Chapter 3 Business Models

Chapter 3

Business Models
Comprehensive System × Area Expansion
Alliance companies × Group companies × Cooperating companies = ∞The INFRONEER Group is focusing on three business models to solve infrastructure challenges through its
business while also maintaining business growth and aiming to achieve a world where there’s no limit to what
can be asked of and what can be delivered by infrastructure services.

Comprehensive system
Taking the entire life cycle of the infrastructure, including planning proposals, construction, operation, maintenance, management, and reinvestments,
we strive to achieve consistency, maximize the value added throughout the infrastructure life cycle and the value chain, and maintain and expand
the Company’s revenue base.

Overview of Business Models

One-stop management throughout the infrastructure life cycle of any project

Growth Strategy

Alliance companies“Construction”“De-construction”
4

3

Reinvestments andtechnical developments

For details of each business segment, visit our website at: https://www.infroneer.com/jp/company/integrated_report/segment/index.html (in Japanese)

Planning anddesignBuilding materials
and equipment
Manufacturing
Sales

ArenasWater supply
and sewerage
concession
Harbors
Publicfacilities

New construction

MaintenanceRepairManagement

RenewalInfrastructure
management

Reinvestments

Sendai International Airport

Airports
Roads

Procurement
Logistics

R-tecconsultant

MAEDA ROAD

Aichi Road Concession

MAEDA SEISAKUSHO MAEDA CORP.
FUJIMI KOKEN

FBS

Global InfrastructureManagement

Miotsukushi Industrial Water Concession
Miura Sewage Concession
TOYO CONSTRUCTIONJMNICHIYUU

・・・

DX (digital links/back office)Corporate Data

“Construction”

Operations, maintenance,and management
Utilize advantages andexpand revenue

Business plan
Evaluation
Investments

Sustainability

Engineering capabilities
Maintain, strengthen,and differentiate advantages

Cooperating companies

Downstream

1

2

Upstream

Capture and create
opportunities

Group companies

Expand and strengthen the business scope to all upstream and downstream areas, with “construction” as the axis

Expand operations to all infrastructure fields withthe focus on “de-construction”

Finance, regional networks,
partnerships

Business Models

Integrated Infrastructure Service Company“De-construction”

Top Message

Reinvestments

In order to increase corporate value through our growth strategy, we will expand our business through M&A and alliances, in addition to the growthof our own business and that of cooperating companies. By expanding our business into a variety of infrastructure fields, including roads, airports,
water supply and sewerage concession, and combining multiple fields, we will be able to provide more comprehensive and efficient services totowns and cities, and to all of society. As a result, we will contribute extensively to solving various problems faced by the government, local
governments, and private business owners.

While aiming to stabilize and expand our own revenue, we will take business risks and improve our corporate value through thecreation of added value and the continuous provision of infrastructure services to society that can be realized because we are an
integrated infrastructure service company.

21

Downstream

Area expansion

Reinforce strength, create opportunities, and expand revenues

The “construction” business represents a pillar of INFRONEER and its key strength.
The robust engineering capabilities built up over many years will provide us an essential advantage for promoting the “de-construction” business for reducing businessrisks and reducing costs. In this sense, strong “construction” business capabilities areimportant for maximizing returns from engaging in “de-construction” businesses.

Operations,maintenance, andmanagement

Take the entire life cycle as a business area

Upstream“Construction” × “De-construction”

By leveraging the engineering capabilities and financial expertise we have cultivated, “de-construction” business enables us to minimize risks and generate large
returns. Specifically, it involves concession projects of acquiring the right to construct, operate, maintain, and manage public infrastructures such as airports, watersupply and sewerage systems, and toll roads. It also includes such businesses as
renewable energy projects of making investments in everything from business development and construction to maintenance, management, operation, and sales.

Major renovation

Capitalrecycling

RenewalReinvestments, creationof secondary market

Partnership,
financing capabilities

Construction

Business models for the futureof our infrastructure

Manufacturing
andprocurement“Construction”
×“De-construction”

Planning anddesignChallenge
the status quo

Planning andproposalComprehensive
system×
area expansion

Know-how,
CSV thinking

Added value

INFRONEER is focusing on three business models to deal witheach of the following themes: “construction × de-construction,”“comprehensive system × area expansion,” and “capital recycling.”
In pursuit of establishing business models that enable sustained growth unaffected by external factors such as the economy and policies, we will aggressively promote the integrated
infrastructure service company model, which offers a comprehensive range of infrastructure management services from upstream to downstream, as the Group’s overall priority strategy
while capitalizing on the strengths of the three business companies. The Group’s robust business capabilities are applicableto approaching various fields by utilizing expertise accumulated
over many years of engaging in business development and operations; professionals possessing diverse and rich knowledge andexperience; and financial competence based on minimization oflife-cycle costs and accurate risk assessment. With these advantages, we intend to maximize our competitiveness while creatinga highly profitable and stable revenue base.

