunnel

Founder・Santaro
Kumagai

750

2015 onword

1995 Establishment of Technical Support Co., Ltd.

Recorded over one
trillion yen in orders,along with the highest
ordinary income inthe constructionindustry

Establishment of Kumagai
Road Co., Ltd.

1,500

History of the group and performance

1985

1963

Foundingof Kumagai
Gumi

1989
World Wide Center(New York) completed

1989

Ordinary profit

Sales (bar)

1,000

1978
Shinjuku Nomura Building
project completed

Our Value Creation Story

1898 to 1945

The Kumagai Gumi Group will continue to work to contribute to thedevelopment of society through Worksite Excellence, the powerful synergyof the superb technology and abundant human resources we have built up
for over our history spanning more than a century.

Merger of Gaeart Kumagai Co., Ltd.
and Tobishima Road Co., Ltd.
Launch of GAEART T. K. Co., Ltd.

20

* 2016 Change of company name to GAEART
Co., Ltd.

250

10

0

0

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020 (FY)* Financial results through fiscal 1988 are for the fiscal year ended September 31; financial results from fiscal 1989 are for the fiscal year ended March 31* Figures through fiscal 1981 are for Kumagai Gumi only

6

The Kumagai Gumi Group Corporate Report 2022

7

Our Value Creation Story

The construction value chain andour main fields of business
Our Value Creation Story

The Kumagai Gumi
Group's Business

Kumagai Gumi Co., Ltd. / GAEART Co., Ltd.
Taiwan Kumagai Co., Ltd.
K&E Co., Ltd.

In every phase of the construction

Techno-Space Creates Co., Ltd.

value chain, the Kumagai Gumi Group

Technos Co., Ltd.

demonstrates the comprehensive

FATEC Co., Ltd.

capabilities of its eight Group

Technical Support Co., Ltd.

Work outsourcing and insurance agency

companies.

DeliveryPlanning andDevelopment

DesignEngineering

Procurement
Construction

Maintenanceand Repair● Research and marketing● Product planning● Business planning● Urban development● Survey/Design● Technology
development/application● Patent-related measures● Construction planning● Construction management● Safety and healthmanagement● Quality assurance● After-sales care system● Periodic inspection

Construction-related
Peripheral Businesses

Construction business

Policy Reinforcement

8

Operational
Management● Building management● Quality and environmental
management● Inspections● System audits

Area of focus● Develop management skills to comprehensively
handle large-scale projects with multiple typesof construction● Strengthen engineering capabilities to provide
one-stop services for design, procurement,
and construction● Improve productivity through the advanced
use of big data obtained from construction projects● Major infrastructure renewal● Renewable energy● Disaster prevention and mitigation,and national land strengthening● Unrecyclable waste disposal facilities

Domestic
Building
Business● Improve the ability to respond to customers by
integrating sales, design, and construction● Bolster the ability to quickly identify and adapt
to changes in the construction market● Strengthen front-loading by utilizing ICT/BIM● Production, commerce, and logistics● Medical and welfare services● Medium- and large-scale wooden
construction● Urban redevelopment● Environmentally-friendly Renewal

Overseas
Construction
Business● Reinforce domestic and overseas sales network● Build closer relationships and businessalliances with domestic and overseas partners● Strengthen technical and solution sales
capabilities● Urban infrastructure development in Asia
● Support for Japanese companies
entering the Asian market● Expand the Group's market share in
TaiwanDomestic Civil
Engineering
Business

Renewable
Energy Business
Real Estate
Development
InfrastructureManagement
Technologicalproduct sales● Improve professional skills andaccumulation of expertise in such areas asproject structuring and business operations● Accelerate joint research and development
within the Group companies as well as themobility of management resources,
including the use of highly-skilledindividuals● Strengthen partnerships with companies
and other organizations beyond the scopeof the Kumagai Gumi Group● Woody biomass power generation businesses,
including a business alliance with Sumitomo Forestry● Wind and solar power generation businesses(including overseas projects)● Urban renewal/urban development projects● Real estate development projects, including
business alliance with Sumitomo Forestry
as well as overseas projects● Toll road operations● PPPs (public-private partnerships) andconcessions including overseas projects● Biomass fuel development and sales● Infrastructure renewal method development and sales● Nursing care/welfare equipment development and sales● Construction equipment rental services (e.g. steel frame
erection jigs)

The Kumagai Gumi Group Corporate Report 2022

9

Our Value Creation Story

The Kumagai Gumi Group's Strengths
Our Value Creation Story

As stated in the Kumagai Gumi Group Vision Statement, the Kumagai Gumi Group is committed to support ourcustomers and society throughout the ages by strengethening our unique "On-site Capability" and "Happiness
Quality" in ways responsive to users.
Our group will continue proactive measure for sustainable growth.
Civil Engineering, Renovation, and Production ofConstruction Machinery and Materials

General contractor business

Kumagai Gumi Co., Ltd.

Technos Co., Ltd.

https://www.kumagaigumi.co.jp
Civil
Engineering

P32

Building
Construction

P34

Constructionrelated Peripheral
Businesses

Overseas
Projects

P36

P38

EstablishedFebruary 1996

Headquarters

2-1 Honohara, Toyokawa, Sales¥5,624,000,000

Aichi Prefecture(FY ended March 2022)

Representative Eiji Morita

Technos manufactures segments for shield tunnels, construction
machinery, etc.; engages in civil engineering and renovation,
environmental-related projects, and basic construction; andoperates a leasing business for a steel construction method called
ACEUP.

Manufacture and sales of road pavement andasphalt mixture, etc.

Trading company specializing in construction

https://www.gaeart.com

http://www.fa-tec.co.jp/

Established

November 1963

FATEC Co., Ltd.

Capital¥1,000,000,000

June 1989

Established

2-1 Tsukudocho,
Shinjuku-ku, Tokyo
Representative Takayuki Aono

CapitalGAEART Co., Ltd. is expanding nationwide as a company thatmeets various infrastructure needs, from new construction tomaintenance management, through infrastructure development
including paving for roads, airports, harbors, and bridges, andthe manufacturing of asphalt mixtures as paving materials.

FATEC Co., Ltd. is a general trading company that offers construction
materials and equipment developed with state-of-the-art technologies.
We provide not only products but also technologies for their utilization.

¥324,000,000(FY ended March 2022)
No. of employees 7 (as of March 2022)
Sales* Sales figures have decreased compared to FY2020 due to the introductionof the Accounting Standard for Revenue Recognition beginning in FY2021.

Building renovation

Working drawing production and education

https://www.k-and-e.co.jp/

https://www.technsp.co.jp/

February 2001
Headquarters 2-7-2 Fujimi,
Chiyoda-ku, Tokyo
15F, Stage Building
Representative Kazuhisa Iwama
Established

Capital
Sales

Techno-Space Creates Co., Ltd.

¥300,000,000¥17,606,000,000(FY ended March 2022)

No. of employees 369 (as of March 2022)

CapitalNovember 1993
Headquarters 3-12-12 Higashi-Ikebukuro, Sales
Toshima-ku, Tokyo
No. of employees
9F, Showa Building
Representative Naoyuki Yamashita
Established¥30,000,000¥754,000,000(FY ended March 2022)
61 (as of March 2022)

K&E Co., Ltd. is a comprehensive producer active in areas from building
deterioration surveys and seismic diagnosis to the planning, design, andconstruction of comfortable spaces, as well as after-sales service.

Techno-Space Creates Co., Ltd. engages in business including
the preparation of construction and architectural schematics andapplication documents. It also engages in educational businessaimed at universities and construction companies.

Construction in Taiwan

Work outsourcing and insurance agency

http://www.taiwankumagai.com.tw

https://www.tsp-kumagai.co.jp/

Taiwan Kumagai Co., Ltd.
Established

December 1974

Capital

NT$800,000,000

Technical Support Co., Ltd.

Established

300

360.2

352.2

July 1995

2-1 Tsukudocho,
Shinjuku-ku, Tokyo
Representative Hiroshi Shimura

Capital

200

21.1

17.9

331.0

30

100

20

22.4

20.2

Sales
(outer circle)

billion yen

307.1

294.5

40

Group companies

22.2%
21.9%

10.8
%

■■

Civil Engineering(Kumagai Gumi only)

22.1%

Operatingprofit(inner circle)

67.3%

17.8

79.5

82.0

83.9

90.0

94.2 10

5.1

5.3

5.2

5.6

5.0

FY2017FY2018FY2019FY2020

FY2021

0

55.7%
■■

Building Construction (Kumagai Gumi only)¥20,000,000

Headquarters

K&E Co., Ltd.

400

08-27 Shinogawamachi, Sales¥49,774,000,000
Shinjuku-ku, Tokyo(FY ended March 2022)
No. of employees 762 (as of March 2022)
Representative Kenji Yamamoto
Headquarters

Operating profit(lower bar)billion yen■■

Group companies

No. of employees 148 (as of March 2022)

Kumagai Gumi implements its projects in close collaboration with its
group companies by effectively utilizing and mutually complementing
the technologies, expertise, products and management resources heldby these companies, so as to maximize its collective capabilities.
Corporate Information ➡ P76

GAEART Co., Ltd.

10¥470,000,000

FY2021 composition ratio
Kumagai Gumi only

Sales (upper bar)https://www.technos.info
CapitalFY2021 results¥70,000,000

Headquarters

Section 1, Dunhua South Road, Taipei, Taiwan Sales¥26,347,000,000
Room 8 (1408), 12F, No. 205(FY ended December 2021)
Representative Tadahiko Shinya
No. of employees 321 (as of December 2021)

Headquarters¥565,000,000(FY ended March 2022)
No. of employees 44 (as of March 2022)

Since its founding in 1974, Taiwan Kumagai Co., Ltd. has built a best-inclass track record in Taiwan as a Japanese general contractor, introducing
Kumagai Gumi's technology to Taiwan, as well as its own initiatives.

The company is developing an outsourcing business for clericalwork, and also offers insurance plans as an agency handlingboth life and non-life insurance.

* Value after deduction of intra-group transactions* Amounts less than 100 million yen are rounded.

Number of female employees
in Group companies:

Employment rate of persons withdisabilities at Group companies:

368 (21.5%)

2.16％(Number of female employees at Kumagai Gumi: 409)

(Employment rate of persons with disabilities
at Kumagai Gumi: 2.10%)

Number of female managers
in Group companies:

Number of patent applications filed
by Group companies:

47

5 cases(Number of female managers at Kumagai Gumi: 66)(Number of patent applications filed
by Kumagai Gumi: 62)

Sales

The Kumagai Gumi Group Corporate Report 2022

11

Our Value Creation Story: The Kumagai Gumi Group's Strengths

GAEART was established in 1963 when the Road Division of Kumagai Gumi became independent.
At the time of its establishment, Japan was experiencing a period of rapid economic growth,and there was much demand in Japan for new road pavement projects such as expressways
and bypasses. However, more than half a century later, the aging of Japan's infrastructure has
become an issue, and the focus of road paving is shifting from new construction to maintenance.
This shift has been accompanied by increasing requirements for GAEART to have maintenancemanagement and pavement diagnosis technologies, as well as management know-how.
In the asphalt mixture manufacturing and sales business, the focus has also shifted from the
President,
production of new mixtures to the production of recycled mixtures. Today's asphalt mixtures are
Representative Director
in transition from those that have been recycled once to those that contain materials recycled
Kenji Yamamoto
two and three times. This requires the development of technologies to meet these needs. A needto respond to the increasing demand for decarbonization has also emerged in recent years.
In these changing times, GAEART aims to contribute to the realization of a sustainable society through the developmentof Japan's infrastructure, particularly in the road sector.

Promoting business activities that focus on solving social issues froma long-term perspective
Toward Systematic Reduction of CO2 Emissions(1) Converting to non-fossil energy sources at construction sites and mixing plants. Conversions have been
made at four mixing plants (Kesennuma, Settsu, Niimi, and Kagawa).
(2) In January 2022, the Toyokawa Mixing Plant began using GTL fuel, a diesel alternative. GTL fuel has
been introduced as a fuel for heavy machinery at five mixing plants (Nara, Shiraoka, Tama, Noda, andToyokawa), which is expected to reduce CO2, NOx, SOx, and PM emissions during combustion.
(3) Foamed asphalt equipment has been installed at the Noda Mixing Plant, which foams asphalt by blendingin water and air. Asphalt mixtures are conventionally produced and applied at about 160 degrees Celsius,
but with this equipment, the asphalt production temperature can be reduced by about 30 degrees Celsius
while maintaining quality, thereby reducing fuel consumption and CO2 emissions.

Strengthening 3R Promotion and Reducing Mixed Waste Emissions(1) We actively engage in the recycling business.
● We are moving ahead with the installation of crushing equipment at our asphalt mixing plants. We
recycle concrete and asphalt waste as pavement materials by accepting and recycling them.
● We have developed and launched sales of G-As Sheet, a pavement crack suppression sheet. Made ofmaterials used in ordinary paving, it is 100% recyclable. It is also expected to contribute to infrastructure
longevity by controlling paving breaches such as fissures and cracks.
(2) We are developing highly durable, long-life, high-quality precast concrete technologies such as highstrength PRC slabs, PRC slabs for roads, and extended slab system precast pavement slabs. In addition
to extending the life cycle of major infrastructure such as roads, airports, and harbors, it is also expected
to reduce CO2 emissions by shortening construction time.

Our Value Creation Story

GAEART Co., Ltd.

Technos Co., Ltd.

Technos believes that the sustainable development of a company is driven by a strong
improvement-oriented mindset, in which we aspire to improvement for "Tomorrow more than
today, and the day after tomorrow more than tomorrow." We have shared this awareness with
our employees to create unique technologies. At the same time, we have been working on
our organization reforms, with the aim of creating a company where employees can both feelsatisfaction in their work and make a contribution to society.
In addition to organization-led improvements, we also promote cross-organizational reforms.
A working team planned and proposed a renovation of our company Headquarters office building.
Currently, the Uniform Improvement Working Group and the Toyokawa Plant DX Working Groupare actively engaged.
Furthermore, our improvement proposal program has been effective in promoting DX andthe SDGs. We will expand this system, which was launched in the Manufacturing Division, to
the Administrative and Construction Divisions, as well as overseas divisions as we transform
ourselves into a company that develops sustainably as part of the Kumagai Gumi Group.

President,
Representative Director

Eiji Morita

The Headquarters office building has been renovated as part of the 25th anniversarycommemorative project.
Construction was handled by K&E Co., and part of the building was converted to woodbased on a proposal by Sumitomo Forestry Home Tech (construction completed in May2022).
Headquarters entranceWith advanced technology and human resources,
we help solve problems in the construction industry by improving productivity"Kirikata Jozu" bridge deck slab cutting system
In collaboration with Seiwa Dia Corporation, Technos

Cuts deck slab away from main
girder while sharing the roadhas developed a bridge deck slab cutting method
called "Kirikata Jozu," which separates the slab fromthe main girder while the road remains in service.
Kirikata Jozu uses a dry-type high-precision wire
saw to separate the concrete deck slab from the main
girder. All cutting equipment is installed underneaththe deck slabs, and cutting can be performed while theroad is in use by using a special fixing jig in combination
with the cutting equipment.

Anti-slip rebar

Rebar

This method takes an approach that is completely different from that ofconventional construction, reducing the floor slab replacement period by 50%
and the construction road closure period by approximately 18%.

Cutting

Cuts can be made to high accuracy, within ±8 mm. The noise level is low and nosludge is generated, which reduces the impact on the surrounding environment.

Toyokawa Plant Productivity Improvement Initiatives
We are fundamentally rethinking our existing manufacturing methods
as we work to overhaul our manufacturing operation to eliminate
waste. We are also promoting DX, connecting the next generation withtraditional artisanal craftsmanship through the use of IT.
Segment transport equipment andautomatic grinder robot

12

The Kumagai Gumi Group Corporate Report 2022

13

Our Value Creation Story

The Kumagai Gumi Group's Value Creation Process
Our Value Creation Story

The Kumagai Gumi Group conducts business activities on the basis of its Group Vision, to contribute to the resolution ofsocial issues and to be of service to our stakeholders.

Management
capitalFY2021 Performance

Business activities

OutputAwareness ofsocial issues

FY2021 results
In parenthesis: Medium-termManagement Plan targets, FY2023

Financial capital

Sales

Total assets

371.1 billion yen

ClimatechangeManufacturing capital

Yuuei Kyoryoku Kai 871
Manufacturing sites 32
Intellectual capital

Number of patents held 515
Research and development expenses

2.7 billion yen

Domestic Civil Engineering

Collapse in
the supply
and demandbalance ofresources
Aging ofinfrastructure

94.1 billion yen (125 billion yen)
Civil
Engineering

Building
Construction
Insight

Farsight

Human capital

Number of employees
non-consolidated 2,626
consolidated 4,338
Societal capital

Domestic sales sites 119(Headquarters, branches, sales offices, etc.)

Technical Research &Development Institute 2
Equipment center 1
Machinary center 1

Community
collapse

Renewal center 1

Overseas sales sites 7
Natural capital(non-consolidated)

Electric power 30,451 kWh
Gas
Diesel oil
Kerosene
Water

14

51.7 m3
16,806 kl
27 kl
385,000 m3

66.1 billion yen (75 billion yen)

Construction-related peripheral (ordinary profit)

Constructionrelated
Peripheral
Businesses

G overna nce

Decline in urban
competitivenessPopulation
decline,decreasing
economic power
Awareness of social issues,and the society we seek ➡P19

1 billion yen (2 billion yen)E

KumagaiGumi'sESG/SDGs
strategy

S

Quality That Inspires
Happiness

Long-term Vision
Global environment /Local communities

Sustainable Coexistencewith NatureG

Creation of rewarding
workplaces for all
Achievement of sustainablecommunities

Enhancing ofcorporate
governance

Strengtheningof relationships
with stakeholders

Partner companies /Business partners

Coexistence in
Mutual Prosperity
For employees

CO2 Emissions reduction rate (Scope 1+2)

Formation ofenvironmentallyconsideratebusiness

Customers and local communities

Domestic Group Companies Busineses

Naturaldisasters

Inefficient urban
infrastructure

235.7 billion (240 billion)

29.3 billion yen (30 billion yen)

OnsiteOverseas
Projects

The Value We Provide
to Stakeholders

Domestic Building Construction Business

Overseas Construction Business

Kumagai
Gumi Group
VisionStatement

Outcomes

Human Resource
Development

-17.3

%
(-25% or higher compared to FY2019 in 2030)
Mixed waste discharge rate
(Kumagai Gumi only)

1.8% (2.0% or less)Shareholders and investors

Return to Shareholders

Casualty frequency rate
(Kumagai Gumi only)

0.63 (0.5 or less)Number of work overtime(monthly average / Kumagai Gumi only)

Global Environment

25.5 Hours (30 hours or less)

Alteration of nature

Number of Cases of Serious Violations of
Law and Regulations (Kumagai Gumi only)(negative)

0 cases (0 cases)

Society in which limited
resources are recycled,
and people, the community,
and nature continue
to be enriched.
The Society we seek
A sustainable society
A society where people
can live comfortably
A society where
the economy continues
to grow

Relationships with Stakeholders ➡P60

The Kumagai Gumi Group Corporate Report 2022

15

Our Value Creation Story

Financial and NonFinancial Highlights
Orders received (Kumagai Gumi only)

Sales

FY2021

FY2021350.2 billion yen

Operating profit

425.2 billion yen

billion yen

billion yen

500

500

400

454.0
381.8
325.0

300

FY2021

400

350.2
283.4

374.0

■Operating profit

389.1

50

436.2450.2425.2

40

23.0

20

100

100

10

0

0

0

6.2

FY2021

FY2021

Number of employees (as of March 31, 2022)

120 yen35.1%

62 cases

Payout ratio

26.5 25.4 28.1

■Dividend per share

Dividend payout ratio

6

5.3

4

22.7

2

250

200

35.0

28.8 31.2

35.1

23.1

40

80

70

FY2021

FY2021

Ordinary profit

Ordinary profit
marginFY2021

FY2021

FY2021

371.1

169.3

FY2021

Profit attributable toowners of parent

23.7 billion yen 5.6%
■Ordinary profit

Total assets, net assets &capital adequacy ratio

ROE

15.9 billion yen

9.5%

Total assets

billion yen■Profit attributable to owners of parent

Ordinary profit margin

90

100

120 120 120

Capitaladequacy
ratiobillion yen

%

50

8

50

20

750

50

30

20

22.7

5.9

26.6 25.7

28.4

5.6

6

4

40

15.3

13.7
10.2

30

23.7

10

2

0

0

20

15.8

13.3

15

11.5

19.4 17.9

9.5 10

15.9

10

0

0
FY2017 FY2018 FY2019 FY2020 FY2021

5600

37.9 38.1 39.5

450

300

150

333.7

43.2

45.6

40

379.6 371.1
353.7 374.8

126.4 134.9 148.0

30

20

Number of female managers
people

5,000

90

49

3,000

2,382 2,497

54

58

66

2,578 2,620 2,626

2,000
20

60

30

0

1,000

0
FY2017 FY2018 FY2019 FY2020 FY2021

FY2017 FY2018 FY2019 FY2020 FY2021

Research anddevelopment expenses

CO2 emissions (Scope 1+2)
(Kumagai Gumi Group overall )Frequency

FY2021

FY2021

FY2021CO2 Total
CO2 Discharge volume
discharge volume & emissions intensity

7.6 t-CO 1.79

■Capital investment ■Research and development expenses

t-CO2/billion yen■Total discharge volume
t-CO2

8

20

7.4

4

2

4.2

4.2

2.99

2.0

2.3

2.62.6 2.52.7

11.3
10

2.7

Emissions intensity
t-CO2/billion yen

2.47

15

6

0.63

2

billion yen

169.3
163.8 1,693
100FY2017 FY2018 FY2019 FY2020 FY2021■Number of employees

people39

50

Capital adequacy ratio%

6.1

FY2021

4.2 billion yen 2.7 billion yen

billion yen

40

66 people

4,000

0

Capital investment

%

6.3

62

10

0

FY2021

45.6%

billion yen

billion yen

6.8

409 people

40

Capital investment & researchand development expenses■Total assets ■Total assets

ROE

Number of female
managers* The company performed a stock merger at aratio of 1 share per 10 shares of common stock,effective October 1, 2017.

FY2021

Net assets

65

60

FY2017 FY2018 FY2019 FY2020 FY2021

Profit attributable to owners ofparent & return on equity (ROE)

73

20

50

FY2017 FY2018 FY2019 FY2020 FY2021

cases

30

150

100

%

0

Ordinary profit

2,626 people
Number of female
employees

yen0

FY2017 FY2018 FY2019 FY2020 FY2021

FY2021Dividend per share

8

5.8

30

Number of employees

%

6.8

6.2

Number of patent applications

Operating profit margin

billion yen

200

FY2017 FY2018 FY2019 FY2020 FY2021

Operatingprofit margin22.7 billion yen 5.3%

300

200

FY2021

Operating profit

Dividend per share & payout ratio

Our Value Creation Story* The financial information is based on the Kumagai Gumi Group consolidated
results, whereas non-financial information is based solely on Kumagai Gumi.
* Amounts less than 100 million yen are rounded.
* For non-financial information on group companies, please refer to P11.

9.6

2.11 1.86

9.2

8.4

1.79

4

1.00

2

0.75

0

0.50

7.6

5

0.25

0
FY2017 FY2018 FY2019 FY2020 FY2021

0

0
FY2017 FY2018 FY2019 FY2020 FY2021

0.70

0.42

0.63

0.44
0.32

0
FY2017 FY2018 FY2019 FY2020 FY2021

FY2017 FY2018 FY2019 FY2020 FY2021* The CO2 calculation method has been changed
from FY2018.

16

The Kumagai Gumi Group Corporate Report 2022

17

Our Value Creation Story

Interview with
the President

Awareness of social issues, and the society we seek
Our Value Creation Story

The Society We Seek
A Sustainable society
A society in where
people can live comfortably
Greenhouse gas
emission reduction,
recovery, storage,
and utilization

Livelihoods withpeace of mind andfeelings of satisfaction
A society without
regional disparities
and disadvantages
due to infrastructure

Kumagai Gumi Co., Ltd.
President
Yasunori Sakurano

Effective utilizationof resources andself-sufficiency

A mechanisms for
swift recovery andrestoration fromnatural disasters

Small living spaces due touneven population distribution
and/or community collapse
Worsening financial situation ofnational and local governments
and aging infrastructure

A society where theeconomy continues to growExperimental cities
and pilot towns that
attract people fromall over the world

Efficient urban
infrastructures using
digital technology

Global warming andacceleration ofclimate change

Imbalance in the
supply and demandof resources

Frequent andintensifying natural
disasters

Economy and/or
industries uniqueto each region

Declining
competitivenessof cities
Inefficient urban
infrastructure

Decreasing economic
power due topopulation decline

Social issues for the year 2030 and beyond

All employees will reaffirm the importance of our spiritof endeavor and our integrity while working tosolve social issues.

