CORPORATE REPORT 2023

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Accelerating Value Creation,
Hazama Ando seeks to build strong relationships with the people with whom we work, and all of our
stakeholders, as we pursue the digital transformation of social systems, build comfortable and resilient
infrastructure more broadly, and promote carbon neutrality on a worldwide scale. Faced with a world that
continues to change day-by-day, we are embracing the challenge of creating sustainable value. Our
endeavors take on various forms, but all continue to have a positive impact on the global society.

The Evolution of Hazama Ando’s Business

Civil
Engineeringin Japan

Building
Constructionin JapanThis segment is charged with upholding social capital, ranging
from roads, railway lines, and other transportation networks towater, sewage, electricity, and other lifelines as well as energy
facilities, which together form the foundation that enables
people to live safe, secure, and comfortable lives. Furthermore,
we will continue to respond to the needs of society, including
soil remediation and other environmental measures and themaintenance and renewal of social capital, including disasterprevention and mitigation efforts.

This segment supports the entire life cycle of buildings, from theplanning stage to design, construction, maintenance, andrenewal. We plan building specifications, construction periods,
and costs to address the needs and conditions of customers. In
addition to safety, quality, and process control, our construction
also takes the surrounding area and environment into consideration to provide optimal buildings and services for our customers.

Overseas
Operations

NonConstruction
Business

For more than half a century, we have been engaged in construction in various countries and regions worldwide. We currently have branch offices in Asia and North America andmaintain a presence in numerous countries. We contribute tosocial development in each locale through infrastructure development and by providing total support to customers preparing
to expand overseas.

To transform the business portfolio, we are proactively working
to expand businesses other than building construction, includingin the fields of energy, real estate and infrastructure management, and building service management.

Corporate Symbol
HAZAMA ANDO CORPORATION’s corporate symbol features large, swirling currents crossing over a square form, in adesign that simultaneously expresses reliability, energy, and strength. The square form, suggesting stability, represents a
wealth of achievements and trust cultivated over many years of history, and a genuine “customer first” attitude. The
large swirls are symbols of HAZAMA ANDO CORPORATION’s determination to cherish the individual values of themerged companies, while creating new value through a bold and unconstrained pursuit of fresh challenges. And the
motion suggested in the design represents how HAZAMA ANDO CORPORATION will continuously evolve and grow,without being confined to conventional ideas.

01

Maximizing Our Impact
INDEX
03 Hazama Ando’s History andTrack Record of Accomplishments

05 Hazama Ando’s Value Creation Strategies
for Contributing to a Sustainable Society

09 Message from the President
15 Strategic Focus

Launch of Medium-Term Management
Plan 2025

19 Financial Strategies

21 Corporate Governance

Ensuring Fair andHonest Corporate Activities
Roundtable Discussion with
the President and External Board Directors
Directors and Audit andSupervisory Committee Members

35 Review of Operations
Civil Engineering

Building Construction
Overseas Operations
Collaboration with Startup Companies

45 Overview of Sustainability Strategies
55 Consolidated Financial Statements
59 Stock Information
60 Corporate Profile
Editorial Policy

61 Head Office Organization Chart
Hazama Ando Corporation

62 Third-Party Opinion

33 Financial and Non-Financial Highlights

About this Report
We published Corporate Report 2023, integrating financial and non-financial information, to give our stakeholders a clearer idea of theoutline of our management strategy and its essential results.
For more information on our ongoing sustainability activities and environmental data, please see Sustainability Report 2023.

Corporate Report 2023

Sustainability Report 2023

 ummary and goals of management strategies
Sin line with the Group’s long-term vision andmedium-term management plan.
Outline of financial and non-financial management strategies and results.

 etails of sustainability activities in line withD
the Group’s materiality.
Disclosure regarding ongoing activities
Environmental data

02

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Hazama Ando’s History and Track Record of Accomplishments
From the outset, taking on unparalleled building projects has been at the very heartof the Group.

Since the founding of its predecessor companies (ANDO Corporation in 1873, HAZAMA Corporation in 1889),
Hazama Ando has never been satisfied with the status quo. We have always taken on the challenge of creating newvalue, such as being first in Japan to engage in novel construction projects and adopt new methods and aiming toachieve the highest technical standards in Japan and overseas. Our identity and the source of our competitive
strengths are rooted in contributing to people’s lives and to society by drawing on the robust technologicalcapabilities and experience we have built up over the years.
Civil Engineering

Completion

In a Nutshell

Building Construction Completion

In a Nutshell

Yalu River Bridge

1911 A revolving railway bridge built over the

Ehime Prefectural Office

Sakuma Dam

1956 The first major mechanized construction

Itochu Corporation Tokyo 1980 A spacious light court (atrium) stands atthe center of this building, which covers
Headquarters Building

Kurobe Dam

1963 A concrete arch dam built to generate(China, North Korea)(Shizuoka Prefecture)(Toyama Prefecture)

Yalu River on the border of China andNorth Korea, now abandoned.
project of Japan’s post-war era.

power to make up for power shortages
during Japan’s high economic growth
period. At 186 meters, its crest height isstill the highest in Japan.

(Ehime Prefecture)(Tokyo)1985 When it opened, this railway tunnel was

Shirashima Oil Storage
Base (Fukuoka Prefecture)

1996 Japan’s largest offshore tank-type oil

Toei Oedo Line
(Subway Line No. 12),
Roppongi-Aoyama Section(Tokyo)Dai Ninh Hydropower
Project Contract CW2(Vietnam)

the longest in the world (53.8 kilometers).
We were in charge of the Yoshioka
section on the Hokkaido side.
storage base.
Japan Society of Civil Engineers Outstanding Civil Engineering Achievement
Award 1996

1985 This project is known as Japan’s firstfull-scale intelligent building.
28th BCS Prize

Tokyo Sea Life Park (Tokyo) 1989 This building’s broad rooftop fountain pool
blends in with Tokyo Bay in the background, creating a beautiful marine
landscape.
32nd BCS PrizeJapan Racing Association 1990 This renovation project marked the 60th
anniversary of Nakayama Racecourse, and(JRA) Nakayama
included Japan’s first curving escalator.
Racecourse Grandstand(Chiba Prefecture)

Tokyo Big Sight (Tokyo)

1995 A lift-up method was used to improve

Petronas Twin Towers(Tower I) (Malaysia)

1997 The tallest building in the world (452

Toppan Koishikawa
Building (Tokyo)

2000 Built as part of Toppan Printing’s 100th

Southern TOHOKU
Proton Therapy Center2007 Japan’s first privately operated particle

2000 This project’s trying conditions included a

densely developed underground environment, as well as easily collapsible groundand the need to build under high waterpressure. To clear these hurdles, we used
a 4-circular face shield method to build
the station shield, a world-firstachievement.
Japan Society of Civil Engineers Outstanding Civil Engineering Achievement
Award 1999

about 112,000 square meters and was
built in about a year and a half.
23rd BCS Prizeis located on five underground floors, inconsideration of the surrounding landscape.
24th BCS Prize(Tokyo)Seikan Tunnel, Yoshioka
Section (Hokkaido)

government office building with great
historical value.

1981 Half of the collection of this huge library,
Keio University Library,which covers about 15,000 square meters,
Mita Media Center (Tokyo)

Honda Aoyama Building
Kan-Etsu Tunnel, Kan-Etsu 1982 The longest mountain expressway tunnel
in Japan.
Expressway (Gunma Prefecture)

1928 Japan’s third-oldest active prefectural

construction accuracy and safety and savelabor required to lift the materials used tobuild this project, one of Japan’s largest
convention facilities.
38th BCS Prizemeters) at the time of construction, thistower remains the tallest 20th-century
skyscraper.

2007 Located northeast of Vietnam’s Ho Chi Minh

City, this hydroelectric power plant consistsof two main dams, four saddle dams, anda connecting waterway, and has a maximum output of 300,000 kW of electricity.

Uji Bridge, Ise Grand Shrine 2010 Both the shrine buildings and the Uji(Mie Prefecture)

Shin-Takeoka Tunnel(Kagoshima Prefecture)

Bridge are rebuilt once every 20 years.
This was the third time for the Company
to be entrusted with the work of
rebuilding the bridge.

2013 The excavation cross-section of this twintunnel is about 380 square meters, making
it Japan’s largest expressway tunnel.
Japan Society of Civil Engineers Outstanding Civil Engineering Achievement
Award 2013

(Fukushima Prefecture)

2013
03

anniversary commemoration, this building
features an impressive curved glass curtain
exterior wall.
42nd BCS Prize

Birth of Hazama Andobeam cancer treatment facility, and thefirst such project to be both designed andbuilt by a construction company.

With a view to bringing about a sustainable society, the Hazama Ando Group willcontinue to create further value.

Today’s society offers many opportunities and challenges, ranging from economic globalization and diversifying
values to increasingly grave environmental issues. Since the merger of our two companies in 2013, the Group has
been keenly aware of the importance of realizing a sustainable society and has been pursuing building operations
centered on our Group management strategy.

Civil Engineering

Building Construction

Tsugaru Dam (Aomori Prefecture)2016

Nippon Seinen-Kan & JAPAN SPORT COUNCIL
Administrative Building (Tokyo)2017

Positioned as the redevelopment of the Meya Dam located 60 meters upstream,
this multipurpose dam used a cruising roller compacted dam-concrete method toshorten the construction period.
Japan Society of Civil Engineers Civil Engineering Design Grand Prize 2018, Japan
Society of Civil Engineers Outstanding Civil Engineering Achievement Award 2017

Yokohama Ring Expressway Northwest Route Shield Tunnel(Kanagawa Prefecture)2019

This large-scale mixed-use complex, which includes a theater, hotel, and officespace, used the lift-up method to lift mega truss structural components.

Honmaru Palace, Nagoya Castle (Aichi Prefecture)2018

To steadily construct a large cross-section, long-distance, deep-laid tunnel, we
made active use of advanced technologies such as the Smart Shield ® system.

Referred to as the crown jewel of Japanese castle palaces, this palace in 1930 was
first to be designated as a National Treasure under a new law, but was destroyedby bombing during World War II. The castle keep was rebuilt in 1959 (by ourCompany) and the entire palace faithfully restored 59 years later.

Futaenotoge Tunnel (Aso Block) (Kumamoto Prefecture)2020

Tokorozawa Civic Cultural Center (Saitama Prefecture)

Japan’s first new tunnel construction to use an early contractor involvement (ECI)
approach, contributing to faster recovery after the Kumamoto earthquake. Excavation was completed in roughly half the typical period required.
Received 2020 JSCE Outstanding Civil Engineering Achievement Award

In this private-finance-initiative renovation project commissioned by the city ofTokorozawa, as a member of the special purpose company, Hazama Ando was incharge of construction work, including reinforcing the ceiling of the concert halland making the facilities barrier-free.

Nam Ngum 1 Hydroelectric Power Plant Expansion (Laos)2022

Shindengen Electric Manufacturing Asaka Office(Saitama Prefecture)2021

This project entailed adding turbines to an existing dam built by our Company.
Construction involved a high degree of difficulty, including building a new water
intake by opening a hole in the existing dam, a first for Southeast Asia.

2019

This project realized a wellness office seamlessly integrated with an interior atrium,
along with outstanding environmental performance.
Recipient of the 2022 IEIJ Lighting Design Award, 2022 IEIJ Good Lighting Award,
ZEB Ready certification (for 52% energy saving), CASBEE Building S Rank certification, and CASBEE Wellness Office S Rank certification.

04

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Value Creation Strategies
INPUT

Management Resources Underpinning
Our Businesses and the External Environment
Financial Capital(consolidated)(non-consolidated)

Fiscal 2022

Total assets
EquityIntellectual Capital
Patent applications

318 billion yen

140.4 billion yen

Equity ratio

42

R&D expenses

3.1 billion yen

44.2%

Manufactured Capital, Social Capital
Bases (including Japan)

Number of member companies
in Hazama Ando Cooperative Association

19 countries

Fiscal 2022

1,321 companies

Number of major Group companies

3 in Japan 3 overseas
Natural Capital

Fiscal 2022

Various R&D bases

Technical Research Institute
Human Capital

Fiscal 2022

As of March 2023

Electric power consumption (consolidated)

Number of employees (consolidated)

Light oil consumption (non-consolidated)

Number of engineers (non-consolidated)

Ready-mixed concrete (non-consolidated)

Nationalities (non-consolidated)

56.59 million kWh
19 thousand kl

563 thousand m3

3,677
2,495

18 countries* Figures are classified based on the IFRS Foundation (formerly IIRC) Integrated Reporting Framework

Our Understanding of the External Environment
An era in which a variety of values exist and diversity is required
Risks
Weak economic growth
Rising geopolitical risks
Surge in material andfuel prices

Shortage in the labor force05

Sustainability-related

Decarbonization and biodiversity
Technological innovation-based

productivity improvement needs

Opportunities
National land resilience
Startup support, etc.

Human capital management

Increased businessco-creation momentum

COVID-19-based new normal

New capitalism

Society 5.0 realization

Hazama Ando’s Value Creation Strategies forContributing to a Sustainable Society
PRINCIPLESCorporate Philosophy and Long-Term VisionCorporate Philosophy

1. We shall contribute to enhancing society by construction

2. We shall pursue customer satisfaction with reliable technologies
and passion
3. We shall realize a prosperous future by creating new values

Hazama Ando VISION2030 Long-Term Vision for Value Creation and
Our Promises to Stakeholders
Create customer value
Achieving customer satisfaction and gaining their trust by means ofinnovative technologies and solutions
1 Provide safety, high quality, and high productivity at a fair cost
2 Provide various environmental and other solutions

Create shareholder value
Securing stable profits and returning profits by further strengthening our mainstay businessand investing in strategic growth
1 Secure stable profits and return profits to shareholders
2 Maintain high capital efficiency

3 Undertake various initiatives including steps to upgrade andexpand governance

Create environmental value
Contributing to the realization of a decarbonized, low environmental impact,
recycling-oriented society to leave a fertile global environment for the next generation
1 Reduce greenhouse gas emissions to achievecarbon neutrality

2 Undertake various initiatives including the introductionof energy-creating and energy-saving technologies

Create employee value
By creating safe and comfortable working environments, realizing enhancementsin the sense of well-being and in the motivation of employees
1 Realize well-being

2 Support autonomous career formation

3 Undertake various initiatives including steps to foster a culture ofmutual education, challenge, and creativity

06Based on our corporate philosophy and Hazama Ando VISION2030, Hazama Ando puts emphasis on growt
sustainability that does not harm the future of the planet. The management framework we are building to
generated through construction and optimizing the positive impact of our businesses on society and the en

STRATEGY

Continuous Reform to the Business Modelwith a View to Risks and Opportunities
Medium-Term Management Plan 2025
Embraces the Challenge of Sustainable Growth

Enhancing Business Growth usiness operations that respondB
immediately to changes in theexternal environment
Realization of appropriate capital
measures

Increasing the Value of
Human Capital aximization of employee valueMthrough proactive human capital
investment

Promoting ESG Management
 ontributions to the environmentCand societyOngoing strengthening ofgovernanceNon-Financial Materiality to Continue Optimizing Positive Social andEnvironmental Impact
Materiality 1

Helping to solve social issues and create value for society

Creating new value in various facets of our businesses andflourishing alongside the communities we serve as we move toward
the realization of a sustainable society
Key CSR
Themes chieving the satisfaction of society andAcustomers and earning their trust
Working in harmony
with the communities we serve
Safe, comfortable working environments

Materiality 2

Relevant
SDGs

Protecting and being attuned to the natural environment

Contribute to the realization of a carbon-free,recycling-oriented society with a low environmental impact to pass on
the earth’s abundance to the next generation
Key CSR
ThemesCreating environmental abundanceMateriality 3

Relevant
SDGs

Promoting sustainable management and taking full responsibility for corporate actions

Realize fair and honest business practices across the supply chain
as the foundation for sustainable management
Key CSR
Themes air and honest corporate activities
FCommunication with stakeholders

RelevantSDGs

07

th strategies that strike a balance between improving people’s living environments with achievingo achieve such growth places equal emphasis on maximizing the social and environmental value
nvironment.

OUTCOME

What We Will Achieve Systematically
Across the Group
Create Financial Value

Medium-Term Management Plan 2025 Key Performance Indicators (Fiscal 2025)
Customer value target
Consolidated ordinary profit

26.5 billion yen

Shareholder value targets
Total return ratio

70% or more

Employee value target
Employee engagement score

At least 80%

R0E

12% or more

Environmental value targets

Greenhouse gas emission reduction rate

Scope 1 + 2

34% or more

Scope 3

21% or more

Create Non-Financial Value
Selected Materiality Key Performance Indicators
Productivity improvement

Eight or more closures in four weeks

Fiscal 2025: Over 10%

Every year: 100%

Proportion of renewableenergy used for electricity

Number of ZEB projects

Protecting and being attuned
to the natural environment

Fiscal 2030: 80%

Fiscal 2024: 5

Promoting sustainable
management andtaking full responsibility
for corporate actions

Information security course
attendanceCompliance training attendanceEvery year: 100%Every year: 100%

Helping to solve social issues
and create value for society(compared to fiscal 2020)

Collaboration to solve social issues
Supporting and contributing to
the United Nations SDGs Indicators

Helping to bring about a carbon-neutral society

08

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Message from the President

Kazuhiko Kuniya
Representative Director
and President

I assumed the role of President in April 2023. I am committed to always keeping abreast of the
expectations of society, pursuing mutual prosperity with all of our stakeholders, and further promoting
the sustainable growth of the company. I would like to offer an overview of our results in the fiscal year
ended March 2023, the final year of our medium-term management plan, as well as our future
prospects from both financial and non-financial perspectives.

I. Analysis and Observations from a Manager’s Perspective
Summary of Fiscal 2022 (Year Ended March 2023)
The construction market in Japan saw a turnaround on
the back of robust willingness in the private sector to
make capital investments, while the overseas construction
market also showed signs of recovery. The overall situation remained uncertain, however, due to factors including mounting geopolitical risks, soaring materials costs
stemming in part from a weak yen, and disruptions to the
supply chain.
In these circumstances, consolidated net sales for the
fiscal year ended March 2023 were up 9.4% year on year
to 372.1 billion yen, while non-consolidated orders
09

increased 12.4% to 348.2 billion yen. Orders in the Building Construction business in particular reached their highest level since our merger. On the profit front, we saw adecline in profits due to flagging profitability for someconstruction projects and the recording of a provision forwarranties for completed construction, coupled withhigher selling, general and administrative expenses,
including personnel and operating costs. As a result, consolidated operating profit was down 25.4% year on year
to 19.8 billion yen and the consolidated operating profit
margin was 5.3%.

Overview of Results for Fiscal 2022 (Year Ended March 2023)
Consolidated net sales

Non-consolidated orders received

Consolidated operating profit+9.4% YoY

+12.4% YoY–25.4% YoY

372.1 billion yen

348.2 billion yen

19.8 billion yen

Consolidated operating profit margin

Profit attributable to owners of parent–2.5 points YoY–14.1% YoY

5.3%

15.1 billion yen

Review of Previous Medium-Term Management Plan
The fiscal year ended March 2023 was also the final year of
the previous medium-term management plan. In terms of
our financial strategy, we sought to strike a balance between
growth potential and profitability and between shareholder
returns and growth investments. However, the global outbreak of COVID-19 right after we announced the plan in
February 2020, went on to impact performance and impeded
various measures throughout the three years of the plan. As
I mentioned, I recognize that we faced an adverse businessenvironment, not least due to soaring materials costs. As aresult, although we met our key performance indicator interms of the total return ratio, we fell short in terms of ourconsolidated ordinary income and ROE targets.
I think our primary focus needs to be on the ordinary
income target. Securing profits is vital, as it provides funds

for shareholder returns as well as investments in humancapital and technology. In other words, we recognize thatthe current business environment requires a financial
strategy focused first of all on accumulating profits rather
than growing net sales. This thinking is reflected in theMedium-Term Management Plan 2025 as well.
We have also identified four areas for growth investment: the energy business, the real estate business, partner strategic investment, and innovation and technology
development investment. From a longer-term perspective,
we will move ahead with investments after fully examining
the risks and returns involved while paying close attention
to developments in the external environment. Based on
how these efforts bear fruit, we will continue to invest
steadily in areas that will contribute to sustainable growth.