Value Creation Story

Three Business Models That are Challenging
the Future of Our Infrastructure

For details of infrastructure management projects, visit our websites at: https://www.infroneer.com/en/company/ourbusiness.html

22Chapter 3 Business Models

Capital Recycling
Creation of Added Value through Capital Recycling
Capital recycling represents the business model by utilizing our engineering capabilities cultivated over many years and the financial
know-how we have acquired through forming domestic and international business partnership, with the goal of promoting
reinvestments and creating secondary markets.
Reinvestments

Holding Company Structure

Secondary market creation

 or details on secondary market creation projects, visit the following websites:F
Building new infrastructure business platforms https://www.infroneer.com/jp/news-article/2022/07/05/524.html (in Japanese)
Structuring equity income funds for the infrastructure investment market in Japan https://www.infroneer.com/jp/news-article/2022/07/05/523.html (in Japanese)① SaleNational government / local government⑦ Reinvestments② Operation

New projects for solving Existing infrastructuressocial issues+ Added value

Pension funds, infrastructure funds,
and others③ Improving public services,
revitalizing regional communities

Local communities and society⑥ Investments④ Infrastructure investment
multiplier effect⑤ Investments

Individual pensions, retirement benefits,
and others

Secondary market① National and local governments sell the rights to operate government-owned infrastructure facilities to private companies, including INFRONEER, toundertake necessary maintenance and renewal work. By purchasing the operating rights, private companies take business risks. INFRONEER draws on its
engineering capabilities and financial know-how to mitigate such risks and reduce costs.
② Right-holding companies operate the infrastructure facilities under the agreement, drawing on the business know-how of the private sector while expertly
demonstrating engineering capabilities to implement renewal work (for added value).
 he infrastructure renewal is expected to raise the quality and comfort of living in the local communities, encouraging population inflow and regional revitalization.
③ T⑤ Through pension funds and infrastructure funds, individual pension and retirement plans are targeted as a primary investment destination, which basicallypursue long-term stable investment performance.
⑥ INFRONEER transfers equity stakes chiefly to pension funds, which basically pursue stable investment performance, while continuing to engage in theoperation, maintenance, and management of the infrastructure in order to provide sustainable and optimal infrastructure services.
 rivate companies can take on new projects to solve social issues based on profits earned from infrastructure transfer gains as well as maintenance and renewal.
⑦ P⑦´The national and local governments can use gains on the transfer of the operating rights acquired in the process ① to invest in new projects for solving social issues.

23

Role ofMD

Role ofMS

16 sales offices
outside Japan

55 dealers

298 sales offices
in JapanCollaboration with and Support for Business Partners
In addition to internal strengthening through M&A and the like, we will accelerate problem-solving in a wider range of areas throughbusiness alliances to supplement areas in which we are deficient, collaborative and joint technical development with partner companies
that share our strategies, and investment in business partners that understand our strategies. In addition to establishing long-term partnerships by enhancing our economic and human resources as well as technical support for cooperating companies, we will proactively
develop future partners through investment in promising venture companies.

Business Portfolio Management
In pursuing the enhancement and utilization of the strengths of “construction” and “de-construction” as well as promoting the expansion ofsegments and areas (enrichment), we intend to accelerate reforms through strict business portfolio management by INFRONEER Holdings
and through DX. We will evaluate each business by combining market growth potential with ROIC, and optimize the allocation of management resources based on timely and rational judgments and decision-making.

Corporate Data

④ Infrastructure investment multiplier effect is expected to improve the fiscal position of the national and local governments. It also brings additional benefits,
such as employment creation and building a stable basis of livelihood, as well as having a positive ripple effect on individual pensions and retirement benefits.

Making use of domestic and international sales offices and local business networks
built by the Group’s individual business companies in various regions, we facilitate
the sharing of sales information and referral of customers between companies, seeking
out new business opportunities.
We use the existing networks of Group companies to obtain a foothold in carryingout global business development in new regions, ensuring efficient market expansion
with minimized risks.

Role ofMK

Sustainability

INFRONEER will promote the strategy of taking investment risks to develop infrastructure projects to generate long-term returns basedon its engineering capabilities for building and infrastructure construction by engaging in a comprehensive range of processes from planning,
design, construction, operation, maintenance, and management. This strategy is expected to produce a number of benefits as follows inalignment with the chart above.

Utilizing Regional Networks of Business Companies toCreate Synergy throughout the Group

Role ofMS

Growth Strategy⑦´ Reinvestments

Private sector(Public-private partnership business, private-sector business)Role of
MD

Business Models

Take on new challenges to address social issues through capital recycling

MK: MAEDA CORPORATION
MD: MAEDA ROAD
MS: MAEDA SEISAKUSHO

Role ofMK

After shifting to holding
company structure

We are aiming to establish business as an integrated infrastructure service company to implement these business models effectively and ensure a highly profitable and stable revenue base, with an eye to addressing social issues associated with infrastructure while achieving our sustained growth.
We believe this will enable us to contribute to solving social challenges relating to the entire nation, such as pension financing,in addition to infrastructure-related issues.