Q

Looking back on FY2021, tell us about your accomplishments.

Although we missed our first-year performance goals,
we laid the groundwork for progress with our Medium-term Management Plan
In 2021, the Kumagai Gumi Group launched a new threeyear Medium-term Management Plan. FY2021, the firstyear of the project, was an important year, but although
non-consolidated orders exceeded the plan's targets,
both sales and operating profit fell short.
In the construction business, the foundation for theGroup's growth, we deepened our unique strengths,
such as project planning and proposal capabilities, aswell as technical capabilities. We also made progress instrengthening our position as the company of choice. In
the domestic civil engineering business, we have received
several sizeable orders for large-scale highway renewal
projects that are the way to the future. In the domestic

18

building construction business, profits increased despite adifficult environment due to soaring materials prices.
To foster the next generation of business, we solicited
new business ideas from within the company with the aimof developing new business domains. This resulted inover 100 proposals. In addition, corporate advertisements
were placed in the Nihon Keizai Shimbun in March andJune 2021, and received a great response.
Although our performance in FY2021 did not necessarily
manifest itself in the form of satisfactory business results,
we believe that we were able to make steady strides inthis way.

Q

What is your view of the business environment in which the Kumagai Gumi Group finds itself?

Despite increasingly uncertain ages,
we feel that change could be a factor forward progress
Looking around the world, the times seem to be becoming
increasingly uncertain with developments such as theoutbreak COVID-19 pandemic, followed by the crisis in
Ukraine. As awareness of sustainability grows, society's
values are also undergoing a major shift. It is extremely
critical for us to create systems through which we canquickly grasp changes and promptly respond to the risks
and opportunities they present.
Meanwhile, in Japan, the COVID-19 pandemic has
triggered major changes in the ways in which people
work and live, bringing us into an era of the "new normal."What's more, our society here in Japan is facing issues
such as the intensification of natural disasters, aging

Q

infrastructure, and declining economic power due topopulation decline.
I think these changes and challenges can be viewed
as opportunities for the Group's business development.
In fact, orders have remained solid in keeping with anincrease in public works projects, new construction of
warehouses and logistics facilities, and expansion andrelocation of production facilities within companies. Whilegleaning business opportunities from social change, I
intend for us to work to solve social issues through ourown business activities as we aim to be a corporate groupwhose existence has worth.

Please tell us about the future developments laid out in your Medium-term Management Plan.

To deepen our foundation in the construction business,
we will strengthen our position as the company of choice, and our earning power
The three pillars of our strategy under the Medium-termManagement Plan are: 1. Bolster our overall construction
business; 2. Accelerate our construction-related peripheralbusinesses; and 3. Develop new business domains.

The first of these strategies involves strengthening ourposition as the company of choice, and our earning power.
In the domestic civil engineering business, we aim toincrease orders for large-scale expressway renewal using

The Kumagai Gumi Group Corporate Report 2022

19

Value Creation Story: Interview with the President

promote overseas development, such as the infrastructurewith its proprietary technology. In domestic building
construction business, we have attracted orders for "withdevelopment project we are pursuing in Indonesia.
As we advance these construction business operations,

TREE," the medium- to large-scale wooden construction

safety initiatives must always be borne in mind. The

business that we are undertaking with Sumitomo Forestry,

frequency rate for FY2021 was 0.63, falling short of ourand development of this effort is moving forward. In theoverseas construction business, in FY2021, our local

target. As the workforce becomes more diverse, there are
increasing numbers of elderly and foreign workers at work

subsidiary in Taiwan, Taiwan Kumagai Co., Ltd., achieved
significant increases in sales and profit. We will continue tosites. We will respond to these changes and ensure safety
management for all workers.

Q

Tell us about your strategies with respect to ESG and SDGs.

Every employee is deeply involved in social issues through their work,
and we strive to create a culture in which we are constantly aware of sustainability
Based on the ESG Initiative Direction that we formulated
in 2019, the Kumagai Group has set non-financial targets
and major evaluation indicators in its Medium-termManagement Plan. We have also created an ESG/SDGs
Matrix to clarify the relationship between the Group'sbusiness activities and the 169 targets of the SDGs.
In FY2021, we conducted an SDGs Awareness Survey

Q

What initiatives are you pursuing to generate new businesses?

Collaborations with other companies and effective investments are under way,
as new business seeds grow in diverse fields
The second of these strategies is to evolve ourwe participated in an ESG-conscious US real estate

construction-related peripheral businesses. Our Groupdevelopment private placement fund investment, inwill take the initiative in expanding our business domains
by collaborating with Sumitomo Forestry and othercollaboration with Sumitomo Forestry. In the future, we

companies, and making effective investments. One of
our priority areas is the renewable energy sector. We are
currently participating in a solar power generation projectin Vietnam. We aim to further expand our business in the
future, including wind power generation. In Japan, we arealso studying the construction of SEP vessels for offshore
wind power generation and are working on biomass
power generation projects.
In the real estate development business, a redevelopment
project is under way in the area surrounding the Iidabashi
Station East Exit, which includes our Headquarters.
Discussions with the local community are ongoing, withthe aim of creating a community-based town. Overseas,Q

will also aim to increase medium- to long-term profits inthe overseas real estate development business.

you?"
We intend to create a corporate culture in which eachand every employee is deeply involved in solving social

indicating a high level of employee awareness of theopportunity and avoiding risk.

Q

What is your message to stakeholders?

As we share our eagerness for difficult projects in difficult places, our spirit of endeavor,
and our integrity, we aim for continuous growth together with our stakeholders

Pellet" business as one of our new initiatives. The initiative

as possible to dialogue directly with them. In recent
conversations with employees, the term "essential worker"
has often been mentioned. Despite the many constraints

locally consumed energy circulation.
And for our third strategy, developing new businessdomains, we intend to narrow down promising projects
and study their commercial feasibility.

number one answer to the question "what resonants withissues through their work, and is constantly aware that
putting this into practice can be a way of both creating

I have been committed to dialogue with our employees
since I became president in 2018. Throughout the covid-19
pandemic, I visited work sites and branch offices as much

be deployed nationwide as a system for locally produced,

SDGs, and some of the results were quite interesting. For
instance, "Goal 3:Health and well being for all" was theof all employees. The response rate reached 95%,

The development and sale of technical products is
another area on which we are focusing as a peripheralbusiness. We are moving forward with a "Black Bark
uses domestic wood tree bark, which has previously beenhandled as waste, as a biomass fuel. The business will

Our Value Creation Story

our highly acclaimed Cotter Floor Slab Method for Bridges,

imposed by the COVID-19 pandemic, employees are
doing their utmost to support social infrastructure in theirrespective workplaces. I believe that this attitude is the
DNA that has supported the development of our Groupsince its establishment in 1898.
In these uncertain times, I am reminded of theimportance of the words of our founder, Santaro Kumagai,"If there is any challenging construction work, let me doit," and of the spirit of endeavor and the integrity that havebeen passed down from generation to generation. To fulfill
our social mission as a group, we will continue to focus
effort on creating an environment in which our diverse
employees can apply themselves to the fullest extent of
their abilities.
It goes without saying that dialogue with our customers
and other stakeholders is just as important as with our
employees. I intend to communicate with you at every
opportunity to convey these strengths and stances of ourcompany, and to utilize your feedback in the managementof our group.

Please tell us about how you plan to strengthen your management base.

In building a management foundation for the next generation,
the key words are "digital" and "human resources"
In addition to our three business strategies, the current
Medium-term Management Plan calls for strengthening
our management foundation. The key words in this effort
are "digital" and "human resources."
In the digital domain, the DX Promotion Department,
newly established in FY2021, is playing a central rolein promoting company-wide reforms. A core businesssystem will be partially operational in FY2023. In thedomain of human resources, we are continuing our efforts
to introduce systems for the advancement of women20

and to renew our mindset regarding diversity in general.
Furthermore, as part of our efforts to work-life balance.
we introduced a flex-time system in the Outside Work
Division in FY2022.
Corporate governance is also a very crucial issue
in strengthening the management foundation. We willcontinue to strengthen our system in close cooperation
with management, not only of our company but of othergroup companies as well.

The Kumagai Gumi Group Corporate Report 2022

21

Strategies for Sustainable Growth

Medium-term Management Plan
Non-financial Targets

In May 2021, the Group formulated its Medium-term Management Plan (FY2021-FY2023). In taking on our role as a

We identify issues that are considered important to our stakeholders from an ESG perspective, and pursue both solutions

leader in the construction service industry that society requires, we aim to contribute to the realization of a society inwhich limited resources are recycled, and people are healthy and happy, the community is prosperous, and nature is

to social issues (social value) and expansion of business earnings (economic value) through our business activities. Our
main evaluation indicators comprise the CO2 emission reduction rate and mixed waste emission rate in the environmental
field (E), the casualty frequency rate and number of overtime hours worked by employees in the social domain (S), andthe number of serious legal violations in the field of governance (G).

preserved. Toward achieving long-term sustainable growth, we are also developing business activities in line with our fourbasic policies (bolstering our overall construction business, accelerating our construction-related peripheral businesses,

Strategies for sustainable growth

Basic Policies

developing new business domains, and strengthening our management foundation.)Long-term Vision

Medium-term Management Plan

Contribute to the realization of asociety in which limited
resources are recycled andpeople, the community, andnature continue to be enriched

Identify Issues

2.0% or less

1.8%

-25%

Number of casualties due tooccupational accidents per 1 million
total actual working hours

0.5 or less0.63

Number of Overtime Hours
Worked by Employees

Average number of overtime hours
worked in one month

30 hours
or less

25.5 hours

Number of Cases of Serious
Violations of Law and Regulations

Those that have been administratively
punished or have been subject toadministrative measures are included

0 cases

0 casesManagement Foundation
Strengthen managementfoundation

SocialGovernanceContribution
to the SDGs

-17.3%

Casualty Frequency Rate

With respect to financial targets, performance was affected by intensified competition for orders and the suspension ofmajor construction projects, resulting in lower revenues and profits compared to the previous fiscal year. Although thedividend payout ratio was maintained at the target level, ROE fell below the target level. We will continue to work towardachieving our goals for the final year of our management plan, keeping in mind downside risks to our performance, suchas delays in procurement of construction materials and soaring raw material prices.

Investment Plan
Concerns that we perceive to be pressing social issues include carbon neutrality, national land resilience and infrastructure
longevity, as well as upgrading urban functions and smart cities. Given this business environment, we are participatingin renewable energy, real estate development, infrastructure management, and technology product sales businesses asa business entity, either by investing or holding assets. During the period of our management plan, we will invest a totalof 40 billion yen in DX (Digital Transformation) to strengthen our management foundation, and to develop productivityenhancing technologies and human resources, etc.
Scale of investment

40

billion yen

Consolidated sales

470.0 billion yen

Consolidated sales

425.2 billion yen
66.1

3.6

1.0 2.6

Consolidated
29.3 0.8 Ordinary
Income

75
30

23.7

billion yen

235.7

15.7

FY2021

5.5
0.5

2.0

Consolidated
Ordinary Income

Bolster overall
construction businessAccelerate Constructionrelated peripheral businesses

Developing new
business domains

Strengthen
management foundation

billion yen

Major infrastructure
renewalRenewable energy

Development oftechnologies that help
resolve social issues

Digital transformation
related50

8.5

Consolidated
Ordinary Income

33

Real estate development

billion yen

240

16.5

inab
a
t
s
u
S

94.1

22

Comparedwith FY2019

Accelerate Constructionrelated Peripheral Businesses

Financial Targets

Domestic Civil Engineering
Business
Domestic construction Building
Business
Overseas Construction Business
Domestic Group Company
Business
Construction-related Peripheral
Businesses

In 2030
Achieve minus 25%
when compared to FY2019

Mixed Waste Discharge Rate

expenditures were budgeted at the previous year's levels and there were signs of a gradual recovery in private capital
investment, which had declined due to the COVID-19 pandemic.

(billion yen)

FY2021
performance

Total amount of mixed waste
generated as a percentage of total
construction waste generated

The economic outlook remains uncertain due to the prolonged effects of COVID-19 infections and soaring energy
prices related to the situation in Ukraine. Construction demand in FY2021 was generally firm, as public works-related

Performance by Segment

Scope 1 All direct emissions of greenhouse gases from the activities of organizations or ones under
their control.
Scope 2 Indirect emissions from electricity, heat, and steam purchased and used by the organization.

Numerical targets during
the Planning Period

Bolster overall
construction business

Developing new
business domains

Upgrading Urban
Functions andSmart Cities

A society where theeconomy continues
to grow

Environment

Business
Business Promotion

A society where
people can live
comfortably

Starting Point

A sustainable society

Making the Land
More Resilient toDisasters andExtending the Lifeof infrastructure

Main Evaluation Indicators

CO2 Emissions reduction rate (Scope 1+2)

Basic Policies

Carbon Neutrality
by 2050 (Japan)

The society we seek

ESG
Perspective

r
le G

ow

th

125
Current Planning Period

The Future We Are Aiming For (2030 Financial Targets)

FY2023Medium- and large-scale
wooden construction

Infrastructure
management field

Collaborate with othercompanies to create new
business opportunities

Technologicaldevelopment related
Human resource
development related

Regarding investment performance, some projects, such as the construction of wooden buildings and Net Zero Energy
Building (ZEB) technology (at our Headquarters and Fukui Office), the acquisition of real estate for redevelopment
projects, or the strengthening of digital infrastructure, were delayed due to the COVID-19 pandemic, but are generally
progressing well. We plan to launch a woody biomass fuel sales business, participate in an overseas real estate fundbusiness, and participate in renewable energy projects in Japan and overseas.
The Kumagai Gumi Group Corporate Report 2022

23

Strategies for Sustainable Growth

Sustainability Strategies

Stakeholder Dialog

Tackling difficult projects in difficult places,
to communicate with stakeholder aboutsustainability initiativesof a sustainable society. In order to introduce these efforts and to gain new perspectives for future progress, an opinion
exchange meeting was held on June 14, 2022, inviting knowledgeable outside experts. First, Mr. Sakurano, President
and Representative Director of Kumagai Gumi, introduced Kumagai Gumi's efforts toward sustainability, after which Prof.
Hidemitsu Sasaya served as facilitator of the discussion, which yielded lively opinions from the experts.

After a passing score on the compulsory routine,
I want you to show what you can do in the freestyle exercise
Sasaya   President Sakurano introduced Kumagai Gumi's

Yoshitaka   I was very impressed by what President

efforts toward sustainability.

Sakurano said about the founder of the company being

Nawa   Overall, I think they are working meticulously

eager to "tackle difficult projects in difficult places."and diligently, and amply deserve a passing grade.

Whether we're talking about carbon neutrality or a circular

However, I think that much of what they are doing can be

economy, realizing these things will certainly entail

compared to going through the motions of the compulsory"difficult projects in difficult places." I think Kumagai Gumi

routines in gymnastics competitions. These days, it's

would make an even stronger impression if a future image

become commonplace to aim for zero targets, such asencompassing the challenges they will undertake further

carbon neutrality and Net Zero Energy Building (ZEB). I

down the road were to be communicated, rather than justhope that Kumagai-gumi will take things a step further,

their current initiatives.

and demonstrate its strengths in areas analagous to the

Suzuki   Certainly, the Cotter Floor Slab Method forfreestyle competition, where it can create a net positive.

Bridges, the Nekko Chip Construction Method, and theIn this sense, I found medium- and large-scale wooden

Black Bark Pellets that you introduced are wonderfulbuilding brands such as "With TREE" to be very interesting

technologies. From a media standpoint, however,

initiatives.

there is the issue of whether this is being adequately

Sasaya   Mr. Nawa's concept of compulsory routine andcommunicated to society.

freestyle exercise is interesting. The preamble of the

Sakurano   As you point out, Mr. Suzuki, the ability to2030 Agenda, a United Nations consensus document that

communicate is something we have been very poor

incorporates the SDGs, as well as Goal 3, use the word

at. Moving forward, we will remain in dialogue with our"well-being." I believe this is an area very similar to thestakeholders, and will thoroughly communicate ourfreestyle concept.

initiatives.

Strategies for Sustainable Growth

Kumagai Gumi promotes sustainability management in order to achieve long-term growth and contribute to the formation

Impressions regarding sustainability initiatives

Initiatives Using the ESG/SDG Matrix

Wouldn't it be more effective to organize comprehensively so that you candisseminate information from single forcefully concentrated point of view?
Participants in the stakeholder dialog
Participating experts (from front row, left)

Ryo Suzuki (Editorial Writer, Nihon Keizai Shimbun)
Mari Yoshitaka (Mitsubishi UFJ Research and Consulting Co.)
(Fellow Principal Sustainability Strategist)

Takashi Nawa (Visiting Professor, Graduate School of Business
Administration, Hitotsubashi University)

Facilitator (front row, right)

Hidemitsu Sasaya (Professor, Basic Education Organization,

Chiba University of Commerce; CSR/SDG Consultant)

24

Kumagai Gumi (back row, from left)

Shin Ueda, General Manager of the Building
Management Division

Yoshiaki Ogawa, Vice President
Yasunori Sakurano, President
Yoshihiko Kato, Vice President
Koji Hidaka, General Manager of the Administration
Division

Koji Okaichi, G eneral Manager of the Civil Engineering
Management Division

Sasaya   Kumagai Gumi organizes ESG/SDGs andby concentrating on a single point of communication.

business initiatives comprehensively in the form of a

Nawa   In terms of this idea of a single point of concentrated

matrix. I was involved in supervising these deliberations.

communication, I found the phrase "Quality that Inspires

Yoshitaka   I think this is a good initiative because it

Happiness" that President Sakurano mentioned earlier inmakes things plain to understand from the perspective

his explanation of the Group Vision to be quite wonderful.

of a foreign investor. It is also clearly tied to the SDGs,

I feel that this phrase, "Quality that Inspires Happiness,"making it easy for employees to understand.

is deeply connected to the foundation of Kumagai's

Suzuki   It's certainly organized in a clear manner, but it's

management, both in the construction and civil engineering

just that in actual business operations, it seems unrealistic

businesses. There is a connection here to the well-being of

to expect all 17 SDGs to be addressed uniformly by a

the SDGs that you mentioned, Mr. Sasaya. I hope you willcompany with such a large number of employees.

stay with this important concept.

Instead, it would seem more readily conveyed to society

Suzuki   I thought that the role of a "leader in the construction

The Kumagai Gumi Group Corporate Report 2022

25

Strategies for Sustainable Growth: Stakeholder Dialog

Ueda   It's exactly as you say. I am in charge of the

Sasaya   Considering the SDGs, this carbon neutrality(partnership) are also related. This is a very broad andconcept.

construction business, and recently I have seen an

issue is not limited to the goals 13 (climate change), 7

difficult topic, but I think that Kumagai Gumi's willingness

Sasaya   I have heard that awareness of the SDGs isincrease in the number of times that on-site managers(clean energy), 9 (technological innovation), and 15

to discuss carbon neutrality in such a forum is in itself agrowing among Kumagai's employees as a result of thistalk about the SDGs in meetings, and create and use their(terrestrial resources), but is related to many othersign of their endeavoring attitude.

matrix.

own matrices.

goals as well. For example, Goals 4 (education) and 17

Strategies for Sustainable Growthservice industry that society requires" was also a great key

Information disclosure and Engagement

Creating an environment where younger employees find their work exciting

Addressing Carbon Neutrality

We should recognize this not only in terms of risk, but also
in terms of opportunity.

26

Suzuki When it comes to information disclosure, it's

financial initiatives in this session. Needless to say, it will

important to actively make use of the media. It would be

be important to communicate these non-financial initiatives

interesting to see a strategy aimed at building the image

in the future, but when communicating to investors, I urgeof being No. 1 in the industry with respect to the SDGs.

you to talk about them in connection with financial growth.

Yoshitaka   Earlier, the Nekko Chip Construction Method

Another key point is employer relations (ER), meaning

was introduced as a circular economy initiative. It was

employeementioned that although this technology was developed

Awareness Survey conducted by Kumagai Gumi amongquite a while ago, it has recently been attracting attention

its employees, people in their 50s and 60s are highly

again. This is exactly right. Values are changing rapidlyinterested in climate change, while those of younger

across time and generations. This is what is known as

generations consider well being, and job satisfaction to beengagement.

According

to

the

SDGs

Nawa   In your earlier explanation of carbon neutrality, youthat it is a business opportunity as well. Regarding these

dynamic materiality. The students I teach at the university

highly important. As Ms. Yoshitaka said, values certainly

noted that the combined Scope 1 and 2 CO2 emissions

new innovations, there is actually a worldwide focus on theare truly Generation Z. To them, the SDG goals are soseem to be changing. I hope that you will strive to createcomprise less than 3% of that of the entire supply chain.

technological capabilities of Japanese companies. I thinkmuch a matter of course that they wonder why society

a workplace in which Generation Z employees, who will

It was a very good analysis and conveyed the sincerity

Kumagai Gumi would gain more recognition from investors

makes such a fuss about them. So this is what I told them,

support Kumagai Gumi in the future, can feel pride andof Kumagai's approach. If there is an issue to point here,

if it would reorganize these risks and opportunities and try"You're exactly right. Japanese companies have been

excitement in their work.

it would be Scope 3, which comprises CO2 emissions of

to communicate them in an easy-to-understand manner.

putting them into practice for a long time as a matter of

Sasaya Finally, I would like to make a supplementarycompanies other than your own. Regarding this Scope 3, it

Suzuki   The Black Bark Pellet operation is one ofcourse. But we have failed to effectively communicate thatcomment as facilitator. I feel that the SDGs are becoming

appears that measures are being taken, including relatively

Kumagai Gumi's initiatives that I find wonderful, since

to everyone, so we are trying to do so now." We need

a compass in an age of confusion. Since 2015, when thefirm efforts to promote ZEB, but upstream efforts have notit can be used as a co-firing fuel for coal-fired power

to communicate more proactively in the future. I hope

SDGs were adopted by the United Nations, the world

been sufficiently demonstrated. I think this is a very difficult

generation. Coal-fired power generation has beenthat Kumagai Gumi will provide more opportunities forhas been facing major challenges: climate change, thearea for any company, but I also think it is a good idea topositioned negatively in relation to carbon neutrality, butdialogue such as this meeting for exchange of opinions.

COVID-19 pandemic, and the Ukraine crisis, all threeorganize it in relation to the circular economy through, forrecently, changes brought on by the situation in Ukraine

Nawa   I think there are two broad points to make aboutof which can be understood in the context of the SDG

example, the utilization of waste materials. I think the theme

and other factors seem to have shifted. I think the Black

this engagement with society. One is about investor

goals. I hope that you will continue to use the SDGs as

is to provide users of the buildings created by Kumagai Gumi

Bark Pellet efforts should be actively communicated as arelations (IR). I have heard about many wonderful non-a compass when considering your sustainability efforts.

new insights, and to enable new modes of behavior.

realistic compromise solution.

Yoshitaka   I have participated in almost every COP12

Okaichi   We are currently in the process of conducting

since the one by the UN, and the global trend is to focus

proof-of-concept tests with Black Bark Pellets with theon how to reduce CO2 emissions over the next 10 years

aim of putting them to practical use. Concentrating massor so. As Mr. Nawa mentioned, the major trend is for

production in one location and transporting it to various

everyone to work together not only on Scope 1 and 2, but

regions would result in the emission of large amounts ofalso on Scope 3, and companies that do so are also being

CO2, so we are considering a business model of local

recognized in ESG investment.

production for local consumption that contributes to the

In addition, when we talk about carbon neutrality, we tend

efficiency of coal-fired power generation in various regions

to be more aware of the risks, but we should also recognize

by dispersing it throughout the country.

The Kumagai Gumi Group Corporate Report 2022

27

Strategies for Sustainable Growth: Stakeholder Dialog

WEB ➡ SDGs

https://www.kumagaigumi.co.jp/csr/sdgs/index.html

Sustainability Initiatives

November 2017

April 2019

August 2020

August 2021

Comments from Kumagai Gumi Participants

Further Enhancing of Sustainability Management and Unprecedented
Information Dissemination

The Kumagai Gumi Group has indicated that it will strengthen its management by incorporating ESG perspectives.

