Kumagai Gumi : Consolidated Financial Results for the Second Quarter Ended September 30,2021〔Japanese GAAP〕

This document has been translated from the Japanese original "Kessan Tanshin" disclosed at the Tokyo Stock Exchange on November 11, 2021 and prepared for reference purpose only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Consolidated Financial Results for the Second Quarter Ended September 30, 2021 〔Japanese GAAP〕

November 11, 2021

Company name : Kumagai Gumi Co., Ltd.

Stock exchange listings : Tokyo Stock Exchange, 1st Section

Securities code : 1861 URL : https://www.kumagaigumi.co.jp/

Representative : Yasunori Sakurano, President

Contact : Chihiro Nosaka, General Manager, Accounting Department, Administration Division

Tel. [phone]

Date of filing of quarterly securities report : November 11, 2021

Scheduled date of dividend payment : ―

Supplemental materials for quarterly financial results : Yes

Presentation on quarterly financial results : Yes

（Rounded down to the nearest million yen）

１．Consolidated Results for the Second Quarter Ended September 30, 2021 (April 1, 2021 - September 30, 2021)

（１） Consolidated Operating Results

（Percentage figures are changes from the same period in the previous fiscal year）

Net sales of completed

Operating income

Ordinary income

Profit attributable to

construction contracts

owners of parent

Million yen

％

Million yen

％

Million yen

％

Million yen

％

FY2021 2nd Quarter

189,555

(8.4)

8,708

(26.5)

9,130

(24.1)

6,259

(19.0)

FY2020 2nd Quarter

206,884

3.4

11,841

23.1

12,033

21.9

7,728

(2.2)

（Note） Comprehensive income

FY2021 2nd Quarter 5,610 million yen

(32.4)％

FY2020 2nd Quarter

8,295 million yen

13.0％

Basic earnings per share

Diluted earnings per share

Yen

Yen

FY2021 2nd Quarter

134.32

－

FY2020 2nd Quarter

165.86

－

（２） Consolidated Financial Position

Total assets

Net assets

Capital adequacy ratio

Net assets per share

Million yen

Million yen

％

Yen

FY2021 2nd Quarter

353,383

163,848

46.4

3,516.07

FY2020

379,573

163,835

43.2

3,516.07

（Reference） Owner's equity

FY2021 2nd Quarter

163,848 million yen

FY2020 163,835 million yen

２．Dividends

Annual cash dividends per share

End of 1st quarter

End of 2nd quarter

End of 3rd quarter

Year-end

Total

Yen

Yen

Yen

Yen

Yen

FY2020

―

―

―

120.00

120.00

FY2021

―

―

FY2021 （forecast）

―

120.00

120.00

（Note） Revision to the latest forecasts of cash dividends announced : None

３．Forecast of Consolidated Operating Results for FY2021 (April 1, 2021 - March 31, 2022)

（Percentage figures are changes from the same period in the previous fiscal year）

Net sales of completed

Operating income

Ordinary income

Profit attributable to

Basic earnings

construction contracts

owners of parent

per share

Million yen

％

Million yen

％

Million yen

％

Million yen

％

Yen

FY2021

451,000

0.2

27,000

(3.8)

27,400

(3.5)

18,600

3.8

399.15

（Note） Revision to the latest forecasts of consolidated operating results announced : None

※Basic earnings per share does not take into account the impact of the "Acquisition of Own Shares" and "Acquisition of Shares in the Stock Compensation Plan" announced today.