Previously, the major business companies of the INFRONEERGroup faced constraints, particularly related to resource efficiency, when tackling social challenges individually. To remedy
this situation, the three companies decided to shift to theholding company structure so that MAEDA CORP., MAEDA
ROAD, MAEDA SEISAKUSHO, and INFRONEER Holdings could
demonstrate team synergy throughout the Group.
INFRONEER is responsible for medium- to long-term strategy planning for the entire Group, ensuring stable capitalthrough IR activities, and enhancing our business portfolio
through effective capital allocation. Furthermore, with a focus
on business management based on growth and capital profitability, we aim to build a system that achieves Group-wide
added value and ROE goals through timely decision-making.
In addition to being able to focus on their own core businesses
as well as operating autonomously, the companies will accelerate collaborative participation in high-compatibility businessareas that had previously been difficult for individual companies, and improve corporate value for the entire Group.

Before shifting to holding
company structure

We transfer equity stakes to pension funds and other investors while continuing to engage in the operation, maintenance, and management of
infrastructure that increases its added value over time and generates stable returns, with the aim of revitalizing the infrastructure investment market.

Synergy = Expansion x Centralization(centrifugal force and centripetal force)

Top Message

Based on our engineering capabilities and financial know-how, reinvestments entail creating a capital flow from taking risks to invest in an infrastructuredevelopment project, constructing facilities, and managing the project to be able to generate long-term returns. The project is then transferred principally to pension funds, which pursue stable investment performance, with the goal of using gains on the transfer of the project to invest in new projects.

To achieve perpetual growth of the entire Group, we have set the medium- to long-term goal of becoming an
integrated infrastructure service company. Toward this end, we are taking on the challenge of transforming toa business model that enables us to maintain stable and high profitability continuously by expanding businessareas while leveraging the strengths of the three business companies in operating existing businesses. We arepromoting this endeavor with Group companies, cooperating companies, and co-creation partners, with theaim of realizing our vision of creating “a world where there’s no limit to what can be asked from and what canbe delivered by infrastructure services.”

Value Creation Story

INFRONEER’s Competitive Advantages

24Chapter 3 Business Models

INFRONEER’s Primary Stakeholder Communication Channels

Stakeholder

For other articles on stakeholder dialogues and opinions in addition to the following, visit the sustainability page of our website at:

Major Dialogues

25• Investor presentation 
Quarterly• Issuance of financial reporting/quarterly reporting 
Quarterly• Issuance of the integrated report 
Annual• Corporate governance report 
As needed• Information disclosure on the IR website As needed• Information disclosure to ESG ratings agencies 
As needed• Visiting and having individual interviews with institutional investors inand outside of Japan 
As needed• Small meeting with investors As needed• Ordinary general meeting of shareholders 
Annual• Issuance of the investor newsletter 
Semiannual• Ensuring transparency of management processes,
enhancing governance• Timely and appropriate information disclosure• Appropriate shareholder returns• Improvement in corporate value• Building relationships of trust through proactive dialogues

Be aware of being a member ofthe local community, have communication with each community
on an ongoing basis, and carryout various activities to solve
social and regional issues. Formpartnerships with NPOs andNGOs to promote collaborative
projects to contribute to solvingsocial issues.

• Cooperation with economic organizations and trade organizations  As needed• Dialogues with NPOs and NGOs 
As needed• Cooperation with international initiatives 
As needed• Dialogues with municipalities and local communities 
As needed• Town meeting with local residents 
As needed• Offering site/facility tours As needed• Information distribution via industrial newspaper and other media  As needed• Cooperation/sponsorship for social contribution activities  As needed• Support to post-disaster reconstruction efforts 
As needed• Sponsorship and hosting events for sports promotion, regional revitalization,and SDGs-related activities 
As needed• Contribution to local communities, mutually beneficial
relations with local communities• Solutions to issues faced by each community• Improving employees’ awareness of CSR through encouraging their participation in social contribution activities

Accurately grasp needs of customers, challenge conventional
infrastructure business models,and offer optimal services andinnovative solutions to customers around the world, thereby
winning the trust of society.

• Customer satisfaction survey (construction performance evaluation score)
As needed• Day-to-day sales activities 
As needed• Regular meetings (for construction projects) 
Periodical• Inspection of buildings Periodical• Trade exhibitions and events 
As needed• Issuance of PR magazines, etc. As needed• Information disclosure through the website As needed• Collecting user feedback via telephone and website As needed• Issuance of the integrated report 
Annual• Provision of optimal infrastructure services• Safe and secure social and local environment• Sustainable social and local development• Solutions to issues faced by customers• Appropriate management of customer information

Implement Group-wide humanresources recruitment and development strategies, with the aimof promoting sustained growthof individuals and organizations.