ESG Initiative Direction Formulated
Kumagai Gumi has identified key issues (Materiality) and Individual issues that are critical to the Group's long-termbusiness development, and clarified our targets concerning related SDGs.

Corporate Report 2020
KPIs for individual issues based on materiality were reported.

Medium-term Management Plan (FY2021-FY2023)
We have positioned carbon neutral initiatives as a management issue, and established management policies such as
reducing CO2 emissions and strengthening the development of renewable energy businesses.

ESG/SDG Matrix Created
In our Corporate Report, we disclosed the linkage between our business activities and the SDGs as part of our ESG/
SDGs strategy.

Kumagai Gumi Employee SDGs Awareness Survey
November 2021

Kumagai Gumi has specified the expansion of employee awareness as being central to our ESG and SDGs initiatives,
and we have conducted a survey for employees as part of the effort.
This survey was administered to all executives and employees of Kumagai Gumi, and received a very high response rateof 95%.

Okaichi After listening to what Ms. Yoshitaka told us today,

have been working on for more than 20 years can be linked

I realize that Kumagai Gumi has a range of potential thatto the SDGs if we change our perspective. Although there

we have failed to draw out. I would like to take a fresh look

are many challenges that we face, I have realized onceat what we possess, and spread information about it.

again the importance of taking on challenges without giving

Upon conducting a management system review, Mr. Sakurano, President of Kumagai Gumi, instructed us to execute ourdaily operations with a greater awareness of their relationship to ESG and the SDGs.

Ueda In our architectural construction business, we areup, and communicating them to society.

focusing on medium- and large-scale wooden buildings

Kato I myself have realized that young employees'

President's Instruction: "Practice daily operations from the ESG/SDG perspective"

and ZEB, and we feel that our customers are very

awareness of the SDGs is clearly different from that ofinterested in these projects. However, when it comesour generation. The strong reputation of Kumagai Gumi's

to actual design and construction, the problem is that

DNA, which we have nurtured with care, has given us

increased costs and other issues make it difficult for theserenewed confidence.

projects to get adopted. In listening to the discussion of

Sakurano On the front lines of our operations at Kumagai

Scope 3 and carbon neutrality, I felt that new possibilities

Gumi,

could be opened up by creatively designing our proposals

management their personal business. By further enhancing

to customers.

this environment, we will be able to disseminate information

Hidaka As we have discussed today, human capital

like never before. We would like to continue to actively

management is among the initiatives that we have started

provide such opportunities to exchange opinions with you.

at our company. We intend to focus more on this in theThank you very much for your time today.

young

employeesaremakingsustainability

Strategies for Sustainable Growth

May 2021

Medium-term and Long-term Management Direction

December 2021

April 2022

President's Instructions upon Review of the Quality and Environment Management System

In the President's message at the beginning of the fiscal year, he stated, "We aim to create a corporate culture that instills in our
employees the habit of always being aware of what strategies we ourselves can use to contribute to solving social issues. In
response to this policy, the General Manager of the Management Strategy Office expressed his policy of strengthening internal
communication of the ESG and SDG mindset, and is working to link fiscal-year targets (for internal operations) to the SDGs.

ESG Initiative Direction
1. Kumagai Gumi has identified key issues (Materiality) to be resolved from Environment, Social, and Governance perspectives,
and will pursue sustainable business activities.
2. The company will create new value by leveraging the group's technologies, experience and expertise. We engage in businessactivities that contribute to the resolution of social issues represented by the SDGs.
3. Through its business activities, Kumagai Gumi aims to build relationships of trust with its stakeholders and to increase its
corporate value.

future.
Ogawa I was able to sort out many things in my mind after
listening to your talk today, such as how technology that we

ESG/SDGs Matrix (P30-31)
We indicated the relationships between business activities based on ESG and the 169 targets of the SDGs (numbers in
the table), and visualized the fields in which Kumagai Gumi contributes to solving social issues through its business, inthe ESG/SDGs Matrix.
The ESG/SDGs Matrix is used to provide clues for innovation to solve further issues, as a list for use in long-term risk
management, and as a tool for dialogue with stakeholders using ESG/SDGs as a starting point. Upon reviewing thefirst year of the Medium-term Management Plan, we have added the crucial issues to be addressed in each businessto the existing Individual Issues and Specific Business Initiatives sections. This matrix is discussed at Kumagai Gumi'sManagement Meetings and by its Sustainability Promotion Committee.

28

The Kumagai Gumi Group Corporate Report 2022

29

Strategies for Sustainable Growth*1 The key issue "Formation of environmentally considerate business" refers to a strengthening of initiatives for carbon neutrality.
*2 Of the relationships between Kumagai Gumi's business and the 169 targets of the SDGs, the primarily relevant ones are noted.
*3 Also, FTSE Blossom Japan Sector Relative, Index MSCI ESG Rating Report "A", etc.

ESG/SDGs Matrix (Kumagai Gumi only)
ESG Initiative Direction
Perspectives

Key issues(Materiality)

Carbonneutrality
initiatives*1CO2 emissions (Scope 1+2) reduction rate(compared with FY2019; target year FY2029)

Reduction of-25% or more

-17.3%

Achievement of zero emissions

Activities to reduce mixed waste discharge

Total mixed waste discharge rate

2.0% or less

1.8%

Initiatives with consideration of biodiversity

Quality and Environment Management System
operation and improvement

Serious environmental accidents during construction

Initiatives in the wood structure businessMedium- to large-scale wooden structure businessinitiative, expanding orders

Number of orders (domestic) / Number of investment projects(overseas)

Initiatives in the forest conservation businessInitiatives for forest conservation in collaboration withother companies

Renewable energy business initiatives

0 cases

2 cases

3/2 or more

2/—

Number of forest conservation projects

3 or more projects—

Promotion of renewable energy business

Number of initiatives in the renewable energy business(Targets are for FY2023)

5 or more projects

Domestic 3
Overseas 2

Initiatives for environmentally considerate architecture(ZEB, etc.)

Number of environmental accreditation projects

6 or more projects

2 projects

Strengthening research for carbon neutrality

Number of technology development initiatives (new projects begun)

4 or more projects

2 cases (to continue after FY2022)

Promotion of action plan for active participation by women

Ratio of women in new graduate hires

25% or more

24.4%

Annual hiring plan achievement

Number hired

Support for acquiring national qualifications

Rate of acquisition of first-class engineering works (civilengineering / architectural construction)

Succession of technology

Promotion of DX

Promotion of diversity

Achievement of work-life balance
Promotion of worker health and prevention oflabor accidents

Serious quality accidents during construction

S Society
Achievementof sustainablecommunities

G Governance
30

176

145

96%/85% or more

95%/82%

50% or more

43%

0 projects

0 projects

7.2
7.b

1.5

6.3
6.6

6.6

6.3
6.6

4.4
4.5
4.7

100%

30%

Rate of new on-site implementation

100%

—

Fostering an understanding orgarizational culture ofdiversity

Number of female managers(Action plan to promote women's advancement: 10% increase compared
to April 2020)

Achieved in FY2021

22.2% increase

70% or more

51%

Promotion of work style reform

Number of overtime work hours (compared with April 2020)

30 hours or less25.5 hours

3.4

0.5 or less

0.63

3.3
3.4
3.9

Number of infrastructure renewal projects (domestic)

20 or more projects

18 projects

Number of infrastructure operation projects

3 or more projects

2 projects

Number of income-producing real estate business participation
projects (domestic)

4 or more projects

1 project

Number of real estate development business participation projects(overseas)

1 or more projects

1 project

Initiatives for urban redevelopment

Number of initiatives

4 or more projects

3 projects

1.5

Solving social issues in Asian countries

Number of orders for infrastructure development projects

2 or more projects

—

1.4
1.5

Creation of new business

Number of initiatives

Commercialization of 1 ormore projects

Consideration of 3 projects

Increase numbers ofparticipation projects andparticipants

86 projects
1,850

Frequency

Smile Project

Number of projects with employee participation / number ofparticipants (total persons) (compared to previous FY)

Disaster prevention/mitigation

Number of initiatives

Handling of natural disasters(resiliency)

High-seismic-resistance structural system

Development of technologies that lead toresolution of social issues

Development of technologies that lead to resolution ofsocial issues (excluding the environmental field)

Improvement of the effectiveness of the Boardof Directors

Continued evaluation and improvement of theeffectiveness of the Board of Directors

Evaluation by outside experts (compared to previous FY)

Enforcement of compliance

Establishment of internal and external systems toprevent legal violations

Number of Cases of Serious Violations of Law andRegulations

Strengthening of risk management

Strengthening the Group's overall crisis management
response capabilities

Safety confirmation system response rate

Active dialogs with investors

Enhancement of dialog with institutional investors andothersRate of increase in number of participants in financial
briefings (compared to previous FY)

Improvement of CS

Customer insight interviews and opinion questionnaires(at 3 years after completion), and other information collection

Customer satisfaction (Based on customer opinion questionnaires [at3 years after completion] and other responses to overall aftercare)

Promotion of CSR procurement

Compliance with Procurement Policy and Procurement
Policy Guidelines

Zero irregular transactions

Strengthening of disclosure

Non-financial information disclosure

Maintain and improve social reputation (compared to previous FY)

Technologies for improved resilience, performance

Number of technology development initiatives(new projects begun)

Supervision: Hidemitsu Sasaya, Professor, Basic Education Organization, Chiba University of Commerce; CSR/SDGs consultant

12.2
12.6

11.6

12.4
12.5
12.6

7.1
7.2
7.a
7.1
7.2
7.a
7.b
7.2
7.3

11.3
11.6

9.4

11.a

9.1
9.4

11.6

10.2
10.3
10.1
10.2
10.3

8.2
8.5
8.8

5.1
5.5
5.b

11.3
11.7
11.a

9.4
9.5

8.2
8.6

9.5

3.7

1.5

4.4
4.5
4.7

4.4
4.7

5.b

8.2
8.8

5.1
5.5
5.6
5.b

8.5
8.8

5.5
5.b

8.2
8.5
8.8

9.5

8.5
8.8

9.4

11.6

8.2

9.1
9.4
9.5
9.a

6.6
6.b

4.4

3.9

1.1
1.2

6.2
6.3
6.4
6.6

4.4

2.1

3.4

4.7
4.b

7.1
7.2
7.b

10.2

8.2
8.3

9.1
9.4

8.2
8.3
8.7
8.8

9.1
9.4
9.a

10.2
10.3
10.b

8.3

9.5

10.2

11.3

10.2
10.b

10.2
10.3

12.2
12.4
12.5
12.6

11.a

12.4
12.5
12.6
12.7

17.7
17.17
16.6 17.17

14.1

15.1

16.7

3 or more projects

6 cases (to continue after FY2022)

Improvement fromprior-year evaluation

No problems with effectiveness0 cases

0 cases

100%

99%

10% increase(compared with FY2021)

18.3% increase

12.6

100%

95.3%

12.6
12.8

0 cases

0 cases

8.5
8.7

12.6
12.7

Improved reputation

CDP A List*3

8.8

12.6

11.5
11.a
11.b
11.c

9.1
9.4
9.5

11.3
10.3

16.7

17.16
17.17

13.1
13.2
13.3

14.1
14.2

15.2
15.4

17.16
16.7

12.8

1 case (to continue after FY2022)

9.1
9.a

13.3

15.1
15.2
15.4

17.7
17.17

13.1
13.2
13.3
12.2
12.4

17.17

12.6

16.5
16.7

10.2
9.1

17.17

15.1
15.2

12.4
12.8

2 or more projects

3.4

17.7
17.16

13.b

21 projects

8.5
8.7
8.8

17.17

12.4
12.6
12.7

4 cases (to continue after FY2022)

5.5

16.7

15.1
15.2
15.4

13.1
13.2
13.3

12.4
12.5
12.6
12.7

1 or more projects

8.2
8.3

13.1
13.2
13.3

15.1
15.2
15.4
15.5

13.3

25 or more projects

3.9

14.1
14.2

12.8

11.2
11.5
11.7
11.a
11.c
11.3
11.7
11.a
11.b
11.c
11.2
11.3
11.7
11.a
11.b
11.1
11.3
11.5
11.c

1.5

14.1

17.17

10.2
10.3

6.6

16.7

12.6

11.6
9.5

12.2
12.7
12.8

13.1
13.2
13.3

10.2

6.3
6.6

Rate of progress of system development (Targets are for FY2023)

Maintenance and improvement of safety management
standards

11.5
11.6

9.4
9.5

8.5
1.4

Renovation of core systems

Rate of men taking maternity leave

9.4

3.9

Standardization of ICT to improve on-site management efficiency

Expansion of real estate businessContribution to local communities

Rate of acquisition of First-Class Architect qualifications (Design)

Quality and Environment Management System
operation and improvement

Infrastructure renewal operation projects

Strengtheningofrelationships
withstakeholders

FY2022

Actions to solve global environmental issues

Securing and developing human resources

Strengtheningof corporate
governance

SDGs *2

Performance
FY2021

Addressing climate change risks

Development of environmental technologies

Achievementof motivating
workplaces
where diversehuman
resources canexert theircapabilities
Creation of
rewarding
workplaces
for all

Indicators

Targets

Strategies for Sustainable Growth

E Environment

Formation ofenvironmentallyconsideratebusiness

Specific issues

Business initiatives
Specific actions

17.14

13.1
13.2
13.3

11.5
11.b

16.7

17.14

16.5
16.7 17.16
17.17
13.2

16.7

17.4

The Kumagai Gumi Group Corporate Report 2022

31

Strategies for Sustainable GrowthBusiness Strategies

Civil Engineering

Domestic civil engineering sales

Domestic civil engineering gross profit margin

150 billion yen

100

106.8 111.6

15 %

12.5

125.0

122.2 121.4
94.1

10

9.9

10.9 11.3

9.7

The COVID-19 pandemic, the invasion of Ukraine by the Russian military,and rising prices have created an upheaval that is global in scale. Although
it means taking a great risk, we aim to make it through and seize great
opportunity. We will keep a close eye on this ongoing change.

Koji OkaichiBusiness environment
Awareness of opportunities

EconomySocialEnvironment● Acceleration in
infrastructure renewal
investment● Investment in disasterprevention/mitigation andnational resilience

Awareness of risks● Increase in global fuel andmaterial prices● Acceleration of supply
shocks● Distribution network
disruption

Strengths●R ecord of performance ininfrastructure renewal construction● Record of performance with Cotter
joints for floor slab replacement● Building up supply chain resilience● E stablishing a business model
to secure profits based on
infrastructure renewal construction
performance● Aging of existing
infrastructure● Shortage of workers withspecific skills● Acceleration of digitaltransformation● Loss of public trust due toembankment issues, etc.

● Stakeholder requirements
for a decarbonized society● Carbon pricing
implementation● Initiatives for renewable energy
related business● Climate change resulting
from global warming● Intensifying natural
disasters● Initiatives for disaster recovery
through unmanned construction● Digital transformation of operations
and creation of an on-site start-up
system50

0
FY2017 FY2018 FY2019 FY2020 FY2021

32

Area of focus

Policy Reinforcement

Major infrastructure renewal
Renewable energy● Develop management skills tocomprehensively handle largescale projects with multiple typesof construction

Disaster prevention andmitigation, and national
land strengthening● Strengthen engineering
capabilities to provide one-stop
services for design, procurement,
and construction

Unrecyclable waste disposal
facilities● Improve productivity throughadvanced use of big data obtained
from construction projects

FY2017 FY2018 FY2019 FY2020 FY2021

Looking back on FY2021

Initiatives in FY2022

According to statistics from the 94 companies of theJapan Federation of Construction Contractors, orders
for domestic civil engineering in FY2021 decreased byapproximately 10% in value from the previous year, bothin the public and private sectors. In contrast, Kumagai's
domestic civil engineering orders in FY2021 were 110.8
billion yen, up approximately 10% from the previous year.
Although private-sector construction declined slightly,
government works construction greatly exceeded theprevious year's level due to large-scale highway renewal
and seismic reinforcement projects.
Sales were 94.1 billion yen, down from the previous
year, due to fewer projects carried forward from theprevious year than there were a year prior, and several
interruptions in large-scale projects.
The Hokusatsu Tunnel Izumi Construction Zone in the
Hokusatsu Odan Road received the 2nd Civil EngineeringAward 2021 from the Japan Federation of Construction
Contractors, the second consecutive year after 2020 inwhich Kumagai Gumi has received the award.

In our disaster prevention and mitigation efforts, we will
foster comprehensive digital technology using ICT withlocal 5G to equip ourselves with the ability to handle
construction projects quickly and reliably. In digitaltwin visualization technology, we are focusing effort on
developing technologies for visualizing mud pressureshield chamber interiors, AI diagnostic systems for tunnel
faces, and AI operation management systems for roughterrain haulers. Kumagai's DX system, Kumagaigumi
Deep Smarts (KDS), which accumulates, analyzes, andutilizes on-site experience, is also in the process of being
put in place.
In our approach to infrastructure renewal, we willdevelop our proven Cotter Floor Slab Method and further
strengthen cooperation with the engineering department
and other industries to respond to increasingly large-scaleand diverse orders.
In the renewable energy field, which demands that we
provide one-stop support including design, procurement,
and construction, we will focus effort on strengthening ourengineering and risk management capabilities in the initialstages.

Hokuriku Shinkansen, Sakai Viaduct

Construction for the Kamitsubo Water Treatment Plant renewal project

Business strategy under the Medium-term Management Plan

Deepening core construction business

FY2023(targets)

Floor slab replacement
construction project

Strategies for Sustainable Growth

Director and Senior Managing Executive Officer
General Manager of the Civil Engineering Management Division
General Manager of the Railway Project Promotion Divisionof the Civil Engineering Management Division50

Tohoku Expressway Towada Jurisdiction
Expressway Renewal Work

The Kumagai Gumi Group Corporate Report 2022

33

Strategies for Sustainable GrowthBusiness Strategies

Building Construction

Domestic architectural construction sales

Domestic building construction gross profit margin

300 billion yen

15 %

200

186.8 195.0

229.5 236.9 235.7

10.6 10.9

240.0
10

10.0 10.3

9.5

Amid an ever-changing economy and society, we will always take on
new business opportunities and pursue growth in Building Construction.
Taking "construction with integrity that considers safety, quality, and theenvironment" to be the starting point of our business, we will contribute to00
FY2017 FY2018 FY2019 FY2020 FY2021

Shin Ueda

Business environment
Awareness of opportunities

Awareness of risks

Strengths

Economy● Expansion of e-commercemarket scale●	Expansion of infrastructure
renewal demand●	New housing demand
resulting from work stylereform and telework
dissemination●	Material price hikes anddelivery delays due tointernational instability factors
such as the Ukrainian crisis●	Decrease in construction
investment due to inflation●	Concerns about increased
credit risk

●	Record of performance in constructionof facilities for logistics (refrigerated
and frozen) and food factories●	Record of performance inconstruction of environmental
facilities (waste disposal)●	Record of performance in high-rise
residential building construction

Social●	Demand for medical andwelfare facilities due to theaging composition of the
population●	Advances in DX technology●	Diversification of society●	Shortage of workers
with specific skills due todeclining population●	End of grace period(in 2024) for regulations on
maximum working hours in
the construction industry●	Extensive Record of performancein the medical and welfare market● Improvement of productivity
through utilization of ICT●	Improved quality of operations andproductivity due to utilization ofdiverse human resources

Environment●	Social demand for
decarbonization and woodutilizing buildings●	Needs of society for energy
conservation, ZEB, ZEH●	Demand for buildings
adapted to BCP●	Weather anomalies resulting
from global warming●	Suspension of construction
due to natural disasters
such as earthquakes andtyphoons● Incurring of disaster recovery
costs●	Medium- and large-scale building
construction technologies from thepartnership with Sumitomo Forestry●	Record of performanceacquiring ZEB, ZEH, and otherenvironmental certifications●	Seismic isolation and vibration
control technologies

Business strategy under the Medium-term Management Plan

5

Medium- to large-scale wooden
structure business initiative

FY2023(targets)

FY2017 FY2018 FY2019 FY2020 FY2021

Looking back on FY2021

Initiatives in FY2022

While sales in our construction business in FY2021
remained at the same level as the previous year, soaring
prices for steel and other construction materials madefor harsh conditions. By diversifying our procurement
methods of materials and other efforts, we were able
to prevent a decrease in our gross profit margin, which
increased slightly. On the sales front, orders received
from customers in the housing, medical and welfare,and logistics markets were strong, and in the urban
redevelopment field, our cooperation in realizing projects
from the development stage bore fruit, resulting in asignificant increase in orders received compared to theprevious fiscal year.
The demand for medium- to large-scale wooden buildings,
which we are working on in collaboration with Sumitomo
Forestry, is rapidly increasing from the perspectives ofdecarbonization and SDGs. In June, we developed heatinsulating, fire-resistant λ-WOOD for wooden fire-resistantbuilding materials, and obtained certification from the
Minister of Land, Infrastructure and Transportation for thematerial's use in major structural members of structures
requiring 1- to 3-hour fire-resistance. As projects such as
office buildings and educational facilities accumulate, sales
development as the "with TREE" brand has grown into thecore of our strategy to attract orders.

In addition to our mission of safe and secure buildings,
we aim to provide higher added value. For medium- andlarge-scale wooden buildings that are environmentallyfriendly and healthy, we combine our technologies withthose of Sumitomo Forestry to achieve high quality
buildings. We present our customers with proposals basedon our experience with highly energy-efficient buildings,
including those with ZEB and ZEH features, and promote
their widespread use in society. We will develop solutionoriented sales activities to solve problems, always fromthe customer's point of view.
In April 2024, the maximum working hour limit regulation
will be applied to the construction industry, and we will
promote the use of ICT technology and labor-saving
construction at work sites to improve productivity. We
will improve the quality of operations and build a strong
production system by accelerating the use of DX, including
the efficient use of core information systems at our Headand Branch Offices.
From the perspective of controlling construction costs,
we will promote front-loading to solve various problems
as early as possible through the use of BIM, and oursales, design, and construction teams will work together
to provide building spaces that satisfy our clients.

Construction of Type-1 Urban Area Redevelopment Project
facility in the Kanazawa Station Musashi-minami area

Medical Corporation Tokushukai Kagoshima Tokushukai Hospitaltransfer to new construction

Strategies for Sustainable Growth

our customers and to society through Building Construction.

Director and Senior Managing
Executive Officer
General Manager of the Building
Management Division

100

Deepening core construction business
Area of focus

Policy Reinforcement

Production, commerce,
and logistics● Improve the ability to respond to
customers by integrating sales,
design, and construction

Medical and welfare services
Medium- and large-scale
wooden construction
Urban redevelopment
Environmentally-friendly
renewal34● Bolster the ability to quickly
identify and adapt to changes in
the construction market● Strengthen of front loading
utilizing ICT/BIM
Nomura Real Estate Development Co., Ltd.,
conceptual image of the completed H1O Aoyama

The Kumagai Gumi Group Corporate Report 2022

35

Strategies for Sustainable GrowthBusiness Strategies

Overseas Projects

Initiatives by Taiwan Kumagai

We will contribute to our customers and society through construction andrelated businesses in Asian countries, including solutions to SDGs issues
such as traffic congestion and environmental pollution, infrastructureManaging Executive Officer
General Manager, International Divisionenergy, as well as Japanese corporate expansion and development projects.

