INFRONEER Medium-term Vision 2024

Questions received after the timely disclosure onOctober 1 and answers to them

October 14, 2021
REVISION

October 20, 2021

Questions received after the timely disclosure on October 1 and answers to themApplicable pages ofINFRONEER Mediumterm Vision 2024

P6

Q1．What is Important Measures in Medium-term Vision? When will they show the effects?

P9

Q2．What is the difference between consolidated financial results of INFRONEER
Holdings and Maeda Corporation ? REVISION

P9

Q3．What is the return to employees according to business performance?

P10

Q4．What is the rate of winning 1st place which is our strength in civil engineering

REVISION

segment?
P12

Q5．What is different between the contributions of infrastructure operation
segment to the consolidated profit and operation profit of financial statement? REVISION

P15

Q6．What is acquisition and cancellation of treasury shares and share buy-back (more than 40 billion yen until FY2024) of “Medium-term Vision” ?
P17

Q7．What are the results of IT and DX and what are the plans for the future?

1

【INFRONEER Medium-term Vision 2024 P.6】

Q1． What is Important Measures in Medium-term Vision? When will they show effects? (1)・ Red-letter measures below starts from phase of establishing foundations.
・ Other measures below also aiming to starts from phase of establishing foundations.

3 Core Strategies

Important Measures

Productivity Reform

Maximize added value

Optimization of costs

Promote groupfinance strategies

ESG

Concrete Measures

ESEnhance competitiveness in existing business fields by gatheringachievements and knowhow of infrastructure operation business

ESReinforce business foundation by using the group company's networks(including global expansion)

ES

Reduce costs for materials and equipment by group joint procurement andcentralized purchasing

S

Secure stable and good-qualified supply through cooperation with
subcontractor companies

S

Maximize productivity in all business fields through promoting digitaltechnology across the whole group

ES

Accelerating research and development speed by gathering our strengths

G

Investment for growth considering capital investment efficiency andprofitability

G

Relocate workforce to high added-value business by integrating
overlapping departments

S

Optimizing and streamlining workloads through accumulation andcentralized management of big data and development of digital tools

EGOptimization of fixed costs by effective utilization (consolidation) ofgroup assets

GReduce capital cost by managing group financeTime of showingeffects
FY22 FY23 FY24 NEXT2

【INFRONEER Medium-term Vision 2024 P.6】

Q1． What is Important Measures in Medium-term Vision? When will they show the effects? (2)・ Red-letter measures below starts from phase of establishing foundations
・ Other measures below also aiming to starts from phase of establishing foundations

3 Core Strategies

Important Measures

Create New
Revenue Bases

Enhancecompetitiveness ininfrastructure
operatingbusiness globallyExpansion of businessfieldsStrengthen and Improve
Corporate Culture

Promote group
humanresources strategies

Strengthen
corporate
governance

ESG

Concrete Measures

ES

Enhance competitiveness in infrastructure operating business by mutually
sharing management resources

SG

Global business expansion of infrastructure operation business with ouroverseas networks

ES

Reinforce renewable energy business that leads to a carbon free society
and sustainable urban development

ES

Expand business fields by sharing our various (engineering technology,know-how, network, etc.) strengths

ESG

Expand into new fields of business by mergers and acquisitions

ESG

Active recruitment of specialist human resources

SG

Carry out employee engagement surveys to improve employee’s
motivation

SG

Improve employees’ motivation thorough investment for education andimprovement of human resources system

ESG

Establishment of CSV thinking and dissemination of management
philosophy through joint training and discussion
with executives

S

Promote sustainable development of company and employees throughstrategic recruiting and education

G

Implementation of management that realizes transparent, fair, speedy anddecisive decision
making

ESG

Improve compliance awareness by continuous training

SGImprove corporate value by strengthening corporate governance

SGFostering a corporate culture in which diverse human resources can play anactive role

Time of showingeffects
FY22 FY23 FY24 NEXT3

【INFRONEER Medium-term Vision 2024 P.9】

Q2．What is the difference between consolidated financial results of INFRONEER Holdings andMaeda Corporation ?