• Information distribution via “talentbook” and Instagram (Group common)
At least twice a month• O ffering company tours, site tours, and internship programs forstudents (jointly by three business companies) As needed• Providing student loan repayment support programs as a way to increase employee engagement (MAEDA ROAD)

Up to 120,000 yen per annum• Providing scholarship programs for overseas students of civil engineering(MAEDA ROAD) 
Every year
• Joint research with local schools and support through support groups(MAEDA ROAD and MAEDA SEISAKUSHO) 
As needed• Improving the quality and quantity of the recruiting basethrough increased name recognition and understanding of the
INFRONEER Group among existing and potential job seekers• Offering a solution to the social issue of outstanding student
loans while providing economic support to applicable employees of the company and increasing their engagement• Tackling workforce shortages in the constructionindustry and ensuring recruitment and developmentof engineers for the company• Promoting industry-academia collaborative R&D and emphasizing the significance of this activity when carrying out
recruiting activities to arouse the interest of students in thecompany• Awards program for cooperating companies 
As needed• On-site safety education 
As needed• Study sessions on quality management for cooperating companies
As needed• Successor training programs As needed• Support for recruitment activities 
As needed• Website operation of and support for Team-Z (network of cooperatingcompanies) As needed• Holding online exhibitions As needed• Making facilities of ICI Center available for public use As needed• Conducting supplier evaluations on an ongoing basis As needed• Setting up whistle-blowing channels As needed• Implementing measures to achieve a safe workplace(including those for foreign national workers [multilingual safety education programs and multilingual posts])• Fair evaluation of technical skills and for career development (career path program; internal technicalqualification program)• Development of future workers• Promotion of co-creation projects• Addressing issues related to legal compliance, humanrights, and the environment throughout the supply chain• Holding town meetings (at 13 locations) 
Annual• Holding philosophy dissemination sessions As needed• Conducting joint new employee orientations 
Annual• Self-evaluation and reporting 
Semiannual• Conducting ES surveys and publishing survey results 
Annual• Setting up whistle-blowing channels As needed• Collection and distribution of management information via the Group websiteAs needed• Online distribution of investor presentations to all officers and employeesQuarterly• INFRONEER Group’s group newsletter 
Annual• Expanding the lineup of benefits eligible for employees’ families  As needed• Development and utilization of human resources• Appropriate personnel evaluations (revision of evaluation systems)• Improving corporate culture (promoting teleworking,introducing free-seating office)• Providing diverse workstyle options, supporting
work-life balance• Creating a safe and comfortable workplace environment• Health promotion and maintenance of employees,
prevention of mental health disorders• Legal compliance, respect for human rights, etc.

• Regularly disclosing data on environmental impact (issuance of integrated report, etc.) Annual• Development of ecological technologies and products As needed• Activities and donations through “dividends for the Earth”  As needed• Cooperation/sponsorship for social contribution activities  As needed• Dialogues with NPOs and NGOs 
As needed• Internal eco point system "Me-pon" As needed• Compliance with environmental laws and regulations• Response to climate change• Building a circular society• Biodiversity conservation• Provision of ecological products (LEAB, bio heavy oil, etc.)

Proactively recruit industry-readyprofessionals and enter new
business areas in a timely manner.

Promote activities jointly to address
issues related to health and safety as
well as quality while fostering partnerships and building relationshipsof trust. Make joint efforts to secure
employment of future workers.
Engage in free and equitable competition and fair business transactions
while promoting efforts to solve environmental and social issues throughout
the entire supply chain, thereby
solidifying relationships of trust.
Respect the individuality of each
employee and create an appropriate workplace environment andcompany systems to promote diversity and increase job satisfaction.
Develop mindsets for challenging
the conventional way of thinking
and having an out-of-the-box
way of viewing things to makechanges as a way to achieve
corporate growth.
View the Earth as an important
stakeholder and work to support
people’s rich and safe lifestyles
through infrastructure service,aiming for sustainable development of the company and society.

Corporate Data

Simon SomervillePortfolio manager of Japanese equities
Marathon Asset Management LP (U.K.)

Earth

As an investment management firm, we at Marathon Asset Management have maintained regular meetings with MAEDA Corp. at their respective offices in London and Tokyo since before the company became
INFRONEER Holdings. We have high regard for INFRONEER as one of the Japanese companies that are
evolving with an eye on the future, including management’s focus on the growth areas of concessions/PPP
and renewables. The most recent news that the company is starting a group-wide Employee Share Ownership
Plan is a progressive initiative.

Ensure sustainable growthand medium- to long-term
improvement in corporate value
by holding constructive dialogues
and reflecting their requests inmanagement.

Sustainability

Investors

Employees and their families

inner

Stakeholder Remarks

Reflection in management processes andbusiness activities

Growth Strategy

Visit the Infroneer AtoZ page at: https://www.infroneer.com/en/company/atoz/

We organized the national
conference of female employees in the construction sector,
which was attended by 158
female employees. The event
ran a number of programs,
such as reports on employment situations and company systems; briefings on duties and career paths of various job categories, given by representatives of eachjob category; a panel discussion; and lectures by Outside Director
Murayama to discuss on the theme of “what should be aimed at bydiversity and inclusion initiatives.” We will continue working to createa workplace environment befitting a diversity-orientated employer.

Major engagement opportunities

Business Models

Employees

Cooperating companies,
alliance partners

In commemoration of our firstissue of the integrated reportin FY2022, we held a discussion inviting Professor Shoichi
Tsumuraya from Hitotsubashi
University’s Graduate School of Business Administration to talk about
the essential purpose and appropriate systems of corporate information disclosure. To improve our corporate value utilizing objective evaluations of experts, we aim to increase stakeholders’ understanding andengagement by presenting our views and directions. The company’s
website posts past dialogue sessions with experts, which are madeavailable from the corporate communications archive Infroneer AtoZ.