Overview of Financial Results for Fiscal 2022 (Year Ended March 2023)
Fiscal 2020

Fiscal 2021

Results

Results

Previous medium-term
management plan

Results

Net sales

352.1 billion yen

340.2 billion yen

440.0 billion yen

372.1 billion yen

Operating profit

27.3 billion yen(7.8%)

26.6 billion yen(7.8%)

30.5 billion yen(6.9%)

19.8 billion yen(5.3%)

25.8 billion yen(2.2 billion yen)
(8.8%)

25.8 billion yen(2.2 billion yen)
(8.6%)

30 billion yen(3 billion yen)(10.0%)

19.6 billion yen(1.1 billion yen)
(6.1%)

12.2%

12.3%

12.0%

10.8%

61.9%

124.9%

cumulative total
100% or more*2

cumulative total
117.2%

4.8 billion yen(4.8 billion yen)

6.4 billion yen(11.2 billion yen)(25.0 billion yen)

7.9 billion yen(19.1 billion yen)

Ordinary profit(medium-term management plan KPI)
(Of which, non-construction profit)* Figures in parentheses indicate the proportion of
non-construction profits to ordinary profit

ROE (medium-term management plan KPI)
Profit attributable to owners of parent ÷ equity*1 × 100

Total return ratio(medium-term management plan KPI)
Growth investments* Figures in parentheses indicate cumulative amounts

Fiscal 2022

Fiscal 2021–2022

Fiscal 2021–2022*1 (Equity at the end of the previous fiscal year + equity at the end of the current fiscal year) ÷ 2*2 Increase to shareholder returns announced in November 2021

10

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Medium-Term Management Plan 2025 Launched, Targeting Further Sustainable Growth
We formulated the long-term Hazama Ando VISION2030
in February 2020, laying down Four Value Creation strategies to guide our efforts to move ahead with changes toenhance corporate value. Positioned as Chapter I «Branding», the previous medium-term management plan laid thegroundwork for new initiatives and took steps to promotethese both inside and outside the Group. In other words,
for the Group to achieve further growth in an increasingly
uncertain business environment requires sustainable management that brings together three strengths: organizational strength that can respond flexibly to rapidlychanging social and environmental issues, quality control

and technical capabilities that tie in firmly with value creation, and earnings power. Building on our exploration of
the issues involved and environment in which we operate
in the previous management plan, the Medium-Term Management Plan 2025 includes new initiatives targeting sustainable growth, including enhancing business growth,
increasing the value of human capital, and promoting ESG
management. We have positioned these as major issues forGroup management and have formulated detailed business measures for achieving them. The Strategic Focus
section on p. 15 gives details on each measure and ourunderstanding of the external environment.

Summary of Four Promises of Previous Management Plan, Management Issues for
Medium-Term Management Plan 2025
Previous medium-term management plan: Fiscal 2020–2022
Our promises tocustomers

We will achieve safety, high quality, high productivity, and low cost by strengthening our technology
development, innovation, and ingenuity.
We will maintain a customer-centered focus over the long term and respond quickly to diverse needs bystrengthening the life cycle support business.

Our promises toshareholders

Wewill secure stable profits, shifting to a business structure that is resistant to changes in orders received in afiscal year.
We
will increase corporate value by returning profits to shareholders in the form of dividends, etc., and
investing in growth.

Our promises to
the global environmentWe will participate in renewable energy businesses.
We will make our activities net carbon-free by promoting the Science Based Targets initiative and the RE100(Renewable Energy 100%) project.
We will pursue development, verification, and deployment of ZEB, next-generation energy management
systems, and other technologies.

Our promises to
employees

We will foster a sense of well-being, treating employees according to working styles and performance, andpromoting health management and diversity.
We will realize working style reforms and enable diverse working styles.
We will cultivate and attract human resources, expanding our HR training program.

Issues with the previous medium-term management plan
• Lack of orders received (business volume)• Lower profits due to worsening profitability of some construction projects and the need for repair work
• Insufficient speed in addressing environmental changes

Main factors• Lack of robust segments and cost competitiveness• Underdeveloped framework for maintaining and improving
quality and increasing profit productivity• Lack of organizational strength to develop measures to respondflexibly to environmental changes and social demands

Management Issues for the Hazama Ando Group
Based on Issues of the Previous Management Plan and the External Environment
Enhancing Business Growth• Business operations that respond immediately to changes in the external environment• Realization of appropriate capital measures

11

Increasing the Value of
Human Capital• Maximization of employee value throughproactive human capital investment

Promoting ESG Management• Contributions to the environmentand society• Ongoing strengthening of governanceMessage from the President

Accelerating the Four Value Creation Strategies under Hazama Ando VISION2030
As I mentioned above, under Medium-Term Management
Plan 2025 we will work to reinforce and accelerate ourFour Value Creation strategies to achieve the long-term
vision. We have established Promises related to each ofthese values, which, along with five new key performanceindicators, are guiding us as we launch measured, Groupwide initiatives. What I want to stress above all is that thebasic policy of the new management plan is to increase
corporate value and enhance the company’s appeal. For acompany to grow sustainably, it is vital to create a structure in which all the people who work alongside one

another can take pride in their work and pursue personal
growth in a safe and healthy manner. We intend to fulfill
the four Promises with this in mind.
Regarding our investment plans, we will select projects
that contribute to the Medium-Term Management Plan
2025, taking into account past achievements as we moveahead with investments targeting sustainable growth.
We will continue to disclose these achievements
annually, both in this Corporate Report and a separate
Sustainability Report.

Medium-Term Management Plan 2025 Four Promises and Investment Plans
Toward the creation of four values ― Increase corporate value + Enhance the company’s appeal
Consolidated
ordinary income

ROE

Total return ratio

Employeeengagement score26.5 billion yen

12% or more

70% or more

At least 80%

 rovide safety, high quality, and high1 P

productivity at a fair cost rovide various environmental and other
2 P
solutions

Our promises tocustomers

Our promises tosociety and theenvironment

34%
or more21%
or more1 Secure stable profits and return profits toshareholders

Our promises toshareholders

1 Reduce greenhouse gas emissions toachieve carbon neutrality
2 Undertake various initiatives including the
introduction of energy-creating andenergy-saving technologies

Greenhouse gas emission
reduction rate
Scope 1 + 2
Scope 32 Maintain high capital efficiency

3 Undertake various initiatives including

steps to upgrade and expand governance

1 Realize well-being

2 Support autonomous career formation

Our promises to
employees

 ndertake various initiatives including steps
3 U
to foster a culture of mutual education,
challenge, and creativity

Measure to Increase Corporate Value and Enhance the Company’s Appeal
Investment Plan
Fiscal 2020–2022
results

Fiscal 2023–2025
plan

Fiscal 2026–2030
plan

Cumulative total• Renewable energy business(2030 target: 200 MW)• Power purchase agreement (PPA) business

4.5 billion yen

10.0 billion yen

15.5 billion yen

30.0 billion yen

Real estatebusiness• Facility management forbusiness assets owned• Public-private partnership,
private-finance-initiative projects,
profitable property acquisition

2.9 billion yen

10.0 billion yen

7.1 billion yen

20.0 billion yen

Partner strategic
investment• Alliances with business partners inJapan and overseas

0.1 billion yen

10.0 billion yen

4.9 billion yen

15.0 billion yen

Innovation
investment,
technology
development
investment, other• Collaboration with start-up companies andnew business investment• Technical Research Institute refurbishment, etc.
• Technology development investment• Venture capital investment

11.6 billion yen

10.0 billion yen

13.4 billion yen

35.0 billion yen

19.1 billion yen

40.0 billion yen

40.9 billion yen

100.0 billion yen

EnergyTotal amount12

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

II. A Commitment to Reinforcing Sustainability Management
Pursuing More Reliable Risk and Opportunity Management Based on Developments
in Society and the Environment
Global social and environmental megatrends in recent
years have cast light on the extreme importance for corporate management of formulating and rigorously implementing strategies that minimize risks and seize uponemerging opportunities. When drawing up the MediumTerm Management Plan 2025, we sought to be attentive
to currents in the environment and reflect them in theplan’s various measures. We will continue to expand

opportunities to get feedback from outside experts andother stakeholders to accurately gauge emerging trends
and create a flexible framework to reflect this feedback ininitiatives. In conjunction with our transition to a company with an Audit and Supervisory Committee, we will
strengthen our sustainability management framework, as
is expected of a listed company.
p. 21 Corporate Governance

Megatrends (Social and Environmental Risks and Opportunities) Recognized by Hazama Ando

We live in an era where various values exist and diversity is required.
Risks

Opportunities

Slowing economic growth,
intensifying competitiveenvironments
Rising geopolitical risks
Surge in material and fuel prices

Sustainability-related

National land resilience

Decarbonization andbiodiversity

Increased startup support andother business co-creation
momentumTechnologicalinnovation-based
productivity improvement
needs

Declining birthrate andaging population,shortage in the labor force

Human capital management

Progress of climate change

COVID-19-based new normal

Society 5.0 realization
New capitalism
Global momentum behind
human rights protection

Spread of infectious diseases

Demands for more robust sustainable management

13Message from the President

Promoting Double Materiality Management in Line with Global Trends
The Corporate Sustainability Reporting Directive (CSRD), a
new directive underpinning Europe’s Green New Deal
strategy, has come into effect in the EU. As a result, global
companies are stepping up the pace of their sustainability
strategies to address double materiality. This entails establishing key measures (materiality) both for the various
strategies for creating social and environmental value toenhance the company’s financial growth, and for the strategies for responsible management that best shape theimpact of the company’s businesses on society and theenvironment. Hazama Ando was quick to recognize the

In Closing, My Aspirations as the New President
My long experience working in the construction businessand being involved in corporate planning has given me athorough understanding of the values and technical capabilities of our organization and honed my management
capabilities. In addition to drawing on the knowledge I
have gained through this experience to direct the strategies of the Group, I will ground my management in theawareness that people are the linchpin of a company, andI intend to help build the future of Hazama Ando on suchimportance of this as we outlined the Four Value Creation
strategies set out in Hazama Ando VISION2030 and thesustainability strategy set out in the Medium-Term Management Plan 2025, and as we established common core
SDGs and key performance indicators for these strategies.
To address demands arising across all facets of society, we
will continue to rigorously implement these strategies andensure the kind of sustainable management that is
expected of companies that operate globally.
p. 18 Priority Core SDGs and Key Performance Indicators
PDF

Sustainability Report 2023: Materiality 1–3

a management foundation. The basic policy of theMedium-Term Management Plan 2025 I mentioned above
is an expression of this determination. To become an
appealing company where all the people we encounter inour businesses can take satisfaction in their work and life
requires the understanding and cooperation of all of ouremployees, partner companies, and other stakeholders. I
ask for your continued understanding and support.

14

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Strategic Focus

Launch of Medium-Term Management Plan 2025
We were keenly attentive to the external environment in the course of formulating Medium-Term
Management Plan 2025. We live in a time of drastic change, an era that presents an array of risks andopportunities based on a variety of values and calls for greater diversity. Given the likelihood of
unforeseen events like the COVID-19 pandemic reoccurring, sustainable management that can respondswiftly to the external environment will be needed more than ever to manage risks appropriately andrealize sustainable growth without passing up valuable opportunities.
Recognizing the nature of this external environment, we believe we need more than ever to augment
our organizational capabilities by honing and bringing together the strengths of diverse individuals.
To this end, the Medium-Term Management Plan 2025 has identified enhancing business growth,
increasing the value of human capital, and promoting ESG management as key issues to be addressed,
and this will guide the various measures we take.

Quantitative Indicators and Priority Measures

Enhancing Business Growth(Billions of yen)

Fiscal 2022
results

Civil
engineering

Gross profit on completed
construction contracts
Net sales on completed
construction contracts

Gross profit on completed
construction contracts

Life cycle
supportbusiness

Fiscal 2023

Fiscal 2024

(15.9%)(16.2%)(15.9%)(15.9%)

133.4

133.0

145.0

150.0

17.2

18.6

20.1

21.2

21.5

23.0

Fiscal 2025 Priority measures (excerpted from Medium-Term Management Plan 2025)

23.9

21.0

(8.4%)(8.1%)(8.4%)(8.4%)

construction contracts

206.2

230.0

240.0

250.0

Gross profit on completed
construction contracts(2.1%)(6.9%)(7.8%)(8.4%)Net sales on completed
construction contracts

27.7

29.5

27.2

25.0

Building
Construction Net sales on completed

Overseas

Period of the Medium-Term Management Plan

Gross profit
Net sales

0.5

5.4

2.0

4.8

2.1

4.9

2.1

5.0

(11.4%)(11.3%)(11.5%)(11.6%)

48.1

42.3

42.6

43.0

Civil Engineering• Secure a steady stream of ongoing orders and expand construction insegments in which the Group maintains a competitive advantage• Strengthen efforts related to large-scale renewal of public infrastructure• Engage in disaster prevention and mitigation as well as national land
resilience measures
Building Construction• Strengthen strategic initiatives to expand areas in which the Group maintains a competitive advantage• Strengthen profitability management by application-specific orders(strengthen portfolio management)• Strengthen design systems and capacity
Shared• Strengthen the construction work structure and systems by cultivating
human resources and strengthening relationships with partner companies• Increase profit productivity through digital transformation and production
process reform• Respond appropriately to surges in labor and material costs• Carefully select ODA projects in light of risk assessments• Expand the customer base for private sector projects with a focus on production facility projects• Work to put in place structure and systems to strengthen risk response
capabilities; strive to secure and increase profits• Pursue customer satisfaction through a level of service diversification that is
only achievable by a large construction company• Pursue the maximization of synergy effects through collaboration between
the renewal business and the general building service management business* Overseas business data is included in the aforementioned Civil Engineering and Building Construction businesses.
* Life cycle business data is the total for the renewal and building service management businesses.
* Renewal Business data is included in the Building Construction business.
* The figures in parentheses are profit margins.
(Billions of yen)

Energy creation
initiatives

Real estate andinfrastructure
management businesses

Scale of renewable energy businessdevelopment (cumulative total)

Amount of investment(cumulative total)

Amount contributed toconsolidated financial results

Period of the Medium-Term Management Plan

Fiscal 2022
results

Fiscal 2025

Priority measures (excerpted from Medium-Term Management Plan 2025)

40 MW

80 MW

4.5

14.5

• Promote the development and acquisition of renewable energy power plants
Solar power generation: 50 MW; biomass: 20 MW; small- and medium-output
hydroelectric power: 5 MW; onshore wind power, etc.: 5 MW• Promote renewable energy-related technological development• Acquire and roll out green hydrogen utilization know-how—

0.1

Amount of investment(cumulative total)

2.9

12.9

Amount contributed toconsolidated financial results

0.2

0.3

• Public-private partnership, private-finance-initiative business operator selection: More than five projects (three years)• Secure stable earnings and promote initiatives that contribute to collaboration
with the construction business• Implement investments based on a cautious approach toward investment risks
and business profitability* Scale of business development is Hazama Ando equity conversion.
*T he amount contributed to consolidated financial results through energy creation initiatives is calculated as the sum of gross profit from non-consolidated operations, gain or loss on
special-purpose companies, and equity in earnings (losses) of affiliates. Calculation of the amount contributed to consolidated results anticipated after 2026 following the construction of
power plants, etc.
*T he amount contributed to consolidated financial results by the real estate and infrastructure management businesses excluding real estate sales, etc.; posted rental revenue target.
* The amount contributed to financial results includes profits from existing businesses.

15

(Billions of yen)

Period of the Medium-Term Management Plan
Fiscal 2022
results
Fiscal 2023 Fiscal 2024 Fiscal 2025
Priority measures (excerpted from Medium-Term Management Plan 2025)

Technology,
R&D

Amount of R&D
investment

Groupbusinesses

Operating profit

Partnerstrategy

Net sales

4.0

4.1

• Technology (ICT, BIM/CIM, etc.) development that contributes to improvements in
productivity, safety, and competitiveness as well as addressing shortages in the
2.0 labor force• Technology (CN, GX, etc.) development that contributes to the achievement of SDGs
• Basic technology research, etc.

2.0

1.5

0.9

2.1

2.8 • Strengthen cost competitiveness by leveraging the expertise of each company

27.4

31.0

30.2

30.2

• Further expand the areas of expertise and strength for the construction business

0.1

Investment total• Simultaneously expand business scale, including transactions outside the Group, andimprove profitability

10.0 • Expand fields to peripheral businesses, and strengthen fields that require
supplementing

struction business will be on strengthening strategic initiatives to expand areas in which the Group maintains
competitive advantage.
The quantitative indicator for our energy creation initiatives is the amount contributed to consolidated financial
results. Although we expect to start seeing real contributions after the fiscal year ending March 2027, in part as weconstruct power plants, the contribution during the periodof Medium-Term Management Plan 2025 will be limited.

In terms of enhancing business growth, we have set grossprofit on completed construction contracts and net sales oncompleted construction contracts as quantitative indicators
for the Civil Engineering, Building Construction, overseas,
and life cycle support businesses, and established priority
measures to achieve our targets.
Our focus in the Civil Engineering business will be on
securing a steady stream of ongoing orders and expand
construction in segments in which the Group maintains acompetitive advantage, while the focus in the Building Con- lease see p. 35 and 39 for details on measures in our Civil EngineeringP
and Building Construction businesses.

Increasing the Value of Human Capital, Promoting ESG Management
Metrics and Priority Measures
Quantitative indicators

Contribute to theEnvironment realization of aSociety• Greenhouse gas emissions in fiscal 2030
(compared to fiscal 2017)
Scope 1 + 2 Reduce by at least 55%
Scope 3 Reduce by at least 33%

Priority measures (excerpted from Medium-Term Management Plan 2025)•R educe Scope 1 and 2 greenhouse gas emissions by 34% or more and Scope 3
greenhouse gas emissions by 21% or more for FY3/26, based on the revised
1.5°C scenario to achieve carbon neutrality in 2050
•C
 ontinue to address recommendations under the TCFD framework; promotemeasures aimed at raising the Group’s CDP evaluation ranking•C ontribute to the decarbonization of business activities by the Group andcustomers as well as society as a whole by promoting energy creation androlling out energy-saving technologies

decarbonized society• Scale of renewable energy 80 MW(Hazama Ando equity conversion)

Increase the value ofhuman capital• Human resources investment (compared to fiscal 2022) • P
 romote measures aimed at improving remuneration, reconstructing human
5.5 billion yen increase
resources and evaluation systems, reforming work styles, increasing employee• Employee engagement score At least 80%
engagement, and diversifying work styles• Number of certified employees Increase by at least 10% • I mprove the skills of staff (support autonomous career formation, review• Number of female managers 60 persons
education and training systems)•S elect young employees and provide early training

Address the issue ofhuman rights
Promote regional
development
Transition to acompany with an
Audit and Supervisory
Committee

Governance

Period of the Medium-Term Management Plan

Establish the Sustainability Committee,
etc.
Reduce policy
shareholdings• Rate of education and training attendance 100%•A
 ugment education and training including the supply chain based on thehuman rights policy• 3 or more cases (three-year cumulative total)•P romote projects that provide new solutions to enhance the attractiveness of
the region, including decarbonization and job creation to resolve issues confronted by the region• Ratio of external board directors A majority• Ratio of female board directors 30% or more•F urther enhance corporate governance by strengthening the supervisory
function of the Board of Directors• I mprove the agility of business execution by accelerating the pace of management decision-making• Promote ESG management at four annual meetings•E ngage in activities that help address issues related to sustainability for theGroup as a whole as an advisory body to the Board of Directors• I dentify human rights issues, develop and implement a system for identifying
and assessing risks (human rights due diligence), and actively disclose details• Our policy is to reduce holdings in listed companies, excluding cases where holdings can contribute to an increase in corporate value, by
examining the economic rationality and significance of holding shares from the perspective of capital efficiency as well as maintaining andstrengthening relationships with business partners.