Akira YamazakiBusiness environment

EconomySocialAwareness of risks

Strengths●	Initiation of economic activities
and projects that stalled due tothe COVID-19 pandemic● Supply chain revision●	Soaring costs of materials
and transportation due tothe Ukrainian crisis andinflation●	Exchange rate fluctuations
including lower yen values●	Strong relationships of trustwith our customers in Japanand Taiwan●	Ensuring safety, including
prevention of COVID-19
infections●	Compliance issues anddecision-making delays indeveloping countries●	Abundant records ofperformance on overseas
projects, including PPPs●	Records of performanceon domestic infrastructuredevelopment●	Presence of leading domestic
and international partners●	Lagging maintenance ofpower line infrastructure andlegal system (Vietnam)●	Knowledge of woodconstruction and developmentfrom partnership with
Sumitomo Forestry●	Strategic business partnershipwith Vietnam's leading
renewable energy company

Environment●	Demand for developing adecarbonized society●	Social demand for wooden
constructure

Business strategy under the Medium-term Management Plan

Deepening core construction business
Area of focus

Urban infrastructure developmentin Asia
Support for Japanese companies
entering the Asian market(Taiwan, Vietnam, Indonesia, India, etc.)
Expand the Group's market sharein Taiwan

36

Conceptual image of the completed Taipei Twin Towers C1 and D1

1. Establishment of a new construction system

Awareness of opportunities●	Demand for robust infrastructure
for economic growth●	Japanese government support
for infrastructure export-related
ODA, etc.
●	Expectations for PPP ininfrastructure maintenance,
management and operation
projects in developing countries

Strategies for Sustainable Growthdevelopment for economic growth, decarbonization fields such as renewable

Taiwan Kumagai Co., Ltd. was established in Taiwan in 1974
as a Kumagai Gumi Group company. Since then, we havebeen constructing infrastructure facilities for 48 years and are
one of the leading Japanese-affiliated general contractors in
Taiwan. In recent years, Taiwan Kumagai has been involved in
the construction of some of Taiwan's representative landmarks,
such as TAIPEI 101, which was the tallest building in the world
when it was completed, and the Hua Zhu Zi Huan residential
super high-rise, with its innovative design reminiscent of thehelical structure of DNA.
In June 2022, Taiwan Kumagai Co. is aiming for further
growth through new initiatives, such as the new constructionof the Taipei Twin Towers C1 and D1 in front of Taipei Station.

Policy Reinforcement● Put projects together
from the initial stage● Strengthen construction
system through businessalliances with domestic
and overseas partners● Strengthen humanresources from inside andoutside the company

Mega solar investment projectin Vietnam Cat Hiep

In addition to the normal construction system, Taiwan Kumagai Co. has
now begun establishing a system in which four dedicated teams, specializing
respectively in (1) underground continuous wall and foundation work, (2)steel frame work, (3) formwork and steel frame assembly, and (4) curtain
wall work, are sequentially placed in charge of their respective worksites.
This type of construction system is very rare in Taiwan. It differentiates us
from local firms and helps to improve productivity and ensure quality andsafety.

Yulon Sindian Shopping Mall

2. Active DX implementation
Taiwan Kumagai Co. has been introducing 3D construction drawings using BIM and has assigned BIM personnel
to many of its work sites. We are now able to provide clients and design offices more three-dimensional andconcrete explanations, which is helpful in resolving problems before construction. We are also actively adopting
DX tools other than BIM to further promote operational efficiency.

3. Expansion of career advancement opportunities for women
Taiwan Kumagai has traditionally employed many female employees in theengineering field, and we are now upgrading our work-site facilities to enable
women to play active roles in the workplace. At the model worksite, five tosix female employees are assigned to construction management, and weare working to train them so that they will be able to work as female On-site
Managers in the future.

Looking back on FY2021

Initiatives in FY2022

Although strongly impacted by the COVID-19 pandemic
and the coup d'état in Myanmar, the following results wereachieved leading up to FY2022.
<Civil Engineering>
Bidding for ODA projects in Indonesia<Architectural construction>
Orders worth approximately 35 billion yen received by
Taiwan Kumagai in Taiwan for 3 consecutive years
Technology collaboration with Sumitomo Forestry in Thailand
and Indonesia<Development>
Investment in an ESG-conscious US real estate development
private placement fund in collaboration with Sumitomo
Forestry<PPP> Received MOM project phase two contract for
long-term comprehensive maintenance management of
Tate's Cairn Tunnel (Tai Lo Shan Tunnel) in Hong Kong

In civil engineering, we will focus on preparing for the startof construction on ODA projects in Indonesia and continue
to work on new projects thereafter.
In architectural construction, we will further refine theTaiwan Kumagai brand strength in Taiwan. In Vietnam, we
will establish an office in Ho Chi Minh City in addition to
the current office in Hanoi, and will strive to win orders for
projects from Japanese clients.
In development, we will work with Sumitomo Forestry
to invest in and provide technical support for medium- tolarge-scale wooden construction projects overseas. We
are participating in renewable energy projects in Vietnam
in collaboration with other companies.
Our PPP business in Hong Kong will strengthen ourcollaboration with domestic and overseas operators ininfrastructure maintenance and management technology
to deepen and expand the business.
The Kumagai Gumi Group Corporate Report 2022

37

Strategies for Sustainable GrowthBusiness Strategies

Construction-related
Peripheral Businesses

Successful development of Black Bark Pellets, a domestic bark raw material
Kumagai Gumi and Kiyomoto Corporation have jointly developed Black Bark Pellets (BBP), a high-quality biomass
fuel, with the aim of contributing to the revitalization of the domestic forestry industry, the realization of carbon
neutrality, and the stable supply of electricity.
Trees absorb carbon dioxide (CO2), and are reborn as wood products after harvesting. Lacking utility, barkgenerated during lumber manufacturing has been handled as waste, but its use is now anticipated to revitalize
the domestic forestry industry. BBP is also an excellent co-firing material forcoal-fired power plants, contributing to the reduction of CO2 emissions andstabilization of power supply through co-firing.

Strategies for Sustainable Growth

In addition to the renewable energy and real estate development businesses, the construction-related peripheral businesses,
which we undertake as a business entity, greatly contributes to the sustainable growth of the Kumagai Gumi Group.
In order to secure solid sources of revenue, we will promote our business operations through collaboration with Sumitomo
Forestry and other companies and through efficient and effective use of investments.

By using domestic local timber instead of relying on overseas timber, we
will build a system for locally produced, locally consumed energy circulation
aimed at supplying electric power to each region through the regional
manufacture and sales of BBP.

Business environment
Awareness of opportunities

Awareness of risks

Strengths

Economy●	The trend toward compact
cities in the central districts ofregional cities●	Expansion of PPP/PFI/
concession business,
infrastructure operation
business●	Sales/rental risk of reserved
floors in redevelopment
projects, etc.
●	Business feasibility ofredevelopment projects due
to soaring building costs●	Knowledge and a record of
performance in real estatedevelopment●	A record of performance in PPP/
PFI/infrastructure managementbusiness in Japan and overseas

Social●	Resumption accepting foreign
visitors to Japan●	New housing demand due toaging of society and work stylereform● Assurance of business
continuity and profitability●	Concerns about fuelprocurement●	Knowledge of real estate
investment related toaccommodations, extensive recordof construction performance●	A record of performance inhigh-rise residential building
construction●	Carbon neutrality / Green
Growth Strategy●	Procurement of renewableenergy-derived powersources, expansion of PPA●	Costs● Changes in social institutions
and tighter regulations, etc.

●	A record of performance inrenewable energy business,related business initiatives,and in-house electric power
procurement

Environment

Business strategy under the Medium-term Management Plan

Accelerate Construction-related Peripheral Businesses
Area of focus

Policy Reinforcement

Renewable Energy Business● Improve professional
skills and accumulationof expertise in suchareas as project
structuring andbusiness operations●	Woody biomass power generation business, including abusiness alliance with Sumitomo Forestry●	Wind and solar power generation businesses (including
overseas projects)

Real Estate Development● Urban renewal/urban development projects●	Real estate development projects, including business alliancewith Sumitomo Forestry as well as overseas projects

Infrastructure Management● Toll road operations●	Public-private partnerships (PPP) and concessions including
overseas projects

Technological Product Sales● Biomass fuel development and sales● Infrastructure renewal method development and sales● Nursing care/welfare equipment development and sales●	Construction equipment rental services(e.g. steel frame erection jigs)

38● Accelerate joint
research anddevelopment within
the Group companies
as well as the mobilityof management
resources, including
the use of highly-skilledindividuals● Strengthen partnerships
with companies andother organizations
beyond the scope of theKumagai Gumi Group

Captive-consumption solar
power generation system(Tsukuba Technical Research &Development Institute)

Experimental building(seam-jointed folded plate roof)

Looking back on FY2021

Initiatives in FY2022

In our renewable energy business, we have adopted acaptive-consumption solar power generation systemwith a storage battery system as a BCP measure at our
Tsukuba Technical Research & Development Institutesince January 2022, with the aim of helping to realize acarbon-neutral society.
In the redevelopment business, we have initiated workthat we have been advancing as the designated businessagent, one at Nishi-Shinjuku district and the other in
the Namiki-dori district at Iwaki Station. We were also
selected as a construction project partner for Block C infront of Sanda Station in Hyogo Prefecture.
For the urban renewal project in the Iidabashi East
area (Tokyo), we are working to establish a council andpreparatory association for redevelopment.
In the real estate development business, we, together
with a hotel management company and others, entered
the competition for thePark-PFI project for
the redevelopment,
management
and operationof Katsuyama
Dinosaur Forest
Park in Katsuyama,
Fukui Prefecture,
and were awarded
preferential
negotiation rights.

We will help realize a decarbonized society through thecommercialization of offshore wind, biomass, solar, andhydroelectric power generation businesses, as well as the
production and sale of Black Bark Pellets.
In the redevelopment business, we will continue toresearch new projects and work to acquire real estate inareas that are expected to be redeveloped in the future.
In the real estate development business, we will promote
the Park-PFI project in Katsuyama City by forming an
SPC for park operation and an SPC for hotel business.
We will also work with real estate funds to create new
businesses.
We will strengthen our PFI business initiatives, as well as
our concession and infrastructure management businessinitiatives.

Conceptual image of the completed
redevelopment project at 5 Chuominami, Nishi-Shinjuku

Conceptual image of the completed Katsuyama Dinosaur Forest Park
reconstruction, management and operation project

Parking facilities (carport type)
The Kumagai Gumi Group Corporate Report 2022

39

Strategies for Sustainable Growth

Financial Analysis
Performance

Status of consolidated statement of cash flows

Currency/Deposits and Balance of Interest-Bearing Debt

■Currency and deposits ■Interest-bearing debt

Unit: billion yen

Cash and cash
equivalents at
beginning of
periodNet cash providedby (used in)operating activities

8.3

Net cashprovided by(used in)Net cash provided
investing activities by (used in)-3.4 financing activities-9.7

Cash and cash
Translation equivalents
adjustment
at endof term

30
25
20
15

23.7
1.0
3.6
0.8

23.5
0.3
4.5
1.0

15.7

13.9

2.6

3.8

2022/32023/3(forecast)

10

5.5
0.5
16.5

5
0

8.5

Constructionrelated Peripheral
Businesses
Domestic Group
Company
Business
Overseas
Construction
Business
Domestic Building
Business
Domestic Civil
Engineering
Business

2024/3(Medium-termManagement Plan)

Capital Policy/Return to Shareholders
Our basic policy for distribution of profits is to make fair and stable returns to shareholders, taking into account factors
including our current business performance, our medium- to long-term business outlook, and the business environment,
while striving to enhance internal reserves for the purpose of enhancing our management foundation and expanding
business income. In addition to the ordinary dividend, we have decided to repurchase a total of 10 billion yen of treasury
stock during the period of the current Medium-term Management Plan (FY2021-FY2023) in order to increase shareholder
returns and improve capital efficiency.
In FY2021, a dividend of 120 yen per share and the repurchase and cancellation of approximately 4 billion yen worthof treasury stock resulted in a payout ratio of 35.1% and a total return ratio of 59.6%. For FY2022, we plan to increase
the dividend per share by 10 yen to 130 yen and continue to repurchase 4 billion yen of treasury stock annually, which is
expected to bring the total return ratio to the same level as in FY2021.
We will work to optimize the balance between investment for growth and return to shareholders.

Payout ratio/Total payouts

billion yen 108.5

100

67.4

82.4

80

75.2

71.3

67.4

15

17.9

15.8
13.3

100

15.9

16.2

59.6%

59.9%

10

40

5
20

19.4

20
billion yen

60

14.5

12.8

12.3

11.9

12.2

0
2018/3

40

33.0
2.0

35 billion yen

120

0.9
71.3

Medium-term Management Plan/Financial Targets (ordinary profit)

Strategies for Sustainable Growth

In FY2021, private capital investment, which had declined due to the spread of
Director Senior Managing Executive Officer,
COVID-19 infections, gradually recovered, and non-consolidated orders received
General Manager of the Administration
increased 23.6% from the previous fiscal year to 350.2 billion yen. However, theDivision
In charge of Complianceprofitability of some of these projects at the time the orders were received washarshly impacted, in part by rising prices for materials and equipment.
Koji Hidaka
Sales decreased 5.6% year on year to 425.2 billion yen, due to a slump in orders
carried forward from the previous year as a result of the COVID-19 pandemic, as well as frequent temporary construction
interruptions caused by external factors in the domestic civil engineering business. In terms of profits, operating profit
fell 19.0% to 22.7 billion yen, ordinary profit fell 16.4% to 23.7 billion yen, and profit attributable to owners of the parent
fell 11.6% to 15.9 billion yen due to the decrease in sales and unprofitable construction projects in the domestic civilengineering business.
Cash flow from operating activities was a positive 8.3 billion yen, but overall cash flow was a negative 3.9 billion yen
due to capital expenditures, dividends, and treasury stock repurchases. As a result, the cash deposit balance amounted
to 67.4 billion yen. Meanwhile, the balance of interest-bearing debt stood at 12.2 billion yen. The balance has been
continuously reduced through scheduled contractual repayments to financial institutions, and in the current fiscal year,
as we promote ESG management, we also refinanced the balance with a sustainability-linked loan. We utilize syndicatedloans for a portion of our borrowing in order to stabilize and improve the efficiency of fund procurement. We have alsoestablished a commitment line of 30 billion yen, enabling us to cope with any sudden demand for funds.

Regarding investment, we plan to invest a total of 40
billion yen during the term of the management plan.
The company plans to invest approximately 2 billion yen
in bolstering our construction business, approximately
30 billion yen in evolving our construction-related
peripheral businesses, and approximately 8 billion yen
in strengthening our management foundation in areasthat are expected to become future sources of earnings.
In addition, we have established investment and loan
criteria and, since last fiscal year, a dedicated screening
department to carefully examine business profitability andrisks.

2019/32020/32021/3

0

%

75

50

23.1%

35.0%

4.2

4.7

2018/3

2019/3

28.8%

31.2%

5.6

5.6

2020/32021/3

9.4
35.1%
5.4
2022/3

9.7
35.7%

25

5.7
0
2023/3 (forecast)Profitattributableto parent
company
shareholder
Total payout
amountTotal
dividends
Dividend
payout ratio
Total payout
amount2022/3Medium-term Management Plan and Investment

Future Outlook

The Kumagai Gumi Group's Medium-term Management Plan (FY2021-FY2023) formulated in May 2021 sets four
financial targets to be achieved by FY2023: consolidated sales of 470 billion yen, consolidated ordinary profit of 33 billion
yen, ROE of 12% or more, and a payout ratio of 30%.
In FY2021, the first year of the plan, neither consolidated sales nor consolidated ordinary profit reached the planned
values. Orders are stacking up, and sales are generally progressing as planned. But as we approach the final year of theplan, ordinary profit must improve profitability through strict cost management that does not give rise to any loss-making
construction projects, and through quicker returns in construction-related peripheral businesses.
ROE was 9.5% in FY2021, and the target profit level will be necessary if we are to achieve 12% or more. The dividend
payout ratio is already at the 35% level due to the company's policy of paying a stable dividend despite a decrease inprofits.

In the construction market, in addition to solid public-sector investment, private-sector construction investment is showing
signs of a gradual recovery. However, the domestic and international economic environment remains uncertain amid theresumption of global economic activity, rising raw material prices brought about by the Ukraine crisis and other factors,
the weak yen, and the resurgence of COVID-19 infections.
In these times of increasing uncertainty, the Kumagai Gumi Group believes, as a leader in the construction service
industry that society requires, that sincerely addressing social issues will lead to the fulfillment of our Medium-termManagement Plan and, by extension, to the sustainable growth and enhancement of the corporate value of our Group.
To this end, we will further strengthen our management foundation through the implementation of appropriate financial
and capital policies and enhance the viability of our advancement of business projects.

The Kumagai Gumi Group Corporate Report 2022

41

Management Foundation

Diverse Human Resources

WEB ➡ Human Resources-related Data

Improve the work environment and workplace systems that enable diverse humanresources to maximize their abilities
As the foundation for the development of the Kumagai Gumi Group, we focus on securing and developing humanresources. And we are creating a workplace environment conducive to healthy functioning. Currently, the constructionindustry is experiencing a serious decline in human resources due to a shortage of young engineers and other workers, andthe retirement of skilled elderly engineers. In light of this situation, Kumagai Gumi is not only promoting the advancementof women, but has also established a reemployment system for elderly employees and a job return system. We are also
actively working to promote non-regular employees to full-time positions.

About recruitment
Kumagai Gumi works to resolve the advancing age of employees and imbalances among generations, and engages inrecruitment activities with an awareness of diversity. For new graduates and mid-career hires, we formulate recruitment
plans based on future performance trends and other factors, taking into consideration the total number of employees, job
types, age distribution, and other factors five to ten years from now.

https://www.kumagaigumi.co.jp/csr/employee/index.html

Main initiatives in fiscal 2021 and evaluation by society
July Discussions at the Japan Sports Agency on the theme of "Learning from Corporate Examples to Promote Women's

Advancement" with officials including Koji Murofushi, Commissioner General of the Japan Sports Agency.

September Introduced a "Pregnancy Support Leave System" and "Fertility Treatment Leave System

Pregnancy Support Leave: Special paid leave that can be used in increments of 30 minutes for up to fivedays per year.
Fertility treatment leave: A system of leave that can be taken in installments up to three times to a maximumof 365 days.

2021

November Receipt of Silver rating in the PRIDE Index, which evaluates companies' LGBTQ efforts
2022
Certifications/Registrations

February

Held a second roundtable discussion with the President and male employees who have taken childcare
leave, to encourage male employees to take childcare leave● Registered as a Tokyo Metropolitan Government "Barrier-Free from the Heart" support company work–life balancepromoting company in Shinjuku WardBusiness status since establishing the Diversity Promotion Office
FY2021

Net sales (million yen)

267,497

331,021

1.2 times

Net income (million yen)

10,392

13,7301.3 times

Average monthly overtime hours (with FY2015 as basis)-24.2 hours

FY2017FY2018FY2019FY2020

FY2021

Number of employees (persons)

2,382

2,497

2,578

2,620

2,626

Number of women in
managerial positions (persons)

1166

6.0 times

Average age (years)

45.2

44.9

44.5

44.4

44.1

Female engineers assigned tothe site (persons)

1430

2.1 times

Average years of service (years)

20.5

19.9

19.5

19.5

19.3

Ratio of full-time female employees

12.6%

18.0%

1.4 times

Ratio of male employees taking
childcare leave

2.3%

31.3%

13.6 times

Ratio of male employees taking
leave for spouse's childbirth

40.0%

35.2%

0.9 times

Number of employees working
shorter hours (persons)21

48

2.3 times

733

4.7 times

228

329

1.4 times

Promotionof women's
workplaceadvancement

As a diversity company
Kumagai Gumi strives to realize a work environment where all employees can work with vitality regardless of gender,
age, nationality, gender identity or sexual orientation (LGBTQ), or disability. We aim to improve business performance bypromoting diversity and work-style reform.

Promotion structure
Kumagai Gumi has established a Diversity Promotion Committee chaired by the President and composed of theGeneral Managers of each division, and has appointed a person in charge of diversity promotion from the Headquarters,
branches, and Group companies to establish a system for advancing diversity. In addition, we have established a Work
Style Reform Working Group, in which representatives from each department study systems and measures to promote
diversity and work-style reforms across the entire company.
Kumagai's Diversity Promotion Department is responsible for the management and effectiveness of these efforts,
integrating the promotion of human resource success and the promotion of work-style reform.

Workplaces where women can play active roles
Kumagai Gumi has formulated a Third Action Plan (January 2021-December 2022) based on the Act on the Promotionof Women's Workplace Participation and Advancement Female Participation and Career Advancement in the Workplace.
It establishes the following three quantitative goals.
● Increase the percentage of women among new graduate hirees to 25% or more.
● Increase in the number of female managers by 10% from the current level (of April 2020).
● Increase the rate at which male employees take leave following the birth of a child (special paid leave for childbirth bya spouse or childcare leave) to at least 70%.

Balancing work Number of employees taking
and nursing care nursing care leave (persons)
Elderly
employees

Number of re-employment
hirees (persons)During the seven years
since diversity promotion
began, sales increased
1.2 times and net income
1.3 times. The numberof female managers
increased sixfold, from 11
to 66, and the number offemale engineers assigned
to the site increased 2.1
times, from 14 to 30. The
use of support systems
enabling men to balance
work and family life is also
increasing. Prolonged
working hours have been
mitigated, with averagemonthly overtime reducedby 24.2 hours per
employee.

Reinforcing management base

Employeesatisfaction

FY2015-FY2021 Comparison

FY2015Classification by indicator
Corporate
performance

Number of employees and average age/years of service Kumagai Gumi alone

42

WEB ➡ Together with Employees

https://www.kumagaigumi.co.jp/csr/employee/date/index.html

Status of employment of persons with disabilities
Expanding the period of Persons with Disabilities Week
(December 3 to December 9 every year) as stipulated
in the Basic Act for Persons with Disabilities, Kumagai
Gumi has established every December as "Persons
with Disabilities Month" since FY2021. During Persons
with Disabilities Month, we are implementing a variety of
initiatives, including an e-learning program on the themeof deepening understanding of persons with disabilities.
In addition, barrier-free restrooms have been installed in
the Headquarters office building to provide a comfortableenvironment for wheelchair users.

Employment rate of persons with disabilities Kumagai
Gumi only
2.40 %
2.20
2.00

Statutory employment rate: 2.30% (from March 1, 2021)

2.22

2.12

2.09

2.14

2.10

1.80
June 2018

June 2019

June 2020

June 2021

June 2022

Status of retiree reemployment
We operate employment-related systems under the premise of employment until the statutory retirement age of 65,
and contribute to the expansion of reemployment of retirees who wish to continue working. To energize employees andorganizations alike, we are enhancing employee benefits to create comfortable work environments. As of April 2022, 336
retirees are working in the company.
The Kumagai Gumi Group Corporate Report 2022

43

Management Foundation: Diverse Human Resources

Development of human resources

Respect for human rights

Aiming to develop human resources under the idea of "Enrich the self, create the future, and support people," Kumagai
Gumi undertakes a variety of initiatives. In April 2019, we formulated the Human Resources Development Plan that sets
our directions in this area.

We have established the Kumagai Gumi Code of Conduct as our pledge to respect human rights and individuality, and to
conduct corporate activities based on the principles of fairness and equality.

Our corporate philosophy structure and vision for human resources
Conceptual structure of Kumagai Gumi
Insight, Onsite, FarsightGroup Vision(Kumagai Gumi's
vision for itself)

Promote the realization of our Group
VisionFormulate an image of
employees as "Kumagai Gumi's
vision for human resources"

Enhance our unique Worksite Excellence,create unique value ("Quality that Inspires
Happiness"), and continue to support
customers and society throughout every era

Vision forhuman resources

We encourage the acquisition of official
qualifications such as Professional
Engineer and 1st-Class Architect. We
also conduct supplementary lectures andmock examinations for examinees, andsupport employees’ skill advancement.

Communication in personnel
evaluation and work performance(Vision expected of all employees)
Roles and duties(Expectations and responsibility for results borneby each person in the workplace)

Our Company's Code of Conduct

FY2021 attendance status of training by rank
Name of training

By target
Category

Participants/Eligible Training rate
Total training hours(persons)(%)
Total hours / per person

Next-generation
executive
development training

Selection

20 / 20

100

1,600

80

Newly appointed line
director trainingRole

21 / 23

91

651

31

Manager positions
5th-year training

Year-specific39 / 41

95

624

16

Newly appointed
manager training

Time ofpromotion

38 / 40

95

608

16

Beginning manager
training

Time ofpromotion

31 / 33

93

496

16

Newly appointed
instructor training

Time ofpromotion

56 / 58

96

896

16

Role

118 / 125

100

944

8

3rd-year training

Year-specific

129 / 129

100

2,064

16

Young employee
follow-up training

Year-specific

129 / 129

100

7,611

59

New employee
training

Year-specific

135 / 135100

22,208165

We conduct goal setting interviewsat the beginning of the term, progressconfirmation interviews at the mid-pointof the term, self-evaluation confirmationinterviews at the end of the term, andfinally an interview on evaluation
results, for a total of four interviews
a year between employees and theirsuperiors. Employees are able to state
their wishes regarding future workplaceassignment and skill development to the
Human Resources and General Affairs
Department via our in-house application
system at any time, without going
through superiors.

