Shimizu (1803) Investor presentation summary

Overview of bond issuance and share buybacks

• Issued zero coupon convertible bonds due 2031 and 2033, each totaling ¥50 billion, mainly in overseas markets excluding the US.

• Bonds have a 0% coupon, are issued above par, and include contingent conversion and acquisition options to discourage conversion.

• Proceeds allocated: approximately ¥90 billion for M&A, ¥10 billion for share buybacks, with buybacks planned through TOSTNET-3.

• Aggregate share buyback limit increased to ¥20 billion for the period August 17 to December 30, 2026.

• Lock-up period for the corporation is 180 days after the closing date.

Strategic rationale and funding structure

• Funding supports growth investments, especially M&A, as part of the "SHIMZ VISION 2030" strategy.

• Bonds are structured to minimize dilution and financing costs, with features to discourage conversion.

• Share buybacks are intended to absorb hedging sales and improve ROE and EPS.

• M&A is a key pillar of the mid- to long-term growth strategy, with recent acquisitions including American Engineering Corporation.

• Proceeds from bonds will further enhance competitiveness and capital efficiency.

Mid- to long-term growth and capital policy

• Growth investments total ¥360 billion for FY2024-2026, including talent, technology, digital, real estate, and renewables.

• Separate budget for M&A to enhance corporate value, with recent acquisitions strengthening the business foundation.

• Capital policy focuses on improving ROE, PER, and PBR through profitability, efficiency, and shareholder returns.

• Additional share buybacks of up to ¥10 billion planned with CB financing.

• Proceeds from bonds allocated to both M&A and share buybacks to support sustainable growth.