We established new quantitative indicators for increasing
the value of human capital and promoting ESG management. To increase the value of human capital, we will aim toraise the employee engagement score and increase thenumber of certified employees through priority measures
such as improving remuneration, reforming work styles, andsupporting staff in improving their skills. Moreover, we haveenhanced governance through the transition to a company
with an Audit and Supervisory Committee, and are working
to reduce policy shareholdings.
 lease see p. 47 for information on measures to increase the value ofPhuman capital.
Please see p. 21 for information on strengthening governance.
16

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Key Measures That Show Value Creation
Initiatives in Businesses Outside Building Construction

To achieve more stable profits in response to changes in the operating environment surrounding the constructionindustry, Hazama Ando is aiming to transform the business portfolio to achieve a balance between businesses thatgenerate stand-alone and recurring profit, and we are making headway in this effort.
Customer value

Shareholder value

Environmental value

Employee value

Tohoku Branch Building Facility Management BusinessIn seeking to achieve more stable profits in response tochanges in the operating environment surrounding the construction industry, our focus is on transforming the businessportfolio to achieve a balance between businesses that generate stand-alone and recurring profit. Part of this effort
involves engaging in the facility management business topromote the effective use of real estate, such as our branchbuildings in Japan. The inaugural project in this area is theHazama Ando Tohoku Branch Building (provisional name)now under construction in Sendai’s Aoba Ward in northern
Japan. We are rebuilding the branch building into a hybrid
building with office space for company use and 102 units ofrental housing space, seeking to create a revenue stream. We
are targeting the start of operation in the early part of 2024.
In the rebuilding, we are aiming to create a healthy, highly
productive, energy-saving next-generation office building thattakes advantage of regional characteristics. We have incorporated a range of environmental technologies, including a ceiling radiation air conditioning system using well water. Our
initiatives have gained recognition: In October 2022, the project received the highest rank for overall building evaluation
under the Building-Housing Energy-Efficiency Labeling System(BELS) as well as Net-ZEB (net zero-energy building) certification (at least 100% energy reduction compared to conventional buildings) for the office portion of the building, and also
received the highest rank for overall building evaluation under
BELS as well as ZEH-M Oriented certification (at least 20%
energy reduction) for the rental housing portion. As a mixed-

used facility consisting of offices and rental housing, this is thefirst time a building in Japan simultaneously acquired Net-ZEB
certification and ZEH-M Oriented certification. Moreover, inJanuary 2023, Hazama Ando was registered as a ZEB Leading
Owner, signifying a building owner that possesses plans for
ZEB-certified buildings.
In May 2023, we further expanded upon our existing Life
Cycle Assessment (LCA) method, applying it to the Tohoku
branch building. By broadening the assessment scope, we
simultaneously acquired the EcoLeaf environmental label andthe Carbon Footprint for Products (CFP) environmental label.
Whereas CFP only evaluates climate change factors, EcoLeaf
is distinct in that it comprehensively evaluates not only climate change but also public indicators for factors such asozone layer depletion, acidification, photochemical oxidants,
and eutrophication. This is the first building in Japan toreceive the EcoLeaf label by conducting a life cycle assessment based on public rules, covering not only the building
itself but also its equipment and operation.
This project has helped transform our business portfolio as
well as afforded the opportunity to apply and verify the latest
environmental technologies to a property, including a moresophisticated life cycle assessment method, and given us
expertise in harnessing the benefits of ZEB conversion fromvarious angles, including building comfort and business continuity performance. It is also reinforcing our efforts to help
bring about a carbon-neutral society and will be a strong
advantage in making proposals to customers down the road.

ZEB chart

First building in Japan to simultaneously acquire
two types of environmental labels

Energy supply

Hazama Ando
Tohoku Branch
Building

Standard temporary energy consumption

ZEB
At least 100% energy
reduction (Net Zero)

ZEB
Oriented

45% energy
generation
Nearly
ZEB
ZEB
Ready

17

56% energy saving
Energy consumption

Reference Building

Calculated according
to public rules(ISO compliant)Ecoleaf

Disclosure(visualization of
third-party results)

Carbon Footprint

Strategic Focus

Ongoing Implementation of Key Performance Indicators
to Create Greater Value
The core SDGs and key performance indicators give visible shape to how we should carry out strategies in line with
the Group’s double materiality, taking into account both financial impact and social and environmental impact. For
the sake of consistency with the Medium-Term Management Plan 2025, we recently transferred elements of ourmeasures (key CSR themes) for each component of materiality, making further headway in improving non-financial
performance while contributing to the SDGs.

Priority Core SDGs and Key Performance Indicators (updated July 2023)
Material Issues Relevant SDGs

Key CSR Themes

Helping to solve social
issues and create value
for society chieving theAsatisfaction of society
and customers andearning their trustCore SDGs

Key Performance Indicators

Serious work-related accidents
Frequency rate orking in harmonyWwith the communities
we serve

Rate of human rights education andtraining attendance

 afe, comfortableS
working environments

Number of female managers(equivalent to manager class)

Metrics

Deadline

Fiscal 2022

0 cases Every year

0 cases0.40 or less

2023

0.64

100%

2025

―

60 persons

2025

29
persons

Eight or more closures in four weeks*1
100%

Building Construction

100%

Employee engagement score

88.6%
2025

72%

Over 10%(compared to fiscal 2020)

2025

4.5%

75/year2025

42

3 or more(over 3 years)

2025

―

CO2 emission reduction rate
(Scope 1 and 2)

At least 34%(compared to fiscal 2017)

2025

24.7%

CO2 emission reduction rate
(Scope 3)

At least 21%(compared to fiscal 2017)

2025

33.5%

5

2024

8

80%

2030

16%

0 cases Every year

0 cases

Productivity improvement*
Patent applications

Regional development projects

 reating environmentalC
abundance

99.0%

At least 80%

2

Protecting and being
attuned to the naturalenvironment

Every year

Civil Engineering

Number of ZEB projects
Proportion of renewable energy used
for electricity
Serious environmental incidents
Recycling of construction site waste
Civil Engineering:
Reduction of overall mixed waste volume

0.8 ton/construction cost(100 millions of yen)

2024

0.6t

6.5 kg/total floor space
(m2)

2024

3.09kgRatio of female board directors

30% or more Every year

25.0%

Ratio of external board directors

Building Construction:
Reduction of mixed waste intensity at
new construction projects

Promoting sustainable
management andtaking full
responsibility forcorporate actions

 onducting fair andChonest corporate
activities
 ngaging in dialogueEwith stakeholders

50% (a majority) Every year

33.3%

Information security course attendance

100% Every year

100%Compliance training attendance

100% Every year100%

*1 Excluding sites where eight or more closures are unfeasible (ensure annual closures of at least six closures in four weeks, develop a framework to ensure workers have eight days off in four weeks)*2 Calculated based on the productivity index of the Japan Federation of Construction Contractors. Based on construction amount per engineer and skilled worker per 8-hour day (completed
construction amount/manpower)

18

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Financial Strategies

To achieve more stable profits in response to changes in the operating environment surroundingachieve a balance between businesses that generate stand-alone and recurring profit. We are
and other stakeholders while securing a sound financial position.
Cash Allocation / Balance Sheet Management
Amid mounting uncertainties over the outlook for the global
economy and drastic changes to the environment surrounding the construction industry, we perceive an even morepressing need to pursue aggressive management that will
boost capital efficiency. We believe the measured use of cash
and deposits, which is one issue for the Group, is critical.
To this end, in our cash allocation plan, we will actively
use cash on hand along with operating cash flow as sourcesof funds for shareholder returns and growth investments.
The Medium-Term Management Plan 2025 sets out a total

return ratio of 70% or more as a key performance indicator
for a financial strategy that helps increase corporate value
and enhance the company’s appeal. Under a basic policy ofmaintaining a consistently high level of dividends, we will
flexibly consider share buybacks as appropriate, taking into
consideration business performance, investment needs, andfinancial conditions. We will seek to enhance corporate
value by striking a balance between shareholder returns
and growth investments.

Three-Year Cash Allocation (Fiscal 2023–2025)
SourceDebt 10.0 billion yen
72.0 billion
yen or more

Operating cash flows
43.0 billion yen

Cash outflow
Capital investment, other 4.0 billion yen
Growth investment 40.0 billion yen

Growth investment andshareholder returns
management allocation
Cash on hand 19.0
billion yen or more

Shareholder returns
28.0 billion yen or more
Fiscal 2025 total return ratio
70% or more

Shinichi Monjugawa
Executive Officer,
Director of Administration Division

19the construction industry, we are aiming to transform the business portfolio tostriving to invest aggressively in growth and enhance returns to shareholders, employees,
Shareholder Return
Our basic policy is to pay consistently stable dividends,
taking into consideration business performance, consolidated financial results, future earnings, and other factors.
In November 2021, under the previous medium-term
management plan, we announced the expansion of ourshareholder return policy. We raised the total cumulative
return ratio target to 100% or more for the two years fromthe fiscal year ended March 2022 to the fiscal year ended
March 2023. We achieved this target through a combination of large-scale share buybacks and increased dividends,
among other measures.
The Medium-Term Management Plan 2025 also aims for a

total return ratio of 70% or more in its final year. Regarding
the fiscal year ending March 2024, the first year of the plan,taking into consideration factors such as the level of profit andequity going forward and the financial context, we plan toincrease both the interim and year-end dividends by 10 yen to
30 yen per share, yielding an annual dividend of 60 yen. This isa dividend level we feel we can maintain. In addition to dividends, the company also considers share buybacks to be an
option for returning profit to shareholders. We will explore
such buybacks while keeping in mind improvements in capitalefficiency and the further return of profits to shareholders,with reference to the financial situation and other factors.

Reduction of Policy Shareholdings
In addition to the objective of receiving income fromchanges in share value or from dividends related to shares,
we position shares that we deem will lead to sustainablegrowth and enhance corporate value as policy shareholdings. Our basic policy is to examine the economic rationality
and significance of holding shares from the perspective ofcapital efficiency as well as maintaining and strengthening
relationships with business partners, and to hold suchshares only when we recognize the appropriateness of
doing so. We carry out examinations yearly, and reduce ourholdings in cases where we do not recognize the appropriateness of holding the shares.
For the fiscal year ended March 2023, we sold shares inthree listed companies but also acquired shares in threeunlisted companies due in part to our partner strategic
investment initiatives, which is part of our growth investment strategy. The ratio of policy shareholdings to consolidated net assets was 15.1%, reflecting an increase in thevaluation of listed shares held and a decrease in consolidated net assets due to the acquisition of treasury shares.

Cash and deposits, Interest-bearing debt,
Debt-to-equity ratio

Annual dividends, Payout ratio, Total return ratio(Billions of yen)(Times)

150

120

90

88.6
0.31

110.7

30

31.2

0.4

120

0.3

90

0.2

60

0.1

30

150

124.9

0.22

31.2

0.20

29.2

66.0
0.17 0.18

27.1

25.2

0.17

24.7

24.1

0

2016 2017 2018 2019 2020 2021 2022
Interest-bearing debt

Debt-to-equity ratio* Figures exclude convertible bonds with stock acquisition rights.

(FY)

120

108.1

90

75.5

0

Cash and deposits

(%)

150

102.9

0.26

60

129.3

120.3

(Yen)

0.5

66.4

20

0 14.1

25
19.4

30

69.0

64.9

60

61.9
33.4

40.5

42.5
30

35.5
30

30

40

40

60

2016 2017 2018 2019 2020 2021 2022 2023

(forecast)

0(FY)

Dividends
Share buyback proportion of total shares
Payout ratio
Total return ratio

20

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Ensuring Fair and Honest Corporate Activities

Increasingly today, society is calling for corporate management that helps address social and environmental
issues. Companies are expected to pursue management that is underpinned by diverse values and skills
and guided by efficient, sound governance offering a high degree of transparency.

Corporate GovernanceTo this end, we transitioned to a company with an Audit
and Supervisory Committee by resolution of the regular
General Meeting of Shareholders held on June 29, 2023.

The Company seeks to ensure more robust corporate governance and continuously enhance corporate value by further
reinforcing the supervisory function of the Board of Directors and improving the flexibility of its business execution.

Independent, Diverse, Transparent Management
Board of Directors

bers who are Audit and Supervisory Committee members(including three external board directors), for a total of ten
members. It makes decisions on important business mattersand supervises business execution. The Board of Directors

The Board of Directors consists of six members other thanmembers who are Audit and Supervisory Committee members (including three external board directors) and four memCorporate Governance and Internal Control Frameworks

Internal

External

Male

FemaleGeneral Meeting of Shareholders
Appointment, dismissal

Board of Directors
6 other than Audit andSupervisory Committee members

Appointment, dismissal(including 3 external board directors) Auditing(including 3 externalboard directors)

Nomination andRemuneration Committee

5 (including 3 external board directors)

Audit andSupervisory
Committee

4 Audit and Supervisory
Committee members

Appointment, dismissal

ReportingAccounting Auditor

Sustainability Committee

13 (including 6 external board directors)

Coordination

Supervision

Advising
Reporting

Supervision

ReportingBoard of Directors
Support Group
Reporting, reporting back, etc.

Coordination

Audit Committee
Support Group
Auditing

Reporting

Auditing

Business
Execution

Various Committees

Instruction, etc.

Internal Control and
Risk Management Committee

ReportingPresident(Representative Director)
Reporting, etc.

Coordination

Human Capital Strategy Committee

Management
Committee

Executive Officers
Executive Officers Committee

Reporting

Audit Department(internal auditing)General Affairs Department(compliance)
Reporting

ReportingInstruction

Auditing

Environmental Strategy Committee

Instruction

Instruction

Recommendations

Reporting

ReportingInstruction

Compliance Promotion Committee
Other

Recommendations

Business Divisions

Group Companies (subsidiaries)
Auditing

Makeup of Board Directors

External board
directors
6

21

IndependenceInternal board
directors

4

Female3

Proportion of
female directors

Male

7

ination and remuneration of directors and executive officers.
The Nomination and Remuneration Committee is an advisory board to the Board of Directors. Its chair and the majority of its members are independent external board directors.
The committee deliberates and decides on the nominationof director candidates, the appointment of executive officers, and the remuneration of the Company’s directors andexecutive officers (excluding board directors who are members of the Audit and Supervisory Committee and externalboard directors), and reports to the Board of Directors. Candidates for the Board of Directors are selected in consideration of the overall balance of the Board’s skill matrix, andindividuals are appointed who have the ability to makeaccurate and prompt decisions, have a keen awareness ofcompliance, and have attractive qualities.

meets monthly in principle, and more often as needed.
The Articles of Incorporation stipulate that some or allimportant decisions about business execution can be delegated to board directors. Some authority has also beendelegated to the Representative Director and President. The
Board of Directors thus focuses more narrowly on high-level
discussions of more critical agenda items and on monitoringbusiness execution.

Audit and Supervisory Committee

The Audit and Supervisory Committee is made up of fourboard directors (three of whom are external). The internalboard director is appointed as a full-time member of the
Audit and Supervisory Committee. Meeting monthly inprinciple, the Audit and Supervisory Committee has theauthority to direct the Audit Department, which is tasked
with internal auditing, and works closely with the department not only to confirm the status of audits and evaluations of the internal control system but also to audit theexecution of duties by directors.

Sustainability Committee

To pursue more thorough-going sustainability management
and address ESG-related matters across the Group, theGroup established the Sustainability Committee in June
2023. With the participation of board directors, the committee takes a comprehensive approach in considering anddeliberating on various key ESG issues from a long-term,wide-ranging perspective.

Nomination and Remuneration Committee(Governance Advisory Board until fiscal 2022)

The Group established the Nomination and Remuneration
Committee to deal chiefly with procedures related to the nom-

Skill Matrix
Position

Name

Corporate
management,
management
strategy

Representative Director

Kazuhiko Kuniya●

Board director

Ichiro Kato

Board director

Takeshi Komatsu

External board director

Masami Fujita●

External board director

Mariko Kitagawa●

External board director

Mieko Kuwayama

Board director
Audit and Supervisory
Committee member

Shinya Miyamori

External board director
Audit and Supervisory
Committee member

Harufumi Mochizuki

External board director
Audit and Supervisory
Committee member

Rie Kawaguchi

External board director
Audit and Supervisory
Committee member

Katsuhiko Ito

Sales,
marketing●Technology
Safety,Environmental development, digitaltransformation
quality control
strategy
strategies

●

●

●

●

●

●

●

Finance,accounting

Human capital

●

●
●

●
●

●

●

Risk
management,compliance

●

●

●

●

●

●

●

●

●
●

Note: The above table shows knowledge, experience, and skills particularly expected of each board director and does not indicate all of the knowledge, experience, and skills possessed byeach director.
Please see p. 31 for board director profiles.

22

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Definition of Each Skill
Relevance to
VISION2030

Definition

Corporate
management,
management
strategy—

Skills to contribute to sustainablegrowth of the Group aiming to realize
Four Value Creation strategies byutilizing experience in corporate
management and important corporate
decision-making, as well as experiencein formulating corporate strategies.

Sales,
marketingCustomervalue
Shareholder
value

Skills to contribute to improvement ofcustomer value and shareholder value
by identifying trends and needs in themarket and providing customers with
best-suited solutions.

Customervalue
Employee
value

Skills to contribute to customer value
and employee value by securingsafety in business activities and providing construction and services withhigh quality.

Skill

Safety, quality
control

Environmental Environmental
strategy
value

Skills to contribute to improvement ofenvironmental value by sustainable
management through decarbonization of business activities and participating in renewable energy projects.

Human Capital GovernanceIn selecting members of the Board of Directors, we look forthe diverse personnel best suited to realize the Four Value
Creation strategies set out in our long-term vision. In termsof creating employee value, following the June 2023 General Meeting of Shareholders, we determined that five ofthe ten board directors (four of whom should be externalboard directors) should possess human capital skills. We
believe this equips the Board of Directors with the expertiseto conduct adequate discussions around human capital. The
Board of Directors plans to regularly monitor the status of
the Group’s human resources strategies.
Additionally, since 2016, the Company has introduced aperformance- and stock-based remuneration system (execu-

Skill

Relevance to
VISION2030

Technology
Customerdevelopment,
value
digitalEnvironmental
transformation
value
strategies
Finance,accounting

Riskmanagement,compliance

Human capital

23

Skills to contribute to improvement ofcustomer value and environmental
value through revolution of construction production systems by proactive
technology development and DX
strategy deployment.

Shareholder
value

Skills to contribute to improvement ofshareholder value by enhancement offinancial strength and effective utilization of shareholders’ equity.

Shareholder
value

Skills to contribute to improvement ofshareholder value by stabilizing corporate management through appropriate risk management and building atrust relationship with society throughfull enforcement of compliance.

Employee
value

Skills to contribute to improvement of
employee value by employee careerdevelopment, working style reform,and securing and improving diversity
aiming to create an environment inwhich employees can have highintegrity and feel job satisfaction.

tive remuneration board incentive plan) to give a longerterm incentive to board directors (excluding those who are
Audit and Supervisory Committee members and externalboard directors) and executive officers. The Ordinary General Meeting of Shareholders held in June 2023 resolved torevise a part of this system to encourage directors and executive officers to take the lead in realizing Hazama Ando
VISION2030 and our medium-term management plan
ending in 2025. Under the revised system, we set an
employee engagement score as an indicator to help management fulfill their duty to create an environment in which
a diverse range of employees can thrive.

Analyzing and Evaluating the Effectiveness of the Board of Directors
All board directors and Audit and Supervisory Committee
members, including external officers, undertake self-evaluations regarding the roles and responsibilities of the Board of
Directors. The Board of Directors Support Group analyzes
and evaluates the effectiveness of the Board based on their
responses, reporting the results in detail to the Board. By
informing the implementation of specific operational
improvements, the results serve to heighten the efficiency
and effectiveness of the Board of Directors.
Analysis of the effectiveness of the Board of Directors for

Definition

the fiscal year ended March 2022 indicated that the Board isfunctioning effectively overall. Specific discussions centeredon the medium-term management plan. Although the Groupwas seen to have made improvements from the previous
year, issues were identified to further enhance the Board of
Directors, including revising agenda items and the way ofproviding information, and enhanced executive training.
Based on these results, we are putting measures in place
to address these issues as we continue working to improvethe effectiveness of the Board of Directors.

Ensuring Fair and Honest Corporate Activities

Management Efficiency

The Group makes a clear distinction between the Board of
Directors and board directors as having decision-making
and business execution supervisory functions, and the Management Committee and Executive Officers Committee as
having a business execution function. Matters to beresolved by the Board of Directors other than those stipulated by law and the Articles of Incorporation are clearlystipulated in our Regulations on Job Responsibilities andAuthority and Regulations on Decision-Making. To speed
up decision-making, the authority to make decisions on
business execution other than the above may be properly
delegated to the Management Committee, executive directors, or executive officers or other personnel appointed by
the Board of Directors. These persons make decisions basedon the Regulations on Decision-Making established by resolution of the Board of Directors.

Policy for Deciding Executive Remuneration Amounts
Remuneration for board directors and executive officers(excluding board directors who are Audit and Supervisory
Committee members and external board directors) consists of basic monetary remuneration and performanceand stock-based remuneration. Regarding remuneration
for individual board directors and executive officers, basic
remuneration is fixed monthly remuneration determinedbased on a remuneration table for each position at an
appropriate level that comprehensively takes into accountcompany performance, job responsibilities, and other factors in each fiscal year.
The Group also grants performance-based remunerationthat functions as sufficient incentive for board directors andexecutive officers to take greater ownership in contributing
to longer-term improvements in performance and toincreased corporate value. Points are awarded to eligible
employees at a fixed time each year based on the degree towhich performance indicators, determined with reference tothe performance indicators set out in the medium-term
management plan, were achieved. Company stock is then

Sustainability Management Framework

Under the supervision of the Board of Directors, we haveestablished advisory committees that span the various business divisions and established a governance framework,
aimed at addressing issues in the environment and in society.
The Group established the new Sustainability Committee
to promote more rigorous management aiming to achieveboth corporate and social sustainability. ESG issues havedrawn increasing attention in recent years. Recognizing theneed to mount a coordinated response across the Group to

granted to employees at the time of their retirement, basedon the amount of points accumulated. The ratio of basic andperformance-based remuneration is set at around 70:30.
Half of performance-based remuneration is converted
into cash and paid in cash.
Meanwhile, remuneration for external board directors
responsible for supervisory functions and board directors
who are members of the Audit and Supervisory Committee
consists solely of fixed monetary remuneration, which isbasic remuneration.
All remuneration is paid within the scope of total remuneration resolved at the General Meeting of Shareholders.
In determining remuneration amounts, the Nomination andRemuneration Committee deliberates and decides on
assessment methods that reflect Group-wide performanceand evaluations of individual divisions for which the board
directors and executive officers are responsible, including
developing basic remuneration tables. The committee thenreports to the Board of Directors, which resolves anddecides on remuneration amounts.

these issues, we deemed that a committee, with the participation of board directors, was needed to take a comprehensive approach in considering and deliberating on various key
ESG issues from a long-term, wide-ranging perspective.
Additionally, we reorganized various existing advisorycommittees and established other new committees to respondflexibly to key ESG issues, transitioning to an advisory committee framework that can efficiently and effectively support
the smooth operation of the Sustainability Committee.

