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

We evaluate the medium to long-term economic rationality by comprehensively taking into consideration profitability evaluation criteria such as capital cost and business return from maintaining and strengthening the business relationship and assess the meaning of holding shares regularly and reports the assessment results to the Board of Directors. When the significance of having cross-shareholdings shares weakens, we sell shares as needed.

As stated in the Medium-Term Business Plan 2022, we have been selling cross-shareholdings in order to bring the ratio of it to 20% or less of consolidated net asset as soon as possible by the end of FY2026, further reviewing the meaning of having cross-shareholdings and pursuing investment efficiency.

To achieve this goal, we have sold cross-shareholdings worth a total of 47.8 billion yen since FY2021, with the sale target of around 150 billion yen from the level of the outstanding cross-shareholdings as of end of FY2020. However, the amount of cross-shareholdings has increased as of the end of the second quarter of FY2023, compared with the balance at the end of FY2020, given the recent rise in the stock market. Going forward, we will proceed with further sales of cross-shareholdings irrespective of the initial sale target of 150 billion yen and will strive to reduce such shares to 20% or below of consolidated net assets by the end of FY2026.

Additionally, we plan to use the proceeds from sales of cross-shareholdings effectively to enhance corporate value, by investing in areas that will contribute to sustained growth with medium and long-term growth in mind, in addition to investing for the purpose of securing stable investment revenue.