※ Notes

（1） Changes in significant subsidiaries during the period

（Changes in specified subsidiaries that resulted in a change in the scope of consolidation） : None

（2） Application of specific accounting for quarterly consolidated financial statements : None

（3） Changes in accounting policies, changes in accounting estimates, and retrospective restatements

① Changes in accounting policies due to the revision of the accounting standards	: Yes
② Changes in accounting policies other than ①	: None
③ Changes in accounting estimates	: None
④ Retrospective restatements	: None

(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes (4) Notes to Quarterly Consolidated

Financial Statements (Changes in Accounting Policies)" on page 9 of the Attachments.
（4） Number of shares issued (common stock)				（Shares）
① Number of shares issued at the end of the period (including treasury stocks)	FY2021 Q2	46,805,660	FY2020	46,805,660
② Number of treasury stocks at the end of the period	FY2021 Q2	205,671	FY2020	209,338
③ Average number of shares outstanding during the period	FY2021 Q2	46,599,069	FY2020 Q2	46,598,663
（quarterly cumulative total）

• "Kessan Tanshin" is not subject to the quarterly review.
• Explanation regarding the appropriate use of forecasts of operating results, and other specific comments
  The financial forecast of operating results in this document are based on information available at present and logical assessments. Actual results may be materially different from expectations due to a variety of factors. Refer to "1. Qualitative Information on Consolidated Operating Results for the Second Quarter Ended September 30, 2021; (3) Qualitative Information Concerning Consolidated Earnings Forecasts" on page 2 of the Attachments for matters related to earnings forecasts.

（Reference） Summery of Nonconsolidated Financial Results

（Rounded down to the nearest million yen）

１．Nonconsolidated Results for the First Quarter Ended September 30, 2021 (April 1, 2021 - September 30, 2021)
（１） Nonconsolidated Operating Results		（Percentage figures are changes from the same period in the previous fiscal year）
	Net sales of completed	Operating income	Ordinary income		Profit
	construction contracts
	Million yen	％	Million yen	％	Million yen		％		Million yen		％
FY2021 2nd Quarter	147,905	(11.6)	7,380	(28.1)	9,194		(19.1)		6,758		(12.4)
FY2020 2nd Quarter	167,345	4.2	10,269	32.0	11,371		38.2		7,717		38.3
	Basic earnings per share	Diluted earnings per share
		Yen		Yen
FY2021 2nd Quarter		144.71	－
FY2020 2nd Quarter		165.24	－
（２） Nonconsolidated Financial Position
	Total assets	Net assets	Capital adequacy ratio		Net assets per share
		Million yen		Million yen			％				Yen
FY2021 2nd Quarter		293,214		131,283			44.8				2,810.98
FY2020		316,659		131,287			41.5				2,811.32
（Reference） Owner's equity	FY2021 2nd Quarter 131,283 million yen	FY2020 131,287 million yen
２．Forecast of Nonconsolidated Operating Results for FY2021 (April 1, 2021 - March 31, 2022)
			（Percentage figures are changes from the same period in the previous fiscal year）
	Net sales of completed	Ordinary income	Profit			Basic earnings per share
	construction contracts
	Million yen	％	Million yen	％	Million yen		％				Yen
FY2021	344,000	(4.5)	22,600	(4.0)	15,800		5.0				338.31

（Note） Revision to the latest forecasts of nonconsolidated operating results announced : None

※Basic earnings per share does not take into account the impact of the "Acquisition of Own Shares" and "Acquisition of Shares in the Stock Compensation Plan" announced today.