24

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Framework for Promoting Sustainability Management
Advising

Nomination and Remuneration Committee

Reporting back,reportingBoard of Directors

Advising

Sustainability Committee

Reporting back,reporting

Supervision
Reporting

ReportingManagement Committee

Reporting

ReportingTechnology
Development
Committee

Investment
Committee

Group-Wide Health,
Safety, and Quality
Committee

Environmental
Strategy Committee

Human Capital
Strategy Committee

Human Rights
Awareness Committee

Supply Chain
Management
Committee

Internal Control and
Risk Management
Committee

Compliance
Promotion Committee

Note: The above are advisory committees that collaborate with the Sustainability Committee

Main Advisory Committees
Committee

Sustainability
Committee

Chair

Number ofmeetings in
2022

Role

Kazuhiko Kuniya Deliberates on various issues related to ESG,
(President)
reports and gives recommendations to the Board
Note: Attended byof Directors
external board directors

Deliberates on, proposes general environmental
strategies to contribute to the Company’s sustainable management, including Group-wide
environmental policies and goals

Environmental
Strategy Committee

Muneo Gomi
(Vice President)

Human Capital
Strategy Committee

Atsushi Sugao(Vice President)

Deliberates on, proposes human capital strategies

Human Rights
Awareness Committee

Atsushi Sugao(Vice President)

Supply Chain
Management Committee

Toru Ikegami(Vice President)Internal Control and
Risk Management
Committee

Atsushi Sugao(Vice President)

Compliance Promotion
Committee

Muneo Gomi
(Vice President)

Newlyestablished

4 times

Main themesI dentifying material issues, risks and opportunities
Sustainability strategies, consideration of performance indicators, disclosure materials
 eassessment of TCFD-based risks and opportunities
RConsideration of environmental measures

Newly
established onsideration of measures to promote humanC
capital management

Deliberates on, proposes Group-wide and organizational efforts to address human rights issues

1 time eporting on human rights awareness activities
Rand consideration of implementation

Deliberates on, proposes supply chain issues incollaboration with partner construction companies

Newly
established

Deliberates on, proposes issues related to theframework for ensuring proper operations andthe internal control system related to operationin general
Deliberates on, proposes issues related to compliance promotion

Human rights due diligence plans and initiatives

4 times*

 onfirming management status of internal control
CsystemAssessing risks, designating priority risks
Evaluating effectiveness of internal risk management framework

2 times

Formulating compliance promotion plans
Monitoring compliance activities* Called the Internal Control Committee until fiscal 2022

Hazama Ando Group Human Rights Policy

We have determined three aims of our corporate philosophy:
1. We shall contribute to enhancing society by construction;
2. We shall pursue customer satisfaction with reliable technologies and passion; and 3. We shall realize a prosperous
25

future by creating new values. Recognizing that respect forhuman rights is essential to achieving these aims, we formulated a human rights policy on April 1, 2023 to guide us in
fulfilling our responsibility to respect human rights.

Ensuring Fair and Honest Corporate Activities

Hazama Ando Human Rights Policy (excerpt)Compliance with international norms and laws

The Hazama Ando Group respects and supports several
international norms, including the International Bill of
Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United
Nations Global Compact, the Children’s Rights and Business
Principles, the OECD Guidelines for Multinational Enterprises, and the U.N. Declaration of the Rights on Indigenous
Peoples, and complies with the laws and regulations applicable in the countries and regions where we conduct business. If there are any discrepancies between these laws andregulations and international norms, we will pursue anapproach that respects international norms to the extent
possible while complying with laws and regulations.
This policy has been created based on the U.N. Guiding
Principles on Business and Human Rights.

other business partners, the Group has established ahuman rights due diligence framework and has put inplace an ongoing cycle of implementing, evaluating,
improving, and disclosing initiatives.

Rectification, remedy

If the Group has caused a negative impact on human rights,
or if it becomes clear that the Group has directly or indirectly contributed to such an impact, we will take appropriate measures to rectify and remedy the situation. Moreover,
if the Group’s business or services are directly related to anegative impact on human rights as a result of its relationships with suppliers or other business partners, even though
the Group has not endorsed this, we will strive to make
improvements after consulting with the parties involved.

Compliance HelplineScope of application

The Group has established a Compliance Helpline for ourown employees, the employees of suppliers, or other persons for reporting and consulting on human rights-related
issues. In operating this helpline, we will strive to ensure its
effectiveness as a mechanism for dealing with complaints.

Respect for human rights

The Group will provide education and training to all Group
officers and employees so that this policy is understood,
fully accepted, and put into practice. We will also work toensure that our suppliers understand the policy.

This policy applies to all officers and employees of the Group
as well as seconded, dispatched, and contract employees.
We also expect our business partners to support the policy.
In particular, we ask our suppliers to cooperate with theGroup in respecting human rights in the supply chain.

While recognizing items listed in the Appendix* as humanrights issues to be addressed as priorities, the Group will
strive to prevent any negative impact on human rights, notlimited to the items listed. We will review and update theitems listed in the Appendix according to changes in theinternal and external context.

Governance and promotion framework

The Board of Directors oversees the human rights initiativesof the entire Group, while an advisory committee is tasked
with promotion. This policy has been approved by the Boardof Directors.

Human rights due diligence

To identify, prevent, and mitigate negative impact onhuman rights in the Group or among its suppliers andHuman Rights Due Diligence

With the aim of preventing human rights violations, inAugust 2023 we administered questionnaires to about 30
major partner companies in Japan that employ foreigntechnical interns, who are considered to be at high risk for

Education and training

Dialogue with stakeholders

The Group engages in dialogue and discussions with relevant
stakeholders regarding the impact of its business activities onhuman rights and its response to human rights issues.

Disclosure

We will regularly disclose progress on our efforts to respecthuman rights based on this policy through various reports
and on our website.
* Appendix to Human Rights Policy (Japanese only)
https://www.ad-hzm.co.jp/sustainability/human_rights_policy/

such violations. Going forward, we will collate and analyze
the results of the questionnaires, and if we ascertain any
negative impact on human rights, we will work to rectify
and remedy it.

26

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Roundtable Discussion with the President
and External Board Directors

A Look Into

(From left)

Harufumi Mochizuki
External Board Director(Audit and Supervisory Committee Member)

Mariko Kitagawa

External Board Director

Kazuhiko Kuniya

Representative Director

In July 2023, Hazama Ando transitioned to a company with an Audit and Supervisory
Committee under the new leadership of President Kazuhiko Kuniya. We invited three people
who have supported our Group over the past six years to exchange opinions about thetransition and the company’s corporate governance in general: board director Mariko Kitagawa,new board director Harufumi Mochizuki, and President Kuniya. The discussion touched on
President Kuniya’s thoughts about corporate reforms, the ideal form of governance, thepurpose of the newly established Sustainability Committee, and the members’ expectationsfor Hazama Ando going forward.

Fortifying Governance and Incorporating
Outside Knowledge into Management

Kuniya: Hazama Ando transitioned to a company with
an Audit and Supervisory Committee in July 2023. The
goal of this change was to further enhance corporate
governance by reinforcing the supervisory function of
the Board of Directors and improve the agility of business execution. About a third of our shareholders areforeigners, and have changed the governance framework—ensuring that around a third of board directors
are female and that the majority of the Board is made up
of external board directors—in a way that I think will beeasier to understand from an overseas perspective.
Many companies in Japan’s construction industry havewell over a century of experience in the business. Precisely because they have developed highly distinctive

27

cultures, these companies have often been slow to
respond to changes in the external environment. We
embarked on the recent reforms because we saw theneed to incorporate outside knowledge into the Board of
Directors as we shift to a more balanced business portfolio that can respond flexibly to changes going forward.
We will incorporate a broad range of outside knowledge
as we carry out swift, efficient business execution, andthen re-examine our actions at Board meetings made up
mainly of external board directors. I believe such a mechanism is indispensable for future growth.
Kitagawa: As a member of the former Governance
Advisory Board—now the Nomination and Remuneration Committee—I was able to be directly involved inthese reforms. I feel the new framework has broughtHazama Ando’s New Governance Framework

even greater clarity to the significant role external board
directors play. Hazama Ando is a company with a long
tradition and history, but it is also a company with a culture of taking in a range of opinions and changing flexibly and quickly. I also feel the company is progressive inthat it has a large proportion of female external board
directors. However, a framework alone is not enough;real action going forward is what counts.
Kuniya: Under the new framework, we removed three
vice presidents from the Board. This was because I felt
there was a contradiction in being responsible for both
execution and supervision, kind of like driving a car whilepulling on the handbrake. From now on, the three vicepresidents will specialize in execution, and as heads ofthe various committees we will talk about in a moment,
they can be responsible for steering the committees as
they see fit.
We appointed Shinya Miyamori, the former board
director in charge of finance, as an Audit and Supervisory
Committee member. The thinking was that he could
help external Audit and Supervisory Committee members understand the details of discussions at Management Committee meetings and of the content ofinternal audits. We chose Miyamori because we thought
he was the right person for this role, given his familiarity
with the current state of the Group.

Mochizuki: I was newly appointed this year as an external board director and an Audit and Supervisory Committee member. I was very pleased to hear what
President Kuniya was saying earlier. When it comes togovernance, it is often pointed out that both the framework and its effectiveness are crucial. And whether aframework is effective or not ultimately depends a lot on
what the President wants to do with it. I believe theBoard of Directors is a forum where people who share
President Kuniya’s sense of crisis can come together andreally talk through what is necessary to achieve theGroup’s business strategies.
In this sense, the agenda of Board of Directors meetings has to be narrowed down to key, broad themes
related to management strategy. However, if our discussions don’t reflect the actual situation on the ground,they serve no purpose. So, if the Board of Directors isgoing to carry out proper management, it’s also essentialthat its members are constantly made aware of what hasgone on in the most recent Management Committee
meetings and other meetings. From that perspective, aninternal Audit and Supervisory Committee member has auseful role to play, and there’s no better choice than aformer director in charge of finance.
Kitagawa: Another major feature of the Board of Directors is that we have reduced the overall number ofmembers. Until now, the company provided sufficient
explanations of proposals in advance to external board
directors. However, due to the large number of proposals,
I felt that there was never enough time for discussion.
Technical issues related to the mainstay construction business should be left to the executives, while Board members should talk more about, say, strengthening humancapital. Having increased both the number and proportion of external board directors, I think we will be able toexchange opinions more openly going forward.

Thinking behind Establishing the
Sustainability Committee

Kuniya: In tandem with reforms to the Board of Directors,
we established a Sustainability Committee as an advisory
body to the Board. The committee is made up of all board
directors plus three vice presidents. We also established six
advisory committees under the Sustainability Committee,
including committees dealing with environmental and28

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Positioning Hazama Ando’s corporate
philosophy as supplying high-quality
products to society seems to me exactly what
purpose-driven management is all about.
The crucial thing for top management isto go on reiterating this.

human capital strategies. Each is chaired by a vice president. This framework allows us to identify businessissues from a variety of perspectives, thoroughly explore
response measures both within each committee and in
the Sustainability Committee, and then report to theBoard of Directors.
There is often a tendency to leave such ESG-related
management matters to experts, but I don’t think that initself is an effective solution. Putting into practice theproper feedback of experts requires thorough-goingknowledge of the business itself as well as the authority
to call the company to action. By having someone at thelevel of vice president or above chair the Sustainability
Committee and all six advisory committees, I believe we
can swiftly put solutions in place that will allow us toachieve effective ESG management.
Hazama Ando VISION2030 holds up four values: customer value, shareholder value, environmental value,and employee value. My hope is that the external board
directors would supervise the long-term vision from abird’s-eye view. I would also like to get your objective,
comprehensive judgments regarding how to balanceeach of the four values, our approach and decision-making processes, issues with implementation and monitoring, and other aspects.
Kitagawa: The new medium-term management plansets a goal of increasing the number of female managers
to 60 by 2025. This is no easy goal; as a female director, I
would like to not only look at it from a bird’s-eye view
but also help guide the process at a deeper level. I don’t
think men and women want separate careers. Jobs thatare challenging but highly rewarding should appeal toboth men and women alike. If that’s the case, it is impor-29

tant to present role models to women who want tofollow the same track as men and pursue careeradvancement. President Kuniya, you have a strong commitment to drive change from the top down, and I
would like to work with you to create a new frameworkthat does distinguish between men and women.
Mochizuki: You noted that about a third of Hazama
Ando’s shareholders are foreigners. The general assumption around the world these days is that increasing corporate value is not possible without meeting thedemands of diverse stakeholders. If something is off
about management from the perspective of stakeholders, the Group will soon find itself in a situation where
investors either won’t invest or won’t hold their investments for very long.
This should be viewed as a serious issue. Avoiding thisrequires a change in mindset, such as the tendency tocompare the company only to competitors in Japan, anda renewal of corporate values. This, in turn, calls for all
employees—starting with executive officers and managers—to take initiative in matters such as humanresources and the environment. For example, if there is a
shortage of female candidates for managerial positions,one option would be to hire more mid-career candidates. I believe it is the responsibility of the Board of
Directors to create the context where this can happen.

 oard members should talk more about,Bsay, strengthening human capital.
Having increased both the number andproportion of external board directors,
I think we will be able to exchange
opinions more openly going forward.

Roundtable Discussion with the President and External Board Directors

We will incorporate a broad range of outside knowledge as we carry out swift,
efficient business execution, and then re-examine our actions at Board meetings
made up mainly of externalboard directors.
I believe such a mechanism isindispensable for future growth.
Enhancing the Company’s Appeal
with a Focus on Quality

Kuniya: The new medium-term management plan adds the new theme of enhancing the company’s appeal to the existing
theme of increasing corporate value. I
believe that this appeal is found in theanswer we give when someone asks us whatkind of company Hazama Ando is.
Even though the social environment
may be changing rapidly, companies haveunderlying philosophies that ought notchange. In our case, this is our rigorous insistence on
quality—that’s what I want to convey as the appeal ofHazama Ando. I want to instill this awareness among all
our employees who work hard every day at construction work sites. When society sees the appeal in theway our employees all insist on quality, and when customers tell us they’re glad they chose Hazama Ando,for us that will be a definite source of pride both in ourown work and in the company.

Mochizuki: Positioning Hazama Ando’s corporate philosophy as supplying high-quality products to society
seems to me exactly what purpose-driven management
is all about. The crucial thing for top management is to
go on reiterating this. Speaking often, in different settings and from different angles, will get this message
across at different levels within the Group, and it will
become entrenched as your corporate image. It will be
important to clearly define what you mean by quality
and then communicate that repeatedly.
Kitagawa: I’ve had the opportunity to read feedback
from individual investors, and it seems the relative lack ofunderstanding about what the image of the company isseems to come up a lot. Personally, even before I became
an external board director, I knew a lot about the company, from the workmanship of your buildings to the
responsiveness of the people in charge, so it’s frustrating
for me to encounter that kind of feedback.
I think promoting diversity, such as mid-career hiring
and the hiring of foreign employees, will also help build
the Group’s presence. I look forward to the company’s
PR activities going forward, and would be happy to help
out in some small way with that.

30

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Directors and Audit and Supervisory Committee Members
As of June 29, 2023

Board Directors

Kazuhiko Kuniya

Ichiro Kato

Representative Director
and President

Board Director andSenior Managing Executive Officer

April 1988 Joined HAZAMA CORPORATION
July 2018	General Manager of Business Administration Planning Department, President
Office and General Manager of Civil Engineering Projects Planning Department, Civil Engineering Division
April 2019	General Manager of Business Administration Planning Department, Deputy
Director of Construction Division
April 2020 Executive Officer, Deputy Director of Tokyo Branch
April 2021 Executive Officer, Director of Kanto Branch
April 2022	Managing Executive Officer, in charge of Information, Director of Corporate
Strategy Division
June 2022	Board Director and Managing Executive Officer, in charge of Information,
Director of Corporate Strategy Division
April 2023 Representative Director and President of the Company (to present)

April 1983 Joined HAZAMA CORPORATION
April 2014 Deputy Director of Kanto Civil Branch of the Company
April 2018 Executive Officer, Director of Kanto Civil Branch
April 2019 Executive Officer, Director of Kanto Branch
April 2020 Managing Executive Officer, Director of Kanto Branch
April 2021 Managing Executive Officer, Director of Construction Division
June 2021	Board Director and Managing Executive Officer, Director of Construction Division
April 2023	Board Director and Senior Managing Executive Officer, Director of Construction Division (to present)

Takeshi Komatsu

Masami Fujita

Board Director andManaging Executive Officer

External Board Director

April 1982 Joined ANDO CORPORATION
April 2015 Executive Officer, Director of Kyushu Branch of the Company
April 2018 Executive Officer, Director of Nagoya Branch
April 2019 Executive Officer, Director of Tokyo Branch
April 2020 Managing Executive Officer, Director of Tokyo Branch
April 2021 Managing Executive Officer, Director of Business Development Division
June 2021	Board Director and Managing Executive Officer, Director of Business Development Division (to present)

April 1980 Joined Fujitsu Limited
June 2012 Representative Director and Vice President of Fujitsu Limited
April 2016	Representative Director and President of Fujitsu Marketing Limited (currently
Fujitsu Japan Limited)
June 2017 External Board Director of the Company (to present)
June 2019	President and Representative Director of SHINKO ELECTRIC INDUSTRIES CO., LTD.
June 2021	Chairman and Representative Director of SHINKO ELECTRIC INDUSTRIES CO., LTD.
(to present)
March 2023 Outside Director of DIC Corporation (to present)

Mariko Kitagawa

Mieko Kuwayama

External Board Director

External Board Director

May 1999 Joined Tsukishima Soko Co., Ltd.
June 2001 Board Director of Simax Co., Ltd (to present)
June 2004 Representative Director and President of Tsukishima Soko Co., Ltd. (to present)
June 2007 Board Director of Tsukishima Butsuryu Service K.K. (to present)
June 2017 External Board Director of the Company (to present)

April 1970 Joined Shiseido Company, Limited
June 2012 Specially Appointed Professor, Graduate School of Law at Hitotsubashi University
April 2015 Visiting Researcher of Hitotsubashi CFO Research Center (to present)
June 2017 External Board Director of Fujitsu General Limited (to present)
April 2018 Senior Researcher of Business Ethics Research Center (to present)
June 2018 External Board Director of the Company (to present)
		 Board Director (Audit and Supervisory Committee Member)* Masami Fujita, Mariko Kitagawa, Mieko Kuwayama, Harufumi Mochizuki, Rie Kawaguchi, and Katsuhiko Ito are external board directors as stipulated in Article 2, Item 15 of the Companies Act.