Achieving high training
participation rates
At the time of training, in addition to
the information provided to the trainee
themselves, the trainee's department
office / branch managers and supervisors
are also notified. We are working tocreate an atmosphere conducive toparticipation in training, with an averageannual participation rate of over 90% in
FY2021.

Promotion of work style reform
Kumagai Gumi has endeavored to promote work style reform by introducing systems for improvement of productivity andoperational efficiency, and to reform awareness. These have included systems for teleworking and staggered working
hours, introduced in FY2020, and a flextime system the Outside Work Division in FY2022.
In our efforts to raise awareness, we have provided opportunities to disseminate messages from our president and to
explain the overtime work limit regulations at training sessions and meetings for executives at each branch office. Since
FY2019 representatives of each of our departments have engaged in the Small Start Project to build up small reforms
that will lead to individual motivation.
Since the maximum limit on overtime work will be applied to the construction industry in FY2024, we will use the next
two years as a critical period in which to reduce overtime work by further reviewing work processes and promoting DX.

44

Human rights training for employees
We conduct training on human rights for new employees. We use this as an opportunity to deepen understanding of
human rights through a broad range of topics, including social discrimination, discrimination toward LGBTQ persons andpersons with disabilities, harassment in general, and human rights violations on the Internet.

Prevention of harassment
We conduct e-learning for all employees. About 80% of employees undergo the program, which covers (1) power
harassment, (2) sexual harassment, (3) harassment related to pregnancy, childbirth, childcare leave, and nursing careleave, (4) dealing with harassment, and (5) a confirmation test. We also make prevention of harassment a mandatory
item in managerial training.

Health management
Reinforcing management base(Base and foundation for everything)

OJT trainer training

Support for certification andoutside education

Kumagai Gumi views the health of employees as the most vital of our management resources. We have established ahealth promotion office in the Human Resources and General Affairs Department in the Headquarters, and have readiedsystems for the comprehensive support of employees' health with the cooperation of health promotion managers at all
branches. Every fiscal year, we formulate an employee health promotion plan, and carry out health promotion activities
that seek an upward spiral in PDCA activities.
With regard to the COVID-19 pandemic, we provide up-to-date information to the countermeasure task force and to
employees as needed, and offer support including health checkup and interview recommendations for employees atparticularly high risk of serious illness.
Annual Plan for the Promotion of Employee Health (FY2022)(1) Initiatives to prevent work-related accidents among employees(2) Assessing working hours and approaching high-risk individuals(3) Conducting general health examinations and approaching high-risk
individuals(4) Implementation of stress checks and approach to high-risk persons(5) Efforts in individual cases(6) Initiatives to maintain and promote the physical, mental, and social
health of employees

We have been recognized under the
Health and Productivity Management
Organization Recognition Program of the
Ministry of Economy, Trade and Industry
and the Tokyo Stock Exchange, as acorporation that practices excellent healthmanagement.

Initiatives for employees with higher risks
All employee health checkup results undergo careful checking by industrial physicians. For employees requiring followup, we provide continuous support along with recommendations for consultations and interviews. To prevent brain andcardiac disease and mental health disorders caused by overtime hours, we offer accumulated fatigue checklists for
eligible employees and every month provide consultation with industrial physicians to persons who request it. In addition
to this, we provide special follow-up through visits by occupational health experts, interviews with employees, and othermeasures to address workplaces in special environments, such as overseas or at disaster reconstruction sites.

Initiatives for mental health
We carry out stress checks, employee training (self care and organizational care), and support for return to the workplace,among a wide range of activities that extend from primary to tertiary prevention.

The Kumagai Gumi Group Corporate Report 2022

45

Management Foundation

WEB ➡ Technology/Services

Technologies of solving social Issues
Technology Development System
Kumagai Gumi understands technology development to
be one of the most important foundations of management,
and we have therefore established systems andstrengthened our initiatives in this regard. We haveestablished a Technological Development Policy basedon our management policy, and the Technical Research& Development Division, Civil Engineering Management
Division and Building Construction Division collaborate
across the board to promote practical technology
development directly related to our business. In addition
to developing technologies that contribute to our core
construction business, we also aim to solve social issues
and create new value to help realize a sustainable society.

Main initiatives in FY2022
We set forth four items for FY2022, the second year of our Medium-term Management Plan.

Management Meeting

Determining management policies/
administrative decision-making

Technology Strategy
Development Committee

Determines technology development policy & strategy

Technology Development
Management Subcommittee
Selection of technology development
themes/collaboration between divisions

Civil Engineering
Management Division

Technical Research &Development Division

Building Management
Division

Kumagai Gumi has established an R&D vision and mission, looking to the accomplishment of our Medium-termManagement Plan, under which we have laid out our Technological Development Policy. We believe that continuing totake on challenges such as basic research for a decarbonized society, technology development in the field of renewableenergy, and research in the area of smart cities with an eye toward the near future will lead to opening up new businessdomains for the Group.

Achievement of communities for sustainable andenriching living

MissionDevelop technologies that aid the world, and bear
responsibility for the future across the ages

Technological development policy
Contribution to the achievement of a decarbonized
and recycling-oriented society
Contribution to advanced construction throughdigitalization

Major research and technology development
results and achievements●	Precast PC floor slab design and construction
technology for bridges using cotter joints●	Calculation method for predicting heavy floor impact
sound levels in apartment buildings●	Composite damper for seismic isolation against
large amplitude earthquake motion●	Development of VR technology for unmanned
construction●	System for monitoring areas around construction
equipment using millimeter-wave radar and visible
cameras●	Development of fire-resistant wood members for
medium- and large-scale wooden buildings●	Development of FLORA TENDER independent
walking aid with stand-up assist feature●	Development of IoT sensor for environmental
measurement(1) Develop technologies contributing to
the construction business●	
Development of ultra-high-strength
concrete●	
Development of innovative
microbial culture systems●	
Infrastructure renewal technology
development●	Development of fire-resistant woodtechnology for medium- and large-scale
wooden buildings●	Development of advanced construction
technology(2) Strengthen construction-peripheralbusinesses and technical productsales● External sales of cotter joints●	Commercialization of a fallprevention walkers●	Commercialization of development
technology from partnership with
Sumitomo Forestry●	Public relations promotion for researchand technology development(3) Take on challenging new business andresearch domains●	Development of algae cultivation
technology●	Environmentally friendly concrete
technology●	Strengthening of research for carbon
neutrality● Research and consulting business(4) Strengthen and support business
infrastructure●	Promotion of BIM/CIM deplopment
and implementation● XR technology development● Local 5G●	Development of construction robots andAI technology●	Securing and developing humanresources in priority research fields●	Advancing development associated with
SDGs

Reinforcing management baseTechnology Development Policy under the Medium-Term Management Plan Policy

Visionhttps://www.kumagaigumi.co.jp/tech/index.html

Patent-related measures
Reflecting the promotion of DX, digital-related applications for items such as remote control, automated driving, anddigital measurement accounted for approximately 20% of all patent applications in FY2021. About 13% were related towood components, structures, and fireproofing related to the medium- and large-sized wood construction sector, an area
in which we are focusing effort. Another roughly 13% of applications were related to assistive devices and mobility aids.
We are also actively collaborating with other companies on patent applications, with joint applications filed as a result of
joint research and joint development accounting for approximately 47% of all of our applications.
We also focus on the protection of architectural designs, and have filed approximately 20 design applications for several
designs (buildings), including the design of the Fukui Headquarters Office building.
As a new initiative, we have begun performing analyses of patent information, which can serve as Big Data, with theaim of providing information that contributes to management and technology strategies, in addition to application filings.

Trends in technology development
Based on our Technological Development Policy, we are researching carbon-neutral technologies using bioprocesses
and developing wooden fire-resistant members that contribute to cost competitiveness in the field of medium- and largescale wooden building construction, with the aim of realizing a decarbonized, recycling-oriented society.
In addition, we will focus on the latest technological fields, such as quality management systems utilizing AI technology,
environmental forecasting and control technology development, as well as developing technologies that will serve as thefoundation of our construction contracting business and contribute to improved reliability and productivity.

46

The Kumagai Gumi Group Corporate Report 2022

47

Management Foundation: Technologies of solving social Issues

Promotion of DX

Results of development with Sumitomo Forestry

Joint development of KS Wooden Buckling-restrained Brace,a horizontal load-bearing member that combines wood and steel

Steel frame
structurebuildingframe*2 Abbreviation of "Kumagaigumi Deep Smarts," a system that stores current and past on-site data in the cloud and makes it available to everyone.

DX Policy

Realizing our Group Vision through Digital Technology
Through digital technology, we heighten technical capabilities,
human capabilities, and, in turn, our on-site excellence.

We will continue to digitize our operations and transform our work into an activity that feels effortless and enjoyable.
We will grow as a whole Group by digitally connecting our customers, partner companies, and employees.

With digital technology, we create "Quality that Inspires Happiness,"and is responsive to the feelings of those who experience it.

Supporting customers and society through the ages with digital technology.
Applying data gained through manufacturing will keep us close to people's lives and society forever.

As a leader in the construction service industry, we will continue to pursue digital technology, "D" to transform, "X".

Accredited as a DX Certified Business Operator

Development of environmentally considerate technologies

Development of a Wooden Earthquake-resistant Hanging Wall Construction Method that incorporates
a wooden member with a hanging wall as an earthquake-resistant element.
Urban afforestation is attracting a great deal of attention from theperspective of realizing a low-carbon society and effectively utilizing
domestic forest resources.
Kumagai Gumi has developed a Wooden Earthquake-resistantHanging Wall Construction Method, which incorporates orthogonallaminated timber (CLT) wooden hanging walls into steel-framebuildings as earthquake-resistant elements, for applicationin mid- to high-rise office buildings and commercial
facilities.

*1 Developed AI mountain tunnel face diagnostic system, 3D simulation system for shield tunnel alignment, AI aggregate particle size classification system for dams, etc.

We will promote efficiency and automation of construction by digitally visualizing the knowledge we have cultivated to date.
Utilizing daily and historical data, we quickly recognize and resolve issues that were opaque before.
Incorporated into thebuilding's structural frame
KS Wooden Bucklingrestrained Brace

Full-scale testing

Having proclaimed "DX Year 1" in April 2019, Kumagai Gumi is continuously working toward the development andimplementation of advanced informatized construction*1 and KDS*2 in the civil engineering business, the use of BIM in theconstruction business, and the renewal of core systems in the Administrative Division.
In April 2021, the IT Strategy Committee was formed as a management committee for IT, to accelerate decision-making
on DX and clarify where authority lies. In May, the DX Promotion Department was established, and in September 2021,
the DX Policy was established. The DX Policy positions DX as a means of realizing the Kumagai Gumi Group Vision:"Insight, Onsite, Farsight."

Reinforcing management base

Steel earthquake-restrained braces used in buildings exhibit excellent performance during earthquakes, butwhen compressive forces exceed the limit, buckling occurs and the brace is severely deformed. To overcome
this drawback, conventional techniques use concrete or steel bucklingKS Wooden Buckling-restrained Brace
restrained members.
The KS Wooden Buckling-restrained Brace, developed by
Laminated veneer lumber (LVL)
Kumagai Gumi in collaboration with Sumitomo Forestry, reinforces
the steel core using wood buckling-restrained materials thatcombine laminated veneer lumber (LVL) and plywood to provide
stable deformation performance without loss of bearing capacity
Plywoodeven under compression, achieving seismic performance
Steel brace
equivalent or superior to that of conventional buckling-restrainedbraces.
Since they are made of wood, KS Wooden Buckling-restrained
Braces can reduce greenhouse gas emissions during manufacturing
by up to 40% compared to steel
braces.

WEB ➡ DX Initiatives

https://www.kumagaigumi.co.jp/ir/management/dx/dx/index.html

Kumagai Gumi was accredited as a DX Certified Business Operator in May
2022 under the DX Certification System established by the Ministry of Economy,
Trade and Industry.

Integrated management of all constructionindustry operations with "Construction WAO"

Perspective image of a model building

Steel sheet

Woodenhanging wall
(CLT)

Kumagai Gumi has been using separate systems foron-site purchasing management and cost management,
separate from its core systems for accounting, sales,
and other operations. As a result, inefficient businessprocesses, complex inter-system integration, and system
operational burdens had become issues. We therefore plan
to introduce Construction WAO, which enables integrated
management of all operations in the construction industry,
to integrate business processes and centralize data.

AftercareCompletion

Proj. order
received
Start work

Construction
WAO

WorkingbudgetDatabase

Income/expenditure

Estimate

Payment

Order
Progress
check

Steel
columnStructural frame using awooden hanging wall

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The Kumagai Gumi Group Corporate Report 2022

49

Special
Feature1

WEB

https://www.kumagaigumi.co.jp/company/tsukuru/tsukuru_2022-1.html

Social Infrastructure Requiring Perfect Quality
Construction of a Large-scale Final Disposal Site
The Okuyama Forest Clean Center has a landfill capacity of 3,193,177 m3, making it one of thelargest final disposal sites in the Tokai area. Its construction must be of the highest quality so as
not to impact the surrounding environment. The people and technology that only Kumagai Gumi
can provide are being put to the fullest use here in order to realize this crucial piece of social
infrastructure that is indispensable to our daily lives.

Construction of crucial social infrastructure, a large-scale final disposal site
The "Okuyama Forest Clean Center," under construction
by Kumagai gumi, is a final disposal site operated andmanaged by MIDAC Holdings, an expert in waste
management. This is a facility for the final disposalof incinerated ash from burned waste and waste thatis difficult to recycle/reuse in landfill. It is a crucialcomponent of social infrastructure that supports our daily
lives. A properly operated and managed final disposalsite also serves to prevent improper waste disposal andillegal dumping. However, the remaining capacity of final

disposal sites in Japan is decreasing, although demandremains high.
The Okuyama Forest Clean Center covers a total areaof approximately 228,000 m2.
This is a large-scale final disposal site with a landfill
capacity of approximately 3,193,177 m3. The construction
demands high-level advanced technology and thoroughquality control. Kumagai Gumi is committed to thismission, and to the creation of social infrastructure.

Carrying out high-quality construction under the All-Kumagai-Gumi structure
The Okuyama Forest Clean Center is divided into
four major construction zones, and Kumagai Gumi isin charge of all of them. Construction work in the firstof these construction zones began in February 2019.
Koichi Arizuka, the Onsite Manager in overallcharge of the site, spokewith us about the project.

Koichi Arizuka, On-site Manager

Final

disposal

sites"The bottom of the repository is covered with animpermeable layer of a special clay mixture 50 cm
thick. An impermeable sheet is then laid on top of
this layer to provide double impermeability.The walls
are also made of a moisture barrier sheet made of adifferent material from that used at the bottom."Special Feature"This final disposalsite reuses land thatwas previously aquarry," he said. "Thisrequired advanced
technology and knowhow that was different
from that of a normal
final disposal site."ordinarily have relatively gently sloping walls, but this site,
being a former quarry, has steep slopes with many areasof bare bedrock. The difference in elevation is about 30
meters, and in some places the walls are almost vertical.
Construction required cutting and leveling the uneven
bedrock, and then formation work, such as pouringconcrete or spraying mortar.
In a managed final disposal site, the key to successis construction that is impervious to water. A completely
impervious structure is required to prevent rainwater thatflows into the repository from affecting groundwater andother resources. Arizuka commented on the technology.

Overview of construction
Name of construction
work

Okuyama Forest Clean Center(final disposal site)
Building construction

Orderer

MIDAC Holdings Co., Ltd.

Designer/Manager

Kensetsu Kougaku Kenkyusha Co., Ltd.

Construction period

January 1, 2019 through June 30, 2026

Details of construction

Final disposal site

Contractor

Kumagai Gumi Co., Ltd.

Human resource development on the front lines, where young employees learn
and grow

Junior employees at work on-site

Leachate water treatment facility

50Construction of the first construction zone, which began
in February 2019, was set for completion in March 2022,
to be followed by the second to fourth construction
zones in February of the same year. Currently, there areseven employees stationed in the on-site work office.
The majority of the workers are in their 20s, making it ayouthful workplace.
The manager of the site, Mr. Arizuka, also talks about theuniquely rewarding aspects of a final disposal site project.
"I myself have been involved in many civil engineering
projects, but this is my first experience with a final
disposal site. Lots of specialized construction isrequired, but at the same time, absolute quality is amust. To me, that's both challlenging and rewarding.
I hope that junior employees will experience the real
thrill of civil engineering at this site and experience
professional growth as a result," he said.
The second and third construction zones, currently
under construction, are scheduled for completion in June
2026. The Okuyama Forest Clean Center will continue
to operate for long after that, with reclamation planned
to continue for approximately 30 years. The construction
work now being undertaken by Kumagai Gumi will enable
the subsequent long-term conservation of the final
disposal site. That is precisely why Kumagai Gumi remains
committed to technology and quality without compromise.

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51

Special
Feature2

WEB

https://www.kumagaigumi.co.jp/works/pickup/sasaeru/sasaeru_2022-1.html

Aware of our connection to society,We make the site more "sightly"
Presenting "the Kuma Seminar",where students learn on-site
Tokyo Joshi Gakuen is constructing a new school building as part of its 120th anniversary. Kumagai
Gumi is in charge of the construction work, and also contributes to the development of students
who will lead the future by collaborating to present the Kuma Seminar program, a hands-on classthat uses the construction site as a learning opportunity.

The Kuma Seminar turns a construction site into a place for students to learn
Located in Shiba, Minato-ku, in the heart of Tokyo, Tokyo
Joshi Gakuen is a girls' junior and senior high school founded in 1903. The school will celebrate its 120th anniversary in2023, and as part of this celebration, construction of a newschool building is underway.
Kumagai Gumi is responsible for the construction ofthis project.
Renovation and demolition of the existing schoolbuilding began in March
2020, and construction of
the new building began in
April 2021. The construction
work was conducted on an
adjacent lot as classes proceeded "in situ" in one of
the existing school buildKeisuke Horie, Work
ings. Keisuke Horie, theStation Manager

work station manager overseeing the site for this project,commented.
"When construction work first began, some at Tokyo
Joshi Gakuen voiced consternation at the unfamiliar
noise and vibration of the construction work. So we
devised a construction method through repeatedconsultations. Out of these communications, we
received an unexpected proposal from Tokyo Joshi
Gakuen," he said.
A new initiative undertaken by Tokyo Joshi Gakuen
involves offering "Exploratory Seminars," or hands-onclasses designed in collaboration with companies andother organizations. We received a proposal from theschool saying they wanted to develop a class together
with Kumagai Gumi, which would provide content for oneof these Exploratory Seminars. That's how the classes
began, under the title "Kuma Seminar," as a collaboration
between Tokyo Joshi Gakuen and Kumagai Gumi.

Students experience an on-site concrete pourapp created by Kumagai Gumi for worker education. In a
survey conducted after each seminar, students made thefollowing comments.
"I learned that no matter how much of a hurry you
might be in, you always have to wear a lifeline." "Itwas so scary in VR, I was amazed to think that people
working on site do this every single day."Special Feature

Nine female students participated in the Kuma Seminar,
which began in May 2021. A total of 12 programs wereconducted. For example, in the Hands-on Concrete Pouring
Workshop, skilled workers from partner companies played
the role of teachers, allowing participants to experience
actual concrete pouring at the work site. Through the
Virtual Reality (VR) Experience, visitors were able tovirtually experience working at heights on ledges, using an

A fresh learning opportunity for on-site employees and workers

While classes are conducted "in situ" in the existing school building in the foreground,construction of a new school building at the back of the building proceeds.

Created by students at the "Kuma
Seminar," safety awareness posters
are displayed at the job site.

Overview of construction
Name ofconstruction work

Tokyo Joshi Gakuen Junior & Senior HighSchool reconstruction plan

OrdererTokyo Joshi Gakuen

Location

1-30-4, Shiba, Minato-ku, Tokyo

Uses

Middle and high school, office, garage

Construction
periodApril 1, 2021 through October 31, 2023

Designer

Kume Sekkei, Kumagai Gumi, Kenchiku
Setsubi Sekkei Kenkyusho (KSSK)Design consortium

Total floor area

18,095.28 m2

The Kuma Seminar provided a fresh learning experience
not only for the students, but also for the employees
and workers at the site. Having their work observed up
close while being questioned by students increases theirprofessional pride and sense of responsibility. The site
was well organized, with a thorough awareness of safety
management. Horie, a veteran On-site Manager withmore than 30 years of experience, says he learned a lot
from the teenage students.
"Surrounded by their high temporary enclosures,construction sites tend to give the impression of

being out of touch with the city and its people's
lives," he said. "But shouldn't we be more aware of
our connection to society? I would like to pass on to
the younger generation the importance of creating
appealing work sites."
The Kuma Seminar was so well received that a second
term of the program began in June 2022, with newstudents joining. The new Tokyo Joshi Gakuen building is
to be completed in November 2022*1, and a new term ofTokyo Joshi Gakuen*2 will begin in April 2023 at the newschool building.

*1 Demolition of the existing school building and exterior work will continue until construction is completed.
*2 Tokyo Joshi Gakuen Junior & Senior High School has announced that it will change its name to "Shiba Kokusai Jr. & Sr. High School" and become co-educational
starting in 2023.

At a hands-on concrete pour experience

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The Kumagai Gumi Group Corporate Report 2022

53

ESG Initiatives

WEB ➡ The Promise of Eco First

https://www.kumagaigumi.co.jp/csr/environment/ecofirst/index.html

Environment

Environmental Issues and Targets

Aiming for a society in which limited resources are recycled, and people, the community, and nature continue to be enriched,
the Kumagai Gumi Group is working to achieve a sustainable society by setting individual issues and targets for addressing
climate change risks, achieving zero emissions, and undertaking initiatives that take biodiversity into consideration.

Target for Kumagai Gumi only
Construction mixed waste discharge rate*2
Maintain at 2.0% or lessElectronic manifest use

The Promise of Eco First

Annual plan

In April 2022, Kumagai Gumi renewed its Eco First
commitment and set a new goal.
Goals to promote the transition to a decarbonized society● Scope 1+2
	Compared to 2020, a 25% reduction by 2030, and carbon neutrality
in 2050● Scope 3	Compared to 2020, a 13% reduction by 2030, and a 37% reduction
by 2050

Goals of promoting the formation of a recycling-oriented
society● In aspiring to achieve zero final waste disposal, advance the 3Rs
and maintain a mixed construction waste discharge rate of 2.0%
or less

In June 2010, Kumagai Gumi became the firstcompany in the construction industry to receive
Eco First Company certification. We are fulfilling
our social responsibility as a company engaged in
the construction business, and are advancing six
initiatives to realize a sustainable society. These
include clarifying and preventing to the utmost
possible extent the environmental impact that canoccur through our business.

The Promise of Eco First (extract)
1. to combat climate change through our businessactivities, we will promote the transition to a
decarbonized society.
2. We will promote the formation of a recycling-oriented
society through business activities.

Initiatives in
the wood
structurebusiness

Development ofenvironmentallyconsideratetechnologies

Achievementof zeroemissions

Business Activities and Environmental Impact

INPUT

Principal material inputs

4. We will strive to develop, improve, and popularize
technologies and methods with consideration for theenvironment.

Wet concrete

CementConstruction
Division

Steel frame
Electric power
Kerosene
Water

OfficeDivision

70,000 t
26,000 t
1,730,000 t
53,000 t

Principal material inputs
Diesel fuel6. We will actively disclose environmental informationand strive to build partnerships with stakeholders.

Initiatives in
the forest
conservation
business

Target for Kumagai Gumi Group
2050: Adoption rate of 100%Society thatcoexists withnatureInitiatives withconsiderationof biodiversity

Promotion of considerationof biodiversity(Construction, Technology
Development Divisions)Target for Kumagai Gumi only (FY2021-FY2025)● Technology development, application: Total 25 cases or more
● External publications (press releases, academic papers): Total 10 or more

Electric power
Water

26,604,000 kWh
16,804 kl
8 kl
362,000 m3
3,809,000 kWh
78,000 kg
24,000 m3

Kumagai Gumi Non-consolidated (Japan) Results for FY2021

Civil Engineering

OUTPUT

Scope 1+2

Completed work value
94.1 billion yen
Tunnels, dams,
land development, etc.

Business
activities

CO2 emissions
NOx emissions
Construction
Division

SOx emissions
Waste discharge
Total gross output
Recycle/reduction
Net discharge

Building
Construction

OfficeDivision

Completed work value
235.7 billion yen

Offices, hospitals, schools, etc.