New hires and their families(recruitment)

Local Community(University)

We hosted seminars forindividual investors in Tokyo,
Osaka, and Nagoya, thethree major cities in Japan,
attracting a total of 521
participants over three days.
The seminar gave a onehour presentation on the earnings summary and future strategies
of INFRONEER. We provide IR information to individual investors
in a meticulous way to correct information asymmetry and aim toincrease the appetite of such investors, which constitutes a driver forstabler and higher share prices.

Customers

FBS and MAEDA CORP. formeda joint venture to undertakea contract for comprehensive management services,
including maintenance andmandatory inspections, for public facilities owned by Joso City, Ibaraki
Prefecture, and started operations in April 2020. Subsequently, thejoint venture and the Joso City Office had a number of study sessions
on the management of public facilities and infrastructure. As a result,
INFRONEER Holdings and Joso City signed a comprehensive cooperation agreement in September 2022 to improve civil services by utilizing
public facilities and infrastructure functions. We will continue with dialogues with the city office with the objective of offering value in termsof a safe and secure social and local environment and sustainability.

Investors
Local communities

Local Community(Municipality)

Policy(INFRONEER’s responsibilities,
stakeholders’ expectations)

Top Message

outer

https://www.infroneer.com/jp/sustainability/ (in Japanese)

Investors, ratings agencies(loyal shareholders)

To achieve our goal of creating “a world where there’s no limit to what can be asked from and what can bedelivered by infrastructure services,” it is important to conduct appropriate information disclosure and stakeholder dialogues. We have had dialogues and communication with stakeholders in various ways, and will continue to do so to maintain good and smooth relationships and build relationships of trust with stakeholders.
Based on such relationships, we will encourage joint efforts to pursue common benefits and create long-termvalue, thus contributing to generating social value.

In recent years, there has been a rise in public expectations for businesses to address social issues, which have been increasingly
becoming complicated and severe. To accurately understand these social expectations and promote initiatives aimed at achievinga sustainable society, we strive to ensure effective communication with stakeholders while building relationships of trust. The
following is an excerpted list of our major means of communication with stakeholders.

Value Creation Story

Stakeholder Dialogue

26

Chapter 3 Business Models

Important Themes
To identify material issues, we have extracted, compiled, and evaluated important themes related to the entire Group.

We have identified the following six materiality issues to quickly promote and implement initiatives to solve
social issues as well as to improve corporate value and contribute to society as a whole permanently by pursuingand offering added value on an ongoing basis.

Identifying Issues for Our Materiality Assessment

Reducing greenhouse gas emissions across the entire value chainImproving the working environment and conditions of workers/
promoting safety and healthIn FY2022, after transitioning to a holding company structure, INFRONEER set up a Sustainability Committee comprised ofrepresentatives of the three business companies. To add to discussions undertaken by management and by the Board of
Directors, INFRONEER asked committee members, who work in a variety of fields at the three business companies, to discuss
solutions to social issues and identify specific material issues that should be addressed over a period of roughly six months.
To give our stakeholders a broader understanding of the challenges surrounding infrastructure and the activities of
INFRONEER, the material issues have been summarized in the form of simple and easy-to-understand expressions. We have also
been careful to clarify the links between our business plan, each business segment, and the priority issues. In view of changes inthe environment and the views and expectations of our stakeholders, we will continue to review and identify the issues that arematerial to our business through discussion.

Reducing use of raw materials derived from fossil resources

Promoting diversity in the workplace and expanding career
opportunities

Reducing the environmental impact of manufacturing plants

Prevention of illegal work/forced labor (support for foreign laborers)

Conserving biodiversityImproving understanding of human rights and preventing violations

Improving the utilization rate of recycled materials and working toachieve zero waste

Enhancement and promotion of education and training

Management and proper disposal of hazardous substancesPromoting disaster prevention and mitigation

Appropriate management of water resources

Strengthening governanceReducing emissions of harmful substances into the atmosphereObservance of compliance and prevention of unfair competitionand corruption

Management of specific chemicals in building materials

Information security

Promoting construction methods and the development, sales, andconstruction of products that contribute to improving functionality
and comfort (buildings, bridges, tunnels, roads, dams, and others)Customer privacy

Promoting design, construction/development, and manufacturingof (respectively) construction methods, technologies, and productsthat save labor and contribute to efficiency on the construction sitePromoting support for ESG across the entire supply chain

Expanding our infrastructure management business contribution tosolving social issues (through the concession business)

Strengthening of risk management

Value-creating human capital and mutual respect

Strengthening governance

Extracting material issues
Value chain analysis

Stakeholder analysis

Mega-trend analysis

Requests and obligations
for the future based on
business plan
PLAN

Management/
business analysis
Risk analysis

Integrating criticalsustainability themes for thethree business companies

Requests and obligations
according to current project
FACT
Extracting criticalsustainability themes bybusiness company(segment)
P. 28

