Obayashi Corporation owns shares in its customers' businesses (hereafter, "cross-shareholdings") to maintain and strengthen trade relationships with our customers.

We review the significance of owning shares in each company by regularly reporting to the Board of Directors on valuation gains/losses, and collective consideration of indicators of profitability such as capital cost and return on business from maintaining and strengthening the business relationship with a company. We verify the economic rationale for owning shares over the medium and long term, and sell shares as needed when the business significance of owning the shares has weakened.

The Medium-Term Business Plan 2022 states that the Obayashi Group will proceed further on reassessment of the significance of owning shares and overall investment efficiency. We have reduced cross-shareholdings, aiming to bring the ratio of cross-shareholdings to 20% or less of consolidated net assets as soon as possible before the end of March 2027. However, the amount of cross-shareholdings has increased as of the end of the fiscal year ended March 31, 2024, compared with the balance at the end of the fiscal year ended March 31, 2021, given the recent rise in the stock market. Going forward, we will proceed with further sales of cross-shareholdings and will strive to reduce such shares to 20% or less of consolidated net assets by the end of March 2027.

To enhance our corporate value, we will strengthen investments in human resources, DX, technology, investments to expand production capacity, and growth investments in fields where we can establish a competitive advantage. From the point of improving capital efficiency, we will implement strategic shareholder returns by setting the necessary equity amount according to the growth of the Group's businesses. Proceeds from the sale of cross-shareholdings will be used for these investments or shareholder returns.