57,000 t-CO 2
73 t
113 t
479,000 t
459,000 t
19,000 t

Scope 1+2CO2 emissions

2,000 t-CO 2* Of the greenhouse gases (CO2, CH4, N2O, HFC, PFC,
SF6), those other than CO2 (CH4, N2O, HFC, PFC,
SF6) are not emitted through our business activities

Compliance with environmental conservation laws

Environmental incidents

Amid the COVID-19 pandemic, we undertook the following
initiatives to prevent violations of environmental laws andregulations, and strove to comply with environmental laws
and regulations.
1. Education on environmental laws and regulations within
the intensive employee education at Headquarters, by
the Headquarters manager in charge of environmental
regulations (6 sessions)
2. Education for branch managers, etc. (1 session)
In FY2021, no fines or penalties were levied due to legal
violations, and no suits were filed.

Two environmental incidents occurred in FY2021.
(1) Tilting of an existing building on an adjacent lot during
underground construction(2) Off-site discharge of concrete-contaminated water
during foundation construction
The causes of the incidents have already been determined,
and efforts will be made to prevent the recurrence of similar
incidents.

The Kumagai Gumi Group Corporate Report 2022

ESG Initiatives

As an "Eco First" company, Kumagai Gumi has engaged since 2010 in initiatives aimed at the achievement of a sustainable
society. In February 2021, we joined the RE100 initiative, and we are working to shift 100% of the electricity used in ourbusiness activities to renewable energy. In addition, regarding our medium- to long-term greenhouse gas emissions
goals, we have obtained SBT certification as we work to achieve our targets. In the area of environmental information
disclosure, the CDP gave the company an A-List rating, the highest rating in the climate change category, and a Supplier
Engagement Leader rating, the highest Supplier Engagement Assessment rating.
In the future, we will further reduce fossil fuels used in heavy machinery and vehicles in our business activities andactively introduce renewable energy. In addition, we will further accelerate decarbonization by promoting ZEB, which
contributes to significant energy savings in the buildings we provide, and by working on renewable energy generation
projects.

● Scope 3
2030: Reduction of 13% compared to 2020
2050: Reduction of 37% compared to 2020

*1 CO2 emissions: Scope 1: Direct emissions from fuel combustion (use of heavy machinery, vehicles, etc.)
Scope 2: Indirect emissions from the use of electricity, etc. supplied by other companies
Scope 3: Indirect emissions from upstream/downstream areas of business activities other than Scope 1 and 2 (materials procurement, operation ofbuildings, disposal, etc.)*2 Construction mixed waste discharge rate (%) = amount of mixed waste generated (t) / total construction waste generated (t) (including from demolition work,
materials buried underground, and construction sludge)*3 Electronic manifest use rate (%) = number of electronic manifests / (number of electronic manifests + number of paper manifests)

Steel rod

5. We will actively participate in environmental
conservation activities in communities.

Addressing
climatechange risks

Promotion of environmentallyconsiderate technologies(Technology Research andDevelopment Division)

3. We strive for a society that coexists with nature andpromote initiatives with consideration for biodiversity.

Formation of environmentally considerate business (Initiatives in FY2021)

54

Promotion of green purchasing

Recycling-oriented
societyMedium- to long-Term targets for Environmental Preservation (The Promise of Eco First)

Initiatives in
the renewableenergybusiness● Scope 1+2
2030: Reduction of 25% compared to 2020
2050: Reduction of 100% compared to 2020

Adoption of renewable electric power

Enforcement of separation of plastic garbage

Environmental target

Target for Kumagai Gumi only

Target for Kumagai Gumi only
Utilization rate*3 95% or more
Promotion of 3R (Reduce, Reuse, Recycle)

ESG Initiative
Direction
Safety and Health,Quality andEnvironment Policy
Biodiversity Initiative Direction

Reduction of CO2 emissions*1 in business activities

Reduction of mixed waste discharge

Fundamental concept of environmental management

Kumagai Gumi
environmental structure

Decarbonizedsociety55

ESG Initiatives

Environment

WEB ➡ Procurement Policy

WEB ➡ Environmental Data

https://www.kumagaigumi.co.jp/csr/partner/procurement/index.html

Promoting the Transition to a Decarbonized Society

Individual Issue: Addressing Climate Change Risks

Kumagai Gumi is focusing on introducing renewable electric energy to achieve carbon neutrality by 2050. At the sametime, we are working to reduce CO2 emitted from diesel oil during the operation of heavy machinery and vehicles throughthe practical application of new technologies and streamlining of construction work. If there is a shortfall in our reduction
performance, we plan to use emissions trading and other methods to achieve carbon neutrality.

Promoting the Formation of a Circulating Society

t-CO2

t-CO2
Scope 1+2 basis year 2020 (FY2019 performance) 74,300 t-CO2

7

Action (1): Improve consumption
efficiency, etc.

65Action (2): Switch to renewableenergy for electric power

Scope 2
Electricity derived fromfossil fuels

4

The

2030 target

3

Scopes 1+2
25% reduction

2

Pro

mis

Scope 1: Diesel oil, etc.

Scope 313% reduction

1

2030

2040

5
4
3

Action (3): Apply energy-savingeo
f Ec
construction methods,
oF
irst
new technologies

0
2020

6

2

2050 target

1

Scopes 1+2
100% reduction

0

Scope 337% reduction

2050

Greenhouse gas reduction targets for Kumagai Gumi only
Basis year 2020 (FY2019 performance)

FY2021 performance

2030 target

2050 target

Scope 1+2

74,300 t-CO2

59,000 t-CO2

Compared to 2020 25% reduction

Compared to 2020 100% reduction

Scope 3

3,782,000 t-CO2

4,752,800 t-CO2

Compared to 2020 13% reduction

Compared to 2020 37% reduction

Case Examples of Carbon Neutral Initiatives

Promotion of ZEB Medium- to Large-Scale Wood Structures
In the reconstruction of Kumagai Gumi's Fukui Head Office,which was completed in 2021, we used high-performancefire-resistant wood developed by our company to create a"smart wellness office" building that reduces environmental
impact while improving comfort and productivity.
Item
Planned site

Promotion of 3R practices

Enforcement of separation of plastic garbage

Promotion of green purchasing

Overall 3R Plan
Identification of incoming materials, quantities by product,
and available disposal options

A new set of Separation Procedures for
Plastic Waste was established in October
2021 to promote the separation, proper
disposal, and recycling of plastic waste.

Purchase of construction
materials and equipment

565.51 m2
299.35 m2

Total floor area

1,190.85 m2

Construction period
Uses

Environmental
performance
ZEB classification
Other

ReduceProposals to clients and designers at the construction
planning stage, followed by implementation
Reuse
Use materials at multiple work sites, primarily materials
for temporary use
RecycleEmphasis on voluntary waste separation activities(1) Priority outsourcing to superior industrial waste
disposal service providers(2) Education on waste separation(3) Foremen's meeting activities at construction sites

1F: Entrance hall, conference rooms
2F: Exhibition room, meeting space
3F, 4F: Offices
BEI 0.17 (excluding solar power generation: 0.39)
196.4 GJ/year ÷ 1156.6.0 GJ/year
BPI 0.63
296MJ/m2 year ÷ 470MJ/m2 year
Nearly ZEB
Ministry of the Environment Advanced Energysaving Building Demonstration Project for ZEB

FY2021 results (Kumagai Gumi only)
Total amount of separated waste plastic
9,600 tElectronic manifest use rate
97.2% (Target: 95% or more)

FY2021 results (Kumagai Gumi only)
Construction mixed waste discharge rate
1.8% (Target: maintain at 2.0% or less)

Striving for a Society That Coexists with Nature"Kumagai Gumi
Procurement Policy" and"Procurement Policy
Guidelines" established.
Established in 2021, reflecting
the perspective of the SDGs
on achieving a sustainable
society in the field of
procurement
Declaration of corporate social
responsibility, including theenvironment and human rights,
from the procurement stage

Individual Issue: Initiatives with Consideration for Biodiversity

In 2008, Kumagai Gumi, together with the Japan Water Agency, established the Hotaru (Firefly) Biotope at the Oyama
Dam (Hita City, Oita Prefecture).
In 2015, we obtained JHEP certification* for the biotope for the purpose ofquantitatively evaluating of our efforts to contribute to the conservation andenhancement of biodiversity. At the time, it was the first biotope in Japan tobe certified for fireflies. The certification was renewed in November 2020.
* Habitat Evaluation and Certification System
Japan Habitat Evaluation and Certification Program

Environmental Risks and Opportunities
Risks

Opportunities● Decline in competitiveness due to insufficient
adaptation to social systems and regulatory tightening● Occurrence of construction delays and shortages ofmaterials and equipment due to abnormal weather● Creation of technologies, products, and businesses
that resolve climate change issues● Expansion of markets due to growing customer needs
for environment-friendly design and construction● Expansion of demand for infrastructure development
associated with increasing frequency and intensity ofnatural disasters

Resource
circulation● Loss of trust and decline in competitiveness due tonon-compliance with laws and regulations● Creation of technologies, products, and businesses forbuilding a circulating society

Biodiversity● Interruption or cancellation of business due todestruction of the environment● Creation of technologies, products, and businesses
that take biodiversity conservation into consideration

Steel frame + wood, 4 floors above ground, fireresistant construction (1 hour)
September 2020 to July 2021

Management system
Operation and management of the Quality
and Environment Management System

Operation in accordance with
the Purchasing Management
Regulations established in
2003, which stipulate the basic
principles of green purchasing.

Climatechange● Occurrence of damage to health due to rise intemperature

The Kumagai Gumi Group Corporate Report 2022

ESG Initiatives

Lot area
Building area

Structure56

Summary
2-6-8 Chuo, Fukui, Fukui Prefecture

Individual Issue: Achieving Zero Emissions

Kumagai Gumi has set a target of reducing our mixed construction waste discharge rate to 2.0% or less by taking
action to cut mixed waste on the way to achieving zero discharge, which is a specific issue laid out in our ESG Initiative
Direction. We are focusing on promoting 3R practices (reduce, reuse, recycle), thorough separation of plastic waste, andpromotion of green purchasing.

CO2 Emissions (Scope 1+2) Carbon Neutrality Plan (Kumagai Gumi only)
7

https://www.kumagaigumi.co.jp/csr/environment/envirodata/index.html

57

ESG Initiatives

Occupational Health and Safety

Quality control

Occupational Health and Safety Policy

Fundamental concept

In the conduct of its business, the Kumagai Gumi Group prioritizes respect for human life and maintains high health and safety
management standards to prevent labor accidents, improve health, and create comfortable working environments. We comply
with social norms, laws, our internal standards, and other rules, and have established a Safety and Health Management
System which we operate with high effectiveness to resolve issues in response to changes in the business environment.

Kumagai Gumi complies with social norms, laws, our internal standards, and other rules, and establises management systems
to operate with high efficacy in response to changes in the business environment. We strive to improve the capabilities of ouremployees, specialized contractors and others through education and training, and we provide construction services that meetthe expectations of our customers and users so that we can foster their trust through our superior comprehensive capabilities.

Structure of the Management System

Structure of the Quality andEnvironment Management System

We also created a database of the results of daily safety
and health patrols, moved forward with risk assessment,
and are developing a system for drafting formulating
workplace Safety and Health Control Plans.

Kumagai Gumi obtained the industry's first company-widecertification under the COHSMS (Construction Occupational
Health and Safety Management System) program launchedin 2008 by the Japan Construction Occupational Safety
and Health Association (JCOSHA). In 2018, we received arenewal of our NEW COHSMS certification, which addresses
the changing environment of the construction industry andthe ISO 45001 international standard.

Safety education for employees
We have established educational guidelines, and are
conducting education on occupational health and safety
and relevant systems at headquarters and branches.
In FY2021, after taking sufficient measures to prevent
COVID-19 infections, we conducted group training
for each employee rank in the form of a training camp
hosted by company headquarters. Participants learned
the importance of discussing safety management matterswith work peers.

Sharing information on health and safety andpreventing recurrence
In April 2021, we introduced the Safety Portal System toaccumulate and centralize data. It enables the sharing anddeployment of information on disasters and accidents, aswell as prompt responses by the departments involved.

President
Headquarters

Overall Quality andEnvironment Control Manager

Kumagai Gumi obtained ISO9001 certificationin 1996 and ISO14001 certification in 1997.
With the aim of assuring reliable quality
and manufacturing products with minimal
environmental impact, we implement the
PDCA cycle for continuous improvement in allprocesses, from receiving orders to providing
aftercare.

Division Head

Quality and Environment Committee

Department Heads

Quality and Environmental Expert
Subcommittee System Audit Team
Branch Managers
Overall Branch Quality and Environment Control Manager
Branch Quality and Environment Committee
Branch Quality and Environmental
Expert Subcommittee
Branch System Audit Team

Branches

Group Leaders
Department Heads/
On-site Managers

Conceptual diagram of the Quality and Environment Management System

Safety and Health Initiatives
Group work for construction

Enhanced safety guidance
for self-employed workers

Due to an incident in which a self-employed worker who had not received employer-provided worker
safety instruction was engaged in dangerous work, we have strengthened the instruction by which selfemployed workers receive training.

Enhanced initiatives
for elder workers

We conduct awareness training to encourage workers to take advantage of their wealth of experience
while being aware of physical decline, encourage nearby workers to provide verbal safety warnings,
promote visualization of fall prevention measures, and have in place age restrictions and a permit
system for work that could result in a fall.
Many foreign workers are active in the construction industry, and labor accidents involving these workers
have increased accordingly. We have translated our own Workers' Basic Education booklet into four
foreign languages to support education for business operators. Similarly, we also prepare foreign
language versions of materials used to educate workers when they enter the worksite.

Safety and health patrols

A program is conducted at all construction sites at least once a month to check for violations of laws andregulations and the implementation status of the health and safety management plans. In preventing fall
accidents, we aim toward creating work environments in which safety belts are rendered unnecessary,rather than simply relying upon them. During Safety Week, the President, Vice Presidents and othermembers of senior management conduct patrols to raise safety awareness.

Order receipt/
design/planning

Ordered construction
handover meeting

Ordered construction
handover meeting
Assessment of required quality,
project properties, etc.

58

FY2017FY2018FY2019FY2020

FY2021Frequency

0.42

0.70

0.44

0.32

0.63

Severity

0.33

0.02

0.02

0.28

0.10

Number of accidents involving
leave of 4 days or more

10

17

13

9

16

Identification of policies/
risks/opportunities
Annual plan

Project operation/
management

Purchasing/construction

ExecutionDo

QCDSE patrol

Guidance/support

Management resources(Human resources, technology, information, etc.)

Review/
improvement

Act

Review by the President

Occupational accidents

Customers/Society/Environment/Stakeholders

Identification of risks
and opportunities
Inspection of blueprints
Planning Group work for constructions

Plan

Headquarters/branch management departments

Review by the President(Management review)

Planning/Review
Project supervision
Aftercare

Improvement/aftercare

Inspection by customer

Site study tour/briefing

Progress management/
integrated management

Patrol inspections
Internal audits
System audits

ESG Initiatives

For the safety/securityof foreign workers

Patrol by partner company
Individual projects (sites)

Checking/
Inspection

Check

Independent inspection by
partner companies

Inspection and evaluation

System audits

Internal inspections
The Kumagai Gumi Group Corporate Report 2022

59

ESG Initiatives

Stakeholder Engagement

Engagement with Employees
Systems for listening to employees' needs

Relationships with stakeholders
Kumagai Gumi will engage in dialogue with stakeholders and build good relationships with them in order to remain atrusted company that is in demand.

For customers

For employees

CS activities

Customer Consultation Office

SDGs Awareness Survey Questionnaire

Customer insight questionnaires
Questionnaire survey 3 years
after delivery of structure

FY2021 consultations
441 cases(590 in FY2020)
Same-day initial response rate of
100% achieved in 6 consecutive
years

Administered in FY2021, with 95% of employees
responding

Visit customer for asking theirinsight
Kumagai Gumi senior
management directly listens tocustomers' frank thoughts

Stress check
Administered in 2021, participation by 89.8% of
employees

For customers

Partner companies /Business partners

General Meeting of Shareholders

Procurement Policy /Procurement Policy Guidelines

Held in June each year

Presented in April 2021

Financial statement briefings

Kumagai Gumi

Shareholders
and investors

Kumagai Gumi has established a staff association for the purpose of promoting friendship and welfare among employees
and communication between the company and employees, thereby contributing to the development of the company.
In FY2021, we solicited requests from all employees regarding the company, and established a forum where branch
representatives of the staff association and President Sakurano exchanged opinions on these requests. Some significant
suggestions resulted, including items for the company to consider. Kumagai Gumi will continue to identify and consider
employee requests through staff meetings.

Engagement with Business Partners

WEB ➡ Together with Suppliers

https://www.kumagaigumi.co.jp/csr/partner/index.html

Procurement Policy and Procurement Policy Guidelines
Kumagai Gumi has established a Procurement Policy and Procurement Policy Guidelines to promote sound businessactivities. Our aim is to improve governance and compliance in our procurement activities, and to work with partnercompanies and business partners to increase added value throughout the value chain.

For employees

Shareholders and investors

2 held in FY2021
including 2 times with top
management in attendance

WEB ➡ Together with Employees

https://www.kumagaigumi.co.jp/csr/employee/index.html

Partnercompanies/
Business partners

Declaration of Partnership
Presented in September 2020

Yuuei Kyoryoku Kai

Small meetings
5 held in FY2021
including 5 times with top
management in attendance

8 branches nationwide / 871
companies(as of Friday, April 01, 2022)
Safety and Health Tournamentand Model Work Site
Presentations were held

For local
communities

Individual meetings/
teleconferences
74 held in FY2021
including 3 times with top
management in attendanceYuuei Kyoryoku Kai
The Yuuei Kyoryoku Kai is an organization of 871 Kumagai Gumi partner companies (as of April 01, 2022).
Since FY2022, we have made understanding and promoting the SDGs our activity goals, and our action plans indicate
which of the 17 SDGs each activity of the partner alliance falls under. We are also promoting the Construction Career
Advancement System in cooperation with the partner alliance in order to create an environment in which skilled workers,
who are the key personnel at construction sites, receive appropriate evaluation and treatment in accordance with their skills
and experience, and to help secure and train the workforce, an urgent issue in the construction industry.
In addition, we will tackle various other issues that are the lifeblood of the construction industry, such as raising the wage
levels of skilled workers, promoting the realization of a five-day workweek, improving productivity by promoting DX, andsecuring and educating foreign workers.

Business improvement and creative refinement proposal program
Together with our affiliates, we operate a business improvement and creative refinement proposal program with aim of
improving business and work efficiency and cutting costs. The program solicits proposals for business improvements,
refinements, and ideas from our employees and the employees of partner companies, receiving 101 submissions in FY2021.
Outstanding proposals are honored with internal awards, and adopted at each branch and work site, helping to improvesafety, quality, the environment, and productivity.

For local communities
Site study tours

Academic support

Social contribution activities

Nearby residents are briefed on
the details of the construction
project, the anticipated impact of
the construction work, and any
concerns or questions about theconstruction are resolved.

Sites are opened to the public,
and explanations are provided toresidents and others in theneighborhood

Environmental education
provided at local elementary andhigh schools

No. of participating employees
in FY2021
1,850 total

Engagement with Customers

WEB ➡ With our customers

https://www.kumagaigumi.co.jp/csr/consumer/index.html

We deliver "Quality that Inspires Happiness"
Kumagai Gumi established the Customer Satisfaction (CS) Promotion Office (current Sustainability Promotion Group) in
1998. The following year, we established Customer Consultation Offices at all of our branches. We work toward organizational
collaboration that enables us to deliver "Quality that Inspires Happiness," and earns the esteem of our customers.
The customer satisfaction (CS) functions of Kumagai Gumi are placed within the Management Strategy Office. The
organization is designed to directly reflect the voices of customers in our management.

60

Engagement with Shareholders and Investors

WEB ➡ To our Investors

https://www.kumagaigumi.co.jp/en/ir/index.html

Kumagai Gumi works to properly, fairly, and promptly disclose information pertaining to our management and businessactivities.
In FY2021, we continued from the previous year with our promotion of new forms of IR activities designed to help us copewith the ongoing COVID-19 pandemic, such as using online tools for small meetings, engaging in dialogue with overseas
investors, and holding financial results briefings in a hybrid in-person and online format. Thanks in part to these activities,
we achieved our goal of increasing the number of participants in financial results briefings and IR meetings, which was oneof our stated ESG/SDG strategies, Enhancing Dialogue with Investors.
At IR meetings, we exchange opinions on performance trends, management strategies, returns to shareholders, as wellas environmental and social issues and governance initiatives.

The Kumagai Gumi Group Corporate Report 2022

ESG Initiatives

Construction briefings

61

ESG Initiatives

Stakeholder Engagement

Engagement with Communities

WEB ➡ With the communities the Community

https://www.kumagaigumi.co.jp/csr/region/index.html

Kumagai Gumi Smile Project, our social contribution activity platform
The Kumagai Gumi Smile Project social contribution activity platform now applies a matching gift system. We total thenumber of employees who have participated in social contribution activities, and make monetary donations that contributeto society based on that number for each fiscal year.
In FY2021, 997 employees engaged in 86 instances of activities in areas including the environment, education, welfare,and community contribution. In FY2022, the company donated 14.09 million yen in social contribution expenses.
The donations were applied to recipients including our KUMAGAI STAR PROJECT social contribution activities, disaster
relief funds, as well as support for organizations working on social issues. Through the United Nations High Commissioner
for Refugees (UNHCR), 1.5 million yen was donated as humanitarian aid to people in difficult living conditions in Ukraine
and other areas in crisis.
Continuing from FY2021, we will continue supporting the following organizations in FY2022.
● Japan Cancer Society (Support for cancer patients, awareness of cancer diseases)● Zenkoku Kodomo Shokudo Shien Center Musubie (Local network bases that serve meals)● Kosodate Hiroba Zenkoku Renraku Kyogikai (Activities to support Childcare in the community)● JUON NETWORK (Activities that relate cities and countryside and give consideration to nature)

Selection as a "Nadeshiko
Brand" enterprise

Inclusion in "New Diversity Management
Selection 100"

Adoption in JPX Nikkei Index 400

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

August 2021

Certified Mechanical Engineering Heritage No. 109 for FY2021 (Japan Society of Mechanical Engineers)
The oldest existing pitching machine in Japan, catapult type: Model KS-P / Model AR
Japan Federation of Construction Contractors (Nikkenren) Award 2021 (Japan Federation of Construction Contractors)
The 2nd Civil Engineering Award for the Hokusatsu Odan Road Hokusatsu Tunnel Izumi Construction Zone

October 2021

2020 Japan Dam Foundation Prize (Japan Dam Foundation)
Excellent Paper Award Hideaki Sato, Civil Engineering Management Division, "Study on the Effect of Autogenous
Shrinkage Strain on Temperature Stress during Concrete Dam Construction"
FY2021 Award for Meritorious Service in Promoting Reduce, Reuse, and Recycle (Reduce, Reuse, and Recycle Promotion Council)● Minister of Land, Infrastructure, Transport and Tourism Award, "Slope Revegetation Method with Recycled
Logging and Locally Generated Topsoil (Nekko Chip Method)"● President's Award of the Reduce, Reuse, Recycle Promotion Council
Uchikyuhoji-machi 4-chome Plan (tentative name), Chuo-ku, Osaka, "3R Activities through '3K' (Devise [Kufu],Study [Kento], and Plan [Keikaku])"Kansai Branch Office, Kumagai Gumi Co. / Osaka Condominium Division, Sekisui House, Ltd. / Kansai Branch
Office, Mitsubishi Estate Residence Co.

Evaluation by society and participation in initiatives

Entry into international
initiative RE100

Selection as a constituent of the
FTSE Blossom Japan Sector Relative Index* Model KS-P was manufactured by the Kumagai Gumi Nagoya Plant (now Technos Co., Ltd.) in 1958.

* Social contribution donations for FY2022 comprise the sum of FY2021 activity points and carryover points.

Supplier Engagement Assessment
Supplier Engagement Assessment Leader rating

THE INCLUSION OF KUMAGAI GUMI CO., LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS,
TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF KUMAGAI GUMI CO., LTD. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMESAND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

External commendations* For each employee participating in social contribution activities, 1 point is credited to the platform. 1 point is calculated as 10,000 yen in social contribution costs.