31

Board Directors (Audit and Supervisory Committee Members)

Shinya Miyamori

Harufumi Mochizuki

Board Director (Audit andSupervisory Committee Member)

External Board Director (Audit andSupervisory Committee Member)

April 1983 Joined HAZAMA CORPORATION
April 2013	General Manager of Finance Department, Administration Division of
the Company
January 2016	Deputy Director of Administration Division and General Manager ofFinance Department, Administration Division
April 2016	Executive Officer, Director of Administration Division in charge ofDisaster Management
June 2017	Board Director and Executive Officer, Director of Administration Division in
charge of Disaster Management
April 2018	Board Director and Managing Executive Officer, Director of Administration
Division in charge of Disaster Management
April 2022	Board Director and Senior Managing Executive Officer, in charge of Finance,
Director of Administration Division in charge of Disaster Management
April 2023 Board Director
June 2023 Board Director, Audit and Supervisory Committee Member (to present)

April 1973 Joined Ministry of International Trade and Industry (METI)
July 2003 Commissioner, Small and Medium Enterprise Agency
July 2006 Commissioner, Agency for Natural Resources and Energy
July 2008 Vice-Minister, Economy, Trade and Industry
August 2010 Special Advisor to the Cabinet
June 2012 Independent Director, Hitachi, Ltd.
June 2013	President and CEO, Representative Director, Tokyo Small and Medium
Business Investment & Consultation Co., Ltd.
June 2014 Outside Director, Audit & Supervisory Board Member, ITOCHU Corporation
June 2023 Outside Director, NEC Corporation (to present)
June 2023	External Board Director, Audit and Supervisory Committee Member (to present)
June 2023 Chairman, Center for Information on Security Trade Control (to present)

Rie Kawaguchi

Katsuhiko ItoExternal Board Director (Audit andSupervisory Committee Member)

External Board Director (Audit andSupervisory Committee Member)

April 1996 Registered as a tax accountant
August 1996 Board Director, Fukuoka M&A Center Co., Ltd. (to present)
February 2003 Passed USCPA exam
May 2004 Board Director, Chikura Shobo Co., Ltd. (to present)
April 2015 Member of Kawaguchi Tax Accountant Office (to present)
June 2022 External Board Director of the Company
June 2023	External Board Director, Audit and Supervisory Committee Member(to present)

October 2000	Registered as an attorney-at-law, became a member of Tokyo Bar Association
June 2001 Statutory Auditor, Nihon Itomic Co., Ltd. (to present)
April 2008	Member, Legal Trainees Training Committee, Tokyo Bar Association(to present)
January 2011 Member of Judicial Committee, Tokyo Summary Court (to present)
December 2020		 Partner, ITN Law Office (to present)
March 2021	Outside Director (Audit and Supervisory Committee Member), Zoom
Corporation (to present)
June 2022 Substitute Audit & Supervisory Board Member
June 2023	External Board Director, Audit and Supervisory Committee Member(to present)

Executive Officers (other than those who also serve as board directors)
Vice Presidents
Toru Ikegami

Muneo Gomi

Atsushi Sugao
Managing Executive Officers
Hiroshi Nakanishi
Akio Fujimoto

Michio Yoshida

Hisakazu Gosho

Executive Officers
Kazutaka Miyazaki
Yoshio Ishihara
Junya Utsumi

Takeaki Inoue

Kazuhiro Funatsu

Makoto Kinoshita
Yoshihisa Sakai
Hiroshi Sone

Tadashi Shimizu

Shinichi Monjugawa
Shigeaki Kunieda

Ryutaro Miyagawa

Hirofumi Taniguchi
Ichiro Nagai

Ryo Motooka
Katsuo Endo

Hiroto Iizuka

Yukinori Furukawa
Jiro Kuroda

Shintaro Motoshige
Tadashi Kiryu

32

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Financial and Non-Financial Highlights
Financial Performance
Orders received (non-consolidated)

Net sales(Billions of yen)(Billions of yen)

450

450

427.6
380.2

360

300.8

270

309.8

360

348.2

180

90

90

0

2019

2020

2021

2022

340.2

2020

2021

372.1

(%)

10.0

30

22.4

18

6.2

25.8

25.8

7.4

7.6

8.0

19.6

6.3
5.3

12

0

Operating profit

2021

2022

Annual dividends, Payout ratio, Total return ratio
150

124.9
40

40

30

30

30

66.4

64.9

61.9

35.5

33.4

40.5

108.1
40

42.5

0

Annual dividends

2019

2020

Payout ratio

2021

2022

Total return ratio

17.6

12.2

12.3

15.1
10.8

8.8

15.0

10.0

5.0

7.0

0

0

2018

2020

2021

Profit attributable to owners of parent

ROE

2019

2022

(Billions of yen)

(FY)

100

50

(%)

200
160

0

2018

5

17.1

Equity, Equity ratio(Yen)(%)

60

12.5

(FY)

Operating profit margin

20.0

16.8

15

4.0

0

2020

(FY)

(%)

20

10

2.0

2019

2022

(Billions of yen)

6.0

6

2018

2019

Profit attributable to owners of parent, ROE(Billions of yen)

23.9

2018

(FY)

Operating profit, Operating profit margin

33

352.1

0

2018

20

378.1

270

180

24

359.9

120

38.0
132.8

40.0
136.0

43.0
145.9

47.7

44.2

50.0
40.0

140.9

140.4
30.0

80

20.0

40

10.0

0

0

2018

(FY)
Equity2019
Equity ratio

2020

2021

2022

(FY)

Non-Financial Performance
Number of employees (consolidated)/
Number of female managers (non-consolidated)
4,000

3,966

3,998

3,857

3,669

3,677
29

3,000

2,000

22

22

Average overtime per month (non-consolidated)
40

30

23

22

20

10

1,000

2018
Employees

2019

2020

2021

2022

25.0

27.1

27.8

27.2

27.5

27.6

2018

2019

2020

2021

2022

20.0
15.0
10.0
5.0
0

(FY)

(FY)

Number of female managers

Safety performance (frequency rate)(non-consolidated)

Productivity improvement compared to fiscal 2020(non-consolidated)
(%)

1.5
1.2

30.0

0

0

(%)

(Hours)

1.24

5.0

4.5

4.0

0.9

3.0

0.71

0.61

0.6

0.64

0.33

0.3

2.2

2.0
1.0

0

0

2018

2019

2020

2021

2022

2018

(FY)

2019

2020

2021

2022

(FY)

Frequency rate indicates the prevalence of work-related fatalities and injuries per 1 million
working hours. Lower values for frequency rate indicate higher safety performance.

Note: Regarding productivity improvement up to fiscal 2020, civil engineering improved
by about 45% and building construction improved by about 44% compared to fiscal
2013, the first year of the Hazama Ando merger (values reported to the Japan
Federation of Construction Contractors).

Greenhouse gas emissions (Scope 1 and 2)

Carbon intensity (non-consolidated)(thousand tons of CO2)(%)

90

74
60

30

60.0

56.5

28

22.1

46

70

72

71

13

16

18

25.7

24.1

57

56

41.3

0.3

41

40.0

20.0

2019

2020

2021

2022

231
202

219

207

150

130

100
50

53
0

2018

250
200

24.7

0

(tons of CO2/Billions of yen)

(FY)

0

2018

2019

2020

2021

2022

(FY)

Scope 1 emissions
Scope 2 emissions
Greenhouse gas reduction rate (versus FY2017)34

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Review of Operations

Civil Engineering

Yodogawa Left Bank Line (Phase 2) 2nd section embankment maintenance, etc.

Business Overview for Fiscal 2022 (Year Ended March 2023)
Public investment in construction remained firm throughout
the year, and there was an ongoing recovery trend in private
investment, although performance was impacted by continued increases in materials costs. In this business environment,
ongoing construction at projects in Japan made steadyheadway—net sales of completed construction contracts
were up slightly year on year and, although gross profit oncompleted construction contracts was down slightly, profitability remained high.
Going forward, we will continue to augment our efforts
in areas that showcase our industry-leading strength,
including urban civil engineering, mountain tunnel civilengineering, and power civil engineering. We will also

strengthen our efforts related to the large-scale maintenance and renewal of public infrastructure, including
expressway renewal work. Furthermore, to capture demandin the market for construction geared toward achievingcarbon neutrality by 2050, we will actively develop technologies such as Carbon Pool concrete and technologies
that support the shift to renewable energy.
Meanwhile, we are stepping up automation and laborsaving initiatives to boost productivity and reform working
styles, developing computerized construction technologythat integrates technical capabilities we have acquired over
the years with digital technology.

Orders received, Net sales of completed construction
contracts (non-consolidated)

Gross profit on completed construction contracts,
Construction gross profit margin (non-consolidated)(Billions of yen)

200

192.1

40

193.5

124.3

135.9

132.2
122.5

101.5

100

133.4

24.0

103.2

20

21.9

17.1
23.3

16.2

15.9

21.4

21.2

10

0

Orders received

2020

2021

2022

Net sales of completed construction contracts

(FY)

18

12

6

0

2019

* Graphs include overseas Civil Engineering business

35

24

17.7

30

50

2018

(%)

20.3

150

118.7

(Billions of yen)

0

2018

2019

2020

2021

Gross profit on completed construction contracts
Construction gross profit margin

2022

(FY)

Review of Operations

Civil Engineering

Analysis of Business Environment and Management Resources,
Initiatives under Medium-Term Management Plan 2025
Quantitative Indicators
Non-consolidated plan

Fiscal 2023 plan

Gross profit
on completed
construction contracts(Profit margin)

billion yen(16.2%)

billion yen(15.9%)

billion yen(15.9%)

133.0

145.0

150.0

Net saleson completed
construction contracts

21.5

billion yen

Fiscal 2024 plan

23.0

billion yen

Fiscal 2025 plan

23.9

billion yen

Market Trend Forecasts

Firm trends in public investment
Growth in public and private investment in the
renewal and renewable energy business sectors

	While the market for new government offices is expected toremain flat, the market overall will remain stable (increase indisaster prevention and mitigation, national land resilience,and defense-related projects)	Renewal business growth in line with aging infrastructure(renewal of highways as well as water and sewage facilities)
	Market growth toward carbon neutrality by 2050 (work invarious areas including the shift to hybrid dams, decarbonization and replacement of thermal power plants, and theresumption of operations at nuclear power plants)

Our Strengths

	Track record and technological superiority in high-difficultyurban civil engineering construction (including shield andlarge-scale excavation work)	Wealth of experience in mountain tunnel construction; possession of digital technology-based automated and advanced
technologies (i-NATM®)	Extensive construction experience in the field of power engineering (dams and power plants)	Extensive construction experience in water and sewage facility renewal construction	Possession of specialty technologies (including radiation
waste treatment technology, large cross-section non-excavation technology: water jet segment method )	Precast concrete plants held by the Group (three locations witha manufacturing capacity of 150,000 cubic meters per year)	Construction work structure and systems in collaboration
with technically reliable and competent partner companies	On-site support framework and systems built on experienced
technical departments at head and branch offices

Priority Measures Based on Medium-Term
Management Plan 2025
Strengthen Sales Capabilities

	Secure a steady stream of ongoing orders and expand construction in areas of industry-leading strength– Urban civil engineering: Shield work (deep-laid, long-distance, large
cross-section, high-difficulty), large-scale excavation work, urban
flood damage countermeasures, river improvement work

– Mountain tunnel civil engineering: Mountain tunnel work utilizing
digital transformation and ICT technology, dam renewal work
– Power civil engineering: Work related to the resumption of operations at nuclear power plants and decommissioning-related construction, hydroelectric power plant renewal work, radioactive waste
treatment facility- and underground network-related construction	Strengthen efforts related to the large-scale maintenance andrenewal of public infrastructure– Highways: Floor slab replacement work (manufacture of Groupowned precast concrete plant floor slabs)– Water purification plants: Private-finance-initiative and design-buildoperate method water purification plant renewal work

	Engage in disaster prevention and mitigation as well as
national land resilience measures	Share information and accelerate the pace of decision-making through the use of digital transformation tools	Reinforce the sales structure and systems through the strategic
placement of personnel from technology management divisions

Strengthen Worksite Capabilities (Achieve 150.0
Billion Yen in Completed Construction)

	Increase profit productivity through production process reform– Create an environment in which technical staff can concentrate on
safety and quality control work (partial outsourcing of administrative tasks, change in roles of senior/administrative staff)– Standardize use of remote cameras, digital signage, drones, etc.
– Undertake the standard implementation of mountain tunnel construction digital transformation (i-NATM®), a data integration platform, and remote centralized management system for temporary
tunnel facilities– Accelerate the pace of information standardization and sharing
through the use of cloud computing worksite data
– Reduce the incidence of defects through the introduction of AIbased knowledge management tools, and control the occurrence ofdisasters through the introduction of a safety management system

	Respond to surges in labor and material costs– Conduct appropriate negotiations with clients in accordance withthe terms and conditions of contracts

	Improve the skills of on-site staff– Upgrade and expand a variety of specialized technical training andconduct video content education– Promote the early acquisition of first-class qualification– Select projects that contribute to the transmission of construction
skills and technical capabilities (small-scale, reinforce concrete structures, and rare types of construction), undertake the strategic placement of young staff and early training of young managers– Expand the use of construction information modeling (CIM) throughICT literacy education

	Maximize technical response capabilities through the coordination of civil engineering and building construction
	Upgrade and expand employment of talented personnel andenhance follow-up after employment
	Increase cost competitiveness– Strengthen procurement capabilities by using three precast concrete
plants owned by the Group (expand and diversify precast concretematerials including shield segments and precast concrete slabs)– Expand the overseas procurement network– Utilize Group companies (Hazama Ando Kogyo: centralized purchasing, Aoyama Kiko: foundation construction	Perfect and implement competitively superior technology
	Strengthen relationships with partner companies

36

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Technical Information

1 Deployment ofMountain Tunnel
Construction
Management
System Hi-Res

Identification ofwork types
Demand monitoring
Hi-Res system

2 Quality Control,37

In conjunction with Sugakikai Kogyo Co., Ltd., Hazama Ando developed a
Hi-Res construction management system that helps save energy and boost
construction efficiency by allowing site staff to gauge the operating status ofheavy machinery and plants at mountain tunnel work sites and by identifying
different types of work. Hi-Res offers several features, including the automatic
generation of excavation performance cycle charts, optimal ventilation control according to work type, and demand monitoring and power consumption control. Since any mechanical equipment that can receive electricalsignals can be linked to Hi-Res, the system can also encompass engine-driven
heavy equipment. It can also be used without being restricted to any given
excavation or waste transportation methods.
We have already deployed the system to multiple tunnel work sites. In
terms of energy savings, results show that power consumption by ventilationequipment fell by as much 68%, at an average of 61%. We also confirmedthat the system produces more accurate cycle
charts compared with existing daily reports. We
Ventilation output control
drew on this information to review the allocation ofavailable personnel in each cycle.
We are currently working on further functional
enhancements to the system, such as the calculation of CO2 emissions during construction, autoクラウド
matic generation of online progress tables, andconstruction task schedules. We will continue totake advantage of the Hi-Res system to lower theenvironmental impact of mountain tunnel conCycle chart generation
struction and pursue greater labor savings andefficiency for workers and staff.

Drawing on the edge AI technology of Avinton Japan Co., Ltd.—a method of
installing AI on a device and performing on-the-spot AI processing—we havedeveloped a system for automatically managing the quantity and timing ofLabor Savings withconcrete placement.
an AI-BasedFor each concrete mixer truck, the arrival time and starting and ending
Concrete Placement
times of concrete placement are converted into electronic data without human
involvement (systems A and B in the diagram below). Meanwhile, by simply
Management
pushing a button using a tablet linked to an optical character recognition
Systemsystem, the driver of the mixer truck converts
the delivery slip into electronic data (system
System A
System B
System C
C). Both sets of data are integrated on a
Network camera at
Entrance gate network camera
Tablet at delivery
cloud service (System D). The system enables
placement point
slip collection site
site staff to gauge and manage placement
Image data of concrete
Placement start,
Mixer delivery
mixer arriving at site
end image data
volumes for each concrete plant and placeslip image data
Mini-computer
Mini-computer
ment times for each mixer in real time.
Mixer delivery slip image data
(image recognition system)(image recognition system)
We used the system in constructing a large
External optical
Data communication
character recognition
caisson.
We were able to proceed without
systemSystem D
the four full-time managers who would normally have been assigned to each pump
Office computer
Cloud service (receiving server, database)Receives various data, performs integrated processing, stores in database
truck. We also achieved greater labor savingsand quality control by capitalizing on ICT
tools for the concrete placement. For
On-site management computer
Administrator
instance, since we could gauge the volume ofpoured concrete in real time, we reduced theComputer user
System integration image
volume of returned concrete by around 60%.

Review of Operations

Civil EngineeringSocial Impact Highlights

1 Laying a Multi-Utility
Pipeline under
National Route 20

National Route 20 Chofu (2) multi-utility
pipeline construction
National Route 20 Chofu (2) multi-utility
pipeline Phase 2 construction

The National Route 20 Chofu multi-utility pipeline construction was a project
to build a network of multi-utility pipelines to house power and communications lines. The goal of the project was to create a network of multi-utility
pipelines to secure vital lifelines in the event of a disaster while also fundamentally eliminating traffic jams caused by digging up roadbeds.
Construction spanned roughly six and a half years and involved connecting seven tunnel shafts, including an existing one, under National Route 20,
using a shield tunnel approximately 5.4 kilometers long. National Route 20 isa narrow highway with high traffic volume (40,000 vehicles per day). Due tohighway regulations, the project also involved nighttime work. A major challenge was the safe and efficient placement of equipment and machinery. Because
the highway is also flanked by residential and commercial facilities, we had to take steps to contain noiseand vibrations, and also take appropriate technicalmeasures to deal with unexpected ground conditions.
Although the project involved a constant level of tension, it was completed successfully.

National Route 20 Chofu (2) multi-utility pipeline.

2 Building Piers fora New Bridge Usinga Pneumatic Caisson
Construction
MethodNew Nozumi Bridge Pier Phase 1
Construction

The Ohkozu diversion channel is an artificial drainage channel built in 1922 toprotect the Echigo Plain from long-standing flooding from the Shinano River.
In recent years, however, abnormal weather conditions have cause more
frequent torrential rains, and the channel faces problems such as a lack ofdrainage capacity and aging facilities. The Ohkozu Diversion Channel
Improvement Project was launched to address these issues.
In conjunction with replacing the Nozumi Bridge as part of the renovation
project, we built two piers for a new Nozumi Bridge using a pneumatic caisson construction method. Because of the need toensure constant flow capacity in case flooding
occurred, we adopted this construction method—which was relatively untried, even by Hazama Ando. Inbuilding the bridge piers that stand in the river, welowered steel-shelled caissons assembled on temporary piers down into the river, without constructing
temporary cofferdams. In addition, to meet the project
deadline, we carried out regular construction work
even during flooding seasons. As a result, despite therisk of flood damage, we completed the project ontime without any accidents.

New Nozumi bridge piers.

38

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Building Construction

JRA Kyoto Racecourse Upgrade (Horse Stable Section).

Business Overview for Fiscal 2022 (Year Ended March 2023)
Owing in part to the recovery in the market environment,
we received orders for large-scale projects both in Japanand overseas, driving a significant year-on-year increase inorders. Although ongoing construction at projects in Japan
made steady headway overall, both profits and profit margins were down year on year, reflecting flagging profitability for some construction projects due to the impact ofsoaring costs of labor and materials, as well as the negative
effect of the weaker yen on overseas projects.
Private-sector construction investment is showing signsof a recovery. However, in addition to uncertainties regarding the global situation and financial markets going forward, costs of materials overall remain at high levels, andthe order environment for new construction projects is

expected to experience intense, ongoing cost competition.
Going forward, we will continue to carry out ZEB trials
and reinforce our initiatives to propose environmental solutions using life cycle assessment results to achieve maximum
customer satisfaction.
Additionally, we will pursue several avenues to grow thebusiness, improve safety and quality, strengthen our cost competitiveness, and secure project volume. These include sharing
information between relevant departments and accelerating
the pace of decision-making through the use of digital transformation tools; reinforcing the construction framework bybuilding stronger relationships with partner companies; andstrengthening worksite capabilities and improving productivity through business reforms and operational efficiency.