Other requests from society
Stakeholders + α

Weighting based on
assessment of social andenvironmental impact +financial impact assessment
Grouping of themes andconcepts
Identifying risks
and opportunities

Identifying
material issues

Specific action
KPIs

Value creation

P. 29

P. 28

Implementing SDGs and VMVIn addition to the relationship between individual material issues and the SDGs, INFRONEER, as a provider of infrastructureservices, also links its own VMV to the SDGs. Our mission (MISSION) is to create value directly and indirectly throughinitiatives, business content, domains, and value chains (VALUE), as well as to identify what society as a whole can achievethrough our initiatives and businesses (VISION).
VisionOur Mission

Value
The Value We Promise

A world where there’s no limit to what canbe asked of and what can be delivered byinfrastructure services.
We challenge the status quo of existing
infrastructure businesses and deliver the mostsuitable service globally with innovative ideas.
Safety, security, and sustainability of oursociety and local communities.

Risks and Opportunities
For the 29 important themes, we examined the risks and opportunities for the entire Group and each business company andevaluated their importance. We examined these as part of our long-term management policy and identified the corresponding
management issues.
The management issues identified were studied and debated by the Group’s management team and directors, including outside
directors, and issues of particular importance were designated as such by the Board of Directors.

Corporate Data

MissionOur Vision for the Future

Ensuring the safety and quality of buildings, structures, andproducts

SustainabilityImproving public benefit for local communities/preferential inregion procurement

Building a society that is conscious of protecting our environment

Growth Strategy

Promoting design, construction, and manufacturing of (respectively)
construction methods, equipment, and products with reduced
environmental impact (ZEB, wooden construction, geothermal, and others)

Strengthening value chain

Building a society that is proactively conscious of the environment

Business Models

Strengthening collaboration with partner companies/strengtheningof supply capacities and improving productivity

Top Message

Generation of electricity using renewable energy and constructionof power generation facilities

Creating a safe, secure, and more comfortable society

27

Important Themes

Value Creation Story

Materiality and KPIs

For details on risk management, see page 47.
For risks and opportunities, visit our website at: https://www.infroneer.com/jp/company/integrated_report/materiality.html (in Japanese)28

Chapter 3 Business Models

Materiality & KPIs

Materiality

Sub-issues

Enhance portfolio and increase
profitabilityE arn high ratings from customers (quality, safety, functionality,
comfort, and value-added
proposals)

Operating profit ratio between “construction” and“de-construction”: 50:50

80:20<Building construction> Customer satisfaction
survey: 80 points or higher out of 100 points

Survey started fromFY2023<Civil engineering> Construction performance rating:
80 points or higher out of 100 points

82.4 points<Road civil engineering> Customer satisfaction
survey: 80 points or higher out of 100 points

Construction: 88.0
Product: 85.5

<Machinery> Customer satisfaction survey: 4 or higher
on a 5-point scale

546,000 MWh/year(546 GWh /year)

Design and construction ratio (building construction)
70% (3-year average)

66.5% (3-year average)

Improve the supply capacity ofpartner companies and train
workers
E nhance labor productivity,
efficiency, and optimization on
the construction siteAccelerate development of certified technologies and productsthat save labor and contributeto an efficient construction site

Net sales of completed construction contracts perperson¥137 million/person (civil engineering)¥153 million/person (building construction)

ROIC is being formulated
Early formulation of certified technical standards
In preparation

20%

Rate of local employment
in SPC employees hired
for concession projects
operated by MK 56.5%
Business registration
rate: 73%
Registration rate oftechnicians: 71%
Registration rate at theregistration site: 100%
¥106 million/person(civil engineering)¥105 million/person(building construction)

5.3%

－

Reduce greenhouse gas emissions
across the entire value chainIntroduce non-fossil fuel certificatesto the entire company
Reducing greenhouse gas
emissions across the entire
value chain
Reducing use of raw
materials derived fromfossil resourcesImproving the utilization
rate of recycled materials
to achieve zero waste
Conserving biodiversity

Reduce greenhouse gas emissions
from plants
R educe waste in new construction
projects
Reduce waste at plants significantlyImprove the utilization rate of recycled materials in new construction
projects
Establish a management systemfor biodiversity conservation
 evelop preservation technology
Dfor biodiversity
Continue forestry activities anddevelopmentE ducation for the Group’s
human resources strategy(increasing and improving
training)
Improving the working
environment and conditions of workers/promoting
safety and healthPromoting diversity in theworkplace and expanding
career opportunities/
improving understandingof human rights andpreventing violations
Prevention of illegal work/forced labor (support forforeign laborers)B uilding an effective
governance system bservance of complianceOand prevention of unfair
competition and corruption
Information security
Customer privacy
Strengthening of risk
management