CDP Climatechange category
A-List rating

Selection as constituent brand in MSCI Japan Empowering
Women Index (WIN)Japan Society of Civil Engineers Annual Academic Lecture Outstanding Lecturer Award (Japan Society of Civil Engineers)
Japan Society of Civil Engineers, 76th Annual Academic Lecture, Excellent Paper Award, FY2021 Annual Meeting of
the Japan Society of Civil Engineers● Tetsuo Amagai, Civil Engineering Division, "A Study on the Efficiency of Construction Management Using
360-Degree Video"● Ooki Tsuchihashi, Kyushu Branch, "Construction Records of Water Conduits Affected by the Kumamoto Earthquake"

Entry into Japan Climate Leaders' Partnership(JCLP) as a supporting member

FY2021 Timber Utilization Excellent Facility Contest (Japan Council for Advancement of Timber Utilization)
Excellence Award Kumagai Gumi Fukui Head Office
FY2021 Good Design Award (Japan Institute of Design Promotion)
Condominium building Grand Maison Kamimachidai Residence Tower

Awardee: Sekisui House Ltd. Designer: Osaka Condominium Dept., Sekisui House Ltd. + Kansai Branch Office, Kumagai Gumi Co., Ltd.

December
2021
SBT Initiative certification

Registration as
ZEB planner

Ministry of Economy,
Trade and Industry
Accredited as a DX Certified
Business Operator

February 2022 Civil Engineering Public Relations Award 2021 (Japan Society of Civil Engineers)
Grand Prize "Shikoku Disaster Prevention, Spreading 88 Stories and Public Awareness Study Group, 'Shikoku
Disaster Prevention 88 Stories Map'"

ESG Initiatives

Eco First Company
certification

Japan Society of Civil Engineers Design Award 2021 (Japan Society of Civil Engineers Landscape and Design Committee)
Excellence Award Pedestrian Deck Renewal at Fujisawa Station North Exit

Yuji Matsuo, Shikoku Branch Office, Kumagai Corporation, et al.

May 2022

FY2021 Japan Dam Foundation Prize (Japan Dam Foundation)
Achievement Award Hitoshi Kadono, Civil Engineering Management Division

June 2022

Civil Engineering Society Award FY2021 (Japan Society of Civil Engineers)
Tanaka Prize, Artwork Division, Reconstruction, "Important Cultural Property Minohashi Bridge Repair Construction"
Architecture of the Modern Movement in Japan (DOCOMOMO Japan Chapter)
Fukui Shrine

Health and Productivity
Management Organization
Recognition Program(Large-scale enterprise category)

62

Receipt of Silver rating in PRIDE
Index that evaluates companies'
LGBTQ efforts"Child-rearing support
company" certification(Kurumin Certification)

Eruboshi certification
Acquisition of highest
3-star certification

FY2021 Zenken Award (Japan Construction Engineers Association [Zenken])
Zenken Award for Infrastructure Projects and Measures (Infrastructure category) "Projects or measures other thandisaster recovery/restoration (general category)"(General) River Category Aso Ohashi Bridge Area slope disaster prevention construction

The Kumagai Gumi Group Corporate Report 2022

63

ESG Initiatives

Listof theBoard ofDirectors

Yasunori Sakurano

President and Representative Director

CEO and President
April
April
April
June
April
April
April
April

1981 Joined Kumagai Gumi Co., Ltd.
2010 General Manager of the Human Resource Division, Administration
Headquarters
2011 Executive Officers
2012 Directors
2014 Managing Director Managing Executive Officer General Manager of theManagement Administration Division2015 General Manager of the Corporate Planning Division2017 Senior Managing Director, Senior Managing Executive Officer
2018 President and Representative Director (current), CEO and President (current)

Yoshihiko Kato

Representative Director

Executive Vice President, all Civil Engineering In charge ofTechnology
April
April

1982 Joined Kumagai Gumi Co., Ltd.
2013 Executive Officer/Deputy General Branch Manager of the Tohoku Branch

April

2014 Managing Executive Officer, General Manager of the Civil Engineering
Management Division2014 Managing Director

June
May
April

2016 General Manager of the Railway Project Promotion Division of the Civil
Engineering Management Division2017 Senior Managing Director, Senior Managing Executive Officer

April2020 Director, Executive Vice President (current)

April

2021 Representative Director (current)
All Civil Engineering (current)
In charge of Technology (current)

Representative Director

Executive Vice President, All Architecture In charge of Occupational
Health and Safety, In charge of Quality and the Environment
April
April
April

1982 Joined Kumagai Gumi Co., Ltd.
2011 Executive Officer, General Manager of the Architectural Construction
Department, Kansai Office2012 Deputy General Branch Manager of the Kansai Office

April2013 Managing Executive Officer, General Branch Manager of the Kansai Office

April
June

2017 Senior Managing Executive Officer, General Manager of the Architectural
Management Division2017 Senior Managing Director

April2020 Director, Executive Vice President (current)

April

2021 Representative Director (current), All Architecture (current) in charge ofOccupational Health and Safety (current), in charge of Quality and theEnvironment (current)

Koji Okaichi
Shin Ueda
Koji Hidaka
Yoshiaki Ogawa
Yoshihiko Kato
Masahiro Kawanowa
Yutaka Takehana
Akio Yamada
Front row, from left

Tatsuru Sato
Shigeru Okada
Yasunori Sakurano
Sakae Yoshida
Kimie Sakuragi
Masaya Nara

Koji Hidaka

Senior Managing Executive Officer, General Manager of the
Administration Division In charge of Compliance
April
April

1981 Joined Kumagai Gumi Co., Ltd.
2012 Deputy General Manager of the Administration Division

April

2013 Executive Officers

April2015 General Manager of the Administration Division (current)

April2016 In charge of Discipline, In charge of Personal Information Protection

April2017 Managing Executive Officer

June2018 Managing Director

April2020 Director (current), Senior Managing Executive Officer (current)

April

2021 In charge of Compliance (current)

Shin Ueda

Director

Tatsuru Sato
April
April
June
April
June
April
April
June
June

1978
2011
2012
2013
2013
2016
2018

Joined Sumitomo Forestry Co., Ltd.
General Manager of the Human Resource Division of the above company
Executive Officer of the above company
Managing Executive Officer of the above company
Director of the above company
Senior Managing Executive Officer of the above company
Representative Director of the above company (current), Executive Vice
President and Executive Officer of the above company (current)
2018 Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd. (current)
2022 Director, Kumagai Gumi Co., Ltd. (current)

Sakae Yoshida
April
April
April
January

Joined Dainippon Ink and Chemicals Inc. (current DIC Corporation)
Factory Manager, Sakai Factory, DIC Corporation
Factory Manager, Chiba Factory of the above company
Executive Officer and General Manager of the Production Supervising
Division of the above company
2018 Advisor to the above company
2020 Director, Kumagai Gumi Co., Ltd. (current)

April
April

Shigeru Okada

June
April
April

2017 Managing Executive Officer, General Branch Manager of Tokyo
Metropolitan Area Office2020 Senior Managing Executive Officer (current)

April

2021 General Manager of the Building Management Division (current)June2021 Director (current)

Koji Okaichi

Director

Senior Managing Executive Officer, General Manager of the Civil
Engineering Management Division
General Manager of the Railway Project Promotion Division of the
Civil Engineering Management Division
April
April
April
April
April
April
April

1984 Joined Kumagai Gumi Co., Ltd.
2016 Executive Officers
Deputy General Manager of the Civil Engineering Management Division, General
Manager of Civil Engineering, Civil Engineering Management Division2017 General Branch Manager of the Kansai Office2018 Managing Executive Officer
2019 Kansai Yume Project Office Director, Kansai Office2020 Senior Managing Executive Officer (current)
2021 General Manager of the Civil Engineering Management Division (current)
General Manager of the Railway Project Promotion Division of the Civil
Engineering Management Division (current)
2021 Director (current)

April
June
June
June
June
April
April
April
June
June

Director

1975
2005
2008
2010
2011
2016
2017
2018
2018
2021

Director *1

Joined Showa Sangyo Co., Ltd.
Executive Officer of the above company
Managing Director of the above company
Senior Managing Director of the above company
President and Representative Director of the above company
Chairman and Representative Director of the above company
Chairman and Director of the above company
Director of the above company
Special Advisor to the above company
Director, Kumagai Gumi Co., Ltd. (current)

Kimie Sakuragi
March

1981

April

1995

November 1998
January

2003

June
April
June
June

2003
2007
2019
2021

September

Director *1

March1990 Joined Yasuda Trust & Banking Co., Ltd. (Now Mizuho Trust & Banking
Co., Ltd.)2009 Executive Officer and General Manager, Investment Planning
Department, Mizuho Trust & Banking Co.
2011 Standing Audit & Supervisory Board Member of the above company
2014 Senior Managing Director, Mizuho Real Estate Sales Co., Ltd.
2017 Registered as Attorney
Joined Torikai Law Office2019 Outside Audit & Supervisory Board Members, Tamron Co., Ltd. (current)

January

2020 Partner, Torikai Law Office (current)June2021 Outside Audit & Supervisory Board Members, Riso Kagaku Corp. (current)June2022 Director, Kumagai Gumi Co., Ltd. (current)

April
June
April
January

*1

1981
2009
2010
2015

January
June

1984 Joined Kumagai Gumi Co., Ltd.
2014 Executive Officers
Deputy General Branch Manager of the Tokyo Metropolitan Area Office,General Manager of the Architectural Construction Department, Tokyo
Metropolitan Area Office2015 Project Management Office

Masaya Nara

Director

Senior Managing Executive Officer, General Manager of the
Building Management Division

June

64

Director

Director *1

Joined Fukutake Publishing Co., Ltd.
(current Benesse Holdings, Inc.)
Supervisor, Publications Department, Publishing Division of theabove company
Section Manager, Business Ethics Committee of the above
company
Manager, Corporate Ethics and Compliance Office of the above
company
Standing Audit & Supervisory Board Member of the above company
Project Professor, The University of Aizu (current)
Outside Director, Toyobo Co., Ltd. (current)
Outside Director, Isuzu Motors Ltd. (Audit Supervisory Committee
Member) (current)
Director, Kumagai Gumi Co., Ltd. (current)

Masahiro Kawanowa
April
1986
February 2009
April

2010

June
April
April
April
June

2013
2015
2018
2021
2022

Joined Kumagai Gumi Co., Ltd.
General Manager of the Financial Management Department,
Administration Division
General Manager of the Legal & Compliance Department,
Administration Division
Outside Audit & Supervisory Board Members, Geostr Corp.
General Manager of the Finance Department, Administration Division
Deputy General Manager of the Administration Division
General Manager of the Examination Department, Administration Division
Standing Audit & Supervisory Board Member (current)

Yutaka Takehana
April
September
June
April
June
June
September
June

1973
2001
2003
2009
2013
2015
2017
2019

April
August
July
June
July
October
June

Audit & Supervisory Board Member *2

Joined National Police Agency
Chief of Police, Hiroshima Prefecture
Vice Governor of Tokyo Metropolis
Senior Executive, Panasonic Corporation
President & CEO, Tokyo Big Sight Inc.
Outside Director, SOHGO SECURITY SERVICES CO., LTD. (ALSOK)
Advisor, Meiji Yasuda Life Insurance Company
Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd. (current)

Akio Yamada
NovemberStanding Audit & Supervisory Board Member

ESG Initiatives

Yoshiaki Ogawa

Back row, from left

Audit & Supervisory Board Member *2

1978 Joined Peat Marwick International accounting office(current Benesse Holdings, Inc.)
1982 Registered as Certified Public Accountant
2009 Partner, KPMG AZSA LLC
2017 Opened Offices of Akio Yamada, Certified Public Accountant (current)
2018 Nittan Valve Co., Ltd. (now NITTAN Corp.) Outside Auditor (current)
Auditor, Pfizer Health Research Foundation (current)
2018 External Auditor, Rakuten Insurance Holdings Co., Ltd. (current)
2021 Outside Auditor, Uchida Yoko Co., Ltd. (current)
2022 Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd. (current)*1 Mr. Sakae Yoshida, Mr. Shigeru Okada, Ms. Kimie Sakuragi and Mr. Masaya Nara are Outside Directors.
*2 Mr. Yutaka Takehana and Mr. Akio Yamada are both Outside Audit & Supervisory Board Members.

The Kumagai Gumi Group Corporate Report 2022

65

ESG Initiatives

WEB ➡ Corporate Governancehttps://www.kumagaigumi.co.jp/company/governance.html

Corporate GovernanceEvaluation of the effectiveness of the Board of Directors

Basic Philosophy
In order to make our Management Philosophy of "We aim to serve as a corporate group that contributes to society throughbusiness activities centered on construction" a reality, we consider enhancement of the efficacy of our corporate governancea priority issue.

Once a year, Kumagai Gumi Directors and Audit & Supervisory Board take part in an anonymous questionnaire survey
evaluating the effectiveness of the Board of Directors. The Board of Directors verifies the results of the survey andconsiders improvements. From the FY2018 evaluation onward, we are conducting reviews of our evaluation item settingsand evaluation results through external experts.
In FY2021, we conducted the following self-evaluations, and based on the findings of the reviews by outside experts,
we confirmed that the Board as a whole is appropriately carrying out its role and responsibilities, and we determined thatthe efficacy of the Board of Directors overall is secured.

Corporate governance system

Accounting Auditors

Drawing on the aims of the Corporate Governance Code,
General Shareholders Meeting
Kumagai Gumi has adopted a corporate governanceAppointment
Appointment
Appointment
Consultation
structure that comprises a Board of Directors, a Audit &Nomination and
Audit &
Board of
Audit
Supervisory Board, and an Accounting Auditors to enhance
Compensation
Supervisory
Directors
Committee
Board
the effectiveness of our corporate governance.
ReportSuper
To achieve clarity in management responsibilities andvisionto build an optimal management system in response to
Business
Executionchanges in the business environment, the term of office ofManagement
Audit
Audit
Directors is set to one year. We also employ an executive
Meeting
officer system to ensure that the duties of directors are
Executive Officers(including those concurrently
Instruction
executed efficiently. We also appoint four Outside Directors
serving as Directors)
Instruction
who provide counsel to management from an objective
Instruction
Administration Division
standpoint.
Audit Office
Legal & Compliance
Operating
Guidance(Internal audit Audit
Department
Division
The nomination of Directors and Executive Officers andfunctions)(checks and balances)amounts of compensation are determined by the Board of
Directors on the basis of reports by the Nomination & Compensation Advisory Committee, composed of the President andRepresentative Director and Outside Directors, to ensure objectivity and transparency.
With regard to Audit & Supervisory Board, we appoint Outside Audit & Supervisory Board Members from among persons
who have appropriate experience and capabilities and who have knowledge of finances, accounting, and legal matters, inorder to conduct audits with high efficacy.
Regarding accounting audits under the Companies Act and the Financial Instruments and Exchange Act, we undergo
impartial audits by GYOSEI & CO.

Meeting the Corporate Governance CodeKey measures
to invigorate
the Board of
Directors● Increase in the number of Outside Directors on the Board of
Directors● Partial revision of criteria for submission of proposals to theBoard of Directors● Measures to strengthen Compliance and Group governance

Key issues for
improvement
sharedThemes to be addressed over the short to medium term
● Further promotion of discussions to achieve the Medium-termManagement Plan
● Further promotion of the transfer of authority by reviewing thecriteria for submission of proposals● Further enhancement of opportunities for dialogue among
outside directors and between outside directors and top
management● Consideration of strengthening the effectiveness of theNomination and Compensation Committee● Further strengthening compliance and group governance

Major changes in strengthening of Corporate GovernanceConcerning the procedures for determining the nomination (including dismissals)
and amounts of compensation (including system design) for Directors and Executive
Officers, the Nomination and Compensation Committee (which performs thefunctions of both the Nomination Committee and the Compensation Committee),consisting of the President and Representative Director and Outside Directors, hasbeen established as a consultative body to the Board of Directors.
In FY2021, the Nomination and Compensation Committee met eight times, withall members in attendance at each meeting. In FY2021, we are considering theevaluation of the performance of Directors and Executive Officers in terms of theircontributions to the FY2020 business results, the individual remuneration amounts
for FY2021, and the executive structure for FY2022 and beyond.

Improvement of the effectivenessof the Board of Directors
Separation of oversight andexecution of business
Clarification of responsibility
Outside Directors
Processes for nomination anddetermination of compensation
Executive compensation

2016

2017

2018

2019

2020

2021

2022

Implement effectiveness evaluation
Introduction of Executive Officer system
Discontinuation of Directors in roles below Vice President
Change in the number of Directors in the Articles of Incorporation (from 18 to 12)
Appointment of 1

Appointment of 2 persons (including 1 woman)

Appointment of 3 persons Appointment of 4 persons

Establishment of Nomination & Compensation Advisory Committee

Directorship composition (since June 2022)
Chairperson

Yasunori
Sakurano

President,
Representative
Director

Member

Sakae Yoshida

Outside Director

MemberShigeru Okada

Outside Director

MemberKimie Sakuragi

Outside Director

MemberMasaya Nara

Outside Director

ESG Initiatives

Nomination and Compensation Committee

2015

Based on the issues for
improvement shared as a resultof the FY2020 evaluation, we
implemented improvement
measures, and also worked toinvigorate discussions at the Boardof Directors meetings by holding
exchanges of opinions after the
meeting's proceedings and otheroccasions.
In order to further enhancethe effectiveness of the Board of
Directors, we will continue to work
toward constructive and active
expression of opinions and highly
effective supervision of businessexecution, taking into account theissues for improvement sharedthrough the evaluation in FY2021.

Themes to be addressed in the medium to long term romotion of discussion of medium- to long-term themes that●P
should be addressed for sustainable growth onsideration of increasing the number of female directors and●Cthe ratio of outside directors in the future

Details are noted in the Corporate Governance Report, which is available at our website or the Tokyo Stock Exchange
website.

2001

Adoption of stock compensation system

Improvement of the effectiveness of internal controls
Kumagai Gumi reviews internal rules and management conferences appropriately, and otherwise improves and operates
structures to assure appropriateness in work, based on our Basic Policy to Establish Internal Control Systems. In addition, theKumagai Gumi Group as a whole undertakes the improvement and operation of internal control with the aim of maintaining
the reliability of our financial reporting, based on the Financial Instruments and Exchange Act.

66

Main Evaluation
Items● Board of Directors composition● Board of Directors operation● Board of Directors agenda● Board of Directors support structure (including the Nomination &Compensation Advisory Committee)● Improvement from the previous year

Support system for Outside Officers
We have a system in place that facilitates understanding of our business activities to ensure the smooth executionof duties by Outside Directors and Outside Officers. The Secretarial Department of the Management Strategy Officeand the Corporate Planning Department play a central role in providing materials for Board of Directors meetings andadvance explanations of agenda items to Outside Directors. They also hold meetings to exchange opinions among
Outside Directors, and inspect branch offices and construction sites.
The Kumagai Gumi Group Corporate Report 2022

67

ESG Initiatives

Corporate GovernanceDirectors’ compensation and selection of Outside Executives

Board of Directors Skills Matrix

Compensation for Directors is based on a system of compensation linked to shareholder interests, functioning appropriately
as an incentive to continuously improve corporate value. When determining individual compensation, our basic policy
is to set an appropriate level based on the responsibility of the individuals, and, within the limit of the total amount ofcompensation for Directors decided at General Shareholders Meeting, determine amounts through the Board of Directors
based on findings reported by the Nomination and Compensation Committee.
Specific compensation for Directors consists of monetary compensation (fixed compensation and bonuses) and stockcompensation. For Outside Directors and Non-Executive Directors who bear supervisory functions, it consists of only
monetary compensation (of fixed compensation, an amount of compensation according to position). The fixed compensation
is monthly monetary compensation, and consists of compensation according to position and compensation according tocontribution to business performance. In addition, Kumagai Gumi has adopted a stock compensation system employing
trusts, by which the company grants points based on position, etc. each fiscal year to eligible persons, and, generally at thetime of retirement, grants shares of stock based on the cumulative number of points.
Compensation for Audit & Supervisory Board Members is determined through deliberation by Audit & Supervisory Board
Members, within the limit of the total amount of compensation for Audit & Supervisory Board Members decided at General
Shareholders Meeting.

Toward realizing our long-term Vision and achieving our Medium-term Management Plan goals, we have defined the following
as the skills required for the Board of Directors, which will play a central role in this effort: (1) Corporate management/
strategy, (2) Sales/marketing, (3) Global operations, (4) Technology/R&D/ICT (DX), (5) Compliance / risk management, (6)finance/accounting, (7) Sustainability (ESG/SDGs), and (8) Human resources development / diversity.
In appointing each Director, Kumagai Gumi takes into account each Director's duties and experience, while paying
attention to ensure that the skill items required by the Board of Directors are appropriately allocated and that diversity andbalance are maintained on the Board of Directors.
The following is a list of skill items that the Board of Directors should have and that are specifically expected of each
Director (Skills Matrix).

Compensation, etc. for Directors and Audit & Supervisory Board Members (FY2021)
Executive category

Total amount by type of compensation, etc.
Fixed compensation

Bonus

Stock compensation

Number of
eligible Officers

246 (29)225 (29)– (–)

20 (–)

11 (4)

46 (21)46 (21)

– (–)

– (–)

4 (2)

Directors

Audit & Supervisory Board
Members(Outside Audit & Supervisory
Board Members among these)* The stock-based compensation noted is the amount of provisions for stock benefits for Directors recorded in FY2021.

Position

Yasunori
Sakurano

Representative
Director
CEO andPresident

Yoshihiko
Kato

Representative
Director
Executive Vice
President

General Civil
Engineeringengineering technology●●

Yoshiaki
Ogawa

Representative
Director
Executive Vice
President

General construction
Safety and health
Quality/environment●●

Reasons for appointment of Outside Executives / Attendance at Board of Directors meetings (FY2021)

Name

Outside Directors

Sakae
YoshidaShigeruOkada(appointed June 2021)

Kimie
Sakuragi(appointed June 2021)(appointed June 2022)

Outside Auditors○

Board ofDirectors○

He has a track record of participation in corporate management, primarily
as a Representative Director and President in different industries. Based on
his resulting extensive experience and wide-ranging insights, the Company
anticipates that he will provide appropriate guidance and advice to theCompany's management.

Board ofDirectors

13 times /13 times○

She has a track record of participation in corporate management, primarily
as a Standing Auditor in different industries. Based on her resulting extensive
experience and wide-ranging insights, the Company anticipates that he will
provide appropriate guidance and advice to the Company's management.

Board ofDirectors

13 times /13 times

He has a track record of participation in corporate management, primarily as
an Executive Officer and Standing Auditor in different industries. Based on
his resulting extensive experience and wide-ranging insights, the Company
anticipates that he will provide appropriate guidance and advice to theCompany's management.

○

He has a track record of practical work as a certified public accountant. The
Company anticipates that he will leverage his resulting extensive experienceand expert knowledge to provide appropriate auditing of the company's
management from an objective standpoint.

YutakaTakehana○

He has a track record of participation in key government office positions andcorporate management in other industries. Based on his resulting extensive
experience and wide-ranging insights, the anticipates that he will provide
appropriate auditing of the company's management from an objective
standpoint.

Board ofDirectors
Audit &
Supervisory
Board

Akio
Yamada○He has a track record of practical work as a certified public accountant. The
Company anticipates that he will leverage his resulting extensive experienceand expert knowledge to provide appropriate auditing of the company's
management from an objective standpoint.

(resigned June 2022)(appointed June 2022)–

17 times /17 times
14 times /14 times
17 times /17 times
14 times /14 times

Sales
Markteting●

GlobalTechnology Compliance
Risk
R&D
management
ICT(DX)●

Finance
Accounting

●

●

Human
resource
Sustainability(ESG/SDGs) development
Diversity

●

●

●

●

Koji Hidaka

General Manager,
Directors
Senior Managing Administration Division
Executive Officer In charge of Compliance●

Shin Ueda

General Manager of the
Directors
Senior Managing Building Management
Executive Officer Division

●

●

●

●

Koji
Okaichi

General Manager of
the Civil Engineering
Management Division
Directors
General Manager ofSenior Managing
the Railway Project
Executive Officer
Promotion Division of
the Civil Engineering
Management Division

●

●

●

●

Tatsuru
Sato

Directors(Non-Executive
Director)

●

●

Sakae
YoshidaDirectors

Outside Director●●

Shigeru
Okada

Directors

Outside Director

●

Kimie
Sakuragi

Directors

Outside Director●●

MasayaNara

Directors

Outside Director

●

●

●

(3) (4)(3) (4)17 times /17 times–

Board ofDirectors
Audit &
Supervisory
Board

MasaakiAyukawa

68

Reason for appointment
He has a track record of participation in corporate management, primarily as
an executive in charge of production divisions in different industries. Based on
his resulting extensive experience and wide-ranging insights, the Company
anticipates that he will provide appropriate guidance and advice to theCompany's management.