Orders received, Net sales of completed construction
contracts (non-consolidated)

Gross profit on completed construction contracts,
Construction gross profit margin (non-consolidated)(Billions of yen)

250

200

235.4

227.2

208.8
186.7

(Billions of yen)

40

244.9
199.3 192.2

187.2

206.2

30

178.5

10.8
8.8

150
20
100

21.2

8.4
20.7

20.6

17.2

10

50
0

Orders received

2019

2020

2021

2022

Net sales of completed construction contracts* Graphs include overseas Building Construction business

(FY)

9

6

3

0

2018

39

18.2

9.3

(%)

12

11.6

0

2018

2019

2020

2021

Gross profit on completed construction contracts
Construction gross profit margin

2022

(FY)

Review of Operations

Building Construction

Analysis of Business Environment and Management Resources,
Initiatives under Medium-Term Management Plan 2025
Quantitative Indicators

Realize synergy effects with the life cycle support business

Non-consolidated plan

Fiscal 2023 plan

Fiscal 2024 plan

Fiscal 2025 plan

Gross profit
on completed
construction contracts(Profit margin)

18.6

20.1

21.0

Net saleson completed
construction contracts

billion yen(8.1%)

230.0

billion yen

billion yen(8.4%)

240.0

billion yen

billion yen(8.4%)

250.0

billion yen

Market Trend Forecasts

Private-sector investment is expected to remain flat
despite showing signs of a recovery. We will closely
observe the impact of global conditions, uncertainty
surrounding the future of financial markets, and risingmaterials and energy prices

	Order environment for new construction projects is expected
to experience intense ongoing cost competition	Manufacturing industry exhibiting a return to domestic operations from an economic security perspective	Renewal market expected to experience continued growth	Market growth toward carbon neutrality in 2050 (diversification of needs, including environmentally friendly technology)
	Expectations of a market recovery as the effects of COVID-19
dissipate

Our Strengths

	Continued stream of orders from leading existing customers
	Existing mechanisms that prioritize profitability in projects
and initiatives
	Possession of and implementation track record for a diverse
range of environmentally friendly technologies
New life cycle assessment method-based environmental
impact assessment technology for buildings
Environmental proposal capabilities based on energy
management technologies, including solar power generation PPA businessNet-ZEB and ZEH-M Oriented certification track record	Precast concrete plants held by the Group (three locations witha manufacturing capacity of 150,000 cubic meters per year)	Ability to address customer needs in the life cycle support
business

Priority Measures Based on Medium-Term
Management Plan 2025
Strengthen Sales Capabilities

	Secure a steady stream of ongoing orders and expand construction in areas of industry-leading strength– Logistics facilities, production facilities (semiconductor, food processing plants, etc.)	Bolster strategic initiatives for expanding areas of strength– Data centers, office buildings, super high-rise condominiums– Deeper relationships with customers based on one-stop services

Strengthen portfolio management– Strengthen profitability management by application-specific order,
and reallocate human resources	Share information and accelerate the pace of decision-making through the use of digital information tools– Enhance the sophistication of project management and analysis byimproving sales system functions– Strengthen collaboration between the sales, design, cost estimation,and construction departments; improve proposal capabilities andorder competitiveness–M aximize customer satisfaction by using systems developed in-house	Reinforce the sales framework and systems through the strategic
placement of personnel from technology management divisions

Strengthen Worksite Capabilities (Achieve 250.0
billion yen in completed construction)
	Increase profit productivity and improve the environment
through production process reform– Create an environment in which technical staff can concentrate on
safety and quality control work (partial outsourcing of administrative tasks, change in roles of senior/administrative staff)– Standardize use of remote cameras, digital signage, drones, etc.
– Reduce the incidence of defects through the introduction of AIbased knowledge management tools, and control the occurrence ofdisasters through the introduction of a safety management system

	Respond to surges in labor and material costs– Share information with customers, respond in a detailed manner,and accept orders under appropriate terms and conditions

	Improve the skills of on-site staff– Promote the early acquisition of first-class qualification– Select projects that contribute to the transmission of construction
skills and technical capabilities (super high-rise, small-scale, andspecialty technology construction), undertake the strategic placement and early training of young staff– Use construction BIM models through ICT literacy education

	Maximize technical response capabilities through the coordination of civil engineering and building construction
	Upgrade and expand employment of talented personnel andenhance follow-up after employment
	Increase cost competitiveness– Strengthen procurement capabilities by using the three precast
plants owned by the Group– Expand the overseas procurement network– Utilize Group companies (Hazama Ando Kogyo: centralized purchasing, Aoyama Kiko: foundation construction)

Perfect and implement competitively superior technology
Strengthen relationships with partner companies

Strengthen Design Systems and Capacity	Improve the sophistication of environmental proposals centered on ZEB
	Improve design capacity by using digital transformation tools	Achieve higher quality, shorter construction periods, andlower costs	Reinforce functions through alliances	Improve ordering opportunities by expanding the scope of
initiatives for dedicated application-specific teams and participating in projects from the upstream stage

40

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Technical Information

1 Standardization ofAmid calls to bring about a more environmentally friendly society, Hazama Andois developing technology for cast-in-place low-carbon concrete with the aim of
reducing CO2 emissions generated by cement materials. In the fiscal year ended
Low-Carbon Precast
March 2023, we collaborated with Hazama Ando Kogyo Co., Ltd. to establish a
Concrete Products
framework that allows us to supply precast concrete products using low-carbon
and Acquisition of
concrete in a standard manner, and adopted the framework for building compoEcoLeaf Labelnents in the normal strength range (~60N/mm2) manufactured by Hazama Ando
Kogyo at its Chiba plant. While ensuring the required performance, such as
strength and durability using the same manufacturing cycle as regular precast
products, we can apply the framework to building structures free of constraints on materials or locations.
Moreover, we ran a life cycle assessment on the manufacturing of five low-carbon precast concrete productsthat we developed, receiving the EcoLeaf environmental
label, which allows environmental information on products to be visualized objectively. This is the first time inJapan that a low-carbon precast concrete product has
been standardized and given EcoLeaf certification.
Customers will now be able to choose low-carbon
precast concrete products that offer the same cost andquality as regular products while reducing cement-generated CO2 emissions by roughly 20%, enabling us to contribute to the carbon neutrality in customer supply chains
Acquisition of Ecoleaf environmental label (selected products).
and create environmental value.

2 Development of Life
Cycle Assessment
Support System
Contributing to
Carbon Neutrality
in Buildings

Challenges 1
L evel of estimate detail depends on thethinking of the client and the company
carrying out constructionDifficulty of assessment due to disparate
calculations among various companies
and differing results

41

Hazama Ando is pursuing various initiatives to reduce greenhouse gas emissions related to our Building Construction and other business activities. One
such initiative has been the development of a life cycle assessment support
system that automatically calculates greenhouse gases and other substancesthat impact the environment, from construction estimates. This systemaddresses issues facing the construction industry regarding life cycle assessment calculations, and makes it possible to visualize and quickly provide ISOcompliant information on calculations using official rules. The system
contributes to the carbon neutrality of our customers’ businesses, while thecalculated values can also be used in communicating with stakeholders.

Hazama Ando
Life Cycle Assessment
 niform estimates based on
U
ISO standards
Third-party certified environmental
labeling also possible
Solution!
Assurance of reliability andtransparency

Lack of standard calculation rulesin the industry

Emphasis on transparency
and fairness

Challenges 2

Hazama Ando
Life Cycle Assessment

C alculations require basic knowledgeof building materials
Takes 10 days or more for skilled
technicians to work on one propertyCalculations naturally entail costs, but
the cost burden is currently unclear

 utomates existing tasks with life cycleA
assessment support system
Anyone can do the same task
Solution!
in minutes

Requires considerable cost and time

Significant reduction in cost, time

Demolition,
recycling
RepairCO2,
etc.

Materials
manufacturing

Construction

Operation

Review of Operations

Building Construction

Social Impact Highlights

1 Tottori Sports

Center Remains a
Valuable Part ofDaily Life
General Sports Center Tottori City
Redevelopment Project

A private finance initiative (build-to-order) framework was used for the redevelopment of the General Sports Center Tottori City, which first opened in
1974. Hazama Ando was a member of the special-purpose company (PFI
General Sports Center Tottori City Co., Ltd.) represented by Gojinsha PlanningResearch Center Co., Ltd., serving as a constituent company and taking chargeof the construction work.
One feature of the construction was a type of main arena building that is
unique to sports centers: The basic frame is made ofreinforced concrete while the roof uses a steel truss
structure. When building the roof frame, there was alimit to the working radius able to be used by crawler
crane, given the size of the site and the shape of thebuilding. By adopting a sliding construction method, inwhich trusses are assembled and painted on the
ground and then installed by sliding them into place,
we were able to shorten the construction period andboost productivity by reducing the need for temporary
scaffolding, and also improved safety by reducing theneed to work at high positions.

General Sports Center Tottori City.

2 Design andConstruction of
Large Distribution
Warehouse with
Leading-Edge
Specifications
Ranzan Logistics Center Plan(provisional name)

CBRE IM Ranzan, a logistics facility that sits adjacent to the Ranzan-Ogawa
interchange on the Kanetsu Expressway, is a 4-story hybrid structure withreinforced concrete columns and steel beams, offering a total floor space ofover 110,000 square meters. The building has advanced specifications, with all
sections offering a pillar span of 11.5 meters from east to west and 14 metersfrom north to south. In addition, it includes a common cafeteria, shop, andbreak room to create a comfortable work environment. We also implemented
LED lighting throughout the building, greened the premises in line with agovernment ordinance requiring 25% of the site to be
set aside for greenery, and installed solar panels. These
efforts gained the building A-rank CASBEE certification,
indicating an environmentally friendly building.
By closely working together within the Group fromthe design stage and selecting the most suitable building methods through repeated trials, we were able tocomplete construction in a short period of 15 months.

CBRE IM Ranzan.

42

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Overseas Operations

Saint Lucia: Cul De Sac Bridge Reconstruction Project.

Capitalizing on an Extensive Track Record and Network to Contribute to
Development in Various Countries
Hazama Ando’s overseas business started out in the Civil
Engineering area in the 1960s, in Vietnam, Indonesia, Thailand, and other countries undergoing rapid development at
the time. We then expanded into Latin America in the mid1970s, and have built up a wealth of achievements largely
associated with Overseas Development Assistance (ODA)
projects. Our overseas Building Construction business dates
back to prewar expansion into East Asia, and we boast a

wealth of experience chiefly in the construction of plantfacilities for Japanese- and foreign-affiliated firms.
The fiscal year ended March 2023 saw ongoing recovery
in overseas markets. In particular, orders in the Building
Construction business significantly exceeded the previous
year’s results, driven by orders for Japanese production
facilities in North America (primarily Mexico) and Thailand.

Building Roads to Link Agricultural Areas and Urban Economies in Bolivia
Okinawa Road Improvement Project (ODA project)

A landlocked country, Bolivia’s network of roads serves roughly 70% of thecountry’s import and export freight needs. However, paved roads account for
only about 8.5% of the network. This project involved a portion of the mainroad (Okinawa Road) connecting the northern part of the Santa Cruz department, a major agricultural area, and the city of Santa Cruz. The work involved
paving a two-lane road stretching approximately 19 kilometers between Okinawa Settlement Districts I and II, areas that are home to a large population ofJapanese settlers, as well as replacing bridges and constructing drainage facilities. Construction was suspended for about 10 months due to the pandemic,
but was completed successfully thanks to added support from the Japanese
government. Going forward, the road is expected to raise quality of life, improveaccess, and revitalize the local economy in the Okinawa district.

Okinawa Road.

Building a Vietnamese Production Base for a Japanese Manufacturer
Sumi Vietnam Wiring Systems No. 3 Plant Construction work

We built the third production base in Vietnam for Sumi Vietnam Wiring Systems,
which manufactures, processes, and sells wire harnesses. The new plant has atotal floor space of around 62,000 square meters and sits on a 140,000-squaremeter section of land in Thanh Liem Industrial Park in Ha Nam province, located in
the northern central part of the country. The building is broadly divided into wire
harness production and warehouse sections. For the warehouse section, which
has a roof height of over 13 meters, we used factory-made precast columns to
speed up construction. In addition, as part of our efforts to achieve carbon neutrality, we installed solar power generation equipment on the warehouse roof.
Sumi Vietnam Wiring Systems No. 3 Plant.

43

Review of Operations

Overseas Operations, Collaboration with Startup Companies

Collaboration with Startup Companies

Guided by Hazama Ando VISION2030, we are working to heighten the Group’s ability tocreate value and help bring about a sustainable society. To this end, we are proactively
pursuing initiatives that aim to create new businesses through investments in startup
companies and through open innovation. The following are examples of achievements inthe fiscal year ended March 2023.
Helping to Bring About a Sustainable Society
through Partially Unmanned Truck Platooning

In March 2023, Hazama Ando acquired Advanced Smart Mobility Co., Ltd., a startup venture business launched by the University of Tokyo. As outlined in the Progress Report on efforts to
support the development of autonomous driving technologies
and create adequate policies version 4.0 roadmap formulated
by Japan’s Ministry of Economy, Trade and Industry and Ministry of Land, Infrastructure, Transport and Tourism, Advanced
Smart Mobility’s goal is to bring to fruition partial unmanned
truck platooning, earmarked for commercialization from fiscal
2025. Through its endeavors, Advanced Smart Mobility will
help realize a sustainable society and address a variety of concerns, including the need to resolve such transportation andlogistics issues as the closure of bus routes, attributable todriver shortages, and the deterioration in local resident convenience, as well as revitalizing local communities through newurban development. We
will also consider further
collaboration in such areas
as the development ofvarious technologies,
including autonomous
driving, that Advanced
Smart Mobility is researching and developing for use
Image of unmanned truck platooning.
in the construction field.

Digitalizing Local Government Crisis Managementwith Smart Disaster Prevention Systems

In March 2023, we acquired Cube Earth Co., Ltd., one of thecompanies selected for the Hazama Ando New Business Cocreation Program 2022, conducted as part of our efforts to realize
the Hazama Ando VISION2030 long-term vision. Cube Earth is a
startup venture business that uses the CubeEarth geographic
information system to provide smart disaster prevention systems
to local governments. Smart disaster prevention systems provide
timely information on the status of damage, evacuation center
operations, the safety of evacuees, and other pertinent data inthe event of a disaster. CubeEarth is a simple platform that canquickly convert public information into mesh data, making it
highly stable and resistant to freezing. CubeEarth can also be
used offline during power outages, making it an effective
system in times of disaster.
Enabling integrated disaster response management and analysis using
a cloud- and network-based disaster prevention system.

Aiming to build a “frailty prevention program”

In November 2022, we acquired Air Digital K.K., another company selected for the Hazama Ando New Business Cocreation
Program 2022. Air Digital opened Sports 60 & Smart, one ofJapan's largest digital sports clubs, at Ario Washinomiya, alarge-scale commercial complex in Kuki City, Saitama. In addition to promoting digital sports, the company also aims to build
a frailty prevention program, unprecedented in Japan, to utilize
digital sports as a means of solving the societal challenge of
maintaining health and preventing frailty among the elderly.
On January 30, 2023, Hazama Ando, Kuki City, and Air Digital signed a collaboration agreement regarding the frailty prevention program based on digital sports machines. The threeparties will mainly collaborate in the areas of boosting residents’ participation in sports that use digital machines and inpreventing frailty using
digital sports machines. Byfurther deepening thiscollaboration, we will continue to strive to establish afrailty prevention programthat will be highly valued
by residents.
Health promotion event co-sponsored by
Air Digital and Kuki City.

Accelerating Efforts to Bring About a Carbon
Neutral Society

Hazama Ando invested in start-up venture company GrowthPartners, Limited in August 2022. Growth Partners holds thepatent to Celldoron, which uses the high water absorbency andspecial particle structure of cellulose that makes it effective ininstantly and easily reducing the fluidity of high moisture content and highly fluid solid-liquid mixtures. Consequently, Celldoron is effective in shortening construction time and reducing
disposal and treatment costs by enabling increased workability
for residual or returned concrete treatment, sludge treatment
and water damage restoration, and in other applications. In
addition, Celldoron is an environmentally friendly additive
agent as it uses recycled paper such as shredder waste as a raw
material. Based on our ongoing R&D on Carbon Pool Concrete,
Celldoron is an effective additive agent, in such circumstances
as the use of residual or returned concrete, and we intend toactively utilize this environmentally friendly technology.
Celldoron

CELLDORON

Elevation model and structure
data map

Details of evacuationroutes that avoid
disaster areas

Overview of the Smart Disaster Prevention System

Understanding the evacuation statusof persons in need of evacuation
support living in disaster areas

Sludge, etc.,
containing water

Celldoron

44

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Overview of
Sustainability Strategies

Materiality 1

Helping to solve
social issues
and create value
for society

SOCIETY

Creating new value in variou
the communities we serve as
Key CSR Themes chieving the satisfaction of societyAand customers and earning their trust
 orking in harmony with theWcommunities we serve afe, comfortable working
Senvironments** The Group recently reclassified its materiality in line with formulating the
Medium-Term Management Plan 2025 and business conditions.

Relevant SDGs

Why It Matters

The construction industry helps to uphold society by maintaining and upgrading theinfrastructure that is indispensable to the lives of people around the world. Aging infrastructure is an issue common to many societies worldwide. As we continue to address
this issue, the vital impact Hazama Ando is called on to make on society is to develop
sophisticated, resilient construction technologies and methods and carry out construction in various regions in harmony with the communities we serve. It goes without
saying that all our actions are grounded in respect for and cultivation of the people
with whom we work. Rooted in this perspective, Ando Hazama VISION2030 challenges
us to create customer, shareholder, and employee value. We will systematically pursue
various measures to achieve these objectives.

Ongoing Monitoring and Response to Risks and Opportunities

We are seeing ongoing moves in various regions to build disaster prevention and mitigation technology and national resilience into infrastructure and to develop regional
communities, encompassing the construction of manufacturing, commercial, and logistics facilities. In addition to safety and resilience, customers look for high-quality construction approaches that help achieve carbon neutrality, longevity, and greater
convenience. In meeting such demands, in addition to considering the surrounding
environment, an increasingly critical management issue is building mutually beneficial
relationships with the people with whom we work.
Striving for innovative, sustainable building operations, Hazama Ando is accelerating the creation of a construction framework that makes greater use of leading-edge
technology throughout the Group while ensuring that our business activities are inharmony with the communities we serve. Meanwhile, faced with a shrinking, aging
construction workforce, we are pursuing labor savings and greater efficiency throughdigital transformation and other advances.
45

Overview of Sustainability Strategies

Materiality 1 Helping to solve social issues and create value for society

us facets of our businesses and flourishing alongsides we move toward the realization of a sustainable society
Key Performance Indicators, Achievements for Each SDG (updated July 2023)
Core SDGs

Key Performance Indicators

Metrics

Serious work-related accidents
Frequency rate
Rate of human rights education andtraining attendance
Number of female managers(equivalent to manager class)Eight or more closures in four weeks*1- Civil Engineering- Building Construction
Employee engagement score
Productivity improvement*2
Patent applications
Regional development projects

Deadline (FY)Fiscal 2022

0 cases

Every year

0 cases0.40 or less

2023

0.64

100%

2025

―

60 persons

2025

29 persons

100%
100%
At least 80%

Every year

99.0%
88.6%

2025

72%

2025

4.5%

75/year2025

42

3 or more (over 3 years)

2025

―

Over 10%(compared to fiscal 2020)*1 E
 xcluding sites where eight or more closures are unfeasible (ensure annual closures of at least six closures in four weeks, develop a framework to ensure workers have eight days off infour weeks).
*2 C alculated based on the productivity index of the Japan Federation of Construction Contractors. Based on construction amount per engineer and skilled worker per 8-hour day (completed construction amount/manpower)Social Impact Highlights

Contributing to the Formation of a Wide-Area Railway Network andthe Sophistication of its Functions
Sotetsu-Tokyu Link Line, Shin-Tsunashima Station

Hazama Ando was tasked with constructing Shin-Tsunashima Station, a newstation on the newly opened Sotetsu-Tokyu link line, which offers thru-service
from the Sotetsu-JR East transfer station Hazawa Yokohama-Kokudai Station
to Hiyoshi Station on the Tokyu Line via Shin-Yokohama Station. A roughly
205-meter section of the 240-meter extension of Shin-Tsunashima Station
was constructed using excavation techniques, but to build the four-story reinforced concrete station structure, we used an underground diaphragm wall toretain the soil and carried out excavation roughly 40 meters down from thesurface. Because the site was located in the middle of a residential area,
securing construction space was difficult. Thus, we adopted a CSM (cutter, soil,
mixing) method, which allows deep-level construction using compact machinery, to build the diaphragm wall. Moreover, since both sides of the station also
served as the starting shafts for the shield tunnel construction of other companies, managing the construction schedule was extremely important.
Despite the challenges, the station successfully opened on March 18, 2023.
Over the longer term, there are moves to build and enhance the functionality of a wide-area rail network in the Tokyo metropolitan area. There are arange of anticipated benefits, including faster delivery, improved Shinkansen
access, lower congestion and fewer transfers on existing lines such as the JR
Tokaido Line, and the revitalization of communities that lie along railway lines.

Sotetsu-Tokyu link line Shin-Tsunashima Station.

46

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Human Capital Management
Increasing the value of human capital
To increase the value of human capital, we have promoted
measures that enhance the Company’s appeal and contribute to increased employee engagement, including establishing a highly credible personnel evaluation system, raising
remuneration levels, strengthening support for the further
career development of employees, and realizing diverse
Item
Employeeengagement score

Fiscal 2022 results

72%

Fiscal 2025 plan

At least 80%

Medium-Term
Management Plan 2025 KPI

Investment in
human resources—

5.5 billion yen
increase comparedwith fiscal 2022

Number ofcertified employees—

Holders of eachqualification increased by
10% or more

29 persons

60 persons(including such items as
training expenses)

Number of
female managers

Human Resources Development Policy

Developing human resources is a pursuit that involves
everyone in the Group. All employees are called to honetheir own abilities and expertise and take an active part indeveloping human capital across the organization. Basedon this recognition, in April 2023 we revised the humanresources development policy first formulated at the time ofApproach to Fostering a Corporate Culture

The Group established creating employee value as part ofHazama Ando VISION2030. In the Medium-Term Management Plan 2025, we are committed to realizing the well-beingof our employees, supporting their autonomous career formation, and undertaking various initiatives including steps tofoster a culture of mutual education, challenge, and creativity.
Hazama Ando VISION2030 calls for the Group to
increase employee engagement. Increasing engagement isalso positioned as one of the most important Group-wide
performance indicators in the Medium-Term Management
Plan 2025 and in terms of the Group’s human resources
strategy, which also sets out a performance indicator for
executive remuneration. The employee engagement survey
includes questions about well-being, career formation,
workplace culture, and the degree of buy-in for the corporate philosophy. These questions serve as an effective gaugeof how well the Group is meeting the commitments made47

work styles. At the same time, we are strengthening themanagement foundation by securing diverse humanresources and maximizing employee value, and have set an
employee engagement score of at least 80% as a Groupwide performance indicator for fiscal 2025.