Give each employee the full training
requiredImprove rate of leave utilization forfamily reasons and the like
Ensure appropriate working hours
 aintain physical and mentalM
health of workers
Create an attractive workplaceImprove the employment rate ofpersons with disabilities, female
employees, and skilled female
employees
E nsure that all employees respecthuman rights and can makeappropriate decisions and takeappropriate actions
C ontinue to ensure legitimate working conditions for all foreign workers
employed on construction sites
Form a Board of Directors with amajority of outside directors
Operate the Nomination Committee, Compensation Committee, andAudit Committee
Promote ESG initiatives under theleadership of the Sustainability
Committee
Build a governance system that canbe trusted by stakeholders
Reduce the number of serious legal
violations to zeroEliminate serious information
security breaches
Eliminate customer data breaches
Operate an effective risk management system

Scopes 1 and 2
40% reduction by FY2030
Substantially zero emissions by FY2050–15.7％

Scope 2
Utilization rate of renewable energy (electrical
power)
RE60 in FY2030
RE100 in FY2050

55.4%

Scope 340% reduction by FY2030–47.6％

Waste discharged from new construction projects
Improve compared with previous fiscal year/total
amount basis

See page 61 for results inprevious fiscal year.

Usage rate of recycled materials in new construction projects
Improve compared with previous fiscal year/total
amount basis
Amount of dividends for the Earth to contribute tomaintaining biodiversity and ecosystem service
Increase from previous fiscal year

Improve employee engagement by building a
corporate culture and system in which diverse
personnel play an active role
Strengthen our advantages and create moreroom for us to grow (weaknesses) (Feedback
and implementation of measures)
Improve the employment rate of female
employees
Increase from previous fiscal year
Zero major accidents
Reduce frequency rate
Keep frequency rate below 0.6 up to FY2030 (MK)Implement human resource training to improve
individual skills
100% participation in required training

17.3%
Frequency rate: 0.56
Strength rate: 0.42

97.9%

Strengthen the governance function by introducing
a Nomination Committee into the company system
Outside director ratio: 50%

Outside director ratio:
55.5% (5 people/9 people)

Appoint independent outside directors aschairpersons of the Board of Directors andof the Nomination, Compensation, and Audit
Committees

Appoint independent outside
directors as chairpersons of
the Board of Directors and of
the Nomination, Compensation, and Audit Committees

Implement PDCA under a Sustainability Committee led by the president

Number of Sustainability
Committee meetings held: 2

Corporate DataA ppropriate allocation of management resources by maximizing operational efficiency andminimizing SG&A expenses
through economies of scale

Construction career advancement system site
registration rate for FY2023: 100%

* To be completed by September 2024

29

FY2022 Results

Sustainability

Promoting design, construction/
development and manufacturingof (respectively) construction
methods, technologies, andproducts that save labor andcontribute to efficiency on theconstruction siteE xpand local recruitment rateof locally based employees andintra-regional orders

Active employment of local human resources

600 t-CO2/year

Strengthening Governance P. 45

Strengthening value chain

Productivity reforms P. 37

Strengthening collaboration
with partner companies/
strengthening of supply capacities and improving productivity(hiring and training of workers)

KPIs (Targets for FY2030)

Growth Strategy

Amount of carbon fixed by adopting wooden structures and buildings
2,000 t-CO2/year

ZEB adoption rate for non-residential design andconstruction projects
40%

Improving public benefit for
local communities/preferential
in-region procurement

2030
Medium- to Long-term Goals(Achievement Vision)

Business Models

S trengthen efforts for designand construction facilities that
contribute to realizing carbon
neutrality

Develop facilities generating cumulative total of
1 million MWh/year (1,000 GWh/year) of power

Value-creating Human Capital and Mutual Respect P. 53

Grow businesses involved inrenewable energy

3.4

Strengthening and improving our corporate culture P. 38

P romoting design, construction,and manufacturing of (respectively) construction methods,
products, and equipment that
reduce environmental impacts(ZEB, wooden construction,and others)

Sub-issues

Reduce greenhouse gases (Compared to FY2018)P romoting disaster prevention
and mitigation

 enerating electricity usingG
renewable energy sources andconstruction and operation of
power generation facilities

Materiality

Top Message

Promoting construction methods
and the development, sales, andconstruction of products that
contribute to improving functionality and comfort (buildings,
bridges, tunnels, roads, dams,
and others)

Three
Strategic
Pillars

FY2022 Results

Building a society that is conscious of protecting our environment P. 49

Ensuring the safety and quality of construction (buildings,
bridges, tunnels, roads, dams,
and others)

KPIs (Targets for FY2030)

Strengthening business foundation

Building a society that is proactively conscious of the environment

Establishing a new revenue base P. 38

Solving social issues through our infrastructure services business

Creating a safe, secure, and more comfortable society

Expanding our infrastructure management business
contributing to solving social
issues (through the concession
business)

2030
Medium- to Long-term Goals(Achievement Vision)

Value Creation Story

Three
Strategic
Pillars30

Chapter 3 Business Models

Domestic and International Bases (Manufacturing Capital)

Among the various types of business foundations that constitute a source of value creation, we attach particularimportance to the following six types: human capital; financial capital; business know-how; domestic andinternational bases; long-term partnerships; and natural capital. While enhancing each of these business foundations built up over many years, we are promoting their efficient and effective combination with the objectiveof facilitating sustainable development of society and the Earth as well as the Group’s sustained growth.