○

Responsibilities

Business strategy

Medium-term Management Plan
(1) Bolster overall construction
business(2) Accelerate construction-related
peripheral businesses(3) Develop new business domains(4) Strengthen managementfoundation(1) to (4)●●(1) (2) (3)

●

●

●

●

●

●

(1) (2) (3)●●(1) to (4)●ESG Initiatives

MasayaNara

Independent
Executive

Attendance(Number of times
attending / Number of
meetings)

Corporate
management
Management
strategy

Directors
Name(¥ million)

Total amount ofcompensation(Outside Directors among these)

Skill items that our Board of Directors should have and that are particularly expected of each Director(up to 4 skill items for each Director)●●(3) (4)(3) (4)* This description does not indicate all the knowledge, experience, and abilities possessed by each Director.

The Kumagai Gumi Group Corporate Report 2022

69

ESG Initiatives

WEB ➡ Risk Management

https://www.kumagaigumi.co.jp/company/compliance.html

Compliance and Risk Management
Fundamental concept
In order for Kumagai Gumi to continue earning the appreciation and trust of customers and society, we believe that all of ourofficers and employees must take responsibility for their daily actions, comply with laws, social sensibilities, and corporate
ethics, and maintain an awareness of compliance.

Enforcement of compliance

Eradication ofanti-social forces● The Kumagai Gumi Code of Conduct declares that we will stand firm against anti-social forces.
● A program is established for responding to anti-social forces, and to educate our employees on specific ways of eliminating such forces.
● Clauses for eliminating organized crime groups have been introduced in the Conditions of Contract for Specialized Construction Work andthe Conditions of Sale and Purchase Agreement for Materials and Equipment used in our transactions with subcontractors.
● Collection of written representations and warranties before signing contracts with agencies.

Prevention ofcollusion/bribery● Our Compliance Rules of Conduct stipulate that, in accepting orders for construction work, we shall not engage in any acts that impair thefairness and impartiality of bidding, including acts in violation of criminal laws and anti-monopoly laws.
● In April 2022, we established Regulations Concerning Compliance with the Anti-monopoly Law and Prevention of Corruption and Bribery,
regarding prohibited acts by executives and staff members, and measures to be taken in response to violations.
● To ensure that all executives and staff members are not involved in any violations, we collect written pledges, conducting training, and takeother measures.

Prevention of
insider trading● We comply with the Financial Instruments and Exchange Act and related laws and regulations, and have established Internal Regulations
on the Prevention of Insider Trading to enhance the effectiveness of compliance. We have established an Insider Information Management
Committee based on these regulations to perform information management across the company.
● We issue notifications four times a year to alert executives and staff members who may come in contact with insider information on a daily
basis.
● If such executives or staff members intend to buy or sell shares of Kumagai Gumi stock, they are to report the matter to the Insider
Information Management Committee in advance and obtain permission.

Information
security● We established our Information Security Policy in 2007, and take concrete measures to protect information assets from unauthorizedaccess, leakage, falsification, loss, disaster, and other threats.
● We respond to security risks, which are becoming more sophisticated every day, by continuously conducting targeted attack e-mail training
and security education, and when a problem occurs, share information with related departments and respond promptly.

Protectionof private
Information● We have established fundamental rules and regulations, such as the Basic Principle, the Privacy Policy, and the Personal Information Protection
Regulations, and engage in initiatives to properly handle and protect the personal information of all stakeholders, including shareholders andemployees.
● We ensure through compliance training and other means that all officers and other employees are aware of the importance of protecting
personal information, and continuously improve the management system and framework.

Compliance system
Kumagai Gumi's compliance system consists primarilyof three internal functions: Autonomous functions by
Headquarters and branch offices, support functions by the
Administration Division and other specialized divisions,and auditing functions by the Audit Office.
In addition, the Legal Compliance Audit Committee, anorganization independent of management, periodicallycarries out evaluations of the company from an outsider'spoint of view and advises management of any problems
uncovered, in order to strengthen the enforcement ofcompliance.

Support functions,administration divisions, etc.

InstructCompany-wide Legal Complianceand Legal Support Systems
Systems improvement
and legal support

Outside evaluation
functions,
Legal Compliance
Audit Committee

Evaluation by outsiders

AdviseManagement

Autonomous functions,
Head and Branch Offices
Enforcement of priorjudgments

Instruct

Auditing and corrective
advising measures

Legal Compliance Audit Committee

Auditing functions,Audit Office

Audit findings

Unbiased audits

The Legal Compliance Audit Committee is composed ofinternal company committee members as well as outsidecommittee members who include attorneys and otherexperts. It convenes every year.

Status of litigation or legal violations (including administrative sanctions, administrative measures)
As of the end of March 2022, our company is involved in seven civil cases in Japan. In FY2021, no serious legal violations(including administrative sanctions, administrative measures, etc.) occurred that involved measures such as suspension ofdesignated bidding at a national level.

Compliance promotion initiatives

Business Continuity Plan (BCP)
Internal whistleblower system

To raise all employees' awareness in enforcing compliancewith laws and ordinances, every year all executives and staff
members of Kumagai Gumi Group submit a written pledge
concerning compliance (100% submission rate).

The Kumagai Gumi Group has set up a hotline forquickly assessing, correcting, and preventing problems
involving compliance. We are working to forecast and root
the occurrence of compliance violations by accepting awide range of whistleblower reports, including from ouremployees, group company employees, and businesses
partners. We have also introduced a leniency program(measures reducing penalties for whistleblowers) to
encourage use of the voluntary whistleblower system.

Compliance training and compliancereinforcement month
To improve basic understanding of compliance, from
October 2021 through February 2022 our company
conducted an internal training program on topics including
antitrust law, bribery, and corruption, targeting employeesof Kumagai Gumi as well as group companies, from aperspective of strengthening the group's compliancestructure.
Kumagai Gumi has designated October as the month
to strengthen compliance, in an attempt to enhance
employees' awareness of compliance and to re-examine
potential risks in daily work.

Whistleblowers

Means ofwhistleblowing

Kumagai Gumi andgroup companies

E-mail/Telephone

Full-time
employees

Senioremployees

Contract
employees

Part-time
employees

Advisors

Temporaryemployees
etc.

Partner firms

Verbal / Telephone
FAX / Postal mailE-mail*Anonymity possible

Contact desk
Midosuji Legal
Profession
Corporation
Legal &
ComplianceDepartment● Implementation of factual investigation● Examination of recurrence prevention
measures● Enactment of appropriate measures

Reporting on investigation
findings and response(except where anonymous)

70

In the event of a major disaster, Kumagai Gumi will make every effort to achieve rapid recovery of sites under construction
and the restoration of infrastructure, and to respond to requests for restoration aid from customers and local residents. We
have formulated a Business Continuity Plan (BCP) as a basic policy for contributing to prevention of secondary accidents,
the restoration of urban functions, the safety of local residents, and the recovery of the private economy.
We have also established a permanent Crisis Management Committee to maintain and improve the effectiveness ofbusiness continuity, formulating fiscal year plans for business continuity activities based on the PDCA cycle. In cooperation
with Group companies, we conduct annual disaster response drills, and we review and improve our overall plan based on
the results of these drills and other factors.

Operation of the Safety Confirmation
Communication System
In preparing support systems based on business continuity
plans, confirmation of the safety of employees is themost important matter. We operate a system that allows
confirmation of safety status, extending even to groupcompanies and partner companies. The Kumagai Gumi
Group has established systems to support quick recovery.

Measures to combat the COVID-19 pandemic
Kumagai Gumi has set up a COVID-19 task force headedby the General Manager of the Administration Division,
to carry out swift decision-making and execution of
measures. From the perspective of ensuring the healthand safety of employees, their families, and people incooperating companies, we provide employees withguidelines for dealing with COVID-19 pandemic (infection
countermeasures, restrictions on activities, business
continuity, etc.). In accordance with the state of thepandemic and government policy, we are continuing withbusiness through the promotion of telework and staggered
commuting, guidance for partner companies, and contagion
control measures.
The Kumagai Gumi Group Corporate Report 2022

ESG Initiatives

All employees submit a written pledge

71

ESG Initiatives

WEB

https://www.kumagaigumi.co.jp/company/director's-interview-2022.html

Round-table with Outside Directors

By advancing management integrated withsustainability, I want us to aspire to be acompany that is good, and trusted by society.
Kumagai Gumi appoints Outside Directors to bring objective perspectives into management and to enhance its
corporate governance. We spoke with three Outside Directors, Sakae Yoshida, Shigeru Okada, and Kimie Sakuragi.

matters we should be discussing at board meetings are
not being sufficiently deliberated. One of the main roles
that the Board of Directors is supposed to play is that ofmonitoring management. To do that, I think we should
spend more time discussing things from a more elevatedperspective, such as Kumagai Gumi's management
strategy. I am also concerned that discussions are being
concluded only within the bounds of the constructionindustry. The other day, a project related to renewableenergy was on the agenda, but shouldn't a new project
like that be discussed from a more encompassing
perspective?
Yoshida   What should Kumagai Gumi focus on in orderto achieve sustainable growth? I think this is an important
discussion for us to have at board meetings. I believe ourrole as outside directors is to further that discussion from athird-party perspective.

Sustainability is a management strategy in itself

Sakae Yoshida

Shigeru Okada

Kimie Sakuragi

We stay aware of different points of view expressed at Board meetingsknow this can be somewhat jarring, but everyone on theexecutive and administrative side has always responded
appropriately.
Mr. Yoshida, this is your second year as an outside
director. Have you noticed any changes in the discussions
at board meetings?
Yoshida   In my first year, I also made a conscious effort,
daring to say things that risked being offensive in order
to trigger discussion. As I enter my second year, I try to
ask more in-depth questions and voice my opinions, andas you both mentioned, there is always an atmosphere inwhich I know I'm being taken seriously. The three of us
outside directors have diverse core career backgrounds,
and I feel that our comments have been reflected in the
more active discussions at the board meetings.

Taking a much broader perspective, not limited to the construction industry
Okada   I feel that the Board of Directors is very careful
in preparing materials and explanations in advance of themeetings. One issue with board discussions is that it issometimes difficult to understand the process undertaken
before a given matter comes up for discussion at a board

72

meeting—whether, for example, the matter was fully
discussed at management meetings. I think there is room
for improvement in this area.
Sakuragi   My feeling is that we place individual agenda
items of business execution front and center, so that someconducted a few days ago. According to the results,
awareness of the SDGs is over 80%, well above the averagefor Japanese companies, which is a very good thing.
We should create an environment where sustainability is
not just a corporate activity, but something that each andevery employee takes personal ownership of.
Yoshida   Sustainability is essentially an issue that should
be integrated with corporate management and businessactivities. Considering this, it is not necessary to tackle all
17 SDGs uniformly. Rather, it's crucial to focus on areasthat are closely related to Kumagai Gumi's business andopen up new business opportunities by delving deeper
into these areas.

I want us to aspire to be a company that is good, and trusted by society
Yoshida   In order for Kumagai Gumi to achievesustainable growth, I would like to see us discoverand develop our essential strength, which consists inelements that are recognized in any industry as uniquely
indispensable. I hope that all of our employees willrecognize this strength and nurture it into something likethe trunk of a great tree.
Sakuragi   I want Kumagai Gumi to aspire to be a goodcompany, one that can build solid relationships of trustwith all stakeholders, including customers, business
partners, employees, shareholders, and society. That iswhat I envision as a good company, and Kumagai Gumi
has a wonderful capacity to grow into that good company.
In order to manifest this, I will play my role as an Outside
Director.
Okada   I have only been an outside director for abouta year, but I like Kumagai Gumi very much. I feel thatthe company has a wealth of human resources and thepotential to grow even more in the future. I intend to do all
I can to help make Kumagai Gumi a company that, when

our employees' children grow up and learn anew about
Kumagai Gumi through job hunting and other activities,
they will be able to think, "My family works for a goodcompany."

ESG Initiatives

Yoshida   It has been more than a year since Ms. Sakuragi
and Mr. Okada became outside directors of Kumagai
Gumi. I'd like to ask you again, what is your impressionof Kumagai Gumi?
Sakuragi   I have the strong impression that this is acompany that places great importance on people-topeople relationships. I think this is also reflected in theatmosphere of the board meetings. President Sakurano,
the Chairman of the Board, has created an atmospherethat makes it easy for everyone to speak up, and I feelthat he is sincerely willing to listen to us Outside Directors
at board meetings.
Okada   I agree with you on that. The company has a very
open atmosphere. My experience is in an industry otherthan construction, and I take care to be bold enough to
speak from a different perspective at board meetings. I

Okada   Sustainability is our essential theme in discussing
Kumagai Gumi's future management.
Sakuragi   In the case of Kumagai Gumi, since ourbusiness is itself deeply linked to building social
infrastructure, I feel that our foundation for sustainabilityconscious management has existed for a long time.
However, the level of sustainability that society will
demand from companies in the future is going to make it amanagement strategy in itself. Given this, I think we needto heighten our awareness of it even further, and consider
sustainability as a medium- to long-term management
strategy, which is to say sustainable management.
Okada   An employee survey on sustainability was

The Kumagai Gumi Group Corporate Report 2022

73

WEB ➡ To our investors
https://www.kumagaigumi.co.jp/ir/index.html

Key Financial Data over 10 Year Period
Unit: millions of yen

Orders received

Performance

79th term

80th term

81st term

82nd term

83rd term

84th term

85th term

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/3

291,024

329,495

293,558

284,711

381,784

454,007324,959

283,361

350,236  Civil Engineering

63,410100,805

115,764

109,463

103,718

129,891

155,751

92,371

100,106

110,826  Building Construction

160,019

190,219

213,730

184,094

180,992

251,892

298,255

232,587

183,255

239,409

Net sales

260,753

328,900

362,090343,647

344,706

374,019

389,058

436,151

450,232

425,216Gross profit

10,40818,35929,03839,06841,08040,23045,53045,49848,084

43,466

8.0

11.4

11.9

10.8

11.7

10.4

10.7

10.2

4.0

5.6

SG&A Expenses

11,575

11,75012,934

14,52815,945

17,18819,06520,05720,015

20,723Operating profit (loss)-1,167

6,608

16,10424,54025,13523,041

26,46425,44028,06922,743

-0.4

2.0

4.4

7.1

7.3

6.2

6.8

5.8

6.2

5.3

Ordinary profit
Profit (loss) attributable to owners of parent
Comprehensive income

65

6,791

15,65825,77225,35822,682

26,55325,71828,40023,732-1,083

4,299

5,458

12,092

16,433

15,783

13,312

19,447

17,92515,850

123

6,313

6,683

12,157

16,947

14,098

12,956

17,851

21,414

15,267

Net assets

45,47150,46153,55164,93380,288126,374

134,883

148,034

163,835

169,302

Total assets

202,800

235,929

255,514

255,525

271,908

333,665

353,718

374,841

379,573

371,096

Property, plant and equipment

14,19314,08015,053

15,745

17,19919,504

24,83625,34725,65827,451

Interest-bearing debt

22,527

21,161

19,93817,821

15,422

14,47912,84912,258

11,88912,153

Capital adequacy ratio (%)

21.7

20.7

21.0

25.4

29.5

37.9

38.1

39.5

43.2

45.6

Cash flows from operating activities

3,540

21,816

18,262

4,234

8,625

17,641-12,398

345

6,572

8,258

Cash flows from investing activities-1,426-369-3,042-448-3,090-14,010-7,379-2,298-4,306-3,395

Cash flow from financing activities-3,208-1,472-1,338-2,926-4,02430,856-6,126-5,361-6,112-9,686

Cash and cash equivalents at end of period

37,16657,60971,702

72,42273,926

108,532

82,44675,15571,33567,404135.70142.09143.27173.762,150.32

2,707.51

2,894.41

3,177.22

3,516.06

3,751.09

-5.91

19.71

15.72

32.35

439.93389.63285.48417.34384.68342.13

Dividend per share (yen)

–

–

2.00

4.00

7.00

90.00

100.00120.00120.00120.00

Payout ratio (%)

–

–

12.7

12.4

15.9

23.1

35.0

28.8

31.2

35.1

99

255

375

286

290

3,420

3,460

2,501

3,005

2,710

–

12.9

23.8

8.8

6.6

8.8

12.1

6.0

7.8

7.9

Per share information Book-value per share (BPS) (yen)Earnings (loss) per share (EPS) (yen)Stock price indicators Stock price at end of term (yen)Price-earnings ratio (PER) (multiple)
Price Book- value Ratio (PBR) (multiple)
Number of shares issued at the end of the period

Other

78th term

223,429   Operating profit margin (%)

Cash flow

77th term

Orders received (Nonconsolidated)   Gross profit margin (%)

Financial status

76th term

Return on equity (ROE) (%)

0.7

1.8

2.6

1.6

1.3

1.3

1.2

0.8

0.9

0.7

186,544,607

277,544,607

377,544,607

377,544,607

37,754,460

46,805,660

46,805,660

46,805,660

46,805,660

45,411,660

-2.5

9.3

10.9

20.4

22.6

15.3

10.2

13.7

11.5

9.5

0.0

3.1

6.4

10.1

9.6

7.5

7.7

7.1

7.5

6.3

Capital investment

1,279

1,272

2,018

2,234

3,187

4,183

7,374

2,636

2,500

4,192

Research and development expenses

1,323

1,374

1,285

1,516

1,784

1,987

2,348

2,581

2,660

2,725

939

951

1,045

1,268

1,344

1,684

1,911

2,062

2,011

2,004

3,524

3,510

3,579

3,702

3,798

3,892

4,032

4,154

4,259

4,338

Ordinary profit to total assets ratio (ROA) (%)

Depreciation
Number of employees*1 The company performed a stock merger at a ratio of 1 share per 10 shares of common stock, effective October 1, 2017. Total book-value per share and earnings
per share were calculated on the assumption of the stock merger carried out at the beginning of the 80th term.
*2 The dividend per share of 90 yen in the 81st term includes a dividend of 20 yen per share to commemorate the company's 120th anniversary.

74

The Kumagai Gumi Group Corporate Report 2022

75

Capital
Number of employees
Scope of Business

Domestic sites

Overseas Offices
Group companies

Kumagai Gumi stock price

Stock price

TOPIX

5,000

100 shares
37,331
Sumitomo Mitsui Trust Bank, Limited

Fiscal Year
Ordinary General Meeting of
Shareholders

Treasury stock:58,229 shares (0.1%)

Securities firms: 44
1,764,301 shares (3.9%)

Foreigninvestors:

298

11,093,012
shares(24.4%)

Legal Compliance
Audit Committee

From April 1 through March 31
March 31
June of the Year

Base Date for Annual Dividend

Shareholder
Composition
Number ofshareholders: 37,331
Total number ofshares outstanding:
45,411,660 shares

Other Japanese corporations:439

10,946,662 shares (24.1%)

Financial
institutions:50

11,469,956
shares(25.3%)

Individuals and others:

36,499The company performed a stock merger at a ratio of 1 share per
10 shares of common stock, effective October 1, 2017. Kumagai
Gumi turnover and Kumagai Gumi stock price prior to the stock
merger have been retroactively revised accordingly.

3,000

90,000,000

2,000

60,000,000

1,000

30,000,000

0

0
March
2013

March
2014

March
2015

March
2016

March
2017

March
2018

March
2019

March
2020

Legal & Compliance Department
Human Resources and General Affairs Department
Diversity Promotion Department
Finance Department
Examination Department
Accounting Department

Safety, Quality and Environment Division

Safety Promotion Department
Quality and Environment Promotion Department
Subcontractor Alliance Promotion Department

Civil Engineering Management Division

Civil Engineering Department
Sales Promotion Department
Marketing Department
Electric Power Marketing Department
Railroad Marketing Department
Technical Center
Civil Engineering Technology Department
Information and Communications Technology (ICT) Promotion Office
Infrastructure Renewal Business Department
Bridge Innovation Business Department
Environmental Business Department
Machinery and Materials Department
Dam Technology Department
Tunnel Technology Department
Shield Technology Department
Project Technology Department
Geological Technology Department
Civil Engineering Design Department

Railroad Project Promotion Division

Building Management Division

March
2021

Marketing &Management Department
Architectural
Management Department
ArchitecturalEngineering Department

Architectural Design
Management Division

Turnover150,000,000
120,000,000

March
2012

Administration Division

10,079,500 shares (22.2%)

4,000

March
2011

76

Share Unit
Administrator of Shareholders
Registry

Hokkaido Office, Tohoku Office,Tokyo Metropolitan Area Office,Nagoya Office, Hokuriku Office, Kansai Office
Chugoku Shikoku Office, Shikoku Office,
Kyushu Office,Okinawa Office, Technical Research &Development Institute*The Okinawa Office was established on April
1, 2022.
Vietnam, Indonesia, Malaysia
GAEART Co., Ltd.
K&E Co. Ltd.
Technos Co., Ltd.
Techno-Space Creates Co., Ltd.
FATEC Co., Ltd.
Technical Support Co., Ltd.
Taiwan Kumagai Co., Ltd

Kumagai Gumi turnover

45,411,660 shares

Number of shareholders

To investigate, survey, plan, design, execute,and supervise construction works, and toprovide technical guidance, provide
comprehensive engineering, management,
and consulting services, as well as related
contracting

Stock Trading Data

Total number of shares
outstanding

Corporate Planning Department
Secretarial Department
Corporate Communication Department
DX Promotion Department

Audit Office

Incorporated

Total Number of Shares
Authorized to Be Issued

Fukui Office

Founded1861
The Tokyo Stock Exchange Prime Market(April 4, 2022)
71,400,000 shares

Stock Exchange ListingManagement Conference

Representative

Securities Code

Auditors Committee

Head Office

Board of Directors

Headquarters

Management Strategy Office

Headquarters

Stock Information

Kumagai Gumi Co., Ltd.
2-1, Tsukudo-cho, Shinjuku-ku,
Tokyo 162-8557, Japan
2-6-8 Chuo, Fukui, Fukui Prefecture 910-0006,
Japan
Yasunori Sakurano, President andRepresentative Director
January 1, 1898
January 6, 1938
30.1 billion yen
4,338 consolidated; 2,626 non-consolidated

Directors/Branch Managers Meeting

Company name

Organizational Chart (as of July 01, 2022)(as of March 31, 2022)

President

Stock Information(as of March 31, 2022)

Audit & Supervisory Board Member

Corporate Information

March
2022

Planning Promotion Department
Sales Promotion Department
Urban Development Department
Solution Sales Department
Architectural Project Department(DX) Promotion Office
Purchasing Department
Architectural Production & Engineering Department
Architectural Structure & Engineering Department
Architectural Environment & Engineering Department
Medium- to Large-Scale Wood Structure Promotion OfficeArchitectural Design Planning Department
Architectural Design Administration Department
Quality Control Department
Architectural Design Department 1
Architectural Design Department 2
Architectural Design Department 3
Structural Design Department
Earthquake-resistant Design Department
Environmental Design Department

International Division

Administration Department
Project Management Department
Project Development Department

New Business Development Division

New Business Planning Promotion Department
Infrastructure Business Promotion Department
Renewable Energy Business Department

Technical Research & Development Division

Planning Group
Technical Research & Development Division
New Technology Innovation Center

Hokkaido Office
Tohoku Office
Tokyo Metropolitan Area Office
Nagoya Office
Hokuriku OfficeKansai Office
Chugoku Shikoku Office
Shikoku Office
Kyushu Office
Okinawa Office

The Kumagai Gumi Group Corporate Report 2022

77

The artwork on the cover comprises works by children from Tsukudo Elementary School, adjacent to the Kumagai Gumi
Headquarters in Shinjuku, Tokyo, on the theme of the environment.
* Kumagai Gumi supports opportunities to foster a mindset that treasures nature and environment in the children who will lead the next generation.
Our work with Tsukudo Elementary School includes environmental learning and cleanup of the local area.

Kumagai Gumi Co., Ltd.
2-1 Tsukudocho, Shinjuku-ku, Tokyo 162-8557
https://www.kumagaigumi.co.jp
Inquiries
Management Strategy Office Corporate Communication Department
TEL 81-3-3235-8114 FAX 81-3-5261-9665
E-mail info@ku.kumagaigumi.co.jp