REVISION• TOB against Maeda Road Construction and establishment of INFRONEER Holdings effected profit attributable to noncontrolling interests• Estimation of change of profit attributable to non-controlling interests based on financial results of financial year of2020 as below(Billions of yen)
Actions of businessintegration

Actual financial results of FY
2020
TOB against Maeda Road (holdshare of 51%)

Estimation of FY 2021 based on financial results of FY 2020
(Establishment of INFRONEER on last half of the year)

Net sales, Gross profit,
Operating profit andOrdinary profit

Fully consolidated
others 0.9

0.9

NoncontrollinginterestsMDMS
7.9

Total Profit

Image of profitattributable to noncontrolling interests andprofit attributable toowners of parent

Estimation of FY 2022 based on
financial results of FY 2020
(Under the operation of
INFRONEER for full year)

4.0

0.45

Full year

MD：Maeda Road Construction

Noncontrollinginterests

31.2

27.2

＋
Owners ofparent

0.9

0.45
4.0

23.3

Noncontrollinginterests

11.6

First halfof year

MS：Maeda Seisakusho

15.6＝
Owners ofparentLast halfof year

Full year

Owners ofparent

Full year
4REVISION【INFRONEER Medium-term Vision 2024 P.9】

Q3．What is the return to employees according to business performance?

• Construction and manufacturing industries, the labor costs will be allocated to cost of sales and selling, generaland administrative expenses (SG&A)• “Return to employees according to business performance" means increase of labor costs in both cost of sales andSG&A

FY22

Return to employees 1.5▸Increase of labor costs included in cost of sales(Construction site and factory employees, etc.)

Netsales
757.5

FY24(Billions of yen)

Return to employees 1.5▸Increase of labor costsCostincluded in SG&Aof sales (HQ and branch employees, etc.)
656.5

Gross
profit
101.0

SG&A
50.5
Operatingprofit50.5(Billions of yen)
Return to employees 6.0

Netsales875.0

Costof sales
760.5

Gross
profit114.5

Return toemployees 4.0
SG&A
55.5

Operatingprofit59.05

【INFRONEER Medium-term Vision 2024 P.10】

Q4．What is the rate of winning 1st place which is our strength in civil engineering segment?

【How to bid public works construction】
・The company with the highest evaluation score (=technical evaluation score divided bybidding price) takes the orderEvaluation＝scoreHigher technical evaluation score can reverse bidding price placing.
As our actual results, we took orders more than 50% of bid which
we evaluated highest technical evaluation score

Technical evaluation
score
Bidding price

Bidding prices has not so much difference between competitors

If the technical evaluation is higher, it is possible to receive orders
even if the bidding price is higher(Technical evaluation is more important)（Image of evaluation： In the case of a tunnel construction of ¥3 billion）

Company A Evaluation Company B
Technicalevaluation score

160＞

130

Bidding price¥3 billion＜¥2.5 billion

Evaluation score

5.333

＞

5.200

Winning company〇✕

Company A with high evaluation
value wins the order(The price is high, but Company A reverses inthe technical evaluation)6

【 INFRONEER Medium-term Vision 2024 P.12】

Q5．What is the difference between the contributions of infrastructure operation segment to theconsolidated profit and operating profit of financial statement?

REVISION

・Operating profit of each segment (civil engineering, building construction, pavement, and machinery) is as follows
Operating profit of each segment + construction profit created by infrastructure operation business

Operating profit (civilengineering, buildingconstruction, pavementand machinery)
Operating profit ofinfrastructure operation
business

Operating profit in FY2030

100 billion JPY

Operating profit of construction
created by infrastructure
operation businessContributions ofinfrastructure operation
segment to theconsolidated profit in
Maeda Corporation's
financial results
土木・建築・舗装・機械セグメント

Revenues from infrastructure
operations, gains on sales,
M&A, etc. in INFRONEER
Vision 2030 and INFRONEER
Medium-term Vision 2024
インフラ運営

営業利益7

【INFRONEER Medium-term Vision 2024 P.15／Notice on Cancellation of Treasury Shares】