Remarks
Positive response rate to engagement-related items
through employee surveys
 eview of remuneration standards coupled with theRupgrade and expansion of benefits
Upgrade and expand training content
First-class architect, engineer, and other qualifications

Manager: Assistant manager (equivalent to manager
class) and above

the merger in 2013. This policy will guide our efforts tocreate employee value as laid out in Hazama Ando
VISION2030 as we seek for the Group and employees togrow together.
PDF  Sustainability Report 2023

Guidelines for human resources development

to employees under the medium-term management planand elsewhere. Although the Medium-Term Management
Plan 2025 set out a positive response rate of at least 80%
for engagement-related items as a Group-wide performance indicator for fiscal 2025, the actual score in fiscal
2022 was 72%. Going forward, we will identify organizational issues through analysis of the survey results and use a
PDCA cycle seeking to make improvements in these areas.
Moreover, as part of our efforts to foster an even stronger corporate culture, we interviewed Group officers infiscal 2022 to define expectations for ideal Group personnel, and held an information session for employees in March2023 to share the results. Ideal Group personnel must possess the ability to accept change, embrace challenges, andgenerate innovation.
PDF  Sustainability Report 2023

Our Expectations for Personnel

Overview of Sustainability Strategies

TOPICS

Materiality 1 Helping to solve social issues and create value for societyFirst Seminar for Group Executives Held in 2023

To gain a fuller understanding of human capital management in the Group, we held a seminar for executives on thistheme in May 2023. We invited Professor Kunio Ito to speak.
Professor Ito is director of the Hitotsubashi CFO Education
and Research Center, who is well-known for the Ito Reportfor Human Capital Management. Over 100 executives
attended. Participants had the opportunity to think once
again about the nature of people in a management context
as they sought to answer questions posed by Professor Ito.
We plan to continue holding similar seminars for executives going forward. All employees, including executives,
will continue to learn and work to increase the value ofhuman capital.

Seminar for Group executives.

Rigorous Occupational Safety

Prevention of Work-Related Accidents and Safety PerformanceOccurrence of Work-Related Accidents

The number and frequency of work-related accidents
remained virtually unchanged year on year. Regarding causes,
many accidents occurred in the course of movements that are
difficult to describe in procedure manuals, and during preparation and responses to trouble, pointing to the need torevisit our sensitivity to risks and address inadequate knowledge. The number of other accidents, including business
operator-related accidents, traffic accidents, and third-partyor public accidents, was down by half from the previous year.
However, multiple public accidents such as damage to buried
pipes and other factors showed that post-mortem reflection
on the previous year and measures to prevent recurrence
were insufficient. Consequently, we have taken steps tostrengthen measures, including creating a new manual on
how to handle objects buried underground. We are moving
forward with adoption of an accident early warning systemthat uses digital transformation to prevent accidents.

Safety Patrols

The Group conducts on-site patrols at construction sites andremote patrols using ICT equipment at overseas sites. Onsite patrol members start by taking part in the daily morning
safety assembly at a site, placing emphasis on interactingwith on-site staff and personnel from partner companies to

Safety Training

In terms of safety training, in addition to conventionalgroup training, we have introduced video-based andremote training, and are aiming to provide more visually

Safety performance (frequency rate)
(%)

1.5
1.2

1.24

0.9

0.71

0.61

0.6

0.64

0.33

0.3
0

2018

2019

2020

2021

2022

(FY)

Frequency rate indicates the prevalence of work-related fatalities and injuries per 1 million
working hours. Lower values for frequency rate indicate higher safety performance.

confirm current conditions in a spirit of working together toraise safety awareness. The advantages of remote patrols
include cutting down on travel time and expenses as well as
better efficiency, since they allow the situation on the groundto be confirmed immediately in the event of an accident.

impactful and memorable education using virtual realityand digital signage.
48

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

ENVIRONME

Materiality 2

Protecting andbeing attuned to
the naturalenvironment

Contribute to the realization
a low environmental impact
Key CSR Themes

Creating environmental abundance

Relevant SDGs

Why It Matters

The United Nations’ declaration of the SDGs and other initiatives have turned world
attention toward the need for environmentally aware business activities. The construction sector faces ardent calls to build environmental solutions that address an array of
issues, beginning with curbing global warming but also extending to ensuring the cyclical use of materials, preserving biodiversity, and controlling water and air pollution. It is
the task of the entire human community to pass on an abundant natural environment tosubsequent generations, and this desire is what underlies the call of Hazama Ando
VISION2030 to create environmental value. Based on the material issue of protecting and being attuned to the natural environment, we are steadily pressing
ahead with actions to achieve our medium-term environmental goals andtargets over the next three years. These guide us as we aim to maximize thepositive impact of our company and society on the environment.

Ongoing Monitoring and Response to Risks and Opportunities

Hazama Ando is pursuing environmentally oriented management by means of our own
internal environmental management approach and construction that offers superior environmental performance. Addressing climate change in particular has become an issue of
urgent concern. In this regard, we are seeking to more reliably identify risks and opportunities and incorporate them into our business strategies, and are accelerating our creation ofenvironmental value, such as by participating in the Science Based Targets (SBT) and RE100(Renewable Energy 100%) initiatives in the fiscal year ended March 2020, and beginning
disclosure based on TCFD recommendations in the fiscal year ended March 2022.
Furthermore, in the Medium-Term Management Plan 2025 announced in May 2023,
we set quantitative indicators for reducing greenhouse gas emissions and expanding
the scale of renewable energy business development. We will put even greater emphasis on the environment, including by expanding our contribution to realizing carbon
neutrality across the supply chain.
49

ENT

Overview of Sustainability Strategies

Materiality 2 Protecting and being attuned to the natural environmentn of a carbon-free, recycling-oriented society withto pass on the earth’s abundance to the next generation
Key Performance Indicators, Achievements for Each SDG (updated July 2023)
Core SDGs

Key Performance Indicators

CO2 emission reduction rate (Scope 1 and 2)
CO2 emission reduction rate (Scope 3)

Metrics

Deadline (FY)At least 34%(compared to fiscal 2017)

Fiscal 2022

2025

24.7%

At least 21%(compared to fiscal 2017)

2025

33.5%

5

2024

8

80%

2030

16％

0 cases

Every year

0 cases

0.8 ton/construction cost(100 millions of yen)2024

0.6 tons

6.5 kg/total floor space (m2)2024

3.09 kg

Number of ZEB projects
Proportion of renewable energy used for electricity
Serious environmental incidents
Recycling of construction site waste- Civil engineering: Reduction of overall mixed
waste volume- Building construction: Reduction of mixed waste
intensity at new construction projects

Social Impact Highlights

Chosen Among Top Firms in 2022 CDP Supplier Engagement Rating
The Group was chosen as a CDP 2022 Supplier Engagement Leader
by the international not-for-profit organization CDP* in its Supplier
Engagement Rating.
Based on responses to the CDP climate change questionnaire,the Supplier Engagement Rating assesses how effectively companies
work with their suppliers to address climate change issues. The mosthighly rated companies are recognized as Supplier Engagement
Leaders. In fiscal 2022, the top 8% of responding companies
received this recognition.
Hazama Ando VISION2030 established the goal of creating environmental value that contributes to the realization of a decarbonized, low environmental impact, recycling-oriented society to leave afertile global environment for the next generation. We will continue
to help protect and be attuned to the natural environment by accelerating our efforts to reduce greenhouse gas emissions across the
supply chain.
*C DP: An international not-for-profit organization established in the U.K. in 2000 that collects, analyzes, and evaluates data on the environmental activities of leading companies around the world, anddiscloses these results to institutional investors.

50

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

TCFD Recommendations
Hazama Ando declared its support for the Task
Force on Climate-related Financial Disclosures(TCFD) in August 2021, joining the TCFD Consortium.
We began making disclosure based on the TCFD
recommendations in October 2021.

Task Force on Climate-related Financial Disclosures (TCFD)

Note: Updated in June 2023

Governance
Governance Framework for Managing Risks and Opportunities Stemming from Climate Change The Environmental Strategy Committee deliberates onrisks and opportunities arising from climate change. The
committee includes representatives from the businessdivisions and other executives. Meeting four times a year,
members seek to identify risks and opportunities, analyze
potential impact should they materialize, and consider
measures in response. Results of deliberations arereported to the Board of Directors through the Management Committee.
 The Internal Control and Risk Management Committee
examines and deliberates on the management of risks
that may significantly impact business, including climatechange. Their findings are reported to the Board of Directors after being discussed at the Sustainability Committee.
The committee is working with the Environmental Strategy
Committee to address risks arising from climate change.

Organizational Framework for Addressing
Climate Change
Advising

Board of Directors
Oversight

Reporting

Reporting back,reportingManagement
Committee
Instruction

Sustainability
Committee

Instruction

Reporting

Reporting

Environmental
Strategy Committee

Coordination

Internal Control and
Risk Management
Committee

Coordination

Business divisions

Coordination

Group companies

Climate Change-Related Risks and Opportunities Identified through Scenario Analysis, Financial
Impact on Our Businesses We are carrying out scenario analysis for 2030 and 2050, assuming 1.5°C, 2°C, and 4°C future temperature increase scenarios

Climate change risks and opportunities that affect Group businesses and their degree of importanceRisks
Category

Risk type

Risk factors

Transition
risk

Policyand legal

Introduction ofcarbon pricing

Chronic

Acute

Physicalrisks

51

Financial impact on the Group if the risk materializes

Degree of impact
4°C
scenario

1.5°C to 2°C
scenario

Increase in material procurement costs due to the introduction ofcarbon pricing

—

Large

Higher materials procurement costs due to the introduction ofcarbon pricing—

MediumRise in averagesummertemperatures

Lower productivity of construction workers due to heat stress

Large

MediumHigher costs of measures to respond to health hazards (heat stroke,etc.) for skilled construction workers

Small

Small

Increasing severity
and frequency ofnatural disasters

Higher materials procurement costs due to supply chain disruptions;higher labor costs and construction site costs and delays due todamage at construction sites

MediumSmall

Overview of Sustainability Strategies

Materiality 2 Protecting and being attuned to the natural environment

Opportunities
Category

Opportunity
type

Energy source,
marketOpportunity
Products andservices

Degree of impact

Financial impact on the Group
if the opportunity materializes

Opportunity factors

4°C
scenario

1.5°C to 2°C
scenario

Higher investment in construction of renewableenergy power generation facilities

Small

MediumHigher new construction orders stemming fromenergy management proposals

MediumLarge

Development, expansionof decarbonized products
and services

Wider adoption of ZEB and high added value

Large

Large

Higher demand for energy-saving renovations

MediumLarge

Disaster prevention andmitigation, national resilience

Higher demand for disaster prevention andmitigation and national resilience construction

Large

Large

Use of decarbonizedenergy sources

Risk Management
Process for Identifying, Assessing, and Managing Climate Change-Related Risks The Group has identified the risks and opportunities stemming from climate change under the guidance of the Environmental Strategy Committee.
Specifically, with an eye to the Group’s supply and value
chains, we are identifying the impact on the Group as awhole and possible impact on various processes, from development and design to materials procurement, construction,
maintenance, and repair, and forecasting the financial impactthat could occur under 4°C, 2°C, and 1.5°C scenarios. More-over, we are using the following categories as assessment
criteria: frequency, period of impact, magnitude of impact,
relevance to core businesses, likelihood of occurrence, andtiming of occurrence. Using these criteria, we have comprehensively assessed various risks and opportunities, assigninga degree of importance of large, medium, or small.

Metrics and Targets
Metrics Using Climate-Related Risk and Opportunity Analyses, and Correlation with and Targets
for Scope 1, 2, and 3 Emissions
Greenhouse gas
reduction targets

Scope 1 + 2* reduction rates

At least 55%
reduction

Fiscal 2030: (compared to fiscal 2017)* Scope 1: Direct emissions associated with fuel use.
Scope 2: Indirect emissions associated with the use ofelectricity, etc.

RE100 targets forelectric power fromrenewable energy sources

Scope 3* reduction rate

At least 33%
reduction

Fiscal 2030: (compared to fiscal 2017)* Scope 3: Other indirect emissions in the supply chain

Ratio of electric power from renewable energy sources used in business activities

Fiscal 2030: The Group’s greenhouse gas emissions and ratio of electric power from renewable energy sources in the mostrecent fiscal year are disclosed on the corporate website
and in the Sustainability Report.

80%

Fiscal 2050:

100% Going forward, we will take actions to mitigate risks andseize opportunities associated with these metrics. To passon an abundant global environment to the next generation, the Group will steadfastly pursue initiatives to bringabout a carbon-free, circular society.
52

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

GOVERNANC

Materiality 3

Promotingsustainable
management
and taking full
responsibility forcorporate actions

Realize fair and honest busin
the foundation for sustainabl
Key CSR Themes

 onducting fair and honest corporateC
activities
 ngaging in dialogue withE
stakeholders* The Group recently reclassified its materiality in line with formulating the
Medium-Term Management Plan 2025 and business conditions.

Relevant SDGs

Why It Matters

To realize sustainable management, Hazama Ando must not only augment
our social and environmental efforts but also pursue fair and honest businesspractices. Above all, it is necessary not simply to comply with laws and regulations but also to instill in our employees and partner firms consistent behavior and fairtrade practices, building strong relationships that foster the co-creation of value.
It is from this perspective that we identified promoting sustainable management
and taking full responsibility for corporate actions as a material issue. This entails building off a foundation of ESG-oriented management to create a responsible management framework while fostering a corporate culture in which all employees think andact responsibly, as well as pursuing uncompromising corporate social responsibility
across the supply chain so that we can maximize our positive impact.

Ongoing Monitoring and Response to Risks and Opportunities

Building and reinforcing a governance framework for sustainability management thattakes a comprehensive view of various impacts on society, the environment, and humanresources, along with appropriately managing and transforming businesses, are management issues that continue to grow in importance on a global scale. In particular,
listed companies in Japan are increasingly required to implement key measures in a
number of areas, including ensuring diversity in their management teams, strengthening the balance between management and execution, and raising awareness of compliance and ensuring compliance with a view to supply chains.
In light of these considerations, Hazama Ando is working to revise and strengthen
its performance indicators to ensure fair and honest business activities while working toenhance the framework for communication with stakeholders.

53

CE

Overview of Sustainability Strategies

Materiality 3 Promoting sustainable management and taking full responsibility for corporate actions

ness practices across the supply chain as
le management
Key Performance Indicators, Achievements for Each SDG (updated July 2023)
Core SDGs

Key Performance Indicators

Metrics

Deadline (FY)Fiscal 2022

Ratio of female board directors

30% or more

Every year

25.0%

Ratio of external board directors

50% (a majority)

Every year

33.3%

Information security course attendance

100%

Every year

100%Compliance training attendance

100%

Every year

100%

Social Impact Highlights

Hazama Ando Group Compliance

みんなで守ろうWe continued to promote compliance activities in fiscal 2022 under the question:“What are the compliance points in the day-to-day work in your workplace?” By continuing to pursue creative new approaches like this, we are striving to foster a corporate culture that is continually aware of the importance of compliance.
In fiscal 2022, we administered a once-every-four-years compliance awarenesssurvey for the purpose of confirming and evaluating current compliance awarenessamong officers and employees. After identifying issues needing to be addressed
based on the survey results, we invited an outside lecturer from a research firm tolead a training session for officers and employees in which we shared the findings,
confirming once again that compliance rooted in integrity is essential to the continuity of a company.
We also conducted training involving video-based e-learning andonline testing, all of which achieved a 100% participation rate.
We also expect our distribution of a monthly e-mail newsletter tolead to heightened awareness and knowledge of compliance.
We will continue to improve on these programs and carry out arange of educational activities.

コンプライアンス

コンプラが 根づく企業に 未来あり！

Compliance awareness poster.

Online training by an outside lecturer.

54

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

（FY）

2019

2020

2021

2022

2023

120,302102,971

129,31766,08075,597

118,753

137,730

121,390

140,431145,094

7,755

4,927

5,887

4,075

3,667

9,023

9,567

14,101(ASSETS)

Current assets   Cash and deposits  Notes receivable, accounts receivable fromcompleted construction contracts and other  Securities   Costs on construction contracts in progress  Other inventories

15,9995,030

14,000
4,686

—

8,823

—

7,930

—

7,079

  Other

18,297

13,279   Total current assets

286,127

277,582

274,429

228,070

245,379   Buildings and structures

20,602

22,297

23,64922,89423,489   Land15,057

15,505

15,79915,852

15,486   Allowance for doubtful accounts

(12)

(14)

(12)

(14)

(160)

Non-current assets   Property, plant and equipment    Machinery, vehicles, tools, furniture and fixtures   Other

1,104

11,421

1,500

11,977852

12,8791,961

11,251

3,253(20,583)(21,576)(22,723)(23,400)(22,125)

2,013

1,572

1,505

1,542

1,610

   Investment securities

22,442

18,69821,697

20,96025,020   Deferred tax assets

8,427

9,527

7,819

7,091

6,455

   Other

3,278

3,099

3,765

4,862

5,081

    Total investments and other assets

34,587

31,46934,12035,532

39,668349,656

339,772

339,610295,332

318,014   Accumulated depreciation    Total property, plant and equipment  Intangible assets   Investments and other assets   Long-term loans receivable   Retirement benefit asset    Allowance for doubtful accounts
Total non-current assets

Total assets* Application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”

55

10,74626,928

439

—

(0)

63,52829,148

145

—

(1)

62,19029,555

132

707

(1)

65,18130,186

73

2,546

(1)

67,262

31,355

62

3,518

(470)

72,634

(Millions of yen)

（FY）

2019

2020

2021

2022

2023

72,62378,93070,624

47,13454,474

357

341

291

237

(LIABILITIES)Current liabilities  Accounts payable for construction contracts and other  Short-term borrowings   Current portion of bonds   Income taxes payable

19,1392,437

17,391

4,812

16,312

4,907

16,676

3,071

16,4891273,962  Advances received on construction contracts in progress

46,01430,862

27,60818,23733,268   Provision for warranties for completed construction

1,886

2,371

2,129

1,442

2,784

  Deposits received   Provision for bonuses   Provision for loss on construction contracts   Provision for loss on damage due to fire  Other   Total current liabilities

Non-current liabilities  Bonds payable

30,564

2,386

1,733

27,461

2,679

955

7,743

6,699

191,904

179,386

7,017

711

6,881

691

30,512

2,595

1,248

5,996

11,756

173,984
400

34,038

2,690

595

3,921

12,343140,388
162

40,873

2,883
653

—

8,700

164,21735  Long-term borrowings

9,064

8,712

8,271

7,640

7,463

   Retirement benefit liability

12,95912,776

8,857

3,816

3,198

107

93

116

162

   Deferred tax liabilities   Provision for environmental measures   Provision for management board incentive plan trust  Provision for employee stock ownership plan trust  Other   Total non-current liabilities

Total liabilities

46

151

—

1,027

24,069

45

148

—

1,016

23,485

37

139

—

1,127

18,949

37

138

—

1,302

13,261

31

138

207

303

1,092

12,472215,973

202,872

192,934

153,650

176,689  Share capital

17,00617,00617,00617,00617,006  Retained earnings

92,945

103,699

115,086

114,124

122,656

129,622

135,348

141,824

137,766

135,614

4,482

1,880

3,754

2,996

3,845

62

116

55

85

203

(NET ASSETS)

Shareholders’ equity  Capital surplus  Treasury shares   Total shareholders’ equity

Accumulated other comprehensive income   Valuation difference on available-for-sale securities   Deferred gains or losses on hedges   Foreign currency translation adjustment

19,927(255)(3)

19,926(5,284)—

19,919(10,187)—

17,058(10,422)(345)

17,058(21,106)178644   Remeasurements of defined benefit plans(1,356)(1,287)281

417   Total accumulated other comprehensive income

3,184

709

4,091

3,154

4,871

Share acquisition rights

4

4

3

—

—

Non-controlling interests

869

837

758

761

839

133,682

136,900

146,676

141,682

141,324

349,656

339,772

339,610295,332

318,014

Total net assets
Total liabilities and net assets* F rom the fiscal year ended March 2019, the Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018)
which requires deferred tax assets to be classified as part of “Investments and other assets,” and deferred tax liabilities to be classified as part of “Long-term liabilities.”56

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Consolidated Statements of Income(Millions of yen)

（FY）

2019

2020

2021

2022

2023

334,244
25,726359,971358,190
19,944
378,135

331,549
20,451
352,000

316,153
24,139340,293

345,858
26,288372,146

290,867
23,312
314,179

314,013
16,905
330,918

287,106
16,729303,835

273,098
20,332
293,431306,530
23,592
330,122

Gross profit on completed construction contracts
Gross profit - other businessTotal gross profit

43,3772,414
45,791

44,177
3,039
47,21644,443
3,722
48,16543,054
3,806
46,861

39,3272,695
42,023

Selling, general and administrative expenses

22,09922,51720,80820,261

22,170Operating profit

23,692

24,69927,357

26,60019,853

131
382
—
—
—
295
808

110
315
—
—
—
310
736

38
327
—
—
—
103
469

25
291
—
166
187
156
827

73
374
329
—
—
223
1,001

481
—
415
—
454
653
2,005

422
—
336
—
170
524
1,452

333
—
19
849
—
733
1,935

320
273
104
—
376
513
1,588

350
53
—
187
428
227
1,246

22,49523,98325,891

25,83819,608

—
—
—
48
—
48

—
733
—
86
254
1,074

—
27
354
12
160
555

—
—
67
—
241
308

2,700
305
94
63
179
3,344

9,333
45
—
—
—
—
—
—
148
9,527

315
—
—
30
—
142
69
—
46
603

25
884
354
—
19
—
—
—
74
1,359

180
—
66
18
115
—
27
306
42
757

—
75
90
—
73
—
71
338
3
653

Profit before income taxes

13,016
7,153(3,002)
4,150

24,454
7,875
(147)
7,727

25,087
7,789
138
7,928

25,390
6,768
949
7,717

22,299
6,978
142
7,120

Profit8,865

16,727

17,15917,672

15,178

3

(76)

(30)

1

(9)

8,862

16,803

17,18917,671

15,187

Net sales

Net sales of completed construction contracts
Sales in other businesses
Total net sales

Cost of sales

Cost of sales of completed construction contracts
Cost of sales in other businesses
Total cost of sales

Gross profit

Non-operating income

Interest income
Dividend income
Foreign exchange gains
Late charges income
Gain on extinguishment of debt
Other
Total non-operating income

Non-operating expenses

Interest expenses
Share of loss of entities accounted for using equity method
Foreign exchange losses
Commission expenses
Compensation for damage
Other
Total non-operating expenses

Ordinary profit
Extraordinary income

Compensation for damage received
Gain on reversal of provision for loss on damage due to fire
Subsidy income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income

Extraordinary losses

Loss on damage due to fire
Impairment loss
Loss on tax purpose reduction entry of non-current assets
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Head office relocation expenses
Loss on litigation
Total extraordinary losses
Income taxes - current
Income taxes - deferred
Total income taxes

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent
57*T he Group adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc., effective from the fiscal year ended March 2022. Figures for prioryears have not been retroactively adjusted.