Contents

１．Qualitative Information on Consolidated Operating Results for the Second Quarter Ended September 30, 2021	････	2
（１）Explanation of operating results	･････････････････････････････････････････････････････････････････	2
（２）Explanation of the financial position	･････････････････････････････････････････････････････････････	2
（３）Explanation of information on future forecasts, including the consolidated earnings forecasts	････････････････	2
２．Quarterly Consolidated Financial Statements	･････････････････････････････････････････････････････････	4
（１）Quarterly consolidated balance sheet	･････････････････････････････････････････････････････････････	4
（２）Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income ･･････	6
（３）Consolidated statements of cash flows	････････････････････････････････････････････････････････････	8
（４）Notes to Quarterly Consolidated Financial Statements	･･･････････････････････････････････････････････	9
（Notes related to the going concern assumption）	･･･････････････････････････････････････････････････	9
（Notes in the case of significant changes in shareholders' equity）	･･････････････････････････････････････	9
（Changes in accounting policies）	････････････････････････････････････････････････････････････････	9
（Segment Information）	･･･････････････････････････････････････････････････････････････････････	11
（Significant Subsequent Events）	････････････････････････････････････････････････････････････････	12
３．Quarterly Nonconsolidated Financial Statements	･･････････････････････････････････････････････････････	13
（１）Quarterly nonconsolidated balance sheet	･･････････････････････････････････････････････････････････	13
（２）Quarterly nonconsolidated statement of income （Cumulative total）	･･･････････････････････････････････	15
４．Supplementary Information	･･････････････････････････････････････････････････････････････････････	16
（１）Orders received, net sales and carried-forward（Nonconsolidated ）	･･･････････････････････････････････ 16
（２）Financial Highlights	･･････････････････････････････････････････････････････････････････････････	17

1

１. Qualitative Information on Consolidated Operating Results for the Second Quarter Ended September 30, 2021

（１）Explanation of operating results

During the second quarter ended September 30, 2021, the Japanese economy remained in an unpredictable situation as the effects of the COVID-19 pandemic dragged on, with high-contact services still facing a challenging earnings environment, including weak demand following state of emergency declarations, despite signs of improvement in business confidence recently, largely thanks to export growth driven by the recovery of overseas economies.

In the construction industry, the order environment remained at a reasonable level because building investment by private-sector enterprises and housing construction showed a tendency toward recovery and public investment also remained at a high level thanks to the implementation of construction budgets.

Under such operating conditions, the Kumagai Gumi Group continued to strive for sustainable growth by working together as a team on The Kumagai Gumi Group Medium-Term Management Plan (FY2021-FY2023)

• Proactive Measures for Sustainable Growth-, which was formulated in May this year and sets (i) deepen the construction business, (ii) accelerate the construction-related peripheral businesses, (iii) develop new business domains, and (iv) strengthen the management foundation as basic policies.
  Looking at the consolidated results for the second quarter ended September 30, 2021, net sales (completed contracts) fell 17.3 billion yen (8.4%) year on year, to 189.5 billion yen, mainly due to a decrease in the order backlog at the beginning of the fiscal year. On the profit front, operating income decreased 3.1 billion yen (26.5%) year on year, to 8.7 billion yen, and ordinary income dropped 2.9 billion yen (24.1%) year on year, to 9.1 billion yen, reflecting decreased net sales and decline in gross profit (gross profit on completed contracts) as a result of a lower gross profit margin (gross profit margin on completed contracts), among other factors. Profit attributable to owners of parent was 6.2 billion yen, down 1.4 billion yen (19.0%) due to income taxes of 2.7 billion yen and other adjustments.

（２）Explanation of the financial position

Total assets at the end of the second quarter were 353.3 billion yen, a decrease of 26.1 billion yen (6.9%) from the end of the previous fiscal year, mainly due to the collection of receivables such as notes receivable, accounts receivable from completed construction contracts and other and accounts receivable other.

Total liabilities fell 26.2 billion yen (12.1%) from the end of the previous fiscal year, to 189.5 billion yen, chiefly owning to the payment of payables such as notes payable, accounts payable for construction contracts and other and electronically recorded obligations - operating. These changes in assets and liabilities are attributable to the fact that, in the construction industry, contract completions/handovers tend to be concentrated on the end of the fiscal year.

Net assets edged up 0.01 billion (0.0%), to 163.8 billion yen, with increases due to the recording of profit attributable to owners of parent, foreign currency translation adjustment and other factors offset by decreases due to dividends paid, valuation difference on available-for-sale securities and other factors. The shareholders' equity ratio was 46.4%, improving 3.2 pt from 43.2% at the end of the previous fiscal year.

（３）Explanation of information on future forecasts, including the consolidated earnings forecasts

The Japanese economy is expected to see a sustained upward trend in exports as the world economy recovers

2