Human resources who can create value through passion

No overseas base
28 domestic bases(1 head office, 27 branches, sales offices, and plants)
1 overseas base, 55 dealers
14 domestic bases (34 satellite offices)
3 overseas bases

The Group’s concept ofhuman capital

Co-creation

In the major segments of civil engineering, building construction, and road civil engineering, we form partnerships with many specialized
construction companies. For this purpose, we mobilize our large network of cooperating companies, which are known for their established track record and trust and are capable of stable and high-quality performance. In the infrastructure operation segment, we expand
our business areas both upstream and downstream through forming international alliances with leading players in the relevant fields. In
the process, we have earned the trust of the client base, including government agencies, real estate companies, transportation infrastructure operators, and energy developers.

Value-creating capital that challenge andco-create with a sense of ownership(Times)

50
45
40
35

0.8
0.6

33.3

0.6

30
25
20

38.1

37.4

0.4

FY18

24.2

29.1

FY19

FY20

FY21

FY22

Civil engineering and building construction segment: Zenyu-kai (567 companies)
Road civil engineering segment: Kyoei-kai (95 companies), Rekiyu-kai (56 companies)

Alliance partners

Nippon Telegraph and Telephone Corporation, Tokyu Corporation, Accenture Japan Ltd,
Fukuoka Jisho Co., Ltd., GL events, AEG, Suez, Whole Earth Foundation, Macquarie Group Limited,and others

Customers

Government agencies, real estate companies, transportation infrastructure companies, energy
companies, and others

D/E ratio (right axis)

Consolidation and upgrading know-how accumulated by individual companies

For details of each business segment, see our website at: https://www.infroneer.com/en/company/ourbusiness.html

Treating the Earth as a valuable stakeholder
Because we are conducting business activities with the benefits provided by the Earth’s resources, we set aside 2% of our consolidated
net income as “dividends for the Earth” in the same concept as wepay dividends to our shareholders. We do not simply contribute funds
as a company but we also promote activities that actively involve our
employees and their families while collaborating with local communities and NPOs. We also administer the in-house eco point system“Me-pon” to visualize individual environmental activities.

Corporate Data

For 100 years, the three businesses companies of the INFRONEER Group have been involved in infrastructure businesses that support thegrowth and development of regional communities and society. To anticipate and respond quickly to the diverse infrastructure needs thatare changing with the times, each company has cultivated its engineering capabilities and expertise and acquired financial know-how
through engaging in challenging new projects. Enhancing these strengths, we have pursued mutual growth with regional communities
and society while improving our corporate value. Going forward, while endeavoring to further reinforce the major business domains―civilengineering, building construction, road civil engineering, infrastructure management, and machinery―we will realize synergistic effects
across the Group as an integrated infrastructure service company in a bid to challenge the status quo for the infrastructure.

Natural Capital

Sustainability

Equity ratio (left axis)

0.4

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2

Cooperating companies(number of member companies)

Growth Strategy(%)

Partnerships for establishing business as an integrated infrastructure service company

Business Models

Challenge

Business Know-how (Intellectual Capital)

31

JM

226 domestic bases(13 head office and branches, 112 sales offices, 101 plants)

Long-term Partnerships (Social and Relationship Capital)

Financial Capital

As a challenger to the status quo for the future of our infrastructure, wewill promote aggressive, occasionally even risk-taking, investment policies.
For investments in new businesses, increasing financial leverage, principally through borrowings, is expected to raise a return on investment incomparison with equity. At the same time, we need to secure a soundfinancial base in order to ensure ongoing investment activities. For thispurpose, we will manage our D/E ratio, equity ratio and other financial
indicators, while conducting financing activities appropriately according
to the situation based on good relationships with our financial institutions
and investors.
For specific financial data, see page 59.

MAEDA
SEISAKUSHO

15 overseas bases(As of March 2023)

Value-creating
human resources

For details of value-creating human resources, see page 55.

Offensive and defensive financial management

MAEDA
ROAD

44 domestic bases(16 head office and branches, 28 sales offices)

Sense ofownership

We are working on the continuous production of value-creating human resources
who can attain professional growth through autonomous learning activities andvarious experiences and take the initiative in co-creation with various partners inpursuit of business success. We are also striving to promote workplace diversity
and engagement by improving our recruitment competitiveness, nurturing humanresources through various opportunities, and fostering an employee-oriented
corporate culture that pursues higher work motivation and satisfaction.


In addition to the headquarters of each business company
in Japan and overseas, INFRONEER has its own base andregional network that realize comprehensive responses
such as our sales offices for MAEDA ROAD and the satellites(franchise companies) of JM (a 100% subsidiary of MAEDA
CORP.). We aim further to strengthen our business base andensure our competitive advantage by utilizing and collaborating with this regional network.

MAEDA
CORP.

Top Message

Human Capital

INFRONEER bases and regional networkthat realize comprehensive responses

Value Creation Story

Six Business Foundations to Support Growth

For details on “Me-pon,” see page 52 or visit our website at:https://www.infroneer.com/jp/sustainability/environment/ (in Japanese)32