Q6．What is acquisition and cancellation of treasury shares and share buy-back (more than 40billion yen until FY2024)of “Medium-term Vision” ?
【Process of acquisition and cancellation of treasury shares】• INFRONEER will acquire approximately 100 million shares of INFRONEER stocks held by Maeda
Corporation and Maeda Road
• Cash (approx. 100 billion) held by our group will be spent for acquisition of treasury shares• Acquired treasury shares will be cancelled ( No changes in total net assets)【Image of BS】

No External financing

BS Before establishment of INFRONEER(1st Quarter of FY2021)

Consolidated balance sheets ofMaeda Corporation (Millions of yen)

BS at establishment of INFRONEER(Rough amount)
Consolidated balance sheets of
INFRONEER Holdings (Millions of yen)

BS After cancellation of treasury shares(Rough amount)
Consolidated balance sheets of
INFRONEER Holdings (Millions of yen)

Total assets

880,608

Total liabilities

524,603

Total assets

930,000

Total liabilities

560,000

Total assets

930,000

Total liabilities

560,000

Cash anddeposits

97,267

Total net assets

356,005

Cash anddeposits

90,000Total net assets

370,000

Cash anddeposits

90,000Total net assets

370,000

Total non-current
assets492,361

Total shareholder’sequity234,880

Total non-current
assets496,000

Total shareholder’sequity332,000

Total non-current
assets496,000

Total shareholder’sequity332,000

Good will

24,948

Share capital

28,463

Good will

23,000Share capital

20,000Good will

23,000Share capital

20,000

Other assets

290,980

Capital surplus

37,682Other assets

344,000

Capital reserve

5,000

Other assets

344,000

Capital reserve

5,000

Retainedearnings

171,376

Capital surplus

217,000

Capital surplus

117,000

Treasury shares△2,641Retainedearnings

190,000

Retainedearnings

190,000

Total accumulated
other comprehensive
income26,214

Treasury shares△100,000

Treasury shares

029,000

94,909Total accumulated
other comprehensive
income29,000Non-controllinginterests

Total accumulated
other comprehensive
incomeNon-controllinginterests

9,000

Non-controllinginterests

9,000

Shares of INFRONEER to be held as a result of theshare transfer (approx. 100 million shares)【Schedule】
FY21222324▼Acquisition and cancellation of reciprocal share holding (end of Nov.)
Share buy-back from market (more than 40 billion yen)

Offset cancelled treasury
shares with capital surplus(no changes in total netassets)8

【INFRONEER Medium-term Vision 2024 P.17】

Q7．What are the results of IT and DX and what are the plans for the future?
• DX department has been established since FY20 and is working with Accenture on thisinitiative• Promote the creation of systems and frameworks that enable rapid and data-driven
decision-making at all levels of management and business operations

Basic policy

The results to date and the plans for the future

AimInfrastructure
operation business

Reduce operating costs
through systemization ofoperations and introducing
systems to multiple place ofour business

Civil engineering
Building
Pavement

Organizational knowledge
and upgrading ofconstruction management
and cost management
know-how based on data
analysis

Businessmanagement

Minimize SG&A byintegrating back-office
functions across a Holdingcompany• Strengthen forecast management and analysis, streamline repair planning and improve theefficiency of daily business operations by development and introduction of an integrated
management system for the operation of the Aichi Road Concession (ARC)▼FY21
Develop and introduce
system in ARC

▼FY22

▼FY23

Analyze and utilize data and construct logic
Expand to other infrastructure
operation projects▼FY24
Moreefficient• Refine achievement data by enhancement cost management system and improve tools• Minimize lost profits by monitoring construction management and change order management
at each construction site and enabling timely support from the head office and branch offices▼FY21▼FY22▼FY23

Develop system and tools
Collection of construction achievement data
Establish system and frameworks toImproving know-how through feedback
analyze data

▼FY24
Continuousimprovement• Centralizing the organization of Maeda Corporation's branch administration department to
prepare for business sharing• Implement business inventory and review the flow of accounting, general affairs, humanresources, and construction-site clerical work, and started in-house sharing and BPO fromexpense reimbursement, utility bill payment, etc.
▼FY21
▼FY22
▼FY23
▼FY24
Business share promotion for Maeda
Expand to each company of HD
MoreCorporation and affiliated companies
expansion
Expand to affiliated companies

9Challenge the status quo