Consolidated Financial Statements

Consolidated Statement of Cash Flows(Millions of yen)

（FY）Cash flows from operating activities
Profit before income taxes
Depreciation
Loss on tax purpose reduction entry of non-current assets
Subsidy income
Compensation for damage received
Loss on damage due to fire
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for warranties for completed construction
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in provision for loss on damage due to fire
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on sales of property, plant and equipment
Share of loss (profit) of entities accounted for using equity method
Decrease (increase) in trade receivables
Decrease (increase) in costs on construction contracts in progress
Decrease (increase) in other inventories
Decrease (increase) in advances paid
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in trade payables
Increase (decrease) in advances received on construction contracts in progress
Increase (decrease) in deposits received
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Compensation for damage paid
Income taxes paid
Proceeds from compensation for damage
Proceeds from insurance income
Net cash provided by (used in) operating activities

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from sales of intangible assets
Proceeds from refund of leasehold and guarantee deposits
Payments of leasehold and guarantee deposits
Payments for investments in capital of subsidiaries and associates
Subsidies received
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

Increase in cash and cash equivalents resulting from
inclusion of subsidiaries in consolidation

Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

2019

2020

2021

2022

2023

13,016
1,794
—
—
—
9,333
45
(21)
(375)
1,382
—
(56)
—
(513)
481
(128)
(7)
—
(51)
—
(13,309)(2,450)(1,097)(389)—(15,849)
20,611
13,898(8,574)(1,997)
15,739
472
(442)
(494)
(9,374)——5,900

24,454
1,814
—
—
—
315
—
2
484
(778)
(1,043)
(87)
—
(426)
422
188
(112)
69
(56)
—
(19,059)
2,833
339
1,224
—
6,339
(15,153)(3,100)
280
4,288
3,239
446
(434)
(1,027)(5,326)——(3,102)25,087
2,080
354
(354)
—
25
884
(1)
(241)
293
(702)
(1,912)
(447)
(365)
333
(73)
(160)
—
(12)
—
16,317(963)(4,136)990—(8,289)(3,245)
3,050
3,254
5,865
37,630
393
(356)
(756)
(7,755)——
29,15425,390
2,410
66
(67)
—
180
—
1
(686)
(653)
(2,075)(4,964)(1,719)
(317)
320
181
(241)
—
13
273
(18,961)
1,518
893
606
—
(23,506)(9,151)
3,525(2,521)
4,298(25,184)290(298)(2,210)(8,683)——(36,086)

22,299
2,100
90
(94)
(2,700)
—
75
615
1,341
58
(305)
(195)
(1,077)
(447)
350
(370)
(179)
—
—
53
(4,647)
408
850
(168)
(3,736)
7,326
15,021
6,835(1,026)(2,430)40,045419(350)(5,467)(6,204)2,700
1,130
32,272(11,123)
11,458(1,202)108(1,754)
200
—
—
—
—
—
(42)
(2,356)(1,474)
1,250
(855)
1,144
(3,805)
234
289
—
—
—
—
199
(3,016)

(60)
221
(429)
299
(2,934)
16
—
—
(955)
—
354
(466)
(3,954)(1,345)
1,281
(433)
358
(2,558)
20
—
—
(104)
(1,876)67
40(4,549)(1,241)
1,467(3,071)336(2,999)
347
—
712
—
—
94
(386)
(4,740)(4,410)8,637(6,299)555(417)—(5,795)(4)(44)(7,779)95,304(7,398)358(393)(5,065)(6,004)(5)(48)(13,244)

(91)
4,107
(5,534)—(341)(4,936)(5,802)(2)(52)(12,656)

(31)
4,291
(4,570)—(291)(15,328)(6,423)(2)(208)(22,565)

(81)
4,611
(4,953)—(237)(10,631)(6,656)(2)(474)(18,425)(4,132)(19,547)

12,573(63,295)

9,586

104

(184)

28

(94)

479

139,190135,093

115,461

128,035

64,739

35

—

—

—

—

—

135,093(84)

115,461—

128,035—

64,739—74,32658

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Stock Information
As of March 31, 2023

Authorized shares

400,000,000 (common stock)

Issued shares

181,021,197 (common stock) (including 23,215,839 in treasury stock)

Number of shares per
trading unit

100

Number of shareholders(common stock)

25,842Top-ten major shareholders

Name

The Master Trust Bank of Japan, Ltd. (Trust Account)
NORTHERN TRUST CO. (AVFC) RE UKUC UCITS CLIENTS NONLENDING 10 PCT TREATY ACCOUNT
Custody Bank of Japan, Ltd. (Trust Account)
Hazama Ando Group Business Partner Shareholding Association
MSIP CLIENT SECURITIESBNP PARIBAS LONDON BRANCH FOR PRIME BROKERAGE
CLEARANCE ACC FOR THIRD PARTY
Mizuho Bank, Ltd.
STATE STREET BANK AND TRUST COMPANY 505103
THE BANK OF NEW YORK MELLON 140044
BNY GCM CLIENT ACCOUNT JPRD AC ISG(FE-AC)

Shares held (thousands)

Shareholding ratio

23,470

12.47

7,580

5.45

7,247

3.75

7,559
6,519

4.07
3.27

4,985

2.68

4,147

2.49

4,476
3,461
3,110

2.64
2.48
2.38

* Although the Company holds treasury stock (23,215,839 shares), it is not included in the above list of major shareholders.
* Shareholding ratios are calculated after excluding treasury stock.
* The number of shares held by The Master Trust Bank of Japan, Ltd. does not include shares set aside in an executive remuneration board incentive
plan (628,754 shares) or in an executive stock-option plan (706,400 shares).

Distribution byshareholder type

Other Japanese
corporations7.3%

Treasury stock

12.8%

Japanese individuals
and others
15.9%

Major Initiatives We Support 
Science Based Targets initiative (SBTi)

The SBTi is a global partnership jointly established in 2015 by four organizations—CDP, theUnited Nations Global Compact, World Resources Institute (WRI), and the World Wide Fundfor Nature (WWF). Its role is to urge companies to set targets for reducing greenhouse gas
emissions that are consistent with scientific knowledge, for the purpose of limiting global
temperature rise to well-below 2°C above pre-industrial levels.

RE100 (Renewable Energy 100%)

A global initiative led by the Climate Group in partnership with CDP, RE100 is a coalitionof businesses committed to transitioning to 100% renewable electricity used in businessby 2050.

Task Force on Climate-related Financial Disclosures (TCFD)

In response to a request from the G20, the Financial Stability Board (FSB), which includes
the participation of central banks, financial authorities, and international organizations,established the Task Force to consider the means of climate change-related disclosure andthe response of financial institutions.
59

Japanese financial
instrument brokers 2.7%
Foreign corporations
and individuals
34.1%Japanese financial
institutions27.2%

Corporate Profile
As of April 1, 2023

Name

HAZAMA ANDO CORPORATION

Established

October 1, 2003

Address

1-9-1 Higashi-Shimbashi, Minato-ku,
Tokyo 105-7360, Japan

Capital

17,006,123,275 yen

Number of
employees

3,677 (consolidated) 3,283 (non-consolidated)

Businessareas

1.	Civil engineering, building construction, and other

Network
In Japan(As of March 31, 2023)

construction inspection, surveying, planning, designing, execution, supervising, technical guidancecontracts, commissioning, and consulting services
2. Provision of building supplies, machinery,and equipment
3. Real estate transactions and ownership and use ofreal property and securities
4.	Soil survey and remediation contracts, businessinvolving waste collection, handling, and disposal,
and related consulting services
5. Planning, design, and consulting services relating toarea development, urban development, environmental improvement, etc.
6. Power generation, electric, thermal, and otherenergy supply business, and consulting services
relating to such business
7. Investment in real estate special purpose companies
involving building construction contracts, purchaseand sale of equity interests therein, and ownershipand sale of trust beneficiary rights
8.	Acquisition, development, licensing, and sale ofsoftware, industrial property rights, and expertise
relating to the use of computers
9. Building maintenance and security services
10.	Businesses incidental to each of the preceding items
11.	Joint management with partners of each of
the preceding businesses and investment inother businesses

Head Office	1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo 107-7360, Japan
81-3-3575-6001
Sapporo Branch	8-1-1, Minami Ichijo Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0061, Japan
81-11-272-6500
Tohoku Branch	1-3-1 Ichibancho, Aoba-ku, Sendai, Miyagi 980-0811, Japan
81-22-266-8111
Hokuriku Branch	1-22, Higashi Bandai-cho, Chuo-ku, Niigata 950-0082, Japan
81-25-243-5577
Tokyo Branch	1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo 105-7360, Japan
81-3-3575-6170
Kanto Branch	1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo 105-7360, Japan
81-3-3575-6180
Shizuoka Branch	2-12, Oute-machi, Aoi-ku, Shizuoka 420-8612, Japan
81-54-255-3431
Nagoya Branch	1-8-20, Marunouchi, Naka-ku, Nagoya 460-0002, Japan
81-52-211-4151
Osaka Branch	6-2-6 Fukushima, Fukushima-ku, Osaka 553-0003, Japan
81-6-6453-2190
Shikoku Branch	11-1, Katahara-machi, Takamatsu, Kagawa 760-0040, Japan
81-87-826-0826
Hiroshima Branch	5-3-18, Otemachi, Naka-ku, Hiroshima 730-0051, Japan
81-82-244-1241
Kyushu Branch	1-8-10, Daimyo, Chuo-ku, Fukuoka 810-0041, Japan
81-92-724-1131
Technical Research Institute	515-1, Karima, Tsukuba, Ibaraki 305-0822, Japan
81-29-858-8800* The Head Office, Tokyo Branch, and Kanto Branch relocated to the above
address on May 9, 2022.

Overseas

Thailand, Vietnam, Malaysia, Indonesia, Myanmar, Sri Lanka,
Laos, Cambodia, Nepal, Turkey, Mexico, U.S., Panama, Honduras

Major subsidiaries and affiliates

Hazama Ando Kogyo Co., Ltd.
Aoyama Kiko Co., Ltd.
Ryoko Kaihatsu Co., Ltd.
HAZAMA ANDO (THAILAND) CO., LTD.
PT. Hazama Ando Murinda (Indonesia)
VIETNAM DEVELOPMENT CONSTRUCTION CO., LTD.

Editorial Policy 
We published the Corporate Report 2023 and the Sustainability
Report 2023 as tools for communicating with our stakeholders
and as tools for sharing awareness of the corporate social
responsibility (CSR) of the Group’s employees.
Corporate Report 2023 focuses on gaining a clearer understanding among our stakeholders of the essence of our management strategies and their results. It provides a brief
introduction of the Group’s management strategies for continuing to create value to address social issues, and offers
highlights of results for fiscal 2022 in relation to the U.N.’s
SDGs, which have garnered attention in society in recent years.
Messages from top management also give an outline of ourmanagement vision and explain its goals and progress towardachieving them.
Part of our ongoing efforts to enhance disclosure, Sustainability Report 2023 summarizes details of various CSR activities
and a range of environmental data most relevant to experts.
The report is posted on our corporate website. Based on theprinciples and content of various guidance issued by GRI andother agencies, after clarifying Group policies and main thrustsof our CSR initiatives, the Report gives concrete examples andseeks to explain the direction of the initiatives.
Sustainability Report 2023 can be downloaded from thesustainability section of our website below.
 IR Library / Corporate Report:

https://www.ad-hzm.co.jp/english/corporate_report/

Report scope In principle, Hazama Ando, but some reported activities
include affiliated companies.
ReportingperiodFiscal 2022 (April 2022—March 2023). Some information on activities in fiscal 2023 is also included.

Publication
date

November 2023
(previous publication: November 2022)

Referenced
guidelines- Japan Ministry of the Environment, Environmental
Reporting Guidelines 2018
- Global Reporting Initiative, GRI Standards- IFRS Foundation, Integrated Reporting Framework
and SASB Standards- Japan Ministry of Economy, Trade and Industry’s
Guidance for Collaborative Value Creation
60

HAZAMA ANDO CORPORATIONCORPORATE REPORT 2023

Head Office Organization Chart Hazama Ando Corporation
As of October 1, 2023

General Meeting of
Shareholders

Audit Department
Secretary Department

Board of Directors
Audit and Supervisory
Committee

President

Corporate
Strategy Division

Business Administration Planning
Department
Innovation Department

DX Strategy Department
Personnel Department
Career Development Department

Administration
Division

Board of Directors Office
General Affairs Department
Finance Department

Legal and Examination
Department
Corporate Communication
Department

Business Development Strategy
Department
Business Development
Department No. 1
Metropolitan Area Business
Development Department
Comprehensive Evaluation Office
Cost Estimation OfficeBusiness Development
Department No. 2
Business Development
Department No. 3
Business Development
Department No. 4
Business Development
Department No. 5

Environment/Renewal Engineering
Department
Real Estate/InfrastructureManagement Division
Sales Office
Energy Business Management
Division
Energy Business Development
Department
Energy Business Technology
Department
Next Generation Energy Strategy
Department
Renewable Energy Business
Department

Construction Project Planning
Department
Construction Management
Department
Procurement Department
Project Promotion Office
ATD (Advanced Technology
Development) OfficeConstruction Technology
Department
Construction Supervision
Department
Civil Engineering Technology
Management Division
Engineering Design Department
Civil Engineering Department No. 1
Civil Engineering Department No. 2
Civil Engineering Department No. 3

Mechanical and Electrical
Department
Building Design Management
Division
Building Design Planning
Department
Building Design Department
Structure Design Department
Production Design Department
Environmental Building Design
Department
Utilities Management Division
Metropolitan Area Utilities Group
Utilities Department
Utility Design Department
Utility Supporting Services
Department

Research and Development
Promotion Department
Carbon Neutral Technology
Development Department
Nuclear Power Department
Soil/Foundation Research
Department

Structural/Materials Research
Department
Environmental Research
Department
Frontier Research Department

Administration Department
Business Development
Department
Civil Engineering Department

Contract Management
Department
Building Department

Project Planning Department
Renewal Building Department
Business Development
Department

Building Service Department
Administration Department
Safety and Environment
Department

Business
Development
Division

Sapporo Branch
Tohoku Branch
Hokuriku BranchTokyo Branch
Kanto Branch
Shizuoka Branch

Construction
Division

Technical
Research
InstituteInternational
Division

Building
Management
Division

Safety, Quality
and Environment
Division
61

Safety Department
Quality Environmental Department

Nagoya Branch
Osaka Branch
Shikoku Branch
Hiroshima Branch
Kyushu Branch

Asia BranchNorth America
BranchThird-Party Opinion

In the current business environment, geopolitical risk and other VUCA* elements are at an all-time high.
Companies are rushing to incorporate appropriate ESG and sustainability strategies into management andshore up their resilience. I have been asked to give my third-party evaluation of Hazama Ando’s Corporate
Report and Sustainability Report and sum up the challenges the Group faces going forward.
*Short for volatility, uncertainty, complexity, and ambiguity, referring to rapidly changing and unpredictable situations.

Major Steps Forward in Sustainability Management

Masaatsu Doi

Professor
Graduate School of Social Well-Being Studies,
Hosei University
Dr. Doi holds a PhD in commerce. He became an associate professor in the Faculty of Regional Policy at the
Takasaki City University of Economics in 2009 after
graduating from the Hitotsubashi University Departmentof Economics and completing post-doctoral studies at
Hitotsubashi’s Graduate School of Commerce andManagement. He moved to Hosei University in 2014 andhas been in his current position since 2016. His major
publications include Social Entrepreneurs: Legitimacy in
the Process of Promoting CSI (Chikura Publishing Company) and Creation and Diffusion of Social Innovation(NTT Publishing).

First of all, I would like to congratulate the company on the bold, steady progress
it has made with regard to the core SDGs and key performance indicators it had
earlier set out. Both the number of core SDGs and indicators are increasing (p. 18
in the Corporate Report). Of particular significance is the ambitious goal of nearly
doubling the number of female managers to 60 by 2025. I look forward to seeing
what comes out of this process, and will be looking at whether the Group’s employees and other stakeholders will take pride in helping to build the structure of thecompany. Key performance indicators also include an employee engagement score,regional development projects, and the ratio of female and external board directors. It is critical that these indicators tie into the promotion of ESG management,
which is one of the management issues identified in the new medium-term management plan. Data trends regarding the utilization of personnel point to the establishment and more widespread use of a range of systems (p. 17 in the Sustainability
Report), and I look forward to the Group making further headway in these areas.
The renewal of the governance framework is also attracting attention. First, thetransition to a company with an Audit and Supervisory Committee will contribute tostronger management governance based on international standards. Anothermajor development is the formation of the new Sustainability Committee, which
will explore and set sustainability-related strategies and goals from the perspectiveof business risks and opportunities as well as material issues. I also hope the Groupwill capitalize on the six advisory committees linked with the Sustainability Committee to collaborate across the organization in carrying out robust sustainability
management and disseminating information promptly and effectively.

Room for Further Development

About a third of the company’s shareholders are foreigners, and the Group
employs people from over 18 countries. It also has manufacturing bases in 19
countries. In this context, there is an increasing need to demonstrate commitment
and strong leadership with regard to global social issues while responding toneeds in Japan. In particular, especially in Western societies, we are seeing growing calls for action regarding global issues such as climate change, biodiversity,and the protection of human rights. I would like to see the Group set a directionthat includes engagement with all of its various stakeholders and make evengreater efforts to engage. I also look for steps to further reinforce the risk management framework, including with regard to geopolitical risks. In doing so, theGroup might consider incorporating international standards, such as ISO 31000
standards related to risk management and BS 25999 standards related to business
continuity management.
Finally, I hope the company will further step up the pace of collaboration withother companies as it draws on its advanced technological capabilities to addresssocial issues. A good example of this is the joint development of Carbon Pool
concrete (p. 10 in the Sustainability Report) to help bring about a carbon-neutral
society. But I also hope to see more open innovation that is not bound by conventional frameworks. With a new management team and governance framework,
the Group has chosen increasing corporate value and enhancing the company’s
appeal as keywords for the medium-term management plan. I will continue tosupport the Group as it makes further strides in these areas.
62

Published by
HAZAMA ANDO CORPORATION
1-9-1, Higashi-Shimbashi, Minato-ku,
Tokyo 105-7360, Japan
Inquiries
Corporate Communication Department
Tel 81-3-3575-6094 Fax 81-3-3575-6017
URL https://www.ad-hzm.co.jp/english/